ASSETS
Notes 31.12.2023 31.12.2022
Property, plant and equipment
1
6 6
Investments in subsidiaries
2
16 741 16 741
Investments in associates
2
7 741 8 060
Other investments
2
5 596 4 985
Other non-current financial assets
3
609 609
Non-current receivables from related parties
4
3 349 3 191
Other non-current receivables
5
9 300 8 450
Deferred tax assets
6
29 29
43 371 42 071
Current receivables from related parties
7
5 085 4 082
Other current receivables
8
69 116
Deferred expenses 23 35
Cash and cash equivalents
9
6 536 5 636
11 713 9 869
55 084 51 940
Share capital
10
20 775 20 775
Reserves
10
11 783 11 233
Retained earnings
10
5 307 4 410
Net result for the period
10
9 295 8 088
47 160 44 506
Non-current liabilities to related parties
11
426 390
Deferred revenue
12
50 50
Deferred tax liabilities
13
348 287
824 727
Dividends payables
14
6 850 6 475
Other current liabilities
15
250 232
7 100 6 707
7 924 7 434
55 084 51 940
Date: 15.03.2024
Prepared by:
Kremena Dulgerova
Katya Zlatareva
Total liabilities
EQUITY
Registered Auditor, Diploma No 0610
Manager:
Vasil Velev
Total Non-current assets
Total current assets
TOTAL ASSETS
Total equity
Total current liabilities
Total non-current liabilities
TOTAL EQUITY AND LIABILITIES
Non-current liabilities
STARA PLANINA HOLD PLC
Current liabilities
STATEMENT OF FINANCIAL POSITION
For the period ended 31 December 2023
BGN’000s
Non-current assets
Current assets
Kremena
Gantcheva
Dulgerova
Digitally signed by
Kremena Gantcheva
Dulgerova
Date: 2024.03.22 12:14:55
+02'00'
Digitally signed by Vasil
Georgiev Velev
Date: 2024.03.22 12:19:54
+02'00'
Digitally signed by KATYA
RAYKOVA ZLATAREVA
Date: 2024.03.29 07:17:54
+02'00'
Notes
31.12.2023 31.12.2022
Divident income
16
9 200 8 198
Other financial income
17
643 312
Other income
18
1 133 1 089
Cost of materials
19
(19) (18)
Cost of hired services
20
(220) (138)
Depreciation (2) (1)
Employee expenses
21
(1 296) (1 244)
Other expenses
22
(143) (109)
Other financial expenses (1) (1)
Result for the period before tax 9 295 8 088
Tax expense, net
Net result for the period 9 295 8 088
Other comprehensive income
611 747
(61) (75)
550 672
Total comprehensive income 9845 8760
Earnings per share 0,44
0,39
Date: 15.03.2024
Prepared by:
Kremena Dulgerova
Katya Zlatareva
Tax effects
Other comprehensive income, net of taxes
Manager:
Vasil Velev
Registered Auditor, Diploma No 0610
STARA PLANINA HOLD PLC
STATEMENT OF COMPREHENSIVE INCOME
BGN’000s
For the period ended 31 December 2023
Investments in equity instruments, reported at FVOCI
Kremena
Gantcheva
Dulgerova
Digitally signed by
Kremena Gantcheva
Dulgerova
Date: 2024.03.22
12:15:58 +02'00'
Digitally signed by Vasil
Georgiev Velev
Date: 2024.03.22 12:20:20
+02'00'
KATYA RAYKOVA
ZLATAREVA
Digitally signed by KATYA
RAYKOVA ZLATAREVA
Date: 2024.03.29 07:19:02
+02'00'
CASH FLOWS FROM OPERATING ACTIVITIES
31.12.2023 31.12.2022
Cash paid to suppliers (292) (242)
Cash paid to employees and social security institutions (1 966) (1 823)
Taxes paid (206) (191)
Bank charges paid (1) (1)
Other payments/proceeds from operating activities
Net cash used in operating activities (2 465) (2 257)
INVESTING ACTIVITIES
Purchase of non-current assets (1) (3)
Payments for loans granted (8 050) (7 683)
Proceeds from loans granted 6 042 3 467
Interests from loans received 446 228
Dividends received from investments 9 200 8 198
Proceeds from sale of investments 560
Net cash used in investing activities
8 197 4 207
FINANCING ACTIVITIES
Dividends paid (4 832) (4 490)
Net cash used in financing activities (4 832) (4 490)
Net increase in cash and cash equivalents 900 (2 540)
Cash and cash equivalents at a beginning of the period 5 636 8 176
Cash and cash equivalents at the end of the period 6 536 5 636
Date: 15.03.2024
Prepared by: Manager:
Kremena Dulgerova
Katya Zlatareva
Registered Auditor, Diploma No 0610
STARA PLANINA HOLD PLC
BGN’000s
For the period ended 31 December 2023
STATEMENT OF CASH FLOWS
Vasil Velev
Kremena
Gantcheva
Dulgerova
Digitally signed by
Kremena Gantcheva
Dulgerova
Date: 2024.03.22
12:16:25 +02'00'
Digitally signed by
Vasil Georgiev Velev
Date: 2024.03.22
12:20:46 +02'00'
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by
KATYA RAYKOVA
ZLATAREVA
Date: 2024.03.29
07:19:38 +02'00'
Share
Capital
Reserves from
changes in fair
value of
investments in
equity
instruments
Other
reserves
Retained
earnings
Total
Balance 01 January 2022 20 775 1 652 8909 11 214 42 550
Net result for the period 8 088 8 088
Profit sharing for dividends (6 181) (6 181)
Profit sharing for bonuses (624) (624)
Other changes in equity
672 1 673
Balance 31 December 2022 20 775 2 324 8 909 12 498 44 506
Balance 01 January 2023 20 775 2 324 8 909 12 498 44 506
Net result for the period 9 295 9 295
Profit sharing for dividends (6 545) (6 545)
Profit sharing for bonuses (647) (647)
Other changes in equity
550 1 551
Balance 31 December 2023 20 775 2 874 8 909 14 602 47 160
Date: 15.03.2024
Prepared by:
Kremena Dulgerova
Registered Auditor, Diploma No 0610
Katya Zlatareva
Vasil Velev
For the period ended 31 December 2023
BGN’000s
STARA PLANINA HOLD PLC
STATEMENT OF CHANGES IN EQUITY
Manager:
Kremena
Gantcheva
Dulgerova
Digitally signed by
Kremena Gantcheva
Dulgerova
Date: 2024.03.22
12:16:55 +02'00'
Digitally signed by Vasil
Georgiev Velev
Date: 2024.03.22
12:21:07 +02'00'
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by KATYA
RAYKOVA ZLATAREVA
Date: 2024.03.29 07:20:15
+02'00'
to the separate financial statements
as of 31.12.2023
GENERAL INFORMATION
STARA PLANINA HOLD Plc (The company) was incorporated in Bulgaria on 27.09.1996 for an
unlimited period of time. The Holding is a successor of Central Privatization Fund AD. On 19.12.1997
Central Privatization Fund AD was renamed to Central Fund Hold Plc, and since 30.04.1999 the
company has been operating under its current name.
Stara Planina Hold Plc is registered in the Registry Agency under UICode 121227995.
The company is not registered under the VAT Act.
Stara Planina Hold Plc is a public company within the meaning of Art. 110 of the Public Offering of
Securities Act.
The registered seat and business address are in the city of Sofia, Izgrev district, 20 Frederic Joliot-
Curie, 9th floor; telephone/fax: 02/9634159; 9630577; 9633754; e-mail office@sphold.com, website
www.sphold.com.
The scope of business activity of the holding is: acquisition, management, evaluation and sale of
shareholdings in Bulgarian and foreign companies; acquisition, management and sale of bonds,
evaluation and sale of patents, transfer of licenses for use of patents, belonging to companies where
the holding company has participations; financing companies where the holding company has
participations; other commercial operations, except those prohibited by law.
The registered capital of Stara Planina Hold Plc is BGN 21 000 000 (twenty-one million) leva divided
into 21 000 000 (twenty-one million) non-preferred registered voting shares with a nominal value of
BGN 1.00 each.
The management body of the company is the Board of Directors with the following members:
• Evgeniy Vasilev Uzunov – Chairman of the Board of Directors and representative of the company;
• Vasil Georgiev Velev – executive member of the Board of Directors and representative of the
company;
• Finance Invest OOD, having its registered seat and business address in the town of Plovdiv, 14,
Maria Luiza Blvd., UIC 115016144, represented for the purpose of performing its obligations as a
member of the Board of Directors by the legal representative Spas Borisov Videv;
• Stefan Atanasov Nikolov – member of the Board of Directors.
Shareholders holding more than 5 % of the voting rights as of 31.12.2023:
Potbul Invest Foundation - 4655400 shares, representing 22.17 % of the capital;
Garant-5 Ltd - 2595972 shares, representing 12.36 % of the capital;
ZUPF Allianz Bulgaria AD - 1285293 shares, representing 6.12 % of the capital.
The listed company staff includes 7 employees.
2.
Statement of Compliance
Stara Planina Hold Plc presents its separate financial statements in compliance with the International
Financial Reporting Standards (IFRS), published by the International Accounting Standards Committee
and adopted by the European Union and retains their use as an applicable basis of the preparation of
the current financial statements as of 31.12.2023. The company complies with the principles and
stipulations of the Accountancy Act.
Functional currency and presentation currency
These financial statements are presented in Bulgarian levs which is the functional currency of the
Company. All data for 2023 and 2022 are presented in thousands of BGN unless otherwise stated at
the respective place. The income per share is calculated and disclosed in BGN.
Upon initial recognition, foreign currency transactions are recorded in the functional currency and the
exchange rate at the time of the transaction or operation published by the BNB is applied to the foreign
currency amount. Cash, receivables and payables, such as monetary reporting items denominated in
foreign currency, are valued in Bulgarian levs using the final exchange rate of the BNB.
In preparing the financial statements, the management has made valuations, estimates and
assumptions that affect the application of accounting policies and the reported amounts of assets and
liabilities, income and expenses. The actual result may differ from these estimates.
