BGN’000s
ASSETS Note
31.12.2022 31.12.2021
Property, plant and equipment 1 92 712 86 204
Intangible assets 2 1 165 1 245
Positive goodwill - -
Investments in other companies 3 36 979 34 112
Other financial assets 4 1 218 1 218
Trade and other receivables 5 11 644 9 967
Deferred tax assets
Total Non-current assets 143 843 132 852
Materials 6 64 390 46 492
Trade and other receivables 7 50 206 46 396
Financial assets - -
Cash and cash equivalents 8 44 909 42 511
Prepaid expenses 358 394
Total current assets 159 863 135 793
TOTAL ASSETS 303 706 268 645
Share capital 9 20 725 20 725
Reserves 9 45 838 44 115
Retained earnings/loss 9 61 113 50 725
Total equity 127 676 115 565
Non-controlling interest
Trade and other payables 10 4 109 3 756
Deferred tax liabilities 10 1 859 1 751
Deferred revenues 10 50 50
State financing 10 1 084 1 279
Total non-current liabilities 7 102 6 836
Trade and other payables 11 51 907 45 715
Deferred revenues 11 20 139
State financing 11 900 968
Total current liabilities 52 827 46 822
Total liabilities 59 929 53 658
TOTAL EQUITY AND LIABILITIES 303 706 268 645
Date: 13.04.2023
Prepared by:
Kremena Dulgerova Katya Zlatareva
Manager:
Vasil Velev
STARA PLANINA HOLD PLC
Non-current assets
For the period ended 31 December 2022
Current assets
EQUITY
Registered Auditor, Diploma No 0610
LIABILITIES
Current
Non-current
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
Kremena
Gantcheva
Dulgerova
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2023.04.26 12:32:53 +03'00'
Vasil
Georgiev
Velev
Digitally signed
by Vasil
Georgiev Velev
Date: 2023.04.26
12:36:35 +03'00'
BGN’000s
Note
31.12.2022 31.12.2021
Net sales revenues 12 375 256 278 366
State finansing revenues 8 504 4 633
Cost of materials
(203 511 ) (139 088 )
Cost of hired services
(28 357 ) (21 679 )
Depreciation
(15 969 ) (15 411 )
Salaries
(71 062 ) (58 814 )
Social securities
(14 106 ) (11 298 )
Changes in finished goods and work in progress
Cost of disposals
(3 900 ) (2 162 )
Other expenses
(3 027 ) (3 105 )
Operational profit
Financial income 13
Financial expenses 14
(787 ) (431 )
Profit before tax
Tax expenses, net
Net profit for the period
Profit attributable to:
Non-controlling interest
Equity holders of the parent company
Other comprehensive income
Investments in equity instruments, reported at FVOCI, net 2 687 2 344
Other comprehensive income-revaluation of a defined benefit
obligation
Other comprehensive income, net of taxes 2 693 2 326
Total comprehensive income 48 306 32 086
Total comprehensive income attributable to:
Non-controlling interest 28 881 17 331
Equity holders of the parent company 19 425 14 755
Earnings per share
Date: 13.04.2023
Prepared by:
Kremena Dulgerova
Katya Zlatareva
Vasil Velev
For the period ended 31 December 2022
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
STARA PLANINA HOLD PLC
Registered Auditor, Diploma No
Manager:
Kremena Gantcheva
Dulgerova
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2023.04.26 12:33:30 +03'00'
Vasil
Georgie
v Velev
Digitally signed
by Vasil
Georgiev Velev
Date: 2023.04.26
12:38:23 +03'00'
BGN’000s
CASH FLOWS FROM OPERATING ACTIVITIES
31.12.2022 31.12.2021
Cash receipts from customers
Cash paid to suppliers
(282 074 ) (196 572 )
Cash paid to employees and social security institutions
(83 636 ) (68 528 )
Taxes paid/received
Interest, fees and commissions paid/received
(20 ) (25 )
Other payments/proceeds for operating activities
(750 ) 4 290
Net cash flow from operating activities
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of non-current assets
(23 822 ) (13 944 )
Proceeds from sales of non-current assets
Payments for loans granted
Proceeds from loans granted and lease contracts
Interests from loans received
Revenues from sale of a subsidiary
Dividends received from investment
Other payments/proceeds for investing activities
Net cash flow from investing activities
(23 073 ) (10 117 )
CASH FLOWS FROM FINANCIAL ACTIVITIES
Proceeds from loans received
Payments for loans received
(11 338 ) (16 892 )
Payments under to lease contracts
(124 ) (176 )
Interest, fees and commissions paid
(110 ) (73 )
Dividends paid
(15 625 ) (12 809 )
Other payments/proceeds for financial activity
(52 ) 174
Net cash flow from financial activities
(15 402 ) (12 622 )
Net increase/decrease in cash and cash equivalents
Cash and cash equivalents at a beginning of the period
Cash and cash equivalents at the end of the period
Date: 13.04.2023
Prepared by:
Registered Auditor,
Diploma No 0610
Kremena Dulgerova
Vasil Velev
Katya Zlatareva
Manager:
CONSOLIDATED CASH FLOW STATEMENT
STARA PLANINA HOLD PLC
For the period ended 31 December 2022
Kremena Gantcheva
Dulgerova
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2023.04.26 12:33:56
+03'00'
Vasil Georgiev
Velev
Digitally signed by Vasil
Georgiev Velev
Date: 2023.04.26 12:37:11
+03'00'
BGN’000s
Share
Capital
Premium
reserve
Revaluation
reserve
Other
reserves
Retained
earnings
Total
Non-
controlling
interest
Balance 01 January 2021 20 724 1 178 19 100 19625 42 340 102 967 92 219
Net result for the period - - - -
Profit sharing for dividents - - - - (5 163 ) (5 163 ) (9 932 )
Other profit sharing - - - 342 (1 042 ) (700 ) (161 )
Revaluation of financial assets - - 6 091 - - 6 091 672
Other changes in equity 1 - (292 ) (1 929 ) 1 536 (684 ) (82 )
Balance 31 December 2021 20 725 1 178 24 899 18 038 50 725 115 565 99 422
Balance 01 January 2022 20 725 1 178 24 899 18 038 50 725 115 565 99 422
Net result for the period - - - -
Profit sharing for dividents - - - - (6 181 ) (6 181 ) (11 870 )
Other profit sharing - - - 53 (1 009 ) (956 ) (218 )
Revaluation of financial assets - - 1 708 - - 1 708 802
Other changes in equity - - (4 ) (34 ) 40 2 (110 )
Balance 31 December 2022 20 725 1 178 26 603 18 057 61 113 127 676 116 101
Date: 13.04.2023
Prepared by:
Kremena Dulgerova
Vasil Velev
Manager:
Registered Auditor, Diploma
No 0610
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the period ended 31 December 2022
STARA PLANINA HOLD PLC
Katya Zlatareva
Kremena
Gantcheva
Dulgerova
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2023.04.26 12:34:34
+03'00'
Vasil Georgiev Velev
Digitally signed by Vasil Georgiev
Velev
Date: 2023.04.26 12:37:41 +03'00'
To the Annual Consolidated Financial
Statements as of 31.12.2022
Name of Reporting Entity
Country of Registration
Legal Form
Domicile and Address of Registerred
Office
Place of Business
Nature of Operations
Change in name
Parent Entity
Ultimate Parent Entity
GENERAL INFORMATION
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
Chief Accountant: Kremena Dulgerova Executive Director: Vasil Velev
Kremena
Gantcheva
Dulgerova
Digitally signed by
Kremena Gantcheva
Dulgerova
Date: 2023.04.26
12:35:09 +03'00'
Vasil Georgiev
Velev
Digitally signed by
Vasil Georgiev Velev
Date: 2023.04.26
12:39:16 +03'00'
CONTENTS
Introduction ........................................................................................................................................................ 2
I. Activity overview ............................................................................................................................................. 2
1. Indicators characterizing the main operational results ............................................................................... 2
2. Investment portfolio .................................................................................................................................... 3
3. Operational results ..................................................................................................................................... 3
4. Major indicators for financial and accounting analysis on a consolidated basis ........................................ 5
5. Risk factors for the activity of the Stara Planina Hold AD group ............................................................... 6
II. Consolidated Non-financial Declaration ........................................................................................................ 6
III. Important developments occurred since the beginning of the year ............................................................ 28
ІV. Expected development of the group .......................................................................................................... 29
V. Research and Development Activity ........................................................................................................... 30
Statement on the impact of Covid-19 ........................................................................................................... 32
VI. Company shares ........................................................................................................................................ 32
1. Own shares. Buy-back ............................................................................................................................. 33
2. Changes in the share price of the companies ......................................................................................... 33
3. Dividend policy ......................................................................................................................................... 35
VІІ. Financial instruments used by the enterprise ........................................................................................... 36
1. Accounting policy ..................................................................................................................................... 36
2. Financial instruments ............................................................................................................................... 36
3. Liquidity .................................................................................................................................................... 36
4. Exposure of the enterprise to price, credit, liquidity and cash flow risk ................................................... 37
VІІІ. Corporate Governance Declaration ......................................................................................................... 37
1. National Corporate Governance Code..................................................................................................... 37
2. Implementation of the National Corporate Governance Code ................................................................. 37
5. Information Art. 10 of Directive 2004/25/EC ............................................................................................ 43
6. Diversity policy ......................................................................................................................................... 43
7. Information on the Board of Directors ...................................................................................................... 43
ІХ. Additional information on Appendix 2 of Ordinance No 2 of the FSC ........................................................ 44
Media............................................................................................................................................................ 47
This document contains information regarding the published estimates feasibility, future period forecasts, as well as data,
which constitutes proprietary information pursuant to Art. 7 Regulation (EU) No 596/2017 on market abuse. This
information could have significant impact on the price of shares issued by the company.
2.
Introduction
The annual consolidated report on the activities of Stara Planina Hold Plc provides comments and
analysis of the financial statements and other material information on the financial standing and
operational results of the company, included in the consolidation as a whole. The report contains an
objective overview presenting faithfully and honestly the development and results of the activities of the
companies in the group of Stara Planina Group Hold Plc, together with a description of the main risks
they face. The Report includes the information required under Art. 45 of the Accountancy Act, Art. 100n,
para. 5 of the Public Offering of Securities Act (POSA), as well as Art. 11 of Ordinance № 2 of the
Financial Supervision Commission.
STARA PLANINA HOLD PLC is a public company within the meaning of art. 110 of the Public
Offering of Securities Act. The company is successor of Central Privatization Fund AD incorporated on
27 September 1996.
The holding is a parent company within the meaning of §1, item 18 of the Additional Provisions of
the Accountancy Act and holds shareholdings in the capital of industrial enterprises in various fields of
production. The company actively participates in the development of the Bulgarian industry by achieving
European and world level of quality and profitability.
I. Activity overview
1. Indicators characterizing the main operational results
Indicator (BGN’000s)
Y2020
Y2021
Y2022
Income from main business activity
200 028
278 366
375 256
Net profit from business activity
8 096
13 054
17 538
Amount of assets
235 107
268 645
303 706
Shareholders' Equity
102 967
115 565
127 676
Structure of the investment portfolio
The economic group of Stara Planina Hold Plc consists of the parent company and its subsidiaries
and associates. The investment portfolio of the holding is distributed mainly in the following industries:
62.2
15.5
7.2
15.2
Machine Building
Electrical Engineering
Light Industry
Financial
3.
2. Investment portfolio
The participation of Stara Planina Hold Plc in subsidiaries and associates is reported in
accordance with the provisions and requirements of IFRS 10: Consolidated financial statements and IAS
28: Investments in Associates.
The Company recognizes dividends from a subsidiary or associate company in the profit or loss
account in its separate financial statements when its right to receive the dividend is established.
Subsidiaries are all enterprises under the control of the company. The control over the subsidiaries
of the company is expressed in its ability to manage and define the financial and operational policy of the
subsidiaries so as to derive benefits as a result of their operations. In the separate financial statements
of the company, investments in subsidiaries are accounted for at their cost value.
Associates are those enterprises over which the company is able to exercise significant influence
but are neither subsidiaries, nor jointly controlled entities. Investments in associates are accounted for at
their cost value.
Major investments in the portfolio of Stara Planina Hold Plc as of 31.12.2022:
Investments in subsidiaries
Hydraulic Elements and Systems Plc
64.53 %
Elhim Iskra Plc
51.40 %
Fazan Jsc
92.65 %
SPH Invest Jsc
99.39 %
Investments in associates
M+C Hydraulic Plc
30.61 %
Bulgarian Rose Plc
49.99 %
Boryana Jsc
50.00 %
Ustrem Jsc
45.00 %
Investments in other companies
Asset Insurance Jsc
20.00 %
Leasing Company Jsc
5.00 %
The subsidiary of Stara Planina Hold Plc SPH Invest Jsc holds 8.28 % of the capital of Hydraulic
Elements and Systems Plc and 0.8 % of the capital of Elhim-Iskra Plc.
Taking into account the influence of the holding on the decision-making process with regard to
the associates and the need to provide more comprehensive and correct information to the shareholders,
investors and all interested parties, as of 01.01.2011 Stara Planina Hold Plc applies an accounting policy
aimed at further facilitating investors in making a well-grounded investment decision.
3. Operational results
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations and has only financial income. The consolidated activity results are formed mainly from the
results of the entities within the group which participate in the consolidated statements.
The structure of income within the last three years is summarized in the table below:
INCOME (BGN’000s)
Y2020
Y2021
Y2022
Sales of finished goods
191 136
266 064
357 694
Sales of trading goods and services
5 162
5 154
9 003
Other incomes
3 730
7 148
8 559
Grants
11 494
4 633
8 504
Financial income
722
1 541
1 404
Total Income
212 244
284 540
385 164
4.
The consolidated sales of the companies in the group as of 31.12.2022 reached BGN 375.3 million
thus reporting a 34.81 % increase compared to the sales in 2021 and an increase by 87.6 % compared
to the reported sales in the pre-crisis 2020.
Annual sales of all companies in the group of Stara Planina Hold group
(million BGN)
* forecast
Based on the results achieved in the first months of 2023 and the updated forecast for the first
half of the year we expect sales in the first quarter of 2023 to be almost 7 % higher than the business
plan, reaching BGN 105.9 million. With these results we will report an increase by over 21 % compared
to the same period of 2022 and an increase by over 67 % compared to the first quarter of 2021. We
expect sales revenues for the first half of 2023 to grow by over 15 % compared to the same period of the
previous year and around 61 % compared to the first half of 2021.
Based on the results achieved in the first months of 2023 and the updated forecast for the first
half of 2023 we revise the sales forecast for 2023 upwards and expect them to exceed BGN 399 million.
Consolidated Net Profit (BGN’000s)
The net consolidated profit as of 31.12.2022 amounts to BGN 17 538 thousand which is an
increase by 34.35 % compared to 2021 and an increase by 116.63 compared to 2020.
218.1
242.7
224.4
200.0
278.4
375.3
392.3
2017 2018 2019 2020 2021 2022 2023*
7861
7556
6747
8096
13054
17538
2017 2018 2019 2020 2021 2022
5.
Consolidated EBITDA (million BGN)
EBITDA is very important benchmark for any business group. The graph provides data on the
consolidated EBITDA of the Group of Stara Planina Hold Plc for the last 5 years.
The 2022 consolidated EBITDA amounts to BGN 67.7 thousand which is a 39.3 % growth
compared to 2021 and an increase by 77.7 % compared to 2020.
4. Major indicators for financial and accounting analysis on a consolidated basis
Profitability Indicator
31.12.2020
31.12.2021
31.12.2022
K1
0.079
0.113
0.137
K2
0.034
0.049
0.058
К1
Profitability of Shareholders’ equity ratio = Net profit / Shareholders’ equity
К2 Asset capitalization ratio = Net profit / Total assets
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.
The return on equity ratio is calculated by expressing net profit as a percentage of equity. This
ratio measures the absolute return to shareholders in terms of their absolute investment.
In 2022, compared to 2021, the return on equity ratio reports an increase due to the increase in
the net consolidated profit by 34.35% compared to the reported increase in the value of equity on a
consolidated basis by 10.48 %.
The return on assets ratio shows the efficiency of using the total assets and in 2022 and also
reported an increase compared to the previous year due to the increase in the net consolidated financial
result by 34.35% compared to the increase in the amount of consolidated assets by 13.05 %.
