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ANNUAL ACTIVITY REPORT OF
MONBAT AD, SOFIA
FOR THE FINANCIAL 2015
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FORWARD LOOKING STATEMENTS
The Annual Report may contain statements which reflect the current view of the Company’s Board of Directors in respect of achieving future financial results, execution of business strategy, plans and objectives of the management. These forward-looking statements concern MONBAT AD and the sectors where the Companies operate in. Statements that include the words “expects”, “intends”, “plans”, “projects”, “accepts”, “will”, “aims”, “strives”, “can”, “could be”, “continues”, and other such statements with regard to the future presentation of the company constitute forward-looking statements for the purposes of the Bulgarian securities legislation and for other purposes. In case that forward-looking statements are presented, the latter concern the future presentation and results of the company that involve risks and uncertainties. It is possible for factors and events to arise that could cause the actual results of MONBAT AD to differ significantly from those given in the forward-looking statements. These factors include but are not limited only to the factors described in the section entitled RISK FACTORS and should be considered in their interaction as well as in view of the whole financial and economic information presented in this document. The forward-looking statements are up-to-date as at the date of the Annual Report. In compliance with the obligations under the Bulgarian legislation and the approved policy of MONBAT AD, the company’s Board of Directors will continue announcing publicly, under the legally provided procedure, new forecasts as well as to update already presented forward-looking statements that need to be corrected. Before taking an investment decision, potential investors should carefully consider the factors stated in the Annual Report, which may cause the actual results of MONBAT AD to differ from the ones presented in this document.
PRESENTATION OF FINANCIAL, MARKET, ECONOMIC AND STATISTICAL INFORMATION
The financial information in the Annual Report has been prepared in compliance with the International Financial Reporting Standards (IFRS). The market, economic and statistical information as well as information regarding the financial and economic situation in the Republic of Bulgaria and the Bulgarian securities market used in the Report has been taken from various sources, explicitly referred in the respective parts where such information is presented. Information presented in this document regarding a part of the systematic risks for MONBAT AD is extracted from publicly available information, including publications and information disclosed in compliance with the requirements of the applicable securities legislation and other regulations. Information presented in this Report regarding the economic sectors where MONBAT AD operates is extracted from publicly available information, including publications and information disclosed in compliance with the requirements of the applicable securities legislation and other regulations. MONBAT AD does not guarantee the accuracy and exhaustiveness of this information as well as the presence of complete uniformity in the information from all these sources. With this regard, MONBAT AD takes responsibility only for the accurate reproduction of extracts from relevant sources of information. The Board of Directors of MONBAT AD confirms that the information extracted from publications and other publicly available sources is reproduced correctly by the relevant sources and, to the best of its knowledge, no facts which could render the reproduced information inaccurate or misleading are missed. Nevertheless, the Board of Directors of MONBAT AD informs that is has relied on the accuracy of this information without conducting an independent review.
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DEAR SHAREHOLDERS
We, the members of the Board of Directors of MONBAT AD, led by the desire to manage the company in the interest of the shareholders and pursuant to the provisions of art. 33 of the Accountancy Act (as at 31.12.2015) , article 100m, paragraph 7 of the LPOS and Annex № 10 to art. 32, paragraph 1, item 2 of Ordinance No. 2 of FCS prepared this Activity Report /the Report/. The Report presents comments and analysis of the financial statements and other essential information regarding the financial situation and the operational results of the company. The Report reflects in a credible way the condition and the development prospects of the company. In 2015 occurred circumstances that the Company's management believes could be of relevance for investors in taking a decision to acquire, sell or continue holding publicly traded securities. The occurred circumstances have been disclosed within the tetms and in accordance with the procedure as provided by the LPOS to the investors, the regulated securities market and the Financial Supervision Commission. The same are also available on the company’s website www.monbat.com – “Investor Center” section, “News – Important Information”. As at 31.12.2015 MONBAT AD generated net sales revenues in the amount of BGN 293 565 thousands which represents 18,30 % growth in comparison with the net sales revenues generated by 31.12.2014 in the amount of BGN 248 159 thousands. The individual net profit of MONBAT AD as at 31.12.2015 is in the amount of BGN 18 454 thousands and reports 33,91 % profit growth compared to the individual net profit of the company for 2014 which is in the amount of BGN 13 780 thousands.
І. GENERAL INFORMATION ABOUT THE COMPANY
The company was incorporated in the Republic of Bulgaria in accordance with the Bulgarian legislation. The legal and organizational form of MONBAT AD is a joint stock public company. The company has its registered seat and business address at 4, Cherni vrah № 32A, 1407 Sofia.
Telephone: + 359 2 962 1150 Fax: + 359 2 962 1146 E-mail : [email protected] Website: www.monbat.com
As at the date of this Activity Report the share registered capital of the company is in the amount of BGN 39 000 000 divided in 39 000 000 dematerialized registered shares with a nominal value of BGN 1.00 each of them.
Changes in the capital of MONBAT AD since the establishment of the company to date are as follows:
On 16.02.1999 by a resolution of Montana District Court in the Commercial Register were filed the following changes under the batch of “AKUMIKAR” AD: the company’s capital was increased form 101 260 000 Bulgarian levs to 749 300 000 Bulgarian levs through issuance of new 64 804 registered voting shares with a nominal value of 10 000 Bulgarian levs each of them.
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By a resolution № 4 оf 05.07.2000 of Sofia District Court the capital of MONBAT AD was denominated from 749 300 000 Bulgarian levs to BGN 749 300, divided into 74 930 registered voting shares with a nominal value of BGN 10 each of them.
By a resolution № 8 of 13.01.2003 of Sofia District Court the capital of MONBAT AD was increased from BGN 749 300 to BGN 800 000 through issuance of new 5 070 shares with a nominal value of BGN 10 each of them.
By a resolution № 10 of 29.12.2005 of Sofia District Court the capital of MONBAT AD was increased from BGN 800 000 to BGN 14 800 000 through issuance of 1 400 000 registered voting shares with a nominal value of BGN 10 each of them. By a resolution № 11 of 07.08.2006 of Sofia District Court was filed a change in the type of shares of MONBAT AD from materialized into dematerialized and the nominal value of BGN 10.00 per share was changed to a nominal value of BGN 1.00 per share.
By a resolution № 12 of 29.11.2006 of Sofia City Court was filed the company’s capital increase from BGN 14 800 000 to BGN 19 500 000 through issuance of new 4 700 000 dematerialized shares with a nominal value of BGN 1.00 each of them.
At the general assembly of the shareholders of MONBAT AD held on 16.05.2008 was approved a resolution a part of the company’s profit for the year 2007, together with the Reserve Fund, to be used for the increase of the Company’s capital and the rest of the profit for the year 2007 to be distributed to the shareholders as dividends. The capital increase of MONBAT AD under the procedure of Art.197, para. 1 and Art. 246, para. 4 of the Commercial Act from BGN 19 500 000 to BGN 39 000 000 was filed with the Commercial Register on 15.06.2008.
At its session as of 16.07.2008 the Financial Supervision Commission approved a resolution to file the subsequent issue of shares of MONBAT AD, issued as a result of the company’s capital increase from BGN 19 500 000 to BGN 39 000 000. The overall amount of the share registered capital of the company was admitted to trading on the Bulgarian Stock Exchange – Sofia AD.
In 2013, 2014 and 2015 were not made changes in the amount of the capital of MONBAT AD. As at 31.12.2015 there is one legal entity that exercises control over the public company MONBAT AD. This company is PRISTA OIL HOLDING EAD, Sofia. PRISTA OIL HOLDING EAD is related to another shareholder with considerable holdings, namely MONBAT TRADING OOD. . On the grounds of art. 145, para. 1, item 1 of LPOS PRISTA OIL HOLDING EAD notified Monbat AD on an executed by the company transfer transaction for 1 9500 000 voting shares or 5 % of the capital of Monbat AD with a settlement date of the transaction in the Central Depository 28.10.2015. As a result of the change PRISTA OIL HOLDING EAD holds directly 16 666 371 shares and the same number of votes at the General Assembly of the Shareholders or 42,73 % of the capital of Monbat AD and through the related party Monbat Trading Ltd. holds 2 752 800 voting shares or 7,06 %. The total number of the shares and votes hold directly and through related parties on the part of PRISTA OIL HOLDING EAD is 19 419 171 shares or 49,79 %
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As at 31.12.2015 the capital structure of MONBAT AD is the following: Тable № 1 Percentage of the Name of the shareholder Number of shares capital PRISTA OIL HOLDING EAD, 16 666 371 42.73 % Sofia
MONBAT TRADING Ltd., Sofia 2 752 800 7.06 %
PRISTA HOLDCO COOPERATIEF 10 053 758 25.78 % U.A.
Other physical persons and legal 9 527 071 24.43 % entities
AS AT 31.12.2015 THE STRUCTURE OF THE ECONOMIC GROUP OF MONBAT AD IS THE FOLLOWING:
On 25.06.2015 г. was held an ordinary session of the General Assembly of the Shareholders of MONBAT AD which approved a resolution for Petar Petrov to be released from his position as a member of the Board of Directors and Executive Director of Monbat AD and Eugen Georg Peterhans to be elected for new member of the Board of Directors and an Executive Director.
The filing of Eugen Georg Peterhans as new member of the Board of Directors and new Executive Director was made on 13.07.2015 under No 20150713144649 in the Commercial Register to the Registry Agency.
On 10.09.2015 the Board of directors of Monbat г. approved a resolution for Eugen Georg Peterhans to be released from his position as Executive Director of Monbat due to the health reasons and elected Atanas Stoilov Bobokov to be the Executive member of the Board of WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 6
Directors of MONBAT AD. On 15.09.2015 г. Atanas Bobokov was filed as an Executive Director under No 20151001113426 in the Commercial Register to the Registry Agency. On 07.12.2015 was held an extraordinary session of the General Assembly of the Shareholders of MONBAT AD which approved a resolution for Eugen Georg Peterhans and Ivan Karageorgiev to be released from their position as members of the Board of Directors of Monbat AD and Peter Bozadzhiev and Yordan Karabinov to be elected for new members of the Board of Directors. The deletion of Eugen Georg Peterhans and Ivan Karageorgiev as members of the Board of Directors and the filing of Peter Bozadzhiev and Yordan Karabinov as new members of the Board of Directors was made on 15.12.2015 under No 20151215100641 in the Commercial Register to the Registry Agency.
As at 31.12.2015 the Board of Directors of Monbat AD is the following: Atanas Bobokov – Executive member of the Board of Directors Plamen Bobokov – Member of the Board of Directors Stoyan Stalev – Member of the Board of Directors Alexander Chaushev – Member of the Board of Directors Nikolay Trenchev – Member of the Board of Directors Kamen Zahariev – Member of the Board of Directors Florian Huth – Member of the Board of Directors Peter Bozadzhiev – Member of the Board of Directors Yordan Karabinov – Member of the Board of Directors
ІІ. OVERVIEW OF THE ACTIVITIES AND THE CONDITION OF THE COMPANY
1. Principal Activity
The principal activity of MONBAT AD is production of lead-acid starter and stationary accumulator batteries and their servicing. The products of the company can be divided in the following main groups: Starter Batteries
Comprehensive lineup of starter batteries, featuring the classic construction "Dynamic", "Maintenance Free", "Premium", "Heavy Duty" and "JIS" series and the AGM range under the label GEM. The batteries application cover the entire range of passenger and commercial vehicles, heavy trucks and agricultural machines, operating in normal and harsh environmental conditions.
Stationary Batteries
Valve-regulated lead-acid (VRLA-AGM) batteries, constructed in accordance with the following standards and reference norms: IEC 60 896-21/22, EN 60896-2, BS 6290-4, IEC 707 FVO, UL 94 VO, BS 6334 FVO, BDS 10457 / 88 and EUROBAT specification: Long life. Product range of 2-, 4-, 6- and 12-volt batteries with capacities from 50 to 600 Ah.
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Semi-traction Batteries
An impressive combination of supperior cycling performance and superb starting power, makes these batteries a multipurpose energy source for applications like small traction, solar systems, cleaning machines, lifting devices, lighting, leisure time, etc.
Special Batteries
Batteries for military application, suitable for both Russian and NATO designed tanks and armoured vehicles - LAND POWER series, as well as for Russian helicopters and Airplanes - AIR POWER series.
Locomotives Batteries
Railroad source of starter power - batteries designed to facilitate diesel engines initial cranking and to provide the electronic and control circuits power supply in the electrolocomotives.
2. Major raw materials
The major raw materials essential to the Company’s activities are: lead with purity of 99.99% and 99.985%, lead alloys - antimony and calcium, polypropylene trade-mark 7523, polyethylene separator and sulfuric acid. The availability of these materials that MONBAT AD supports ensures the production process for a period of between 15 and 30 days. Prices of lead and lead alloys and polypropylene are variable and directly dependent on the exchange prices of lead on the London Metal Exchange and the stock exchange price of oil. During the last years the management of MONBAT AD has made considerable investment expenses to ensure resource availability of lead and propylene - own production, by means of building its own recycling facilities, namely: In 2010 opened the recycling facility in Idjia, Serbia with annual capacity 15 – 16 000 tones of lead and lead alloys. At the end of 2011 opened the second foreign recycling facility in the economic group of MONBAT AD – Monbat Recycling SRL, Romania. An investment was made in the amount of EUR 13 mln. The annual capacity of the facility is 15 – 16 000 tones of lead and lead alloys. The share of own recycled lead, that MONBAT AD purchases mainly from its subsidiaries, used in the production process in 2013 represents 88 % and the share of the recycled polypropylene - own production - almost 100 %. The share of own recycled lead, that MONBAT AD buys mainly from its subsidiaries, used in the production in 2014 represented 88 % and the share of the recycled polypropylene - own production - nearly 100 %. The share of own recycled lead, that MONBAT AD buys mainly from its subsidiaries, used in the production in 2015 represented 96 % and the share of the recycled polypropylene - own production - nearly 100 %. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 8
By means of creating own recycling facilities, the management of the company strives to reduce the risk of change in the price of the major raw materials.
The movement of the lead price in 2015 is shown in the following diagram:
MOVEMENT OF THE LEAD PRICE FOR THE
PERIOD JANUARY - DECEMBER 2015
2200 2000 1800 1600 1400
May June July March April January August February October September NovemberDecember
USD/MT
*The average price of the lead for 2015 in USD/MT is 1794.95
The production is dependent on the price of electricity and natural gas, which are currently state-regulated. However, these prices do not significantly affect the cost price formation, as production of accumulator batteries is not energy consuming - up to 2 % of the cost price of the output is determined by electricity consumption and 0.9 % of the natural gas consumption.
MARKETS AND SALES
The marketing chanels of MONBAT AD are built primarily on the basis of distribution trading for the domestic and foreign market. The company has granted deferred payment terms for the domestic market up to 30 days and for the foreign market – up to 90 days. In case of deferred payments, sales are being insured by BAEZ AD (the Bulgarian Export Insurance Agency). MONBAT produces a wide range of products and has international positions in the markets of the Balkan countries and extended presence in the markets of Western Europe as important markets for the company are France, Germany, Turkey, Britain and Greece. A direct competitor on the Bulgarian market is Elchim-Iskra AD. In 2007 MONBAT AD acquired the third largest producer in the accumulator batteries business in Bulgaria – START AD, Dobrich. As at 31.12.2015 MONBAT AD reported individual net sales revenues in the amount of BGN 293 565 000 which represents an increase by 18 % compared to the net sales revenues generated for the same period of 2014 in the amount of BGN 248 159 000. The generated sales revenues on the domestic market on an individual basis during the fourth quarter of 2015 were in the amount of BGN 92 031 000 and represent 31, 35 % of the total sales, and the generated revenues from abroad including intra-community supplies were in the amount of BGN 201 534 000 and represents 68, 65 % of the net sales revenues of the company.
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BREAKDOWN OF THE NET SALES REVENUES ON THE DOMESTIC AND FOREIGN MARKETS
MONBAT AD is an export-oriented company. Breakdown of the markets of MONBAT AD on an individual basis for 2015 is shown in the table below.
Тable № 2 31.12.2015 31.12.2014 Country Export (EUR, mln) % Export (EUR, mln) % FRANCE 18.35 17.81 13.53 14.60 OTHER 13.37 12.99 15.52 16.75 SPAIN 11.11 10.78 7.59 8.19 GERMANY 9.44 9.16 7.84 8.46 ROMANIA 6.57 6.38 5.69 6.14 NETHERLANDS 5.55 5.39 6.16 6.65 ITALY 5.24 5.09 5.51 5.95 GREAT BRITAIN 4.93 4.78 3.63 3.92 GREECE 4.09 3.97 5.21 5.62 SERBIA 3.93 3.81 3.34 3.60 BELGIUM 2.91 2.82 4.02 4.34 UKRAINE 2.48 2.41 0.48 0.52 SOUTH AFRICA 2.39 2.32 2.39 2.58 LEBANON 1.95 1.89 2.15 2.32 FINLAND 1.75 1.70 1.29 1.39 DENMARK 1.68 1.63 1.44 1.55 IRLNAD 1.56 1.51 1.76 1.90 CZECH 1.47 1.42 1.61 1.74 PORTUGAL 1.47 1.42 0.6 0.65 GEORGIA 1.45 1.41 1.51 1.63 POLAND 1.35 1.31 1.38 1.49 TOTAL 103.04 100 % 92.65 100 %
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For the period 01.01.2015 - 31.12.2015 major market for MONBAT AD was France with EUR 18, 35 mln. sales revenues which represents 13, 53 % of the total revenues from abroad of the company on an individual basis.
BREAKDOWN OF SALES BY TYPES OF BATTERIES AS AT 31.12.2015
Semi traction Bateries 6.19%
Stationary Bateries 18.37%
Starter Bateries 75.44%
BREAKDOWN OF SALES BY TYPES OF BATTERIES AS AT 31.12.2014
Semi traction Bateries 5 %
Stationary Bateries 20 %
Starter Bateries 75 %
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SALES BY TYPES OF BATTERIES AS AT 31.12.2013
Semi traction Bateries 4 %
Stationary Bateries 7 %
Starter Bateries 89 %
OPERATING RESULTS
As a result of its business activities carried out in 2015 MONBAT AD reports profit before taxes in the amount of BGN 20 504 thousands which represents an increase by 33,15 % compared to the profit before taxes generated in 2014 in the amount of BGN 15 399 thousands. The individual net profit of MONBAT AD as at 31.12.2015 is in the amount of BGN 18 454 thousands and registers an increase by 33,91 % compared to the company’s individual net profit for 2014 which is in the amount of BGN 13 780 thousands
*Data presented in EUR mln.
NET SALES REVENUES, EBITDA, NET PROFIT
160 150,09
140 125,48 126,88 Net sales revenues 120 EBITDA 100 Net profit
80
60
40 14,64 12,73 11,12 9,91 9,44 20 7,04
0 2013 2014 2015
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Table №3
SHAREHOLDERS' EQUITY, MINORITY HOLDINGS AND LIABILITIES 2013 2014 2015 а 1 % 2 % 3 А. SHAREHOLDERS' EQUITY I. Share capital 39000 0% 39000 0% 39000 II. Reserves 90169 3% 93214 0% 93214 III. Retained earnings 1. Retained earnings from previous periods 0 0% 0 100% 7930 undistributed profit 0 0% 0 100% 7930 loss not covered 0 0% 0 0% 0 one-time effect from changes in accounting 0 0 0 policy 0% 0% 2. Current year profit 21754 -36,66% 13780 33,92% 18454 3. Current year lost 0 0% 0 0% 0 Total retained earnings 21754 -36,66% 13780 91,47% 26384 TOTAL SHAREHOLDERS' EQUITY "А" (I+II+III): 150923 -3,27% 145994 8,63% 158598
Table № 4 2013 2014 2015 Operational profit 23 609 15 399 19 870
Operating revenues by category Table №5 (in thousand BGN) REVENUES 2013 2014 2015 1 % 2 % 3 А. Operating revenues I. Net revenues from the sale of: 1. Finished goods 198676 0% 198008 11,62% 221013 2. Goods for sale 324 -12,96% 282 -33,33% 188 3. Services 1019 2,55% 1045 18,56% 1239 4. Other 45391 7,56% 48824 45,68% 71125 I: Total net revenues from sale 245 410 1,12% 248 159 18,30% 293 565
Operating expenditures by category Table № 6 (in thousand BGN) ЕXPENSES 2013 2014 2015 а 1 % 2 % 3 Expenditures I. Operating expenses 1. Materials 166209 2,66% 170624 15,02% 196247 2. External services 13273 0% 13220 13,78% 15042 3. Depreciation 5022 4,04% 5225 -3,85% 5024 4. Salaries 5421 3,95% 5635 25,63% 7079 5. Social secutiry 1051 -5,61% 992 34,07% 1330 6. Net book value of assets sold (finished goods 31179 100% 33932 35,66% 46033 excluded) 7. Assets under construction and write off of assets (2958) 100% (2735) -138,68% 1058 8. Other expenses 3133 142,67% 7603 -66,80% 2524 incl. impairment of assets 0 0% 0 0% 0 incl. provisions 0 0% 0 0% 0 Total: 222 330 5,5% 234 496 17,0% 274 337 WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 13
FINANCIAL INDICATORS
1. LIQUIDITY
Table № 7 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Total liquidity ratio 2,42 4,55 2,16 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Immediate ratio 0,16 0,47 0,27 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Quick ratio 1,56 3,50 1,57 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Absolute liquidity ratio 0,16 0,47 0,27
LIQUIDITY INDICATORS
5,00 4,55
4,00 3,50 3,00 2,42
2,00 1,56 2,16 1,57 1,00 0.57 0,16 0,47 0,47 0,27 0,00 0,27
As at 31.12.2013 As at 31.12.2014 As at 31.12.2015
Total liquidity ratio Immediate ratio Quick ratio Absolute liquidity ratio
The trend of the liquidity indicators over time provides the most valuable information. Liabilities to creditors of MONBAT AD are being paid off in cash rather than using inventories or equipment. I.e., these factors describe the company's ability to pay off its debts on time.
TOTAL LIQUIDITY RATIO Table № 8 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Total liquidity ratio 2,42 4,55 2,16
The total liquidity ratio is one of the earliest formulated indicators and is considered to be universal. The total liquidity ratio represents the ratio of current assets to current liabilities. It could be expected that current assets will be at least equal to current liabilities, whereas actually it is normal for them to be even slightly higher than the current liabilities. Therefore, optimal values of this ratio are over 1 – 1,5. However, some types of companies are able to operate at odds of less than 1. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 14
For 2015 the value of the total liquidity ratio from 2.16 decreased in comparison with the rates for the previous two financial years. The registered increase in the value of this ration for 2015 compared to 2014 is due to the increase in the amount of the company’s current assets by 8 % and the increase in the amount of the company’s current liabilities by 127 %
IMMEDIATE LIQUIDITY RATIO Table № 9 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Immediate ratio 0,16 0,47 0,27
The value of the immediate liquidity ratio of MONBAT AD for 2015 is 0.27 and registers a decrease compared to its rate from 2014. The decrease in the value of the immediate liquidity ratio for 2015 compared to 2014 is due to the increase in cash of the company by 28 % and increase in the current liabilities by 127 %.
QUICK LIQUIDITY RATIO Table № 10 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Quick ratio 1,56 3,50 1,57
The quick liquidity ratio represents the ratio of current assets minus inventories to cutent liabilities. Its traditional rate, setting stability for the company, is about 0,5 but much higher rates would indicate that company’s assets are not being used in the best way. The quick liquidity ratio of the company for 2015 is 1.57 and registers a decrease compared to its rate of 3.50 for 2014. In 2015 compared to 2014 the group of inventories increased by 29 %.
ABSOLUTE LIQUIDITY RATIO Table № 11 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Absolute liquidity ratio 0,16 0,47 0,27
The absolute liquidity ratio is calculated as the ratio of cash and short term liabilities and indicates company’s ability to meet its short term liabilities with its available cash. The absolute liquidity ratio of the company for 2015 is 0.27. For 2015 the company’s cash reports an increase by 28 % compared to the previous 2014 while the rate of the short term liabilities reports a increase by 127 %.
2. Capital resources
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The financial autonomy and financial leverage indicators report on the ratio between own funds and borrowed funds in the capital structure of the company. High rates of the financial autonomy inicator, respectively, the low rates of the financial leverage indicator, provide guarantee both for investors /creditors/ and for the owners themselves, on the ability if the company to pay regularly its long-term liabilities. The effect of using borrowed funds (debt) by the company with a view to increase the final total net income from the funds involved in the activity (equity and borrowings) is called financial leverage. The benefit of using financial leverage appears when the company benefits from the investment of borrowed funds more than the expenses (interest) on their attraction. When a company achieves higher yields when using borrowed funds in its capital structure than the expenses on their attraction are, leverage is justified and should be considered in a positive way (with the reservation that the rate of leverage does not significantly negatively influence other financial indicators of the company).
THE FINANCIAL LEVERAGE INDICATORS
Table № 12 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Financial leverage indicator 0,32 0,39 0,38 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Debt/Assets 0,24 0,28 0,28 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Financial autonomy indicator 3,13 2,54 2,63
LEVERAGE INDICATORS
3,50 3,13 3,00 2,54 2,63 2,50
2,00
1,50
1,00 0,32 0,24 0,39 0,50 0,28 0,38 0,28 0,00
As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Financial leverage indicator Debt/Assets Financial autonomy indicator
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FINANCIAL LEVERAGE RATIO
Table № 13 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Financial leverage indicator 0,32 0,39 0,38
The indicators for the share of capital, obtained through loans show what part of the total capital represent the borrowings. The higher the share of long-term debt compared to shareholders’ equity is, the higher will be the likelihood of failure in the payment of fixed liabilities. The value of the financial leverage ratio of MONBAT AD for 2015 is 0.38 and reports a decrease compared to its rate registerred in 2014 (0.39).
FINANCIAL AUTONOMY RATIO
Table № 14 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Financial autonomy indicator 3,13 2,54 2,63
The financial autonomy ratio shows what percentage of the total liabilities represents the shareholders’ equity of the company. As at 31.12.2015 the value of the company’s financial autonomy ratio is 2.63 compared to its rate of 2.54, registered as at 31.12.2014 and its rate of 3.13, reported for 2013. During the analyzed financial period the value of the financial autonomy ratio increased compared to the previous 2014. The indicated decrease in the value the financial autonomy ratio in 2015 compared to 2014 is due to the increase of the company’s debt by 5 % and increase of the shareholder’s equity by 8,6 %.
DEBT TO TOTAL ASSETS RATIO
The rate of the ratio shows what part of the assets is being financed through debt. Table № 15 As at 31.12.2013 As at 31.12.2014 As at 31.12.2015 Debt/Assets 0,24 0,28 0,28
As at 31.12.2015 the value of the Debt/Assets ratio is lower compared to its rate for 2014. The registered increase in the value of this ratio in 2015 compared to 2014 is due to the increase in the company’s total debt by 3 % together with an increase in the value of the company’s assets by 7 %.