Estimates and key assumptions are currently under review.
The Company presents comparative information in the financial statements for the previous year, as the
articles on the Statement of Financial Position and the Statement of Changes in Equity, as well as the
notes thereto, include comparative data as of the beginning of the earliest comparative period.
Going concern statement
According to the assessment of the management of the holding as of the date of this report, the military
conflicts in Ukraine and the Middle East did not have a direct significant impact on the activities, insofar
as Stara Planina Hold Plc and the companies of the group do not have assets in the directly affected
regions, as well as relationships with persons/entities subject to the imposed sanctions. In the separate
financial statements of Stara Planina Hold Plc as of 31.12.2023, there are no assets and liabilities
whose valuation was influenced by the crises caused by the military conflicts. The Board of Directors
does not identify any significant risks that could lead to a material adjustment of the balance sheet
amounts of assets and liabilities within the next financial year or in the holding's business model and
plans.
The management believes that potential adverse developments do not represent a material uncertainty
for the application of the going concern principle. The management has reasonable expectations that
the Company has sufficient resources to continue the normal development of the activity in the
foreseeable future and does not intend to significantly limit or discontinue the activity. For this reason, in
preparing the financial statements, the Company continues to apply the going concern principle.
ACCOUNTING POLICY
Assessment of the information materiality for the accounting policy
The assessment of the information materiality for the accounting policy is consistent with the
assessment of the materiality of any other information in the financial statements taking into account:
quantitative factors - the value of transactions, other events or conditions; and
qualitative factors - the nature of the transactions, other events or conditions.
3.
Change in the accounting policy
Stara Planina Hold Plc has not changed its accounting policy during the reporting period due to the
absence of conditions that would lead to a significant change in the information in the financial
statements.
Selection of an accounting policy from one or more options permitted by IFRS
Stara Planina Hold Plc has chosen to evaluate the positions in its financial statement according to the
historical cost model with the exception of equity securities, reported according to the fair value through
other comprehensive income model.
The main emphasis in the disclosure of information about the accounting policy is the way Stara
Planina Hold Plc has applied the IFRS requirements according to its specifics, since information
specific to the enterprise is more useful for the financial statements users, unlike not so standardized
information or such which only repeats or summarizes the requirements of IFRS.
Financial assets
Investments in participations
Stara Planina Hold Plc's holdings in subsidiaries and associated enterprises are reported in compliance
with the requirements of IFRS 10: Consolidated Financial Statements; IFRS 12 Disclosure of Equity
Interests in Other Entities; IAS 27 Separate Financial Statements and IAS 28 Investments in Associates
and Joint Ventures.
Identification and evaluation of investments in subsidiaries
Subsidiary enterprises are all enterprises under the control of Stara Planina Hold Plc. The control over
the subsidiaries is conditioned by the fact that the company is exposed to and has rights to the variable
returns from its participation in the subsidiaries and is able to have impact on those returns through its
powers in the enterprises where investments were made. When recognizing investments in subsidiary
enterprises, all facts and circumstances are examined and assessed in order to determine the
existence of the conditions for control, including: - authority (powers) over the enterprises where the
investment was made; - exposure or rights to returns; and – the possibility of Stara Planina Hold Plc to
use the power over the enterprise it has invested in to influence the amount of return. Facts and
circumstances such as: - the purpose and objective of the enterprise where investments were made; -
what are the significant (relevant) activities; - how decisions are made about these activities; - whether
the rights of Stara Planina Hold Plc give it a current opportunity to lead the significant activities; -
whether Stara Planina Hold Plc is represented or has the right to influence the returns from its
participation in the enterprise; and - whether Stara Planina Hold Plc has the ability to use its authority
over the investee to influence the amount of return, are continuously monitored and if there are any
changes in facts or circumstances, control is reassessed. As of the date of the financial statements,
there have been no changes in facts or circumstances that require a reassessment of the control over
the subsidiaries. Stara Planina Hold Plc has power over its subsidiaries due to the existing rights that
give the current opportunity to direct the significant activities that have an essential impact on the
returns of these enterprises. Stara Planina Hold Plc can control the activities that generate income. In
the company's separate financial statements, investments in subsidiaries are reported at acquisition
cost. The Company recognizes dividends from a subsidiary in the profit or loss in its separate financial
statements when its right to receive the dividend is established.
Identification and evaluation of investments in associates
The enterprises over which the Company exercises significant influence are associated. Significant
influence is the right to participate in decision-making related to the financial and operational policy of
the enterprise where Stara Planina Hold Plc has invested but is not control or joint control over this
policy. When assessing the significant influence, Stara Planina Hold Plc evaluates all facts and
circumstances, including the term of exercise of potential voting rights and all other contractual
4.
commitments. Factors that are indicators of significant influence were taken into account during the
evaluation: - representation in the board of directors or another equivalent governing body; -
participation in policy-related decision-making processes, including decisions on dividends and other
distributions; - significant transactions between the parties; - mutual exchange of management
personnel; - provision of essential technical information. Investments in associates are accounted for at
acquisition cost. The Company recognizes dividends from an associate in the profit or loss in its
separate financial statements when its right to receive the dividend is established.
Classification and valuation of investments in equity instruments (minority interests)
Stara Planina Hold Plc complies with the requirements of IFRS 9 Financial Instruments; IFRS 7
Financial instruments: disclosure when reporting investments in equity instruments (minority interests).
Stara Planina Hold Plc classifies these investments as accounted for at fair value through other
comprehensive income (FVOCI). When classifying in the category under the fair value through other
comprehensive income Stara Planina Hold Plc took into account the conditions: - the financial assets
are held within the framework of a business model, the purpose of which is achieved both by reducing
contractual cash flows and by selling financial assets; - the contractual terms of the financial asset give
rise to cash flows. Changes in the fair value of investments are reported through other comprehensive
income (as a reserve from subsequent valuation of financial instruments). Income from dividends is
recognized in the profit or loss for the period, only when: - the right of Stara Planina Hold Plc to receive
payment for dividends is established; - it is probable that the economic benefits related to the dividends
will be received by Stara Planina Hold Plc and - the amount of the dividends can be reliably estimated.
Granted loans
Stara Planina Hold Plc recognizes a financial asset – a loan receivable when it becomes a party to the
contractual terms of the instrument. Initially, the financial asset is valued at the relevant transaction
price - transaction value. Loan income is accrued in the period when it arises.
Trade and other receivables
Trade and other receivables are initially recognized when they arise and are reported at the relevant
transaction price – their nominal value, reduced by the amount of impairment for uncollectible amounts.
Cash
Cash includes cash on current accounts, bank deposits and cash on hand. They are reported at their
nominal value.
For the purposes of preparing the cash flows statements, cash receipts from customers and cash
payments to suppliers are presented gross, including VAT (20%).
The Company believes that there is no need for depreciation of available cash because it is held in a
financial institution and has a low credit risk.
Impairment of financial assets
Stara Planina Hold Plc has adopted the approach to recognize financial assets impairment losses when
an impairment event has occurred. The company recognizes an impairment loss for its financial assets,
according to fair value through other comprehensive income, contract receivables and credit
commitments, and the expected credit loss model is used for the recognition. This is the part of lifetime
expected credit losses that represent expected credit losses that result from default events on financial
instruments that are possible within 12 months of the reporting date.
The Company's management has made significant judgments and estimates, developing models
covering historical information as well as forward-looking information in order to reliably estimate
expected credit losses. Stara Planina Hold Plc recognizes an adjustment for impairment losses: - for
financial instruments, in respect of which there is no significant increase in the credit risk after the date
of initial recognition, the recognized adjustment for losses must represent the expected credit losses for
5.
12 months; - for financial instruments in respect of which there is a significant increase in the credit risk
after the date of initial recognition, an adjustment for expected credit losses is recognized for the entire
term. The Company's management makes valuations at each reporting date whether the credit risk of
the financial instrument has increased significantly since the initial recognition. The valuation uses the
change in default risk over the expected term of the financial instrument instead of the change in the
amount of expected credit losses. For the purposes of the valuation, the default risk for the financial
instrument at the reporting date is compared to the default risk for the financial instrument as it was at
the initial recognition and takes into account reasonable and hopeful information that is available
without undue cost and efforts and is indicative of the significant increase in the credit risk since the
initial recognition. Indicators that are relevant to the credit risk valuation include: - change in internal
interest rates or other valuations for instruments after the date of the initial recognition of the instrument;
- change in other conditions for the instrument, such as conditions or clauses, collateral, etc.; - change
in market interest rates and spreads for similar instruments; - internal and external credit quality
assessments; - change in the operations of the borrower, including financial results and deviation from
expectations and forecasts; - changes in economic conditions, including regulatory changes that affect
the borrower; - default on other instruments by the same borrower, etc.
At the end of the reporting period, the company's management has valuated the expected credit losses
and has assessed that the credit risk has not increased significantly since the initial recognition as a
result of which valuation no impairment has been recorded.
Derivative financial instruments
The company has not used derivative financial instruments to hedge risks of changes in exchange
rates, interest rates, or cash flows.
Fixed assets
The perceived value threshold of materiality, below which tangible assets, regardless of the fact that
they are long-lasting, are reported as a current expense upon their acquisition, is BGN 700.
Property, plant and equipment are immaterial to the Company's financial statements.
The Company has no intangible assets and goodwill and has not recognized any impairment losses for
its property, plant and equipment during the current period or comparable reporting periods.
In previous accounting periods, the Company has disclosed information about the accounting policy
related to the impairment of non-current assets, which repeats the requirements of IAS 36 Impairment
of Assets and does not provide information specific to the Company.
The balance sheet amount of property, plant and equipment is reviewed at each reporting date to
determine whether there is any indication of impairment. If such an indication for impairment exists, the
estimated recoverable amount of the asset is determined. The recoverable amount is determined at
least once a year.
An impairment loss is recognized in the statement of profit or loss when the carrying amount of the
asset or cash-generating unit exceeds the recoverable amount.
