ASSETS
Notes
31.12.2021 31.12.2020
Property, plant and equipment
1
5 6
Investments in subsidiaries
2
16 741 18 695
Investments in associates
2
8 060 8 060
Other investments
2
4 238 3 407
Other non-current financial assets
3
609 609
Non-current receivables from related parties
4
1 157 1 157
Other non-current receivables
5
8 450 8 977
Deferred tax assets
6
29 29
39 289 40 940
Current receivables from related parties
7
1 762 1 704
Other current receivables
8
169 152
Deferred expenses 34 23
Cash and cash equivalents
9
8 176 3 267
10 141 5 146
49 430 46 086
Share capital
10
20 775 20 774
Reserves
10
10 561 9 812
Retained earnings
10
3 414 3 908
Net result for the period
10
7 800 5 075
42 550 39 569
Non-current liabilities to related parties
11
347 199
Deferred revenue
12
50
Deferred tax liabilities
13
212 129
609 328
Dividends payables
14
6 063 5 924
Other current liabilities
15
208 265
6 271 6 189
6 880 6 517
49 430 46 086
Contingent liabilities
16
294 294
Date: 07.03.2022
Prepared by:
Kremena Dulgerova
Katya Zlatareva
Vasil Velev
Registered Auditor,
Diploma No 0610
STARA PLANINA HOLD PLC
Current liabilities
STATEMENT OF FINANCIAL POSITION
For the period ended 31 December 2021
BGN’000s
Non-current assets
Current assets
EQUITY
Total non-current liabilities
Manager:
Total Non-current assets
Total current assets
TOTAL ASSETS
Total equity
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
Non-current liabilities
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.03.17 15:57:14 +02'00'
Digitally signed by Vasil Georgiev
Velev
Date: 2022.03.17 15:59:17 +02'00'
KATYA RAYKOVA
ZLATAREVA
Digitally signed by KATYA
RAYKOVA ZLATAREVA
Date: 2022.03.24 14:08:56
+02'00'
Notes
31.12.2021 31.12.2020
Divident income
17
7 708 5 633
Other financial income
18
535 272
Other income
19
1 035 527
Cost of materials
20
(22) (13)
Cost of hired services
21
(137) (151)
Depreciation (2) (2)
Employee expenses
22
(1 153) (957)
Other expenses
23
(160) (230)
Other financial expenses (4) (4)
Result for the period before tax 7 800 5 075
Tax expense, net
Net result for the period 7 800 5 075
Other comprehensive income
830 577
83 57
747 520
Total comprehensive income 8547 5595
Earnings per share 0,37
0,24
Date: 07.03.2022
Prepared by:
Kremena Dulgerova
Katya Zlatareva
Vasil Velev
Registered Auditor,
Diploma No 0610
Manager:
STARA PLANINA HOLD PLC
STATEMENT OF COMPREHENSIVE INCOME
BGN’000s
For the period ended 31 December 2021
Investments in equity instruments, reported at FVOCI
Tax effects
Other comprehensive income, net of taxes
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.03.17 15:57:30 +02'00'
Digitally signed by Vasil Georgiev
Velev
Date: 2022.03.17 15:59:36 +02'00'
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by
KATYA RAYKOVA
ZLATAREVA
Date: 2022.03.24
14:07:14 +02'00'
CASH FLOWS FROM OPERATING ACTIVITIES
31.12.2021 31.12.2020
Cash paid to suppliers (285) (344)
Cash paid to employees and social security institutions (1 681) (1 513)
Taxes paid (162) (160)
Bank charges paid (4) (4)
Other payments/proceeds from operating activities 170 63
Net cash used in operating activities (1 962) (1 958)
INVESTING ACTIVITIES
Purchase of non-current assets (2)
Payments for loans granted (1 160) (725)
Proceeds from loans granted 1 547 569
Interests from loans received 395 290
Dividends received from investments 7 708 5 633
Proceeds from sale of investments 2 211
Net cash used in investing activities
10 701 5 765
FINANCING ACTIVITIES
Dividends paid (3 830) (3 682)
Net cash used in financing activities (3 830) (3 682)
Net increase in cash and cash equivalents 4 909 125
Cash and cash equivalents at a beginning of the period 3 267 3 142
Cash and cash equivalents at the end of the period 8 176 3 267
Date: 07.03.2022
Prepared by:
Kremena Dulgerova
Vasil Velev
Registered Auditor, Diploma
No 0610
Manager:
Katya Zlatareva
STARA PLANINA HOLD PLC
BGN’000s
For the period ended 31 December 2021
STATEMENT OF CASH FLOWS
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.03.17 15:57:46 +02'00'
Digitally signed by Vasil Georgiev
Velev
Date: 2022.03.17 15:59:51 +02'00'
KATYA
RAYKOVA
ZLATARE
VA
Digitally signed
by KATYA
RAYKOVA
ZLATAREVA
Date: 2022.03.24
14:07:57 +02'00'
Share
Capital
Reserves from
changes in fair
value of
investments in
equity
instruments
Other
reserves
Retained
earnings
Total
Balance 01 January 2020 20 774 385 8907 9 512 39 578
Net result for the period 5 075 5 075
Profit sharing for dividends (5 090) (5 090)
Profit sharing for bonuses (514) (514)
Other changes in equity
520 520
Balance 31 December 2020 20 774 905 8 907 8 983 39 569
Balance 01 January 2021 20 774 905 8 907 8 983 39 569
Net result for the period 7 800 7 800
Profit sharing for dividends (5 163) (5 163)
Profit sharing for bonuses (406) (406)
Other changes in equity
1
747 2 750
Balance 31 December 2021 20 775 1 652 8 909 11 214 42 550
Date: 07.03.2022
Prepared by:
Kremena Dulgerova
Vasil Velev
Registered Auditor, Diploma
No 0610
Manager:
Katya Zlatareva
For the period ended 31 December 2021
BGN’000s
STARA PLANINA HOLD PLC
STATEMENT OF CHANGES IN EQUITY
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.03.17 15:58:01 +02'00'
Digitally signed by Vasil Georgiev
Velev
Date: 2022.03.17 16:00:06 +02'00'
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by
KATYA RAYKOVA
ZLATAREVA
Date: 2022.03.24
14:08:27 +02'00'
To the 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.
The listed company staff includes 7 employees.
Statement of Compliance
Stara Planina Hold Plc presents its financial statements in compliance with the International Financial
Reporting Standards (IFRS), published by the International Accounting Standards Committee and
2.
adopted by the European Union and retains their use as an applicable basis of the preparation of the
current financial statements as of 31.12.2021. The company complies with the principles and
stipulations 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 beginning of the earliest comparative period.
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 December 2021, the Governing Council of the ECB assesses the risks to
the economic outlook as generally balanced. Economic activity may exceed the ECB's expectations if
consumers are more confident and save less than expected. To the contrary, the recent deterioration of
the pandemic, including the spread of new modifications, could prove to be a longer-lasting brake on
growth. The future trend of energy prices and the way supply difficulties are being overcome pose risks
to the recovery and to the inflation forecast. If price pressures are fueled by larger-than-expected wage
increases, or if the economy returns to full capacity more quickly, inflation may be higher.
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 current 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
3.
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 associated companies 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 a subsidiary 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 an associate 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 through
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 profit or loss and the amounts accumulated in other comprehensive income will not be
reclassified in profit or loss after their derecognition (upon 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 by the impairment of losses. Interest income, foreign exchange rate gains
and losses and impairment are recognized in the profit or loss. Any gain or loss from derecognition is
recognized in profit or loss.
At the end of the reporting period the management of the company has made an assessment of the
expected credit losses on these receivables and has found that it is not necessary to make an
impairment on them and such has not been made.
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 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.
4.
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 700 BGN under which tangible
assets, regardless if fixed or not, are accounted for as current expenditures upon acquisition.
Tangible fixed assets are initially accounted for at acquisition price, which includes the purchase price
(including duties and non-recoverable taxes) and all direct costs. Direct costs are those necessary to
bring the asset into working condition in accordance with its intended use.
Following the initial recognition as an asset, 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 their write-off.
When a tangible fixed asset is transformed into goods, no profit or loss is reported. The acquisition cost
shall be the book value of the tangible fixed asset 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 measured at 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.
The amortized cost of tangible fixed assets is equal to their book value. Tangible fixed assets are
depreciated 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, the 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.
Assets for which impairment loss has been recognized are subsequently tested for possible recovery of
the impairment at each date of preparation of financial statements.
Intangible fixed assets
The company does not own such assets.
Inventory
The company does not have any inventory.
Receivables
Receivables are presented and reported at their nominal value, reduced by the amount of impairment
for uncollectible amounts.
5.
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.
The analysis of the company’s receivables found that all due amounts are recoverable and there are no
circumstances or events necessitating impairment of receivables.
Cash
Cash funds are short-term financial assets in the form of cash and/or cash equivalents. Cash means
available cash in hand or in demand deposits. Cash equivalents are short-term highly liquid
investments which are easily transferable into the respective cash amounts and which bear insignificant
risk from fluctuations in their value.
Cash and cash equivalents include cash on hand and current accounts.
For the purposes of preparing the cash flows statements, cash receipts from customers and cash
payments to suppliers are reported as gross amounts, VAT (20%) included.
Cash 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
Liabilities for dividends are recognized following a respective resolution by the General meeting of
shareholders.
Retirement benefits and other liabilities
The employer provides compulsory insurance of the employed personnel for retirement, healthcare and
unemployment.
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 was performed
and as a current liability (less all amounts paid out and any due deductions) without discounting. As of
the date of the annual financial statements the company makes valuation of the expected costs of the
accumulated compensated leave, which is expected to be paid as a result of the unused right. The
valuation includes undiscounted expenditures for the compensation itself and the respective obligatory
public social security insurance payable by the employer.
Provisions
Provisions are recognized when the company has current legal or constructive obligation resulting from
a past event the settlement of which requires the allocation of economically-beneficial resources when it
is possible to measure reliably the sum necessary to settle the obligation. When a discount is used, the
amount of the provision reported will be increased in each period in order to reflect the expired time.
Such an increase will be recognized as a financial expenditure.
Contingent liability is disclosed in the statements unless the probable necessity for outgoing cash flow
resources, including economic benefits to cover the liability, is deferred.
Temporary tax differences
Temporary tax differences are accrued using the balance sheet method for all temporary differences
arising between the tax base of the assets and liabilities and their book value, formed for accounting
purposes. 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 will be recognized only to the extent that it is probable to have sufficient future taxable profit,
within the legal terms, against which the losses can be utilized.
6.
Recognition of 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 Board members are also close members of their families, within the meaning of the international
accounting standards. 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 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.
7.
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.
Currency risk. Stara Planina Hold Plc does not hold any foreign currency instruments and therefore the
company is not exposed to significant currency risks.
Interest risk. The company is not exposed to significant market interest risks since it does not hold
significant interest-bearing assets or liabilities based on floating interest rates.
Other price risk. The Company is exposed to risk of changes in the price of equity stock classified as
FVOCI held for long-term investments.
The company is not exposed to other price risks related to financial assets associated with inventory
prices.