3. KEY INDICATORS
Summerized information on the financial indicators of MONBAT AD for the last three financial years is presented in the following table:
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Table № 16
Indicators 2013 2014 2015 Net sales revenues 245 410 248 159 293 565 EBITDA 28 631 19 396 24 894 EBIT 23 609 14 171 19 870 Net profit 21 754 13 780 18 454 Shareholders’ equity 150 923 145 994 158 598 Long-term liabilities 11 046 37 072 13 730 Short-term liabilities 37 221 20 493 46 599 Long-term (non-current) assets 108 958 110 406 118 160 Short-term (current) assets 90 232 93 153 100 767 Working capital 53 011 72 660 54 168 Cash 6 101 9 705 12 426 Total debt 48 267 57 565 60 329 Total assets 199 190 203 559 218 927 Interest expenses 1 490 1073 1 147 Inventories 32 147 21 417 27 656 Short-term receivables 51 866 61 965 60 553 Operating expenditures 222 330 234 496 274 337 Materials 166 209 170 624 196 247 Profitability of sales 8.86 % 5.17 % 6,29 % ROA Return on assets 10.93 % 6.76 % 8,43 % ROE Return on equity 14.41 % 9,4 % 11,64 % Inventory Turnover Period 47.15 31,06 33,91 Receivable Collection Period 37.37 34.96 37,29 Working capital Turnover Period 77.76 105,40 66,43 Interest Coverage – interest expenses/EBIT 0.06 0.75 0,05 Total Turnover of Working Capital 4.63 3.41 5,42
RETURN ON EQUITY (ROE)
The Return on Equity indicator is calculated as the profit after taxation from the total income statement is related as a percentage of the company's shareholders’ equity. This ratio measures the return to shareholders in terms of their absolute investments. This ratio reports stable high rates for the last three financial periods due to the generated profit for these years. For 2015 the value of the Return on Equity ratio from 11.64 % reports a decrease compared to its rate of 9.40 % registerred in 2014. The decrease in the value of the Return on Equity ratio is due to the decrease of the company’s net profit by 34 % with a registered increase of the shareholders’ equity by 8,6 %.
RETURN ON ASSETS (ROA)
The Return on Assets indicator shows the effectiveness of using the total assets in the company. The ratio operating profit to total assets increased its rate in 2015 compared to 2014 WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 18 from 6.76 % to 8.43 %. The increase in the value of the Return on Assets indicator in 2015 compared to 2014 is due to the increase of the company’s net profit by 34 % and the increase of the total assets by 8 %.
ІІІ. PRINCIPAL RISKS WHICH THE ISSUER FACES
Risks relevant to the Company and its operations can generally be divided into common (systematic) and specific (unsystematic) risks. Systematic risks are related to the macro environment where MONBAT AD operates, therefore they are not subject to control by the management team. Unsystematic risks are directly relevant to the operations of the Company and largely depend on the corporate Board. For their minimization it is relied on increasing the effectiveness of internal business planning and forecasting, which will provide opportunities to overcome the potential negative consequences of risk event occurring. The general risk management plan of the Company’s management is focused on the unpredictability of the financial markets and is aimed at minimizing the potential negative impact over the Company’s financial standing. Each of the risks associated with the state – political, economic, credit, inflation, monetary - has its own importance, but their aggregate consideration and interaction form an overall picture of the economic fundamentals, market conditions, competitive conditions in the country where the respective company operates. SYSTEMATIC RISKS OVERALL MACROECONOMIC RISK Pursuant to data of BNB („Economic Review” of BNB, 4th edition for 2015.), during the fourth quarter of 2015 the global economic indicator declined, giving a warning for an ongoing but slower improvement in global economic activity in comparison with the previous quarter. Divergences continued to be observed across geographic regions and based on the level of economic indicators a moderate increase in the Eurozone economic growth and weaker growth in the USA and the developing economies could be expected. Global inflation declined further due to the decrease in the price indices of both developed and developing economies, underpinned by the continuous fall in the international commodity prices and that of the crude oil in the utmost. The pace of growth of the world economy begins to slow down in 2015 mainly due to the developing economies lower growth. BNB expects that in 2016 and 2017 the growth in developing countries will increase, leading to acceleration of the global growth.The significant decrease in the international prices of basic raw materials, and the one of the crude oil in the utmost, in 2015 is due to maintaining a high level of production and stocks in the presence of weakening demand. According to BNB the downward trend in prices is expected to be discontinued at the earliest in the second half of 2016 under the influence of the growth recovery in developing countries. Increase in international prices of basic raw materials, according to BNB can be expected in 2017. The risks for a weaker global economic growth in the first half of 2016 are mainly related to the possibility of a more pronounced slowdown in some developing economies’ growth, as well as to the uncertainty over the effects stemming from the increase in the base interest rates in the USA. If the downward trend in the international prices of basic raw materials and crude oil continues, this would create risks of lower than currently expected global inflation. In the light of these risks the external environment will remain a source of uncertainty to the development of the Bulgarian economy in the first half of 2016. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 19
Pursuant to data of BNB the economic activity in Bulgaria in 2015 accelerated as the forecast foresees economic growth to slow down to 2.1 % in 2016, with lower government investment acting as a specific factor for this year. In 2017 BNB expects the real GDP growth to accelerate again to 2.8 % and estimates the risks for the economic activity growth as balanced. Due to the open nature of the Bulgarian economy and the considerable import of basic raw materials and fuels, the dynamics of their prices on international markets has a significant impact on domestic prices. BNB expects that in 2016, with the stabilization of international commodity prices, deflationary trend in consumer prices in the country will be discontinued, and in 2017, in the pursuit of the assumption for an increase in international prices, inflation will slowly begin to increase. There are risks for inflation to be lower than projected, if international price dynamics is below the expectations. The Government forecasts regarding the impact of the negative trade balance is that the balance of the current account will decline to a deficit of 1 % of GDP in 2017. The direct foreign investments (DFI) are expected to stabilize at levels of around 3 % of GDP in the period 2015- 2017. With the gradual acceleration of economic activity in the period 2016-2017 the rate of employment growth is projected to reach 0.9 % in 2017, while the unemployment rate is expected to decrease to 9.4 %. With the employment increase in 2015 labor income will continue growing at a moderate pace. More significant acceleration in their dynamics is expected in the period 2016-2017, in terms of higher economic activity and growth in labor productivity in the country. The change in external assumptions for international commodity prices and exchange rate dynamics of the euro against the dollar will be reflected in a revision of expectations about the inflation in Bulgaria. The projected price increase in non-energy goods on the international markets and higher prices of imported durable goods (expressed in lev) would lead to an increase in the overall level of consumer prices at the end of 2015 of 0.8 %. The average annual inflation, however, is projected to remain negative due to declines in fuel prices at the end of the previous and the beginning of this year. The average annual change in the harmonized consumer prices index (HCPI) in 2015 is expected to be -0.6 %, and in the period 2016-2018 - inflation is expected to be positive 1.8 -2 %, assuming higher international oil prices during the following years and domestic demand recovery. According to forecasts of the Government, private sector crediting will grow at a relatively weak pace in the period 2016-2017. At the end of 2015 its growth on an annual basis will be 1.9 percent while by 2017 is will accelerate to 3.1 %. During the whole period will be observed a trend for a gradual increase in the contribution of loans to households, especially in consumer credits, which will follow the growing contribution of private consumption to the economic growth. (Source: Ministry of Finance) Pursuant to data of the National Statistical Institute (NSI) in the fourth quarter of 2015 the Gross Domestic Product (GDP) expanded with 3.1 % compared to the same quarter of the previous year and with 0.8 % compared to the third quarter of 2015 according to the seasonally adjusted data. According to the flash GDP estimates of NSI for the fourth quarter of 2015, the GDP at current prices amounted to BGN 23 977 million. GVA in the fourth quarter of 2015 amounted to 20 728 million BGN. In the structure of GDP by the expenditure approach the largest share has the final consumption (78.6%), which in nominal terms amounted to BGN 18 835 million. In the fourth quarter of 2015 gross capital formation is BGN 6 335 million and has a share of 26.4 % in GDP. The external balance (exports minus imports) has a negative sign.
Growth rate of GDP – total and by components WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 20
Source: NSI BULGARIAN TRADE WITH THIRD COUNTRIES IN 2015 (PRELIMINARY DATA)
Pursuant to data of the National Statistical Institute (NSI) in 2015 Bulgarian exports to third countries increased by 0.6 % compared to 2014 and amounted to BGN 16.4 Billion. Main trade partners of Bulgaria were Turkey, China, Serbia, Russian Federation, Former Yugoslav Republic of Macedonia, USA and Egypt, which accounted for 53.9 % of the exports to non-EU countries. In December 2015 Bulgarian exports to third countries increased by 3.2% compared to the corresponding month of the previous year and amounted to BGN 1.413 Billion.
Bulgarian imports from third countries in 2015 decreased by 5.9 % compared to 2014 and added up to BGN 18.4 Billion (at CIF prices). The largest amounts were reported for the goods imported from the Russian Federation, Turkey, China and Ukraine. In December 2015 Bulgarian imports from third countries decreased by 8.0 % compared to the corresponding month of the previous year and amounted to BGN 1.436 Billion.
BULGARIAN TRADE WITH THIRD COUNTRIES AND EU - TOTAL
Pursuant to data of the National Statistical Institute (NSI) in 2015 the value of all exported goods from Bulgaria amounted to BGN 45.5 Billion and compared to 2014 the exports WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 21 increased by 5.2 %. In December 2015 the total exports added up to BGN 3.574 Billion and increased by 4.4 % compared to the corresponding month of the previous year. The total value of all the goods imported in the country in 2015 amounted to BGN 51.7 Billion BGN (at CIF prices), or by 1.1 % more than 2014. In December 2015 the total imports decreased by 2.1 % compared to the same month of the previous year and added up to BGN 4.292 Billion.
The total foreign trade balance (exports FOB - import CIF) was negative in 2015 and amounted to BGN 6 175.3 Million which was BGN 1 688.6 Million less than the balance in 2014. At FOB/FOB prices (after elimination of transport and insurance costs on imports) in 2015 the total foreign trade balance was also negative and amounted to BGN 2 683.4 Million. In December 2015 the total foreign trade balance (exports FOB - import CIF) was negative and added up to BGN 718.5 Million. The trade balance at FOB/FOB prices was negative and amounted to BGN 458.5 Million.
INFLATION RISK
Inflation risk is the overall increase in prices, where money is devalued and there is likelihood for households and businesses to suffer a loss. Major factor that affected the annual inflation rate in 2015, according to BNB, is the deflationary impact of the external environment, reflecting the downward dynamics of international prices of commodities and basic materials. At the end of 2015 annual inflation was minus 0.9 % (with minus 0.2 % as of December, 2014). Prices of goods imported into Bulgaria continued the trend, established in the beginning of 2013, to decline on an annual basis and be a precondition for a decrease in the overall indices of domestic producer prices and end-user prices. The devaluation of the euro against the dollar by an average of 16.5 % in 2015 partially counteracted the downward trend in prices of imported goods. („Economic Review” of BNB, 4th edition for 2015.) Pursuant to data of the National Statistical Institute (NSI) the consumer price index for December, 2015 compared to November, 2015 is 100.0 %, i.e. monthly inflation is 0.0 %. Annual inflation for December, 2015 compared to December, 2014 is minus 0.4 %. The average annual inflation for the period January - December 2015 compared to January – December, 2014 is minus 0.1 %. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 22
Source: NSI
Pursuant to data of the National Statistical Institute (NSI) the harmonized consumer price index for December, 2015 compared to November, 2015 is 100.4 %, i.e. monthly inflation is 0.4 %. Annual inflation for December, 2015 compared to December, 2014 is minus 0.9 %. The average annual inflation for the period January - December 2015 compared to January – December, 2014 is minus 1.1 %.
Inflation in 2015:
Table № 17 Month Consumer Price Index Harmonized Consumer (CPI) Price Index (HCPI) Compared to the From the Compared to the From the previous month beginning of the previous month beginning of the year year 1 January, 2015 -0.4 % -0.4 % -0.7 % -0.7 % 1 February, 2015 0.2 % -0.2 % 0.1 % -0.6 % 1 March, 2015 0.4 % 0.2 % 0.3 % -0.3 % 1 April, 2015 0.7 % 0.9 % 0.5 % 0.2 % 1 May, 2015 -0.2 % 0.7 % 0.0 % 0.2 % 1 June, 2015 -0.9 % -0.2 % -0.5 % -0.3 % 1 July, 2015 -0.2 % -0.3 % 0.2 % -0.2 % 1 August, 2015 0.0 % -0.3 % 0.1 % -0.1 % 1 September, 2015 -0.1 % -0.5 % -0.8 % -0.9 % 1 October, 2015 0.2 % -0.3 % -0.2 % -1.0 % 1 November, 2015 -0.1 % -0.4 % -0.3 % -1.3 % 1 December, 2015 0.0 % -0.4 % 0.4 % -0.9 %
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 23
The consumer price index (CPI) is the official measure of inflation in Bulgaria. It measures the total relative price change of goods and ٭ services used by households for private (non-production) consumption. The harmonized consumer price index (HCPI) is a comparable measure of inflation in the EU countries. It is one of the criteria for ٭٭ price stability and for Bulgaria's accession to the eurozone. HCPI and CPI measures the total relative change in the price level of goods and services.
The Bulgarian National Bank expects that during the first half of 2016 inflation will remain negative, but with the trend towards a gradual slowdown in the pace of decline that will be determined mainly by predicted slower decrease in prices of energy products and increase in some prices as a result of the rise in the vignette tax and excise duty on tobacco products since the beginning of 2016. The forecast is based on the assumption for a modest increase in international food prices in euros during the first half of 2016 compared to the end of 2015, while retaining the decrease on an annual basis. Prices set by administrative way are expected to contribute positively to the overall inflation, which will reflect the increase in the vignette tax and excise duty on tobacco products since the beginning of 2016. Base inflation will have lower positive contribution to the overall inflation in line with the predicted growth in consumer spending of households with continued improvement in the labor market and growth in employees’ compensations. There are risks for lower annual inflation rate than predicted, stemming mainly from the possibility of oil prices to continue declining at a faster pace than expected. Additional decline in the price of certain goods and services can be expected as a result of the decrease of the regulated price of natural gas during the first quarter of 2016 by the Energy and Water Regulatory Commission (EWRC). (ref. „BNB Forecast on the basic macroeconomic indicators for 2015-2017“).
INTEREST RATE RISK
The interest rate risk is related to possible, contingent adverse changes in the interest rates, set by the financial institutions in the Republic of Bulgaria. At its session in December 2015, the Governing Council of the European Central Bank (ECB) made an overall assessment of the strength and duration of the factors that currently delay the return of inflation to levels below, but close to, 2 % in the medium term. The analysis confirmed the need for further monetary stimulus in order to ensure the return of the inflation rate to these levels. For these reasons the Governing Council of the ECB has taken the following decisions to achieve its objective of price stability: to reduce the interest rate on the deposit facility by 10 basis points to -0.30 % and the interest rate on the main refinancing operations and the interest rate on the marginal lending facility - to remain unchanged at the level of 0.05 % to 0.30 % ; to extend the period of the Asset Purchase Program (APP), providing that monthly asset purchases for EUR 60 billion under the APP will be held by the end of March 2017, and if necessary - even longer, but in any cases until a durable correction in the trend of inflation, consistent with the objective, is found in place; to be reinvested, as long as necessary, matured principal payments for securities purchased under the APP, which will contribute to more favorable liquidity conditions and more appropriate position of the monetary policy; to include liquid debt instruments denominated in euro and issued by regional and local authorities in the Eurozone in the list of assets eligible for regular purchases by the national central banks; WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 24
to continue conducting its main refinancing operations and the quarterly LTROs (long term refinancing operations) as fixed rate and full allotment auctions for as long as necessary, but at least until the end of the last period for maintenance of the 2017 reserves; The decisions were adopted with the objective for the inflation to return to the levels below, but close to 2 %, and thus to stabilize inflation expectations in the medium term. The new measures will ensure no restrictive financial conditions and will further strengthen the impact of the measures for significant facilitation taken from June 2014 onwards, which had a significant positive impact on the financing conditions, lending and the real economy.
2015 Base Interest Rates of the Bulgarian National Bank:
Month Base Interest Rate
January, 2015 0.01 %
February, 2015 0.01 %
March, 2015 0.01 %
April, 2015 0.01 % May, 2015 0.01 % June, 2015 0.02 % July, 2015 0.02 % August, 2015 0.01 % September, 2015 0.01 % October, 2015 0.01 % November, 2015 0.01 % December, 2015 0.01 % *Source:BNB
In 2015 the interest rate policy of commercial banks and BNB paved the way for strong liquidity growth in the banking system, although it was closely related to the financial and economic consequences of the political processes in Greece. A series of restrictive measures were introduced by the Bulgarian National Bank to commercial banks in the country with Greek shareholdings during the period. Findings in relation to preservation of the capital buffers for credit institutions were within ranges except for one bank, which was not specified by the BNB. According to BNB in 2015 the volumes traded on the BGN monetary market decreased significantly compared to the previous year due to the increased liquidity in the banking system and the weak credit activity. The low activity on the interbank monetary market in combination with the interest rates conditions in the Eurozone are pointed out by BNB as main factors for the decrease in the interest rates in all maturities traded between banks during the year. During the last 12 months the interest rates on interbank deposits with 3, 6 and 12 months term in the country and in the Eurozone continued following a long-term downward trend. According to BNB the continuing growth of attracted funds from residents together with the interest rate conditions on the interbank monetary markets in the country and in the Eurozone have been the incentives for commercial banks to further lower the interest rates on deposits in 2015. As of November 2015, the weighted average interest rate on new fixed term deposits in total for the sectors “non-financial enterprises” and “households” amounted to 1.1 % (2.1 % as of December, 2014). The decreasing price of borrowed funds and the increase in liquidity in the banking system together with the increased competition between banks in the presence of still low demand for borrowings have been the main factors according to BNB determining the decrease in the interest rates on loans in 2015. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 25
Interest rate risk could adversely affect the company in any eventual increase in the interest rates on loans, because the expenses for interests on the debt financing used by the company will increase, and this could have an adverse impact on its liquidity and financial results. POLITICAL RISK
Political risk is the likelihood of a governmental change or a sudden shift in its policy, occurrence of external or internal political disturbances and unfavorable changes in the European and/or national legislation, as a result of which the environment where local businesses operate to change adversely and investors - to suffer losses. Political risks for Bulgaria in the international aspect are associated with the commitments for implementation of significant structural reforms in the country in its capacity of a full-right EU member, enhancing social stability and reducing inefficient expenses. The Country Report Bulgaria of the European Commission, dated 26.02.2016 makes an in-depth review of all sectors and some of the main findings and forthcoming policy challenges for the country are indicated to be: The performance of the financial sector as a whole has stabilised, but risks remain. It is found that the banking sector liquidity and profitability has improved, but it is also indicated that a more robust assessment of the resilience of the sector can only be made based on the results of the upcoming asset quality review and stress test, which are expected towards late summer. Vulnerabilities in the non-banking sector have been identified that have yet to be addressed. Risks stemming from high corporate debt and barriers to deleveraging remain. The persistent negative inflation makes deleveraging more difficult and puts additional pressure on the profitability of non-financial corporations. The external position of the country as a whole has improved further but risks remain. Remaining weaknesses in the labour market continue to hinder growth and limit the adjustment capacity of the economy. It is noted that despite progress with reforms of active labour market policies, further improvement in matching people with vacancies is hindered by poor prioritisation, targeting and sustainability of measures in this area. The Country Report Bulgaria also found that “challenges persist regarding the business environment. An unstable legal framework and low trust in the judicial system hinder private investment. Furthermore, corruption remains an important concern in Bulgaria and the response of the national authorities continues to be hampered by weak and fragmented institutions. The slow implementation of reforms in the areas of public administration and e-government prevents significant improvements in the business environment. Furthermore, the outstanding weaknesses of the public procurement system limit the use of the European Structural and Investment Funds. Insufficient access to finance and lack of appropriate framework conditions for R&D investment hamper innovation and competitiveness. Delays with critical structural reforms in key sectors such as energy could further impede competitiveness.” Additional threat to the country represent the geopolitical risks including politics, diplomacy, international conflicts, crime and global governance. These risks are, in particular, terrorism, organized crime, illegal trade, corruption, regional military conflicts escalating conflicts over resources etc. In the report on global risks in 2015 were also added the following newly emerging risks: failure of national governments, inter-state conflicts with regional implications, large-scale terrorist attacks with political and / or religious purposes and weapons of mass destruction. Bulgaria together with the other countries – EU members from the region continue being seriously affected by the common European problem with the intensive refugee flow from the Middle East. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 26
Political risk will continue growing if the government fails to take adequate measures for consistent implementation and completion of the structural reforms in all sectors and implement an integrated policy for financial, economic and social stabilization of the country. Other factors that also influence this risk are possible legislative changes and in particular those concerning the economic and investment climate in the country.
CURRENCY RISK Exposure to currency risk is the dependence on and the effects from changes in the currency exchange rates. Systematic currency risk is the likelihood of any possible change of the currency regime in the country (currency board) which would either lead to devaluation of the BGN or the appreciation of the BGN against foreign currencies. Currency risk will have impact over companies having market shares, payments to which are made in currencies different from the Bulgarian lev and the euro. In view of the fact that according to the current legislation in the country the Bulgarian lev is pegged to the euro at the rate of EUR 1 = BGN 1.95583 and the Bulgarian National Bank is obliged to maintain a level of Bulgarian lev in circulation equivalent to the foreign exchange reserves of the Bank, the risk of devaluation of the lev against the European currency is minimal and consists in a possible elimination of the currency board in Bulgaria ahead of term. At this stage it appears to be unlikely since the Currency Board is expected to be repealed upon adoption of the euro as an official legal tender in Bulgaria. Theoretically, currency risk could increase when Bulgaria joins the second phase of the European Exchange Rate Mechanism (ERM II). This is a regime under which the country must maintain the currency rate against the euro within a + / -15% from central parity. In practice, all countries which are currently in the mechanism (Denmark, Estonia, Cyprus, Lithuania, Latvia, Malta) have witnessed fluctuations that were significantly smaller than the allowed ± 15%. The fixed rate of the BGN to the EUR does not eliminate the risk for the Bulgarian currency of adverse movements in the euro exchange rate against other major currencies (U.S. dollar, British pound, Swiss franc) in the international financial markets, but at present the company does not consider that this risk would be significant in terms of its activity due to the fact that all purchases and sales of the company are being carried out in euro. The company might be affected by the currency risk, depending on the type of currency of its cash and the type of currency of the company’s contingent loans. The combination between the impact of the global recession and the intensive process of globalization changes the profile of the “users” of this type of risk.Insurance of any kind of financial and currency risks is a regular practice in the Western Europe countries, in order to limit the risk for the respective company to maintain or increase its growth, and to begin working with new or unknown partners, while at the same time expressing confidence in their ability to correctly pay by providing commercial credit.
UNSYSTEMATIC RISKS
RISK OF PRICE CHANGES IN THE BASIC PRIME AND RAW MATERIALS
The principal activity of MONBAT AD is production and trading with accumulator and lead-acid batteries – starter batteries, stationary batteries for telecom application, semi-traction batteries, specialized batteries – army power range and locomotive batteries. Major prime and raw materials for the company’s production process are lead and lead alloys, polypropylene, polyethylene separator and sulfuric acid. For the last three years, lead takes the following percentage of the cost structure per unit: 2013 – 74 % WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 27
2014 – 70 % 2015 - 70 %
The movement of the lead price in 2015 is shown in the following diagram:
MOVEMENT OF THE LEAD PRICE FOR THE
PERIOD JANUARY - DECEMBER 2015
2200 2000 1800 1600 1400
May June July March April January August February October September NovemberDecember
USD/MT
*The average price of the lead for 2015 in USD/MT is 1794.95
The risk of price change in the basic raw material – lead is being managed by means of construction of company’s own recycling facilities.
DEPENDENCE OF MONBAT AD ON DISTRIBUTORS, SUPPLIERS, CUSTOMERS There is no dependence of MONBAT AD on customers due to the fact that company’s sales are not being made directly with customers but through the mediation of an extensive distribution network in the country and abroad. Sales with deferred payment in the country and for export are insured in the Bulgarian Export Insurance Agency (BAEZ) by reason of which the risk of non-payment on the part of the customers is completely eliminated. MONBAT AD is an export-oriented company. The company exports in 2015 most of its products as the most important markets asFrance,Germany, Spain and Greece.
DEPENDENCE OF MONBAT AD ON KEY PERSONNEL The professional activities and efforts, qualifications, motivation and reputation of the members of the corporate boards and the senior officials of MONBAT AD and the companies within the economic group are essential for achieving the strategic and investment objectives of the Company. The leave or release of any member of corporate boards or key executive official would, in the short term, negatively affect the smooth conduct of the company’s business activities. Nevertheless, the established management system and consistently applied corporate policy for provision of incentives to motivate employees within the structure, guarantee to a great extent the long-term participation of the corporate boards’ members and key management personnel in the activities of the company.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 28
RISK OF CHANGE IN THE DEMAND AND INTRODUCTION OF NEW TECHNOLOGIES This risk is related to demographic, economic and technological changes and determines the fact that the demand for company’s products might change over time also as a result of the introduction of new products. With the introduction of new technologies in the automotive industry (hybrid and electric cars), consistent with environmental protection and reduction of the separate carbon dioxide emissions to a minimum, the need for alternative energy sources such as new generation lead-acid batteries grows. At the same time, the need for multifunctional products - accumulator batteries - as a spare source for the photovoltaic power supply and lighting systems also grows. These new generation products could negatively affect the demand for an existing and approved product as a result of the fact that they are or at least they are perceived by consumers as more effective, more refined, combining new features, as well as due to the fact that they are more advertised. Monbat AD has not yet been exposed to such a risk, but in the future could be relatively exposed to such a risk since the principal products of the company are lead-acid batteries for various applications: starter batteries, stationary batteries for telecommunication application, semi-traction batteries, special batteries for military application and locomotive batteries. LIQUIDITY RISK Liquidity risk consists of the likelihood that MONBAT AD is unable to pay its current liabilities. The absolute liquidity ratio is calculated as the ratio of cash and short term liabilities and indicates company’s ability to meet its short term liabilities with its available cash. The absolute liquidity ratio of the company for 2015 is 0.28 For 2015 г. the company’s cash reports an increase by 28 % compared to the previous 2014 г. while the rate of the short term liabilities reports an increase by 117 %. The absolute liquidity ratio of the company for 2015 is 0.47 For 2014 the company’s cash reports a decrease by 59 % compared to the previous 2013 while the rate of the short term liabilities reports a decrease by 45 %.