The recoverable amount of the assets is the higher of their fair value less costs of disposal and their
value in use. When defining value in use, estimated future cash flows are discounted to their present
value using a pre-tax discount rate that reflects current market assessments of the time value of money
and the specific risks associated with the asset. In respect of an asset that does not generate
substantially independent cash flows, the recoverable amount is defined for the cash-generating unit to
which the asset belongs.
Once the Company's management has identified the assets subject to impairment testing as material to
the financial statements, the Company evaluates whether the accounting policy information regarding
the impairment is in fact material.
As part of its assessment, the Company considers that no impairment loss or impairment loss recovery
(in respect of property, plant and equipment) has occurred during the current or comparable reporting
periods. Therefore, information about the accounting policy regarding how the Company recognizes
and allocates impairment losses is unlikely to be material to primary users.
6.
Similarly, because the Company has no intangible assets and goodwill, information about its accounting
policy regarding impairments of intangible assets and goodwill is unlikely to provide its primary users
with material information.
Tangible fixed assets are recognized at acquisition cost less accumulated depreciation.
The amortized cost of tangible fixed assets is equal to their book value. Tangible fixed assets are
depreciated on a straight-line basis according to their expected useful life (service life). Service life is
defined according to the period during which it is assumed that the depreciable assets will be used by
the company taking into account their probable physical wear and obsolescence. The terms are defined
as follows:
• Buildings – 25 years
• Plant and equipment – 3.33 years
• Motor vehicles – 4 years
• Computers – 2 years
• Other fixed assets – 6.66 years
Inventory
The company does not have inventories.
Liabilities
Liabilities for dividends are recognized following a respective resolution by the General meeting of
shareholders.
Retirement benefits and other liabilities
The employer provides compulsory insurance of the employed personnel for retirement, healthcare and
unemployment.
Social security and retirement plans offered by the company in its capacity of an employer are based on
the Bulgarian legislation and constitute predetermined fixed instalments.
Short term employee benefits (due within 12 months following the end of the period when earned) are
recognized as expenses in the income statement during the period wherein the work was performed
and as a current liability (less all amounts paid out and any due deductions) without discounting. As of
the date of the annual financial statements the company makes valuation of the expected costs of the
accumulated compensated leave, which is expected to be paid as a result of the unused right. The
valuation includes undiscounted expenditures for the compensation itself and the respective obligatory
public social security insurance payable by the employer.
Provisions
Provisions are recognized when the company has current legal or constructive obligation resulting from
a past event the settlement of which requires the allocation of economically-beneficial resources when it
is possible to measure reliably the sum necessary to settle the obligation. When a discount is used, the
amount of the provision reported will be increased in each period in order to reflect the expired time.
Such an increase will be recognized as a financial expenditure.
Contingent liability is disclosed in the statements unless the probable necessity for outgoing cash flow
resources, including economic benefits to cover the liability, is deferred.
Temporary tax differences
Temporary tax differences are accrued using the balance sheet method for all temporary differences
arising between the tax base of the assets and liabilities and their book value, formed for accounting
purposes. When calculating temporary tax differences, tax rates are used, which refer to the periods of
reverse occurrence of the temporary tax differences.
The main temporary differences result from impairment of receivables, revaluations under fair value and
accrued provision expenses.
7.
Recoverable temporary tax differences arising from the transfer of unused tax losses from previous
periods will be recognized only to the extent that it is probable to have sufficient future taxable profit,
within the legal terms, against which the losses can be utilized.
Recognition of income and expenses
IFRS 15 creates a comprehensive framework for defining whether, to what extent and when revenues
shall be recognized. Pursuant to IFRS 15, revenue is recognized when a customer obtains control over
the goods or services. Defining the time when the control is transferred - at a particular point in time or
over time requires judgment.
Interest income is recognized on a current basis in proportion to the time base that takes into account
the effective income from the asset.
Operating expenses are accrued at the time of their occurrence, regardless of the cash receipts and
payments. Reporting and recognition of expenses is performed in compliance with the requirement for a
causal link between income and expenses.
Related parties
For the purpose of preparing these financial statements, members of the Board of Directors have
presented in the annual report the legal entities related to them and controlled by them. Related parties
to the Board members are also close members of their families, within the meaning of the international
accounting standards. Related parties to the company are the subsidiaries and associates.
Changes in the related parties to Stara Planina Hold Plc are being followed for the entire reporting
period and for the previous reporting period, as far as this information concerns reporting of
transactions and events in the financial statements.
The Board of Directors of Stara Planina Hold Plc has adopted procedures to avoid and disclose
conflicts of interest. They impose obligations for the members to avoid and not to admit actual or
potential conflicts of interest and, if necessary, to immediately disclose conflicts of interest and provide
shareholders with access to information on transactions between them and the company or any related
party.
During the reporting period members of the Board of directors and parties related to them have not
entered into agreements with the company under terms beyond the regular business operations or
deviating significantly from the market conditions.
There are no transactions beyond the regular business operations of the issuer or deviating significantly
from the market conditions.
Transactions between Stara Planina Hold Plc and related parties during the reporting period include
mostly the loans provided to subsidiaries and associates.
Loan agreement dated 25.04.2019 granting Fazan Jsc the amount of BGN 407 000 with maturity until
25.12.2025 at 2.5 % annual interest rate.
Loan agreement dated 09.01.2022 granting Fazan Jsc the amount of BGN 550 000 with maturity until
08.01.2026 at 2.5 % annual interest rate.
Loan agreement dated 01.07.2022 with Boryana Jsc, – associated company, including loand
under the following conditions:
1. Loan in the amount of BGN 470 thousand with maturity until 16.09.2027 at 2.5% annual
interest, unpaid principal as of 31.12.2023 in the amount of BGN 430 thousand.
2. Loan to finance the purchase of machines in the amount of BGN 483 thousand with a
maturity until of 01.03.2027 at 2.5 % annual interest, unpaid principal as of 31.12.2023 in the
amount of BGN 112 thousand.
Loan agreement dated 15.11.2022 with Elhim-Iskra Plc - in the amount of BGN 1 200 000 for a
period until 30.11.2027 at an annual interest rate 2.5%, unpaid principal as of 31.12.2023 in the amount
of BGN 1 150 thousand.
Loan agreement dated 12.07.2023 with HES Plc - in the amount of BGN 4 000 000 for a period
until 30.06.2024 at an annual interest rate 3.5%.
8.
Loan agreement dated 01.11.2023 with SPH Invest Jsc - in the amount of up to BGN 1 000 000
(one million) for a period until 01.11.2025 at an annual interest rate 3.5%, unpaid principal as of
31.12.2023 in the amount of BGN 700 thousand.
Events after the balance sheet date
Events, both favorable or unfavorable, that occur between the end of the reporting period and the date
that the financial statements are approved for issuance, may be: (a) adjusting events – events that
provide further evidence on conditions that existed on the date of the annual financial statements, and
(b) non-adjusting events – events that are indicative of conditions after the date of the annual financial
statements.
The Company adjusts recognized amounts or recognizes amounts which have not been recognized, in
case of reported adjusting events.
The Company does not adjust recognized amounts or does not recognize amounts which have not
been recognized in case of reported non-adjusting events. They are only disclosed in the Notes to the
annual financial statements.
No events occurred after the reporting date until the date on which the financial statement was
approved for issue, which would require additional corrections and/or disclosures in the financial
statement of Stara Planina Hold Plc for the year ending on December 31, 2023.
Financial risk management
The Management monitors the overall risk and finds ways to neutralize potential negative effects on the
company’s financial indicators.
Currency risk. Stara Planina Hold Plc does not hold any foreign currency instruments and therefore the
company is not exposed to significant currency risks.
Interest risk. The company is not exposed to significant market interest risks since it does not hold
significant interest-bearing assets or liabilities based on floating interest rates.
Other price risk. The Company is exposed to risk of changes in the price of equity stock classified as
FVOCI held for long-term investments.
The company is not exposed to other price risks related to financial assets associated with inventory
prices.
Credit risk. Stara Planina Hold Plc has granted loans to companies in its portfolio which have
longstanding credit reputation which minimizes the credit risk. Risk management is defined by the
management of the company.
Liquidity risk. The company is not exposed to liquidity risks. Liquidity risk management is monitored by
the management of the company.
All risk factors for the operations of the company are described in detail in the Activity Report.
Approximate accounting estimates
The accounting policy has been developed in accordance with the hierarchy of IAS 8 Accounting
Policy, Changes in Accounting Estimates and Errors.
Accounting estimates are the monetary amounts in the financial statements, the estimation of
which has an element of uncertainty.
Stara Planina Hold Plc prepares accounting estimates when the accounting policy requires the
items in the financial statements to be valued in a way that includes uncertainty in the valuation,
i.e. be valued at monetary amounts that cannot be directly observed but must instead be
estimated.
The company prepares accounting estimates to achieve the objective stated in the accounting
policy. Preparing accounting estimates involves the use of judgments or assumptions based on the
most current, reliable information available.
Accounting estimates have been applied to assess: - the fair value of financial assets and; - the
costs of depreciation of an asset of property, machinery and equipment.
9.
Preparation of an accounting estimate includes the selection and simultaneous use of: - valuation
methods; - input data for evaluation. Valuation methods include: - estimation methods (used to
estimate the loss allowance for expected credit losses under IFRS 9 Financial Instruments.
Estimates are subject to revision in case of changes in the circumstances they are based on or
resulting from further experience or subsequent developments. The effects of changes in the
accounting estimates are taken into account when defining the profit or loss, as follows:
a) For the period of the change - if the change affects only that period;
b) For the period of the change and future periods - if the change affects these periods as well.
The effect of the changes in the accounting estimate is included in the same entry of the
comprehensive income statement as previously used for the estimated value. The error related to
prior periods is reported during the current period by increasing or decreasing the retained profit
balance from previous years. The comparative information from the previous reporting period is
recalculated. When the decrease in retained earnings is greater than the balance of retained
earnings before the decrease, the difference is reported as an uncovered loss from previous years.
Changes in the accounting policy are to be made only when required by law, accounting
standards, or if the change will lead to a more adequate representation of the events or
transactions reported in the financial statements.