Efficiency Indicator
31.12.2020
31.12.2021
31.12.2022
K3
1.124
1.131
1.154
K4
0.890
0.884
0.867
К3 Expenses efficiency ratio = Total income / Total expenses
К4 Income efficiency ratio = Total expenses / Total income
The analysis of the efficiency of the consolidated revenues and expenses for 2020 shows that
BGN 1.154 revenues were received per BGN 1.00 of the expenses. Revenues fully cover the expenses
on a consolidated basis which is a pre-condition for a positive cash flow from operational activity, meeting
35.3
37.1
34.1
38.1
48.6
67.7
2017 2018 2019 2020 2021 2022
6.
the undertaken dividend commitments as well as for partial financing of the companies in the portfolio of
the Holding.
Liquidity Indicator
31.12.2020
31.12.2021
31.12.2022
K5
3.196
2.900
3.026
K6
1.140
0.908
0.850
К5
Total liquidity ratio = Current assets / Current liabilities
К6 Absolute liquidity ratio = Cash / Current liabilities
It is assumed that the optimal values of the total liquidity indicator are above 1-1.5. In 2022, the
value of this indicator on a consolidated basis reports an increase compared to the previous year which
is due to an increase in the value of consolidated current assets by 17.73 % compared to an increase in
the value of current liabilities by 12.83 %.
The absolute liquidity ratio expresses the ability of the Group to meet its short-term obligations
with its available cash. In 2022, the value of this ratio on a consolidated basis reports a slight decrease
compared to the previous year which is due to a decrease in the short-term liabilities by 11.37 %
compared to an increase in cash by 5.64 %.
In 2022 again the Group of Stara Planina Hold Plc has been covering its current liabilities on time
with the available current assets. The liquid structure of current assets and liabilities allows part of the
funds to be directed to long-term financing of the companies under control.
Financial Autonomy Indicators
31.12.2020
31.12.2021
31.12.2022
K7
2.579
2.154
2.130
K8
0.388
0.464
0.469
К7 Financial Autonomy ratio = Shareholders’ equity / Borrowed capital
К8 Debt ratio = Borrowed capital / Shareholders’ equity
Through the financial autonomy indicator and debt ratio, the proportion between shareholders’
equity and borrowed funds in the capital structure of the group is taken into account. The high level of the
financial autonomy ratio, respectively the low level of the debt ratio is a guarantee, both for the investors
/creditors/ and for the owners themselves, regarding the ability of the companies in the group to regularly
pay their long-term obligations.
5. Risk factors for the activities of the Group of Stara Planina Hold Plc
A significant effect on the financial standing of Stara Planina Hold Plc has the direct dependence
on the financial condition of the subsidiaries and associates as far as their operations are primarily export-
oriented - mainly to the countries of the European Union.
Stara Planina Hold AD and the companies in the group are exposed to systematic risks related to
the market and the macroenvironment where they operate, therefore they cannot be managed and
controlled by the management team of the holding and the companies in the group.
The main risks for Stara Planina Hold Plc and the companies in the Group for 2022 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.
Macroeconomic indicators such as inflation, instability of financial markets and the slowdown of
economy, as well as the energy crisis, as a result of the global economic and political consequences of
7.
Covid-19 and the military actions in Ukraine, continue having a significant impact on business processes
and prospects for economic development in global aspect.
The macroeconomic forecasts of the ECB staff as of December 2022 foresee global real GDP
growth (excluding the euro area) to slow to 2.6% in 2023 – below the long-term average – before
recovering gradually to 3.1% and 3.3 % in 2024 and 2025 respectively. This outlook is weaker than the
one outlined in the September 2022 forecast. The outlook for world trade and external demand for euro
area goods also decreased from the one in the September 2022 forecast.
At the same time, the European Commission's Winter Economic Forecast raises growth prospects
and slightly lowers inflation forecasts. Growth for 2022, according to the data from the January forecast,
is estimated at 3.5 % in both the EU and the еuro area. GDP is projected to grow by 0.8 % in 2023 and
1.6 % in 2024 (0.9 % and 1.5 % in the euro area), with Bulgaria expected to grow by 1.2 % in 2023 and
2.5 % in 2024. Expected headline inflation to fall from 9.2 % in 2022 to 6.4 % in 2023 and 2.8 % in 2024
in the EU. In the euro area, it is expected to slow from 8.4 % in 2022 to 5.6% in 2023 and to 2.5 % in
2024.
The January forecast of the European Commission foresees the growth of the gross domestic
product (GDP) of Bulgaria for the past year 2022 to reach 3.9 percent, compared to the forecast for an
increase of 3.1 percent given in November. For 2023, the European Commission expects Bulgaria's
economy to increase its volume by 1.4 percent compared to the previous growth forecast of 1.1 percent,
and in 2024 by 2.5 percent compared to the previous expectation of an increase of 2.4 percent.
Pursuant to data of the National Statistical Institute, in December 2022 the composite indicator
"business climate in industry" in Bulgaria increases by 2.5 percentage points as a result of the more
positive industrial entrepreneurs’ expectations about the business situation of the enterprises over the
next 6 months. According to them, in the last month there is a certain increase of the production assurance
with orders but that is not accompanied by increased expectations about the production activity over the
next three months. The uncertain economic environment and labor shortages continue being the main
problems for business development in Bulgaria.
According to
EUROSTAT data, in the fourth quarter of 2022 compared to the same quarter of the
previous year, seasonally adjusted GDP increased by 1.8 % in the euro area and by 1.7 % in the EU,
after a growth by 2.4 % in the euro area and 2.6 % in the EU in the third quarter. In the fourth quarter of
2022, seasonally adjusted GDP remained stable in the euro area and decreased by 0.1% in the EU
compared to the previous quarter, while in the third quarter of 2022 GDP grew by 0.4% in both the euro
area and the EU. For 2022, overall GDP increased by 3.5% in both the euro area and the EU, with a
corresponding increase of 5.3% in the euro area and 5.4% in the EU in 2021.
According to EUROSTAT estimates, in December 2022, seasonally adjusted industrial production
fell by 1.1 % in the euro area and by 0.4 % in the EU compared to November 2022. In December 2022,
compared to December 2021, industrial production decreased by 1.7 % in the euro area and by 0.4 % in
the EU. Average annual industrial production for 2022 compared to 2021 increased by 0.9 % in the euro
area and by 1.9 % in the EU.
In December 2022, the Economic Confidence Indicator (ESI) rose for the second consecutive
month in both the EU (+1.5 points to 94.2), the kata and the Eurozone (+1.8 points to 95.8), however,
remaining below the long-term average.
According to data from the European Commission as of 30.01.2023, economic confidence in the
euro area reached a seven-month high in January 2023, as there was a strong improvement in
expectations in all sectors except construction. The confidence index, a monthly indicator of the regional
economic outlook, rose to 99.9 in January from 97.1 in the last month of 2022. Confidence improved for
a third straight month to reach its highest level since June 2022, when it was 103.1 points. The increase
in general confidence reflected strong growth in manufacturing, services, retail trade and consumer
confidence.
According to
EUROFER (European Steel Association), total production in the steel-using sectors
in 2021 recovered (+6.8%) after the sharp decline reported in 2020 due to the impact of the pandemic.
Production in steel-using sectors is expected to continue to grow in 2022 with a slightly higher percentage
growth than previously forecast (+2.1% vs. +1.9%). On the one hand, developments in the second and
8.
third quarters of 2022 were stronger than expected, as output growth proved to be stable and resilient
despite the war in Ukraine and related disruptions. On the other hand, a rapid deterioration in the global
industrial and economic outlook, combined with the lingering effects of rising energy costs, based on
preliminary data leads to a production decline in the last quarter of 2022. The overall outlook for steel
demand remains with very high uncertainty, which is likely to continue to undermine demand at least
through the first half of 2023.
The heavy impact of the conflict in Ukraine on steel-using industries and the deteriorating overall
economic outlook will affect apparent steel consumption, leading to a deeper-than-expected recession (-
4.6%, previously estimated at -3.5%), as a result of the three-month decline in the second, third and fourth
quarters of 2022. Due to the continuing negative factors (war, energy prices, high inflation) and a
deteriorating economic outlook for 2023, apparent steel consumption will also decline in 2023, albeit
slightly less than previous estimates (-1.6% vs. previous expectation of a decline of -1.9%). In 2024, with
a more favorable industrial outlook and improvements in steel demand, steel consumption is expected to
experience a moderate recovery (+1.6%).
EUROFER Forecast for the Mechanical Engineering and Metal Goods Sectors
(Е-28, % change YoY)
According to EUROFER data, after a sharp decline (-11.8%) in 2020 due to the pandemic,
preceded by a smaller decline (-0.1%) in 2019 due to global trade tensions and the decline in
manufacturing sectors, production in the engineering sector recovered strongly (+16.0%) in 2021, thanks
to the sharp recovery of industrial sectors in the European Union, especially in the first half of the year.
Production in the mechanical engineering sector is expected to report growth in 2022 as well (+6.5%
revised upward expectation compared to the previous growth forecast of +5.8%), but in 2023 it is
projected to experience a slight decline (-0.2%) as a result of continued disruptions due to the ongoing
war and high energy costs. The negative effects on production in the sector will be particularly visible in
the first two quarters of 2023. Subject to an overall positive development of the economic cycle in the
second half of 2023, the sector is expected to achieve growth again in 2024 (+3.1 %).
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.
On 15 December 2022, the Governing Council of the ECB adopted a new decision to increase the
three key ECB interest rates by 50 basis points announcing that they will continue rising significantly at a
steady pace to reach levels that are sufficiently restrictive, to ensure a timely return of inflation to the
medium-term target of 2%.
As a result of the previous decisions to increase the three main interest rates of the ECB from July
and September, on 30.09.2022 the BNB announced for the first time since 2016 a main interest rate
6.5
-0.3
-1
0
0.4
-0.2
3.1
3.8
-7
-5.9
-0.3
1.5
-3.1
1.9
Y2022 1Q23 2Q23 3Q23 4Q23 Y2023 Y2024
Mechanical engineering Metal goods
9.
higher than zero and effective from 01.10.2022 the main interest rate in Bulgaria rises to 0.49 percent.
For November, the main interest rate announced by the BNB is 0.59 % and for December 2022- 1.30 %.
The change in the interest rates also has an effect depending on the share of bank and commercial
loans taken. In the beginning of 2022, Euribor started its movement from a negative position, and for 5
years its value has only been negative, and since September 2011, the direction of the annual trend is
only downward. Throughout 2022, a strong upward trend is reported, which continues into the first months
of the current year to reach its highest values since 2009.
12-month EURIBOR
(01.01.2022-31.12.2022)
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 2022 ECB’s staff macroeconomic forecasts for inflation have been revised up
significantly and forecast inflation to reach on the average 8.4 % in 2022 before slowing to 6.3 % in 2023,
and during the year it is expected to noticeably decrease. Inflation is then projected to average 3.4 % in
2024 and 2.3 % in 2025. Inflation, excluding energy and food, is projected to average 3.9 % in 2022 and
rise to 4.2 % in 2023, then drop to 2.8 % in 2024 and to 2.4 % in 2025.
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.49
0.59
1.30
2022 BNB Base Interest Rate
10.
Pursuant to data of the National Statistical Institute, in December 2022, the monthly inflation rate
in Bulgaria was 0.9 % compared to the previous month, and the annual inflation rate in December 2022
compared to December 2021 was 16.9 % and reported lower levels for the third consecutive month
compared to the peak value of September 2022. The annual average inflation rate for the period January
- December 2022 compared to the period January - December 2021 was 15.3%.
According to the macroeconomic forecast of the Bulgarian National Bank for the annual inflation,
measured by the harmonized index of consumer prices (HIPC), it is to slow down to 4.2% at the end of
2023 under the influence of the assumptions of downward dynamics of the euro prices of oil and food on
the international markets. Inflation is expected to average 7.0% for the year, and in the short term,
pressures on producer prices from factors such as realized increases in commodity prices and supply
and labor shortages will continue affecting consumer prices. Administratively determined prices are also
expected to have a relatively high positive contribution to general inflation at the end of 2023. BNB
forecasts inflation at the end of 2024 to slow down to 3.3 %, following the downward dynamics of food
and energy raw material prices on the international markets.
The systematic currency risk is the probability of a possible change in the currency regime of the
country (currency board) which would lead either to the devaluation of the lev or to the appreciation of
the lev against foreign currencies. According to the current legislation in the country, the Bulgarian lev is
fixed to the common European currency - euro in the ratio EUR 1 = BGN 1.95583 and the risk of
depreciation of the lev against the European currency is minimal, but there is a risk of adverse changes
in the euro against other major currencies, such as the US dollar, the Swiss franc, the British pound and
others.
Given the export orientation of most of the companies in the group of Stara Planina Hold Plc,
changes in the values of currencies have a certain effect and are a risk factor for their activities. Exchange
rates affect revenues from sales abroad and the cost of deliveries of imported raw materials as they
largely compensate each other. 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 annual growth of the average monthly US dollar/BGN exchange rate by the end of 2022 is 6.8 % in
favor of the BGN. At the same time, the end of the third quarter of the year, the common European
currency reached its lowest level against the US dollar in 20 years - 0.9538 US dollars for 1 euro, and at
the end of January 2023, the euro rose to 1.0929 US dollars which is its highest level since April 2022
and represents an increase by more than 14 % from the lowest value in September.
Political risk: The political risk is the probability for a change of Government or a change in its policy,
occurrence of internal political turbulences and unfavorable changes in the European and/or national
legislation, as a result of which the environment where local companies operate will change unfavorably
and investors will suffer losses.
The ongoing political instability in the country for more than three years is assessed as one of the
main factors negatively affecting economic activity and the business environment in the country, which is
a serious obstacle to attracting new investments and retaining foreign investments in the country in the
medium and longer term. This instability may not only hinder the reform program and Bulgaria's ability to
fully invest the EU funds, but also delay the country's accession to the Eurozone and significantly weaken
the growth potential of the Bulgarian economy. In addition, the political instability and the lack of
consistency in the government policies applied also lead to financial instability, which increases the risk
of a sudden change in the tax legislation applicable to the company's activities, which will lead to
unforeseen, significant costs and, accordingly, adversely affected the financial result.
Internationally, the political risks for Bulgaria is related to the failure in achieving sustainable results
in relation to our country's commitments to implement serious structural reforms in accordance with the
EU policies for affirming the rule of law, effectively countering corruption and increasing social stability,
11.
as well as to the ongoing military conflict in Ukraine, the potential instability of other countries in the
immediate vicinity of the Balkan Peninsula, and the pressure of waves of refugees from countries in the
Middle East.
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
According to the ECB, the euro area economy is likely to contract in the first quarter of 2023 due to
the energy crisis, high uncertainty, weakening economic activity and tighter financing conditions. Under
the conditions of slowing pace of the world economy, the risks for growth are mainly for its decrease,
especially in the short term. The military conflict in Ukraine continues posing a material adverse risk to
the economy. Energy and food costs could also remain persistently higher than expected. There could
be a further slowdown in growth in the euro area if the global economy weakens more sharply than
expected.
Risks to the inflation forecast are mostly on the upside. In the short term, existing supply chain
pressures may lead to larger than expected increases in energy and food retail prices. In the medium
term, risks stem mostly from domestic factors, such as a sustained rise in inflation expectations above
the ECB's 2 % target or higher than expected wage increases. In the short term, the risk of energy supply
disruptions remains high.
According to the European Commission's Winter Economic Forecast, the increase in investment
from EU funds, especially under the Recovery and Resilience Plan, is expected to support aggregate
investment in Bulgaria in both 2023 and 2024. The Commission emphasizes that potential delays in the
implementation of the national recovery and resilience plan represent a negative risk for the growth of
investments in our country.
Under these conditions, the companies in the Group of the Stara Planina Hold Plc make serious
efforts to guarantee their security with orders also for 2023, as well as to maintain and even increase their
market positions. The companies continue their investment policies aimed at technological renewal,
digitization of processes and expansion of production capabilities with a view to increasing productivity
and quality of the manufactured products in parallel with their policies on optimizing the production
process and stimulating the persons employed in the Group.