ECOLOGICAL RISK The responsibility of MONBAT AD as the largest producer of accumulator batteries in Bulgaria and a dynamically developing public company finds expression also in the attitude towards environment. The management of MONBAT AD considers the activities directed towards pollution prevention or reduction aimed at achieving a maximum level of human health and environmental protection as a major priority and a crucial factor in the long-term and sustainable development. It is a company’s practice of long standing to provide clear and accurate environmental information on its products, services and activities to customers, suppliers and the general public. The management of MONBAT AD makes efforts to reduce the impact of the company on the environment through: Effective use of electricity and heat power/thermal energy; minimizing and recycling waste; preventing pollution through reducing and minimizing detrimental emission in the air and water; useing the best available techniques and best management practices when expanding the production; internal monitoring in terms of air, water and soil pollution; Self-control system - the establishment and operation of an internal control system is designed to achieve continuous compliance with the environmental, health and safety regulations WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 29 on the basis of the Integrated Management System. The self-control system evaluates the efficiency and effectiveness of the management system and the operations of MONBAT AD in general. Pursuant to the requirements of the Law on Health and Safe Labor Conditions and the respective subordinate legislation and the Disaster Protection Act, MONBAT AD has developed an emergency plan to carry out rescue and emergency recovery activities in case of disasters, emergencies and accidents which have occurred in the production process. The purpose of the protection plan is to preventively ensure the necessary materials, equipment and resources for effective activities to prevent the consequences of disasters and accidents; preparation of the personnel on the site for action; way of announcing and preparing the personnel; managing the personnel’s activities; procedures for putting the plan into action and informing the competent authorities; ways, means and procedures for notifying, when possible, the endangered population near the site; the procedure for carrying out the relevant rescue and emergency recovery activities on the territory of the site; procedures for restoring the activities on the site; ensuring the necessary measures for recreation of the environment. The development strategy of MONBAT AD includes participation in long-term socially useful projects in the environment protection area. The Company has a system for separate waste collection and disposal by means of building a network of containers for collecting old accumulator batteries with the distributors of MONBAT AD. Old batteries are among the widespread harmful waste and the company significantly contributes to environmental protection by collecting, neutralizing and recycling such batteries. Lead and polypropylene derived form recycling are put again in the production of new accumulator batteries and thus waste has been efficiently utilized. The company has established the only individual system for collecting old batteries in Bulgaria and operates under its own Program for management of spent lead-acid accumulator batteries.
FORCE MAJEURE
A number of force majeure circumstances such as natural disasters, accidents or intentional acts, could cause substantial property damages that could lead to temporary suspension and even cessation of the activities of the company. MONBAT AD has a full property insurance of the production facilities and storages of materials and production but in case of a continuous violation of the sequence of production activities, that fact could hardly compensate the lost profits.
ІV. IMPORTANT EVENTS, OCCURRED AFTER THE DATE OF THE ANNUAL FINANCIAL STATEMENTS
All important events, which have occurred after the date of the annual financial statements, were disclosed through the information disclosure system of MONBAT AD, namely - to the regulated securities market, the Financial Supervision Commission and the public. The information is also available on the website of the company www.monbat.com.
V. CURRENT TRENDS AND PROBABLE FUTURE DEVELOPMENT OF THE COMPANY
2013 INVESTMENTS
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 30
In2013 the overall amount of the investments made by MONBAT AD amounts to EUR 3 200 000.
2014 INVESTMENTS
In2014 the overall amount of the investments made by MONBAT AD amounts to EUR 3 293 000.
2015 INVESTMENTS
In 2015 Monbat AD has made investments totaling EUR 3 951 000 out of which directly bought assets in the amount of EUR 1 845 188. In 2015 the expenses on acquisition of tangible fixed assets amounted to EUR 2 105 812, allocated as follows: Block molding starter – EUR 195 800 Pasting line Accurate – EUR 179 440 Production Corps lead tape and fencing – EUR 374 744 Assembly line for stationary batteries – EUR 486 707 Other reconstructions – EUR 869 121
VІ. RESEARCH AND DEVELOPMENT ACTIVITIES
The management of MONBAT AD highly appreciates the importance of continuous development through elaborating new technologies and continuously invests significant resources and efforts in this direction. The activities related to development and adoption of new products is being carried out jointly by the Marketing and Trade Department, Technical Department, Production Department and Testing Laboratory. The company’s own research and development laboratory is equipped with modern, specialized electronic devices:
Spectrophotometer with inductively coupled plasma (ICP-OES) "VARIAN" for measuring the content of chemical elements in solutions. Atomic absorption spectrophotometer "GBC" for measuring metals in water samples or samples dissolved in mineral acids. Spectrophotometer "NOVA 400" Merk" for measuring concentration of elements in water and water samples. Emission Spectrometer "Metalys" for measuring the concentration of elements in solid samples based on lead. Conventional analytical chemical laboratory. Stands for testing electrical characteristics (charge / discharge) Bitrode TPN6-50/1500- 12 and Bitrode TPN12-25/600-12. Stand for simulation of a complete short circuit Cameras for thermal impact on test specimens TBV 2000. Equipment for mechanical impact on test specimens - shock and vibrostands.
The amount spent on research and development activities within the period 2013 – 2015 form a part of the overall amount spent on remunerations for the experts in the separate departments Marketing and Trade Department, Technical Department, Production Department and Testing Laboratory. Investments in research and development activities form a part of the WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 31 overall investment expenses of the company for the respective periods. With this regard the same can not be separated.
VІІ. INFORMATION REQUIRED PURSUANT TO ART. 187D AND ART. 247 OF THE COMMERCIAL LAW
1. The number and the nominal value of the acquired and transferred through the year own stocks; the share of the capital which they represent, as well as the price at which the acquisition or transfer have been executed
As at 31.12.2015 the company does not holds own shares.
2. The grounds for the acquisitions made through the year
Purcuant to the provisions of the company’s Articles of Association the Board of Directors of MONBAT AD has the power to initiare redemption procedures based on respective particular resolutions.
3. The number and the nominal value of the possessed own stocks and the share of the capital which they represent
As at 31.12.2015 the company does not holds own shares.
4. The total remuneration received during the year by the members of the boards
In 2015 the members of the Board of Directors have received the following remuneration:
Table № 18 Full name Position Net/BGN Atanas Bobokov Chairperson and Executive member of 418 004 the Board of Directors since 01.10.2015 Plamen Bobokov Member of the Board of Directors 324 000 Alexandar Chaushev Member of the Board of Directors 24 000 Nikolay Trenchev Member of the Board of Directors 24 000 Kamen Zahariev Member of the Board of Directors 0 Florian Huth Member of the Board of Directors 0 Peter Bozadzhiev Member of the Board of Directors 1619 Yordan Karabinov Member of the Board of Directors 1619 Eugen Peterhans Member of the Board of Directors until 147 829 15.12.2015 г. Ivan Karageorgiev Member of the Board of Directors until 22 380 15.12.2015 г. Petar Petrov Member of the Board of Directors until 64 936 25.06.2015 г.
The General Assembly of Shareholders held on 25.06.2015 authorized the Board of Directors of the Company to set additional remuneration for 2014 to the members of the Board of Directors of MONBAT AD in the total amount of up to BGN 600 000.
5. The acquired, possessed and transferred stocks and bonds of the company by the members of the Board of Directors during the year WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 32
As at 31.12.2015 the shares of the capital of MONBAT AD hold by members of the Board of Directors are as follows:
Atanas Bobokov – Chairperson of the Board of Directors – 110 shares
Alexandar Chaushev – Member of the Supervisory Board - 8 630 shares
6. The rights of the members of the Board of Directors to acquire stocks and bonds of the company
Members of the Board of Directors of the Company may freely acquire shares of the company’s capital on the regulated securities market subject to the provisions of the Law against Market Abuse with Financial Instruments and the Law on Public Offering of Securities.
THE PARTICIPATION OF THE MEMBERS OF THE BOARD OF DIRECTORS IN COMMERCIAL COMPANIES AS UNLIMITED LIABLE PARTNERS, THE POSSESSION OF MORE THAN 25 PERCENT OF THE CAPITAL OF ANOTHER COMPANY, AS WELL AS THEIR PARTICIPATION IN THE MANAGEMENT OF OTHER COMPANIES OR COOPERATIONS AS PROCURATORS, MANAGERS OR MEMBERS OF BOARDS
A/Atanas Stoilov Bobokov – Chairperson of the Board of Directors and Executive Director
Member of the Board of Directors of PRISTA OIL HOLDING EAD, UIC: 121516626, No20, Zlaten Rog Str., Lozenets district, Sofia
Managing partner - MIX OIL Ltd., UIC: 831015922, No1 Han Kubrat Str., floor 6, office 5, Rousse, holding 50 % of the capital
Managing Director of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Koshut Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia
Executive member of the Board of Directors of PRISTA REAL ESTATES AD, UIC: 175021319, No9, Layosh Koshut Str., Krasno Selo district, Sofia.
Member of the Board of Directors of START AD, UIC: 124712007, 4, Golo Burdo Str., Lozenets district, Sofia.
Member of the Board of Directors of OCTA LIGHT BULGARIA AD, UIC: 201133233, N 22, Veslets Str., Oborishte district, 1000 Sofia.
Member of the Board of Directors of MONBAT RECYCLING EAD, UIC: 200801562, 4, Golo Burdo Str., Lozenets district, Sofia.
Member of the Board of Directors of VUELTA EUROPE AD, UIC: 117546396, No 106, Lipnik Str., 7013 Rousse.
Member of the Board of Directors of WINERY HOUSE RUSE AD, UIC: 117630264, No 73, Borisova Str., 7012 Rousse. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 33
Member of the Supervisory Board of MARINE ANTIPOLLUTION ENTERPRISE AD, UIC: 813109299, South Industrial Area, Base oil terminal, Asparuhovo district, 9000 Varna
Partner – LEVENTA Ltd., UIC: 117632621, No 73, Borisova Str., 7012 Rousse, holding 50 % of the capital.
Partner – PRISTA OIL TRADING Ltd., UIC: 130343881, No9, Layosh Koshut Str., Krasno Selo district, 1606 Sofia, holding 36 % of the capital.
Atanas Bobokov was elected to be a Chairparson of the Board of Directors of MONBAT AD on 25.06.2012.
No coercive administrative measures or administrative penalties have been imposed on Atanas Bobokov with regard to his activities during the previous five years.
B/ Plamen Stoilov Bobokov - Member of the Board of Directors
Member of the Board of Directors of PRISTA OIL HOLDING EAD, UIC: 121516626, No20, Zlaten Rog Str., Lozenets district, 1407 Sofia
Managing partner - MIX OIL Ltd., UIC: 831015922, No1 Han Kubrat Str., floor 6, office 5, Rousse, holding 50 % of the capital
Managing Director of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Koshut Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia
Member of the Board of Directors of PRISTA REAL ESTATES AD, UIC: 175021319, No9, Layosh Koshut Str., Krasno Selo district, Sofia.
Member of the Board of Directors of VUELTA EUROPE AD, UIC: 117546396, No 106, Lipnik Str., 7013 Rousse.
Member of the Board of Directors of WINERY HOUSE RUSE AD, UIC: 117630264, No 73, Borisova Str., 7012 Rousse.
Member of the Supervisory Board of MARINE ANTIPOLLUTION ENTERPRISE AD, UIC: 813109299, South Industrial Area, Base oil terminal, Asparuhovo district, 9000 Varna
Partner – LEVENTA Ltd., UIC: 117632621, No 73, Borisova Str., 7012 Rousse, holding 50 % of the capital.
Partner – PRISTA OIL TRADING Ltd., UIC: 130343881, No9, Layosh Koshut Str., Krasno Selo district, 1606 Sofia, holding 36 % of the capital.
Plamen Bobokov was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012.
No coercive administrative measures or administrative penalties have been imposed on Mr. Plamen Bobokov with regard to his activities during the previous five years. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 34
C/Stoyan Zhivkov Stalev – Member of the Board of Directors
Stalev does not participate in management and supervisory bodies of other companies.
Stoyan Stalev was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012.
No coercive administrative measures or administrative penalties have been imposed on Mr. Stoyan Stalev with regard to his activities during the previous five years.
D/ Alexander Viktorov Chaushev – Member of the Board of Directors
Member of the Board of Directors of SOPHARMA AD, UIC: 831902088, No 16 Iliensko Shose, nadezhda district, 1220 Sofia.
Member of the Board of Directors of MANAGEMENT AND ADVERTIZING AGENCY IN SPORTS EAD, UIC: 130969084, No 42, Todor Alexandrov Blvd., Vuzrazhdane district, 1303 Sofia.
Member of the Board of Directors of DK – DOMOSTROENE AD, UIC: 102148397, Pobeda housing estate, 8000 Burgas.
Partner – SOFSERVICE Ltd., UIC 131407109, No 339, Tzar Boris III Blvd., Knyazhevo housing estate, Vitosha district, 1618 Sofia, holding 78 % of the company’s capital.
Alexander Chaushev was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012.
No coercive administrative measures or administrative penalties have been imposed on Mr. Alexander Chaushev with regard to his activities during the previous five years.
E/ Nikolay Georgiev Trenchev – Member of the Board of Directors
Partner – EKOTEH Ltd., UIC: 125026751, No 39, Tzar Osvoboditel Str., entr. D, floor 2, app. 11, 7700 Turgovishte, holding 75 % of the company’s capital.
Nikolay Trenchev was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012.
No coercive administrative measures or administrative penalties have been imposed on Mr. Nikolay Trenchev with regard to his activities during the previous five years.
F/ Kamen Zahariev – Member of the Board of Directors
Kamen Zahariev participates in the management of the following companies:
Uksnab Ltd, Ukraine WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 35
SPS Investment NY, Holland Prista Oil Holding EAD, Sofia, registered under comnay case № 13825/1994 of Sofia City Court, having its registered seat and business address at No 20, Zlaten Rog Str., Sofia, with UIC: 121516626
Kamen Zahariev was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012.
No coercive administrative measures or administrative penalties have been imposed on Mr. Kamen Zahariev with regard to his activities during the previous five years.
G/ Florian Huth – Member of the Board of Directors
Florian Huth participates in the management of the following companies:
AND GNG East Ukraine Ltd, BVI – Member of the Board of Directors Setcar Holdings Ltd, Cyprus – Member of the Board of Directors Prista Oil Holding EAD, Sofia, registered under comnay case № 13825/1994 of Sofia City Court, having its registered seat and business address at No 20, Zlaten Rog Str., Sofia, with UIC: 121516626
Florian Huth was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012.
No coercive administrative measures or administrative penalties have been imposed on Mr. Florian Huth with regard to his activities during the previous five years.
H/ Peter Bozadzhiev – Member of the Board of Directors
Peter Bozadzhiev participates in the management of the following companies:
„ Prista Oil Holding EAD, Sofia, registered under comnay case № 13825/1994 of Sofia City Court, having its registered seat and business address at No 20, Zlaten Rog Str., Sofia, with UIC: 121516626
Peter Bozadzhiev was elected to be a memer of the Board of Directors of MONBAT AD on 07.12.2015 г.
No coercive administrative measures or administrative penalties have been imposed on Peter Bozadzhiev with regard to his activities during the previous five years
J/ Yordan Karabinov – Member of the Board of Directors
Yordan Karabinov participates in the management of the following companies:
The Bulgarian Institute of internal auditors – Chairperson J&K Partners LTD, Sofia , with UIC 175277788 Contro, Sofia, with UIC 201971539 Kraimorie Beach LTD with UIC 201642757
Partner in Contro, Sofia, with UIC 201971539 WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 36
The owner of the capital of: J&K Partners LTD, Sofia , with UIC 175277788 Kraimorie Beach LTD with UIC 201642757
Yordan Karabinov was elected to be a memer of the Board of Directors of MONBAT AD on 07.12.2015 г. No coercive administrative measures or administrative penalties have been imposed on Yordan Karabinov with regard to his activities during the previous five years
MANAGEMENT EXPERTISE AND EXPERIENCE OF THE MEMBERS OF THE BOARD OF DIRECTORS Atanas Stoilov Bobokov – Chairperson of the Board of Directors and Execitive Director
Table № 19 Education Higher economic education - 1985 г.
Higher Institute of Economics “Karl Marx”, Sofia
Relevant professional experience Member of the Board of Directors of PRISTA OIL HOLDING EAD, UIC: 121516626, No20,
Zlaten Rog Str., Lozenets district, Sofia Managing partner - MIX OIL Ltd., UIC: 831015922, No1 Han Kubrat Str., floor 6, office 5, Rousse, holding 50 % of the capital Managing Director of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Koshut Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia Executive member of the Board of Directors of PRISTA REAL ESTATES AD, UIC: 175021319, No9, Layosh Koshut Str., Krasno Selo district, Sofia. Member of the Board of Directors of START AD, UIC: 124712007, 4, Golo Burdo Str., Lozenets district, Sofia. Member of the Board of Directors of OCTA LIGHT BULGARIA AD, UIC: 201133233, N 22, Veslets Str., Oborishte district, 1000 Sofia. Member of the Board of Directors of MONBAT RECYCLING EAD, UIC: 200801562, 4, Golo Burdo Str., Lozenets district, Sofia. Member of the Board of Directors of VUELTA EUROPE AD, UIC: 117546396, No 106, Lipnik Str., 7013 Rousse. Member of the Board of Directors of WINERY HOUSE RUSE AD, UIC: 117630264, No 73, WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 37
Borisova Str., 7012 Rousse. Member of the Supervisory Board of MARINE ANTIPOLLUTION ENTERPRISE AD, UIC: 813109299, South Industrial Area, Base oil terminal, Asparuhovo district, 9000 Varna. Partner – LEVENTA Ltd., UIC: 117632621, No 73, Borisova Str., 7012 Rousse, holding 50 % of the capital. Partner – PRISTA OIL TRADING Ltd., UIC: 130343881, No9, Layosh Koshut Str., Krasno Selo district, 1606 Sofia, holding 36 % of the capital.
Plamen Stoilov Bobokov – Member of the Board of Directors
Table № 20
Education Higher Legal education
In 1993 graduated from Sofia University “St. Kliment Ohridski”
Relevant professional experience Member of the Board of Directors of PRISTA OIL HOLDING EAD, UIC: 121516626, No20, Zlaten Rog Str., Lozenets district, 1407 Sofia Managing partner - MIX OIL Ltd., UIC: 831015922, No1 Han Kubrat Str., floor 6, office 5, Rousse, holding 50 % of the capital Managing Director of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Koshut Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia Member of the Board of Directors of PRISTA REAL ESTATES AD, UIC: 175021319, No9, Layosh Koshut Str., Krasno Selo district, Sofia. Member of the Board of Directors of VUELTA EUROPE AD, UIC: 117546396, No 106, Lipnik Str., 7013 Rousse. Member of the Board of Directors of WINERY HOUSE RUSE AD, UIC: 117630264, No 73, Borisova Str., 7012 Rousse. Member of the Supervisory Board of MARINE ANTIPOLLUTION ENTERPRISE AD, UIC: 813109299, South Industrial Area, Base oil terminal, Asparuhovo district, 9000 Varna. Partner – LEVENTA Ltd., UIC: 117632621, WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 38
No 73, Borisova Str., 7012 Rousse, holding 50 % of the capital. Partner – PRISTA OIL TRADING Ltd., UIC: 130343881, No9, Layosh Koshut Str., Krasno Selo district, 1606 Sofia, holding 36 % of the capital.
Stoyan Zhivkov Stalev – Member of the Board of Directors
Table № 21 Education Higher Legal education
In 1978 graduated from Sofia University “St.Kliment Ohridski”
Relevant professional experience 1980 - 1991 - Research Associate and Senior Research Associate /Associate Professor/ in
the BAS Institute of Legal science 1985 - Doctor of Legal Sciences 1990 - 1991 – Legal advisor to the President of the Republic of Bulgaria Zhelyo Zhelev 1991 - 1998 – ambassador of the Republic of Bulgaria in Germany 1997 – Minister of the Foreign affairs in the government of Mr. Stefan Sofiyanski 1998 – 2006 – ambassador of the Republic of Bulgaria in Turkey 2006 – 2010 Executive director of the Bulgarian Investment Agency
Alexander Viktorov Chaushev – Member of the Board of Directors
Table № 22 Education Higher Economic education
In 1991 graduated from Moscow State Institute of International Relations
Relevant professional experience 1993 - Expert in the Ministry of Commerce 1994 -1996 - Manager of Agroengineering 90
EOOD In 1997 – Manager of “Nafta Trading” AD In 1998 – Vice-president of “Agrohold” AD 1999 - 2001 - First Deputy Executive WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 39
Director of “Lukoil Bulgaria” EOOD 2001 - 2004 Manager of “Litasko Bulgaria” EOOD 2004 – 2006 Executive Director of
“Agrohold” AD Member of the Board of Directors of SOPHARMA AD, UIC: 831902088, No 16 Iliensko Shose, nadezhda district, 1220 Sofia. Member of the Board of Directors of MANAGEMENT AND ADVERTIZING AGENCY IN SPORTS EAD, UIC: 130969084, No 42, Todor Alexandrov Blvd., Vuzrazhdane district, 1303 Sofia. Member of the Board of Directors of DK – DOMOSTROENE AD, UIC: 102148397, Pobeda housing estate, 8000 Burgas. Partner – SOFSERVICE Ltd., UIC 131407109, No 339, Tzar Boris III Blvd., Knyazhevo housing estate, Vitosha district, 1618 Sofia, holding 78 % of the company’s capital.
Nikolay Georgiev Trenchev – Member of the Board of Directors
Table № 23 Education Higher Legal educationIn 1976 graduated from Sofia University “St. Kliment Ohridski”
Relevant professional experience December 1976 - until present – lawyer, registered with the Sofia Bar Association 1992 - until present - partner in law office Malchev, Trenchev and Partners
For the period 1992 - 1996 - legal advisor of numerous Bulgarian and foreign companies, including advisor on privatization transactions. Partner – EKOTEH Ltd., UIC: 125026751, No 39, Tzar Osvoboditel Str., entr. D, floor 2, app. 11, 7700 Turgovishte, holding 75 % of the company’s capital. Partner - BELNIKOLOV, PETROV AND PARTNERS Ltd., UIC: 175217702, 4, Golo Burdo Str., Lozenets district, 1407 Sofia, holding 25 % of the capital.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 40
Kamen Zahariev – Member of the Board of Directors
Table №24 Education University Degree in International and Comparative Law, Moscow Institute of International Relations (Diploma "with distinction", top 5% of class), 1982
Ph.D. (Doctor Juris) in international law, Institute of Law, Academy of Science, Berlin, Germany, 1987 (Award: "Summa cum laude").
Further Education in Banking and Finance:
1. Imperial College, University of London, Diploma in mining projects appraisal and finance.
2. Attendance at several training and further education courses:
EUROMONEY courses on corporate and project finance, syndicated loans,
European Bank in-house credit training and courses in negotiation and presentation skills,
Completed all EBRD senior management and leadership skills training courses in- house, Personal coaching.
Relevant professional experience Participates in the management of the following companies:
Uksnab Ltd, Ukraine SPS Investment NY, Holland Prista Oil Holding EAD, Sofia, registered under comnay case № 13825/1994 of Sofia City Court, having its registered seat and business address at No 20, Zlaten Rog Str., Sofia, with UIC: 121516626 Memer of the Board of Directors of MONBAT AD.
Florian Huth – Member of the Board of Directors Table №25 Education Master in Business Administration and a CFA charter holder as well as a Certified Public Accountant WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 41
Relevant professional experience Participates in the management of the following companies:
AND GNG East Ukraine Ltd, BVI – Member of the Board of Directors Setcar Holdings Ltd, Cyprus – Member of the Board of Directors Member of the Board of Directors of MONBAT AD. Member of the Board of Directors of
Peter Bozadziev - Member of the Board of Directors
Table №26 Education University of Portsmouth, UK BA (HONS) in Business Administration
Civic Education Project, Central European University & Jale University Diploma in Public Administration and Executive Management, Negotiation Analysis
Relevant professional experience Prista Oil Holding EAD, Executive Director and Board Member
PO GROUP BV, GROUP CFO
MONBAT Economic group, CFO
Senior Memager PwC Serbia doo
Senior Memager PwC Bulgaria Ltd.
Yordan Karabinov
Table №27 Education IMD MBA – Institute of Development of the Management, Switzerland
American University in Bulgaria - BA in Business AdministrationВтора
Second specialization: Political Sience and International Relations
Member of ACCA, USA WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 42
CIA
Relevant professional experience The Bulgarian Institute of internal auditors – Chairperson
J&K Partners LTD, Sofia
Contro, Sofia, with UIC 201971539
Kraimorie Beach LTD with UIC 201642757
7. Executed contracts in 2015 with members of the Board of Directors or their related persons beyond the usual activity of the company or substantially diverted from the market requirements
In 2015 ave not been executed transaction with members of the Board of Directors or their related persons beyond the usual activity of the company or substantially diverted from the market requirements.
8. Planned economic policy for the next year, including the expected investments and development of the personnel, the expected revenue from investments and development of the company, as well as the forthcoming transactions of substantial importance for the activity of the company
The company presents information on the consolidated sales revenues and the profit on monthly basis.
VІІІ. AVAILABILITY OF BRANCHES OF THE ENTERPRISE
The company does not have registered branches in the country and abroad.
ІХ. FINANCIAL INSTRUMENTS USED BY THE COMPANY
In 2015 the company didn’t use any financial instruments
Х. INFORMATION ON THE CORPORATE GOVERNANCE PROGRAM AND ITS IMPLEMENTATION
The Code is being applied based on the “comply or explain” principle. This means that the company adheres to the Code and in case of any diversion, its Corporate Board should clarify the reasons for that. MONBAT AD provides this information on the compliance with the Code as the latter will also be posted on the company’s website.