Credit risk. The company is not exposed to significant credit risk. Risk management is defined by the
management of the company.
Liquidity risk. The company is not exposed to liquidity risks. Liquidity risk management is monitored by
the management of the company.
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 has to 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). The change in accounting policy will not be applied retroactively
when the adjustment to the balance of retained earnings from previous years cannot be reliably
determined. Changes in the accounting policy arising from the 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.
8.
NOTES UNDER STATEMENT OF FINANCIAL POSITION
(In all applications amounts are shown in thousands BGN unless otherwise stated)
Note 1
Property, plant and equipment
Reporting period to
31.12.2021
Machinery and
equipment
Fixtures
Others
Total
Acquired
6
21
4
31
Depreciation
6
20
0
26
Closing balance
0
1
4
5
Note 2
Investments in subsidiaries, associates and other investments
Name and domicile of the companies
Amount
Fair
value
Percent
age of
the
capital
Investment
in
securities
listed on a
stock
exchange
Investment in
securities not
accepted for
trading on a
stock
exchange
I. Investments in Subsidiaries
Hydraulic elements and systems Plc,
Yambol
2 331
76 314
64,53
2 331
0
Elhim - Iskra Plc, Pazardzhik
8 323
10 325
51,40
8 323
0
Fazan Jsc, Ruse
2 413
2 413
92,65
0
2413
SPH Invest Jsc, Sofia
3 542
3 542
99,39
0
3 542
Dionisii Jsc, Nikopol
99
99
68,99
0
99
SPH Trans Ltd, Sofia
33
33
65,00
0
33
Total I
16 741
92 726
10 654
6 087
II. Investments in Associates
M+C Hydraulic Plc, Kazanluk
5 409
110 468
30,61
5 409
0
Bulgarian Rose Plc
1 903
4 013
49,99
1 903
0
Boryana Jsc, Cherven Briag
429
429
50,00
429
Ustrem Jsc, Svishtov
319
319
45,00
0
319
Total II
8 060
115 229
7 312
748
III. Investments in Other Companies
Asset Insurance Jsc, Sofia
3 524
3 524
20,00
0
3 524
Leasing Company Jsc, Sofia
712
712
5,00
0
712
Ptici & Ptichi produkti Jsc, Pleven
0
0
24,20
0
0
Medical Center "Center for Prevention
of the health" Ltd, Sofia
2
2
25,00
0
2
Total III
4 238
4 238
0
4 238
TOTAL (I+II+III)
29 039
212 193
17 966
11 073
Data for the current period related to subsidiaries and associates such as company name, registered
seat, amount of the investment, fair value of stock exchange traded shares, as per the bulletin of the
Bulgarian Stock Exchange - Sofia as at 31.12.2021 and the % of the shareholdings are presented in the
table. For the fair value of investments in subsidiaries and associates not admitted to trading on the
BSE is used their historical price.
9.
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). For the investments in ZAD
Asset Insurance AD and Leasing Company Jsc, fair value market valuation was made as of 31.12.2021
using the net asset value method.
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.
Note 3
Other non-current financial assets
31.12.2021
31.12.2020
Additional cash contribution in accordance
with art. 246, para 2, item 4 of Commercial Act
609
609
In 2016 an additional monetary contribution was made 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 4
Non-current receivables from related
parties
31.12.2021
31.12.2020
Additional cash contribution in accordance
with Art. 134 of the Commerce Act
200
Loans
1157
957
Closing balance
1157
1157
Note 5
Other non-current receivables
31.12.2021
31.12.2020
Loans
8400
8977
Receivables from the sale of a subsidiary
50
Closing balance
8450
8977
Note 6
Deferred tax assets
31.12.2021
31.12.2020
Temporary tax differences since the
application of IFRS 9
29
29
Note 7
Current receivables from related parties
31.12.2021
31.12.2020
Loans
678
628
Interest on loans
84
76
Receivables from dividends
1000
1000
Closing balance
1762
1704
Note 8
Other current receivables
31.12.2021
31.12.2020
Loans
140
Interest on loans
18
140
Prepayments
11
12
Closing balance
169
152
Note 9
Cash and cash equivalents
31.12.2021
31.12.2020
Cash
7
8
Cash in current accounts
6673
3251
Blocked cash deposits
180
8
Blocked cash for dividend payment
1316
Closing balance
8176
3267
10.
Note 10
Equity
31.12.2021
31.12.2020
Share capital
21000
21000
Bought own shares
-226
-226
Reserves
9448
9448
Discounts of repurchased shares
-539
-541
Reserves from changes in the fair value of
investments in equity instruments
1652
905
Retained earnings
3414
3908
Net result for the period
7800
5075
Closing balance
42550
39569
As a result of the market evaluation at fair value for the investment in ZAD Asset Insurance AD, an
increase by BGN 634 thousand was reported in Reserves of changes in the fair value of investments in
equity instruments. Accordingly, a tax liability of BGN 63 thousand was recognized and differed as
stated in the reserve decrease.
As a result of the market evaluation at fair value for the investment in Leasing Company Jsc, an
increase by BGN 196 thousand was reported in Reserves of changes in the fair value of investments in
equity instruments. Accordingly, a tax liability of BGN 20 thousand was recognized and differed as
stated in the reserve decrease.
Note 11
Non-current liabilities to related parties
31.12.2021
31.12.2020
Obligations for bonuses and guaranties for
the board members
347
199
Guarantees of the members of the Board of
Directors
170
Closing balance
347
199
Note 12
Deferred revenue
31.12.2021
31.12.2020
Deferred income from the sale of a
subsidiary
50
Note 13
Deferred tax liabilities
31.12.2021
31.12.2020
Temporary tax differences since the
application of IFRS 9
212
129
Note 14
Dividends payables
31.12.2021
31.12.2020
Dividends payables
6063
5924
Note 15
Other current liabilities
31.12.2021
31.12.2020
Obligations bonuses
184
189
Contributions
9
8
Income tax on individuals
13
13
Tax on expenditure
2
2
Other liabilities
53
Closing balance
208
265
Note 16
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 up to BGN 294 thousand.
11.
NOTES ON THE PROFIT OR LOSS ACCOUNT AND OTHER COMPREHENSIVE INCOME
(In all applications amounts are shown in thousands BGN unless otherwise stated)
Note 17
Dividend income
31.12.2021
31.12.2020
Dividend income
7708
5633
Note 18
Other financial income
31.12.2021
31.12.2020
Interest income from loans
281
269
Positive differences from operations with financial
instruments
254
3
Closing balance
535
272
Note 19
Other income
31.12.2021
31.12.2020
Derecognition of dividends with expired limitation
period
1035
517
Income from insurance compensations
10
Closing balance
1035
527
Note 20
Cost of materials
31.12.2021
31.12.2020
Cost of office supplies
2
2
Expenses for office furniture
6
2
Maintenance costs for office equipment
8
6
Costs for sanitation
6
3
Closing balance
22
13
Note 21
Cost of hired services
31.12.2021
31.12.2020
Legal expenses
42
42
Auditing services
5
4
Advertising costs
11
12
Subscription costs
4
4
Postage
1
1
Maintenance of computers
13
10
Fees for state institutions
8
7
Civil contracts
35
64
Consultancy services
7
Other
11
7
Closing balance
137
151
Note 22
Employee expenses
31.12.2021
31.12.2020
Management salaries
686
578
Staff salaries
405
324
Social security costs
62
55
Closing balance
1153
957
12.
Note 23
Other expenses
31.12.2021
31.12.2020
Expenses for representative purposes
11
19
Seminars
14
1
Membership fee
42
43
Donations
10
107
Medical service
59
58
Life insurance
21
Other
3
2
Closing balance
160
230
The financial statements are prepared for the year ended on 31.12.2021 and approved by the
Board of Directors of Stara Planina Hold Plc on 17.03.2022
Pursuant to Article 30, paragraph 1 of the Accountancy Act, the Company announces that the
2021 audit remuneration amounts to BGN 5 000.
The financial statements of Stara Planina Hold Plc for the year ended on 31 December 2021
have been certified by the registered auditor Katya Zlatareva, diploma № 0610.
Chief Accountant: Kremena Dulgerova Executive Director: Vasil Velev
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.03.17 15:58:21 +02'00'
Digitally signed by Vasil Georgiev
Velev
Date: 2022.03.17 16:00:25 +02'00'
For 2021
This document contains information on the possibilities for realization of published forecasts as well as future periods
forecasts as well as data representing inside information under Art. 7 Regulation (EU) No 596/2014 on market abuse
(Market Abuse Regulation). This information could significantly affect the price of the shares issued by the company.
2.
CONTENTS
Introduction ........................................................................................................................................................ 3
I. Activity overview ............................................................................................................................................. 3
1. Indicators characterizing the main activity results ......................................................................................... 3
2. Investment Portfolio Standing .................................................................................................................... 4
3. Operational results ..................................................................................................................................... 4
4. Risk factors for the activity ......................................................................................................................... 5
II. Analysis of major financial and nonfinancial indicators ............................................................................... 10
1. Non-financial declaration ......................................................................................................................... 10
2. Environmental protection ......................................................................................................................... 10
3. Corporate social responsibility ................................................................................................................. 10
III. Important Events Occurred Since the Beginning of the Year ..................................................................... 12
ІV. Expected development of the company and planned business policy ...................................................... 12
Statement on the impact of Covid-19 ........................................................................................................... 14
V. Research and Development Activity ........................................................................................................... 14
1. Own shares. Buy-back ......................................................................................................................... 15
2. Changes in the company share prices..................................................................................................... 15
VIІ. Branches. Employees ............................................................................................................................... 17
VІІI. Financial instruments used by the company ............................................................................................ 17
1. Accounting policy ..................................................................................................................................... 17
3. Financial instruments ............................................................................................................................... 18
4. Liquidity .................................................................................................................................................... 19
5. Risk Exposition of the Company .............................................................................................................. 19
ІX. Corporate Governance Declaration ........................................................................................................... 20
1. National Corporate Governance Code..................................................................................................... 20
2. Implementation of the Code ..................................................................................................................... 20
3. Assessment of the Implementation of the Code ...................................................................................... 24
4. Description of the Internal Control and Risk Management System ......................................................... 25
5. Information under Art. 10 of Directive 2004/25/EC .................................................................................. 26
6. Diversity policy ......................................................................................................................................... 26
7. Information about the members of the Board of Directors ....................................................................... 26
Х. Additional information under Appendix 2 of Ordinance No 2 of the FSC .................................................... 28
XІ. Information under Appendix 3 of Ordinance No 2 of the FSC ................................................................... 32
Media............................................................................................................................................................ 33
3.
Introduction
The annual activity report of Stara Planina Hold Plc presents comments and analysis of the
financial statements and other relevant information regarding the financial standing and operational
results of the company. The Report contains an objective review which presents truly and fairly the
development and operational results of Stara Planina Hold Plc as well as its condition together with
a description of the main risks the company faces. It includes the information pursuant to art. 39 of
the Accountancy Act, Art. 100n, para. 7 of the Public Offering of Securities Act (POSA) as well as
art. 10 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 the successor of Central Privatization Fund AD,
incorporated on 27 September 1996.The holding company has shareholdings in the capital of
industrial enterprises operating in various fields of production. It actively participates in the
development of the Bulgarian industry by achieving European and world quality level and profitability.