The military conflict in Ukraine since February 2022, as well as the ongoing process of imposing
mutual sanctions between the US and the EU, on the one hand, and Russia, on the other, have objectively
affected economic activity and trade relations not only in Europe, but also globally, leading to an increase
in the prices of raw materials, fuels and energy carriers in general, additional difficulties in logistics, strong
inflationary pressure. The companies in the Group of Stara planina hold Plc do not have investments in
assets related to Russia and Ukraine but some of them have established commercial relations with
companies from these countries. In the reporting year 2022, the companies did not carry out transactions
and have no receivables or liabilities to persons/entities against whom restrictive measures have been
imposed. In relation to supply chains, companies are dependent on these countries but at this stage there
are no circumstances that could endanger the activities of these companies in the group.
Factors that will continue influencing costs in 2023 as well are the market prices of raw materials
for the production, transportation of supplies, regional market price of labor, energy prices and security
of their supply. The macroeconomic development of the country, the unstable political situation, financial
policy, as well as geopolitical factors appear to be the most worrisome circumstances that will have an
impact on business in 2023 as well. The development of the military conflict in Ukraine and the effect of
the measures taken at European and national level will affect the activities of the companies in the group
and may lead to adjustments of the expected business results.
The management of the holding will continue monitoring, analyzing and making assessments of
the decisions and actions taken by the governing bodies of Bulgaria and the EU and, accordingly, of the
possible direct and indirect consequences on the activities of the companies in the group.
12.
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 continuation of the conflict in Ukraine, as of the date of this report, we assess the risks
associated with securing the supply of materials, as well as the sale of finished products to partners
related to the affected region as highly increased. Along with the threat to the European and regional
stability, the situation puts an additional risk to the energy supplies and opportunities for sustainable
economic growth. We expect inflation in Bulgaria to slow down in 2023 and the average annual value of
inflation, measured by the harmonized index of consumer prices (HIPC), not to exceed 7-9%.
II. Consolidated Non-financial Declaration
The consolidated non-financial declaration of Stara Planina Hold Plc and the companies in the
group has been prepared on the basis of the provision of art. 51 and according to the requirements of art.
48 of the Accountancy Act. The declaration provides description of the policies applied by the group with
respect to activities conducted in in the field of ecology, social issues and those related to employees,
respect for human rights, fight against corruption and bribery. All companies in the group strive to
introduce and apply practices of good corporate governance and social responsibility, applied by Stara
Planina Hold Plc as a parent company.
Good corporate governance and social responsibility policy
The corporate policy of Stara Planina Hold Plc is based on responsible, sustainable and transparent
management in accordance with the recognized standards and principles of good corporate governance,
changes in the regulatory, financial and economic environment where the companies in the group operate
and the principles of corporate social responsibility, reflecting the responsibility of enterprises for their
impact on society, environment and the economy as a whole.
Stara Planina Hold Plc and the public companies in the group have their own long-term good
corporate governance programs, subject to the principles of:
• responsibility and independence of the corporate Boards;
• shareholders’ rights protection and ensuring equal treatment of all shareholders;
• ensuring the recognition of the rights of persons interested in the management and
sustainable development of the company and promoting cooperation with them;
• ensuring timely and accurate information disclosure about the financial standing,
operational results, ownership and management of the company;
• effective control over the activities of the board of directors and its accountability to all
stakeholders.
The activities of the non-public companies in the group are in compliance with the main priorities
and directions of the corporate program of Stara Planina Hold Plc.
The corporate governance of the group is carried out in accordance with the constitution, laws, by-
laws and applicable regulations of the Republic of Bulgaria and the jurisdictions where they operate. In
all their actions the companies in the group of Stara Planina Hold Plc comply with the relevant provisions
of the current legislation and monitor the renewal and strict application of the requirements concerning
their operations.
Business model
Our mission
Stara Planina Hold Plc unites industrial enterprises dedicated to manufacturing of products
intended to meet various consumer and business needs. Our investment portfolio includes companies
operating in the machine building, electrochemical industry, in the field of finance and in the field of
perfumery, cosmetics and textile.
We participate in the development of the Bulgarian industry by achieving European and global level
of quality, productivity and profitability of our business. Our success is being shared among all parties
involved in its achievement.
13.
Our values
We believe that the world will always need a modern and productive industry that in at the core of
wealth throughout the world.
We believe that the Bulgarian industry can rise to the challenge of accelerated development
imposed by the global economy by focusing on people's knowledge, the resultant innovations and the
investments that make them happen and we sustainably implement these policies in all companies in the
group.
We believe that achieving high goals is a reward for the work and collaboration of all parties
involved in our development and that it is possible to share our success on a large scale.
Our future
Stara Planina Hold Plc will continue managing its subsidiary companies setting high goals in terms
of quality, safety, productivity and profitability.
Our leading priority is to increase productivity along with increasing the satisfaction of our
employees and customers, as well as the quality of the products manufactured.
We will continue investing annually in technological renewal, innovation and infrastructure
improvements, as well as in the development and training of our employees by providing opportunities
for their professional realization.
Important task for 2023 again will be to retain the major markets and expand the customer base.
This will require us to continue offering good prices, high quality and short delivery terms.
Under these conditions, achieving good financial results with the expected volume of production is
the main priority for the companies in the Group, thus guaranteeing the investments of shareholders and
increasing their well-being.
Organizational structure
The corporate governance of Stara Planina Hold Plc is a system with clearly defined functions,
rights and responsibilities at all levels - General Meeting of Shareholders, Board of Directors, Audit
Committee, employees. Each of the companies in the group of the holding has an operating
organizational structure compliant with the legal and organizational form of the company and the nature
of the respective business processes. All companies in the group follow the policies of corporate
governance and social responsibility of the parent company Stara Planina Hold Plc.
General Meeting of Shareholders - the main governing body, enabling shareholders in making
decisions on fundamental issues regarding the activities of Stara Planina Hold Plc and the joint stock
companies in the group.
Board of Directors - defines the strategy for development and management of the holding and the
companies in the group by resolving all issues within the scope of activities, except for those that are the
exclusive competence of the General Meeting of Shareholders. The Board of Directors is elected by the
General Meeting of Shareholders with two of the members being independent directors.
In its capacity of a company of public interest and in accordance with the requirements of the
Independent Financial Audit Act, an audit committee has been established and operates in Stara Planina
Hold Plc.
Employees - Stara Planina Hold Plc has an average number of 7 employees under employment
contracts. The company has outsourced the legal services to a law firm. All company employees have
university degrees and adequate qualifications for the positions occupied.
A total of 2450 employees work for the enterprises in the Group of Stara Planina Hold Plc. 2164
of them or 88.32 % work in the three largest companies.
In 2022 the number of employees in the group of Stara Planina Hold Plc reported aх increase by
5.7 %. With these employees we report a significant increase in labor productivity which is a result of the
policy applied in the group of investing in people and in technological improvement of the working
14.
environment.
Number of people employed by all enterprises of the Group of Stara Planina Hold Plc
* forecast
Labor productivity per employee in the Group (thousand BGN)
* forecast
Against the background of the indicated increase in the number of employees in the group in
2022, labor productivity reported an increase by 28 % compared to the previous 2021. With the expected
growth of sales revenues in 2023 by over 4 % we anticipate a minimal increase in the number of
employees in 2023 by approximately 0.5 % with an expected growth of labor productivity by approximately
3 % and growth of the average salary in the companies within the Group of Stara Planina Hold Plc by
over 10.2 % on an annual basis.
Infrastructure
The production and administrative facilities of the enterprises are located on their own territory.
The infrastructure of the enterprises of the group consists primarily of:
• Technical infrastructure – includes equipment and machinery, storage facilities and transport
network on the territory of the enterprises
• Social infrastructure – includes activities on the physical working conditions, social interactions,
breaks and healthcare.
2143
2082
1943
2004
2164
2192
2510
2477
2276
2318
2450
2460
2018 2019 2020 2021 2022 2023*
89.3
96.8
90.6
88.0
119.6
153.1
157.0
2017 2018 2019 2020 2021 2022 2023*
Total
Three the largest
enterprises
15.
• Information structure – includes reliably built information bases.
• Sales infrastructure – The companies in the Group operate in the domestic market, in the
European Union and in third countries. The products of our companies are sold in more than 100
countries and are appreciated by customers such as Palfinger, Pinguely, Terex handlers.
Production
Low-speed, high-torque orbital hydraulic motors
Hydrostatic power steering systems
Hydraulic valves, breaks and accessories for them
Hydraulic piston cylinders
Hydraulic telescopic cylinders
Hydraulic plunger cylinders
Hydraulic rack cylinders
Starter batteries
Traction batteries
Stationary batteries
Production and repair of parts for grain combines
Production and repair of parts for grain cleaning
machines
Perforated metal sheets
Spare parts and custom equipment
Metal items for furniture industry
Essential oils - rose oil; lavender oil
Natural flower waters
Concretes
Absolutes
Sauces and compositions
Perfumery cosmetics
Perfume compositions
Men's, women's and kid's socks
Sport socks
Children's tights
Women's top knitwear
Men's top knitwear
Raw materials used
Machine building - ferrous metals (steel and cast iron), sintered items, gaskets, springs, sealing
elements and other parts made primarily of polyurethane, fitting kits, packaging and auxiliary materials.
In very limited cases, non-ferrous metals are used. Sheet metal, rails, pipes, powder coating, fixing
elements and plastic elements.
Batteries - lead and lead alloys. The raw material is delivered in the form of blocks and is stored
on a designated site. Polypropylene and polyethylene are also used in the production of rechargeable
batteries for which there are no special transport and storage requirements, nor any special requirements
towards their suppliers.
Light industry - The main raw materials used in the production of rose oil and the perfume industry
are plants and herbs. In the production of vinegar are used quality wine material, apples supplied from
farmers, sugar, alcohol and yeast. The packages are made of PET.
Textile - Cotton and bamboo yarn, small percentages of lycra, polyamide and elastomer. Wool
and combined wool-acryl, wool-polyamide, cotton-acryl, cotton-viscose yarns.
Production inputs are accompanied by the necessary quality certificates.
The companies work primarily with suppliers and contractors that adhere to high environmental
standards and apply the best environmental management practices, including energy efficiency and
effective resource utilization, waste reduction and management.
Transport used for the delivery of raw materials and chemicals and for the sale of production
For delivery of raw materials and chemicals and shipment of finished products is used road and
railroad, sea and air transport. The main criterion when choosing a forwarding company is the transit time
of transport and delivery, as well as strict compliance with safety standards and relevant regulatory
requirements.
A sustainable policy of the companies in the group is to partner with companies that have a license
for international and domestic transport, disposing with the necessary equipment and reliable certificates
to transport dangerous and specialized consignments.
16.
Fuel and chemicals used
Natural gas - Mainly used for heating. Supplied to the production facilities over gas pipes that are
subjected to checks by the State Technical Supervision.
Fuels (petrol, diesel, propane-butane) fuels and lubricants. They are used mainly for the purposes
of in-house transport.
Hydraulic oils - Used as a production input for finished hydraulic products.
Concentrated sulfuric acid - Used for the production of batteries. Delivered by a specialized
transport and stored in specially constructed tanks.
Paints and coatings - Used in painting and galvanization processes. This includes varnished
polyurethanes, solvents, hardeners, epoxy primer, specific salts, sodium compounds, acids, etc.
Liquefied oxygen and carbon dioxide - Delivered by a specialized transport – tank trucks operated
by licensed companies holding special permits (ADR). They are stored in specialized containers which
are subjected to checks by the State Technical Supervision.
The STIO checks conducted throughout the year did not find any deviations.
Cleaning chemicals and detergents for textile items – perchlorethylene and silicone softener.
Environmental protection
Description of policies and their objectives
Stara Planina Hold Plc pays special attention to the impact on the environment that the
productions of the enterprises in the group have. They annually report on the assessment of the
environmental impact and the measures taken in this direction and annually make investments in the
implementation of the common corporate policy for transition to a cleaner and green economy.
The main policies of the companies in the group are focused on compliance with the
environmental norms and standards for the production activities, reduction of harmful emissions from
electricity consumption through construction and commissioning of photovoltaic systems for generating
energy for their own needs and implementing other energy efficiency measures.
With regard to all new projects and investments of Stara Planina Hold Plc and the companies in
the group, including the purchase of new technical equipment, a preliminary assessment is made on the
environmental impact.
The policies of the production companies in the group require a periodic review of the
environmental impact of the energy use and are mainly aimed at:
• reducing energy consumption from conventional sources;
• increasing energy efficiency;
• use of less polluting fuels;
• implementation of renewable energy technologies.
М+S Hydraulic Plc - The policy of the company on the environmental protection and reduction of
harmful environmental effects is an integral part of its Development Program.
Integral parts of the Environmental Program are the Environmental Management Action Plan, the
Waste Management Program and the Waste Management Action Plan. Activities, measures and tasks
are identified in the action plans, and respectively funds are provided, deadlines and responsible persons
for their implementation are specified.
The management of hazardous waste: oils, lubricating and cooling fluids, filtering elements,
rechargeable batteries, residues from lapping and grinding, etc. is at the necessary level: the built sites
for the temporary storage of hazardous waste in Kazanlak and the three branches are maintained in good
condition, contracts have been concluded with companies certified by the respective Regional
Environmental and Water Inspectorates for the handling of such waste, other companies with permits are
being sought with the aim of alternative options and/or expanding the range of waste delivered.
For 2022, the company's expenses for the transfer of hazardous waste are BGN 87.3 thousand,
and the income from the industrial waste transferred for recovery is BGN 848 thousand.
17.
A contract is in place with ECOPACK - an organization for utilization of packaging waste and thus
the requirements arising from the Ordinance on packaging waste are being fulfilled. For 2022 the fees
paid to this organization amount to BGN 23.9 thousand.
Every year, the company adopts and implements a Plan-program for its own environmental
monitoring, covering all structural units and processes.
The company has its own wastewater treatment plant, maintained in good technical condition.
The company carries out its own monitoring of water purity. The quality control of the company’s waste
waters is periodically conducted by the laboratory of the Wastewater Treatment Plant, Kazanlak, located
in the village of Ovoshtnik.
In order to preserve the purity of the atmospheric air, every year an accredited laboratory performs
measurements of the concentration of organic carbon released into the atmosphere from organized
sources /chimneys / in the areas for painting the products. Based on the results of these measurements,
the ecologist prepares a Solvent Management Plan /RMP/, approved by the Regional Environmental and
Water Inspectorates - St. Zagora.
In order to control the quality of the groundwater used by the company for industrial purposes, an
analysis of its quality is carried out regularly on an annual basis by an accredited laboratory. The results
of the analysis are presented in the Basin Directorate "Eastern White Sea Region", Plovdiv.
The noise emitted by the company along the boundary of the property is regularly measured in
order to prepare a noise map and assess the impact of noise in the environment.
All environment related activities are defined and conducted in accordance with the publicly
disclosed Environmental Policy and the procedures provided for in the Environment Protection
Management System (EPMS) operating in the company thus contributing to the systematization and
improvement of the environment related activities. The Environment Protection Management System
(EPMS) was successfully certified for compliance with the new standard ISO 14001:2015. The
Environment Protection Management System which has been developed and implemented in
accordance with the requirements of both ISO 14001:2004 and OHSAS 18001:2007 (Occupational
Health and Safety Management System) are part of the Integrated Management System which also
includes the existing Quality Management System under ISO 9001:2015.
Hydraulic Elements and Systems Plc – Since 2005 the company has been maintaining and
developing the implemented management system according to the requirements of the international
standard ISO 9001-2008 by TÜV Rheinland in all its activities and units, in order to increase the efficiency
and quality of work while ensuring healthy and safe working conditions and environmental protection.
An audit is performed annually /pursuant to order № 254 /16.11.2021/ analyzing the overall
activities of HES Plc for the implementation of the Safety measures management system. The main
organization and coordination activities related to risk management, achievement of healthy, safe and
environmentally friendly working conditions and compliance with the applicable environmental protection
standards related to air, water and waste are reviewed and evaluated.
In order to prevent and limit the impact of the activity on the atmospheric air, a solvent
management plan has been developed and approved by the Regional Environmental and Water
Inspectorates - St. Zagora. The air filters are periodically changed and the technological equipment -
checked. An accredited laboratory regularly monitors the metal surfaces coating installation and the
installation for deposition of metal coatings - galvanization section. An installation has been built for safe
firing and cleaning the painting devices. The paint installation has been replaced with new primer and
paint chambers with automated processes with a minimum of human participation.