CORPORATE BOARD – BOARD OF DIRECTORS
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 43
All members of the Board of Directors meet the legal requirements for taking the position they occupy. The functions and obligations of the Corporate Board as well as its structure and competences are in conformity with the requirements of the Code. The Board of Directors manages the company in accordance with the established vision, goals and strategy of the company and the interests of the shareholders. In their activities the members of the Board of Directors are being guided by the generally accepted principles of integrity and managerial and professional competence. The remunerations of the members of the management are being announced in the Annual Report of the Board of Directors in compliance with the legal requirements, the Company’s by- laws and the Code of Ethics. Shareholders have an easy access to information on the remunerations received by the members of the company’s management. The basic principles for setting the remuneration of the members of the Board of Directors - permanent and additional are regulated by the Remuneration policy for the Board of Directors. The Board of Directors presents as a part of the Company’s annual financial statements a Report on the implementation and execution of the Remuneration Policy. Members of the Board of Directors avoid and do not allow any real or potential conflict of interests. In 2015 the Board of Directors performed its functions as monitoring the compliance with laws and rules laid down in the company’s by-laws. The present composition of the Board of Directors guarantees the independence and objectiveness of the resolutions and actions of its members. The Board of Directors of MONBAT AD consists of nine members as three of them are independent within the meaning of LPOS. The independent members of the Company’s Board of Directors act in the best interest of the company and the shareholders, impartially and in a non-aligned manner. The members of the Board of Directors have appropriate knowledge and experience necessary for the positions they occupy. Four of the members of the Board of Directors have higher legal education and the other member – higher economic education. In this regard, the Company has implemented the requirements of the National Code on the necessary knowledge and experience for the position occupied by members of the Board of Directors. After their election the members of the Board of Directors have not attended an induction program on legal and financial issues related to the company in view of the fact that they have the necessary education, qualifications and experience and are fully aware with the company’s activities. Members of the Board of Directors who are not independent members have long-term professional experience in the company and a thorough knowledge about its activities. The general assembly of the shareholders approves the remuneration of the members of the Board of Directors – permanent and additional based on the approved and applied Remuneration Policy for the members of the Board of Directors. The remuneration of the members of the Board of Directors is based on their activities and responsibilities. The remuneration of the independent members is permanent and reflects their participation in Board meetings, performance of their tasks to control the operations of the executive management and effectively participate in the Company’s business. The independent director does not receive any additional remuneration from the company. It is not provided that members of the Board of Directors are to be compensated for their activities with shares or options. Information disclosure on the remuneration of members of the Board of Directors is in compliance with the legal requirements and the Company’s by- laws. MONBAT AD has adopted the following documents with regard to the activities and remunerations of the corporate board’s members: • Rules for setting the remunerations and bonuses of members of the Board of Directors as well as the total cash amount received during the year in relation to the position they occupy. • Rules and restrictions on the value of gifts that members of the Board of Directors may WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 44 receive. • Rules on interested and related parties transactions. • Remuneration Policy for the members of the Board of Directors of Monbat AD
The Company’s Board of Directors is being supported by an audit committee elected by the general assembly of shareholders.
1. Audit Committee
At the regular session of the annual general assembly of shareholders of MONBAT AD held in 2015 was approved a resolution for election of the company’s audit committee, namely: the general assembly elected an audit committee with the following members: Irena Vakova, Elena Dimanina and Svitlana Samko. All members of the audit committee are independent.
AUDIT AND INTERNAL CONTROL
The company has a functioning internal control and risk management system /ICRM system/ that guarantees the effective functioning of reporting and information disclosure systems. The ICRM system was elaborated and functions also with a view to identify risks that pursue the activities of the company and support their effective management. Senior management has the main responsibility and role in terms of developing the internal control and risk management system. It performs both managing and guiding function and also ongoing monitoring. The ongoing monitoring on the part of the senior management consists of assessment whether the ICRM system is still suitable for the company in the conditions of changed environment, whether it acts as expected and whether it is periodically adjusted to changed conditions. Assessment of selected areas, carried out in this context, as a responsibility of the senior management complies with the priorities of the company. The assessment is also proportionate to the characteristics of the company and the impact of the risks identified. The senior management reports to the audit committee on the basic characteristics and peculiarities of the ICRM system and also on key issues, including main incidents established and the respectively approved or applied corrective measures.
SHAREHOLDERS' RIGHTS PROTECTION
The Corporate Board of MONBAT AD guarantees equal treatment of all shareholders of the Company, including minority and foreign ones. The Company provides protection of the rights of every shareholder through: • Facilitating shareholders to participate effectively in the work of the general assemblies of shareholders by means of timely disclosure of the materials for the GAS through 3 media agencies - EXTRI NEWS, INFOSTOCK, INVESTOR.BG and on its website www.monbat.com. News about the company is also being disclosed through the social network Facebook, where a group of MONBAT’s investors was set up. Information disclosure to financial media, analysts, current and potential investors is being made through sending all news and report to a mailing list with over 600 contacts. All news are being made public in Bulgarian and English language. • Carrying out clear procedures for convening and holding general assemblies of the shareholders - ordinary and extraordinary sessions. Every invitaion for holding a general assembly of the shareholders includes explanation in details on the procedures for exercising the right to vote and the possibility to participate in the session of the GAS. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 45
Pursuant to the Company’s Articles of Association, exercising the right to vote is also possible through correspondence and electronic means. • The Board of Directors affords an opportunity for all shareholders to participate in the distribution of the company’s profit, in the event that the General Assembly of Shareholders has approved a particular resolution for dividend distribution. • The overall policy of the company to support shareholders in exercising all their rights is being carried out through the Investor Relations Director of the company.
INFORMATION DISCLOSURE
The Corporate Board applies Rules on the inside information and the insiders for the company that regulate also the obligations, the procedure and responsibility for public disclosure of inside information for MONBAT AD, a prohibition for trading in the presence of inside information and manipulation of the financial instruments market. The Board of Directors of MONBAT AD believes that with its activities in 2015 has created preconditions for sufficient transparency in its relations with investors, financial media and analysts on the capital market. The Corporate Board of MONBAT AD discloses the monthly consolidated results of the company to the investors. During the reported 2015 the company has disclosed any regulated information within the time limits and under the procedure provided for in the LPOS and the respective by-laws. An Investor Center section was set up on the Company’s website. This section of the website aims to facilitate receiving of timely and relevant information from investors of the company - shareholders, potential investors, financial media and analysts, and to create maximum transparency in the relations between them and the company's management. Updated information on the most important corporate events, materials from held and upcoming events can be found in there. This section contains information on the financial and economic standing of the company, the implementation of the internationally acknowledged good corporate governance standards. The business organization of the Board of Directors, of the sessions of the General Assembly of Shareholders enables equal treatment of all shareholders, irrespective of the number of shares they hold. The Investor Relations Director communicates with due care and precision with all investor groups. The company has established and approved the practice to ensure effective communication with all shareholders. The management of the Company realizes that presentations of the company in various specialized economic editions have a favorable effect over the complete image of the company - extending the range of investors and customers, making the production popular. Therefore, it is of utmost importance for the management of the company that the information presented to financial media analysts is accurate, precise and reliable. The Investor Relations Director, as a liaison between the management of the company and its investors, develops the overall policy in terms of relations with financial media, provides direct contact with them, discloses important information to investors on the condition and plans of the company, strictly observing the information disclosure principles, considering what information constitutes a trade secret and what information should be publicly disclosed. This policy will be further developed and regularly updated at the discretion of the Investor Relations Director.
STAKEHOLDERS
The company identifies as stakeholders all persons interested in the economic prosperity of MONBAT AD – shareholders, workers and employees, customers, suppliers, distributors, bank – creditors and the community as a whole. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 46
The Board of Directors encourages the co-operation between the company and the stakeholders aimed at increasing the prosperity of all parties and providing sustainable development of the company. The company provides the stakeholders with the necessary information on its activities, current data on the financial standing and all the information that would contribute to their correct orientation and decision making. With reference to the internal regulations of some stakeholders of the company, MONBAT AD provides them with particular Reports on the SCR policies of the company related to ecology, safe and healthy labor conditions, anti-corruption and human resources. In its stakeholder policy the company complies with the legislative requirements, based on the transparency, accountancy and business ethics principles. MONBAT AD is a member of the UN Global Compact Network, and the management of the company adopted the Global Compact principles and engaged itself with applying in its activities socially responsible practices in all directions, covered by its ten core principles. The management of MONBAT AD has engaged itself to voluntarily, actively and consistently apply socially responsible employment practices that exceed the requirements of the employment legislation. The management of MONBAT AD considers pollution prevention or reduction activities aimed at achieving a maximum level of human health and environmental protection as a fundamental priority of the company and determining factor in its long-term and sustainable development. The Board of Directors of MONBAT AD annually elaborates and makes public, including through the website of the company, a Report (Communication on Progress) on the initiatives undertaken during the reported year in the four main areas of operation of the Global Compact principles, namely: human rights protection, labor rights protection, environmental protection and supporting anti-corruption initiatives and transparency policy. These reports for the respective year are being posted on the website of the company, “About Us” Section, “Corporate Social Responsibility”
ХІ. ADDITIONAL INFORMATION UNDER SECTION VI A OF APPENDIX NO 10 OF ORDINANCE NO 2 OF 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 revenues from sales of the issuer as a whole and the changes that occurred during the reporting fiscal year
SOLD CONTINGENT ACCUMULATOR BATTERIES 12V55AH FOR THE PERIOD 2013 - 2015
Table № 28 Year 2013 2014 2015 Number of accumulator batteries sold 2 257 935 2 282 652 2 565 681
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 WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 47 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 issuer
Information about the revenues allocated by major categories of activities
Table № 29 (in thousand BGN) REVENUES 2013 2014 2015 1 % 2 % 3 А. Operating revenues I. Net revenues from the sale of: 1. Finished goods 198676 0% 198008 11,62% 221013 2. Goods for sale 324 -12,96% 282 -33,33% 188 3. Services 1019 2,55% 1045 18,56% 1239 4. Other 45391 7,56% 48824 45,68% 71125 I: Total net revenues from sale 245 410 1,12% 248 159 18,30% 293 565 II. Revenues from financing for fixed assets 529 incl. government grants II: Total 529 100% 508 26,38% 642 III. Financial income 1. Interest revenue 2627 13,78% 2989 -22,78% 2308 2. Divident income 0 0% 0 0% 0 3. Gains from operations with financial assets 0 0 and instruments 0% 0% 0 4. Gains from foreign exchange operations 81 316% 337 20% 406 5. Other financial income 195 0% 0 0% 0 III: Total financial income 2 903 14,57% 3 326 -18,40% 2 714 B. Total revenues before extraordinary activities (I+II+III) 248 842 1,27% 251 993 17,83% 296 921
Information about the the revenues allocated by local and external markets
Breakdown of revenues by markets is presented in Chapter II of this Report.
3. Information about concluded big transactions and such of material importance for the issuer’s activity
In 2015 MONBAT AD has not concluded big transactions which are of material importance for the issuer’s activity.
4. Information about the transactions concluded between the issuer 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
In 2015 MONBAT AD has concluded transactions with related parties as follows:
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Table № 30
Related party Type of relation Transactions START AD, Sofia Subsidiary company of MONBAT Sale of materials and AD as MONBAT AD holds 87.26 % production on the part of of the capital MONBAT AD START AD, Sofia Subsidiary company of MONBAT Purchase of materials on the AD as MONBAT AD holds 87.26 % part of MONBAT AD of the capital MONBAT RECYCLING EAD Subsidiary company of MONBAT Sale of materials and others BULGARIA AD as MONBAT AD holds 100 % of on the part of MONBAT AD the capital MONBAT RECYCLING EAD Subsidiary company of MONBAT Purchase of materials on the BULGARIA AD as MONBAT AD holds 100 % of part of MONBAT AD. the capital MONBAT RECYCLING Subsidiary company of Monbat Purchase of materials on the ROMANIA Recycling EAD Bulgaria, as part of MONBAT AD. MONBAT AD holds 100 % of the capital
No transactions with related parties have been concluded which are outside its usual activity or substantially deviate from the market conditions.
5. Information about events and indicators of unusual for the issuer nature, having substantial influence over its operation and the realized by it revenues and expenses made; assessment of their influence over the results during the current year
During 2015 has not occurred an unpredictable and unforeseen circumstance of an extraordinary nature, which has had an impact on the company.
6. Information about off-balance kept transactions in 2015 – 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
In 2015 were not concluded off-balance kept 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 asthe investments in equity securities outside its economic group and the sources/ways of financing
As of 31.12.2015 MONBAT AD has directl and indirect holdings in the following subsidiary companies within the economic group if the issuer:
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 49
Table № 31 Company’s Principal activity Capital share or name percentage of votes at the General Assembly as of 31.12.2015 MONBAT Recycling of accumulator batteries and lead scrap, lead alloys, 100 % of the capital PLC DOO, polyethylene and polypropylene materials, trading in Serbia accumulator batteries, batteries, lead, polyethylene and polypropylene scrap and materials on the territory of the Republic of Serbia as well as export and import from and to the Republic of Serbia of scrap, materials and finished goods. START AD, Production, service and marketing of accumulator batteries; 87,26 % of the voting Sofia engineering and development-implementation activities; shares production and marketing of equipment for production of accumulator batteries; foreign and domestic trade and setting up commercial networks, specialized stores and representation offices. SC MONBAT Recycling of accumulator batteries and lead scrap, lead alloys, 100 % of the capital RECYCLING polyethylene and polypropylene materials, trading in SRL – accumulator batteries, batteries, lead, polyethylene and Romania polypropylene scrap and materials on the territory of the Republic of Romania as well as export and import from and to the Republic of Romania of scrap, materials and finished goods. MONBAT Recycling of accumulator batteries and lead scrap, lead alloys, 100 % of the capital RECYCLING polyethylene and polypropylene materials, trading in EAD – accumulator batteries, batteries, lead, polyethylene and Bulgaria polypropylene scrap and materials on the territory of Bulgaria. OCTA Manufacturing of high power light emitting diodes – 51 % of the capital LIGHT manufacturing of single color (white), multicolor (blue, red, BULGARIA green), high power (from 0.5W to 5W), highly effective (above AD 100 lumen/Watt) user orientated (<80 lumen/Watt) series of light emitting diodes for general and specific purposes. Engineering in the field of lighting industry in the country and abroad, including marketing, feasibility studies, design. Design and manufacturing of specialized lighting fixtures and luminaries for general purpose for street, architectural, stage and accent lighting Design, manufacturing and installation of whole lighting systems, including implementation of energy-efficient lighting solutions, work with municipalities and private corporations. Complex engineering and exploitation of installations on ESCO agreements within the territory of Bulgaria and abroad (attractive nearby markets as Greece, Serbia, Rumania, future markets as Western Europe). Investment and development in the field of optoelectronics, studies and experimental activities for the implementation of new products and materials for the manufacturing of high power LEDs and their use for general lighting; development of new products and concepts for the introduction of high power light emitting diodes for mass usage. MONBAT Trade company with scope of activity: trading, service and 99 % of the capital WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 50
ROMANIA marketing of accumulator batteries, accumulator, lead, OOD polyethylene and polypropylene scrap.
8. Information about the concluded by the issuer, by its subsidiary or parent undertaking, 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
Long-term loans
Amount and maturity date of the loans of MONBAT AD as at 31.12.2015
Table № 32
Utilized Contract № Maturity Type of Amount amount as of Bank and date date credit Currency of credit 31.12.2015 г. Collateral Eurobank 100- Investment Bulgaria AD 532/16.05.2007 16.05.2017 loan EUR 6 100 000 1 080042 yes
Reiffeisen Bank 28.11.2013, Аnnex 15.12.2016/15.1 Investment EAD № 2/12.02.2014 1.2018 loan EUR 5 700 000 2 967 330 yes Reiffeisen Bank Revolving EAD 25.02.2014 15.02.2017 loan EUR 3 200 000 3 146 454 yes Eurobank Bulgaria AD 339/07.12.2014 01.09.2014 Credit line EUR 2 200 000 1 197 BGN yes Unicredit Investment Bulbank 1099/14.06.2007 11.06.2017 loan EUR 6 228 000 0 yes Eurobank 100 -972/2010 01.09.2016 Overdraft EUR 1 000 000 0 yes Bulgaria AD Аnnex 29.07.2014 Hipo Noe 16.05.2014 г. 03.10.2016 Investment EUR 10 000 000 10 000 000 yes Gruppe Bank loan AG DSC Bank №1675/16.09.2015 10.09.2016 Overdraft EUR 2 500 000 400 000 yes
DSC Bank №1674/16.09.2015 10.09.2016 Overdraft EUR 2 000 000 0 yes
9. Information about the concluded by the issuer, by its subsidiary or the parent undertaking, in their capacity of lenders, loan contracts, including the provision of guarantees of any type, including to related persons, with indication of the concrete conditions there under, including the deadlines for repayment and the purpose for which they have been granted
The main contracts for loans granted to related parties are presented as follows:
MONBAT RECYCLING EAD
Contract, dated 05.11.2011 Firstly receivables of Monbat AD from Monbat Recycling EAD of the amount of BGN 12 734 had been increased with deals from transfers of receivables and other transaction with companies. Credit term: Till the fully acquittal of the debt WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 51
Interest: 6 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 10 435 thousand Redemption: Montly payment of principles at the amount of BGN 251 thousand till 14.03.2014 and from 01.04.2014 the amount of BGN 124 thousand including interests form of the debt of investment loans in Unicredit Bulbank N 1099/11.06.2007, the loan is refinanced from Raifaizenbank EAD and Eurobank EFG AD N 100-532/16.05.2007.
• Contract, dated 17.03.2014 for selling a receivable Monbat AD cedeed to Monbat Recycling EAD the receivable from Monbat Romania OOD for the amount of BGN 602 thousand . Balance on the receivable as of 31.12.2015 - BGN 602 thousand
• Contract, dated 21.10.2014 – loan The amount of the loan 3 960 000 EUR, 7 745 087 BGN. Maturity date10.05.2016 г. Interest 3 M EURIBOR + fixed mark-up Utilized amount as of 31.12.2015 at the amount of BGN 5 867 000 With an Annex from January 2015 the amount of the loan was changed to 3 000 000 EUR. With an Annex as of 06.01.2015 the interest rate on all granted loans was reduced to 4%. The other conditions were left unchanged.
OCTA LIGHT BULGARIA AD
Contract, dated 29.02.2012 Utilized principle: BGN 4 660 thousand Credit term: 31.12.2013 Interest: 8 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 4 660 thousand Collateral: Pledge on the machines and installations, secured with a Promissory Note Redemption: no redemption plan The loan of BGN 4 660 thousand was impaired during 2012 and 31.12.2014. Contract, dated 2013 Utilized principle: BGN 3 510 thousand Credit term: 31.12.2013 Interest: 8 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 1 380 thousand Collateral: Pledge on the machines and installations, secured with a Promissory Note Redemption: no redemption plan Part of the loans granted in 2013 and 2014 in the amount of BGN 2685 000 and the accrued interest in the amount of BGN 649 000 were devalued as of 31.12.2014.
Contracts, dated 2014 Utilized principle: BGN 3 990 thousand Credit term: 31.12.2014 Interest: 8 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 3 990 thousand Collateral: Pledge on the machines and installations, secured with a Promissory Note Redemption: no redemption plan WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 52
With annex from 01.10.2014 the interest rate was changed to 5% and credit term to 31.12.2014. All the other conditions of the loan contracts are re-negotiated with the same conditions.
Contracts, dated 2015 г.
Utilized principle: BGN 7 475 thousand Credit term: 31.12.2015 Interest: 5 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 7 475 thousand Collateral: Pledge on the machines and installations, secured with a Promissory Note Redemption: no redemption plan Collaterals granted under the contracts were a pledge on the machines and equipment, secured by a promissory note. With annex as of 25.05.2015 the interest rate on all granted loans was reduced to 4% and the repayment term was set to be 31.12.2018. The other conditions were left unchanged.
PRISTA OIL HOLDING EAD
Contract, dated 2013 Deposits granted to Prista Oil Holding EAD Utilized principle: BGN 17 594 thousand Credit term: 22.04.2015 Interest: 6 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 11 328 thousand Redemption: no redemption plan
Contract, dated 2014 Deposits granted to Prista Oil Holding EAD Utilized principle: BGN 2 900 thousand Credit term: 24.04.2015 Interest: 6 % annual interest rate Balance on the principle as of 31.12.2014 - BGN 2 900 thousand Redemption: no redemption plan With annex as of 01.06.2015 the interest rate on all granted loans was reduced to 4%. The other conditions were left unchanged.
START AD
Contract, dated 16.12.2014 - loan Utilized principle: BGN 5 867 thousand Credit term: 06.02.2015 Interest: 4 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 0 Redemption: no redemption plan
10. Information on the use of the funds from a new issue of securities carried out during the reported period
During the reported period the company has not issued a new issue of shares. WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 53
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
The Company has not published a Forecast for 2015.
12. Analysis and assessment of the policy concerning the management of the financial resources with indication of the possibilities for servicing of the liabilities, eventual jeopardizes and measures which the issuer has undertaken or is to undertake with a view to their removal
The management of the financial resources is subject to the requirement to achieve maximum efficiency with the simultaneous observance of agreed payment terms both with suppliers and customers. This means predominant use of own resources which leads to lower financial costs. A result of such a policy of managing the financial resources is faster reduction of the period for collection of receivables compared to the period for payment of liabilities. This leads to an effective increase of the cash in the company and to the possibility for the investment costs to be financed without this being always at the expense of resources attracted by banks, which reduces the interest costs. On the other hand, this way a significant reserve of unused credits is preserved that can be used for both current and investment expenditures thus maintaining high liquidity of payments.
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
As a result of the successfully completed by MONBAT AD Project “Increasing the competitiveness of Monbat Plc by investing in new equipment for grid and plate for dry charged and gravity casted lead acid batteries producing”, approved with a Resolution No ТМГ-01- 1/27.05.2009 of the Executive Director of the Bulgarian Small and Medium Enterprises Promotion Agency under an open procedure for a competitive selection of projects “Technological Modernization in Big Enterprises”, the company received a grant in the amount of BGN 4 227 266.23. The Project has been implemented on the basis of a contract signed with the Bulgarian Small and Medium Enterprises Promotion Agency № ТМГ-02-4/09.07.2009 within 18 months and the management of MONBAT AD acknowledges the successful completion of both the specific and the main purpose of the tender offer, namely providing competitiveness and sustainable development of the company by means of introducing new and innovative equipment and technologies within the conditions of the world financial and economic crisis.
In 2013 the total amount of the investments made in MONBAT AD is EUR 3 200 000.
In 2014 the total amount of the investments made in MONBAT AD is EUR 3 293 000. In 2015 the Company has not announced an Investment Program. In 2015 Monbat AD has made investments totaling EUR 3 951 000 out of which directly bought assets in the amount of EUR 1 845 188. In 2015 the expenses on acquisition of tangible fixed assets amounted to EUR 2 105 812, allocated as follows: Block molding starter – EUR 195 800 Pasting line Accurate – EUR 179 440 Production Corps lead tape and fencing – EUR 374 744 Assembly line for stationary batteries – EUR 486 707 WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 54
Other reconstructions – EUR 869 121 In 2016 the management of MONBAT AD plans the implementation of an investment program to ensure production of 2 600 000 accumulator batteries by means of improving the quality and reducing the production losses. The 2016 planned investments are in the amount of EUR 3 671 000 and will be implemented in the following directions: Investments in a basic, assembly workshop /starter and stationary batteries/, block molding /starter and stationary batteries/, physics laboratory - EUR 3 615 000; Ensuring the production capacity of the equipment - EUR 33 000; Ensuring the quality of the production manufactured – EUR 23 000
14. Information about occurred during the reporting period changes in the base principles for management of the issuer and its economic group
There is no change occured in the base principles for management of the company.
15. Information about the main characteristics of the applied by the issuer in the course of preparation of the financial statements internal controls system and risk management system
The company has a functioning internal control and risk management system /ICRM system/ that guarantees the efficient functioning of reporting and information disclosure systems. The ICRM system was elaborated and functions also with a view to identify risks that pursue the activities of the company and support their efficient management. Senior management has the main responsibility and role in terms of developing the internal control and risk management system. It performs both managing and directing function and also ongoing monitoring. The ongoing monitoring of controls by senior management is to assess whether the ICRM system is still suitable for the company in a changed environment, whethet it acts as expected and whether it is periodically adjusted to changed conditions. Evaluation of selected areas, carried out in this context as a responsibility of the senior management complies with the priorities of the company. Evaluation is also proportionate to the characteristics of the company and the impact of the risks identified. The senior management reports to the audit committee on the basic characteristics of the ICRM system and also on key issues, including main incidents established and the respectively approved or applied corrective measures.
16. Information on the changes in the Board of Directors in 2015
On 25.06.2015 г. was held an ordinary session of the General Assembly of the Shareholders of MONBAT AD which approved a resolution for Petar Petrov to be released from his position as a member of the Board of Directors and Executive Director of Monbat AD and Eugen Georg Peterhans to be elected for new member of the Board of Directors and an Executive Director.
The filing of Eugen Georg Peterhans as new member of the Board of Directors and new Executive Director was made on 13.07.2015 under No 20150713144649 in the Commercial Register to the Registry Agency.
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On 10.09.2015 the Board of directors of Monbat г. approved a resolution for Eugen Georg Peterhans to be released from his position as Executive Director of Monbat due to the health reasons and elected Atanas Stoilov Bobokov to be the Executive member of the Board of Directors of MONBAT AD. On 15.09.2015 г. Atanas Bobokov was filed as an Executive Director under No 20151001113426 in the Commercial Register to the Registry Agency. On 07.12.2015 was held an extraordinary session of the General Assembly of the Shareholders of MONBAT AD which approved a resolution for Eugen Georg Peterhans and Ivan Karageorgiev to be released from their position as members of the Board of Directors of Monbat AD and Peter Bozadzhiev and Yordan Karabinov to be elected for new members of the Board of Directors. The deletion of Eugen Georg Peterhans and Ivan Karageorgiev as members of the Board of Directors and the filing of Peter Bozadzhiev and Yordan Karabinov as new members of the Board of Directors was made on 15.12.2015 under No 20151215100641 in the Commercial Register to the Registry Agency.
As at 31.12.2015 the Board of Directors of Monbat AD is the following: Atanas Bobokov – Executive member of the Board of Directors Plamen Bobokov – Member of the Board of Directors Stoyan Stalev – Member of the Board of Directors Alexander Chaushev – Member of the Board of Directors Nikolay Trenchev – Member of the Board of Directors Kamen Zahariev – Member of the Board of Directors Florian Huth – Member of the Board of Directors Peter Bozadzhiev – Member of the Board of Directors Yordan Karabinov – Member of the Board of Directors
17. Information on the amount of the remunerations, rewards and/or the benefits of everyone of the members of the management and control bodies for the fiscal year under review, paid by the issuer and its subsidiaries, irrespective of whether they have been included in the issuer’s expenses or rise from profit distribution, including: a) received amounts and non-money remunerations; b) contingent or deferred remunerations, occurred during the year, even if the remuneration is due at a later time; c) amount owed by the issuer or its subsidiaries for payment of pensions, compensations at retiring on a pension or other similar compensations
Table № 33
Full name Position Net/BGN Atanas Bobokov Chairperson and Executive member of 418 004 the Board of Directors since 01.10.2015 Plamen Bobokov Member of the Board of Directors 324 000 Alexandar Chaushev Member of the Board of Directors 24 000 Nikolay Trenchev Member of the Board of Directors 24 000 Kamen Zahariev Member of the Board of Directors 0 Florian Huth Member of the Board of Directors 0 Peter Bozadzhiev Member of the Board of Directors 1619 Yordan Karabinov Member of the Board of Directors 1619 Eugen Peterhans Member of the Board of Directors 147 829 since 15.12.2015 г. Ivan Karageorgiev Member of the Board of Directors 22 380 WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 56
since 15.12.2015 г. Petar Petrov Member of the Board of Directors 64 936 since 25.06.2015 г.