I. Activity overview
1. Indicators characterizing the main activity results
Indicator (BGN’000)
Y2019
Y2020
Y2021
Income from main business activity
7 637
6 432
9 278
Profit from main business activity
6 427
5 075
7 800
Net profit from operations
6 427
5 075
7 800
Net profit per share (BGN)
0.306
0.242
0.371
Total assets
45 226
46 086
49 430
Net assets
39 578
39 569
42 550
Shareholders’ capital
20 774
20 774
20 775
Dividend per share (BGN)
0.246
0.249
Investment portfolio structure
The economic group of Stara Planina Hold Plc consists of the parent company and its
subsidiaries and associates. The investment portfolio of the holding company is distributed mainly
in the following industries:
59.8
16.5
7.5
16.2
Machine Building
Electrical Engineering
Light Industry
Financial
4.
2. Investment Portfolio Standing
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 AD
20.00 %
Leasing Company Jsc
5.00 %
3. Operational results
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations. The company has focused its activities primarily on the management of its subsidiaries
and associates.
The structure of income within the last three years is summarized in the table below:
INCOME (BGN’000)
Y 2019
Y 2020
Y 2021
Financial Income
7381
5905
8 243
Income from Interests
257
269
281
Income from Dividends
7124
5633
7 708
Other
256
527
1 035
Total Income
7637
6432
9 278
Net unconsolidated profit
(BGN’000)
4734
5146
5531
5758
6427
5075
7800
2015 2016 2017 2018 2019 2020 2021
5.
The net profit of Stara Planina Hold AD as of 31.12.2021 reached BGN 7.8 million which is a
53.69 % increase compared to the reported net profit in the amount of BGN 5.1 million for the
previous year and an increase by 21.36 % compared to the 2019 net profit.
As of the date of this report the sales of the companies in the Group for the whole of 2021
reached BGN 278.2 million which means that sales revenues as of 31.12.2021 reported almost 40%
growth compared to the sales in 2020 and an increase by 24 % compared to reported sales in the
pre-crisis year 2019.
Based on the results achieved in the first months of 2022, we expect sales in the first quarter
of 2022 to be nearly 7 % higher than the business plan exceeding BGN 84 million. With this result
we will report an increase by 32.5 % over the same period of 2021 and an increase by 49 %
compared to the first quarter of 2020. We expect revenues for the first half of 2022 to grow by nearly
22 % over the same period of the previous year.
Based on the results achieved in the first months of 2022 and the updated forecast for the first
quarter of 2022, we revise the sales forecast for 2022 by 2 % and expect them to reach BGN 312
million.
Annual sales of all companies within the Group
(million BGN)
* forecast
4. Risk factors for the activity
The forecast data and indicators provided in this report are stated before reviewing the impact
of Covid-19 on our business. A statement on the impact of Covid-19 is made in section IV of the
Report.
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.
218.1
242.7
224.4
200.0
278.2
312.0
2017 2018 2019 2020 2021 2022*
6.
Major risks and uncertainties for Stara Planina Hold Plc are related to the possibility for the
actual income from a given investment not to correspond to the expected one which is conditioned
by the successful activities of the companies in the Group. In this sense, the main risks for Stara
Planina Hold Plc and the companies in the Group for 2021 and in the following financial periods 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.
The macroeconomic forecasts of the ECB’s experts as of December 2021 foresee real GDP
growth of 5.1 % in 2021, 4.2 % in 2022, 2.9 % in 2023 and 1.6 % in 2024. Compared to the
September forecasts, expectations have been revised downwards for 2022 and upwards for 2023.
Real GDP growth (excluding the euro area) is expected to rise to 6.0 % in 2021, then slow to 4.5 %
in 2022, to 3.9 % in 2023 and to 3.7 % in 2024. The revision mainly reflects the negative impact of
the current supply difficulties on the world imports which are expected to start decreasing as from
the second quarter of 2022 and disappear completely by 2023. The future course of the pandemic
remains a key risk affecting baseline forecasts for the global economy.
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 (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%).
7.
Production Growth Forecast
(Е-28, % change YoY)
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.
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 monetary policy meeting in December 2021, the Governing Council of the ECB revised
its assessment on the state of economy and the measures taken against the pandemic by reaffirming
the ECB's key interest rates.
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.
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
8.
12-month EURIBOR
(01.01.2020-31.12.2020)
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 December 2021 ECB staff macroeconomic projections foresee annual inflation at 2.6% in
2021, 3.2% in 2022, 1.8% in 2023 and 1.8% in 2024 - significantly higher than in previous September
forecasts. Inflation (excluding energy and food) is expected to average 1.4 % in 2021, 1.9 % in 2022,
1.7 % in 2023 and 1.8 % in 2024 and is also higher than in the September forecasts. The ECB
expects energy prices to stabilize in 2022, consumer habits to return to normal and price pressures
stemming from global supply difficulties to ease.
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
9.
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 this Report the National Recovery and Resilience Plan of the
Republic of Bulgaria has not been officially approved yet and the respective funds provided to
support the recovery of the business have not been received. 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, as well as the timely implementation of adequate
measures to support the investment climate in the country continue to pose a risk of unequal
Bulgarian business compared to its European competitors and by slowing down the pace of recovery
of our country.
In addition to the indicated systematic risks, the activities of the companies in the group of
Stara Planina Hold Plc are related to non-systematic risks such as industry risk, concerning the state
and trends for development of a given industry as a whole and a company risk arising from the
specifics of the company. The management of Stara Planina Hold Plc does not expect significant
influence from them.
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.
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.
According to information from December 2021, the Governing Council of the ECB assesses
the risks to the economic outlook as generally balanced. Economic activity may exceed the ECB's
expectations if consumers are more confident and save less than expected. To the contrary, the
recent deterioration of the pandemic, including the spread of new modifications, could prove to be a
longer-lasting brake on growth. The future trend of energy prices and the way supply difficulties are
being overcome pose risks to the recovery and to the inflation forecast. If price pressures are fueled
10.
by larger-than-expected wage increases, or if the economy returns to full capacity more quickly,
inflation may be higher.
Economic growth continues to be 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 in the Autumn Forecast, 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 escalation of the conflict in Ukraine, as of the date of this notice, 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 12th consecutive month
in February 2022, reaching 10 % compared to 9.1 % in the previous month, to continue growing
significantly due to the geopolitical tensions.
II. Analysis of major financial and nonfinancial indicators
1. Non-financial declaration
As a parent company in a large Group, Stara Planina Hold Plc will include a consolidated non-
financial declaration in the consolidated activity report.
2. Environmental protection
As a holding company with no independent commercial operations, Stara Planina Hold Plc has
focused its activities primarily on the management of subsidiaries and associates. The holding
company pays special attention to the environmental impact of the production of our companies.
They annually report on the assessment of the impact on the environment and the measures taken
in this direction.
3. Corporate social responsibility
The companies in the Group have corporate social responsibility policies in place mostly with
respect to the relations between the company and its personnel.
Every year Stara Planina Hold Plc participates in charity events of public importance.
Stara Planina Hold Plc holds 25% of the capital of Medical Preventive Care Center which is to
provide early diagnosis, treatment, rehabilitation and prevention services to the personnel employed
in the companies within the Group.
In Stara Planina Hold Plc and the main companies in the Group, incentives and benefits are
being provided in addition to the statutory ones.
The monthly remuneration system applies elements of bonuses and incentives. Food vouchers
are provided.
In addition to the legally required Occupational Injury Insurance, additional Life and Accident
and General Illness insurance is also provided.
With regard to healthcare, great attention is paid to preventive medical practices.
11.
Further improving professional qualification and retraining is a priority of corporate social
responsibility.
Number of people employed by all enterprises of the Holding Group
* forecast
In 2021 the number of employees in the Group of Stara Planina Hold Plc reported a slight
increase by 1.8 % as the main reason is related to the impact of the crisis and the restrictive
measures aimed at limiting the spread of Covid-19.
Labor productivity per employee in the group (BGN’000)
* forecast
Against the background of the indicated increase in the number of employees in the Group,
labor productivity reported an increase by 35.91% compared to the previous 2020.
With the expected growth of sales revenues in 2022 by nearly 12 % we anticipate a minimal
increase in the number of employees in 2022 by approximately 2 % with an expected growth of labor
productivity of over 8 % and growth of the average salary in the Group companies of Stara Planina
Hold Plc by over 10.7 % on an annual basis.
2143
2082
1943
2004
2089
2510
2477
2276
2318
2369
2018 2019 2020 2021 2022*
89.3
96.8
90.6
88.0
119.6
129.3
2017 2018 2019 2020 2021 2022*
Total
The three largest
enterprises
12.
III. Important Events 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 associated with securing
supplies of materials as well as the sale of finished products to partners related to the affected region.
ІV. Expected development of the company and planned business policy
Net sales revenue
(Quarterly, BGN’000s)
* forecast
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.
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 146.49 million which is a
50.1 % growth compared to the second half of the previous year and an increase by 43.9 %
compared to the second half of 2019.
The annual sales of the companies in the Group reached BGN 278.2 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.
At the same time, the net profit of Stara Planina Hold Plc reached BGN 7 800 thousand which
gives us confidence that for another year part of it will be distributed as a dividend to the shareholders
of the holding.
Forming the holding's profit is a process that is 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.
0
10000
20000
30000
40000
50000
60000
70000
80000
90000
1Q 2Q 3Q 4Q
2020 2021 2022*
13.
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 maintains the announced forecasts for the
beginning of 2022. The growth in consolidated sales revenues is expected to continue in the first
half of 2022 and we expect it to reach 22 % compared to the first half of 2021 and for the second
quarter to reach 4.0 % on an annual basis. Based on the optimistic results from the first months of
the year the Board of Directors of Stara Planina Hold Plc expects consolidated sales revenues in
2022 to exceed BGN 311 million which means an increase by over 11 % compared to 2021 and an
increase by almost 55% compared to 2020.
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.
In this context, we will continue being required to offer competitive prices, tailored customer
approach, high quality and operational delivery times.
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
0
1000
2000
3000
4000
5000
6000
1Q 2Q 3Q 4Q
2020 2021 2022*
14.
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.
Achieving good financial results at the expected sales volumes is a major task to achieve so
as to ensure stability in the market capitalization of the companies in the group, in order to guarantee
shareholders’ investments and their profitability.
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 December 2021, the Governing Council of the ECB assesses
the risks to the economic outlook as generally balanced. Economic activity may exceed the ECB's
expectations if consumers are more confident and save less than expected. To the contrary, the
recent deterioration of the pandemic, including the spread of new modifications, could prove to be a
longer-lasting brake on growth. The future trend of energy prices and the way supply difficulties are
being overcome pose risks to the recovery and to the inflation forecast. If price pressures are fueled
by larger-than-expected wage increases, or if the economy returns to full capacity more quickly,
inflation may be higher.