Changes in the accounting policy are to be applied retrospectively. Any adjustment due to the
change is recorded as an adjustment to the balance of the retained earnings from previous years.
The comparative information is recalculated. The difference resulting from the recalculation of tax
expenses in the income statement for the previous period are reported as an adjustment to the
retained earnings (uncovered loss). The change in the accounting policy is applied retroactively
when the adjustment to the balance of retained earnings from previous years cannot be reliably
determined. A change in the accounting policy occurs when a new or amended accounting
standard is adopted, and is accounted for in accordance with the requirements specified in the new
or amended accounting standard, if any. When the respective accounting standard does not
stipulate specific requirements for reporting changes in the accounting policy, they are to be
reported in accordance with IAS 8.
During the reporting period, the accounting policy has not been changed.
No errors were identified, both for the current and for previous reporting periods, which required
the reflection of corrections.
10.
NOTES UNDER THE STATEMENT OF FINANCIAL POSITION
(In all applications amounts are shown in thousands BGN unless otherwise stated)
Note 1
Property, plant and equipment
Reporting period to
31.12.2023
Machinery and
equipment
Fixtures
Others
Total
Acquired
8
23
4
35
Depreciation
7
22
0
29
Closing balance
1
1
4
6
Note 2
Investments in subsidiaries, associates and other investments
Name and domicile of the companies
Amount
Fair
value
Percent
age of
the
capital
Investment
in
securities
listed on a
stock
exchange
Investment in
securities not
accepted for
trading on a
stock
exchange
I. Investments in Subsidiaries
Hydraulic elements and systems Plc,
Yambol
2 331
69 856
64,53
2 331
0
Elhim - Iskra Plc, Pazardzhik
8 323
12 261
51,40
8 323
0
Fazan Jsc, Ruse
2 413
2 413
92,65
0
2413
SPH Invest Jsc, Sofia
3 542
3 542
99,39
0
3 542
Dionisii Jsc, Nikopol
99
99
68,99
0
99
SPH Trans Ltd, Sofia
33
33
65,00
0
33
Total I
16 741
88 204
10 654
6 087
II. Investments in Associates
M+C Hydraulic Plc, Kazanluk
5 409
138 840
30,61
5 409
0
Bulgarian Rose Plc
1 903
4 950
49,99
1 903
0
Boryana Jsc, Cherven Briag
429
429
50,00
429
Total II
7 741
144 219
7 312
429
III. Investments in Other Companies
Asset Insurance Jsc, Sofia
4 694
4 694
20,00
0
4 694
Leasing Company Jsc, Sofia
900
900
5,00
0
900
Ptici & Ptichi produkti Jsc, Pleven
0
0
24,20
0
0
Medical Center "Center for Prevention
of the health" Ltd, Sofia
2
2
25,00
0
2
Total III
5 596
5 596
0
5 596
TOTAL (I+II+III)
30 078
238 019
17 966
12 112
On 18.07.2023 Stara Planina Hold Plc sold its shareholding, representing 45.00 % of the capital of
Ustrem Jsc., UIC: 206417771, Svishtov at the price of BGN 560 000. Buyer of the shares is the
company "Raykov" Ltd. UIC: 104697074. The investment in Ustrem Jsc was made by Stara Planina
Hold Plc in 2017, with the shareholding in the amount of 45.00 % of the company's capital worth BGN
319 077.
11.
Data for the current period related to subsidiaries and associates such as company name, registered
seat, amount of the investment, fair value of stock exchange traded shares, as per the bulletin of the
Bulgarian Stock Exchange - Sofia as at 31.12.2023 and the % of the shareholdings are presented in the
table. For the fair value of investments in subsidiaries and associates not admitted to trading on the
BSE is used their historical price.
Investments in equity instruments (minority shares), pursuant to IFRS 9 are classified as reported at fair
value through the statement of other comprehensive income (FVOCI). For the investments in ZAD
Asset Insurance AD and Leasing Company Jsc, fair value market valuation was made as of 31.12.2023
using the net asset value method.
Note 3
Other non-current financial assets
31.12.2023
31.12.2022
Additional cash contribution in accordance
with art. 246, para 2, item 4 of Commercial Act
609
609
In 2016 an additional monetary contribution was made in accordance with art. 246, para 2, item 4 of
Commercial Act in the amount of BGN 609 thousand in the Reserve fund of Asset Insurance AD - a
minority interest company in the portfolio of Stara Planina Hold Plc portfolio.
An agreement for undertaking a subordinated contingent liability has been concluded between Stara
Planina Hold Plc and ZAD Asset Insurance AD. Pursuant to this agreement, Stara Planina Hold Plc
shall provide ZAD Asset Insurance AD upon request and upon occurrence of an activating event the
amount up to BGN 294 thousand.
Note 4
Non-current receivables from related
parties
31.12.2023
31.12.2022
Loans
3 349
3 191
Note 5
Other non-current receivables
31.12.2023
31.12.2022
Loans
9 250
8 400
Receivables from the sale of a subsidiary
50
50
Closing balance
9 300
8 450
Note 6
Deferred tax assets
31.12.2023
31.12.2022
Temporary tax differences since the
application of IFRS 9
29
29
Note 7
Current receivables from related parties
31.12.2023
31.12.2022
Loans
4 000
3 000
Interest on loans
85
82
Receivables from dividends
1000
1000
Closing balance
5 085
4 082
Note 8
Other current receivables
31.12.2023
31.12.2022
Interest on loans
58
105
Prepayments
11
11
Closing balance
69
116
12.
Note 9
Cash and cash equivalents
31.12.2023
31.12.2022
Cash
7
10
Cash in current accounts
4 725
3 878
Blocked cash deposits
180
180
Blocked cash for dividend payment
1 624
1 568
Closing balance
6 536
5 636
Note 10
Equity
31.12.2023
31.12.2022
Share capital
21 000
21 000
Bought own shares
-225
-225
Reserves
9 448
9 448
Discounts of repurchased shares
-539
-539
Reserves from changes in the fair value of
investments in equity instruments
2 874
2 324
Retained earnings
5 307
4 410
Net result for the period
9 295
8 088
Closing balance
47 160
44 506
As a result of the market evaluation at fair value for the investment in ZAD Asset Insurance AD, an
increase by BGN 426 thousand was reported in Reserves of changes in the fair value of investments in
equity instruments. Accordingly, a tax liability of BGN 42 thousand was recognized and differed as
stated in the reserve decrease.
As a result of the market evaluation at fair value for the investment in Leasing Company Jsc, an
increase by BGN 185 thousand was reported in Reserves of changes in the fair value of investments in
equity instruments. Accordingly, a tax liability of BGN 19 thousand was recognized and differed as
stated in the reserve decrease.
Note 11
Non-current liabilities to related parties
31.12.2023
31.12.2022
Obligations for bonuses and guaranties for
the board members
256
220
Guarantees of the members of the Board of
Directors
170
170
Closing balance
426
390
Note 12
Deferred revenue
31.12.2023
31.12.2022
Deferred income from the sale of a
subsidiary
50
50
Note 13
Deferred tax liabilities
31.12.2023
31.12.2022
Temporary tax differences since the
application of IFRS 9
348
287
Note 14
Dividends payables
31.12.2023
31.12.2022
Dividends payables
6 850
6 475
Note 15
Other current liabilities
31.12.2023
31.12.2022
Obligations bonuses
224
206
Contributions
10
11
Income tax on individuals
14
13
Tax on expenditure
2
2
Closing balance
250
232
13.
NOTES ON THE PROFIT OR LOSS ACCOUNT AND OTHER COMPREHENSIVE INCOME
(In all applications amounts are shown in thousands BGN unless otherwise stated)
Note 16
Dividend income
31.12.2023
31.12.2022
Dividend income
9 200
8 198
Note 17
Other financial income
31.12.2023
31.12.2022
Interest income from loans
402
312
Positive differences from operations with financial
instruments
241
Closing balance
643
312
Note 18
Other income
31.12.2023
31.12.2022
Derecognition of dividends with expired limitation
period
1 133
1089
Note 19
Cost of materials
31.12.2023
31.12.2022
Cost of office supplies
2
2
Expenses for office furniture
2
1
Maintenance costs for office equipment
9
9
Costs for sanitation
6
6
Closing balance
19
18
Note 20
Cost of hired services
31.12.2023
31.12.2022
Legal expenses
70
42
Auditing services
6
5
Advertising costs
15
20
Subscription costs
4
4
Postage
1
1
Maintenance of programs and computers
32
23
Fees for state institutions
11
8
Civil contracts
63
17
Consultancy services
15
12
Other
3
6
Closing balance
220
138
Note 21
Employee expenses
31.12.2023
31.12.2022
Management salaries
827
755
Staff salaries
405
419
Social security costs
64
70
Closing balance
1296
1244
14.
Note 22
Other expenses
31.12.2023
31.12.2022
Expenses for representative purposes
14
11
Seminars
19
1
Membership fee
38
33
Donations
15
13
Medical service
30
27
Life insurance
21
21
Other
6
3
Closing balance
143
109
The financial statements are prepared for the year ended on 31.12.2023 and approved by the
Board of Directors of Stara Planina Hold Plc on 22.03.2024
Pursuant to Article 30, paragraph 1 of the Accountancy Act, the Company announces that the
2023 audit remuneration amounts to BGN 6 000.
The financial statements of Stara Planina Hold Plc for the year ended on 31 December 2023
have been certified by the registered auditor Katya Zlatareva, diploma № 0610.