Water consumption is carried out with a permit - № 31530045 /07.07.2008, amended and
extended by a decision № RR - 3988 /13.10.2020 for groundwater abstraction. The company has its own
plant for galvanic wastewater treatment, maintained in good technical condition. The company carries out
its own monitoring of water purity. Control over the quality of the company's wastewater is periodically
performed by an accredited laboratory. The chemical analysis of the controlled parameters is within the
permissible norms.
In 2022 outdoor lighting with light sensors was built in the company. The lighting in the common
18.
areas of an administrative building was partially replaced with motion sensors. In the working premises,
the lighting has been replaced with energy-saving lighting fixtures. A network was built to supply cleaning
machines with borehole water. The motors of some machines have been replaced with inverter motors.
A reactive power system has been built.
In 2022, construction of a heating installation with propane-butane gas began, as an alternative
option. 4 diesel forklifts have been gradually replaced with LPG forklifts. Natural gas is mainly used for
heating purposes. When a certain temperature is reached in the working premises, the heaters are turned
off. Adjacent gas panels and temperature sensors have been built in each section. The system is
controlled by software and is completely autonomous.
Generated waste is being stored at the place of formation until their transfer to a licensed company
holding a document under Art. 35 of the Waste Management Act for subsequent treatment. Periodic
inspection of warehouses for storage of hazardous waste is carried out.
Elhim-Iskra Plc - The company has a long-term policy in terms of human health and
environmental protection. Activities on preventing air, water and soil pollution are one of the major
priorities of the company. The company has introduced an Environmental Management System. The
system covers implementation of the activities in a way that guarantees protection of the environment;
permanent monitoring, inspection, control and management of the processes and activities affecting the
environment; analysis and assessment of the impact of the used raw materials and inputs used on the
environment; preventive actions so as to avoid environmental pollution; compliance with all laws and
regulations, as well as the internal regulations adopted by the Company, including the internal
environmental protection company rules; constant research and implementation of new environmental
technologies.
The environmental system of Elhim-Iskra Plc has been developed in accordance with the
requirements of the issued Complex Permit, regulating the emission standards and requiring adoption of
good environmental management practices and ensuring a systematic and thorough approach to
environmental issues.
The company monitors periodically all of the identified aspects of environment: air, water, soil,
noise, water use, waste management.
Elhim-Iskra Plc has a Waste Management Company Program approved by the Regional
Environmental and Water Inspectorates - Pazardzhik. According to the Waste Management Act, the
company, as an entity that places products on the market, after the use of which widespread waste is
generated, fulfills its obligations through collective systems, represented by waste recovery organizations.
For all generated industrial and hazardous waste, the company has concluded contracts with
companies that have a permit for their utilization or disposal.
During the annual control measurements conducted by accredited laboratories and the company
itself, no violations of the emission norms prescribed in the Complex Permit have been found.
In 2022, ten inspections of the company were carried out by the Regional Environmental and
Water Inspectorates and the Basin Directorate. No sanctions have been imposed for violating the
conditions of the permit or non-compliance with the regulations and no discrepancies have been found in
the fulfillment of the conditions. On this basis, the company has paid 30% less water abstraction fee,
according to the Law on the Waters.
Bulgarian Rose Plc - The company has adopted a Policy on the reduction of the cost of natural
resources related both to reducing environmental pollution and reducing the financial costs of energy
consumption.
The company has an approved Waste Management Program. Special sites have been set up for
storing household, industrial and hazardous waste which are collected separately and controlled by the
Regional Environmental and Water Inspectorate. For the purpose of recycling packaging waste, the
company has a contract with ECOBULPACK - a national-level organization for recycling packaging
waste.
There is also a permanently operational Industrial and Household Wastewater Treatment Plant.
19.
Waste water is regularly subjected to monitoring of physical and chemical indicators by submitting
samples for analyses at a licensed laboratory.
In order to preserve the air pure, the company conducts regular preventive maintenance and
technical activities on its steam plants. Gas emissions released during boiler operation are subjected to
technical inspections and monitoring.
In order to preserve the purity of the air, the necessary prophylaxis and technical measures of the
boilers in the steam power plants of the company are regularly carried out, which are put into operation
only during the rese picking campaign. Technical supervision and monitoring of the emissions of gases
released during the operation of the boilers is performed.
The company
Ustrem Jsc is also certified according to the ISO 9001-2008 standard in order to
increase the efficiency and quality of work in ensuring healthy and safe working conditions and
environmental protection.
Textile industry - The companies follow a policy on environmental issues which is part of the
Program for management of the processes and operations in the company aimed at ensuring
environmental protection. The companies comply with the requirements of the current legislation
governing the acceptable norms and emissions of substances in accordance with the regulation on
industrial wastewater discharge. They have their own treatment plants, the use of which is mandatory is
mandatory in dyeing operations. All sensitive processes are subject to continuous assessment: materials,
inputs, energy, water, emissions, waste and their alternatives which makes it possible to find ways to
reduce the impact of these processes on the environment and reduce them to the necessary and required
limits.
In 2022, no sanctions have been imposed on any of the companies in the Group for environmental
pollution. All industrial enterprises in the Group have waste management programs approved by the
Regional Environmental and Water Inspectorates and fulfill the requirements provided in the regulations.
The companies have their own policies on the reduction of natural resources costs which costs are related
both to the environmental pollution reduction as well as to reduction in the financial costs of energy
consumption.
The companies in the Group of Stara Planina Hold Plc conduct a responsible policy on
environmental protection and reduction of adverse environmental impact of their operations as part of the
development strategy.
Main activities completed in 2022
The companies report on and update their environmental protection programs on an annual basis.
The conducted monitoring covers all structural units and processes. The staff training programs include
environmental training at different levels - managers and specialists. There are also practical classes on
simulations of environmental emergencies, such as prevention of contamination in case of large-scale
spillages, etc.
Licensed companies are assigned with measurements of air purity, taking into account the level
of concentration of organic carbon in the atmosphere from organized sources (smoke stacks). Accredited
laboratories periodically monitor specific processes such as the solvent management system, metal
coating installations which falls in the OS consumption category with threshold values above 15 t/y.
Accredited laboratories make analysis of the water sources used thereby controlling the chemical
parameters in order to achieve compliance with the acceptable limits.
Special waste is being stored under control until handed over to licensed companies certified
under Art. 35 of the Waste Management Act for further treatment. Planned periodic inspections of facilities
and warehouses for storage of hazardous chemicals are carried out.
The larger companies have employed an environmental specialist responsible for the control of
the activities on the management of waste generated by the companies, compliance with prescriptions
and maintenance of relations with the respective state and municipal bodies. The specialist is also
responsible for maintaining the internal regulations updated in compliance with the current environmental
regulatory framework.
20.
The results from the completed activities in the field of environmental protection have been
achieved through the implementation of various projects. Energy efficiency improvement leads to
reduction in the use of natural raw materials and reduction of the generated waste, rational redistribution
of products, separate collection and disposal of waste.
In order to reduce the consumption of purchased electricity and for the purpose of efficient use of
inexhaustible natural resources, in early 2021 a newly built photovoltaic installation with a capacity of 860
kW began operation in M + S Hydraulic Plc. In 2022, the construction of a new "Photovoltaic plant for
own needs" with an installed peak power of 1000 kWp began but at the moment it has not yet been put
into operation. The total value of the investments for the construction of the photovoltaic systems in 2022
amounts to BGN 967 million and it is expected that after the commissioning of the second system the
company will be able to cover up to 25 % of the annual electricity consumption for own needs.
In 2021, as part of the investment program of HES Plc, the construction of the first own
photovoltaic system with a capacity of 997 kW was completed, which was put into operation in March
2022. The total amount of the investment is BGN 1071 thousand. Through this system, the consumption
of purchased electricity from conventional sources has been reduced. In 2022, 11.14 % of the company's
energy needs were met through its own production of energy from renewable natural sources. In 2022,
a second 999 kWp photovoltaic system was designed to be built on the roofs of production buildings and
on a car park structure. The value of the investment is BGN 1,356 thousand. Until the middle of 2023, as
another step of the company's sustainable development strategy, with the aim of increasing the share of
clean and renewable energy generated for the company's own needs, and also with the aim of further
reducing the dependence on conventional energy carriers, the operation of the second photovoltaic
system is expected to begin.
In 2021 Elhim-Iskra AD invested over BGN 680 thousand for the construction of a photovoltaic
system with a capacity of 997 kWp that was completed, connected and put into operation and covers
11.2 % of annual electricity consumption for own needs. In 2022, the company made investments in the
amount of BGN 2,499 thousand for maintenance and purchase of new assets.
The environmental management system is part of the general management system of each
company and for 2022 it functioned integrated with the quality management system and the system for
health and safety at work at the level of processes, activities and functions.
A positive result of the implemented environmental policy is ensuring and simultaneously
achieving efficient business, effective cost control, energy saving and reduction of harmful emissions.
In accordance with its environmental protection policy, companies make efforts to reduce CO2
emissions by implementing consumption efficiency measures, generating energy by building and
commissioning photovoltaic systems to produce energy from renewable sources for own needs.
Environmental protection costs (BGN’000s)
* forecast
340
382
358
509
699
781
2018 2019 2020 2021 2022 2023*
21.
In 2022 the costs for the implementation of environmental protection policies increased by 37.1%
compared to the previous year. These costs do not include the investments for construction and
commissioning of photovoltaic systems in order to increase the share of clean and renewable energy,
generated for own needs. We anticipate that in 2023 the costs without the planned investments in this
direction will be increased by about 12 % compared to 2022.
Future objectives and upcoming tasks
In the field of environmental protection, the Group of Stara Planina Hold Plc is committed to
conduct a policy aimed at effective protection and prevention of pollution; effective and efficient utilization
of natural resources, including energy, in order to preserve it. The companies will operate in compliance
with the regulatory framework in the осева of environmental protection. They will plan funds for training,
awareness and motivation of employees so they can perform their duties in a quality, safe and
environmentally friendly manner and in compliance with the adopted policies.
The companies continue the practical steps on the reduction of natural resources costs which
costs are related both to the environmental pollution reduction as well as to reduction in the financial
costs of energy resources. The investment programs for technological update adopted with the business
plans for the companies will introduce new machinery, equipment and technologies that reduce the
adverse impact on the environment, including activities on the streamlining of recirculated use of treated
water and closed cooling water cycle.
The next step in the implementation of the energy efficiency policy of the companies in the group
is the development and implementation of an energy storage system generated from renewable sources,
which allows for its intelligent use by connecting the photovoltaic system with storage batteries.
Ecological risks
Climate change related risk
Climate change could adversely affect the activities of the group companies directly and indirectly.
Direct risks are associated with natural disasters or permanent changes to the business environment
caused by climate change which could lead to endangering the health and lives of people employed in
companies and consumers of manufactured products, as well as to the destruction of infrastructure
related to their activity. Such an adverse impact from climate change could require additional costs to
address the issues, in addition to sustainable investments in energy efficiency.
The indirect effects of climate change can include sudden changes in the prices of energy carriers
and other raw materials which will lead to difficulties in supply and demand or to a change in the standards
to which products produced by the companies in the group should meet. Climate change may also lead
to a shift in the regulatory framework towards imposing excessive and inadequate requirements on
production processes, leading to increased operating costs or loss if companies are unable to meet the
new requirements .
At this stage, the impact of climate change on the activities of the group companies is estimated
to be weak in the short term, but in the medium and long term it could increase.
Environmental risks arising from the activity
The adoption of an environmental management system ensures a continuous process of
minimizing the risk of pollution and other adverse effects on the environment, efficient use of resources
and higher efficiency of companies’ operations.
Risks that could lead to adverse effects on the environment as a result of the companies’
operations are related to water pollution from the wastewater used in the production process in case of
an accidental spillage of chemicals or air pollution due to accidental release of harmful emissions.
Such risks are minimal but nevertheless the companies have developed early warning
mechanisms and environmental incident response plans. The readiness to react immediately in case of
events with potentially adverse effects on the environment is subject to an ongoing monitoring.
22.
Social issues those related to employees
Description of policies and their objectives
Stara Planina Hold AD and the companies in the group apply a corporate policy in the social field.
The rules of conduct set out in the Code of Ethics of Stara Planina Hold Plc and the companies in the
Group are subject to the following basic principles:
• Competence – using the knowledge and experience that managers and employees have in
performing their functions and continuous improvement of their professional skills.
• Confidentiality - protection of the facts and circumstances that have become known to managers
and employees during or on the occasion of performance of their duties.
• Honesty - honest and ethical behavior in accordance with generally accepted rules.
• Independence - not allowing a manager or employee to be influenced by related parties with
regard to his work.
• Objectivity - true, accurate and impartial collection, analysis and evaluation by the manager and
the employee of all facts and circumstances in performance of his duties.
The success of enterprises is based on social responsibility that requires consideration of the
impact that the company's activities have on the local community, society, environment and the economy
as a whole. This approach contributes to achieving the group's long-term goals and sustainable growth,
as well as to establishing transparent and honest relationships with all stakeholders.
Each company identifies the stakeholders in relation to its activities based on their level and
sphere of influence as well as their role and effect on the company’s sustainable development and those
which in turn may have an impact on company's operations including shareholders, stakeholders,
customers, suppliers, employees, creditors, public groups, and state and local government bodies, etc.
The companies in the group of Stara Planina Hold Plc have approved human resources
management policies, aimed mainly at improving working conditions, raising qualifications, raising
incomes, social support while respecting basic human rights and carrying out other activities, that
contribute to maintaining the health and working capacity of employees.
The following policies are applied to the persons employed in the companies in the group of Stara
Planina Hold Plc:
• The requirements and standards for safe and healthy working conditions have been introduced
and applied. All companies in the group undergo a mandatory audit of the provided working conditions in
accordance with the requirements of the Bulgarian legislation. Periodically repairs and renovations of the
working premises are carried out in order to improve working conditions.
• Periodic risk assessments are carried out to identify remaining risks of accidents or illness in the
workplace and to reduce the impact of these risks on employees by taking the necessary measures in a
timely manner.
• The companies in the group maintain effective social dialogue with the trade unions, which, along
with the existing collective agreements, supports the implementation and improvement of good practices
for corporate social responsibility, both for employees and their families.
• All companies adopt and implement annual occupational health and safety programs.
• Free medical examinations and care for all employees of the companies are provided and
regularly performed.
• Equal rights and opportunities for work and career development of employees are provided,
based solely on the qualification, personal qualities and results achieved in the work process. Direct or
indirect discrimination in employment or at work is not allowed.
• The remuneration setting system is based on uniform, objective criteria, and the system for
applying bonuses to the payment of employees is based only on the achieved good results at work.
• A policy for providing social allowances to the remuneration of employees has been introduced
and is being implemented - food vouchers are provided on a monthly basis; travel expenses for distance
from the place of work to the permanent address of the employees are paid; treatment aids are provided,
as well as for personal occasions; bonuses are provided for the Easter and Christmas holidays.
23.
• On the territory of all companies in the group are separated rest areas, conditions for sports
activities are provided, which are financed by the companies. In some of the companies, sport teams
have been formed in various team sports where each employee has the opportunity to join.
• For the employees of the companies in the group, insurances are concluded, such as life
insurance, “Accident at work” and “Accident and general illness”.
• A policy for continuous promotion of training and qualification is in place - all of the companies in
the group organize and conduct introductory trainings, courses for acquiring professional qualification
and /or trainings for raising the qualification.
• For employees willing to increase their education and qualification in a profession in the
company’s scope of activity, the larger enterprises in the Group pay 50% of the semester fees for the
respective higher education.
• Larger companies work in partnership with vocational secondary technical schools in the
respective city, providing conditions for conducting a dual form of education (work-based learning) with
students from 11th and 12th grade and provide scholarships for student education from 8th to 10th grade.
• Issues related to quality, environment, health and safety are of primary importance and therefore
the major companies maintain and develop integrated management systems in compliance with the
requirements of leading international standards for quality management (ISO 9001: 2015), environment
ISO 14001: 2004), health and safety (OHSAS 18001: 2007), with the active participation of highly qualified
specialists and engineers.
Stara Planina Hold Plc and the companies in the group annually support the development of the
local community by financing various sports and social organizations, cultural events, construction of
infrastructure facilities in partnership with the relevant municipal authorities and participate in socially
significant donations.
Main activities completed in 2022
In 2018 Stara Planina Hold Plc contributed 25% of the capital for the incorporation of a Medical
Center for Health Prevention which provides early diagnosis, treatment, rehabilitation and prevention
services to the employees of the companies in the Group.