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 current wave of Covid-19 in our country, as well as each subsequent
one, will have a negative impact on the planned business processes.
V. Research and Development Activity
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations. The holding company provides support to the enterprises in the Group in the research
and development activity since it views this activity as an integral part of the annual business plans
of the companies.
The companies have departments and units developing operations for process improvement,
and research and development of new products. In 2021 as well, the main objectives of the units
carrying out R&D activities were focused on meeting the growing requirements of the customers by
developing new types of products.
15.
VI. Company shares
1. Own shares. Buy-back
The General Meeting of Shareholders, 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.
2. Changes in the company share prices
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 by the end of 2020.
Market capitalization (BGN million)
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 holding.
Closing price per share (in BGN) at year-end
2015
2016
2017
2018
2019
2020
2021
3.95
6.49
8.01
6.55
4.76
5.45
10.10
Stara Planina Hold Plc has traditionally been part of the portfolios of local institutional investors
which support the share price of Bulgarian companies.
0
50
100
150
200
2013 2014 2015 2016 2017 2018 2019 2020 2021
16.
The shares of Stara Planina Hold Plc are traded on the main market, “Standard” segment of
the Bulgarian Stock Exchange. BSE code: SPH.
Stara Planina Hold Plc has a free float of 67.04% and its shares are among the most actively
traded on the BSE-Sofia where liquidity continues being a major issue.
Share price over Y2021
Source: Infostock.bg
3. Dividend policy
Distributed dividends
(BGN million)
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
17.
Stara Planina Hold Plc follows a policy of annual dividend distribution. The Board of Directors
assumes that at the annual general meeting of the shareholders, the tradition of distributing part of
the financial profit for paying out dividends will be continued.
Every year since its incorporation Stara Planina Hold Plc has paid out dividends. The total
amount of the distributed dividends up to and including 2020 is BGN 36.341 million. The initial
investment in the holding company has a dividend coverage of 17.8 times.
Stara Planina Hold Plc pays out dividends in accordance with the requirements of the Public
Offerings of Securities Act and the other applicable regulations – under an agreement with the
Central Depository and through the branch network of International Asset Bank AD in regional cities.
VIІ. Branches. Employees
Stara Planina hold Plc does not have any registered branches in the country and abroad.
As of 31.12.2021 Stara Planina Hold Plc has a total of 7 employees under employment
contracts. The company has outsourced the legal services of a law firm. All company employees
possess university degrees and adequate qualifications for the positions occupied. During the last
calendar, year the company has not employed any temporary employees.
No arrangements for participation of the employees in the capital of the issuer have been
made, including through issuance of shares, options or other securities of the issuer.
VІІI. Financial instruments used by the company
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.
These annual financial statements are prepared in compliance with the International Financial
Reporting Standards adopted by the European Union. The company continues applying the same
accounting policy as for the preparation of the 2020 annual financial statements.
The accounting policy of the Company is described in the Explanatory Notes presented
together with the Annual Financial Statements.
In accordance with the accounting policy applied, investments in subsidiaries and associates
are reported under the historical cost method and the capital growth of these companies is not
reflected 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.
This current income is 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. Major indicators for financial and accounting analysis
Profitability Indicator
31.12.2018 г.
31.12.2019 г.
31.12.2020 г.
31.12.2021 г.
К1
0.149
0.162
0.128
0.183
К2
0.133
0.142
0.110
0.158
К1 Profitability of Shareholders’ equity ratio = Net profit / Shareholders’ equity
К2 Asset capitalization ratio = Net profit / Total assets
18.
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
31.12.2018 г.
31.12.2019 г.
31.12.2020 г.
31.12.2021 г.
К3
6.263
6.312
4.740
6.277
К4
0.160
0.158
0.211
0.159
К3 Expenses efficiency ratio = Total income / Total expenses
К4 Income efficiency ratio = Total expenses / Total income
The analysis of the efficiency of revenues and expenses for 2021 shows that BGN 6.277
revenues were received per BGN 1.00 of the expenses. Revenues fully cover the expenses of the
company which is a pre-condition for a positive cash flow from operational activity, meeting the
undertaken dividend comitments as well as for partial financing of the companies in the portfolio of
the Holding.
Liquidity Indicator
31.12.2018 г.
31.12.2019 г.
31.12.2020 г.
31.12.2021 г.
К5
3,012
0,986
0,831
1.617
К6
0,501
0,583
0,528
1.304
К5 Total liquidity ratio = Current assets / Current liabilities
К6 Absolute liquidity ratio = Cash / Current liabilities
In 2021 again 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
31.12.2018 г.
31.12.2019 г.
31.12.2020 г.
31.12.2021 г.
К7
8,274
7,007
6,072
6.185
К8
0,121
0,143
0,165
0.162
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.
3. Financial instruments
The most essential part in the financial instruments used by the company is taken by the
holdings of Stara Planina Hold Plc in the subsidiaries and associates.
Financial instruments of the Company are detailed in the Explanatory Notes presented
together with the Annual Financial Statements.
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
19.
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. In
accordance with the IFRS 9, loans are classified as financial instruments reported at amortized
value. At the end of the reporting period, the management of the company has made a valuation of
the expected credit losses under these receivables and has found that no impairment must be carried
out and therefore no such impairment has been performed.
Their distribution as of 31.12.2021 is detailed in Section ІХ of the Report.
The Financial Resources Management Policy of Stara Planina Hold Plc is focused mainly in
the management of the companies in the portfolio. The free cash amounts are directed towards
financing the companies.
4. Liquidity
Considering 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 overheads 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.
5. Risk Exposition of the Company
Market risk comprises three types of risk:
Currency risk – the risk that the value of a financial instrument will fluctuate due to changes in
the currency exchange rates
Interest risk – the risk that the value of a financial instrument will fluctuate due to changes in
the market interest rates
Price risk – the risk that the value of a financial instrument will fluctuate as a result of changes
in the market prices.
As of 31.12.2021 Stara Planina Hold Plc does not have any financial instruments in foreign
currency. Interest bearing financial instruments of Stara Planina Hold Plc are primarily the granted
loans. All of them are with fixed annual interest rate of 2.5 – 3.5%.
Investments in subsidiary and associated enterprises are reported and presented as per the
acquisition price method. The nature of the financial instruments used by the company indicates that
market risk does not have a significant effect on the financial results.
The risk of changes in the market prices of equity instruments arises from equity stocks
classified as reported at fair value through other comprehensive income (FVOCI), held for long-term
investment.
Credit risk – Stara Planina Hold Plc has granted loans to companies in its portfolio which have
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 risk of the cash flow are also kept at a minimum.
20.
ІX. Corporate Governance Declaration
1. National Corporate Governance Code
Stara Planina Hold Plc implements its own long-term Good Corporate Governance Program.
The Program provides for the implementation 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.
On 30.10.2007 the Board of Directors of Stara Planina Hold Plc considering the important role
of modern corporate governance to support the 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).
2. Implementation of the Code
The management of Stara Planina Hold Plc applies 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 directs and controls 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
21.
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 members of the Board of Directors is defined by the company’s Articles of
Association. The composition of the Board is structured in a way that guarantees the
professionalism, impartiality and independence of its decisions related to the management of the
company. The Board of Directors has allocated the tasks and responsibilities between its members.
The company has 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 election of board members takes place through a transparent procedure that provides
timely and sufficient information on the personal and professional qualities of the nominees.
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 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.
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 General Meeting of Shareholders held on 20 May, 2020 adopted a new Remuneration
Policy for the members of the Board of Directors which is consistent with the amendments to the
regulation and aims to support the long-term business objectives of the company and promote
behavior that supports the value creation for shareholders, while providing competitive remuneration
sufficient to attract and retain directors with qualities necessary for the successful management and
development of the company.
The Remuneration Policy defines 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 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 policy for defining the remuneration of the board
members and the report on its implementation which are published on the company's website.
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
22.
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 does not and will not allow transactions between the company and
members of the Board of Directors and any related parties.
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 has established an operating audit committee 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
proposes to the General Meeting the election of an 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 Board of Directors, with the assistance of the Audit Committee, ensures compliance with
the applicable legislation in terms of the independent financial audit. The company has developed
an internal control system that ensures the effective functioning of the reporting and disclosure
systems in order to identify the risks associated with the company's activities and support their
effective management.
Chapter Three
Shareholders' Rights Protection
The corporate Board of Stara Planina Hold Plc ensures the equal treatment of all shareholders,
including minority and foreign shareholders and is responsible for the protection of their rights. The
Board facilitates the exercising of these rights within the limits permitted by the applicable legislation
and in accordance with the company's internal rules. The corporate Board has 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 have access to information about the rules under which General meetings are
convened and held, including voting procedures. The company provides 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 Board ensures the right of all
shareholders to express their opinion, as well as to ask questions at the general meeting.
The invitation for the general meeting of shareholders contains 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 invitation and the materials for the general meeting of the shareholders of Stara Planina
Hold Plc 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 company
announces 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 company's website. 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.
23.
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
Meeting of Shareholders 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 Board 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.
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 company has not issued shares
of a different class. The company does 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 has approved a policy and an information disclosure system in
accordance with legal requirements. It guarantees equal access to information to all addressees
(shareholders, stakeholders, investment community) and prevents inside information abuse.The
holding has internal rules for preparation of the annual and interim reports and rules for financial and
non-financial information disclosure. The company annually discloses 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.
The company maintains its own website providing information about the company, the
management bodies, shareholder structure and the companies in the portfolio of Stara Planina Hold
Plc. The corporate governance section 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. A
special section includes materials on forthcoming general meetings of the shareholders, information
on the resolutions adopted at the general meetings. Data on the company's initiatives, auditors and
media publishing news about the holding company is publicly available. The Q&A system for
shareholders, stakeholders via electronic means proves its efficiency. A procedure has been
provided for receiving dividends from previous years by the shareholders. We continue the practice
of sending prompt replies to letters and inquiries from shareholders, including to those received by
e-mail and their storage in a register dully kept by the Investor Relations Director. A practice has
been introduced for the answers to any questions, regardless of their nature, to include a detailed
explanation of the shareholders’ rights. The procedure for shares inheritance is described in detail.
24.
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. The company uses the X3 News media
which provides equal and timely access to the relevant information to all users.
The information disclosure system ensures full, timely, accurate and understandable
information which provides a possibility for objective and informed decisions and assessments.
Chapter Five
Stakeholders. Sustainable Development
The corporate governance of Stara Planina Hold Plc ensures effective interaction with the
stakeholders, identified by the company as such. The stakeholders’ policy complies with the legal
requirements in accordance with the principles of transparency, accountability and business ethics.
A policy has been developed that takes into account the stakeholders’ interests that ensures their
attraction and guarantees the balance between the development of the company and the
environment where it operates. Effective relations are maintained with the stakeholders. The
company periodically informs shareholders, stakeholders and the investment community about
various important issues. The internal rules were supplemented by commitments regarding the
provision of comprehensive information and the interaction of the company with its shareholders -
institutional investors, as well as with the Bulgarian Stock Exchange – Sofia Plc, which is a regulated
market of financial instruments and with the investment intermediaries on this market. The
company’s shares are not admitted to trading in a different jurisdiction.