Chief Accountant: Kremena Dulgerova Executive Director: Vasil Velev
Kremena
Gantcheva
Dulgerova
Digitally signed by
Kremena Gantcheva
Dulgerova
Date: 2024.03.22
12:17:40 +02'00'
Digitally signed by
Vasil Georgiev Velev
Date: 2024.03.22
12:21:40 +02'00'
CONTENTS
Introduction ...................................................................................................................................................... 2
I. Activity overview .......................................................................................................................................... 2
1. Indicators characterizing the main activity results .................................................................................. 2
2. Investment Portfolio Standing ................................................................................................................ 3
3. Operational results .................................................................................................................................. 3
4. Risk factors for the activity ..................................................................................................................... 5
II. Analysis of major financial and nonfinancial indicators ....................................................................... 13
1. Non-financial declaration ...................................................................................................................... 13
2. Environmental protection ..................................................................................................................... 13
3. Corporate social responsibility ............................................................................................................ 13
III. Important Events Occurred Since the Beginning of the Year .............................................................. 15
ІV. Expected development of the company and planned business policy .............................................. 15
V. Research and Development Activity ....................................................................................................... 17
1. Own shares. Buy-back ...................................................................................................................... 17
2. Changes in the company share prices ............................................................................................ 18
VIІ. Branches. Employees ............................................................................................................................. 20
VІІI. Financial instruments used by the company ...................................................................................... 20
1. Accounting policy .................................................................................................................................. 20
3. Financial instruments ........................................................................................................................ 21
4. Liquidity .................................................................................................................................................. 22
5. Risk Exposition of the Company .......................................................................................................... 22
ІX. Corporate Governance Declaration ........................................................................................................ 22
1. National Corporate Governance Code ................................................................................................. 22
2. Implementation of the Code .................................................................................................................. 23
4. Assessment of the Implementation of the Code ............................................................................ 27
4. Description of the Internal Control and Risk Management System ................................................. 27
5. Information under Art. 10 of Directive 2004/25/EC ............................................................................. 28
6. Diversity policy ....................................................................................................................................... 29
7. Information about the members of the Board of Directors ............................................................... 29
Х. Additional information under Appendix 2 of Ordinance No 2 of the FSC ........................................... 31
XІ. Information under Appendix 3 of Ordinance No 2 of the FSC ............................................................. 36
Media ........................................................................................................................................................... 36
This document contains information on the possibilities for realization of published forecasts as well as future periods
forecasts as well as data representing inside information under Art. 7 Regulation (EU) No 596/2014 on market abuse
(Market Abuse Regulation). This information could significantly affect the price of the shares issued by the company.
2.
Introduction
The annual activity report of Stara Planina Hold Plc presents comments and analysis of the financial
statements and other relevant information regarding the financial standing and operational results of the
company. The Report contains an objective review which presents truly and fairly the development and
operational results of Stara Planina Hold Plc as well as its condition together with a description of the
main risks the company faces. It includes the information pursuant to art. 39 of the Accountancy Act, Art.
100n, para. 7 of the Public Offering of Securities Act (POSA) as well as art. 10 of Ordinance № 2 of the
Financial Supervision Commission.
STARA PLANINA HOLD PLC is a public company within the meaning of Art. 110 of the Public
Offering of Securities Act. The company is the successor of Central Privatization Fund AD, incorporated
on 27 September 1996.The holding company has shareholdings in the capital of industrial enterprises
operating in various fields of production. It actively participates in the development of the Bulgarian
industry by achieving European and world quality level and profitability.
I. Activity overview
1. Indicators characterizing the main activity results
Indicator (BGN’000)
Y2021
Y2022
Y2023
Income from main business activity
9 278
9 599
10 976
Profit from main business activity
7 800
8 088
9 295
Net profit from operations
7 800
8 088
9 295
Net profit per share (BGN)
0.371
0.385
0.443
Total assets
49 430
51 940
55 084
Net assets
42 550
44 506
47 160
Shareholders’ capital
20 775
20 775
20 775
Dividend per share (BGN)
0.298
0.31579
Investment portfolio structure
The economic group of Stara Planina Hold Plc consists of the parent company and its subsidiaries
and associates. The investment portfolio of the holding company is distributed mainly in the following
industries:
63.2
14.6
7.1
15.1
Machine Building
Electrical Engineering
Light Industry
Financial
3.
2. Investment Portfolio Standing
Major investments in the portfolio of Stara Planina Hold Plc as of 31.12.2023:
Investments in subsidiaries
Hydraulic Elements and Systems Plc
64.53 %
Elhim Iskra Plc
51.40 %
Fazan Jsc
92.65 %
SPH Invest Jsc
99.39 %
Investments in associates
M+C Hydraulic Plc
30.61 %
Bulgarian Rose Plc
49.99 %
Boryana Jsc
50.00 %
Investments in other companies
Asset Insurance AD
20.00 %
Leasing Company Jsc
5.00 %
3. Operational results
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations. The company has focused its activities primarily on the management of its subsidiaries and
associates.
The structure of income within the last three years is summarized in the table below:
INCOME (BGN’000)
Y 2021
Y 2022
Y 2023
Financial Income
8 243
8 510
9 843
Income from Interests
281
312
402
Income from Dividends
7 708
8 198
9 200
Other
1 035
1 089
1 133
Total Income
9 278
9 599
10 976
Net unconsolidated profit
(BGN’000)
5531
5758
6427
5075
7800
8088
9295
2017 2018 2019 2020 2021 2022 2023
4.
The net profit of Stara Planina Hold AD as of 31.12.2023 reached BGN 9.3 million which is a 17.9%
growth compared to the reported net profit in the amount of BGN 8.1 million for the previous year and an
increase by 19.17 % compared to the 2021 net profit.
As of the date of this report, the sales of the companies in the group for the entire year 2023 reached
BGN 378.95 million and thus the sales revenues as of 31.12.2023 reports a 1 % growth compared to
sales in 2022 and an increase by 36.14 % compared to reported sales in 2021.
The group's consolidated sales revenue for the first half of 2023 reached BGN 211.61 million,
reporting an increase by 15.4% compared to sales in the same period of 2022 and an increase by nearly
61 % over the reported sales in the first half of 2021. The group's total consolidated profit after tax for the
first half of 2023 reached BGN 26.66 million which represents a growth by 17.02 % compared to the
reported consolidated profit after tax for the same period of the previous year and an increase by 60.99%
compared to the profit for the first half of 2021
In the second half of 2023, we reported revenues in the amount of BGN 167.34 million which
represents a decrease by 12.79 % compared to the same period of the previous year and an increase by
14.08 % compared to the second half of 2021.
Based on the results of the first months of 2024 and given the impact of the negative trends in the
development of the European and world economy, as well as the seriously lowered expectations of the
German government for growth in 2024 by only 0.2 % of the German economy, we lower our forecast for
sales in the first quarter of 2024, expecting them to reach BGN 77.4 million. With this result, we would
report a decrease by about 28 % compared to the record high levels of sales achieved in the same period
of 2023 and a decrease by about 11 % compared to the first quarter of 2022. We expect revenues for the
first half of 2024 to be down by about 22 % compared to the same period of 2023. At this stage, we expect
that the group's consolidated sales revenue for the year 2024 to be worth BGN 328.21 million.
Annual sales of all companies in the Group
(Million BGN)
* forecast
218.11
242.74
224.41
200.03
278.37
375.26
378.95
328.21
2017 2018 2019 2020 2021 2022 2023 2024*
5.
4. Risk factors for the activity
A significant effect on the financial standing of Stara Planina Hold Plc has the direct dependence
on the financial condition of the subsidiaries and associates as far as their operations are primarily export-
oriented - mainly to the countries of the European Union.
Major risks and uncertainties for Stara Planina Hold Plc are related to the possibility for the actual
income from a given investment not to correspond to the expected one which is conditioned by the
successful activities of the companies in the Group. In this sense, the main risks for Stara Planina Hold
Plc and the companies in the Group for 2023 are:
Overall macroeconomic risk: Macroeconomic conditions and trends for the development of the
market and the macro environment where the companies operate represent a systematic risk that cannot
be managed and controlled by the corporate board of the holding and those of the companies in the
Group but has a significant impact on the activities and results of the enterprises.
Macroeconomic indicators such as inflation, instability of financial markets and the slowdown of
economy, as well as the energy crisis, as a result of the global economic and political consequences of
Covid-19 and the military actions in Ukraine, continue having a significant impact on business processes
and prospects for economic development in global aspect.
According to data from the December, 2023 Economic Bulletin of the ECB, the economy of the
euro area contracted in the second half of 2023 under the adverse impact of tight financing conditions,
weakened confidence and loss of competitiveness. The current expectations of the ECB’s experts are
that its recovery will be slightly slower than predicted in the September 2023 forecasts. Short-term
indicators point to weak economic activity in the fourth quarter of 2023 as well. However, growth is
expected to strengthen from the beginning of 2024 onward with real disposable income rising, supported
by falling inflation, solid wage growth and sustained employment, and with export growth picking up to
catch up with stronger foreign demand. Overall, average annual real GDP growth is expected to slow
from 3.4% in 2022 to 0.6% in 2023, then pick up to 0.8 % in 2024 and stabilize at 1.5% in 2025 and 2026.
Compared to the September 2023 forecast, the GDP growth outlook has been revised slightly downwards
for 2023-2024 based on the latest published data and weak business survey results but has not been
revised for 2025.
Business investments are expected to grow weakly in 2024 due to the tight financing conditions,
lagging behind rising demand. A recovery is expected in 2025-2026, reflecting weakening of the negative
impact of financing conditions and the support under the New Generation EU (NGEU) program.
Global trade growth is expected to regain momentum and increase broadly in line with the
economic activity. ECB’s experts forecast world trade to grow by 3.0 % in 2024 and 2025 and by 3.2 %
in 2026. External demand for the euro area is forecast to grow by 2.6 % in 2024, 2.9 % in 2025 and 3.1%
in 2026 which is also at lower level than the September forecasts.
In the 2024 Winter Economic Forecast, published on 15.02.2024, the European Commission again
lowered its economic growth expectations for both the European Union and the Eurozone to 0.5 % in
2023, compared to the expectations for a 0.6 % growth in the autumn forecast. For 2024, the deterioration
of the EC's forecasts is more pronounced and while the autumn forecast predicted an increase in EU
GDP by 1.3%, the current expectations are for an increase of 0.9%. The Eurozone economy is projected
to grow by 0.8% in 2024, compared to the 1.2% predicted in the previous economic forecast. For Bulgaria,
the expectations for economic growth in 2023 remain unchanged (2%), and for 2024 GDP is expected to
increase by 1.9% compared to the expectation of growth of 1.8% in the autumn forecast.