The actives during the reporting period are being completed on an annual basis. They include
assessment and re-assessment of workplace risk, monitoring staff health, analysis of and
recommendations for action and risk-free behavior at the work place in order to prevent risk and reduce
morbidity; training and professional qualification as well as incentives and bonuses provided for in the
policies.
The machine building companies invest additional funds to provide specialists for the production.
For workers and employees wishing to increase their education and qualification in a profession in the
field of mechanical engineering, the managements of these companies offer the conclusion of a contract
for the improvement of qualification. Scholarships are paid to students and pupils in vocational schools,
50% of the higher education fee is covered for employees in specialized universities, internships and
practices are organized on the territory of enterprises.
The companies traditionally support local structures in financing various social, sport and cultural
events.
Every year Stara Planina Hold Plc participates in charity events of public importance. Since 2003
the holding has been regularly taking part in all editions of the charity campaign Bulgarian Christmas
carried out under the auspices of the President of the Republic of Bulgaria. Every year Stara Planina Hold
Plc makes a monetary donation for the Support a Dream initiative launched by the President of the
Republic of Bulgaria aimed at organizing a prom night for disadvantaged young people. Every year Stara
Planina Hold Plc participates in the charity campaign Easter for Everyone conducted by the Bulgarian
Red Cross under the auspices of the Ombudsman of the Republic of Bulgaria. Stara Planina Hold Plc is
regularly involved as a major sponsor of the national exhibition Inventions. Transfer. Innovations.
24.
Social activities costs (BGN’000)
* forecast
In 2022 the total value of expenditures for social activities increased by 53.1% compared to the
previous year and an increase compared to the 2021 forecast expectations by 43.47 %. We anticipate
that in 2023 the costs for social activities will increase by 20% compared to 2022.
The active implementation of policies related to the sustainable development of the companies
leads to creation of a more favorable social environment and a better quality of life for employees,
providing the necessary conditions and prerequisites for performance of employees’ professional duties,
mastering good manufacturing practices, motivation and satisfaction with working and payment
conditions.
Future objectives and upcoming tasks
Stara Planina Hold AD and the companies in the group will continue conducting a socially
responsible policy to regulate labor and employment issues with a priority attention to its social aspects.
In pursuance of the long-term human resources policies, the companies will continue adhering to
the corporate social responsibility and applying their long-established traditions in the social sphere as
well as the good practices in order to achieve the social objectives.
Following the approved policy and business programs, a large part of the activities in the social
sphere will thus be aimed at retaining highly qualified specialists and qualified workers and thus generally
achieving high efficiency at each workplace.
In 2023 we will continue the activities on monitoring the health status of the employees, promoting
safe behavior at work; training, qualification upgrade and acquisition of new skills and capacity; improving
working conditions and constant monitoring and control on the working environment factors.
Increasing corporate culture aims to create and maintain strong motivation, creative environment
within the team, high moral and integrity, and confidence in the future.
Risks with a potential negative effect on employees’ development
The management of the companies in the Group of Stara Planina Hold Plc strives to achieve
maximum employee satisfaction. Any worsening of the current economic situation in the country and
fluctuations in the markets where our business operates would lead to destabilization of the companies
and thus to a decrease in the efficiency of the conducted social policy.
We take measures to ensure the health and working capacity of employees, the continuity of our
business and activities related to regulatory obligations.
Policies with regard to the products and the counterparties of the companies in the group
of Stara Planina Hold Plc
2975
3022
2978
3795
5809
6970
2018 2019 2020 2021 2022 2023*
25.
• The companies in the group of Stara Planina Hold Plc consistently apply a policy aimed at
increasing the level of quality and ensuring the safety of manufactured products to meet the growing
needs of customers. Joint analyzes are regularly carried out between the product planning, design,
engineering and quality assurance departments, on the one hand, and the sales and marketing
departments, in order to improve product development, functionality and quality.
• The companies in the group of Stara Planina Hold Plc apply quality management systems and
carry out their production activities in accordance with the highest standards applicable to the respective
production field.
• The companies in the group of Stara Planina Hold Plc apply rules for confidentiality and protection
of commercial information and personal data in order to protect customers, business partners and other
stakeholders.
• The companies in the group of Stara Planina Hold Plc group provide their partners with correct
and timely information on the basic business rules, products, services and technologies and promote
loyal business practices in accordance with the adopted rules for ethical business conduct and the current
regulations.
• The companies in the group of Stara Planina Hold Plc require their customers to comply with
basic internationally recognized anti-corruption standards and those in the field of corporate ethics,
environmental protection, human rights protection in order to establish a sustainable partnership.
• The companies in the group of Stara Planina Hold AD operate only with suppliers who fulfill their
social responsibilities in the areas: clean supplies, compliance with regulatory requirements and social
norms, information security and respect for human rights, labor and safety and health conditions.
Human rights issues
The corporate policy of Stara Planina Hold Plc and the companies in the group is subject to the
principle of respect for and observance of human rights, without any differences based on gender, race,
nationality, ethnicity, citizenship, origin, religion, beliefs, political affiliation, personal or social status, age,
sexual orientation, marital status, property, social or other status.
We support the principles of the UN Universal Declaration of Human Rights, the International
Labor Organization (ILO) Declaration on Fundamental Rights and Rights at Work, the UN Guiding
Principles on Business and Human Rights, adopted by the UN Human Rights Council. In June 2011 and
we apply them in the established labor relations with our employees.
The group of Stara Planina Hold Plc does not allow discrimination in the workplace, in relations
with business contractors - suppliers and customers, as well as in relations with all groups of stakeholders
based on discrimination on any grounds.
Issues related to fight with corruption and bribery
The corporate policy of Stara Planina Hold Plc and the companies in the group is based on the
principle of compliance with high ethical standards in all aspects and directions of corporate activities and
consistent implementation of transparency policy. No forms of corruption, including bribery, are allowed
or tolerated.
The management and employees of Stara Planina Hold Plc and the companies in the group
consistently apply the rules of conduct set out in the adopted Codes of Ethics and responsible work and
business practices in accordance with the adopted rules for ethical business conduct and the current
regulations. The standards adopted in the codes of ethics apply equally to all parties the companies have
or may have relations with, such as shareholders, potential investors, financial analysts and other
stakeholders.
Strict accounting is performed in Stara Planina Hold Plc and the companies in the group, subject
to annual internal and external independent audit control. All transactions are evaluated in advance and
are subject to approval by the relevant corporate Board.
Stara Planina Hold Plc has adopted a Policy on Transactions with Interested and Related Parties
and a Procedure for Avoidance and Disclosure of Conflicts of Interests as well as a Policy on the
Information Provision and Disclosure. They are applied in accordance with our business model and in the
26.
interest of the employees’ rights and those of all stakeholder groups. All processes and procedures are
conducted in a way that excludes all forms of corruption in the companies in the group.
In 2022, no restrictions of the above stated rights were found related to decisions and actions of
companies in the Group of Stara Planina Hold Plc.
The companies do not apply a diversity policy with respect to their management bodies in relation
to aspects such as age, gender or education and professional experience. The management structure is
defined in the Articles of the companies. Election of members of the Board of Directors is a right and
prerogative of the shareholders.
Taxonomy Related Disclosures
Regulation (EU) 2020/852 of the European Parliament and of the Council of 18 June 2020 on the
establishment of a framework to facilitate sustainable investment (Regulation 2020/852) establishes the
criteria determining whether an economic activity qualifies as environmentally sustainable for the
purposes of establishing the degree of environmental sustainability of a given investment.
The regulation specifies six environmental objectives:
(a) climate change mitigation;
(b) climate change adaptation;
(c) the sustainable use and protection of water and marine resources;
(d) the transition to a circular economy;
(e) pollution prevention and control;
(f) the protection and restoration of biodiversity and ecosystems.
In their environmental programs, the companies in the Group of Stara Planina Hold Plc have set
and are steadily striving to achieve the following objectives related to their activities:
• climate change mitigation;
• climate change adaptation;
• the transition to a circular economy;
• pollution prevention and control
Based on the provisions of Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021, an
assessment was made on the economic activities within the companies in the Group of Stara Planina
Hold Plc, eligible for the taxonomy and related to the first two environmental objectives (climate change
mitigation and climate change adaptation) in accordance with Art. 8 of Regulation (EU) 2020/852.
We examined in detail the economic activities of all the companies in the group of Stara Planina
Hold Plc - as independent economic activities and as separate activities in the scope of the activities of
the companies included in the consolidation in the context of the activities eligible for the taxonomy
according to Annex I (climate change mitigation) and Annex II (climate change adaptation) pursuant to
Delegated Regulation (EU) 2021/2178 of the Commission of July 6, 2021 and based on the exceptions
for the reporting period according to Article 10 of Delegated Regulation (EU) 2021/2178.
The economic activity of Elhim-Iskra Plc according to 3.4. of the Annexes of Commission
Delegated Regulation (EU) 2021/2139 of 4 June 2021 - Manufacture of batteries and the economic
activity of SPH Invest Jsc – according to 7.7. of the Annexes: Acquisition and ownership of buildings are
presented as fully taxonomically eligible economic activities. The economic activities of Stara Planina
Hold Plc, M+S Hydraulic Plc, HES Plc, Fazan JSC, Boryana JSC and Ustrem JSC generally do not fall
within the scope of the activities regulated by Delegated Regulation 2021/2139, respectively - within the
scope of the taxonomy with the exception of separate activities that are explicitly indicated in the
presented calculations of the share of consolidated turnover, capital expenditure (Capex) and operational
expenditure (Opex) for the reporting period 2022, which are related to taxonomically eligible economic
activities related to the first two environmental objectives. These separate activities also fall under the
description of the activities in the EU Taxonomy and are considered to be supporting activities to the
group of Stara Planina Hold Plc which is why the same assessment approach has been applied to them
and they are included and disclosed in the presentation of the key indicators.
We considered our activities based on the exceptions for the reporting period pursuant to Art. 10
of Delegated Regulation (EU) 2021/2178, whereas all indicators are presented as ratios related only to
27.
taxonomically eligible activities. In this regard, we draw attention to the fact that, in view of the ongoing
review and updating of the understandings of the European Commission regarding the scope of the
taxonomy, it is possible that we may subsequently and in our next reports re-evaluate the reporting of the
share of consolidated turnover, capital expenditure (Capex) and operating expenses (Opex).
Based on the analysis carried out, we present the share of the consolidated turnover, capital
expenditure (Capex) and operational expenditure (Opex) for the reporting period 2022, which are related
to taxonomically eligible economic activities related to the first two environmental objectives (mitigation
of the change of climate and adaptation to climate change) in accordance with Art. 8 of the Taxonomy
Regulation - Regulation (EU) 2020/852 of the European Parliament and of the Council of June 18, 2020
to create a framework to facilitate sustainable investments and to amend Regulation (EU) 2019/2088,
and Art. 10, para. 2 of Art. 8 of the Delegated Regulation (EU) 2021/2139 of June 4, 2021.
KPI related to turnover (turnover KPI)
Indicator
Net
consolidated
turnover in
thousand BGN
The part of the net turnover derived from
products or services, including
intangibles, associated with Taxonomy-
eligible economic activities
Relative share
in %
Products or services,
including intangibles,
associated with Taxonomy-
eligible economic activities
Net
consolidated
turnover in
thousand BGN
/net sales
revenue/
375 256
46 349
12.35 %
4.1 Electricity generation
using solar photovoltaic
technology; 5.5 Collection
and transport of non-
hazardous waste in source
segregated fractions; 7.7.
Acquisition and ownership of
buildings; 3.4. Manufacture
of batteries.
The turnover-related indicator is calculated as a ratio between the consolidated net sales revenue
of Stara planina hold Plc, according to the annual consolidated financial report as of 31.12.2022 and the
part of the net turnover of the companies included in the consolidation derived from the taxonomically
eligible economic activities, specified in the table.
KPI related to capital expenditure (CapEx) (CapEx KPI)
Indicator
Additions to tangible
and intangible assets
considered before
depreciation,
amortisation and any
re-measurements,
including those
resulting from
revaluations and
impairments and
excluding fair value
changes
The part of the capital expenditure that is
any of the following:
(a) related to assets or processes that
are associated with Taxonomy-eligible
economic activities;
(b) part of a plan to expand
Taxonomy-aligned economic activities or to
allow Taxonomy-eligible economic
activities to become Taxonomy-aligned
under the conditions specified;
(c) related to the purchase of output
from Taxonomy-eligible economic activities
and individual measures enabling the
target activities to become low-carbon or to
lead to greenhouse gas reductions
Relative
share in %
Products or services,
including intangibles,
associated with Taxonomy-
eligible economic activities
Capital
expenditure in
thousand BGN
26 022
2 269
8.72 %
5.3 construction, extension
and operation of waste water
collection and treatment; 5.5
Collection and transport of
non-hazardous waste in
source segregated fractions;
7.2 Renovation of existing
buildings; 7.4. Installation,
28.
maintenance and repair of
charging stations for electric
vehicles in buildings (and
parking spaces attached to
buildings); 3.4. Manufacture of
batteries;
4.1 Electricity
generation using solar
photovoltaic technology.
The indicator related to capital expenditure is calculated as a ratio between the sum of capital
expenditures of the companies included in the consolidation and the part of these expenditures derived
from the taxonomically permissible economic activities indicated in the table.
KPI related to operating expenditure (OpEx) (OpEx KPI)
Indicator
Direct non-capitalised
costs that relate to
research and
development, building
renovation measures,
short-term lease,
maintenance and
repair, and any other
direct expenditures
relating to the day-to-
day servicing of assets
of property, plant and
equipment that are
necessary to ensure
the continued and
effective functioning of
such assets
The part of the operating expenditure that
is any of the following:
(a) related to assets or processes
associated with Taxonomy-eligible
economic activities, including training and
other human resources adaptation needs,
and direct non-capitalised costs that
represent research and development;
(b) part of the CapEx plan to expand
Taxonomy-aligned economic activities or
allow Taxonomy-eligible economic
activities to become Taxonomy-aligned
within a predefined timeframe;
(c) related to the purchase of output
from Taxonomy-eligible economic
activities and to individual measures
enabling the target activities to become
low-carbon or to lead to greenhouse gas
reductions as well as individual building
renovation measures and provided that
such measures are implemented and
operational within 18 months.
Relative
share in %
Products or services,
including intangibles,
associated with Taxonomy-
eligible economic activities
Operating
expenditure
in thousand
BGN
29 295
18 725
63.92 %
5.5 Collection and transport of
non-hazardous waste in source
segregated fractions
6.5 Transport by motorbikes,
passenger cars and light
commercial vehicles; 6.6
Freight transport services by
road; 7.2 Renovation of existing
buildings; 7.4. Installation,
maintenance and repair of
charging stations for electric
vehicles in buildings (and
parking spaces attached to
buildings)
The indicator related to operating expenses is calculated as a ratio between the sum of the
operating expenses of the companies included in the consolidation, which are related to research and
development activities, building repair measures, short-term leases (rents), maintenance and repairs, as
well as all other direct costs related to the current maintenance of the assets of the property, machinery
and equipment category, which are necessary to ensure the continuous and efficient operation of these
assets and the part of these costs that arises from the taxonomically permissible economic activities
indicated in the table .
29.
III. Important developments occurred since the beginning of the year
After the date of the annual accounting closing, the management of Stara Planina Hold Plc is not
aware of any important and material events which may influence the investors’ interest with the exception
of the military conflict in Ukraine, which increases the risks related to securing supplies of materials and
sale of finished products to partners related to the affected region.
ІV. Expected development of the group
2022 year made the world face new serious challenges caused both by the consequences of the
covid-pandemic and the ongoing for more than ten months now military conflict in Ukraine. The increase
in the prices of raw materials, fuels and energy carriers in general, the difficult logistics, strong inflationary
pressure, as well as the continuous process of imposing mutual sanctions between the USA and the EU,
on the one hand, and Russia, on the other, objectively affected the economy not only in Europe, but also
on a global scale. On a national level, the industrial activities throughout the year were, and continues
being, severely affected by the escalating political instability.
Against this background, the consolidated sales revenues of the Group for the first half of 2022
reached BGN 183.4 million and reported a 39.6 % growth compared to the sales for the same period of
2021 and almost an 80 % increase compared to the sales for the first half of 2020.