Stara Planina Hold Plc takes 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 control related to the information disclosure process on the part of Stara Planina Hold Plc
is multidirectional. No violations of the provisions and deadlines for disclosure have been found so
far. The financial reports are published on the website of the holding 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
Director.
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 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 the company complies with the Code as a whole.
Implementation of the recommendations in the Code is responsibility of the corporate Board.
In this sense, applying particular texts of the Code does not depend on the corporate Board, insofar
25.
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 throughout 2021 complied with the National Corporate Governance Code.
4. Description of the Internal Control and Risk Management System
The internal control and risk management systems of the holding 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 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 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 management of the holding prepares an annual activity report as well as a financial
statement for every financial year which gives an accurate and honest estimate of the financial
standing of the company at the end of the year, 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 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 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.
26.
5. Information under Art. 10 of Directive 2004/25/EC
The company does 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, 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.
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 under Art. 43, para. 2 of the Articles
of Association of the company. The Board of Directors, 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 company 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 also provide for the powers of the Board of Directors to increase
the capital of the company by issuing shares.
6. Diversity policy
The Company does not apply a diversity policy in relation to aspects such as age, gender or
education and professional experience. The management structure is defined in the company's
Articles of Association. The Board of Directors 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 about the members of the Board of Directors
Stara Planina Hold Plc has a one-tier management system. The Board of Directors is the
managing body of Stara Planina Hold Plc, 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.
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
27.
During the reporting year no changes in the members of the Board of Directors have been
made.
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.
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’snoperation.
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.
Participation of the members of the Board of Directors
Member of the
Board of Directors
Commercial companies, in
which the member owns
more than 25 percent of
thecapital
Participation in the management of other
companies or co-operations as procurators,
managers or board members
Evgeniy Vasilev
Uzunov
Sostra Engineering Ltd.
Elhim-Iskra Plc. – Pazardzhik, representative of
Garant-5 Ltd.;
Hydraulic elements and systems Plc. - Yambol,
representative of Loma Ltd.;
M+S Hydraulic Plc. – Kazanlak, representative of
Sostra Engineering Ltd.;
Bulgarian Rose Plc. – Karlovo, representative of
Bic Hold Ltd.;
Fazan Jsc. – Ruse, representative of Stara
Planina Hold Plc.;
M+S–97 Jsc. – Kazanlak;
Ustrem Jsc. – Svishtov.
Vasil Georgiev Velev
Velev Invest Ltd.
Hydraulic elements and systems Plc. - Yambol,
representative of Velev Invest Ltd.;
M+S Hydraulic Plc. – Kazanlak, representative of
Velev Invest Ltd.;
Bulgarian Rose Plc. – Karlovo, representative of
„Leasing Company” Jsc;
Fazan Jsc. – Ruse, representative of Bic Hold
Ltd.;
M+S–97 Jsc. – Kazanlak, representative of Bic
Hold Ltd.;
Elhim-Iskra Plc. – Pazardzhik;
Bic Hold Ltd. – Sofia;
Garant-5 Ltd. – Plovdiv;
28.
Velev Invest Ltd. – Sofia;
Interfininvest Jsc. – Etropole.
Finance Invest Ltd
None
None
Spas Borisov Videv
BMP Ltd.
Finance Invest Ltd.
Hydraulic elements and systems Plc. - Yambol,
representative of Maya-PL Ltd.;
Bulgarian Rose Plc. – Karlovo, representative of
Stara Planina Hold Plc.;
M+S Hydraulic Plc. – Kazanlak, representative of
Stara Planina Hold Plc.;
Boryana Jsc, Cherven Bryag – representative of
SPH Invest Jsc
Elhim-Iskra Plc. – Pazardzhik;
Garant 5 Ltd. – Plovdiv;
Finans Invest Ltd. – Plovdiv;
BMP Ltd. – Plovdiv;
Fazan Jsc. – Ruse;
Ustrem Jsc. – Svishtov
Stefan Atanasov
Nikolov
B&V Coffee Ltd.
Radix Bulgaria Ltd.
Ves Trade Ltd.
Herbstmond Bulgaria Ltd
Fazan Jsc. – Ruse, representative of Garant 5
Ltd. – Executive Director;
Prisma-Lux Ltd.,
B&V Coffee Ltd.,
Radix Bulgaria Ltd.,
ALPA-2000 Ltd.,
Herbstmond Bulgaria Ltd,
Boryana Ltd.;
None of the members of the Board of Directors participates in companies as an unlimited
liability partner.
Х. Additional information under 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.
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.
29.
In 2021 no other transactions of significant importance for the activity of Stara Planina Hold
Plc 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 which are outside the scope of issuer's usual business activity or
transactions significantly deviate from the market conditions.
5. Information about events and indicators of unusual for the issuer nature, having substantial
influence over its operation and the revenues realized thereof and expenses made; assessment of
their influence over the results during 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 about 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
Investments of Stara Planina Hold Plc are in securities and shareholdings in Bulgarian
companies. Information on the shareholdings of Stara Planina Hold Plc is provided under Section І
of this Report - Investment Portfolio Standing.
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
As of 31.12.2021 Stara Planina Hold Plc has no obligations under loan agreements.
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 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 up to
BGN 294 thousand.
Loan agreements concluded by the subsidiaries:
Fazan Jsc.: Loan agreement dated 25.04.2019 with Stara Planina Hold Plc granting the
amount of BGN 407 000 with maturity until 25.12.2023 at 2.5% annual interest rate.
Fazan Jsc.: Loan agreement dated 09.01.2020 with Stara Planina Hold Plc granting the
amount of BGN 550 000 with maturity until 08.01.2024 at 2.5% annual interest rate.
Loan agreement dated 14.12.2020 with Alpa 2000 Ltd. granting the amount of BGN 84 000
with maturity until14.01.2022 at of 3.6 % annual interest rate.
30.
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
Loan agreement dated 25.04.2019 granting Fazan Jsc, UIC:827182916 – subsidiary company,
the amount of BGN 407 000 with maturity until 25.12.2023, last Annex as of 21.12.2021, at 2.5 %
annual interest rate, unpaid principal as of 31.12.2021 in the amount of BGN 407 thousand.
Loan agreement dated 09.01.2020 granting Fazan Jsc, UIC:827182916 – subsidiary company,
the amount of BGN 550 thousand with maturity until 08.01.2024, last Annex as of 07.01.2022, at
2.5% annual interest rate, unpaid principal as of 31.12.2021 in the amount of BGN 550 thousand.
Loan agreement dated 16.05.2016 granting Boryana Jsc, UIC: 114006352 – associated
company, the amount of BGN 500 000 with maturity until 16.05.2022, last Annex as of 17.05.2021,
at 3% annual interest, unpaid principal as of 31.12.2021 in the amount of BGN 470 thousand.
Loan agreement dated 22.01.2021 granting Boryana Jsc, UIC: 114006352 – associated
company, the amount of BGN 200 thousand with maturity until 31.12.2021, last Annex as of
28.10.2021, at 3% annual interest, unpaid principal as of 31.12.2021 in the amount of BGN 50
thousand.
Loan agreement dated 18.05.2018 granting Ustrem Ltd., UIC:206417771 – associated
company, the amount of BGN 100 thousand with maturity until 18.05.2022, last Annex as of
18.05.2021, at 3 % annual interest, unpaid principal as of 31.12.2021 in the amount of BGN BGN 83
thousand.
Loan agreement dated 29.01.2020 granting Ustrem Ltd., UIC:206417771 – associated
company, the amount of BGN 75 thousand with maturity until 29.07.2022, last Annex as of
29.07.2021, at 3 % annual interest, unpaid principal as of 31.12.2021 in the amount of BGN BGN 75
thousand.
Loan agreement dated 29.03.2021 granting Ustrem Ltd., UIC:206417771 – associated
company, the amount of BGN 200 thousand with maturity until 25.03.2023, at 2,5 % annual interest,
unpaid principal as of 31.12.2021 in the amount of BGN BGN 200 thousand.
Loan agreement dated 01.10.2013 granting Leasing Company Jsc, UIC: 121126583 - a
company with a minority stake in the portfolio of Stara Planina Hold Plc, the amount of BGN 3400
thousand with maturity until 01.10.2023, last Annex as of 01.10.2021, at 2.5 % annual interest,
unpaid principal as of 31.12.2021 in the amount of BGN BGN 3 400 thousand.
Loan agreement dated 28.04.2015 granting Leasing Company Jsc, UIC: 121126583 - a
company with a minority stake in the portfolio of Stara Planina Hold Plc, the amount of BGN 6500
thousand with maturity until 28.04.2023, last Annex as of 28.04.2021, at 2.5 % annual interest,
unpaid principal as of 31.12.2021 in the amount of BGN BGN 5 000 thousand.
Loan agreement dated 01.10.2021 granting Vinprom Jsc, UIC: 104055430 – a subsidiary
company until 17.11.2021, the amount of BGN 180 thousand with maturity until 30.10.2022, at 2,5
% annual interest, unpaid principal as of 31.12.2021 in the amount of BGN 140 000 thousand,
purpose of granting: to finance the purchase of tanks for the activity of Vinprom JSC.
Loan agreements concluded by the subsidiaries:
Elhim-Iskra Plc. Loan agreement dated 04.10.2021 granted to ELBAT Jsc, Dolna Banya, UIC:
175407160 in the amount of BGN 1 000 000 with maturity until 31.12.2023 at 1.3 % annual interest,
unpaid principal as of 31.12.2021 in the amount of BGN 1 000 000. The relations between the
company and the borrower are commercial.
Dionisiy Jsc. Loan agreement dated 30.04.2019 with Vinprom Jsc., UIC: 104055430, in the
amount of BGN 35 thousand with maturity until 30.04.2021 at 3.0 % annual interest, unpaid principal
31.
as of 31.12.2021 in the amount of BGN 28 thousand, purpose of granting: financing the production
operations.
10. Information on the use of the funds from a new issue of securities carried out during the
reported 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.
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 removal
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. The loans are specified under item 9 of
this section of the Report. An expression of this policy is also the deferred 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 is no possible
threats which necessitate 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. As of the date of this Report, 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.
14. Information about occurred during the reporting period changes in the basic management
principles of the issuer and its group of enterprises within the meaning of the Accountancy Act
Stara Planina Hold manages its investments by setting high but achievable goals in 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
AD and the companies of the economic group.
15. Information about the main characteristics of the internal control system and risk
management system applied by the issuer in the course 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 by the management
body. The holding has an established practice for periodic discussion of 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 IX, item 4 of this Report.
16. Information on the changes in the management and supervisory 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.
32.
Detailed information on the Board of Directors is specified under Section IX, item 6 of the
Report.
17. Information on the shares of the issuer held by the members of the management and
control bodies and the procurators, including the shares held by each of them separately and as a
percentage of the shares of each class, as well as options provided by the issuer on its securities -
type and amount of the securities on which the options are based, exercise price of the options,
purchase price, if any, and the term of the options
Member of the Board of Directors
Number of shares
as of 31.12.2021
% of the
capital
Number of shares
as of 31.12.2020
% of the
capital
Evgeniy Vasilev Uzunov
225996
1.08
223396
1.06
Vasil Georgiev Velev
420000
2.00
420000
2.00
Finance Invest Ltd
219408
1.04
219408
1.04
Stefan Atanasov Nikolov
7000
0.03
7000
0.03
The issuer has not provided options on securities to the members of the Board of Directors.
