Annual Consolidated Report for the Activity 2009
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Annual Consolidated Report for the Activity 2009 WorldReginfo - af1cf81f-e766-4821-8ac7-478a81de89f9 Contents 1. General Information 4 2. Review of the activity of “Holding Roads” PLC in 2009 5 3. Important events occurring after the date of preparing the annual financial report 14 4. Forecasted development 16 5. Basic risks which the company is facing 27 6. Deals of significant importance 30 7. Share participations and investments in the country and abroad 34 8. Management bodies 36 9. Information about the shares 39 10. Additional information upon Section ІVa of Attachment № 10 to Ordinance № 2 42 3 WorldReginfo - af1cf81f-e766-4821-8ac7-478a81de89f9 Dear Shareholders, This report about the activity of “Holding Roads” PLC for the preceding 2009 is performed in conformity with the requirements and provisions of article 33 paragraph 3 of the Law for Accounting, article 100n, paragraph 5 of the Public Offering of Securities Act and article 32a, paragraph 1, point 2 and paragraph 2 of Ordinance №2 dated 17.09.2003 for the prospects at offering and admitting to trading at regulated market securities and concerning the information disclosure by the public entities and the other issuers of securities. The report contains comment and analysis of the financial reports and other significant information concerning the financial state and the results from the activity of the issuers and the companies comprising the consolidation and reflects in reliable manner the state and the perspectives for the group development as a whole. Management Board of “Holding Roads” PLC 4 WorldReginfo - af1cf81f-e766-4821-8ac7-478a81de89f9 General Information “Holding Roads” PLC is one of the largest road construction structures in Bulgaria. The company shares are 100% private ownership. It is public company and is traded at Bulgarian Stock Exchange – Sofia, official market. The holding shares are included in the leading index of Bulgarian Stock Exchange Sofix. The holding owns throughout the state ownership over more than 1500 decares terrains and buildings with over 70 thousand square meters built area. “Holding Roads” PLC employs over 2050 people on continuous basis. In the recent years the company has performed road construction works (capital repair works, reconstruction and new construction) of over 1000 kilometers road network. The company was incorporated on 25.11.1996 in line of the mass privatization as Privatization Fund Roads. In the period 1996-1997 the company participated in first, second and third tender sessions of the mass privatization as it acquired thus shares from companies in various fields of the economy. In 1998 the privatization fund was re-registered as Holding company, as its investments portfolio was optimized as well. The company focuses its ownership mainly in companies occupied with road construction and the activities and services connected with it. Currently the companies of the portfolio of “Holding Roads” PLC cover in territorial aspect the whole state, as according to this index the company is unmatched in the Republic of Bulgaria. The structure holds 11 asphalt bases in the state and 12 quarries for construction materials. The branch companies of the holding are owners of seven certified and accredited laboratories in which the utilized materials are tested. On 23.05.2008 the Company is re-registered in the Commercial Register to the Registry Agency with Uniform Identification Code 121671772. The head office and address of management of the company is: city of Sofia, 1000 “Moskovska” Str. № 3. «Holding Roads» PLC is member of: Bulgarian Branch Chamber “Roads” Bulgarian Construction Chamber Bulgarian Industrial Association Bulgarian Industrial Capital Association Bulgarian Chamber of Commerce and Industry 5 1. Review of the activity of “Holding Roads” PLC in 2009 In the preceding 2009 the activity of the companies of the structure of “Holding Roads” PLC was aimed at active participation in the public procurements for infrastructure construction, WorldReginfo - af1cf81f-e766-4821-8ac7-478a81de89f9 organized on the territory of the Republic of Bulgaria and towards extending the scope of their basic activity in fields with provided funding. The activity of “Holding Roads” PLC in addition to participating in tender procedures included as well: Investments in shares and stocks of legal entities with subject of activity that is comparable with the one of the company; Management of the companies over which “Holding Roads” PLC exercises control in view of the organization and ensuring the effective performance of the activity of the structure; Supporting the branch companies for performing their investment activity, necessary for the resource provision of