In the second half of the year we recorded sales revenues in the amount of BGN 191.86 million
thus achieving a 30.81 % growth compared to the second half of the previous year and an increase by
96.65 % compared to the second half of 2020.
The annual sales of the companies in the group reached BGN 375.3 million and thus the sales
revenue as of 31.12.2022 reported a growth by 34.81 % compared to the 2021 sales and an increase by
87.60% compared to the reported sales in 2020.
Net sales revenue
(Quarterly, BGN’000s)
* forecast
Forming the holding's profit is a process that is highly dependent on the mood of our markets.
Despite the prices growth of raw materials, fuels and energy carriers in general, the difficult logistics and
strong inflationary pressure, the expected 2022 gross profit of the group is in the amount of BGN 51.4
million which is a growth by 55.61 % compared to the reported gross consolidated profit for the previous
year and an increase of almost 120 % compared to the gross consolidated profit for 2020.
The level of our export is directly dependent on the markets where the Group operates – mainly in
the European Union. Throughout 2022 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 2023 albeit at considerably slower rates.
-10000
10000
30000
50000
70000
90000
110000
1Q 2Q 3Q 4Q
2021 2022 2023*
30.
The reported results in the first months of 2023 give us reason to raise our forecast for sales in the
first quarter of 2023, expecting them to reach BGN 105.9 million. With this result we will report a growth
by over 21 % compared to the same periodof 2022 and an increase by more than 67 % compared to the
first quarter of 2021. We expect revenues for the first half of 2023 to achieve growth by more than 15 %
compared to the same period of the previous year. Stara Planina Hold Plc expects that the consolidated
sales revenue in 2023 will exceed BGN 399 million which means a growth by 6.4 % compared to 2022
and an increase by approximately 43 % compared to 2021.
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 restrictive
measures against the pandemic, other factors 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.
In 2023 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 2022 reached BGN 23.3 million, intended mainly for technological renewal and
innovation, infrastructure improvements and green transition, including construction of own photovoltaic
systems by several companies.
Investments
(Quarterly, BGN’000s)
* forecast
In 2023 we plan to continue our investment policy expecting investment to show even a weak
growth by 2 % compared to the investments for 2022. The main part of the planned investments is
intended for new technological equipment and reconstruction, new technologies for digitalization of
processes, green transition and expansion of production possibilities with a view to increase the
productivity and quality of the manufactured products and reduce the cost price, optimization of the
production process and stimulating employees.
The companies plan to participate in procedures under existing and new European operational
programs aimed at developing human resources and increasing competitiveness.
0
1000
2000
3000
4000
5000
6000
7000
8000
9000
10000
1Q 2Q 3Q 4Q
2021 2022 2023*
31.
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.
V. Research and Development Activity
Stara Planina Hold Plc does not perform independent research and development activity. The
holding company provides support to the companies in the Group in their research and development
activities since it views these activities as an integral part of the annual business plans of the companies.
The main enterprises in the group have separate divisions, directorates, departments and
laboratories which consistently develop activities to improve production, develop and introduce new
products in mass production, as well as new production methods and technologies.
In 2022 again the main objectives of the units engaged in development activities in the companies
of the group were aimed at meeting the increased requirements and growing expectations of customers
in terms of quality, price and variety of products offered.
Main achievements of companies from the group of Stara Planina Hold Plc in 2021 in the
research and development field
M+S Hydraulic Plc
With the purpose of optimization of production processes - reduction of production time and
increase of quality were
• introduced into production high-performance machines - CNC controlled lathes and centers
allowing introduction in the production of high-performance tools with increased cutting
modes thus significantly reducing production time;
• introduced robotization of the turning process of the workpiece Support plate and Distribution
plate and delivered a manipulator for the "old paint shop";
• introduced new precision control devices, couple torque control unit and labeling machine
according to documentation and partly customer requirements;
• introduced new washing machines, as well as an installation for brushing shafts;
• introduced into operation a device for checking the cleanliness of the details after washing;
• introduced modern screwdriving devices that guarantee high-quality screwdriving of hydraulic
products;
• introduced a semi-automated line for assembly and packaging of MP/MR mass motors.
A study has begun for the implementation and realization of a technological process for
carbonitriding of hydromotor details.
New washing substances and new coolants have been tested and implemented in production.
High-quality worm cutters - class AA-DIN 3968 were provided for milling the splines of output shafts SH,
MS, MT, MV and for milling the external profile of the "Rotor" part.
Hydraulic Elements and Systems Plc
The company has respective departments and units that develop activities to improve production,
develop and adopt new products.
In 2022 again, the main goals of the units carrying out development activities were aimed at
satisfying the increased demands of customers with the development of new types of products;
improvement of the production technology in order to increase the quality of the range produced so far;
optimization of the technological and production process with the purpose of reducing the cost of products
and competitive price presence on the market.
All directions of scientific research activities carried out by the company are in accordance with the
strategy for sustainable development of the company.
32.
• In 2022, more than 40 new models of hydraulic cylinders and even more modifications of
existing ones were developed and produced by the company and the majority of them are
expected to enter regular production in 2023.
• Regarding the development activity from a technological point of view, in 2022, HES Plc
introduced a high-tech process for super-finish processing of spherical surfaces, which is
borrowed from the production of artificial joints for medicine.
Elhim-Iskra Plc
In 2022, the activities of the development team were aimed at:
• Development of new technologies and related implementation of new production capacities
with the main purpose of increasing productivity and optimization at each stage of the
technological process.
• A new range of ELT series semi-traction batteries with armored plates used for autonomous
vehicle propulsion were put into production.
• New types of OPzS monobloc stationary batteries for small, medium and large capacities,
used in providing emergency power supply in Bulgaria and Europe, were developed and
put into production.
• New types of solar batteries of the ES OPzS type were developed and put into production,
for small, medium and large capacities, which are used in the construction of photovoltaic
parks for the production of electricity in Bulgaria and Europe and the Middle East.
The elements in the modular solutions of Elhim-Iskra Plc type ES OPzS will be manufactured in
the company's production facilities, certified according to ISO 9001; compliant with the requirements of
IEC 61427 for photovoltaic energy systems; "Long Life" according to the Eurobat classification; fully
compliant with the requirements of IEC 60896-11 for ventilated lead-acid batteries and with the safety
requirements of EN 50272-2 for stationary batteries. The company's infrastructure and test base allow
full testing of solutions, resulting in quick and efficient installation and launch.
Bulgarian Rose Plc
In 2022, the objectives of the development unit were aimed at renewing formulations and bringing
them into line, according to the new regulatory requirements regarding prohibited substances in cosmetic
products, optimization of production technology and quality of manufactured products, compliance with
the needs and requirements of distributors in the country and abroad.
In 2022, the Company took part in the national stand organized by IANSMP, within the framework
of the Beauty Eurasia 2022 International Exhibition of Perfumery and Cosmetics, which was held in
Istanbul in June.
The team of specialists in the "Innovations" department will also face new challenges in 2023. The
tasks set in the company's business program envisage development of a new cosmetic series in a low-
price range; expansion of the existing cosmetic series with new products conditioned by the needs and
demands of our customers; development of products under own brand according to a specific assignment
of a client.
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.
Stara Planina Hold Plc and the companies in the Group have undertaken measures that have been
implemented sustainably for a third 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 2022 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.
33.
The effect of the restrictive measures taken in relation to Covid-19 did not have a material impact
on the results in 2022 and has a diminishing significance, especially given the reopening of the Chinese
economy after the country ended its strict restrictions against the spread of Covid- 19.
A potential renewal of pandemic restrictions and a possible shutdown of the economy, both in the
country and in separate countries in Europe and the world, would represent a serious obstacle to global
growth.
VI. Company shares
1. Own shares. Buy-back
The General Meeting of Shareholders of Stara Planina Hold Plc, held on 16.05.2019, adopted a
resolution to buy back up to 3 % of the total number of shares issued by the company for a period not
longer than 5 years and appointed the Board of Directors to define the specific parameters.
During 2022 Stara Planina Hold Plc has not acquired or sold its own shares.
As of 31.12.2022 Stara Planina Hold Plc owns 225 337 own shares, representing 1.07 % of the
capital of the holding company. 50 000 shares are also hold by the subsidiary company SPH Invest Jsc.
Pursuant to the provision of Art. 187a, Para. 3 of the Commercial Act, the exercise of any rights,
including the right to vote, on these 275 337 shares shall cease until their transfer.
In 2022 no joint stock company in the Group has acquired or transferred own shares.
2. Changes in the share price of the companies
The shares of Stara Planina Hold AD are traded on BSE Main Market, Standard segment on the
Bulgarian Stock Exchange AD. Exchange code: SPH.
In 2022, the movement of the share price was variable between BGN 8.00 and BGN 10.50. At the
beginning of 2022, the share was worth BGN 10.10, reaching its highest level of BGN 10.50 on June 3rd
and the lowest value of BGN 8.00 - on October 6th to close at BGN 9.30 at the end of the period.
The average stock price of one share of STARA PLANINA HOLD Plc for the last business day of
2021 is BGN 10.10 and for the last business day of 2022 it is BGN 9.30 which represents a decrease in
the share price by 7.92 %.
At the end of 2022 the market capitalization of Stara Planina Hold Plc was BGN 195.3 million
compared to BGN 212.1million by the end of 2021.
Stara Planina Hold Plc
Market capitalization (BGN million)
Price (at closing) per one share of the company at the end of the year
2016
2017
2018
2019
2020
2021
2022
6.49
8.01
6.55
4.76
5.45
10.10
9.30
0
50
100
150
200
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
34.
Four of the companies in the investment portfolio of the holding company are public companies
and their market capitalization is being set by the stock exchange. This allows for the ratio between the
market capitalization of the holding company and the market capitalization of its holdings to be calculated.
Traditionally the price of the holding is lower than the total price of its holdings.
Market capitalization (BGN million)
M+S Hydraulic Plc
Price (at closing) per one share of the company at the
end of the year
2016
2017
2018
2019
2020
2021
2022
6.65
8.08
7.65
6.00
6.25
9.15
8.95
Market capitalization (BGN million)
Hydraulic Elements and Systems Plc
Price (at closing) per one share of the company at the
end of the year
2016
2017
2018
2019
2020
2021
2022
4.27
5.19
4.80
4.26
3.84
6.50
6.40
Market capitalization (BGN million)
Elhim Iskra Plc
Price (at closing) per one share of the company at the
end of the year
2016
2017
2018
2019
2020
2021
2022
1.24
1.30
0.98
0.88
0.78
0.80
0.87
Market capitalization (BGN million)
Bulgarian Rose Plc
Price (at closing) per one share of the company at the
end of the year
2016
2017
2018
2019
2020
2021
2022
2.65
2.00
2.20
1.89
1.02
1.50
1.70
0
50
100
150
200
250
300
350
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0
20
40
60
80
100
120
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0
10
20
30
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
0
3
6
9
12
15
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
35.
3. Dividend policy
Stara Planina Hold Plc applies a policy of annual dividend distribution. The Board of Directors
assumes that at the regular annual general meeting the shareholders will continue the tradition of
distributing part of the financial profit for dividend.
For each year of its existence Stara Planina Hold Plc has paid a dividend. The total amount of the
distributed dividend until the financial year 2021 incl. is BGN 42.522 million. The initial investment in the
holding has a dividend coverage of 24.3 times.
Distributed dividends from Stara Planina Hold Plc (BGN million)
For the completed financial years of their existence the companies in the group of Stara
Planina Hold Plc have distributed dividends totaling BGN 215.56 million.
Distributed dividends Total for the Whole Group (BGN million)
0.27
0.29
0.32
1.02
2.10
4.27
4.53
4.75
5.04
5.09
5.16
6.18
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
3.88
6.94
9.42
9.74
15.10
17.64
18.86
20.97
22.43
19.16
21.72
26.21
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021
36.
4. Branches. Employees
Stara Planina hold Plc and the companies in the group do not have any registerred branches in
the country and abroad.
Information on the employees is presented in Section II of this report - Non-financial declaration.
VІІ. Financial instruments used by the enterprise
1. Accounting policy
In compliance with the accounting legislation in force in Bulgaria, since the beginning of 2003
Stara Planina Hold Plc has been applying the International Financial Reporting Standards.
The Consolidated Financial Statements of Stara Planina Hold Plc as of 31.12.2022 have been
prepared in compliance with the International Financial Reporting Standards adopted by the European
Union.
The whole accounting policy of the Company is described in the Explanatory Notes presented
together with the Annual Consolidated Financial Statements as of 31.12.2022.
Investments in subsidiaries and associates are reported and presented under the acquisition cost
method in the separate statements of Stara Planina Hold Plc.
Major business operations of the company are sale, purchase and management of shareholdings
in companies. Main part of the 2022 revenues is formed by dividend revenues. These current incomes
are mainly used for financing the companies in the holding's portfolio, meeting the commitments under
the adopted dividend policy, as well as for administrative needs.
In the reporting year, the accounting policy of the company has not been changed compared to
the previous reporting period. No errors have been found for both the current and previous reporting
periods. Therefore, there are no adjustments due to errors.
2. Financial instruments
The most essential part of the financial instruments used by the company is taken by the holdings
of Stara Planina Hold Plc in the subsidiaries and associates.
Financial instruments of the company are detailed in the Explanatory Notes presented together
with the Annual Consolidated Financial Statements as of 31.12.2022.
Typical for the investments of Stara Planina Hold Plc (BSE code SPH) in subsidiaries and
associates is that four of them are public companies with their shared being admitted to trading on the
Bulgarian Stock Exchange: M+S Hydraulic Plc (MSH), Hydraulic Elements and Systems Plc (HES), Elhim
Iskra Plc (ELHM) and Bulgarian Rose Plc (ROZA).
Next, in terms of significance, come the loans granted to the companies in the portfolio of Stara
Planina Hold Plc. They are filed as per their nominal value as of the date of occurrence. At the end of the
reporting period there is no data on the existence of circumstances for impairment of receivables on them
and such has not been made.
The Financial Resources Management Policy of Stara Planina Hold Plc is focused mainly on the
management of the companies in the portfolio. The free cash amounts are directed towards financing the
companies.
3. Liquidity
Given the specifics of the activity, the major part of the incoming cash flows is generally formed
by dividends received and the outgoing cash flows are used for payment of dividends to the shareholders
and for covering administrative expenses related to its maintenance.
It is a long-term corporate governance policy of Stara Planina Hold Plc to use the available cash
resource to fund projects of its portfolio companies.
The company has not undertaken any obligations to incur capital expenses at the end of the
reporting period.
37.
4. Exposure of the enterprise to price, credit, liquidity and cash flow risk
The management monitors the overall risk and provides ways to minimize potential adverse
effects on the financial indicators of the company.
The nature of the financial instruments used by the company indicates that the market risk does
not have a significant effect on the financial results.
The risk of changes in the market price of equity instruments arises from equity securities
classified as reported at fair value through other comprehensive income (FVOCI) held for long-term
investment.
Stara Planina Hold Plc has granted loans to companies included in its portfolio which have a long-
term unblemished credit reputation which minimizes the credit risk.
Due to the nature of the financial instruments used by Stara Planina Hold Plc, the liquidity risk,
the interest rate risk and the cash flow risk are also minimal.
Detailed information on the risk factors to which Stara Planina Hold Plc and the companies in the
group are exposed is presented under Section I, item 4 of this Report.
VІІІ. Corporate Governance Declaration
1. National Corporate Governance Code
Stara Planina Hold Plc implements a long-term Good Corporate Governance Program. The
Program provides for the completion of a number of initiatives in several main areas, the implementation
of which is subordinated to its priority objectives:
• responsibility and independence of the corporate Board,
• shareholders' rights protection;
• ensuring equal treatment of each shareholder (including minority and foreign
shareholders);
• ensuring recognition of the rights of the parties interested in the management and
sustainable development of the company and promoting the co-operation with them;
• ensuring prompt and accurate disclosure of the statutory required information related to
Stara Planina Hold Plc regarding important issues of the financial standing, activity results, ownership
and management of the company;
• supporting the strategic management of Stara Planina Hold Plc, the efficient control over
the activity of the Board of Directors and its accountability to all stakeholders.
The public companies in the group have also developed and implement their own long-term
corporate governance programs and the activity of the non-public companies is in compliance with the
main priorities and guidelines of the corporate program of Stara Planina Hold Plc.