There are no special rights or restrictions for the members of the management body to acquire
shares of the company. They may freely acquire shares from the capital of the company on a
regulated securities market in compliance with the applicable provisions of the Bulgarian legislation
and the European regulation.
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 – no such arrangements are
known
The company is not aware of such arrangements.
19. Information about pending legal, administrative or arbitration proceedings relating to
issuer’s liabilities or receivables at amount at least 10 percent of its equity
Stara Planina Hold Plc is not involved in any pending legal, administrative or arbitration
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 address for
correspondence
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.
XІ. Information under Appendix 3 of Ordinance No 2 of the FSC
1. Information on the securities that have not been admitted to trading on a regulated market
in the Republic of Bulgaria or another Member State
There are no shares of Stara Planina Hold Plc which have not been admitted to trading on a
regulated market in the Republic of Bulgaria or other Member State.
As of 31.12.2021 the registered capital of the company amounts to BGN 21000000, fully
registered and paid. The capital is distributed in 21000000 registered, dematerialized, ordinary (non-
preferred), freely transferable shares with a nominal value of BGN 1.00, with the right to one vote at
the General meeting of the shareholders, the right to dividend and liquidation share. All shares are
of one class.
Pursuant to data received by Central Depository AD, as of 31 December 2021, Stara Planina
Hold Plc has 59 shareholders - legal entities, holding 61.63 % of the capital and 21942 shareholders
- physical persons holding 38.37 % of shares.
33.
2. Information on the direct and indirect holding of 5 or more percent of the voting rights in the
company’s general meeting, including data about the shareholders, the amount of their holding and
the manner in which the shares are owned
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.
3. Information about the shareholders with special control rights and description of these rights
There are no shareholders with special control rights.
4. Agreements among the shareholders, which are known to the company and which may
result in limitations over the transfer of shares or the voting right
The company is not aware of any arrangements among the shareholders which may lead to
restrictions on the transfer of shares or voting right.
5. Significant contracts of the company that give rise to action, are amended or terminated due
to a change in the control of the company upon implementation of obligatory tender offer and the
consequences thereof, except for the cases where disclosure of this information may cause serious
damages to the company; the exception under the previous sentence shall not apply in the cases
when the company is obliged to disclose the information by virtue of the law
There are such contracts.
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.
Vasil Velev, Executive Director
Digitally signed by Vasil Georgiev Velev
Date: 2022.03.17 16:00:44 +02'00'
1
STARA PLANINA HOLD PLC
REPORT
on the Implementation of the Remuneration Policy for the Members of the Board of Directors
This Report has been prepared on the grounds of Art. 12 of Ordinance No. 48 of the FSC.
The report describes the way the Company implements the Remuneration Policy for the Members
of the Board of Directors adopted at the regular annual General Meeting of Shareholders in 2021.
The Report includes a remuneration policy implementation program for the next financial
year and an overview of the implementation of the remuneration policy throughout the reported
year - 2021.
І. Implementation of the Remuneration Policy in the reporting period
Pursuant to the requirements of Ordinance No. 48, the Company shall provide the following
information in relation to the implementation of the Remuneration Policy for the Members of the
Board of Directors in 2021:
1. Information on the decision-making process in defining the remuneration policy, including
if applicable, information on the mandate and composition of the remuneration committee, the
names of external consultants whose services have been used in defining the remuneration policy
The Remuneration Policy for the Members of the Board of Directors has been developed in
compliance with the requirements set out in Ordinance No. 48 of the FSC while taking into account
the recommendations of the National Corporate Governance Code. The Policy was adopted at the
regular annual meeting of the Company’s shareholders in 2021.
According to the current Remuneration Policy for the Members of the Board of Directors, no
Remuneration Committee has been established in the Company, with the remuneration policy
being monitored by the independent members of the Board of Directors. No external advisors have
been involved in the development of the Policy.
2. Information on the relative weight of variable and fixed remuneration of the members of
management and supervisory bodies
Members of the Board of Directors are entitled to remuneration where the type, amount and
period of time it is payable for are to be specified by a resolution of the General Meeting of
Shareholders and is payable subject to the terms and conditions of the Management Contracts
concluded between these members and the Company.
Fixed remuneration comprises payments that are not calculated based on performance
assessment and includes remunerations of permanent nature that have been precisely defined or
can be unambiguously determined and is in compliance with the applicable legislation.
Variable remuneration is a component of the total remuneration in the form of profit-sharing
bonuses, incentives, benefits – related to retirement and other material incentives and financial
instruments which are awarded based on activity performance assessment criteria.
At the 2019 regular annual General Meeting of Shareholders where all of the Board
members were re-elected was adopted a resolution to keep unchanged the amount of the fixed
(permanent) part of their remuneration.
The members of the Board received variable remuneration for their activities in 2021
pursuant to a decision of the General Meeting of Shareholders.
The proportion between the variable and fixed remuneration is 37/63. 40 % of the variable
remuneration, defined by a resolution of the general meeting of shareholders, is deferred for a
period of three years.
2
3. Information on performance criteria, based on which stock options, company shares or
other variable compensation is granted together with an explanation on how the criteria under art.
14, para. 2 and 3 of Ordinance No. 48 of the FSC contribute to the long-term interests of the
company
No stock options, including company shares, rights to acquire financial instruments have
been granted to the members of the Board of Directors.
Performance criteria for 2021, based on which another type of variable remuneration is
possible to be granted comprise the business results and other non-financial indicators set out in
the company’s Policy.
4. Explanation of the methods applied to assess whether the performance criteria are met
Remunerations of the members of the Board of Directors are not set out based on business
performance. They are precisely defined or are unambiguously definable and in compliance with
the applicable legislation
Performance criteria for 2021, used as a basis for a possible payout of another type of
variable remuneration, are as follows:
1. Financial indicators:
(а) Level and dynamics of EBITDA (the earnings of the company and its subsidiaries before
interest, tax, depreciation and amortization): 2021 – BGN 48546 thousand; 2020 – BGN 36223
thousand, 2019 – BGN 34514 thousand.
The 2021 net profit of the company amounts to BGN 7800 thousand compared to BGN
5075 thousand for 2020 which is a 53.69 % growth. The profit growth is due to the reported profit
growths of the companies in the Group.
(b) Level and dynamics of subsidiaries' sales:
At the end of 2021 – BGN 278 170 thousand; 2020 – BGN 200 338 thousand; at the end of
2019 – BGN 224 409 thousand.
The change in the net sales revenues in 2021 is a 39.07 % growth compared to 2020 and
23.96 % compared to 2019. The higher sales level in 2021 is mainly due to the net sales’ growths
achieved by the companies in the Group, irrespective the effect of the restrictive measures taken
by governments in relation to Covid-19.
(c) Level and dynamics of subsidiaries' receivables:
At the end of 2021 – BGN 56 803 thousand; 2020 – BGN 39 171 thousand, at the end of
2019 – BGN 43 967 thousand. While in 2019 the receivables represent 19.6 % of the sold
production, in 2020 their share is 19.8 % and in 2021 it is 20.4 % of the sold production. The
growth of receivables outpaces the sales growth. At the end of 2021 the receivables are 45 %
more than at the end of 2020 and 29.2 % more than in 2019. In addition to the net increase in
sales, an additional reason for the increase in receivables is the increased deferred payment
period applied to our main customers.
Pursuant to art.4, item 7 of the Remuneration Policy, the assessment on the implementation
of the financial indicators for 2021 was made on the basis of the published consolidated public
notice on the financial standing as of 31.12.2021 and the corresponding values of the indicators
are indicated in accordance with the financial statement thereto.
2. Non-financial indicators as follows:
(a) Compliance with the principles of the National Corporate Governance Code;
(b) Еnforcement and compliance with the adopted Code of Ethical Conduct, Information
Provision and Disclosure Policy and other internal rules and policies of the company.
Non-financial indicators: as evident from the annual report, based on the report on the
accomplishment of the particularly set initiatives, an assessment has been made of the overall
implementation of the National Corporate Governance Code on the part of the corporate board of
Stara Planina Hold Plc. In 2021 the activity of the Board of Directors has complied with the
principles laid down in the National Corporate Governance Code. The Ethical Code of Conduct,
3
Information Provision and Disclosure Policy and the other internal rules and policies of the
company have been applied and adhered to.
The results under item 1 are very good and with reference to the non-financial indicators
performance under item 2, we propose to the General Meeting of Shareholders to distribute part of
the company’s 2021 profit as an additional remuneration for each member of the Board of
Directors in the form of profit-sharing bonuses.
On the grounds of Art. 5, para. 3 of the Remuneration Policy, the payout of 40 % of the
variable remuneration defined in the resolution of the General Meeting of Shareholders shall be
deferred for a period of 3 years.
5. Clarification on the relations between remuneration and performance (results achieved)
There are performance criteria in place based on which a payout of another type of variable
remuneration is possible, however, no such has been applied.
6. Main payments and justification of the annual bonus payment scheme and/or any other
non-monetary additional compensations
At the 2019 regular annual General Meeting of Shareholders a resolution was adopted for a
permanent/fixed monthly remuneration to be paid to each member of the Board of Directors. The
period for which the resolution on the fixed remuneration amount shall apply is equal to the
mandate of the members of the Board of Directors. With the adoption of the Remuneration Policy
for the members of the Board of Directors at the regular annual general meeting of shareholders
held on 20.05.2021, effective as of 01.06.2021, a new amount of the permanent remuneration of
each member of the Board of Directors was determined. In 2021, the members of the Board of
Directors were paid a fixed monthly remuneration in accordance with the resolution adopted at the
regular annual General Meeting of the Shareholders held in 2019 and the Remuneration Policy for
the members of the Board of Directors, adopted at the regular annual general meeting of
shareholders, held on 20.05.2021.
7. Description of the main characteristics of the supplementary voluntary pension insurance
scheme together with information on the paid and / or payable contributions by the company in
favor of the respective Board member for the respective financial year, if applicable
No provision has been made for additional voluntary pension insurance of the Board
members.
8. Information for periods of delayed payment of variable remuneration
Payment of 40 % of the variable remuneration defined in the resolution of the General
Meeting of Shareholders is deferred for a period of 3 years as payout of the deferred part of the
variable remuneration is to be made proportionately over the deferred period.
9. Information on the severance payment policy
Early contract termination compensation is set out in the Remuneration Policy for the
Members of the Board of Directors adopted by the General Meeting of Shareholders and it is
dependent on the amount of the fixed remunerations paid over the last 24 months.
No compensation is due where the dismissal is due to poor performance or culpable
conduct on the part of the Board member.
Management contracts concluded with members of the Board of Directors and the
Executive Director on behalf of the Company mandatorily include a clause providing the Company
with an option to demand a payback of the variable remuneration paid out based on data which
have subsequently been found to be false. Resolution to demand payback shall be taken by the
General Meeting of Shareholders of the Company.