the projects upon which they are working, as well as supporting them for the performance of their operative activity; Optimization of the relations and activities in the framework of the structure with the aim of raising the general effectiveness’ Participation in tenders for infrastructural construction on the territory of the Republic of Albania; Seeking for ways for the successful entering on the foreign markets of road construction services most of all in the states of the region. Events that are important for the company and that occurred in 2009 Contracts for winter maintenance and current repair works Up to the 31 st of December 2009 “Holding Roads” PLC and its branch companies have entered contracts with “Road Infrastructure” Agency for winter maintenance and current repair works of 4 705 kilometers republican road network at the total value of 142 million BGN excluding VAT. The contracts include maintenance /preventive, current, winter and repair-restoration works in the case of wrecks/ for the period 2009/2010. They encompass the territory of Regional Road Service Sofia, Slivnitza, Sevlievo, Lukovit, Lovech, Levski, Pleven, Vidin, Kula, Belogradchik, Oryahovo, Byala Slatina, Vratza, Mezdra, Lom, Berkovitza, Burgas, Aytos, Pomorie, Sredetz etc. The term for their performance is one year. “Holding Roads” PLC received prize in class “transportation infrastructure” For second successive year “Holding Roads” PLC received the highest prize in class “transportation infrastructure” of the Bulgarian Construction Chamber. The results of the traditional classification TOP 50+ for constructors, members of the Bulgarian Construction Chamber and entered in the Central professional register of the constructor, was conferred at ceremony held on the 26 th of October 2009 in the capital hotel “Princess”. Ranking was performed on the basis of the information in the public part of the register for the last financial year. The indexes are net sales revenues – 50 points, fixed tangible assets – 20 points, payroll personnel – 30 points. WorldReginfo - af1cf81f-e766-4821-8ac7-478a81de89f9 They opened the extension of “Bulgaria” Boul. In the town of Russe On the 3 rd of July 2009 at official ceremony was held the opening of the extension of the eight-kilometer section upon “Bulgaria” Boul. in the town of Russe. Holding Roads PLC is contractor upon the site that is part of programme “Transit Roads IV” funded by the European Investment Bank and the state budget. The repair works upon the restoration of the boulevard section with length of 8 kilometers continued for three years as the total value o the project amounts to 10 million EUR. Boulevard “Bulgaria” in Ruse is the northern entrance of the state concerning the so-called European Transport Corridor N 9 and part of the Republican road network. The traffic intensity is one of the highest in the state for road construction of such nature, as over 25 per cent of the traffic is of heavy load automobiles. Upon the boulevard enter and exit over 40% of the transit automobile commodities turnover of the state. The Albanian branch of “Holding Roads” PLC was issued with professional license In the month of April 2009 the branch of “Holding Roads” PLC registered in Tirana “Holding Roads WorldReginfo - af1cf81f-e766-4821-8ac7-478a81de89f9 PLC (Dega ne Shqiperi)”, was issued with professional license by the Ministry of Public Works, Transportation and Telecommunications of the Republic of Albania. Thus the company acquires the right for exercising construction activity in the state. 7 Activity Results /thousand BGN/ Indexes 2009 2008 Revenues from the activity 144 181 188 906 Expenditures for the activity 138 799 196 653 Net profit/loss 5 700 (8 322) Net revenues from sales 124 188 184 878 Expenditures upon economic elements 127 519 180 696 Financial revenues 20 005 4 028 Financial expenditures 11 280 15 957 Assets sum 289 057 295 969 Net assets 30 542 25 243 Shareholders’ capital 30 672 30 672 Number of shares 30 672 000 30 672 000 The consolidate revenues of the activity of “Holding Roads” PLC in 2009 amount to 144 181 thousand BGN. After the performed correction in the consolidated financial report of the company for the preceding year, for 2008 the consolidated revenues from the group activity amount to 188 906 thousand BGN. The decrease in 2009 versus the preceding reporting period results on one hand from the decrease in the net revenues from sale of commodities and services. WorldReginfo - af1cf81f-e766-4821-8ac7-478a81de89f9 The greatest relative share in the consolidated revenues from the activity of the group is the one of the net revenues from sales. For 2009 the net revenues from sales amount to 39 626 thousand BGN and they are distributed upon categories as follows: Net revenues from sales Net revenues from sales Produce