The General Assembly of Shareholders held on 25.06.2015 authorized the Board of Directors of the Company to set additional remuneration for 2014 to the members of the Board of Directors of MONBAT AD in the total amount of up to BGN 600 000.
18. 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
As of 31.12.2015 the shares of the capital of MONBAT AD hold by members of the Board of Directors are as follows:
Atanas Stoilov Bobokov – Chairperson of the Board of Directors – 110 shares
Alexandar Chaushev – Member of the Board of Directors - 8 630 shares
19. Information about the known to the company agreements (including also after the fiscal year closing) as a result of which changes may occur at a future time in the owned percent of shares or bonds by current shareholders and bondholder
The management of the company does not have information about known to the company agreements as a result of which changes may occur at a future time in the owned percentage of shares by current shareholders.
20. Information about pending legal, administrative or arbitration proceedings relating to issuer’s liabilities or receivables at the amount of at least 10 percent of its equity; if the total amountof the issuer’s liabilities or receivables under all initiated proceedings exceeds 10 per cent of its equity, information shall be submitted for each procedure separately
There are not any pending legal, administrative or arbitration proceedings relating to issuer’s liabilities or receivables at the amount of at least 10 percent of its equity.
21. Data about the investor relations director
Daniela Ilcheva Peeva tel. +359 2 9882413 ; e-mail [email protected] 1407 Sofia, 32 A Cherni vrah blvd., fl. 4
ХІІ. CHANGES IN THE PRICE OF THE COMPANY’S SHARES FOR 2015
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200000 9 8 150000 7 6 5 100000 4 3 50000 2 1 0 0
Quantity Price
ХІІІ. INFORMATION UNDER APPENDIX NO 11 OF ORDINANCE NO 2 OF FSC 1. Structure of the company’s capital, including the securities that have not been admitted to trading on a regulated market in the Republic of Bulgaria or another Member State, with indication of the different classes of shares, the rights and liabilities attaching to any of the classes of shares and the portion of the total capital which each individual class constitutes As of 31.12.2015 the capital of MONBAT AD amounts to BGN 39 000 000, divided into 39 000 000 ordinary, registered, dematerialized shares with nominal value of BGN 1.00 each of them. All shares of the company belong to one class and each share entitles to one vote at the general assembly of shareholders, the right to dividend and a liquidation quota, proportionate to the nominal value of the share. The whole issue of 39 000 000 shares, issued by the company was registered for trading on the on the Main Market, "Premium" equities segment on the BSE - Sofia
2. Limitations over the securities transfer, such as limitations for holding of securities or a requirement to obtain approval of the company or another shareholder All shares of the company are freely transferable without restrictions or conditions, subject to the requirements of the current legislation in the Republic of Bulgaria. It is not necessary to obtain approval of the company or another shareholder for acquiring and holding shares of the capital of MONBAT AD. 3. Information on the direct and indirect holding of 5 or more percent of the voting rights in the company’s general assembly, including data about the shareholders, the amount of their holding and the manner in which the shares are owned There is one legal entity that exercises control over the public company MONBAT AD. This company is PRISTA OIL HOLDING EAD, Sofia. PRISTA OIL HOLDING EAD is related to another shareholder with considerable holdings, namely MONBAT TRADING OOD. On the grounds of art. 145, para. 1, item 1 of LPOS PRISTA OIL HOLDING EAD notified Monbat AD on an executed by the company transfer transaction for 1 9500 000 voting shares or 5 % of the capital of Monbat AD with a settlement date of the transaction in the Central WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 58
Depository 28.10.2015. As a result of the change PRISTA OIL HOLDING EAD holds directly 16 666 371 shares and the same number of votes at the General Assembly of the Shareholders or 42,73 % of the capital of Monbat AD and through the related party Monbat Trading Ltd. holds 2 752 800 voting shares or 7,06 %. The total number of the shares and votes hold directly and through related parties on the part of PRISTA OIL HOLDING EAD is 19 419 171 shares or 49,79 % As at 31.12.2015 the capital structure of MONBAT AD is the following:
Table № 34
Percentage of Name of the shareholder Number of shares the capital PRISTA OIL HOLDING EAD, 16 666 371 42.73 % Sofia MONBAT TRADING Ltd., Sofia 2 752 800 7.06 % PRISTA HOLDCO 10 053 758 25.78 % COOPERATIEF U.A. Other physical persons and legal 9 527 071 24.43 % entities
4. Data about the shareholders with special control rights and description of these rights MONBAT AD does not have any shareholders with special control rights. 5. The control system in exercising the voting right in cases when officials of the company are also its shareholders and when the control is not exercised directly by them The company does not have a control system in exercising the voting right in cases when officials of the company are also its shareholders and when the control is not exercised directly by them. Any official who is a shareholder of the company exercise his/her right to vote at his/her own discretion. 6. Limitations over the voting rights, such as limitations over the voting rights of the shareholders with a given percent or number of votes, deadline for exercising the voting rights or systems whereby with the company’s assistance, the financial rights attaching to the shares are separated from the holding of shares There are no limitations over the voting rights of any shareholder of MONBAT AD. The right to vote at the general assembly of the shareholders of MONBAT AD shall be exercised, personally or by proxy, by persons that had acquired shared and had been filed with the book of shareholders latest 14 days prior to the date of the assembly. The proxy holder must dispose of an explicit, notary certified proxy in accordance with the requirements of LPOS. 7. Agreements among the shareholders, which are known to the company and which may result in limitations over the transfer of shares or the voting right The Company is not aware of agreements among shareholders which may result in limitations over the transfer of shares or the voting right. 8. The provisions about the appointment and dismissal of the members of the company’s management bodies and about introduction of amendments and supplements to the WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 59 articles of association Pursuant to the Articles of Association of MONBAT AD, The following persons are not eligible as members of the BD of the Company: 1. who have been members of managing or controlling body of a company or co-operation, terminated through insolvency, for the last two years preceding the date of the judgment for declaring insolvency, if there are creditors unpaid; 2. who, as at the moment of the election, are sentenced with an effective verdict for crimes against property, against economy or against financial, tax or social security system, committed in the Republic of Bulgaria or abroad, unless they are exculpated. At least one third of the members of the BD must be independent persons. The independent member of the BD may not be a person who: 1. is employee of the Company; 2. is shareholder, holding directly or through related persons at least 25% (twenty five per cent) of the votes in the GM or is a person related to the Company; 3. is in long-term business relationship with the Company; 4. is member of management or controlling body of a company under items 2 and 3 of this paragraph; 5. is a person related to another member of management or controlling body of the Company. The members of the BD are elected for a term of up to five years. The members of the BD may be reelected without limitation and may be released from duty also prior to the expiry of the mandate, for which they are elected, pursuant to resolution of the GM. Amends and supplements the Articles of Association could be adopted by the General Assembly of Shareholders.
9. The powers of the company’s management bodies, including the right to take decisions for the issue and redemption of shares in the company The members of the BD are obligated: 1. to perform their duties with the proper care of good businessman in a way, for which they reasonably believe to be in the interest of all shareholders of the Company and using only information for which they reasonably believe to true and compete; 2. to be loyal to the Company through: a) preferring the interest of the Company before their own interest; b) avoiding direct or indirect conflicts between their interest and the interest of the Company and, in case such conflicts arise – timeously and completely to disclose them in writing before the Board of Directors and not to participate as well as influence the other members of the board when passing resolutions in such cases; c) not disclosing non-public information for the Company including after terminating their membership in the BD until the relevant circumstances are announced by the Company publicly. The Company may buy back its own shares without making a tender offer, through acquisition of not more than 3 per cent own voting shares, both pursuant to a resolution of the General Shareholders Meeting and pursuant to a resolution of the Board of Directors for a term not longer than eighteen months as from the date of the resolution of the relevant body of the Company. The buy-back of own shares pursuant to a resolution of the Board of Directors may be performed without special delegation of powers for that from the General Shareholders Meeting for each separate case, but entirely on the grounds of the powers vested in the Board of Directors by virtue of the present provision of the Articles of Association for a term of up to 2 (two) years after registration of these Articles of Association at the Commercial Register to the Registry Agency.
10. Significant contracts of MONBAT AD which give rise to action, have been amended or terminated due to change in the control of the company upon carrying out of WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062
Annual Separate Activity Report Independent Auditor’s Report Separate Financial Statements
MONBAT AD
31 December 2015
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062
Contents
Page
Annual separate activity report - Independent auditor’s report - Separate statement of financial position 1 Separate income statement 3 Separate statement of comprehensive income 4 Separate statement of changes in equity 5 Separate statement of cash flows 7 Notes to the separate financial statements 8
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 1 Separate Financial statements 31 Decembar 2015
Separate statement of financial position as at 31 December 2015
Assets Note 2015 2014 2013 BGN BGN BGN ‘000 ‘000 ‘000 restated restated Non-current assets Intangible assets 5 195 180 139 Property, plant and equipment 6 47 905 45 200 44 021
Investments in subsidiaries 7 41 032 41 032 42 205
Long-term related party receivables 33 29 028 23 994 22 593 Non-current assets 118 160 110 406 108 958
Current assets Inventories 10 27 656 21 417 22 408 Short-term financial assets 11 60 34 24 Trade receivables 12 32 217 26 963 26 786
Short-term related-party receivables 33 25 585 32 799 20 926 Tax receivables 13 2 643 1 881 3 742 Other receivables 14 180 354 506 Cash and cash equivalents 15 12 426 9 705 6 101 Current assets 100 767 93 153 80 493
Total assets 218 927 203 559 189 451
Prepared by: Belnikolov and partners Executive director: Atanas Bobokov OOD – Henry Belnikolov Manager
Date: 15.03.2016
Audited according to the auditor’s report dated 30.03.2016:
The accompanying notes on pages from 8 to 57 form an integral part of the financial statements.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 2 Separate Financial statements 31 Decembar 2015
Separate statement of financial position as at 31 December 2015 (continued)
Equity and liabilities Note 2015 2014 2013 BGN BGN BGN ‘000 ‘000 ‘000 restated restated Equity Share capital 16.1 39 000 39 000 39 000 Share premium 16.2 28 611 28 611 28 611 General reserve 16.3 64 603 64 603 51 819 Retained earnings 26 384 13 780 21 754 Total equity 158 598 145 994 141 184
Liabilities Non-current liabilities Long-term borrowings 19.1 9 198 33 819 6 649 Finance lease liabilities 8 - - 239 Deferred tax liabilities, net 9 804 867 1 310 Long-term grants 19.2 3 728 2 386 2 848 Non-current liabilities 13 730 37 072 11 046
Current liabilities Guarantee provisions 17 462 532 797 Pension and other employee obligations 18.2 488 351 454 Short-term borrowings 19.1 25 214 8 680 20 138 Finance lease liabilities 8 19 238 394 Trade payables 20 13 471 6 455 7 776
Short-term related party payables 32 3 226 1 905 5 457 Tax liabilities 21 548 135 863 Short-term grants 19.2 662 456 456 Other liabilities 22 2 509 1 741 886 Current liabilities 46 599 20 493 37 221
Total liabilities 60 329 57 565 48 267
Total equity and liabilities 218 927 203 559 189 451
Prepared by: Belnikolov and partners Executive director: Atanas Bobokov OOD – Henry Belnikolov Manager
Date: 15.03.2016
Audited according to the auditor’s report dated 30.03.2016:
The accompanying notes on pages from 8 to 57 form an integral part of the financial statements.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 3 Separate Financial statements 31 Decembar 2015 Separate income statement for the year ended 31 December 2015 Note 2015 2014 BGN ‘000 BGN ‘000
Revenue 23 293 552 247 091 Other revenue 23 642 508
Cost of materials 24 (196 247) (170 624) Hired services expenses 25 (15 042) (13 220) Employee benefits expenses 18.1 (8 409) (6 627) Amortization of non-financial assets 5,6 (5 024) (5 225) Changes in finished goods and work in progress (1 058) 2 735 Cost of goods sold and other current assets (46 009) (32 925) Other expenses 27 (2 524) (2 118) Impairment of investments 27.1 - (1 173) Impairment of receivables 27.2 - (4 312) 26 (11) 61 Gain on sale of non-current assets Operating profit 19 870 14 171
Finance costs 28 (1 636) (1 819) Finance income 28 2 308 2 989 Other financial items 29 (38) 58 Profit before tax 20 504 15 399 Tax expense 30 (2 050) (1 619) Profit for the year 18 454 13 780
BGN BGN
Earnings per share 31.1 0.47 0.35
Prepared by: Belnikolov and partners Executive director: Atanas Bobokov OOD – Henry Belnikolov Manager
Date: 15.03.2016
Audited according to the auditor’s report dated 30.03.2016:
The accompanying notes on pages from 8 to 57 form an integral part of the financial statements.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 4 Separate Financial statements 31 Decembar 2015 Separate statement of comprehensive income for the year ended 31 December 2015
Note 2015 2014 BGN ‘000 BGN ‘000
Profit for the year 18 454 13 780
Total comprehensive income for the year 18 454 13 780
Prepared by: Belnikolov and partners Executive director: Atanas Bobokov OOD – Henry Belnikolov Manager
Date: 15.03.2016
Audited according to the auditor’s report dated 30.03.2016:
The accompanying notes on pages from 8 to 57 form an integral part of the financial statements.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 5 Separate Financial statements 31 Decembar 2015 Separate statement of changes in equity for the year ended 31 December 2015
All amounts are presented in BGN ‘000 Share capital Share General Retained Total equity premium reserve earnings Balance at 1 January 2015 39 000 28 611 64 603 13 780 145 994 Dividends (5 850) (5 850) Transactions with owners (5 850) (5 850) Profit for the period - - - 18 454 18 454 Total comprehensive income for the period - - - 18 454 18 454 Balance at 31 December 2015 39 000 28 611 64 603 26 384 158 598
All amounts are presented in BGN ‘000 Share capital Share General Retained Total equity premium reserve earnings Balance at 1 January 2014 39 000 28 611 51 819 21 754 141 184 Dividends - - - (8 970) (8 970) Transactions with owners - - - (8 970) (8 970) Profit for the period - - - 13 780 13 780 Total comprehensive income for the period - - - 13 780 13 780 Transfer of retained earnings to other reserves - - 12 784 (12 784) - Balance at 31 December 2014 39 000 28 611 64 603 13 780 145 994
The accompanying notes on pages from 8 to 57 form an integral part of the financial statements.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 6 Separate Financial statements 31 Decembar 2015
All amounts are presented in BGN ‘000 Share capital Share General Retained Total equity premium reserve earnings Balance at 1 January 2013 36 377 14 631 50 523 9 051 110 582 Dividends - - - (7 755) (7 755) Redemption of shares 2 623 13 980 - - 16 603 Transactions with owners 2 623 13 980 - - 16 603 Profit for the period - - - 21 754 21 754 Total comprehensive income for the period - - - 21 754 21 754 Transfer of retained earnings to other reserves - - 1 296 (1 296) - Balance at 31 December 2013 39 000 28 611 51 819 21 754 141 184
Prepared by: Belnikolov and partners Executive director: Atanas Bobokov OOD – Henry Belnikolov Manager
Date: 15.03.2016
Audited according to the auditor’s report dated 30.03.2016:
The accompanying notes on pages from 8 to 57 form an integral part of the financial statements.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 7 Separate Financial statements 31 Decembar 2015
Separate statement of cash flows for the year ended 31 December 2015
Note 2015 2014 BGN ‘000 BGN ‘000 Operating activities Cash receipts from customers 217 502 195 352 Cash paid to suppliers (198 100) (183 556) Cash paid to employees and social security institutions (7 832) (6 432) Taxes paid 19 591 16 525 Other cash flows from operating activities (849) (832) Net cash flow from operating activities 30 312 21 057
Investment activities Purchase of property, plant and equipment (7 654) (7 364) Purchase of other intangible assets 5 (73) (88) Loans granted (8 137) (18 893) Loan repayments received 297 132 Grants received 2 190 - Other cash flows (50) - Net cash flow from investment activities (13 427) (26 213)
Financial activities Proceeds from borrowings 880 51 652 Repayments of borrowings (7 478) (36 121) Discharge of finance lease liabilities (220) (395) Interest paid (1 060) (792) Dividends paid 31.2 (5 588) (4 684) Other cash flows from financial activities (463) (721) Net cash flow from financial activities (13 929) 8 939 Net change in cash and cash equivalents 2 956 3 783 Cash and cash equivalents, beginning of year 9 705 6 101 Exchange losses on cash and cash equivalents (235) (179) Cash and cash equivalents, end of year 15 12 426 9 705
Prepared by: Belnikolov and partners OOD – Executive director: Atanas Bobokov Henry Belnikolov Manager
Date: 15.03.2016
Audited according to the auditor’s report dated 30.03.2016:
The accompanying notes on pages from 8 to 57 form an integral part of the financial statements.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 8 Separate Financial statements 31 December 2015
Notes to the separate financial statements 1. Nature of operations The main activities of Monbat AD (“The Company”) include manufacturing, maintenance and realization of batteries; engineering and development activity; production and trade of equipment used in battery manufacturing; domestic and foreign trade and construction of commercial networks; specialized stores and representative offices. The Company is registered as joint stock company in c.c. 4636/1999 in SCC, with PIN: 111028849 in the Bulgarian Trade Register.
The Company’s headquarters and registered address is: 32A Cherni Vrah buld., Sofia. The correspondence address is: 32A Cherni Vrah buld., Sofia.
The Company is registered at the Bulgarian stock exchange on 22.12.2006.
The Group is managed through single-tier management system consisting of Board of Directors.
The members of the Board of Directors are:
1. Atanas Stoilov Bobokov - chairman 2. Petar Nikolov Bozadjiev 3. Jordan Atanasov Karabinov 4. Plamen Stoilov Bobokov 5. Aleksandar Viktorov Chaushev 6. Nikolay Georgiev Trenchev 7. Stoyan Jivkov Stalev 8. Kamen Zahariev 9. Florian Huth
The Company is represented by its Executive director - Atanas Bobokov . The ultimate owner of the Company, is Prista Oil Group B.V Netherlands. The principle place of the activity is town of Montana, 76 ‘Industrialna’ str. The number of employees as of 31 December 2015 is 324 (31.12.2014 is 307). 2. Basis for the preparation of the financial statements The financial statements of the Company have been prepared in accordance with International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and approved by the European Union (EU). The financial statements are presented in Bulgarian leva (BGN), which is also the functional currency of the Company. All amounts are presented in thousand Bulgarian leva (BGN‘000) (including comparative information for 2014) unless otherwise stated. The Company also prepares consolidated financial statements in accordance with International Financial Reporting Standards (IFRS) developed and published by the International Accounting Standards Board (IASB) and approved by EU. Investments in subsidiaries are accounted for and disclosed in accordance with IAS 27 “Separate Financial Statements”. The financial statements are prepared under the going concern principle.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 9 Separate Financial statements 31 December 2015
After making enquiries, the directors have a reasonable expectation that the Company has adequate resources to continue in operational existence for the foreseeable future. Accordingly, the Board of Directors expects that the Company will have sufficient resources to continue to adopt the going concern basis in preparing the annual report and accounts.
Initial application of new amendments to the existing Standards and Interpretations effective for the current financial period
The following new amendments to the existing standards and new interpretation issued by the International Accounting Standards Board (IASB) and adopted by the EU are effective for the current financial period:
Amendments to various standards “Improvements to IFRSs (cycle 2011-2013)” resulting from the annual improvement project of IFRS (IFRS 3, IFRS 13 and IAS 40) primarily with a view to removing inconsistencies and clarifying wording - adopted by the EU on December 18, 2014 (amendments are to be applied for annual periods beginning on or after January 1, 2015), IFRIC 21 “Levies” adopted by the EU on June 13, 2014 (effective for annual periods beginning on or after June 17, 2014).
The adoption of these amendments to the existing standards and interpretation has not led to any material changes in the Company’s financial statements.
Amendments to the existing Standards issued by IASB and adopted by the EU but not yet effective
At the date of authorisation of these financial statements the following amendments to the existing standards issued by IASB and adopted by the EU were in issue but not yet effective:
Amendments to various standards “Improvements to IFRSs (cycle 2010-2012)” resulting from the annual improvement project of IFRS (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38) primarily with a view to removing inconsistencies and clarifying wording - adopted by the EU on December 17, 2014 (amendments are to be applied for annual periods beginning on or after February 1, 2015), Amendments to IAS 16 “Property, Plant and Equipment” and IAS 41 “Agriculture” - Agriculture: Bearer Plants - adopted by the EU on November 23, 2015 (effective for annual periods beginning on or after January 1, 2016), Amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets” - Clarification of Acceptable Methods of Depreciation and Amortisation - adopted by the EU on December 2, 2015 (effective for annual periods beginning on or after January 1, 2016), Amendments to IAS 19 “Employee Benefits” - Defined Benefit Plans: Employee Contributions - adopted by the EU on December 17, 2014 (effective for annual periods beginning on or after February 1, 2015), Amendments to IFRS 11 “Joint Arrangements” – Accounting for Acquisitions of Interests in Joint Operations adopted by the EU on November 24, 2015 (effective for annual periods beginning on or after January 1, 2016).
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 10 Separate Financial statements 31 December 2015
Amendments to IAS 1 “Presentation of Financial Statements” - Disclosure Initiative – adopted by the EU on December 18, 2015 (effective for annual periods beginning on or after January 1, 2016), Amendments to IAS 27 “Separate Financial Statements” - Equity Method in Separate Financial Statements - adopted by the EU on December 18, 2015 (effective for annual periods beginning on or after January 1, 2016), Amendments to various standards “Improvements to IFRSs (cycle 2012-2014)” resulting from the annual improvement project of IFRS (IFRS 5, IFRS 7, IAS 19 and IAS 34) primarily with a view to removing inconsistencies and clarifying wording - adopted by the EU on December 15, 2015 (amendments are to be applied for annual periods beginning on or after January 1, 2016).
New Standards and amendments to the existing Standards issued by IASB but not yet adopted by the EU
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the IASB except from the following new standards and amendments to the existing standards, which were not endorsed for use in EU as at 31.12.2015 (the effective dates stated below is for IFRS in full):
IFRS 9 Financial Instruments (effective for annual periods beginning on or after January 1, 2018); IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after January 1, 2016) - the European Commission has decided not to launch the endorsement process of this interim standard and to wait for the final standard, IFRS 15 “Revenue from Contracts with Customers” and further amendments (effective for annual periods beginning on or after January 1, 2018), IFRS 16 “Leases” (effective for annual periods beginning on or after 1 January 2019), Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture (effective for annual periods beginning on or after January 1, 2016), Amendments to IFRS 10 “Consolidated Financial Statements”, IFRS 12 “Disclosure of Interests in Other Entities” and IAS 28 “Investments in Associates and Joint Ventures” - Investment Entities: Applying the Consolidation Exception (effective for annual periods beginning on or after January 1, 2016),
The Company anticipates that the adoption of these standards and amendments to the existing standards will have no material impact on the financial statements of the Company in the period of initial application
At the same time, hedge accounting regarding the portfolio of financial assets and liabilities, whose principles have not been adopted by the EU, is still unregulated.
According to the Company’s estimates, application of hedge accounting for the portfolio of financial assets or liabilities pursuant to IAS 39: Financial Instruments: Recognition and Measurement, would not significantly impact the financial statements, if applied as at the reporting date.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 11 Separate Financial statements 31 December 2015
3. Summary of accounting policies 3.1. Overall considerations The significant accounting policies that have been used in the preparation of these financial statements are summarized below. The financial statements have been prepared using the measurement bases specified by IFRS for each type of asset, liability, income and expense. The measurement bases are more fully described in the accounting policies below. It should be noted that accounting estimates and assumptions are used for the preparation of the financial statements. Although these estimates are based on management's best knowledge of current events and actions, actual results may ultimately differ from those estimates. 3.2. Presentation of financial statements The financial statements are presented in accordance with IAS 1 “Presentation of Financial Statements” (revised 2007). The Company has elected to present the statement of comprehensive income in two statements: an income statement and a statement of comprehensive income. Two comparative periods are presented for the statement of financial position when the Company: (i) applies an accounting policy retrospectively, (ii) makes a retrospective restatement of items in its financial statements, or (iii) reclassifies items in the financial statements.
3.3. Investments in subsidiaries Subsidiaries are firms under the control of the Company. An investor, regardless of the nature of its participation in an entity (in the investee), defines whether he is a parent company, by assessing whether he controls, the investee.
An investor controls the investee when it is exposed to or has rights to variable returns from its involvement with the investee and has the ability to affect that returns through its power over the investee. Therefore, an investor controls an entity (the investee) if and only if the investor has all of the following:
a) Power over an investee b) Exposure, or rights, to variable returns from its involvement with the investee c) Ability to use its power over the investee to affect the amount of the investor’s returns
The Company recognizes a dividend from a subsidiary in profit or loss in its separate financial statements when the right to receive the dividend has been established. .
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 12 Separate Financial statements 31 December 2015
3.4. Foreign currency translation
Foreign currency transactions are translated into the functional currency, using the exchange rates prevailing at the dates of the transactions (spot exchange rate as published by the Bulgarian National Bank). Foreign exchange gains and losses resulting from the settlement of such transactions and from the re-measurement of monetary items at year-end exchange rates are recognized in profit or loss.
Non-monetary items measured at historical cost are translated using the exchange rates at the date of the transaction (not retranslated). Non-monetary items measured at fair value are translated using the exchange rates at the date when fair value was determined.
3.5. Revenue
Revenue comprises revenue from the sale of goods and the rendering of services. Revenue from major products and services is shown in note 23.
Revenue is measured by reference to the fair value of consideration received or receivable by the Company for goods supplied and services provided, excluding VAT, rebates and trade discounts.
Revenue is recognized, provided all of the following conditions are satisfied:
• the amount of the revenue can be measured reliably;
• it is probable that the economic benefits associated with the transaction will flow to the Company;
• the costs incurred or to be incurred can be measured reliably; and
• when the criteria for each of the Company's different activities has been met. These activity-specific recognition criteria are based on the goods or solutions provided to the customer and the contract conditions in each case, and are described below.
3.5.1. Sale of goods
Sale of goods comprises the sale of accumulator batteries and equipment for accumulator batteries. Revenue is recognized when the Company has transferred to the buyer the significant risks and rewards of ownership of the goods supplied. Significant risks and rewards are generally considered to be transferred to the buyer when the customer has taken undisputed delivery of the goods.