10. Information on the period during which shares cannot be transferred and stock options
cannot be exercised, in case of variable remuneration based on shares
No provision has been made for remunerations comprising shares, including company
shares and rights to acquire financial instruments.
4
11. Information on the policy to retain a number of shares until the end of the mandate
under item 10 of the members of the supervisory and managing boards
The Company does not have such a policy.
12. Information on the contracts of the members of the managing and supervisory boards,
including the terms of the individual contracts, termination notice periods and details on any
compensation and/or other redundancy payouts
The contract with each member of the Board of Directors is concluded for a period until the
end of the mandate for which he was elected by the General Meeting of Shareholders. During the
reporting financial year, the company has not terminated contract with a member of the Board of
Directors.
In case of early termination of a management contract with a member of the Board of
Directors, respectively with an Executive Director, the total amount of compensations due in
relation to the early termination, as well as payments related to the notice period may not exceed
the amount of the paid annual remuneration for the last 24 months.
13. Full amount of the remunerations and other financial incentives for the members of the
managing and supervisory bodies for the respective financial year
The full amount of the remunerations of the Board members for the financial 2021 stands at
a total of BGN 1092327.56.
The remunerations received by the members of the Board of Directors, including from
subsidiaries, are as follows:
• Evgeniy Vasilev Uzunov – BGN 315081.89
• Vasil Georgiev Velev – BGN 315081.89
• Finance Invest Ltd. – BGN 231081.89
• Stefan Atanasov Nikolov – BGN 231081.89.
The deferred part of the total amount of the remunerations stands at a total of BGN
162397.66 as follows:
• Evgeniy Vasilev Uzunov – BGN 40599.42
• Vasil Georgiev Velev – BGN 40599.42
• Finance Invest Ltd. – BGN 40599.42
• Stefan Atanasov Nikolov – BGN 40599.42.
14. Information on the remuneration of each person who had been a member of a
managing or supervisory body of a public company for a certain period in the respective financial
year
Not applicable for the reporting financial year.
15. Information in respect of shares and/or stock options and / or other incentive schemes
based on shares
The Remuneration Policy for the Members of the Board of Directors adopted by the General
Meeting of Shareholders provides for an option for variable remunerations in the form of shares,
stock options, rights to acquire shares or other financial instruments to be provided. No such
options have been provided so far.
16. annual change in the remuneration, the company’s results and the average amount of
the remunerations of the company’s full-time employees who are not directors, during the previous
at least five financial years, presented together in a way that allows comparison
5
17. information on exercising the possibility to demand a refund of the variable
remuneration
During the reporting financial year, there were no grounds for exercising the possibility to
demand a refund of the variable remuneration from a member of the board of directors, therefore
such an opportunity was not exercised.
18. information on all deviations from the remuneration policy implementation procedure in
connection with extraordinary circumstances under Art. 11, para. 13 of Ordinance 48 of the FSC,
including an explanation of the extraordinary circumstance’s nature and an indication of the
specific components that have not been applied
The Remuneration Policy does not specify extraordinary circumstances under which the
company may temporarily not apply part of the policy and during the reporting financial year no
deviations from the procedure for its implementation have been made.
ІІ. Remuneration Policy Implementation Program for the next financial year
At the regular annual general meeting of shareholders in 2021 a new Remuneration Policy
for the members of the Board of Directors was adopted, in accordance with the amendments to
Ordinance № 48 of the FSC.
The Remuneration Policy aims to support the long-term business goals of the company and
encourage behavior which facilitates value creation for the shareholders while ensuring competitive
level of the remunerations, sufficient to attract and retain directors possessing qualities required for
the successful management and development of the company.
The Policy has been developed to be implemented over a long period of time and is subject
to review every four years, except when significant amendments or supplements are necessary.
Amendments to the Policy approved by the General Meeting of Shareholders shall be adopted as
per the rules for its elaboration and approval.
6
The Board of Directors considers that the Policy principles for setting up the remunerations
are at this point effective considering the financial results achieved in the reporting period. Their
implementation will continue to be a priority of the Board of Directors.
The Board of Directors is responsible for the prompt announcement of the Remuneration
Policy adopted by the General Meeting of Shareholders and any subsequent amendments thereto.
At its meeting, the Board of Directors reviewed the Policy in terms of the remuneration of
the executive directors. The Board of Directors has given its recommendations in setting up the
employees’ remunerations occupying other management positions in the administration of the
company. It monitors the level and structure of the employees’ remunerations occupying other
management positions in the administration based on information provided by the executive
director of the company and ensures that the remuneration of each executive member of the board
of directors is fairly defined compared to the remuneration of other board members and the senior
managers in the administration.
This report was approved at a meeting of the Board of Directors held on 17.03.2022.
Executive Director:
Vasil Velev
Digitally signed by Vasil
Georgiev Velev
Date: 2022.03.17 16:01:05
+02'00'
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 financial statements on the activities of Stara Planina Hold Plc for the financial
year 2021, prepared in accordance with applicable accounting standards, accurately and fairly reflect
the information on the assets and liabilities, financial standing and profit or loss of the issuer and the
companies included in the consolidation;
(b) the annual activity report of Stara Planina Hold Plc for the financial year 2021 provides a
reliable overview of the issuer's development and performance, as well as the standing of the issuer
and the companies included in the consolidation, together with a description of the main risks and
uncertainties to be faced.
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 financial statements on the activities of Stara Planina Hold Plc for the financial
year 2021, prepared in accordance with applicable accounting standards, accurately and fairly reflect
the information on the assets and liabilities, financial standing and profit or loss of the issuer and the
companies included in the consolidation;
(b) the annual activity report of Stara Planina Hold Plc for the financial year 2021 provides a
reliable overview of the issuer's development and performance, as well as the standing of the issuer
and the companies included in the consolidation, together with a description of the main risks and
uncertainties to be faced.
Declarer: Kremena Dyulgerova
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2022.03.17 15:58:38
+02'00'
Digitally signed by Vasil
Georgiev Velev
Date: 2022.03.17 16:01:19
+02'00'
Attn.
The shareholders
of STARA PLANINA HOLD PLC
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REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of Stara Planina Hold PLC (the Company), including the
statement of financial position as of 31.12.2021 and the profit and loss, and other comprehensive income
statements, the statements on changes in equity and the cash flows statements for the year then ended and the
explanatory notes to the financial statements including summary of the significant accounting policies.
In our opinion, the enclosed financial statements present fairly, in all material aspects, the financial
position of the Company as of 31.12.2021 and its financial results from business operations and its cash
flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS)
adopted for use in the European Union (EU).
Basis for the opinion
We conducted our audit in accordance with the International Audit Standards (IAS). Our
responsibilities under these standards are further described in the section of our report "Responsibilities of
the auditor for the audit of the financial statements". We are independent from the Company in accordance
with the Code of Ethics for Professional Accountants of the International Ethic Standards for Accountants
Council (the Code of IESAC), together with the ethical requirements of the Independent Financial Audit Act
(IFAA), applicable to our audit of the financial statements in Bulgaria, while we have also fulfilled our other
ethical responsibilities in accordance with the IFAA and the Code of IESAC. We consider that the audit
evidence we obtained as sufficient and appropriate to provide a basis for our opinion.
Key audit issues
The key audit issues are those which as per our professional judgment were of the greatest significance
in the audit of the financial statements for the current period. These issues are reviewed as part of our audit
of the financial statements as a whole and the formation of our opinion thereof, as we do not provide a
separate opinion on these issues. Key issues are indicated in the "Responsibilities of the auditor for the audit
of the financial statements" section of this report.
Other information different from the financial statements and the auditor report thereon
The management is responsible for this other information. The other information includes an activity
report (incl.) and a corporate governance declaration and a Report on the implementation of the
Remuneration Policy, prepared by the management in accordance with Chapter seven of the Accountancy
Act but does not include the financial statements and our auditor report thereon which we received prior to
the date of our auditor report.
Our opinion on the financial statements does not include the other information and we do not express
any conclusion of certainty related thereto, unless explicitly specified in our report and to the extent stated.
With regard to our audit of the financial statements, our responsibility is to read this other information
and thus to consider whether this other information is materially inconsistent with the financial statements or
with our knowledge, gained during the audit, or otherwise it seems to contain substantially incorrect
reporting. If based on the work we have performed, we conclude that there is materially incorrect reporting
in this other information, we are required to report on this fact.
We have nothing to report with this regard.
Responsibility of the management and the persons engaged with general management in terms
of the financial statements
The management is responsible for the preparation and the fair presentation of these financial
statements in accordance with the IFRS applicable in the EU and for such an internal control system as the
management has considered being necessary to ensure the preparation of financial statements that are free
from material misstatements, whether due to fraud or error.
When preparing the financial statements, the management is responsible for the assessment of the
Company's ability to continue operating as a going concern, disclosing, when applicable, any issues related
to the going concern assumption and using the accounting basis on the grounds of the going concern
assumption unless the management intends to liquidate the Company or to cease its operations, or if the
management does not actually have any alternative but to do so.
The persons engaged with general management are responsible for supervising the financial reporting
processes of the Company.
The management is responsible for the fact that the electronic format of the separate financial
statements of the Company for the year ending on December 31, 2021, comprised in the attached electronic
file „8945006HQ7VN30FUR531-20211231-EN-SEP.zip“ has been prepared in all material aspects in
accordance with the requirements of the Commission Delegated Regulation (EU) 2019/815 of 17 December
2018 supplementing Directive 2004/109 / EC of the European Parliament and of the Council ("EEEF
Regulation").
Responsibilities of the auditor for the audit of the financial statements
Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are
free from material misstatements, whether due to fraud or error, and to issue an auditor report that includes
our audit opinion. Reasonable assurance is a high level of assurance but it does not guarantee that an audit
conducted in accordance with the IAS will always reveal materially incorrect reporting whenever such
reporting exists. Incorrect reporting may occur as a result of fraud or error and are considered to be material
if it could reasonably be expected that they, individually or in the aggregate, could influence the economic
decisions of users based on these financial statements.
As part of the audit in accordance with the IAS, we apply professional judgment and maintain
professional skepticism during the entire audit. We also:
- identify and assess risks from material misstatements in the financial statements, whether due to
fraud or error, develop and implement audit procedures in response to these risks and obtain sufficient and
appropriate audit evidence to provide a basis for our opinion. The risk for a given significant misstatement,
resulting from fraud, not to be revealed is higher than the risk of material misstatements resulting from error
due to the fact that fraud may involve secret collusions, falsification, deliberate omissions, statements
intended to mislead the auditor as well as disregard or circumvention of the internal control.
- obtain understanding of the internal control related to the audit in order to develop audit procedures
that are appropriate under the particular circumstances but not for the purpose of expressing an opinion on
the effectiveness of the Company’s internal control.
- evaluate the appropriateness of accounting policies used and the reasonableness of the accounting
estimates and related disclosures made by the management.