According to the assessment of the European Commission, after almost reaching a technical
recession in the second half of 2023, the prospects for the EU economy in the first quarter of 2024 remain
weak. The growth rate is expected to stabilize from the second half of 2024 to the end of 2025.
6.
In addition, according to EUROSTAT data on an annual basis, in December 2023 compared to
December 2022, industrial production increased by 1.2 % in both the euro area and the European Union
but the annual average industrial production for 2023 compared to 2022 decreased by 2.4 % in the euro
area and by 2.0 % in the EU. In Bulgaria, in December compared to November 2023, production in the
industrial sector increased by 3.3 percent, reversing its direction from the previous month, when it
decreased by 3.9 percent. In December 2023, compared to December 2022, Bulgarian industrial
production weakened by 6.9 percent after a decline of 12.3 percent in November and 5.9 percent in
October. Thus, Bulgaria continues being third among the EU countries in terms of the most significant
decline in industrial production in December.
At the same time, according to preliminary data of the NSI for 2023, Bulgaria's trade with its main
trading partners from the EU and third countries shrank for another month in a row in December. A
decline was reported both in terms of the export of Bulgarian goods and the import in our country. In
2023, the total export of goods from Bulgaria worth BGN 86,562.7 million decreased by 6.8 % compared
to 2022 and the reported decrease in the total import of goods on an annual basis is 10.2%. In December
2023, the total export of goods decreased by 3.5% and the total import of goods decreased by 6.9 %
compared to the same month of the previous year. This negative trend in our foreign trade continues
reflecting the stagnation of the world's leading economies and indicates problems for the growth of the
Bulgarian economy this year.
Pursuant to data of the National Statistical Institute, in December 2023, the total business climate
indicator decreases by 1.8 percentage points compared to the previous month (from 21.6% to 19.8%)
which is due to the unfavorable business climate in the construction, retail trade and service sector. The
composite indicator "business climate in industry" preserves approximately its November level (from
20.6% to 20.7%). The expectations of the industrial entrepreneurs about the activity over the next 3
months are worsened. The uncertain economic environment and shortage of labor continue to be the
most serious obstacles for the business development. Concerning selling prices in industry, the
managers’ forecasts are for certain increase, although the prevailing part of them foresee preservation of
their level over the next 3 months.
According to preliminary seasonally adjusted data of the NSI, in December 2023 the Industrial
Production Index, which measures changes in the output of Bulgarian industrial enterprises and evaluates
the average change in production between two time periods, increased by 3.3 % compared to the
previous month and reports a decrease by 6.9% compared to December 2022. On an annual basis, a
decline in industrial production was recorded in the processing industry - by 8.9 % and in the mining
industry - by 8.8 %, while an increase was registered in the production and distribution of electricity and
heat energy and gas - by 4.6 %.
According to data of the NSI, in December 2023 the Total Producer Price Index in Industry, which
measures the average change in the prices of industrial products produced and sold by Bulgarian
enterprises, recorded a decrease by 0.6 % compared to previous month and a decrease by 14.6 %
compared to the same month of 2022. In the sectors where the main companies in the group of the Stara
Planina Hold Plc operate, for December 2023, compared to December 2022, was recorded a decrease
by 1.7 % in the production of metal products and a growth by 6.2 % in the production of machines.
According to data from the European Commission in December 2023, the Economic Sentiment
Indicator (ESI) rose both in the EU (+1.8 points to 95.6) and the euro area (+2.4 points to 96.4). In the
European Union, the improvement in ESI was driven by higher confidence among consumers and
managers in retail, services and construction.
According to EUROFER (European Steel Association), the worsening of the economy and industry
outlook in 2023 in the European Union, especially due to high inflation and the subsequent increase in
the interest rates by the European Central Bank, has had a limited impact on the output of the steel-using
sectors. The construction sector, which accounts for 35 % of EU steel consumption, is the only significant
exception. Economic uncertainty is expected to continue affecting the steel market growth in 2024.
Although the EU industry proved to be quite resilient until the end of the first half of 2023, the second half
7.
of 2023 was characterized by predominantly negative trends, driven by uncertainty in energy prices, weak
demand, inflation, geopolitical tensions and economic challenges caused by high interest rates. While in
2022 production grew more than expected (+3%) as of 31.12.2023, EUROFER predicts a slowdown in
growth (+0.7%) on an annual basis with large differences between the individual economies of European
countries and their industrial sectors. Growth in steel-using sectors is forecast to slow further in 2024
(+0.2%), mainly due to another recession in the construction sector, with growth expected to pick up
moderately in 2025 (+1.5%).
EUROFER Forecast for the Mechanical Engineering and Metal Goods Sectors
(Е-28, % change YoY)
In the third quarter of 2023, production in the mechanical engineering sector experienced a slight
decline (-0.1%), after ten consecutive quarterly increases (+1.8% in the previous quarter). Led by the
overall industrial recovery after COVID, the mechanical engineering sector reported strong production
levels, even above those prior to 2019. However, the growth of the sector remains exposed to continued
downside risks, including due to the impact of the war in Ukraine and the continued deterioration of the
economic and industrial outlook. The mechanical engineering sector is expected to report only moderate
growth in 2023 (+1.6%, revised upwards from +0.5%). This sluggish performance is due to continued
weakness across the industrial sector, the impact of high interest rates and inflation-driven economic
uncertainty. Despite expected growth in the economy and industry in the first half of 2024, the sector is
projected to report a decline in production in 2024 (-0.5%) before recovering in 2025 (+2.4%).
After a reported decline by 3.3% for 2023, EUROFER's expectations for the metal goods sector in
2024 are for further declines until mid-year, followed by a growth in the third and fourth quarters and
nominal growth of 0.1 % on an annual basis. For 2025, expectations are for a more substantial growth of
(1.3%).
The interest rate risk is related to changes in the levels of the market interest rates, which could
lead to an increase in the interest expenses and a corresponding decrease in the financial result of the
companies in the Group.
At its meeting on 14 December 2023, the Governing Council of the ECB decided that the interest
rate on the main refinancing operations and the interest rates on the marginal credit facility and the
deposit facility would remain unchanged – 4.50 %, 4.75 % and 4.00 %, respectively. Based on its current
assessments, the Governing Council considers that the ECB's key interest rates are at a level which, if
sustained long enough, will make a significant contribution to achieving this objective.
The main interest rate of the BNB for the nine months of 2023 is presented in the following graph:
1.6
-2.0
-1.6
0.1
1.4
-0.5
2.4
-3.3
-1.9
-0.4
1.4
1.3
0.1
1.3
Y2023 1Q24 2Q24 3Q24 4Q24 Y2024 Y2025
Mechanical engineering Metal goods
8.
Source: BNB
The change in interest rates reflects depending on the share of attracted bank and commercial
loans. At the beginning of 2022, Euribor started its movement from a negative position, and for 5 years
its value was only negative, and from September 2011 to the beginning of 2022, the direction of the
annual trend was only downward. Since the beginning of 2023, a strong upward trend has been reported,
with the highest value since 2009 being reached at the end of September. In the last quarter of the year,
the movement is again in a downward direction.
12-month EURIBOR
(01.01.2023 - 31.12.2023)
Stara Planina Hold Plc uses optimally the available resource in order to reduce the impact of the
interest rate levels.
Inflation risk is related to the probability for the purchase prices of goods and services to increase
significantly which leads to lower incomes, shrinking consumers’ demand and limiting the country's
economy growth. Inflation can directly affect the real return on a given investment since with high inflation,
even high nominal incomes can appear to have a negative nominal return.
The December 2023 ECB’s staff macroeconomic forecasts for the euro area expect HICP inflation
to fall from an average of 5.4 % in 2023 to 2.7 % in 2024 and 2.1 % in 2025, reaching a level of 1.9 % in
2026. After the sharp drop in HIPC inflation to 2.4 % in November, a temporary rise is expected in the
shortest term, mainly related to rising base effects in the energy component and the withdrawal of some
fiscal support measures. As a result, energy inflation should increase in 2024, partially neutralizing further
declines in food inflation and HICP inflation excluding energy and food. This means that headline inflation
will gradually decline not until 2024. As from the end of 2024, all core components of inflation are expected
1.42
1.82
2.17
2.47
2.77
2.96
3.12
3.29
3.53
3.64
3.79
3.80
01.01.2023 01.02.2023 01.03.2023 01.04.2023 01.05.2023 01.06.2023 01.07.2023 01.08.2023 01.09.2023 01.10.2023 01.11.2023 01.12.2023
BNB Base Interest Rates
01.01.2023 - 01.12.2023
9.
to continue weakening, contributing to headline HICP inflation reaching the target level in the second half
of 2025.
Pursuant to data of the National Statistical Institute, in December 2023, the monthly inflation rate
in Bulgaria was 0.3 % compared to the previous month, and the annual inflation rate in December 2023
compared to December 2022 was 5.0 %. The annual average inflation rate for the period January -
December 2023 compared to the period January - December 2022 was 8.6%.
The World Bank and other institutions have recently warned that precisely the high inflation may
prove to be an obstacle for Bulgaria on its way to adopting the euro. Although the indicator is gradually
decreasing, it is happening more slowly than necessary.
According to the macroeconomic forecast of the Bulgarian National Bank for the annual
inflation, measured by the harmonized index of consumer prices (HIPC), it is to slow down to 3.1%
at the end of 2024 and to remain at the same level at the end of 2025. The expected downward
dynamics of inflation is mainly due to the assumed decrease in the prices of oil and agricultural raw
materials on the international markets in 2024. At the same time, in the short and medium term, the
BNB predicts the pressure to increase the production costs of companies resulting from the
continued high growth of the costs of labor per unit of output and the labor shortage in the country,
to remain strong and continue to exert a pro-inflationary influence on consumer prices.
The systematic currency risk is the probability of a possible change in the currency regime of the
country (currency board) which would lead either to the devaluation of the lev or to the appreciation of
the lev against foreign currencies. According to the current legislation in the country, the Bulgarian lev is
fixed to the common European currency - euro in the ratio EUR 1 = BGN 1.95583 and the risk of
depreciation of the lev against the European currency is minimal, but there is a risk of adverse changes
in the euro against other major currencies, such as the US dollar, the Swiss franc, the British pound and
others.