3.5.2. Rendering of services
Services rendered by the Company comprise of transportation for the delivery of the production. The revenue is recognized when the services are rendered.
3.5.3. Interest income
Interest income is reported on an accrual basis using the effective interest method. Dividend income is recognized at the time the right to receive payment is established.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 13 Separate Financial statements 31 December 2015
3.6. Operating expenses
Operating expenses are recognized in profit or loss upon utilization of the service or at the date of their origin. Expenditure for warranties is recognized and charged against the associated provision when the related revenue is recognized.
3.7. Interest expenses and borrowing costs
Interest expenses are reported on an accrual basis using the effective interest method.
Borrowing costs primarily comprise interest on the Company's borrowings. Borrowing costs directly attributable to the acquisition, construction or production of a qualifying asset are capitalized during the period of time that is necessary to complete and prepare the asset for its intended use or sale. Other borrowing costs are expensed in the period in which they are incurred and reported in 'Finance costs'. 3.8. Intangible assets Intangible assets include software licenses, trademarks and other intangible assets. They are accounted for using the cost model. The cost comprises its purchase price, including any import duties and non-refundable purchase taxes, and any directly attributable expenditure on preparing the asset for its intended use, whereby capitalized costs are amortized on a straight line basis over their estimated useful lives, as these assets are considered finite. If an intangible asset is acquired in a business combination, the cost of that intangible asset is based on its fair value at the date of acquisition. Subsequent measurement is carried at cost less accumulated depreciation and impairment losses. Allowance for impairment is recorded as an expense and are recognized in the income statement for the period. Subsequent expenditure on an intangible asset after its purchase or its completion is expensed as incurred unless it is probable that this expenditure will enable the asset to generate future economic benefits in excess of its originally assessed standard of performance and this expenditure can be measured reliably and attributed to the asset. If these two conditions are met, the subsequent expenditure is added to the carrying amount of the intangible asset. Residual values and useful lives of the other intangible assets are defined by the management at each reporting date Amortization is calculated using the straight-line method over the estimated useful life of individual assets as follows: Software 2 years Others 7 years Amortization expenses are included in the income statement under the line “Amortization of intangible assets”. The gain or loss arising on the disposal of an intangible asset is determined as the difference between the proceeds and the carrying amount of the asset, and is included in the statement of comprehensive income under the line “Gain from sale of intangible assets”. The recognition threshold adopted by the Company for other intangible assets amounts to BGN 700.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 14 Separate Financial statements 31 December 2015
3.9. Property, plant and equipment
Items of property, plant and equipment are initially measured at cost, which comprises its purchase price and any directly attributable costs of bringing the asset to working condition for its intended use.
Subsequent measurement of property, plant and equipment except assets under construction are measured at price of acquisition, less accumulated depreciation and later losses.
Subsequent expenditure relating to an item of property, plant and equipment is added to the carrying amount of the asset when it is probable that this expenditure will enable the asset to generate future economic benefits in excess of the its originally assessed standard of performance. All other subsequent expenditure is recognized as incurred.
Material residual value estimates and estimates of useful life are updated as required, but at least annually, whether or not the asset is revalued.
Property, plant and equipment acquired under finance lease agreement, are depreciated based on their expected useful life, determined by reference to comparable assets or based on the period of the lease contract, if shorter.
Depreciation is calculated using the straight-line method over the estimated useful life of individual assets as follows: Buildings 25 years Machines 10 years Vehicles 7 years Fixtures 7 years Computers 2 years Others 3 years
Depreciation has been included in the income statement within 'Depreciation, amortization and impairment of non-financial assets'.
Gains or losses arising on the disposal of property, plant and equipment are determined as the difference between the disposal proceeds and the carrying amount of the assets and are recognized in the income statement within 'Gain/(Loss) on sale of non-current assets'.
The recognition threshold adopted by the Company for property, plant and equipment amounts to BGN 700.
3.10. Leases
The company is a leesse according to financial and operating lease contracts.
In accordance with IAS 17 “Leases”, the economic ownership of a leased asset is transferred to the lessee, if the lessee bears substantially all the risks and rewards related to the ownership of the leased asset.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 15 Separate Financial statements 31 December 2015
Upon conclusion of a finance lease the asset is recognized in the statement of financial position of the lessee at the lower of two values- fair value of the leased asset and the present value of minimum lease payments plus incidental payments, it any. The statement of financial position reflects the corresponding finance lease obligation, whether part of the lease payments are payable in advance upon signing the lease.
Subsequently the lease payments are separated between finance expense and reduction of outstanding liability under a finance lease.
Assets acquired under the terms of finance lease are depreciated or amortized in accordance with IAS 16 “Property, Plant and Equipment” or IAS 38 “Intangible Assets”.
The interest element of leasing payments represents a constant proportion of the capital balance outstanding and is charged to profit or loss over the period of the lease.
All other leases are treated as operating leases. Payments on operating lease agreements are recognized as an expense on a straight-line basis over the lease term. Associated costs, such as maintenance and insurance, are expensed as incurred.
3.11. Impairment testing of intangible assets and property, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are largely independent cash inflows (cash-generating units). As a result, some assets are tested individually for impairment and some are tested at cash-generating unit level.
All individual assets or cash-generating units are tested for impairment whenever events or changes in circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognized for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate the present value of those cash flows. The data used for impairment testing procedures are directly linked to the Company's latest approved budget, adjusted as necessary to exclude the effects of future reorganizations and asset enhancements. Discount factors are determined individually for each cash-generating unit and reflect their respective risk profiles as assessed by management.
Impairment losses for cash-gener¬ating units reduce the carrying amount of the assets allocated to that cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss previously recognized may no longer exist. An impairment charge is reversed if the cash-generating unit’s recoverable amount exceeds its carrying amount.
3.12. Financial instruments
Financial assets and financial liabilities are recognized when the Company becomes a party to the contractual provisions of the financial instrument.
Financial assets are derecognized when the contractual rights to the cash flows from the financial asset expire, or when the financial asset and all substantial risks and rewards are transferred.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 16 Separate Financial statements 31 December 2015
A financial liability is derecognized when it is extinguished, discharged, cancelled or expires.
Financial assets and financial liabilities are measured initially at fair value plus transactions costs, except for financial assets and financial liabilities carried at fair value through profit or loss, which are measured initially at fair value.
All financial assets are recognized on their transaction date.
Financial assets and financial liabilities are subsequently measured as described below.
3.12.1. Financial assets
For the purpose of subsequent measurement, financial assets other than those designated and effective as hedging instruments are classified into the following categories upon initial recognition: loans and receivables; financial assets at fair value through profit or loss; held-to-maturity investments; available-for-sale financial assets.
Financial assets are assigned to the different categories, depending on the purpose for which the investments were acquired. The category determines subsequent measurement and whether any resulting income and expense is recognized in profit or loss or in other comprehensive income. All financial assets except for those at fair value through profit or loss are subject to review for impairment at least at each reporting date. Financial assets are impaired when there is any objective evidence that a financial asset or a group of financial assets is impaired. Different criteria to determine impairment are applied for each category of financial assets, which are described below. All income and expenses relating to financial assets that are recognized in profit or loss are presented within 'Finance costs', 'Finance income' or 'Other financial items', except for impairment of trade receivables which is presented within 'Other expenses'. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. After initial recognition these are measured at amortized cost using the effective interest method, less provision for impairment. The Company’s cash and cash equivalents, trade and most other receivables fall into this category of financial instruments. Discounting is omitted where the effect of discounting is immaterial. Individually significant receivables are considered for impairment when they are past due or when other objective evidence is received that a specific counterparty will default. Receivables that are not considered to be individually impaired are reviewed for impairment in groups, which are determined by reference to the industry and region of a counterparty and other available feature of shared credit risk characteristics. The percentage of the write down is then based on recent historical counterparty default rates for each identified group. Impairment of trade receivables are presented within 'Other expenses'.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 17 Separate Financial statements 31 December 2015
3.12.2. Financial liabilities
The Company's financial liabilities include bank loans, overdrafts, trade and other payables and finance lease liabilities.
Financial liabilities are recognized when the Company becomes a party to the contractual agreements for payment of cash amounts or another financial asset to another company or contractual liability for exchange of financial instruments with another company under unfavorable terms. All interest-related charges and, if applicable, changes in an instrument's fair value that are reported in profit or loss are included within 'Finance costs' or 'Finance income'.
Financial liabilities are measured subsequently at amortized cost using the effective interest method, except for financial liabilities held for trading or designated at fair value through profit or loss, that are carried subsequently at fair value with gains or losses recognized in profit or loss.
Bank loans are raised for support of long-term funding of the Company’s operations. They are recognized in the statement of financial position of the Company, net of any costs.
Trade payables are recognized initially at their nominal value and subsequently measured at amortized cost less settlement payments.
Dividends payable to shareholders are recognized when the dividends are approved at the general meeting of the shareholders/ owners.
3.12.3. Derivative financial instruments
As of December 31, 2015 no derivative financial instruments have been used by the Company. The derivative financial instruments are recognized initially at fair value and reported subsequently at fair value in the statement of financial position. The changes in the fair value of derivatives are recognized in profit or loss.
3.12.4. Contracts for the sale and redemption of securities
Securities can be sold or rented if a commitment is made for their redemption (repo). Those securities continue to be recognized in the statement of financial position, when all material risks and benefits, arising from the rights on those shares, continue to be property of the Company. In such case a liability to the other counterparty is recognized in the statement of financial position, when the Company receives the remuneration.
Similarly, the Company rents or buys securities by committing to re-sell them back to the seller (reverse repo), but does not acquire the material risks and benefits of the securities. The transactions with securities are treated as collateralized loans, when the monetary remuneration is paid. In this case the securities are not recognized in the statement of financial position.
The difference between the selling and redemption price is recognized as installments for the whole term of the agreement, by using the effective interest rate method. The securities, rented to counterparties, are recognized in the statement of financial position. The borrowed securities are not recognized in the statement of the financial position, excluding the case in which they are sold to third parties, where the redemption obligation is recognized as a trade liability at fair value and the subsequent gain or loss is included in the net operating activities’ result.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 18 Separate Financial statements 31 December 2015
3.13. Inventories Inventories include raw materials, work in progress, and goods. Cost of inventories includes all expenses directly attributable to the purchase or manufacturing process, recycling and other direct expenses connected to their delivery as well as suitable portions of related production overheads, based on normal operating capacity. Financing costs are not included in the cost of the inventories. At the end of every accounting period, inventories are carried at the lower of cost and net realizable value. The amount of impairment of inventories to their net realizable value is recognized as an expense for the period of impairment. Net realizable value is the estimated selling price of the inventories less any applicable selling expenses and cost of completion. In case inventories have already been impaired to their net realizable value and in the following period the impairment conditions are no longer present, than the new net realizable value is adopted. The reversal amount can only be up to the carrying amount of the inventories prior to their impairment. The reversal of the impairment is accounted for as decrease in inventory expenses for the period in which the reversal takes place. The Company determines the cost of inventories by using the weighted average cost. When inventories are sold, the carrying amount of those inventories is expensed in the period in which the related revenue is recognized. 3.14. Income taxes Tax expense recognized in profit or loss comprises the sum of deferred tax and current tax not recognized in other comprehensive income or directly in equity. Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by the end of the reporting period. Deferred income taxes are calculated using the liability method on temporary differences between the carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on the initial recognition of an asset or liability unless the related transaction affects tax or accounting profit. Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to apply to their respective period of realization, provided they are enacted or substantively enacted by the end of the reporting period. Deferred tax liabilities are always provided for in full. Deferred tax assets are recognized to the extent that it is probable that they will be able to be utilized against future taxable income. For management's assessment of the probability of future taxable income to utilize against deferred tax assets, see note 3.21. Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off current tax assets and liabilities from the same taxation authority. Changes in deferred tax assets or liabilities are recognized as a component of tax income or expense in profit or loss, except where they relate to items that are recognized in other comprehensive income (such as the revaluation of land) or directly in equity, in which case the related deferred tax is also recognized in other comprehensive income or equity, respectively.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 19 Separate Financial statements 31 December 2015
3.15. Cash and cash equivalents Cash and cash equivalents comprise cash on hand, current bank accounts and term deposits up to 3 months. 3.16. Non-current assets and liabilities classified as held for sale and discontinued operations When the Company intends to sell a non-current asset or a group of assets (a disposal group), and if sale within 12 months is highly probable, the asset or disposal group is classified as 'held for sale' and presented separately in the statement of financial position. Liabilities are classified as 'held for sale' and presented as such in the statement of financial position if they are directly associated with a disposal group. Assets classified as 'held for sale' are measured at the lower of their carrying amounts immediately prior to their classification as held for sale and their fair value less costs to sell. Assets classified as 'held for sale' are not subject to depreciation or amortization subsequent to their classification as 'held for sale'. 3.17. Equity, reserves and dividend payments Share capital represents the nominal value of shares that have been issued. Share premium includes any premiums received on issue of share capital. Any transaction costs associated with the issuing of shares are deducted from share premium, net of any related income tax benefits. The revaluation reserve includes the revaluation of non-financial assets. General reserves include legal reserves required by the Bulgarian legislation, general reserves from generated profit or loss incurred from prior years. Retained earnings include financial result and accumulated profit and uncovered losses from prior years. Dividend payables to shareholders are included in 'Related party payables' when the dividends have been approved at the general meeting of shareholders prior to the reporting date. All transactions with owners of the parent are recorded separately within equity. 3.18. Post-employment benefits and short-term employee benefits The Company reports short-term payables relating to unutilized paid leaves, which shall be compensated in case it is expected the leaves to occur within 12 months after the end of the accounting period during which the employees have performed the work related to those leaves. The short-term payables to personnel include wages, salaries and related social security payments. The Company provides post employment benefits through defined contribution plans. A defined contribution plan is a pension plan under which the Company pays fixed contributions into an independent entity in accordance with Bulgarian legisltation. The Company has no legal or constructive obligations to pay further contributions after its payment of the fixed contribution. In accordance with Labor Code requirements, in case of retirement, after the employee has gained the legal right of pension due to years of services and age, the Company is obliged to pay him/her compensation at the amount of up to six gross wages. The Company has accrued a legal obligation to pay benefits to employees upon retirement in accordance with IAS 19”Employee
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 20 Separate Financial statements 31 December 2015 benefits” on the basis of projected payments for the following five years discounted to present value using the long-term interest rate for risk-free securities. Short-term employee benefits, including holiday entitlement, are included in current liabilities in position 'pension and other employee obligations', measured at undiscounted value that the Company expects to pay as a result of the unused entitlement.
3.19. Provisions, contingent assets and contingent liabilities Provisions are recognized when present obligations as a result of a past event will probably lead to an outflow of economic resources from the Company and amounts can be estimated reliably. Timing or amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or constructive commitment that has resulted from past events, for example, product warranties granted, legal disputes or onerous contracts. Restructuring provisions are recognized only if a detailed formal plan for the restructuring has been developed and implemented, or management has at least announced the plan's main features to those affected by it. Provisions are not recognized for future operating losses. Provisions are measured at the estimated expenditure required to settle the present obligation, based on the most reliable evidence available at the reporting date, including the risks and uncertainties associated with the present obligation. Where there are a number of similar obligations, the likelihood that an outflow will be required in settlement is determined by considering the class of obligations as a whole. Provisions are discounted to their present values, where the time value of money is material. Any reimbursement that the Company can be virtually certain to collect from a third party with respect to the obligation is recognized as a separate asset. However, this asset may not exceed the amount of the related provision. All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate. In those cases where the possible outflow of economic resources as a result of present obligations is considered improbable or remote, no liability is recognized. Contingent liabilities are subsequently measured at the higher amount of a comparable provision as described above and the amount initially recognized, less any amortization. Possible inflows of economic benefits to the Company that do not yet meet the recognition criteria of an asset are considered contingent assets and are presented in 35.
3.20. Grants
The government grants provided by the State, are initially recognised as deferred income (financing) when there is reasonable assurance that they will be received by the Company and that the latter has complied and complies with the associated thereto terms and requirements.
The government grant that compensates the Company for expenses incurred is recognised in current profit or loss on a systematic basis in the same period in which the expenses are recognised.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 21 Separate Financial statements 31 December 2015
The government grant that compensates investment expenses incurred to acquire an asset is recognised in current profit or loss on a systematic basis over the useful life of the asset usually at the amount of the recognised depreciation charge.
3.21. Significant management judgment in applying accounting policies
The following are significant management judgments in applying the accounting policies of the Company that have the most significant effect on the financial statements. Critical estimation uncertainties are described in note 3.22.
3.21.1. Leases
In applying the classification of leases in IAS 17 “Leases”, management considers its leases of machines, equipment and vehicles facilities as finance lease arrangements. In some cases, the lease transaction is not always conclusive, and management uses judgment in determining whether the lease is a finance lease arrangement that transfers substantially all the risks and rewards incidental to ownership.
3.21.2. Deferred tax assets
The assessment of the probability of future taxable income in which deferred tax assets can be utilized is based on the Company's latest approved budget forecast, which is adjusted for significant non-taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax rules in the numerous jurisdictions in which the Company operates are also carefully taken into consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset, especially when it can be utilized without a time limit, that deferred tax asset is usually recognized in full. The recognition of deferred tax assets that are subject to certain legal or economic limits or uncertainties is assessed individually by management based on the specific facts and circumstances.
3.22. Estimation uncertainty
When preparing the financial statements management undertakes a number of judgements, estimates and assumptions about recognition and measurement of assets, liabilities, income and expenses.
The actual results may differ from the judgements, estimates and assumptions made by management, and will seldom equal the estimated results.
Information about significant judgements, estimates and assumptions that have the most significant effect on recognition and measurement of assets, liabilities, income and expenses are discussed below.
3.22.1. Impairment
An impairment loss is recognized for the amount by which the asset's or cash-generating unit's carrying amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-in-use. To determine the value-in-use, management estimates expected future cash flows from each cash-generating unit and determines a suitable interest rate in order to calculate
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 22 Separate Financial statements 31 December 2015 the present value of those cash flows (see note 3.11). In the process of measuring expected future cash flows management makes assumptions about future operating results. These assumptions relate to future events and circumstances. The actual results may vary, and may cause significant adjustments to the Company's assets within the next financial year.
In most cases, determining the applicable discount rate involves estimating the appropriate adjustment to market risk and the appropriate adjustment to asset-specific risk factors.
In addition, as at December 31, 2015 the management of the Company have performed test for impairment of investment in the subsidiary Octa Light Bulgaria AD (note 7), as well as loans and receivables from the subsidiary (note 33). The test for impairment is based on discounted cash- flow model based on expected proceeds from current and future projects of the subsidiary in subsequent reporting periods. The key parameters in the impairment test are: discount rate of 10.58%, as well as realization of future contracts in next 12 months of approximately BGN 15 mln. The management of the Company and of the subsidiary believes that based on the business plan, which include contracts with reasonable level of assurance, there is no need for additional impairment for the year ended December 31, 2015. 3.22.2. Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at each reporting date.
At 31 December 2015 management assesses that the useful lives represent the expected utility of the assets to the Company. The carrying amounts are analyzed in notes 5 and 6. Actual results, however, may vary due to technical obsolescence, particularly relating to software and IT equipment.
3.22.3. Inventories
Inventories are measured at the lower of cost and net realizable value. In estimating net realizable values, management takes into account the most reliable evidence available at the times the estimates are made. The Company's core business is subject to technology changes which may cause selling prices to change rapidly. Moreover, future realization of the carrying amounts of inventory assets BGN 27 656 thousand (2014: BGN 21 417 thousand) is affected by the fluctuations of the prices on the lead and lead component markets.
3.22.4. Fair value of financial instruments
Management uses valuation techniques in measuring the fair value of financial instruments where active market quotes are not available. In applying the valuation techniques management makes maximum use of market inputs, and uses estimates and assumptions that are, as far as possible, consistent with observable data that market participants would use in pricing the instrument. Where applicable data is not observable, management uses its best estimate about the assumptions that market participants would make. These estimates may vary from the actual prices that would be achieved in an arm's length transaction at the reporting date.
3.22.5. Provisions
Warranties represent recognized amounts, which the Company expects to incur as an expense for servicing and repair of defects of the basic products during the next year.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 23 Separate Financial statements 31 December 2015
The amount recognized for warranties for which customers are covered for the cost of repairs is estimated based on management's past experience and the future expectations of defects.
4. Correction of Prior Period Accounting Error During 2015 following a revision of the costing model and the underlying assumptions with respect to valuation of the work in progress in Monbat AD (a subsidiary of the Group), the management of the Company discovered that:
1. Certain items which had the nature of finished products and raw materials were classified as work in progress. Certain items which had the nature of work-in progress were classified as finished products.
In these separate financial statements the correction of the misclassification is treated as a prior period accounting error under IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” and consequently the earliest comparative period presented is restated.
The effect for the year ended 2014 is: 1) a decrease in the reported numbers for work in progress in the amount of 1,820 BGN thousand, 2) a decrease in the reported numbers for finished products for 410 BGN thousand and 3) a corresponding increase in raw materials of 2,230 BGN thousand
The effect for the year ended 2013 is: 1) a decrease in the reported numbers for work in progress in the amount of 325 BGN thousand, 2) a decrease in the reported numbers for finished products for 1,439 BGN thousand and 3) a corresponding increase in raw materials of 1,764 BGN thousand.
2. There was an accounting error in aggregating the inventory stock count protocols for financial years ended 31.12.2014 and 31.12.2013 which led to increase in reported quantities for work in progress items.
3. The technological norms with respect to certain items that are part of the recipes used to value work in progress and the bill of materials used for the valuation of the later have not been accurate.
In these separate financial statements the corrections pertaining to items 2 and 3 listed are treated as a prior period accounting error under IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” and consequently the earliest comparative period presented is restated.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 24 Separate Financial statements 31 December 2015
EFFECT OF RESTATEMENT ON THE SEPERATE STATEMENT OF FINANCIAL POSITON:
(all amounts in BGN thousands) As at 31 December Assets Note 2014 Effect of Error 2014 2013 Effect of Error 2013 Techn stock Techn stock BGN ‘000 norms count BGN ‘000 BGN ‘000 norms count BGN ‘000 Original Restated original original Non-current assets Intangible assets 5 180 - - 180 139 - - 139 Property, plant and 45 200 - - 45 200 44 021 - - 44 021 equipment 6 Investments in 41 032 - - 41 032 42 205 - - 42 205 subsidiaries 7 Long-term related party 23 994 - - 23 994 22 593 - - 22 593 receivables 33 Non-current assets 110 406 - - 110 406 108 958 - - 108 958
Current assets Inventories 10 30 103 (8 117) (569) 21 417 32 147 (8 361) (1 378) 22 408 Short-term financial 34 - - 34 24 - - 24 assets 11 Trade receivables 12 26 963 - - 26 963 26 786 - - 26 786 Short-term related- 32 799 - - 32 799 20 926 - - 20 926 party receivables 33 Tax receivables 13 1 982 (24) (77) 1881 3 742 - - 3 742 Other receivables 14 354 - - 354 506 - - 506 Cash and cash 15 9 705 - - 9 705 6 101 - - 6 101 equivalents Current assets 101 940 (8 141) (646) 93 153 90 232 (8 361) (1 378) 80 493
Total assets 212 346 (8 141) (646) 203 559 199 190 (8 361) (1 378) 189 451
(all amounts in BGN As at 31 December thousands) Equity and liabilities Note 2014 Effect of Error 2014 2013 Effect of Error 2013 Techn stock BGN Techn stock BGN BGN ‘000 norms count ‘000 BGN ‘000 norms count ‘000 Original Restated Original Original Equity Share capital 16.1 39 000 - - 39 000 39 000 - - 39 000 Share premium 16.2 28 611 - - 28 611 28 611 - - 28 611 General reserve 16.3 74 342 (8 361) (1 378) 64 603 61 558 (8 361) (1 378) 51 819 Retained earnings 12 832 220 728 13 780 21 754 - - 21 754 Total equity 154 785 (8 141) (650) 145 994 150 923 (8 361) (1 378) 141 184
Liabilities Non-current liabilities Long-term borrowings 19.1 33 819 - - 33 819 6 649 - - 6 649 Finance lease liabilities 8 - - - - 239 - - 239 Deferred tax liabilities, net 9 867 - - 867 1 310 - - 1 310 Long-term grants 19.2 2 386 - - 2 386 2 848 - - 2 848 Non-current liabilities 37 072 - - 37 072 11 046 - - 11 046
Current liabilities Guarantee provisions 17 532 - - 532 797 - - 797 Pension and other employee obligations 18.2 351 - - 351 454 - - 454 Short-term borrowings 19.1 8 680 - - 8 680 20 138 - - 20 138 Finance lease liabilities 8 238 - - 238 394 - - 394 Trade payables 20 6 455 - - 6 455 7 776 - - 7 776
Short-term related party payables 32 1 905 - - 1 905 5 457 - - 5 457 Tax liabilities 21 131 - 4 135 863 - - 863 Short-term grants 19.2 456 - - 456 456 - - 456 Other liabilities 22 1 741 - - 1 741 886 - - 886 Current liabilities 20 489 - 4 20 493 37 221 - - 37 221
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 25 Separate Financial statements 31 December 2015
Total liabilities 57 561 - 4 57 565 48 267 - - 48 267 Total equity and liabilities 212 346 (8 141) (646) 203 559 199 190 (8 361) (1 378) 189 451
EFFECT OF RESTATEMENT ON THE SEPERATE INCOME STATEMENT FOR THE YEAR ENDED 31 DECEMBER:
Note 2014 Effect of Error 2014 BGN ‘000 Techn stockcount BGN ‘000 original norms Restated
Revenue 23 247 091 - - 247 091 Other revenue 23 508 - - 508
Cost of materials 24 (171 090) 466 - (170 624) Hired services expenses 25 (13 220) - - (13 220) Employee benefits expenses 18.1 (6 627) - - (6 627) Amortization of non-financial assets 5,6 (5 225) - - (5 225)
Changes in finished goods and work in progress 2 148 (222) 809 2 735 Cost of goods sold and other current assets (32 925) - - (32 925) Other expenses 27 (2 118) - - (2 118) Impairment of investments 27.1 (1 173) - - (1 173) Impairment of receivables 27.2 (4 312) - - (4 312) Gain on sale of non-current assets 26 61 - - 61 Operating profit 13 118 244 809 14 171
Finance costs 28 (1 819) - - (1 819) Finance income 28 2 989 - - 2 989 Other financial items 29 58 - - 58 Profit before tax 14 346 244 809 15 399 Tax expense 30 (1 514) (24) (81) (1 619) Profit for the year 12 832 220 728 13 780
BGN BGN
Earnings per share 31.1 0.33 0.02 0.35
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 26 Separate Financial statements 31 December 2015
5.0. Intangible assets
The Company's intangible assets comprise software licenses, trademarks and other intangible assets. The carrying amounts for the reporting periods under review can be analyzed as follows:
At 31 December 2015 Software Trademarks Others Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount Balance at 1 January 2015 146 467 87 700 Additions, separately acquired 68 6 74 Balance at 31 December 2015 214 473 87 774 Amortization Balance at 1 January 2015 (143) (365) (12) (520) Amortization (14) (33) (12) (59) Balance at 31 December 2015 (157) (398) (24) (579) Carrying amount at 31 December 2015 57 75 63 195
As at 31 December 2014 Software Trademarks Others Total BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Gross carrying amount Balance at 1 January 2014 143 467 2 612 Additions, separately acquired 3 - 85 88 Balance at 31 December 2014 146 467 87 700 Amortization Balance at 1 January 2014 (139) (332) (2) (473) Amortization (4) (33) (10) (47) Balance at 31 December 2014 (143) (365) (12) (520) Carrying amount at 31 December 2014 3 102 75 180
No material contractual commitments were entered into during 2015.