On 30.10.2007 the Board of Directors of Stara Planina Hold Plc, considering the important role of
modern corporate governance to support sustainable development of the national economy of the
Republic of Bulgaria, and lead by its willingness to continue implementing the internationally recognized
good corporate governance standard, resolved that the holding company will carry out its activity in
compliance with the principles and provisions of the National Corporate Governance Code
(CGCode_July2021_BG.pdf (nkku.bg). The public companies in the group have also joined the Code.
2. Implementation of the National Corporate Governance Code
The management of Stara Planina Hold Plc and the management bodies of the public companies
in the group apply the National Code based on the “comply or explain” principle. The application of this
principle is based on the Recommendation of the EU Commission on the quality of reporting in corporate
governance.
The main direction when executing the commitments of the code was to bring the internal acts of
the company and its overall activity in accordance with the changing legal regulations. All of the internal
regulations listed below may be found in the Corporate Governance section on the company website.
Stara Planina Hold Plc participates in discussions of draft amendments and supplements or
projects for new acts in the field of public offering of securities presented by the competent authorities.
STARA PLANINA HOLD PLC – sphold.com
38.
As a member of the National Corporate Governance Committee, Stara Planina Hold Plc participates
through its representative in the process of discussion and adoption of amendments to the National Code,
effective as of July 1, 2021.
Chapter One. Corporate Boards
The Board of Directors of Stara Planina Holc Plc and the Boards of the companies in the group
direct and control the company in a responsible and independent manner according to the vision,
objectives and strategies of the company and in the best interest of all shareholders. It monitors the
results of the company's performance and initiates changes in the management of its operations, when
necessary. The Board of Directors treats all shareholders equally, acts in their best interest and in a
diligent manner. The members of the Board of Directors are guided in their activities by the generally
accepted principles of integrity and managerial and professional competence. The company has adopted
and adheres to a Code of Ethics.
The Board of Directors promotes the implementation and monitors the observance of the adopted
principles for sustainable development by the companies in the group; provides and controls the
establishment and proper functioning of a risk management system; ensures and controls the integrated
functioning of the accounting and financial reporting systems; gives guidelines, approves and controls
the business plans implementation of the companies in the Group, the material transactions as well as
other activities, required by the company's Rules of Procedure.
The Board of Directors reports on its activities to the General Meeting of Shareholders. In case of
proposals for election of new members of the Board of Directors, the principles of compliance of the
competence of the nominees with the nature of the company’s activities are observed. The contracts for
assignment of the management, concluded with the members of the Board of Directors, define their
responsibilities and tasks, the criteria for the amount of their remuneration, their obligations for loyalty to
the company and the grounds for dismissal.
The number of Board members of Stara Planina Hold Plc and those of the Board of the companies
in the group is defined by the company’s Articles of Association. The composition of the Boards is
structured in a way that guarantees the professionalism, impartiality and independence of its decisions
related to the management of the company. The Boards of Directors have allocated the tasks and
responsibilities between their members. The independent directors control the executive management
and participate effectively in the company's performance in accordance with the shareholders’ interests
and rights. The Chairman of the Board of Directors is an independent director. The members of the Board
of Directors have appropriate knowledge and experience and after their election the new members are
acquainted with the main legal and financial issues related to the company's performance. Enhancing the
competence and qualification of the Board members is a constant practice and their training is
encouraged. The succession of mandates ensures efficient operation of the company and compliance
with the legal requirements.
The members of the Board of Directors have sufficient time to perform their tasks and duties. The
Rules of Procedure of the Board of Directors define the maximum number of companies outside the
portfolio of Stara Planina Hold Plc where Board members may hold management positions, as well as
the number of consecutive mandates of the independent members. Such a practice has been adopted
and applied by the public companies in the group.
The amount and the structure of the remuneration to the members of the Board of Directors are
defined by the General Meeting of the Shareholders. They take into account the responsibilities and
contribution of each member, the possibility of selection and retention of qualified and loyal members, the
need to align the interests of members with the long-term interests of the company. The remuneration of
the independent members of the Board of Directors is permanent (fixed). Pursuant to a decision of the
Shareholders, it may also have a variable part.
The regular annual general meetings of the shareholders of the holding and the public companies
of the group, held in 2021, adopted new Remuneration Policies for the members of the Board of Directors,
in line with the amendments to the regulations and aimed at contributing to the long-term business goals
and promoting behavior that supports value creation for the shareholders, while providing a competitive
STARA PLANINA HOLD PLC – sphold.com
39.
remuneration sufficient to attract and retain directors with the qualities necessary for the successful
management and development of the company.
The Remuneration Policies define the principles for setting the amount and the structure of the
remuneration and specifies the particular additional incentives which are based on clear criteria and
indicators related to the results of the company and the economic group. Information on the
remunerations of the members of the Board of Directions of the holding company and those of the public
companies in the group is disclosed in an annual report which is a separate document to the Annual
Financial Statements of the company. Shareholders and stakeholders have easy access to the adopted
policies for defining the remuneration of the board members and the reports on their implementation
which are published on the company's website. The companies in the group have adopted general rules
for the members of the board of directors where the functions and obligations of the board, the procedure
for election and dismissal of members are defined.
The Board of Directors of Stara Planina Hold Plc and the Boards of the public companies in the
group have adopted procedures to avoid and disclose conflicts of interest. They impose obligations for
the members to avoid and not to admit actual or potential conflicts of interest and, if necessary, to
immediately disclose conflicts of interest and provide shareholders with access to information on
transactions between them and the company or any related party. On the other hand, each conflict of
interests in the company should be disclosed to the Board of Directors. Stara Planina Hold Plc and the
public companies in the group do not and will not allow transactions between the company and members
of the Board of Directors and any related parties thereto. The rules of Stara Planina Hold Plc on the
avoidance and disclosure of conflicts of interest are also applied by the non-public companies in the
group.
Chapter Two. Audit and Internal Control
In accordance with the requirements of the current legislation and based on the criteria defined
thereof Stara Planina Holc Plc and the public companies in the group have established and operating
audit committees with members that meets the legal requirements and specific needs of the company.
The audit committee supervises the internal audit activities and monitors the overall relations with
the external auditor, including the nature of non-audit services provided by the latter. Its activities are
aimed at increasing the efficiency of the financial reporting processes, the internal control and risk
management systems.
The Audit Committee prepares a written recommendation, based on which the corporate board of
the respective public company proposes to the General Meeting the election of an independent auditor
to verify and certify the annual financial statements. In the proposals for election of an external auditor,
the rotation principle is applied in accordance with the requirements of the relevant regulation.
The Audit Committee operates in accordance with its own rules of procedure and work schedule.
It supervises the internal audit activities and monitors the overall relationship with the external auditor,
including the nature of non-audit services provided by the company's auditor.
Chapter Three. Shareholders' Rights Protection
The corporate Boards of Stara Planina Hold Plc and the public companies in the group ensure
the equal treatment of all shareholders, including minority and foreign shareholders and is responsible
for the protection of their rights. They facilitate the exercising of these rights within the limits permitted by
the applicable legislation and in accordance with the company's internal rules. The corporate Boards
have provided information to all shareholders about their rights, the financial results of the company and
corporate events through the information disclosure system and the company's website.
All shareholders of the holding company and the public companies in the group have access to
information about the rules under which General meetings are convened and held, including voting
procedures. The companies provide sufficient and timely information on the date and venue of the
General meeting, as well as detailed information on the issues to be discussed and decided on at the
meeting. The corporate Boards ensure the right of all shareholders to express their opinion, as well as to
ask questions at the general meeting.
The invitations for the general meetings of shareholders of Stara Planina Hold Plc and the public
companies in the group include the information required under the Commercial Act and the Public
STARA PLANINA HOLD PLC – sphold.com
40.
Offering of Securities Act, as well as additional information on exercising the right to vote and the
possibility to add new items to the agenda under Art. 223a of the Commercial Act.
The invitations and the materials for the general meetings of the shareholders of Stara Planina
Hold Plc and the public companies in the group are announced through the X3 News media to the public,
the Financial Supervision Commission and the regulated securities market. Pursuant to the legal
requirements the companies announce a notice for holding a general meeting of the shareholders and
for dividend payment, upon a decision adopted by the GMS, also through the corporate actions
announcement system of the Central Depository. After presenting the invitation and the materials for the
general meeting of shareholders, they are available on the websites of the companies. The texts of the
written materials related to the agenda of the General Meeting are particular and clear and do not mislead
shareholders. All proposals regarding major corporate events are presented as separate items on the
agenda of the General Meeting, including the profit distribution proposal.
Shareholders with voting rights have the opportunity to exercise their voting rights at the General
Meeting of the company in person or through representatives/proxies. As part of the materials for the
General Meeting of Shareholders, the Board of Directors presents a sample power of attorney and Proxy
Voting Rules.
Rules for Organization and Holding Regular and Extraordinary Sessions of the General Meetings
of Shareholders of the holding company and the public companies in the group have been adopter in
order to guarantee equal treatment of all shareholders and the right of each shareholder to express
opinion on the items in the agenda of the meeting. The rules and procedures for holding a general meeting
of shareholders do not complicate or increase the cost of voting unnecessarily. These procedures
encourage the participation of shareholders in the general meeting but do not provide the possibility of
remote attendance by technical means, insofar as this would make holding of the meeting more
expensive. Proxy Voting Rules have been adopted. Following the adopted amendments to the Articles of
Association of the company in 2021, the right to vote at the General Meeting of Shareholders may be
exercised by correspondence based on a decision of the Board of Directors. All members of the corporate
Boards attend the general meetings of the shareholders. When necessary, they assist shareholders with
the inclusion of additional items in the agenda of the General Meeting and guarantee the right of the
shareholders to be informed on the adopted resolutions.
The Rules for Organizing and Holding General Meetings provide a mechanism for assisting the
shareholders who have exercised the right to include additional items and propose resolutions on issues
already included in the agenda of the meeting. The resolutions of the General Meeting are published on
the company’s website for a period of 10 years. The companies have not issued shares of a different
class. The companies do not have shareholders with control rights.
Increasing the trust of shareholders, investors and stakeholders has been one of the major
commitments of the corporate Board. In this regard, the company is continually strengthening its position
of a stable institution. In 2022, we continued endorsing and applying various ways to disclose current
information on the financial and economic standing of the company and important corporate events as
well as their promotion.
Chapter Four. Disclosure of Financial and Non-financial Information
Stara Planina Hold Plc and the public companies in the group have approved policies and
information disclosure systems in accordance with legal requirements. They guarantee equal access to
information to all addressees (shareholders, stakeholders, investment community) and do not allow inside
information abuse. The information disclosure systems provide complete, timely, accurate and
understandable information that allows for objective and informed decisions and assessments. The
holding and the public companies in the group have internal rules for preparation of annual and interim
reports and information disclosure procedures. The holding annually publishes a non-financial statement
on a consolidated basis where detailed information on the activities and initiatives of all companies in the
holding's portfolio in the field of non-financial reporting is provided.
Stara Planina Hold Plc and the public companies in the group maintain their own websites
providing information about the company, the management bodies, shareholder structure and the
companies in the portfolio. The corporate governance section on the website of the holding company
STARA PLANINA HOLD PLC – sphold.com
41.
includes internal regulatory documents, information on the shareholders' rights and their participation in
the general meeting, financial statements for the last 10 years, information for dividend payments as well
as personal data protection information.
Special sections include materials on forthcoming general meetings of the shareholders,
information on the resolutions adopted at the general meetings. Data on the initiatives of the companies,
auditors and media publishing news about the holding company and the public companies in the group
are publicly available.
The news section on the holding's website is particularly rich, providing information on the
company's periodical publications, upcoming events, as well as any important information related to the
holding's activities. The Q&A system for shareholders, stakeholders via electronic means proves its
effectiveness. A procedure for receiving dividends from shareholders for previous years has been
developed. The practice of sending timely answers to letters and inquiries of shareholders on the part of
the holding company and public companies in the group, including those received by e-mail and their
storage in a register duly kept by the Investor Relations Director, continues. A practice has been
introduced by the holding company, regardless of the nature of the question asked, that the answers
include a detailed explanation of the shareholders’ rights.
The procedure for shares inheritance is described in detail. Each shareholder who addresses the
holding on a different occasion is being provided with comprehensive information about his rights and
receives information on various issues regarding the business activities and the current standing of the
company, including the historical prices of the shares of Stara Planina Hold Plc on the stock exchange.
Stara Planina Hold Plc and the public companies in the group use the X3 News media that
provides equal and timely access to the relevant information to all users.
Chapter Five. Stakeholders. Sustainable Development
The corporate governance of Stara Planina Hold Plc and the companies in the group ensure
effective interaction with the stakeholders, identified by the respective company as such. The
stakeholders’ policy complies with the legal requirements in accordance with the principles of
transparency, accountability and business ethics. Policies have been developed taking into account the
stakeholders’ interests that guarantee the balance between the development of the companies and the
environment where they operate. Effective relations are maintained with the stakeholders. The
companies periodically inform shareholders, stakeholders and the investment community about various
important issues.
The shares of Stara Planina Hold Plc and the public companies in the group are not admitted to
trading in a different jurisdiction.
Stara Planina Hold Plc and the companies in the group take active part in various forms of joint
collaboration with state institutions and non-government organizations engaged with corporate
governance in the country. Throughout the reporting year we, once again, recognize the benefit from our
co-operation and membership in the Bulgarian Industrial Capital Association. The Investor Relations
Directors of the holding and the public subsidiaries are members of the Association of Bulgarian Investor
Relations Directors. The holding has nominated a representative to the National Corporate Governance
Commission.
The control related to the information disclosure process on the part of Stara Planina Hold Plc and
the public companies in the group is multidirectional. No violations of the provisions and deadlines for
disclosure have been found so far. The financial reports are published on the websites immediately after
they are presented to the regulating authority and the public which provides a possibility for control by the
shareholders, investors and all stakeholders. Another form of control in terms of the information disclosure
process is exercised by the members of the Board of Directors over the Investor Relations Directors.
The overall policy of the Board of Directors of Stara Planina Hold Plc regarding the management
of the companies in the economic group is in accordance with the principles of socially justified and
environmentally friendly economic development. The corporate Boards of the companies in the group
annually develop and approve business plans of the enterprises which envisage the specific actions and
policies regarding the sustainable development of each company. In their investment programs, projects
STARA PLANINA HOLD PLC – sphold.com
42.
aimed at the environmentally friendly development of the respective company are set and implemented
annually, as well as social projects aimed mainly at employees.
3. Assessment of the Implementation of the Code
Applying the National Corporate Governance Code by Stara Planina Hold Plc and the public
companies in the group is a process to continue throughout the current year as well.
The review of the Code in relation to the implementation of the underlying “comply or explain”
principle leads to the conclusion that Stara Planina Hold Plc and the public companies in the group comply
with the Code as a whole.
Implementation of the recommendations in the Code is responsibility of the corporate Boards. In
this sense, applying particular texts of the Code does not depend on the corporate Board, insofar as the
appointment of members of the Board of Directors is a right and prerogative of the shareholders.
In conclusion we can summarize that the activities of the corporate Board of Stara Planina Hold
Plc and the public companies in the group throughout 2022 have been in accordance with the National
Corporate Governance Code, and the activities of the non-public companies in the group are in
accordance with the main priorities and guidelines of the corporate program of Stara Planina Hold Plc.
4. Description of the Internal Control and Risk Management Systems
The internal control and risk management systems of the holding company and the companies in
the group ensure effective reporting and information disclosure, identification of the risks accompanying
the activity of the company and their effective management. Their purpose is to ensure compliance
between legal and regulatory requirements and the proper functioning of internal processes. These
systems are established in accordance with the specifics of the company - its activities, financial
characteristics, industry, needs and resources.
The Board of Directors has the primary responsibility for the internal control and risk management
systems. The Board performs both a management and guidance function as well as ongoing monitoring,
assessing whether the systems are suitable for the company in a changed environment, whether they
operate as well as expected and whether they are being adapted periodically to the changed conditions.
The management’s responsibility includes implementing an internal control system to prevent,
detect and correct errors and misstatements resulting from the actions of the accounting system. In this
regard, the management observes the following basic principles in its activity:
• adherence to a specific management and accounting policy, disclosed in the financial statements;
• performance of all operations in accordance with the laws and statutory regulations;
• recording all events and transactions in a timely manner, with the exact amount in the relevant
accounts and for the relevant reporting period, so as to allow the financial statements to be prepared in
accordance with the specified accounting framework;
• observing the principle of prudence in valuation of assets, liabilities, income and expenses;
detection and termination of fraud and errors;
• completeness and correctness of the accounting information;
• preparation of reliable financial information; adherence to international financial reporting
standards and compliance with the going concern principle.