Given the export orientation of most of the companies in the group of Stara Planina Hold Plc,
changes in the values of currencies have a certain effect and are a risk factor for their activities. Exchange
rates affect revenues from sales abroad and the cost of deliveries of imported raw materials as they
largely compensate each other. Due to the fact that these companies make their main payments in BGN
and EUR and realize the main part of their sales revenues in EUR, the impact of this risk on their activity
is significantly reduced. The management of the holding observes the movement of the exchange rates
and takes measures to avoid the negative consequences of their change.
Changes in the values of currencies have a certain effect and are a risk factor for the activity.
Exchange rates affect revenues from sales abroad and the cost of supplies of imported raw materials.
The annual growth of the average monthly US dollar/BGN exchange rate by the end of 2022 is 6.8 % in
favor of the BGN. At the same time, the end of the third quarter of the year, the common European
currency reached its lowest level against the US dollar in 20 years - 0.9538 US dollars for 1 euro, and at
the end of January 2023, the euro rose to 1.0929 US dollars which is its highest level since April 2022
and represents an increase by more than 14 % from the lowest value in September.
The political risk is the probability of occurrence of serious domestic political upheavals that will
lead to a negative change in the government's economic program and its priorities for economic
development, as a result of which the environment where companies operate will change in a negative
direction, and investors will suffer losses.
As of the date of this report, the political instability in the country from the last three years does not
appear to have been resolved despite the formation of the compromise government from June 2023. It
continues being assessed as one of the main reasons negatively affecting economic activity and business
environment in the country, mainly due to the seriously damaged principle of the rule of law, giving rise
to legal uncertainty, including property security. In addition, at the beginning of October 2023, with almost
a year delay, Bulgaria officially submitted a request to the European Commission for the receipt of the
second tranche under the National Recovery and Resilience Plan, intended to provide the member states
10.
of the Union with funds under the European recovery and resilience mechanism to support economic
recovery. According to the schedule, Bulgaria was supposed to receive the second payment at the end
of 2022, and the third and the fourth one - in the past year 2023. As of the date of this report, Bulgaria
has not yet received payment under the second tranche, due to a delay in the necessary reforms at the
national level, which, along with the financial-economic and geopolitical negative trends, further hinders
the possibility of making the necessary investments, for the competitive functioning of the Bulgarian
economy and to accelerate the pace of recovery of our country.
Along with these factors, the lack of a principled, adequate and sustainable regulatory environment,
numerous bureaucratic obstacles for businesses and citizens, high energy cost, the lack of human
resources, as well as delayed and relatively insufficient direct support for investments lead to an outflow
of capitals from the country and are major obstacles to attracting new ones in the medium and longer
term. This hinders the reform program and Bulgaria's ability to fully invest EU funds and could also delay
the country's accession to the euro area and significantly weaken the growth potential of the Bulgarian
economy.
The reduction of regulatory and other administrative burdens, especially for small and medium-
sized businesses, including through the introduction of e-government in all areas, the real fight against
gray economy, corruption, monopolization and cartelization, the implementation of a structured and
balanced approach in the formation and implementation of national policies for a green transition,
sustainable energy development of the country taking into account national priorities and guaranteeing
energy supplies at minimum prices, easing and speeding up of the procedures for admitting workers from
third countries and promoting their sustainable employment in Bulgaria should become real state policies
with a view to achieving Bulgaria's strategic priorities for equal membership in the Schengen, the
Eurozone and the OECD, thus ensuring acceleration of economic growth and improvement of the quality
of life in our country.
Internationally, the political risks for Bulgaria stem from the failure to achieve sustainable results in
connection with our country's commitments to implement serious structural reforms in accordance with
EU policies. Along with the ongoing negative consequences of the military conflict in Ukraine, the
escalation of the military conflict in the Middle East appears to be an additional serious risk for our country
and the world, given the inevitable negative economic and financial impact it is expected to have, both in
line with the prices of oil, its availability and the resulting effects, as well as in terms of intensifying the
pressure of refugee waves from the countries of this region. In the baseline scenario of the ECB's
December 2023 macroeconomic forecast, this conflict is assumed to be geographically limited and
therefore not expected to have a significant economic impact on the euro area economy beyond what
has already been observed. In the event of a hypothetical escalation of the conflict, however, ECB experts
believe that around a third of the transit of oil and natural gas through the Strait of Hormuz could be
disrupted, leading to a tightening of global energy markets. As a result, in the second quarter of 2024, oil
prices would rise to nearly $130/barrel and natural gas prices would jump to EUR 83/megawatt hour.
According to the European Commission's Winter Economic Forecast, attacks by Houthi rebels in
the Red Sea are disrupting one of the main shipping routes for the global economy, which could have a
significant negative impact on the EU economy given the fact that in 2022, around 23% of all imports of
goods into the EU come by ships from Asia, most of which travel through the Red Sea. From the start of
the attacks (October 19, 2023) to the end of January 2024, the average volume of transit trade through
the Red Sea decreased by 70%, delivery times between Asia and Europe increased by 10-15 days, and
the cost of container transport on several routes from China to Europe have increased by around 400%.
Regulatory risk, including increased focus on sustainability: Regulatory risk is related to the impact of the
existing regulatory framework at national and European level or its change, as well as the potential
possibility of sanctions due to non-compliance with this framework.
In recent years, Bulgarian and European businesses have been increasingly affected by
intensively strengthening European and national regulation in many directions, including increasing focus
11.
on sustainability related issues o. Not infrequently, new requirements take effect faster than they can be
implemented into related systems and processes, potentially disrupting normal business processes. In
addition, the tendency to continually increase the administrative burden on businesses in the absence of
reasonable and adequate relief greatly increases the costs required to comply with the new regulation
and related reporting requirements.
In this regard and considering the upcoming introduction into Bulgarian legislation of the
requirements of the Corporate Sustainability Reporting Directive (CSRD), in a volume significantly wider
than the requirements of the Non-Financial Reporting Directive (NFRD), Stara Planina Hold Plc as a
holding company has a well-developed and effective Corporate Governance and Social Responsibility
Policy in the holding structure to which all companies in the group adhere. This policy addresses all social
and governance aspects, including human resources management, mainly aimed at improving working
conditions, increasing qualifications, increasing incomes, social support, respect for human rights in
accordance with the principles of the United Nations Universal Declaration on human rights, the
International Labor Organization (ILO) Declaration on Fundamental Rights and Rights at Work, the UN
Guiding Principles on Business and Human Rights adopted by the UN Human Rights Council, as well as
conducting an open dialogue with all stakeholder groups. The policy is also aimed at increasing the level
of quality and guaranteeing the safety of manufactured products to satisfy the growing needs of
customers while observing the principle of adhering to high ethical standards in all aspects and directions
of corporate and business activities and consistently applying a policy of transparency in preventing any
form of corruption. The environmental policies of the companies in the group are aimed at compliance
with environmental norms and standards for the production activities carried out, at reducing harmful
emissions from the consumption of electrical energy through the construction and commissioning of
photovoltaic systems for generating energy for own needs, at applying other energy efficiency measures,
based on circular economy principles. At the moment, the holding is in process of finalizing key guidelines
from its strategy for sustainable governance, on issues related to the process of adapting the companies
in the group to a lower carbon and more environmentally sustainable operations.
In addition to the indicated systematic risks, the activities of the companies in the group of Stara
Planina Hold Plc are related to non-systematic risks such as industry risk, concerning the state and trends
for development of a given industry as a whole and a company risk arising from the specifics of the
company.
Influence of the main risks and uncertainties
According to the December 2023 ECB Economic Bulletin, risks to economic growth are on the
downside. Growth may be weaker if the effect of monetary policy turns out to be stronger than expected.
A weaker global economy or a further slowdown in global trade could also dampen growth in the
eurozone. The war in Ukraine and the military conflict in the Middle East are major sources of geopolitical
risk.
Risks to higher inflation include increased geopolitical tensions that could push up energy prices in
the short term, and extreme weather events, that could cause food prices rise. Inflation may also turn out
to be higher than expected if inflation expectations rise above the target level or if wages and the rate of
profit rise more than expected. The ECB's December 2023 non-energy commodity price assumptions
have been revised upwards for 2024 and downwards for 2025 following the September 2023 projections
amid mixed trends in international metal and commodity prices. Metal prices rose mainly due to favorable
economic news coming out of China.
The World Bank's assessment of Bulgaria, reflected in the autumn forecast for 2023 for the Europe
and Central Asia region, indicates that our country needs new policies and ambitious reforms to stimulate
economic growth in order to reach middle income levels in the EU in the next 15 years. Bulgaria needs
to address its institutional and governance weaknesses and ensure fair competition to increase business
efficiency and expand the private sector.
12.
The results from a survey as from the end of the year 2023 among the members of the Bulgarian
Industrial Capital Association of (BICA) - a nationally representative employer organization uniting the
majority of public companies in the country, show rather pessimism regarding growth in the coming year.
The data shows that 4/5 of the respondents expect sales to decrease or remain at the 2023 level and
regarding the financial result 43 % of the respondents believe that in 2024 it will decrease compared to
the financial result in 2023, 33 % believe that it will remain at the same level and only 24% are optimistic
that the 2024 financial result will be better. 4 out of 5 of the surveyed entrepreneurs expect that exports
will decrease or remain unchanged in 2024 compared to 2023. The expectations related to domestic
investment activity are also indicative – 43 % of the members - respondents are considering to keep
investments at the 2023 level and 29 % of them believe that the amount of investments in 2024 will
decrease compared to 2023.
An additional serious factor that will continue having a negative impact on the competitiveness of
the Bulgarian business compared to that of other European countries is the decision to partially accept
Bulgaria and Romania in the Schengen area. On 30 December 2023 – 12 years after the European
Commission first confirmed that the two countries met the criteria, the Council of the European Union
adopted a decision that will lead to the abolition of air and sea border controls with the remaining
Schengen countries from the end of March 2024 but not to the opportunity to use the economic benefits
from the abolition of land borders, through which the main volume of goods passes - about 97% of the
parcels. This will continue depriving our country of opportunities to improve the business climate and
attract investments, with a value of lost benefits due to the lack of free movement of goods of around
BGN 1 billion per year.