All amortization and impairment charges (or reversals if any) are included within 'Depreciation, amortization and impairment of non-financial assets.
No intangible assets have been pledged as security for liabilities.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 27 Separate Financial statements 31 December 2015
6.
6. Property, plant and equipment Company's property, plant and equipment comprise land, buildings, machines and equipment, installations, vehicles, fixtures and acquisition expenses. The carrying amount can be analyzed as follows:
Land Buildings Machines Installations Vehicles Fixtures Assets Total and under equipment construction
BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000
Gross carrying amount Balance at 1 January 2015 4 683 12 303 61 977 3 529 3 738 2 341 7 412 95 983
Additions - 883 787 106 128 49 5 741 7 694 Disposals - - - - (35) - - (35)
Transfer of assets - 121 8 296 611 - 6 (9 034) -
Balance at 31 December 2015 4 683 13 307 71 060 4 246 3 831 2 396 4 119 103 642
Amortizations Balance at 1 January 2015 - (3 090) (41 717) (987) (2 807) (2 182) - (50 783)
Amortization - (516) (3 977) (161) (258) (53) - (4 965) Written-off amortization - - - - 11 - 11
Balance at 31 December 2015 - (3 606) (45 694) (1 148) (3 054) (2 235) - (55 737)
Carrying amount at 31 December 2015 4 683 9 701 25 366 3 098 777 161 4 119 47 905
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 28 Separate Financial statements 31 December 2015
6. Property, plant and equipment (continued)
Land Buildings Machines Installations Vehicles Fixtures Assets Total and under equipment construction
BGN BGN BGN ‘000 ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 ‘000 Gross carrying amount Balance at 1 January 2014 4 678 10 136 60 335 3 523 3 770 2 298 5 619 90 359 Additions 5 247 600 6 111 43 6 355 7 367 Transfer of assets - 1 920 2 639 - - - (4 559) - Disposals - - (1 597) - (143) - (3) (1 743) Balance at 31 December 2014 4 683 12 303 61 977 3 529 3 738 2 341 7 412 95 983 Amortization Balance at 1 January 2014 - (2 599) (38 203) (849) (2 590) (2 097) - (46 338) Amortization - (491) (4 104) (138) (360) (85) - (5 178) Written-off amortization - - 590 - 143 - - 733 Balance at 31 December 2014 - (3 090) (41 717) (987) (2 807) (2 182) - (50 783) Carrying amount at 31 December 2014 4 683 9 213 20 260 2 542 931 159 7 412 45 200
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 29 Separate Financial statements 31 December 2015
6. Property, plant and equipment (continued)
All depreciation charges are included within 'Depreciation and amortization of non-financial assets'.
In 2015 the Company has ordered construction of production equipment with value of BGN 1,543 thousand and made an advance payment in the amount of BGN 464 thousand and production machine for plates with value of BGN 530 thousand, and made an advance payment in the amount of BGN 132 thousand.
The material part of the expenses for the acquisition of intangible assets of the company includes expenses, related to the ongoing reconstruction and modernization of the newly built plant in Montana.
As at 31 December 2015 the expenses for the acquisition intangible assets are at the amount of BGN 4 119 thousand (2014: BGN 7 412 thousand) and are distributed as follows:
Project BG 161 PО 003-1.1.07 :0 BGN(2 387 th. BGN 2014) Block moulder starter battery 383 th. BGN (2014 г. – 183 th. BGN) Line Accurate 351 th. BGN (2014 г. – 0 th. BGN) Production frame for lead plane and grille :733 th. BGN(2014 :745 th. BGN) New Hi-energy voltage cabel 0 th. BGN (2014 : 345 TH. BGN) Assembly line for VRLA battery th.BGN 952(2014: 847 thousand BGN) Other reconstructions BGN 1 700 thousand (2014: BGN 2 905 thousand)
The carrying amount of the Company’s property, plant and equipment pledged as security for its loans (see note 20), is presented as follows:
Land Buildings Machines Vehicles Total and equipment BGN BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 ‘000
Carrying amount at 31 December 2015 3 180 5 688 7 297 193 16 358 Carrying amount at 31 December 2014 3 180 5 925 8 107 215 17 427
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 30 Separate Financial statements 31 December 2015
7. Investments in subsidiaries The Company has the following investments in subsidiaries:
Name of the Country of Main 2015 share 2014 share subsidiary incorporation activities BGN ‘000 % BGN ‘000 %
Production of Start AD Bulgaria Batteries 4 483 87.26 4 483 87.26 Monbat Recycling EAD Bulgaria Lead recycling 35 182 100 35 182 100 Monbat OOD Trade of Romania Romania Batteries 194 99 194 99 Production of Octa light powerful Bulgaria AD Bulgaria LED 1 173 50.45 1 173 50.45 41 032 41 032 The investments in subsidiaries are represented in the financial statements of the Company, using the cost method, net of impairment.
The securities of the subsidiaries are not registered on the public market and their fair value cannot be estimated.
In 2015 and 2014 the Company has not received any dividends.
The company has no other contingent liabilities and other obligations, related to investments in subsidiaries (see note 35).
8. Leases 8.1. Finance leases as a lessee The Company acquired under finance lease agreements the following assets machines, production equipment and vehicles. The net carrying amount of the assets held under finance leases is at amount of BGN 437 thousand (2014: BGN 616 thousand);. The assets are included in group “Machines and equipment” and “Vehicles” of “Property, plant and equipment”
Finance lease liabilities are secured by the related assets held under finance lease arrangements
Future minimum finance lease payments at the end of each reporting period under review are as follows:
Minimum lease payments due Within 1 year 1 to 5 years After 5 Total years BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 31 December 2015 Lease payments 22 - - 22 Finance charges (3) - - (3) Net present values 19 - - 19 31 December 2014 Lease payments 252 - - 252 Finance charges (14) - - (14) Net present values 238 - - 238
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 31 Separate Financial statements 31 December 2015
The lease agreements include fixed lease payments and purchase option at the end of 7-th year of the lease term. The agreements are non-cancellable but do not contain any further restrictions. No contingent rents were recognized as an expense and no sublease income is expected to be received as all assets are used exclusively by the Company.
The fair value of the finance lease liabilities has been estimated at BGN 19 thousand (2014: BGN 238 thousand;). This amount reflects present value and takes into account interest rates available on secured bank borrowings on similar terms.
8.2. Operating leases as a lessee The Company's future minimum operating lease payments are as follows:
Minimum lease payments due Within 1 year 1 to 5 years Total BGN ‘000 BGN ‘000 BGN ‘000
31 December 2015 240 240 480 31 December 2014 240 240 480 Lease payments recognized as an expense during the period amount to BGN 240 thousand (2014: BGN 240 thousand). This amount consists of minimum lease payments.
The Company's operating lease agreements do not contain any contingent rent clauses. None of the operating lease agreements contains renewal or purchase options or escalation clauses or any restrictions regarding dividends, further leasing or additional debt.
9. Deferred tax assets and liabilities Deferred taxes arising from temporary differences can be summarized as follows:
Deferred tax liabilities (assets) 1 January 2015 Recognized in 31 December 2015 profit and loss BGN ‘000 BGN ‘000 BGN ‘000 Non-current assets Property, plant and equipment 2 231 (69) 2 162 Current liabilities Obligations for employee’s compensated leaves (4) (1) (5) Impairment of receivables (970) - (970) Provisions for guarantees for returns 10 7 17 Impairment of inventories (50) - (50) Impairment of investments (350) - (350) 867 (63) 804 Recognized as: Deferred tax assets (1 409) (1 375) Deferred tax liabilities 2 276 2 179 Deferred tax liabilities, net 867 804
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 32 Separate Financial statements 31 December 2015
Deferred tax liabilities (assets) 1 January 2014 Recognized in 31 December 2014 profit and loss BGN ‘000 BGN ‘000 BGN ‘000 Non-current assets Property, plant and equipment 2 219 12 2 231 Current liabilities Obligations for employee’s compensated leaves (6) 2 (4) Impairment of receivables (603) (367) (970) Provisions for guarantees for returns (17) 27 10 Impairment of inventories (50) - (50) Impairment of investments (233) (117) (350) 1 310 (443) 867 Recognized as: Deferred tax assets (925) (1 409) Deferred tax liabilities 2 235 2 276 Deferred tax liabilities, net 1 310 867
10. Inventories Inventories, recognized in the statement of financial position can be analyzed as follows
2015 2014 2013 ‘000 лв. ‘000 лв. ‘000 лв.
Work in progress 7 507 7 444 7 567 Materials 17 769 9 558 12 370 Production 2 327 4 367 2 456 Goods 53 48 15 Inventories 27 656 21 417 22 408
No decrease in the expenses as a result of the reduction of the reimbursement of impairments, which have been recognized in previous periods, has occurred in 2015 or 2014. A pledge has been founded on a combination of raw materials and inventories – lead, lead composites and accumulator batteries and similar products, owned by Monbat AD, pledged as collateral for the liabilities under an overdraft agreement for turnover cash items and for the issuance of bank guarantees, dated 25.02.2010 with SG Expressbank AD, overdraft agreement from 07.12.2004 and contract 23.11.2010 with Eurobank EFG Bulgaria AD. The carrying amount of the inventories, pledged as a collateral for borrowings (see note 19), amounts to BGN 12 242 thousand as at 31.12.2015.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 33 Separate Financial statements 31 December 2015
11. Short-term financial assets In the reporting periods under review the other short-term financial assets include equity investments and loans, held for shor term period. 2015 2014 BGN ‘000 BGN ‘000
Equity investment 50 - Battery Center Europa - 24 Michail Jotov 10 10 60 34
Contract from 22.12.2014 with Michail Jotov Utilized principal: BGN 10 thousand. Contract duration: one year Balance of the principle as of 31.12.2015 - BGN 10 thousand Redemption: Single payment at the maturity date of the contract
Contract from 01.08.2013 with Battery Center Europa Utilized principal: BGN 24 thousand. Contract duration: one year Balance of the principle as of 31.12.2015 - BGN 0 thousand Redemption: Single payment at the maturity date of the contract Anex to prolong the term of the contract
12. Trade receivables 2015 2014 BGN ‘000 BGN ‘000
Trade receivables, gross 33 372 28 118 Impairment (1 155) (1 155) Trade receivables 32 217 26 963 All trade receivables are short term. The net carrying value of trade receivables is considered a reasonable approximation of fair value. All trade receivables of the Company have been reviewed for indicators of impairment. Certain trade receivables were found to be impaired and an allowance for credit losses of BGN 978 thousand during 2014 has been recognized within ‘Impairment of receivables”. The impaired trade receivables are mostly due from trade customers that are experiencing financial difficulties. Some of the impaired receivables in previous periods had written-off.
The movement in the allowance for credit losses can be reconciled as follows: 2015 2014 BGN ‘000 BGN ‘000 Balance at 1 January (1 155) (237) Impairment loss - (978) Revenues from restatement impairment - - Written-off receivables - 60 Balance at 31 December (1 155) (1 155)
An analysis of unimpaired trade receivables that are past due is presented in note 38.1.3.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 34 Separate Financial statements 31 December 2015
13. Tax receivables 2015 2014 BGN ‘000 BGN ‘000 VAT recoverable 2 406 1 721 Customs collections 237 160 2 643 1 881 Tax receivables include VAT recoverable at the amount of BGN 2 406 thousand for December 2015. The tax has been recovered in 2016.
14. Other receivables 2015 2014 BGN ‘000 BGN ‘000 Receivables from trade loan interest - 185 Prepaid insurances 82 66 Other 98 103 180 354
15. Cash and cash equivalents Cash and cash equivalents include the following components:
2015 2014 BGN ‘000 BGN ‘000 Cash at bank and in hand - BGN 1 828 4 142 - EUR 10 233 5 049 - USD 247 512 - GBP 118 2 Cash and cash equivalents 12 426 9 705
At 31.12.2015 and 31.12.2014 the Company has not restricted cash.
16. Equity
16.1. Share capital The share capital of the Name of the Company consists only of 39 000 000 fully paid ordinary shares with a nominal value of BGN 1. All shares are equally eligible to receive dividends and the repayment of capital and represent one vote at the shareholders' meeting of the Company.
During 2014 the Company has sold 120 bought back own shares.
Unicredit Bank Austria AG has been engaged as a sub-custodian by Prista Holdco Cooperatief U.A. (being a shareholder in Prista Oil Group BV which is in turn the sole shareholder of Prista Oil Holding EAD and 90% owner of Monbat Trading OOD). As of 31.12.2015 and 31.12.2014 under the custodian agreement Unicredit Bank Austria AG holds 1 376 400 shares or 3.53% of the capital of the Company with beneficial owner Monbat Trading OOD, and 4 588 121 shares or 11.76% of the capital of the Company with beneficial owner Prista Oil Holding EAD.
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 35 Separate Financial statements 31 December 2015
As at 31.12.2014 Prista Oil Holding EAD holds directly 18 616 371 shares and the same number of votes at the General Assembly of the Shareholders or 47.73% of the capital of Monbat AD and through the related party Monbat Trading Ltd. holds 2 752 800 voting shares or 7.06 % of the capital of the Company. The total number of the shares and votes hold directly and through related parties by Prista Oil Holding EAD is 21 369 171 shares or 54.79 %
On 28.10.2015 is executed transfer transaction for 1 9500 000 voting shares or 5 % of the capital of Monbat AD in the Central Depository. As at 31.12.2015 as a result of the change Prista Oil Holding EAD holds directly 16 666 371 shares and the same number of votes at the General Assembly of the Shareholders or 42,73 % of the capital of Monbat AD and through the related party Monbat Trading Ltd. holds 2 752 800 voting shares or 7,06 % of the capital of the Company. The total number of the shares and votes hold directly and through related parties on the part of Prista Oil Holding EAD is 19 419 171 shares or 49,79 % of the capital of Monbat AD.
Prista Holdco Cooperatief U.A., notified Monbat AD on an executed by the company acquisition transaction for 1 950 000 voting shares or 5 % of the capital of Monbat AD with a settlement date of the transaction in the Central Depository 28.10.2015. As a result of the change Prista Holdco Cooperatief U.A. holds directly 10 053 758 shares as at 31.12.2015 or 25,78 % of the capital of Monbat AD. Prista Holdco Cooperatief U.A.exercises the right to vote directly and not through related parties.
A call option was granted by Prista Holdco Cooperatief U.A. to the Group with respect to the transferred shares. The call option lapses on 1st of June 2016 and is exercisable at any time prior to that date.
In October 2015 a side letter was signed by Prista Holdco Cooperatief U.A. providing that the voting rights attributable to the shares are retained by the Group.
As a result as at 31.12.2015 and as at the date of these separate financial statements Prista Oil Holding EAD continues to exercise the voting rights over 54.79% from all shares of the Company or over 21 369 171 shares.
2015 2014
Number of shares issued and fully paid, - beginning of the year 39 000 000 38 999 880 Sold redemption of shares - 120 Number of shares issued and fully paid 39 000 000 39 000 000 Total number of shares authorized as at 31 December 39 000 000 39 000 000
The list of the principal shareholders of Monbat AD is as follows:
31 December 31 December 31 December 31 December 2015 2015 2014 2014 Number of Number of
shares % shares % Prista Oil Holding EAD 12 078 250 30.97 14 028 250 35.97 Prista Holdco Cooperatief U.A. 10 053 758 25.78 8 103 758 20.78 Unicredit Bank Austria AG 5 964 521 15.29 5 964 521 15.29 Monbat Trading OOD 1 376 400 3.53 1 376 400 3.53 Other natural persons and entities 9 527 071 24.43 9 527 071 24.43
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 36 Separate Financial statements 31 December 2015
39 000 000 100 39 000 000 100
16.2. Share premium Share premium of the Company consists of proceeds, received in addition to nominal value of the shares issued in 2006. The proceeds are included in share premium, less any registration and other regulatory fees. The excess over the nominal value of BGN 1, for each redeemed share units and the fees for the investment mediator, increase the share premium value by BGN 28 611 thousand at 31.12.2015 (31.12.2014). 16.3. General reserve All amounts are in BGN ‘000 Legal reserves Other reserves Total
Balance at 01 January 2014 3 900 47 919 51 819 Transfer of profit - 12 784 12 784 Balance at 31 December 2014 3 900 60 703 64 603 Transfer of profit - - - Balance at 31 December 2015 3 900 60 703 64 603
Legal reserves
Legal reserves represent 10% from the current earnings as required by the Commercial law until it reaches 10% of the share capital. Other reserves Other reserves at 31.12.2015 amount to BGN 60 703 thousand and are formed by the retained earnings of the Company in 2006, 2008, 2009,2010,2012,2013,2014 and other changes.
17. Guarantee provisions The carrying amounts of the provisions can be summarized as follows:
Guarantee provisions BGN ‘000
Carrying amount 1 January 2015 532 Charged / (utilized) amounts (70) Carrying amount at 31 December 2015 462
2015 2014 BGN ‘000 BGN ‘000 Current Carrying amount 462 532 462 532 Provisions for guarantees are recognized amounts, which are expected by the Company to be made as expenses for warranty service and replacement of the main products through the next
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 37 Separate Financial statements 31 December 2015 year. Recognized provision is calculated on the best estimate basis, which the Company’s management can make based on previous experience and anticipated product sales.
18. Employee remuneration
18.1. Employee benefits expenses
Expenses recognized for employee benefits include:
2015 2014 BGN ‘000 BGN ‘000
Wages, salaries 7 079 5 635 Social security costs 1 330 992 Employee benefits expense 8 409 6 627 18.2. Employee benefits The liabilities for pension and other employee obligations recognized in the statement of financial position consist of the following amounts:
2015 2014 BGN ‘000 BGN ‘000
Wages, salaries obligations 172 59 Social security obligations 197 167 Compensated leaves obligations 119 125 Employee and Insurance institutions obligations 488 351
The current portion of these liabilities represents the Company's obligations to its current and former employees that are expected to be settled during 2016. Other short-term employee obligations arise mainly from accrued holiday entitlement at the end of the reporting period. In accordance with the requirements of the Labor Act when terminating an employment after the employee has become entitled to retirement pension, the Company is obliged to pay compensation amounting to six gross wages. The Company has not accrued legal obligation to pay benefits to employees upon retirement in accordance with the requirements of IAS 19 ‘Employee Benefits’, as such are not expected to occur based on previous experience.
19. Borrowings Borrowings include the following financial liabilities:
Current Non-current 2015 2014 2015 2014 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 Financial liabilities measured at amortized cost Other bank loans 25 214 8 680 9 198 33 819 Total carrying amounts 25 214 8 680 9 198 33 819
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 38 Separate Financial statements 31 December 2015
19.1. Borrowings at amortized cost
Details of the contracts for banking loans:
1. Eurobank Bulgaria AD Contract № 100-532 from 16.05.2007 Maturity date: 16.05.2017 Amount borrowed: EUR 6 100 000 Type of credit: Investment loan Interest: 3-month EURIBOR + fixed mark-up Collateral: Mortgage on real estate: Land in Regulation XXIII 27 250 sq. m. in Montana, including the buildings on it. Pledge on movable property owned by Monbat AD – Property, plant and equipment worth EUR 2 934 860, automobiles at the amount of EUR 131 484 and equipment acquired with the loan. Utilized amount as of 31.12.2015 at the amount of EUR 1 080 042 or BGN 2 112 379
2. Raifeissenbank EAD Contract dated 28.11.2013, Annex 3/14.03.2014 Maturity date: 15.12.2016 (limit A),15.11.2018 (limit B) Amount borrowed: EUR 5 700 000 Type of credit: Investment loan Interest: 1-month EURIBOR + fixed mark-up Collateral: First rank collateral of assets including Engitec line, owned by Monbat Recysling and first rank conventional mortgage of own real estate, owned by Monbat Utilized amount as of 31.12.2015 at the amount of EUR 2 967 330 or BGN 5 803 593
3. Raifeissenbank EAD Contract dated 25.02.2014, Maturity date: 15.02.2017 Amount borrowed: EUR 3 200 000 Type of credit: Revolving loan Interest: 1-month EURIBOR + fixed mark-up Collateral: Rank collateral of mortgage of own real estate, cadaster № 48489.5.279, cadaster № 48489.5.281, cadaster № 48489.5.396, together with bildings on it, on the teritory of Montana str. Indystrialna. Utilized amount as of 31.12.2014 at the amount of EUR 3 146 454 or BGN 6 153 929
4. Eurobank Bulgaria AD Contract № 339/07.12.2004 Maturity date: 01.09.2014 Amount borrowed: EUR 2 200 000 Type of credit: Credit line Interest: 3-month EURIBOR + fixed mark-up Collateral: Pledge, registered in the Special Pledge Registry There is annex from 29.07.2014 and the loan is transfered from EUR in BGN Maturity date: 01.09.2016 Amount borrowed: 9 129 401 BGN Type of credit: Credit line Interest: 3 M Sofibor + + fixed mark-up Collateral:: Pledge of assets and inventories owned by Monbat AD Utilized amount as of 31.12.2015 at the amount of BGN 1 197
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 39 Separate Financial statements 31 December 2015
5. Eurobank Bulgaria AD Contract № 100-972 / 23.11.2010 Maturity date: 29.08.2015 Amount borrowed: EUR 1 000 000 Type of credit: Working capital Interest: 3-month EURIBOR + fixed mark-up Collateral: Real estate 1: ½ ideal part of land with identification N48489.282 on the cadastral map of Montana, buildings and factories, warehouse currently owned by Monbat AD, approved with Directive № RD-18- 19-/05.04.2006 of the executive director of AK. Real estate 2: ½ ideal part of land with identification N48489.282 on the cadastral map of Montana, buildings and factories, warehouse currently owned by Monbat AD, approved with Directive № RD-18- 19-/05.04.2006 of the executive director of AK. Pledges: Pledge 1: Machines, installations and vehicles, located in the factory of Monbat AD in Montana, 72 “Industrial” str. Pledge 2: Vehicle weighing machine and security room with an area of 102 sq.m., according to documentary evidence and inventory number 300000003 Pledge 3: Unloading area, with an area of 1980 sq.m., according to documentary evidence and property inventory number 3000000004. Utilized amount as of 31.12.2015 at the amount of EUR 0 or BGN 0. There is annex from 29.07.2014 and the loan is transfered from EUR in BGN Maturity date: 01.09.2016 Amount borrowed: 1 955 830 BGN Type of credit: Credit line Interest: 3 M Sofibor + + fixed mark-up Collateral:: Pledge of assets and inventories owned by Monbat AD Utilized amount as of 31.12.2015 at the amount of BGN 594
6. HYPO NOE Gruppe Bank AG Contract from 16.05.2014 Maturity date: 03.10.2016 Amount borrowed: EUR 10 000 000 Type of credit: Investment loan Interest: 3 M EURIBOR + fixed mark-up Collateral: Pledge agreement for all Monbat’s shares of Monbat Recycling EAD Utilized amount as of 31.12.2015 at the amount of EUR 10 000 000 or BGN 19 558 300
7. DSК Bank EAD Contract.№1675/16.09.2015 Maturity date: 10.09.2016 Amount borrowed: EUR 2 500 000 Type of credit: For working capital Interest: 3 M EURIBOR + fixed mark-up Collateral: Pledge agreement for materials Utilized amount as of 31.12.2015 at the amount of EUR 400 000 or BGN 782 332
8. DSК Bank EAD Contract.№1674/16.09.2015 Maturity date: 10.09.2016 Amount borrowed: BGN 2 000 000 Type of credit: For working capital Interest: 1 M EURIBOR + fixed mark-up Collateral: Pledge agreement for materials Utilized amount as of 31.12.2015 at the amount of BGN 0
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 40 Separate Financial statements 31 December 2015
9. Bank credit card accounts with credit limits BGN 50 000 and utilized amounts as of 31.12.2015 at the amount of BGN 0
19.2. Grants
Under Operational Programme “Development of the competitiveness of the Bulgarian economy 2007–2013”, Monbat AD received a grant in the sum of 4 227 thousands Bulgarian levs under the procedure “Technology upgrade in large enterprises”. The purpose of the grant is to invest in new equipment for production of grating and plates for dry-charged and lead-acid batteries. The short-term and long-term part of the financing can be presented in the following way:
Current Non-current 662 3 728 Carrying amount 662 3 728
In 2013 MONBAT AD won Project under Procedure BG161PO003-1.1.07 "Incolcate on Innovative Products in the companies" OP "Development of Competitive Bulgarian Economy" totaling BGN 4 112 788.97 . The value of the grant under the procedure for both projects is BGN 2 053 084.48 received in 2015. The project is for production of two types of batteries - AGM technology - stationary batteries (telecommunication) and automobile batteries with AGM technology.
20. Trade payables Trade payables recognized in the statement of financial position can be analyzed as follows:
2015 2014 BGN ‘000 BGN ‘000
Payables to suppliers 13 471 6 455
21. Tax liabilities The tax liabilities include: 2015 2014 BGN ‘000 BGN ‘000
Corporate income tax 419 4 Personal income tax 75 60 Expense tax 54 71 548 135 22. Other liabilities
Other liabilities can be summarized as follows: 2015 2014 BGN ‘000 BGN ‘000
Product tax 885 632 Deferred income – supplies 1 567 1 066 Deductions from staff for other liabilities - 2 Dividends payable to individuals 48 40
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 41 Separate Financial statements 31 December 2015
Other short-term liabilities 9 1 2 509 1 741
According to the Regulation on establishing the terms and conditions for payment of product fees for products whose use generates widespread waste, the Company charges product fee for batteries. The fee is not paid effectively to the Ministry of Environment and Water, as the Company has complied with the requirements of the Waste management act and performs the activities required for the collection, transportation, temporary storage, pre-treatment, dismantling and disposal of the waste. With Directive № RD 335 / 20.05.2015 the Minister of environment and water, the accrued product fee for 2014 has been waived and the Company has reported an income at the amount of BGN 633 thousand. The Company expects that the accrued product fee for 2015 will be waived with a directive of the Minister of environment and water in 2016 for the Company keeps the requirements of the Waste management act.