- reach a conclusion on the appropriateness of the accounting basis, used by the management, based on
the going concern assumption, and, based on the audit evidence obtained as to whether there is a material
uncertainty related to events or conditions that might provoke significant doubts on the Company's ability to
continue functioning as a going concern. If we reach the conclusion that there is a significant uncertainty, we
are required to draw attention in our audit report to the disclosures related to this uncertainty in the financial
statements or in the event that these disclosures are inadequate to modify our opinion. Our conclusions are
based on audit evidence obtained before the date of our auditor report. Future events or conditions may,
however, cause the Company to suspend its operations as a going concern.
- evaluate the overall performance, structure and contents of the financial statements, including the
disclosures and whether the financial statements present material transactions and events in a manner that
achieves fair presentation.
REPORT RELATED TO OTHER LEGAL AND REGULATORY REQUIREMENTS
Additional issues subject to reporting pursuant to the Accountancy Act and the Public Offering
of Securities Act
In addition to our responsibilities and reporting under the International Audit Standards described
above under the section "Information other than the financial statements and the auditor report thereon" in
terms of the activity report and the corporate governance declaration, we have also implemented procedures,
added to those required under the International Audit Standards as per the Guidelines of the professional
organization for all Certified Public Accountants and Registered Auditors in Bulgaria – Institute of Certified
Public Accountants (ICPA), issued on 29.11.2016 (approved by its Managing Board on 29.11.2016). These
procedures concern verifications on the availability as well as verifications on the form and contents of such
other information with the objective to assist us in forming our opinion on whether the other information
includes disclosures and reports provided for under Chapter Seven of the Accountancy Act and the Public
Offering of Securities Act (Art. 100n, para. 10 of the Public Offering of Securities Act in relation to Art.
100n, para. 8, item. 3 and 4 of the Public Offering of Securities Act) as well as art. 100n, para 13 in relation
to Art.116c, para.1 of the Public Offering of Securities Act, applicable in Bulgaria.
Opinion with regard to Art. 37, Para. 6 of the Accountancy Act
Based on the procedures performed, our opinion is that:
a) The information included in the activity report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
b) The activity report is prepared in accordance with the requirements of Chapter seven of the
Accountancy Act and Art. 100n, Para. 7 of the Public Offering of Securities Act.
c) The corporate governance declaration for the financial year for which the financial statements are
prepared presents the information as required by Chapter seven of the Accountancy Act and Art. 100n, Para.
8 of the Public Offering of Securities Act.
d) The report on the implementation of the Remuneration Policy for the financial year for which the
financial statements are prepared is presented and meets the requirements set out in the ordinance under Art.
116c, para. 1 of the Public Offering of Securities Act.
Opinion with regard to Art. 100n, Para. 10 and in relation to Art. 100n, Para 8, Items 3 and 4 of the
Public Offering of Securities Act
Based on the audit procedures performed and the acquired knowledge and understanding of the
company's activities and the environment it operates in, our opinion is that the description of the main
characteristics of the internal control and risk management systems of the company in relation to the
financial reporting process, which is part of the activity report (as part of the contents of the corporate
governance declaration) and the information under Article 10, Paragraph 1, Letters "c", "d", "f", "h" and "i"
of Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 regarding take-
over offers, does not contain materially incorrect reporting.
Additional reporting on the financial statements audit in connection with Art. 100n, Para. 4,
Item 3 of the Public Offering of Securities Act
Statement with regard to Art. 100n, Para. 4, Item 3, letter "b" of the Public Offering of Securities Act
Information on related parties’ transactions is disclosed under Enclosure to the financial statements.
Based on the audit procedures that we conducted in terms of the related parties’ transactions as part of our
audit of the financial statements as a whole, no facts, circumstances or other information has become known
to us, based on which to conclude that the related parties’ transactions are not disclosed in the accompanying
financial statements for the year ended on 31.12.2021 in all material aspects, in accordance with IAS 24
"Related Party Disclosures". The results from our audit procedures on related parties’ transactions have been
reviewed in the context of forming our opinion on the financial statements as a whole, but not to express a
separate opinion on related parties’ transactions.
Statement with regard to Art. 100n, Para. 4, Item 3, letter "c" of the Public Offering of Securities Act
Our responsibilities for the audit of the financial statements as a whole, described in the section of our
report "Responsibilities of the auditor for the audit of the financial statements" include an assessment on
whether the financial statements present material transactions and events in a manner that achieves fair
presentation. Based on the audit procedures performed on essential transactions underlying the financial
statements for the year ended on 31.12.2021, no facts, circumstances or other information has become known
to us, based on which to conclude that there are cases of materially incorrect reporting and disclosure in
accordance with the requirements of IFRS adopted by the European Union. The results from our audit
procedures on the material to the financial statements transactions and events of the Company are reviewed
by us in the context of forming our opinion on the financial statements as a whole, but not to express a
separate opinion on these material transactions.
Statement with regard to Commission Delegated Regulation (EU) 2019/815 of 17 December 2018
supplementing Directive 2004/109/EC of the European Parliament and of the Council ("EEEF Regulation")
In addition to our responsibilities and our reporting under IAS, described above in the section
"Responsibilities of the auditor for the audit of the financial statements", we have followed the procedures in
accordance with the "Guidelines on the expression of the Audit Opinion with regard to the implementation
of the Single European Electronic Format (EEEF) for the financial statements of companies whose securities
are admitted to trading on a regulated market in the European Union (EU)" of the professional organization
of registered auditors in Bulgaria, the Institute of the Certified Public Accountants (ICPA)". These
procedures concern verification of the format and whether the readable part of this electronic format
corresponds to the audited separate financial statements and expressing an opinion regarding the compliance
of the electronic format of the separate financial statements of Stara Planina Hold Plc for the year ended on
31 December 2021 attached in the electronic file „8945006HQ7VN30FUR531-20211231-EN-SEP.zip“ with
the requirements of Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing
Directive 2004/109 / EC of the European Parliament and of the Council by means of regulatory technical
standards to define the uniform electronic format for reporting ("EEEF Regulation"). Based on these
requirements, the electronic format of the separate financial statements included in the annual separate report
on the activities under Art. 100n, para. 4 of the Public Offering of Securities Act must be provided in
XHTML format.
Based on the performed procedures, our opinion is that the electronic format of the individual financial
statements of Stara Planina Hold AD for the year ending December 31, 2021, contained in the attached
electronic file „8945006HQ7VN30FUR531-20211231-EN-SEP.zip“, has been prepared in all material
aspects in accordance with the requirements of the EEEF Regulation.
Reporting under Art. 10 of Regulation (EC) No 537/2014 in relation to the requirements of Art.
59 of the Independent Financial Audit Act
Pursuant to the requirements of the Independent Financial Audit Act in relation to Art. 10 of
Regulation (EC) No 537/2014, we further report the following information.
- Dinev Odit Ltd. with prof. Mihail Dinev as a key auditor was appointed as a statutory auditor of the
financial statement for the year ended on 31.12.2021 of Stara Planina Hold Plc ("the Company") at the
General Meeting of Shareholders held on 20.05.2020 for a period of one year.
- The audit of the financial statements for the year ended on 31.12.2021 of the Company represents a
seventh full continuous commitment to a statutory audit of this enterprise, performed by us.
- We confirm that our audit opinion is consistent with the additional report provided to the Audit
Committee of the Company in accordance with the requirements of Art. 60 of the Independent Financial
Audit Act.
- We confirm that we have not provided the banned services except for the audit as specified under
Art. 64 of the Independent Financial Audit Act.
- We confirm that we have preserved our independence in relation to the Company when conducting
the audit.
Responsible auditor:
/Katya Zlatareva, registered auditor, diploma No. 0610/
1000, Sofia, 3, 6-ti Septemvri Str.
Date: 24.03.2022
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by
KATYA RAYKOVA
ZLATAREVA
Date: 2022.03.24
14:13:21 +02'00'
TO
THE SHAREHOLDERS OF
STARA PLANINA HOLD AD
DECLARATION
PURSUANT TO ART. 100N, PARA.4, ITEM.3 OF
THE PUBLIC OFFERING OF SECURITIES ACT
The undersigned Katya Zlatareva, registered auditor, diploma № 0610, appointed statutory auditor of
the financial statements for the year ended 31.12.2021 of Stara Planina Hold Plc (the Company) by the
General Meeting of Shareholders held on 20.05.2021, for period of one year, based on Art. 100n, para. 4,
item 3 of the Public Offering of Securities Act I DECLARE that:
1. Art. 100n, para. 4, item 3, letter “a” of the POSA: In our opinion, the attached separate annual
financial statements, prepared in accordance with the applicable accounting standards, accurately and fairly
reflect the information on the assets and liabilities, financial condition and profit or loss of the Company as
of 31.12.2021, in accordance with International Financial Reporting Standards from the European Union.
2. Art. 100n, para. 4, item 3, letter “b” of the POSA: In our opinion, the information relating to
related party transactions has been properly announced and disclosed in accordance with applicable
accounting standards.Based on our audit procedures on related party transactions as part of our audit of the
annual financial statements as a whole, we have not become aware of any facts, circumstances or other
information on the basis of which we can conclude that related party transactions are not disclosed in the
attached separate annual financial statements for the year ended on 31 December 2021, in all material
aspects, in accordance with the requirements of IAS 24 “Related Party Disclosures”. The results of our audit
procedures on related party transactions are reviewed by us in the context of forming our opinion on the
annual financial statements as a whole, and not for the purpose of expressing a separate opinion on related
party transactions.
3. Art. 100n, para. 4, vol. 3, p. "C" of the POSA: In our opinion, the information relating to the
material transactions for the public company for the respective reporting period is duly disclosed in the notes
to the financial statements.Our responsibilities for auditing the separate annual financial statements as a
whole, described in the section Responsibilities of the Auditor for the Audit of the Financial Statements,
include assessment on whether the separate annual financial statements present material transactions and
events in a manner that provides reliable presentation. Based on our audit procedures on the material
transactions underlying the separate annual financial statements for the year ended on 31 December 2021, we
are not aware of any facts, circumstances or other information on the basis of which we can conclude that
there are cases of material misstatement in accordance with the applicable requirements of IFRS adopted by
the European Union. The results of our audit procedures on the material transactions and events of the
Company are considered by us in the context of forming our opinion on the separate annual financial
statements as a whole, and not for the purpose of expressing a separate opinion on these material
transactions.
Certifications made with this declaration should be considered only in the context of the audit report
issued by us as a result of the independent financial audit of the separate annual financial statements of Stara
Planina Hold Plc for the reporting period ending on December 31, 2021, with the date of the auditor's report
March 24, 2022. This declaration is intended only for the above addressee and has been prepared solely in
compliance with the requirements of Art. 100n, para. 4, item 3 of the Public Offering of Securities Act and
should not be taken as a substitute for our conclusions included in the audit report issued by us on March 24,
2022 in relation to the issues covered by Art. 100n, item 3 of the Public Offering of Securities Act.
Responsible auditor: /Katya Zlatareva, registered auditor, diploma No. 0610/
1000, Sofia, 3, 6-ti Septemvri Str.
Date: 24.03.2022
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by
KATYA RAYKOVA
ZLATAREVA
Date: 2022.03.24
14:12:52 +02'00'