The respective company's Board of Directors is responsible for the risk management which
includes identifying, assessing and controlling potential events or situations that may adversely affect the
achievement of the organization's objectives, and is designed to give reasonable assurance that the
company's business objectives will be achieved.
The corporate Boards of the holding company and the companies in the group prepare annual
activity reports as well as financial statements for every financial year that give an accurate and honest
estimate of the financial standing of the company at the end of the year, its operational financial results,
and the cash flows in compliance with the applicable accounting framework. In order to ensure an
independent and objective assessment of the financial statements the annual audit of the holding
company and the companies in the group is performed by an independent statutory auditor. All financial
statements are prepared in accordance with the International Accounting Standards. The current financial
and accounting activities of the companies is subject to periodic control and analysis by the management
STARA PLANINA HOLD PLC – sphold.com
43.
body. There is an established practice for periodic discussion at meetings of the Board of Directors of the
current financial results of the company's activities, including the implementation of the investment
program.
5. Information Art. 10 of Directive 2004/25/EC
The companies in the group do not have significant direct or indirect shareholdings (including
indirect shareholdings through pyramid structures and cross-shareholding) within the meaning of Art. 85
of Directive 2001/34/EC.
There are no holders of securities with special control rights.
There are no restrictions on the voting right.
The rules that regulate the appointment and replacement of members of the Board of Directors
and the introduction of amendments to the memorandum of association are specified in the published
Articles of Association of the company and are not regulated by the corporate Board. According to the
Articles of Association of Stara Planina Hold Plc and the companies in the group, only the General
Meeting of Shareholders has the right to elect and dismiss members of the Board of Directors of the
company and decisions are taken by a majority of 2/3 of the shares represented. Only the General
Meeting of Shareholders has the right to make amendments and supplements to the Articles of
Association of the company. Decisions are taken by a majority of 2/3 of the shares represented.
Resolutions for buy-back procedures or issuance of shares are to be adopted by the shareholders
in accordance with the legislation in force.
The powers of the Board of Directors are regulated in detail in the Articles of Association of the
companies in the group. The Board of Directors of the public company, without being expressly authorized
to do so by the General Meeting, may not carry out transactions specified under Art. 114 of the Public
Offering of Securities Act. Transactions of the public companies with the participation of interested parties,
other than those mentioned above, are subject to prior approval by the Board of Directors.
The Articles of Association of Stara Planina Hold Plc also provide for the powers of the Board of
Directors to increase the capital of the company by issuing shares.
6. Diversity policy
The management structure of Stara Planina Hold Plc is defined in the company's Articles of
Association. The Board of Directors consists of three individuals and one legal entity, which has
respectively appointed a physical person as its representative. The members of the Board of Directors
have the education, qualification, knowledge and professional experience necessary for the responsible
and competent performance of their functions and responsibilities. The company does not apply a
diversity policy regarding the management body in relation to aspects such as age and gender.
The election of the members of the board of directors is the right and prerogative of the
shareholders in accordance with the requirements of the law and the Articles of Association.
7. Information on the Board of Directors
Stara Planina Hold Plc has a one-tier management system. The Board of Directors is the
managing body, responsible for the planning and coordination of the company’s overall performance, as
laid down in the scope of its business activity, by means of undertaking all actions for organization,
management and control, provided by law and the Articles of Association. The organization of work, as
well as all duties, responsibilities and competences are regulated and specified by the Rules of Regulation
of the of the Board of Directors of Stara Planina Hold Plc. The Board of Directors takes its decisions at
meetings, held at least once every three months, in accordance with the statutory requirements of the
terma and procedures for their convocation and holding.
As of 31.12.2022 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
STARA PLANINA HOLD PLC – sphold.com
44.
Stefan Atanasov Nikolov – Member of the Board of Directors
During the reporting year no changes in the members of the Board of Directors have been made.
The composition of the Board of Directors elected by the General Meeting guarantees the
independence and objectiveness of the assessments and actions of its members in terms of the
company’s operation.
During the reporting year, members of the Board of Directors or parties related to them have not
entered into transactions with the company which are beyond its usual business activity or significantly
deviate from the market conditions.
The statutory requirement for at least one third of the members of the Board of Directors to be
independent persons is observed. There are no changes in the special criteria for election of Board
members. In its practice so far, the Board of Directors has not encountered a situation of direct or indirect
conflict of interest between a member of the management body and a shareholder. There has not been
found any instance of direct or indirect conflicts between the interest of a Board member and the
company’s interest.
Information about the companies in which the members of the Board of Directors own more than
25% of the capital and about their participation as procurators, managers or board members in other
companies or cooperatives is presented in the annual individual activity report as of 31.12.2022 (https
://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20221231-EN-SEP.xhtml).
ІХ. Additional information on Appendix 2 of Ordinance No 2 of the FSC
1. Information given in value or quantitative terms about the main categories of commodities, products
and/or provided services, with indication of their share in the sales revenues of the issuer as a whole and the
changes that occurred during the reporting fiscal year
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations and has only financial income.
2. Information about the revenues allocated by separate categories of activities, domestic and external
markets as well as information about the sources for supply of materials required for the manufacture of
commodities or the provision of services with indication of the degree of dependence in relation to any
individual seller or buyer/user, where if the share of any of them exceeds 10 per cent of the expenses or
revenues from sales, information shall be provided about every person separately about such person’s share
in the sales or purchases and his relations with the company
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations and has only financial income.The revenues of the companies in the group are formed mainly
from sales of production as follows:
M+S hydraulic Plc – orbital and hydraulic motors, hydrostatic servo controls and accessories for
them axial-piston motors and pumps;
HES Plc – piston, plunger, telescopic and rail hydraulic cylinders, hydraulic pumps, precision
rotary parts, axial-piston motors and pumps;
Elhim Iskra Plc – starter accumulators, traction, semi-traction and stationary batteries and
elements therefor;
Bulgarian Rose Plc – natural aromatic products, sauces and compositions, perfumery cosmetics,
essences and aromas for the food industry;
Boryana Jsc – fashion ladies' and man's knitwear;
Fazan Jsc – socks and socks items;
Ustrem Jsc – spare parts for grain combines, agricultural machinery and non-standard equipment.
3. Information on concluded material transactions
In 2022, no transactions of significant importance for the activities of Stara Planina Hold Plc were
concluded, with the exception of lending to companies in the Group. Information regarding loans granted
to subsidiaries and associated enterprises is presented under item 9 of this section of the report.
STARA PLANINA HOLD PLC – sphold.com
45.
4. Information about the transactions concluded between the company and related parties during the
reporting period, proposals for conclusion of such transactions as well as transactions which are outside its
usual activity or substantially deviate from the market conditions, to which the issuer or its subsidiary is a party,
indicating the amount of the transactions, the nature of relatedness and any information necessary for an
estimate of the influence over the issuer’s financial status
Transactions concluded between Stara Planina Hold Plc and related parties during the reporting
period are only the loans granted to subsidiaries and associates, specified under item 9 of this section of
the Report.
There are no transactions beyond the scope of issuer's usual business activity or transactions
which significantly deviate from the market conditions.
5. Information on events and indicators of unusual nature for the issuer which have significant influence
on its activity, the realized incomes and accrued expenses; assessment of their impact on the results
throughout the current year
As a holding company Stara Planina Hold Plc does not perform independent commercial
operations and the company has focused its activities primarily on the management of the subsidiaries
and associates in the Group. Therefore, a significant effect on the financial standing of Stara Planina
Hold Plc has the direct dependence on the financial standing of the subsidiaries and associates whose
operations are primarily export-oriented - mainly to the countries of the European Union.
In 2022 the activities of the companies in the Group were determined by new serious challenges
caused both by the consequences of the covid-pandemic and the ongoing for more than ten months now
military conflict in Ukraine. The increase in the prices of raw materials, fuels and energy carriers in
general, the difficult logistics, strong inflationary pressure, as well as the continuous process of imposing
mutual sanctions between the USA and the EU, on the one hand, and Russia, on the other, objectively
affected the economy not only in Europe, but also on a global scale. On a national level, the industrial
activities throughout the year were, and continues being, severely affected by the escalating political
instability.
There are no events and indicators of an unusual nature that had a significant impact on the
issuer's activity.
A statement on the influence of Covid-19 is given in a separate section of this Report.
6. Information on off-balance kept transactions – nature and business objective, indication of the
financial impact of the transactions on the operation, if the risk and benefits of these transactions are
substantial for the assessment of the issuer’s financial status
There are no such transactions.
7. Information about holdings of the issuer, about its main investments in the country and abroad (in
securities, financial instruments, intangible assets and real estate), as well as the investments in equity
securities outside its economic group and the sources/ways of financing
The investments of Stara Planina Hold Plc are in securities and shareholdings in Bulgarian
companies and were made with own funds.The company does not have any real estate property.
Information on the shareholdings of Stara Planina Hold Plc is provided under Section І of this Report -
Investment Portfolio.
8. Information about the concluded by the issuer, by its subsidiary, in their capacity of borrowers, loan
contracts with indication of the terms and conditions thereof, including the deadlines for repayment as well as
information on the provided guarantees and assuming of liabilities
This information is presented in the Annual activity report to the 2022 Separate Annual Financial
Statements (
https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20221231-EN-SEP.xhtml).
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
STARA PLANINA HOLD PLC – sphold.com
46.
This information is presented in the Annual activity report to the 2022 Separate Annual Financial
Statements (
https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20221231-EN-SEP.xhtml).
10. Information on the use of the funds from a new issue of securities during the reporting period
During the reporting period has not been issued a new issue of securities.
11. Analysis of the ratio between the achieved financial results, reflected in the financial statement for
the fiscal year, and previously published forecasts for these results
Stara Planina Hold Plc publishes monthly forecasts for the sales of the companies in the Group,
the gross profit and accordingly reports the real results compared to the forecasts. Forecasts are being
updated on a quarterly basis based on the reported results. The achieved financial results in the financial
statements for the financial year do not differ from the published forecast results.
The public companies in the group of Stara Planina Hold Plc also publish monthly forecasts for
their sales and gross profit and accordingly report the real results compared to the forecasts made. The
achieved financial results reflected in the financial statements for 2022 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 elimination
The policy of Stara Planina Hold is focused mainly on the management of the companies in its
portfolio. Free funds are used for financing the companies. Indicative of this policy are the loans granted
to companies from the holding's portfolio. The loans are specified under item 9 of this section of the
Report. An expression of this policy is also the deferre dividend payment to Stara Planina Hold Plc in its
capacity of a majority or major shareholder on the part of the respective companies.
Stara Planina Hold Plc services all of its liabilities in a timely manner hence there are no possible
threats necessitating measures for their elimination.
13. Assessment of the possibilities for realization of the investment intentions, indicating the amount
of the available funds and stating the possible changes in the structure of the financing of this activity
The activity of Stara Planina Hold is focused mainly on the management of its current investments.
There are no close plans for new investments to be made by the company. The holding gives priority to
the development of the companies in the portfolio.
Information on the planned investments of the companies in the group for 2023 is presented under
section IV Planned development of the group of this Report.
The management of Stara Planina Hold Plc finds the possibilities for realization of these
investment intentions as realistic.
14. Information on changes in the major principles for management of the issuer and its economic
group occurred during the reporting period
Stara Planina Hold manages its investments by setting high but achievable goals in the terms of
quality, output and profitability. Particular attention is being paid to the aspect of environmental protection,
human resources development and corporate and social responsibility. During the reporting period there
are no changes in the basic principles of management of Stara Planina Hold Plc and the companies of
the economic group.
15. Information on the main characteristics of the internal control and risk management system applied
by issuer in the process of preparation of the financial statements
In order to ensure an independent and objective assessment of the financial statements the
annual audit of the holding is performed by an independent statutory auditor. All financial statements are
prepared in accordance with the International Accounting Standards. The current financial and
accounting activity of the company is subject to periodic control and analysis on the part of the
management body. The holding has an established practice to periodically discuss the current financial
results of the companies included in its strategic investment portfolio in order to ensure implementation
of their business programs and accurate analysis of the opportunities for future investment projects.
Detailed information on the internal control and risk management systems is presented under
Section VIII, item 4 of this Report.
STARA PLANINA HOLD PLC – sphold.com
47.
16. Information on the changes in the management and supervision bodies during the reporting fiscal
year
Stara Planina Hold Plc has a one-tier management system. The Board of Directors includes 4
persons. During the reporting financial year were not made changes in the members of the Board of
Directors and the representation of the holding company.
Detailed information on the Board of Directors is specified under Section VIII, item 6 of the Report.
17. Information about the owned by the members of the management and of the control bodies,
procurators and the senior management shares of the issuer, including the shares held by anyone of them
separately or as a percent from the shares of each class, as well as provided to them options on securities of
the issuer by the latter – type and amount of the securities over which the options have been set up, price of
exercising of the options, purchase price, if any, and term of the options
This information is presented in the Annual activity report to the 2021 Separate Annual Financial
Statements
https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20221231-EN-SEP.xhtml).
18. Information on the arrangements known to the company (including also after the closure of the
fiscal year), as a result of which in future periods may occur changes in the relative portion of shares or
debentures owned by shareholders or debenture holders
The company is not aware of such arrangements.
19. Information on pending court, administrative or arbitrary proceedings related to obligations or
receivables of the issuer amounting to at least 10 percent of its own capital
Stara Planina Hold Plc is not involved in any pending court, administrative or arbitrary proceedings
as well as in any judgments or requests for dissolution or declaration of liquidation.
20. Information on the Investor Relations Director, including telephone and mailing address
Investor Relations Director is Sofia Kirilova Argirova-Atanasova, tel. 02/9634161, 0879899469,
address for correspondence: 20, Frederic Joliot Curie Str. 9th floor, 1113 Sofia, Bulgaria,
investor@sphold.com.
Other information at the discretion of the company
The company considers that there is no other information that has not been publicly disclosed by
the company and which would be important for shareholders and investors in making an informed
investment decision.
Media
Stara Planina Hold Plc discloses statutory information to the public through information media X3
News.
The inside information for Stara Planina Hold Plc under Art. 7 of Regulation (EU) № 596/2014 of
the European Parliament and of the Council of 16 April 2014 concerning the circumstances occurred in
2022 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&MESSA
GE_TYPE=2 through which the company publicly discloses inside information.
Executive Director: Vasil Velev
Vasil Georgiev
Velev
Digitally signed by Vasil Georgiev
Velev
Date: 2023.04.26 12:40:25 +03'00'
STARA PLANINA HOLD PLC – sphold.com
48.
DECLARATION
under Art. 100n, para. 4, item 4 of the POSA
The undersigned Vasil Georgiev Velev - Executive Director of Stara Planina Hold Plc certify that:
a) the annual consolidated financial statements of Stara Planina Hold Plc as of 31.12.2022,
prepared in accordance with the applicable accounting standards, accurately and fairly reflect the
information on assets and liabilities, financial standing and profit or loss of the issuer and the companies
included in the consolidation as a whole;
(b) the annual consolidated activity report provides a reliable overview of the development and
results of the activities and condition of the companies included in the consolidation as a whole, together
with a description of the main risks and uncertainties they face.
Declarer:
Vasil Velev
DECLARATION
under Art. 100n, para. 4, item 4 of the POSA
The undersigned Kremena Gancheva Dulgerova - Chief Accountant of Stara Planina Hold Plc
certify that:
a) the annual consolidated financial statements of Stara Planina Hold Plc as of 31.12.2022,
prepared in accordance with the applicable accounting standards, accurately and fairly reflect the
information on assets and liabilities, financial standing and profit or loss of the issuer and the companies
included in the consolidation as a whole;
b) the annual consolidated activity report provides a reliable overview of the development and
results of the activities and condition of the companies included in the consolidation as a whole, together
with a description of the main risks and uncertainties they face.
Declarer:
Kremena Dulgerova
Kremena
Gantcheva
Dulgerova
Digitally signed by
Kremena Gantcheva
Dulgerova
Date: 2023.04.26
12:35:34 +03'00'
Vasil Georgiev
Velev
Digitally signed by Vasil Georgiev
Velev
Date: 2023.04.26 12:39:57 +03'00'