23. Revenue and other revenue The Company’s revenue and other revenue can be analyzed as follows:
2015 2014 BGN ‘000 BGN ‘000
Sale of production 221 013 198 008 Sale of materials 47 892 35 337 Sale of goods 188 282 Rendering of services 1 239 1 045 Others, including written-off liabilities 23 862 12 927 294 194 247 599
24. Cost of materials
Cost of materials includes: 2015 2014 BGN ‘000 BGN ‘000
Raw materials (188 285) (162 415) Electricity (3 471) (3 272) Fuels and lubricants (2 009) (2 307) Packaging and other materials (368) (257) Spare parts and accessories (1 121) (1 235) Other costs (993) (1 138) (196 247) (170 624) 25. Hired-services expenses Hired services expenses include:
2015 2014 BGN ‘000 BGN ‘000
Distribution (10 757) (9 708) Insurance (638) (614) Rent (276) (323) Advertisement (229) (196) Fees on civic contracts (206) (217)
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 42 Separate Financial statements 31 December 2015
Audit fees (54) (94) Others (2 882) (2 068) (15 042) (13 220) 26. Gains from sale of non-current assets 2015 2014 BGN ‘000 BGN ‘000
Proceeds from sale of non-current assets 13 1 068 Carrying amount of non-current assets sold (24) (1 007) Gains from sale of non-current assets (11) 61
27. Other expenses
The Company’s other expenses include: 2015 2014 BGN ‘000 BGN ‘000
Waste of inventory (1 138) (1 117) Business trips (188) (220) Representation expenses (127) (80) Donations (120) (69) Written-off receivables (23) (17) Others (928) (615) ( 2 524) (2 118)
27.1. Impairment of investments 2015 2014 ‘000 лв. ‘000 лв.
Investments in Octa Lait Bulgaria AD - (1 173) - (1 173)
27.2. Impairment of receivables 2015 2014 ‘000 лв. ‘000 лв.
Granted borrowing from Octa Lait Bulgaria AD - (2 685) Interest accrued Octa Lait Bulgaria AD - (649) Trade receivables from Lubriko EOOD - (978) Trade receivables from IBT - - - (4312) 28. Finance costs and finance income
Finance costs for the presented reporting periods can be analyzed as follows
2015 2014 BGN ‘000 BGN ‘000
Interest expenses for finance lease agreements (3) (15) Costs for borrowings at amortized cost: Bank loans at amortized cost: (1 065) (1 058) Total interest expenses for financial liabilities not at fair value (1 068) (1 073)
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 43 Separate Financial statements 31 December 2015
through profit or loss Interest rate swap (79) - Other finance costs (489) (746) Finance costs (1 636) (1 819)
Finance income may be analyzed as follows for the presented reporting periods:
2015 2014 BGN ‘000 BGN ‘000
Interest income from cash and cash equivalents 2 5 Interest income on financial assets carried at amortized cost 2 306 2 984 Total interest income for financial assets not at fair value through profit or loss 2 306 2 984 Finance income 2 308 2 989
29. Other financial items Other financial items consist of the following:
2015 2014 BGN ‘000 BGN ‘000 Loss from exchange differences on loans and receivables (38) 58 Other financial items (38) 58
30. Income tax expense
The relationship between the expected tax expense based on the effective tax rate of 10 % (2014: 10 %) and the reported tax expense actually in profit or loss can be reconciled as follows: 2015 2014 BGN ‘000 BGN ‘000
Profit before tax 20 504 15 399 Tax rate 10% 10% Expected tax expense (2 050) (1 539) Adjustments for tax-exempt income: - (80) Actual tax expense (2 050) (1 619) Tax expenses include Current tax expenses Deferred tax expense: (2 113) (2 062)
Origination and reversal of temporary differences 63 443 Income tax expense (2 050) (1 619) Effective tax rate 10% 10.51%
Note 10 provides information on the deferred tax assets and liabilities, recognized directly in the other comprehensive income.
31. Earnings per share and dividends
31.1. Earnings per share
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 44 Separate Financial statements 31 December 2015
Basic earnings per share have been calculated using the profit attributed to shareholders of the Company as the numerator.
The weighted average number of outstanding shares used for basic earnings per share as well as profit attributable to shareholders is as follows:
2015 2014
Profit attributable to the shareholders (BGN) 18 454 000 13 780 000 Weighted average number of outstanding shares 39 000 000 39 000 000 Basic earnings per share (BGN per share) 0.47 0.35
31.2. Dividends
At a General meeting of the shareholders, which took place on 25 June 2015, a decision has been made to distribute dividends at the amount of BGN 5 850 000, which is part of the income for 2014. During 2015 the Company has paid dividends at the amount of BGN 5 587 540.
At a General meeting of the shareholders, which took place on 30 June 2014, a decision has been made to distribute dividends at the amount of BGN 8 970 000, which is part of the income for 2013. During 2014, the Company has paid dividends at the amount of BGN 4 684 485, and dividends due at the amount of BGN 4 281 764 have been netted off with receivables on granted loans – principal at the amount of BGN 3 331 667 and interest at the amount of BGN 950 097 from Prista Oil Holding AD, as per Decision of the Company and in accordance with an agreement between Monbat AD and Prista Oil Holding EAD.
32. Related Party Transactions
The Group's related parties include its shareholders, subsidiaries, companies under common control , key management and others as described below.
Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or received. Outstanding balances are usually settled by bank accounts.
The related parties of the Group are described below:
Related party Country Type of relation
"PRISTA OIL GROUP" B.V Netherlands Parent company Prista Holdco Cooperatief U.A. Netherlands Related party "START” AD Bulgaria Subsidiary "МONBAT RECYCLING" Romania Subsidiary "МОNBAT" Serbia Subsidiary "MONBAT TRADING" OOD Bulgaria Related party „YU MONBAT” Serbia Subsidiary " PRISTA OIL " EAD Bulgaria Parent company " PRISTA OIL REAL ESTATES" Bulgaria Related party "PRISTA OIL TRADING" Bulgaria Related party “PRISTA OIL” Romania Related party
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 45 Separate Financial statements 31 December 2015
Related party Country Type of relation “PRISTA OIL” Ukraine - Odessa Related party “PRISTA OIL” Ukraine - Kiev Related party “PRISTA OIL” Hungary Related party “PRISTA OIL” Slovakia Related party “PRISTA OIL” Macedonia Related party “PRISTA OIL” Serbia Related party “PRISTA OIL” Turkey Related party Bobko OOD/Mix oil Bulgaria Plamen Bobokov Vinarska kyshta Ruse AD Bulgaria Plamen Bobokov Vuelta Evropa AD Bulgaria Plamen Bobokov Prista Port AD Bulgaria Plamen Bobokov Uglans OOD Bulgaria Plamen Bobokov Leventa OOD Bulgaria Plamen Bobokov PRR OOD Bulgaria Plamen Bobokov Foundation “Bratia Bobokovi” Bulgaria Atanas Bobokov Prista Oil Rally Team Bulgaria Atanas Bobokov FK Dunav – Ruse Bulgaria Atanas Bobokov MOL RUSE INVEST OOD Bulgaria Atanas Bobokov SD of PROEKT RUSE AD Bulgaria Atanas Bobokov Pomorie Vineyard AD Bulgaria Atanas Bobokov Agrohold AD Bulgaria Aleksandar Chaushev Ekspo Grup AD Bulgaria Aleksandar Chaushev Management and advertising of sports Bulgaria agency EAD Aleksandar Chaushev Sofservice OOD Bulgaria Aleksandar Chaushev Bulgarian chamber of commerce – Bulgarian Bulgaria businesses union Atanas Bobokov ТК VVV – Pro Tennis Bulgaria Plamen Bobokov Ziteks OD Bulgaria Atanas Bobokov Ekobat AD Bulgaria “Start” AD PCHMV AD Bulgaria Plamen Bobokov IBT OOD Bulgaria Related party Bulgarian Romanian Chamber of industrial commerce Bulgaria Plamen Bobokov Star Oil Switzerland - Geneva Atanas Bobokov Member of the Board of Plamen Stoilov Bobokov Bulgaria Directors of Monbat AD Member of the Board of Aleksandar Viktorov Chaushev Bulgaria Directors of Monbat AD Member of the Board of Nikolay Georgiev Trenchev Bulgaria Directors of Monbat AD Member of the Board of Stоyan Stalev Bulgaria Directors of Monbat AD Member of the Board of Atanas Stoilov Bobokov Bulgaria Directors of Monbat AD Member of the Board of Florian Huit Germany Directors of Monbat AD Member of the Board of Kamen Zahariev Bulgaria Directors of Monbat AD Member of the Board of Petar Nikolov Bozadjiev Bulgaria Directors of Monbat AD Member of the Board of Jordan Atanasov Karabinov Bulgaria Directors of Monbat AD
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Related party Country Type of relation Octa Lait Bulgaria AD Bulgaria Subsidiary Monbat Recycling EAD Bulgaria Subsidiary Monbat OOD Romania Romania Subsidiary
32.1. Transactions with shareholders 2015 2014 BGN ‘000 BGN ‘000 Monbat Trading OOD - purchase of goods and services 1 007 538 - distributed dividends 413 633 - purchase of services 24 24
Prista Oil EAD - purchase of materials 2 - - purchase of services 62 - - purchase of assets 48 - - purchase of other 18 - - loan granted - 2 900 - interest accrued 720 1 017 - dividend receivable - 4 282
- dividend 2 792 - 32.2. Transactions with subsidiaries 2015 2014 BGN ‘000 BGN ‘000
Start AD - sale of materials 35 508 24 945 - sale of production 7 892 7 474 - sale of assets - 1 042 - sale of goods 8 96 - sale of services 99 - - purchase of materials 54 308 41 128 - purchase of services 1 - - loan granted - 5 867
Monbat DOO Serbia - transferred advances - 145
YU Monbat Serbia - sale of production 2 641 3 247 - sale of goods 1 6
Monbat Recycling Romania - purchase of materials 45 960 43 670 - purchase of services 96 42 - repayment of borrowings - 1 964
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 47 Separate Financial statements 31 December 2015
2015 2014 BGN ‘000 BGN ‘000
Monbat Recycling EAD - sale of services 9 115 - sale of materials 9 233 6 862 - sale of production 1 2 - sale of others (waste of lead units) 22 203 11 047 - purchase of materials 92 591 74 072 - purchase of services 594 472 - purchase of other 67 43 - purchase of assets - 5 - interest accrued 899 1 293 - loan granted - 5 867
Monbat OOD Romania - sale of production 2 907 1 280 - sale of goods - 4
OctaLight Bulgaria AD - granted borrowing 7 475 3 990 - interest accrued 571 457 - purchase of goods 7 16 - purchase of services 17 - - purchase of assets 103 13
32.3. Transactions with other related parties 2015 2014 BGN ‘000 BGN ‘000
PCMV AD - interest accrued 66 82
Atanas Bobokov - granted borrowing 235 350
32.4. Transactions with key management personnel
Key management personnel remuneration includes the following expenses:
2015 2014 BGN ‘000 BGN ‘000 Short-term employee benefits: Salaries including bonuses 1 631 1 453 Social security costs 24 20 Company car allowance 65 62 Total remunerations 1 720 1 535
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33. Related party balances at year-end 2015 2014 BGN ‘000 BGN ‘000 Non-current Receivables from: - Monbat Recycling EAD- loans, trade receivables and interest 16 904 22 030 - Monbat Recycling Romania-loans ceeded 1 964 1 964 - Octa Light Bulgaria AD – loans, net of impairment 10 160 - Total non-current receivables from related parties 29 028 23 994
Current Receivables from: - Monbat DOO Serbia – interest subsidiaries 356 356 - Monbat DOO Serbia – trade receivables 1 211 1 211 - Monbat Recycling Romania – trade receivables 3 793 4 535 - Monbat Recycling EAD – interest 350 - - YU Monbat- trade receivables 413 499 - Oktagon international EOOD- granted loan 427 - - Oktagon international EOOD- interest 15 - - IBT – interest 11 - - Atanas Bobokov – granted funds 585 350 - Prista oil EAD – deposit 14 228 14 228 - Prista oil EAD –interest 978 307 - Monbat Romania OOD – trade receivables 501 521 - Octa Light Bulgaria AD – loans, net of impairment - 2 685 - IBT – granted funds 93 93 - Octa Light Bulgaria AD – loan interest 1 069 649 - PCMV granted loan 1 360 1 360 - PCMV interest 195 129 - Start AD- granted funds - 5 867 - Start AD- interest - 9 Total current receivables from related parties 25 585 32 799 Total receivables from related parties 54 613 56 793
Current Payables to: - Monbat Recycling EAD – trade payables 1 944 - - Start AD– trade payables 1 065 1 905 - Monbat Trading OOD – trade payables 9 - - Monbat Trading OOD – dividends payable 184 - - Prista oil Holding EAD – trade payables 24 - Total current payables to related parties 3 226 1 905 Total payables to related parties 3 226 1 905
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The main contracts for loans granted to related parties are presented as follows:
1. Monbat Recycling EAD
Contract, dated 05.11.2011 Firstly receivables of Monbat AD from Monbat Recycling EAD of the amount of BGN 12 734 had been increased with deals from transfers of receivables and other transaction with companies. Credit term: Till the fully acquittal of the debt Interest: 6 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 10 435 thousand Redemption: Montly payment of principles at the amount of BGN 251 thousand till 14.03.2014 and from 01.04.2014 the amount of BGN 124 thousand including interests form of the debt of investment loans in Unicredit Bulbank N 1099/11.06.2007, the loan is refinanced on 25.03.2014 from Raifaizenbank EAD and Eurobank EFG AD N 100-532/16.05.2007.
Contract, dated 17.03.2014 Monbat AD cedeed to Monbat Recycling EAD the receivable from Monbat Romania OOD for the amount of BGN 602 thousand . Balance on the receivable as of 31.12.2015 - BGN 602 thousand
Contract, dated 21.10.2014 The amount of the loan 3 960 000 EUR, 7 745 087 BGN. Maturity date10.05.2016 г. Interest 3 M EURIBOR + fixed mark-up Utilized amount as of 31.12.2015 at the amount of BGN 5 867 000 With the annex from January 2015 the amount of the loan has been changed to 3 000 000 EUR. With annex from 01.06.2015 the interest rate has been changed to 4%. All the other conditions of the loan contracts are re-negotiated with the same conditions.
2. Octa Light Bulgaria AD
Contract, dated 29.02.2012 Utilized principle: BGN 4 660 thousand Credit term: 31.12.2013 Interest: 8 % annual interest rate Balance on the principle as of 31.12.2014 - BGN . 4 660 thousand Collateral: Pledge on the machines and installations, secured with a Promissory Note Redemption: no redemption plan The loan of BGN 4 660 thousand was impaired during 2012 and 31.12.2014.
Contract, dated 2013 Utilized principle: BGN 3 510 thousand
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Credit term: 31.12.2013 Interest: 8 % annual interest rate Balance on the principle as of 31.12.2014 - BGN 1 380 thousand Collateral: Pledge on the machines and installations, secured with a Promissory Note Redemption: no redemption plan Part of the loans dated 2013 and 2014 for the amount of 2 685 Th. BGN and acured interest for the amount of 649 Th.BGN has been impaired at 31.12.2014 (note 27.2).
Contract, dated 2014 Utilized principle: BGN 3 990 thousand Credit term: 31.12.2014 Interest: 8 % annual interest rate Balance on the principle as of 31.12.2014 - BGN 3 990 thousand Collateral: Pledge on the machines and installations, secured with a Promissory Note Redemption: no redemption plan With annex from 01.10.2014 the interest rate has been changed to 5% and credit term to 31.12.2015. All the other conditions of the loan contracts are re-negotiated with the same conditions.
Contract, dated 2015 Utilized principle: BGN 7 475 thousand Credit term: 31.12.2015 Interest: 5 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 7 475 thousand Collateral: Pledge on the machines and installations, secured with a Promissory Note Redemption: no redemption plan With annex from 25.05.2014 the interest rate has been changed to 4% and credit term to 31.12.2018. All the other conditions of the loan contracts are re-negotiated with the same conditions.
3. PCHMV
Contract, dated 2013 Utilized principle: BGN 1 640 thousand Credit term: 31.12.2014 Interest: 6 % annual interest rate Balance on the principle as of 31.12.2014 - BGN 1 360 thousand Redemption: no redemption plan With annex from 01.06.2015 the interest rate has been changed to 4% . All the other conditions of the loan contracts are re-negotiated with the same conditions.
4. Prista Oil Holding EAD
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Contract, dated 2013 Deposits granted to Prista Oil Holding EAD Utilized principle: BGN 17 594 thousand Credit term: 22.04.2015 Interest: 6 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 11 328 thousand Redemption: no redemption plan
Contract, dated 2014 Deposits granted to Prista Oil Holding EAD Utilized principle: BGN 2 900 thousand Credit term: 24.04.2015 Interest: 6 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 2 900 thousand Redemption: no redemption plan With annex from 01.06.2015 the interest rate has been changed to 4%. All the other conditions of the loan contracts are re-negotiated with the same conditions.
5. Start AD
Contract, dated 16.12.2014 Utilized principle: BGN 5 867 thousand Credit term: 06.02.2015 Interest: 4 % annual interest rate Balance on the principle as of 31.12.2015 - BGN 0 Redemption: no redemption plan 34. Non-cash transactions
During the presented reporting periods, the Company entered into the following non-cash investing and financing activities which are not reflected in the statement of cash flows: During 2014 with a General meeting of the shareholders the dividends due have been attributed to Prista oil Holding EAD. Those dividends are at the amount of BGN 4 281 764 and were attributed with the use of receivables on granted loans – principal at the amount of BGN 3 331 667, interest at the amount of BGN 950 097 from Prista oil Holding AD
35. Contingent assets and contingent liabilities
No warranty and legal claims were brought against the Company during the year
The contingent assets can be represented as follows:
2015 2014 BGN ‘000 BGN ‘000 Letters of credit 741 352 741 352
The contingent liabilities can be represented as follows:
2015 2014 BGN ‘000 BGN ‘000
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Guarantee note 644 1 324 644 1 324
36. Categories of financial assets and liabilities The carrying amounts presented in the statement of financial position relate to the following categories of assets and liabilities:
Financial assets Note 2015 2014 BGN ‘000 BGN ‘000 Non-current assets Credits and borrowings 32 29 028 23 994 Current assets Trade receivables 32 217 26 963 Related party receivables 12 25 585 32 799 Cash and cash equivalents 33 12 426 9 705 70 228 69 467
Financial liabilities Note 2015 2014 BGN ‘000 BGN ‘000 Financial liabilities measured at amortized cost
Non-current : Borrowings 19.1 9 198 33 819 9 198 33 819
Current liabilities: Borrowings 19.1 25 214 8 680 Related party liabilities 33 3 226 1 905 Finance lease liabilities 8 19 238 Trade payables 20 13 471 6 455 Other payables 22 2 509 1 741 44 439 19 019
See note 3.12 about information related to the accounting policy for each category financial instruments. Description of the risk management objectives and policies of the Company related to the financial instruments is presented in note 37.
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37. Financial instrument risk Risk management objectives and policies
The Company is exposed to various risks in relation to financial instruments. The Company's financial assets and liabilities by category are summarized in note 36. The main types of risks are market risk, credit risk and liquidity risk.
The Company's risk management is coordinated at its headquarters, in close co-operation with the board of directors, and focuses on actively securing the Company's short to medium-term cash flows by minimizing the exposure to financial markets. Long-term financial investments are managed to generate lasting returns.
The Company does not actively engage in the trading of financial assets for speculative purposes nor does it write options.
The Company is exposed to market risk through its use of financial instruments and specifically to currency risk and interest rate risk.
38. Market risk analysis 38.1.1. Foreign currency risk Most of the Company’s transactions are carried out in Bulgarian leva (BGN). Exposures to currency exchange rates arise from the Company's overseas sales and purchases, which are primarily denominated in US-Dollars.
To mitigate the Company's exposure to foreign currency risk, non-BGN cash flows are monitored and forward exchange contracts are entered into in accordance with Company’s risk management policies. Generally, Company’s risk management procedures distinguish short-term foreign currency cash flows (due within 6 months) from longer-term cash flows. Where the amounts to be paid and received in a specific currency are expected to largely offset one another, no further hedging activity is undertaken.
Foreign currency denominated financial assets and liabilities which expose the Company to currency risk are disclosed below. The amounts shown are those reported to key management translated into Bulgarian leva at the closing rate:
Short-term exposure USD ‘000
31 December 2015 Financial assets 1 083 Financial liabilities (2 835) Total exposure (1 752)
31 December 2014 Financial assets 2 273 Financial liabilities (36)
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 54 Separate Financial statements 31 December 2015
Total exposure 2 237
The following table illustrates the sensitivity of post-tax profit for the year and other components of equity in regards to the Company's financial assets and financial liabilities and the USD/BGN exchange rate ‘all other things being equal.
It assumes a +/- 10% change of the BGN/USD exchange rate for the year ended at 31 December 2015 (2014: 10 %). Both of these percentages have been determined based on the average market volatility in exchange rates in the previous 12 months. The sensitivity analysis is based on the Company's foreign currency financial instruments held at each reporting date and also takes into account
If the BGN had strengthened against the USD by 10% and (2014: 10%) then this would have had the following impact:
Effect on the financial result for the year USD ‘000
31 December 2015 (175) 31 December 2014 224
If the BGN had weakened against the USD by 10% and (2014: 10%) then this would have had the following impact:
Effect on the financial result for the year USD ‘000
31 December 2015 175 31 December 2014 (224)
Exposures to foreign exchange rates vary during the year depending on the volume of overseas transactions. Nonetheless, the analysis above is considered to be representative of the Company's exposure to currency risk.
38.1.2. Interest rate risk The Company's policy is to minimize interest rate cash flow risk exposures on long-term financing. At 31 December 2015, the Company is exposed to changes in market interest rates through bank borrowings at variable interest rates. Other borrowings are at fixed interest rates.
If the interested rate would increase with 5 %(2014: 5%) then this would have had the following impact:
Effect on the financial result for the year USD ‘000
31 December 2015 (57) 31 December 2014 (54)
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 55 Separate Financial statements 31 December 2015
If the interested rate would fell down with 5 %(2014: 5%) then this would have had the following impact:
Effect on the financial result for the year USD ‘000
31 December 2015 57 31 December 2014 54
38.1.3 Credit risk Credit risk is the risk that counterparty fails to discharge an obligation to the Company. The Company is exposed to this risk for various financial instruments, for example by granting loans and receivables to customers, placing deposits, etc. The Company's maximum exposure to credit risk is limited to the carrying amount of financial assets recognized at the reporting date.
The Company continuously monitors defaults of customers and other counterparties, identified either individually or by group, and incorporate this information into its credit risk controls. Where available at reasonable cost, external credit ratings and/or reports on customers and other counterparties are obtained and used. The Company's policy is to deal only with creditworthy counterparties. The Company's management considers that all the above financial assets that are not impaired or past due for each of the reporting dates under review are of good credit quality. The Company's financial assets are secured by collateral or other credit enhancements.
Some of the unimpaired trade receivables are past due as at the reporting date. Financial assets past due but not impaired can be shown as follows:
2015 2014 BGN ‘000 BGN ‘000 More than 6 months but not more than 1 year 263 180 Total 263 180
In respect of trade and other receivables, the Company is not exposed to any significant credit risk exposure to any single counterparty or any group of counterparties having similar characteristics. Trade receivables consist of a large number of customers in various industries and geographical areas. Based on historical information about customer default rates management consider the credit quality of trade receivables that are not past due or impaired to be good.
The credit risk for cash and cash equivalents, money market funds, debentures and derivate financial instruments is considered negligible, since the counterparties are reputable banks with high quality external credit ratings.
An impairment loss has been recorded in relation to the trade receivables. The carrying amounts disclosed above are the Company's maximum possible credit risk exposure in relation to these instruments.
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38.2. Liquidity risk Liquidity risk is the risk arising from the Company not being able to meet its obligations. The Company manages its liquidity needs by monitoring scheduled debt servicing payments for long- term financial liabilities as well as forecast cash inflows and outflows due in day-to-day business. Liquidity needs are monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day lookout period are identified monthly. Net cash requirements are compared to available borrowing facilities in order to determine headroom or any shortfalls. This analysis shows that available borrowing facilities are expected to be sufficient over the lookout period.
The Company maintains cash and marketable securities to meet its liquidity requirements for 30- day periods at a minimum. Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit facilities and the ability to sell long-term financial assets.
As at 31 December 2014, the Company's liabilities have contractual maturities (including interest payments where applicable) as summarized below: Current Non-current 31 December 2015 Up to 12 months 1 to 5 years BGN ‘000 BGN ‘000 Bank liabilities 25 214 9 198 Finance lease liabilities 19 - Related party liabilities 3 226 - Trade and other liabilities 13 471 - Total 41 930 9 198
This compares to the maturity of the Company's liabilities in the previous reporting periods as follows: Current Non-current 31 December 2014 Up to 12 months 1 to 5 years BGN ‘000 BGN ‘000
Bank liabilities 8 680 33 819 Finance lease liabilities 252 - Related party liabilities 1 905 - Trade and other liabilities 7 130 - Total 17 967 33 819 The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying values of the liabilities at the reporting date.
Financial assets used for managing liquidity risk The Company considers expected cash flows from financial assets in assessing and managing liquidity risk, in particular its cash resources and trade receivables. The Company's existing cash resources and trade receivables do not significantly exceed the current cash outflow requirements. Cash flows from trade and other receivables are all contractually due within six months.
39. Capital management policies and procedures The Company's capital management objectives are: to ensure the Company's ability to continue as a going concern; and
WorldReginfo - cf5f184d-4cf3-4e72-b570-82124b121062 Monbat AD 57 Separate Financial statements 31 December 2015
to provide an adequate return to the shareholder by pricing products and services commensurately with the level of risk.
The Company monitors capital on the basis of the correlation between net debt and sharolders equity. Net debt is calculated as general debt less the carrying amount of cash and cash equivalents. The Company manages the capital structure and makes adjustments to it in the light of changes in economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt. The equity may be analyzed as follows for the presented reporting periods:
2015 2014 BGN‘000 BGN‘000
Equity 158 598 145 994 Debt 34 431 42 737 - Cash and cash equivalents (12 426) (9 705) Net debt 22 005 33 032 Net debt to equity 0.14 0.23
The Company has honored its covenant obligations, including maintaining capital ratios. 40. Events after reporting date No adjusting or significant non-adjusting events have occurred between the reporting date and the date of authorization.
41. Authorization of the financial statements The financial statements for the year ended 31 December 2015 (including comparatives) were approved by the board of directors on 15 March 2016.
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