Factors that will continue influencing the activities in 2024 are the market prices of raw materials
and materials for production, the transport of supplies, the regional market price of labor, the prices of
energy resources and the security of their supplies. Given the ongoing military conflicts in Ukraine, the
Middle East and the obstruction of the transport route through the Red Sea, as of the date of this report,
we assess the risks associated with securing the supply of materials, as well as the sale of finished
products to partners related to the affected regions as highly elevated. Along with the threat to European
and regional stability, the geopolitical situation puts at additional risk the supply of energy resources and
the possibilities for sustainable growth of the economy. The effect of the measures taken at the European
and national level, as well as the countermeasures imposed accordingly, will have an impact on the
activities of the enterprises of the group and may lead to an adjustment of the expected business results.
The deteriorating business environment in the European Union, expressed in high energy price levels,
the continuous imposition of numerous complicated regulations that significantly increase the
administrative burden for business, demotivates entrepreneurial activity and leads to an outflow of capital
from Europe, lowering competitiveness and hindering economic growth.
Given the negative demographic trend in the country, the lack of a state policy that eases labor
immigration and a business-aligned methodology for personnel planning and training, the shortage of
human resources continues being one of the main risks that every business in Bulgaria faces with a
growing negative impact.
Against the background of the described risks, the company's management recognizes high
uncertainty regarding the global economic and geopolitical outlook that has deteriorated significantly in
the past year due to numerous factors, all of which may continue to intensify.
Possible changes in the demand for the manufactured products are also risky due to changes in
the price levels, quality, reliability and solvency of the consumers, the technologies used and the
organization of the production.
No asset sales are anticipated in the near future.
13.
II. Analysis of major financial and nonfinancial indicators
1. Non-financial declaration
As a parent company in a large Group, Stara Planina Hold Plc will include a consolidated non-
financial declaration and taxonomy related disclosures in the consolidated activity report.
2. Environmental protection
As a holding company with no independent commercial operations, Stara Planina Hold Plc has
focused its activities primarily on the management of subsidiaries and associates. The holding company
pays special attention to the environmental impact of the production of our companies. They annually
report on the assessment of the impact on the environment and the measures taken in this direction.
3. Corporate social responsibility
The corporate policy of Stara Planina Hold Plc is based on responsible, sustainable and transparent
management in accordance with the recognized standards and principles of good corporate governance,
changes in the regulatory, financial and economic environment where the companies in the group operate
and the principles of corporate social responsibility, reflecting the responsibility of enterprises for their
impact on society, environment and the economy as a whole.
Stara Planina Hold AD and the companies in the group apply a corporate policy in the social field.
The rules of conduct set out in the Code of Ethics of Stara Planina Hold Plc and the companies in the
Group are subject to the following basic principles:
• Competence – using the knowledge and experience that managers and employees have in
performing their functions and continuous improvement of their professional skills.
• Confidentiality - protection of the facts and circumstances that have become known to managers
and employees during or on the occasion of performance of their duties.
• Honesty - honest and ethical behavior in accordance with generally accepted rules.
• Independence - not allowing a manager or employee to be influenced by related parties with
regard to his work.
• Objectivity - true, accurate and impartial collection, analysis and evaluation by the manager and
the employee of all facts and circumstances in performance of his duties.
The success of enterprises is based on social responsibility that requires consideration of the
impact that the company's activities have on the local community, society, environment and the economy
as a whole. This approach contributes to achieving the group's long-term goals and sustainable growth,
as well as to establishing transparent and honest relationships with all stakeholders.
Each company identifies the stakeholders in relation to its activities based on their level and sphere
of influence as well as their role and effect on the company’s sustainable development and those which
in turn may have an impact on company's operations including shareholders, stakeholders, customers,
suppliers, employees, creditors, public groups, and state and local government bodies, etc.
The companies in the group of Stara Planina Hold Plc have approved human resources
management policies, aimed mainly at improving working conditions, raising qualifications, raising
incomes, social support while respecting basic human rights and carrying out other activities, that
contribute to maintaining the health and working capacity of employees. In accordance with these
policies, companies implement and annually update incentives and benefits for employees that go
beyond the regulatory requirements. A policy for providing social allowances to the remuneration of
employed persons has been introduced and is being implemented - food vouchers are provided on a
monthly basis; the travel expenses for the distance from the place of work to the permanent address of
the employed persons are paid; treatment benefits are provided. "Life", "Occupational accident" and
"Accident and general illness" insurances have been concluded for persons employed in the enterprises
14.
of the group. A policy for constant promotion of training and qualification is applied - in all companies of
the group, introductory trainings, courses to acquire professional qualifications and/or trainings to
increase qualifications are organized and conducted.
Every year Stara Planina Hold Plc participates in charity events of public importance.
Stara Planina Hold Plc holds 25% of the capital of Medical Preventive Care Center which is to
provide early diagnosis, treatment, rehabilitation and prevention services to the personnel employed in
the companies within the Group.
Number of people employed by all enterprises of the Holding Group
* forecast
In 2023 the number of employees in the Group of Stara Planina Hold Plc reported de crease by
3.96 % compared to the previous year.
Labor productivity per employee in the group (BGN’000)
* forecast
Against the background of the indicated decrease in the number of employees in the Group, labor
productivity reported an increase by 5.2 % compared to the previous 2022 and a 34.65% growth
compared to 2021. With the expected decrease of sales revenues in 2024 by around 12 % in 2024 at this
2082
1943
2004
2164
2124
1885
2477
2276
2318
2450
2353
2125
2019 2020 2021 2022 2023 2024*
90.6
88.0
119.6
153.1
161.1
156.1
2019 2020 2021 2022 2023 2024*
Total
The three largest
enterprises
15.
stage we expect a decrease in the number of employees by about 10% compared to 2023, with an
expected decrease in labor productivity of about 3% and preserving the average monthly salary in the
companies within the Group of Stara Planina Hold Plc unchanged.
III. Important Events Occurred Since the Beginning of the Year
After the date of the annual accounting closing, the management of Stara Planina Hold Plc is not
aware of any important and material events which may influence the investors’ interest with the exception
of the continuing military conflicts in Ukraine, the Middle East and the obstruction of the transport route
through the Red Sea which increase the risks associated with securing supplies of materials as well as
the sale of finished products to partners related to the affected regions.
ІV. Expected development of the company and planned business policy
During the year of 2023, our country, Europe and the world were strongly influenced by the effects
of the dynamic global changes and the superimposed crises one after another. The military conflicts in
Ukraine and the Middle East, weakening global demand amid tight monetary policy in many countries
and worsening terms of trade led to the sharpest contraction in industrial production in about three years
and continue affecting economy with a trend for a negative development and even decline. Seven
countries of the European Union are already officially in recession and a total of thirteen reported a decline
in the economy in the third quarter of the year. On a national level, the business activities during the year
were conditioned by the unceasing political instability that continues being assessed as a main reason,
negatively affecting economic activity and business environment in Bulgaria. Our country continuously
needs consistent state policies, ambitious reforms and a clear strategic vision to stimulate economic
growth.
Against this background, the consolidated sales revenues of the Group of Stara Planina Hold Plc
on an annual basis reached BGN 378.95 million thus reporting a 1 % growth compared to sales in 2022
and an increase by 36.14% compared to sales in 2021.
Net sales revenue
(Quarterly, BGN’000s)
* forecast
The net profit of Stara Planina Hold AD for the year 2023 reached BGN 9.3 million which represents
a growth by 17.9 % compared to the reported net profit for the previous year which gives us confidence
that for the 27th year in a row, part of it will be distributed as a dividend for the shareholders of the holding
company.
The formation of the holding's profit is a process that is highly dependent on the state and sentiment
of our markets. Despite the impact of the negative factors that determined the activities of the companies
-10000
10000
30000
50000
70000
90000
110000
1Q 2Q 3Q 4Q
2022 2023 2024*
16.
in the group of Stara Planina Hold Plc during the reporting year, the expected gross profit of the group
for the year 2023 is in the amount of 47.02 million which is a decrease by 8.5 % compared to the reported
gross consolidated profit for the previous year and an increase by over 42% of the gross consolidated
profit for 2021.
The level of our export is directly dependent on the markets where the Group operates – mainly in
the European Union. Throughout 2023 we managed to retain our main markets but the expectations and
forecasts of our partners in the country, Europe and the world remain reserved and even pessimistic, at
least until the middle of 2024, which, together with the negative trends in the industry, gives us reason to
expect results with lower values for the current financial year. The state of the economy of Germany,
which is the main trading partner of the companies in the group of Stara Planina Hold Plc, continues
being particularly worrying. According to the forecast data of the Germany's Federal Statistical Office
"Destatis", the country's GDP decreased by 0.3% in the fourth quarter of 2023 compared to the previous
quarter, and the forecast of the Bundesbank indicates that the weak performance of the German economy
will continue in the first months of 2024. This is likely to make Germany one of the worst performers within
the eurozone, with its huge industrial sector, normally an important driver of growth, proving a stumbling
block for the entire European economy.
The reported results in the first months of 2024, together with the continuing negative impact of the
financial-economic and geopolitical factors determining the prospects for the development of the
European and world economy, give us reason to lower our forecast for sales in the first quarter of 2024.
We expect with the revenues for the first half of 2024 to report a decrease of about 22% compared to the
same period of 2023. Stara Planina Hold Plc expects that the consolidated revenues from sales in 2024
will exceed BGN 328.2 million which means a decrease by about 13% on an annual basis compared to
2023 and by about 12% compared to 2022.
It is possible that our estimates will not be reached due to the influence of external factors. The EU
economy continues being exposed to risks and factors such as new difficulties in supply chains, the
prices of and security of energy resources, weaker demand on external markets, a possible additional
tightening of monetary policy, as well as geopolitical factors, related to the military conflicts in Ukraine
and the Middle East have a negative impact.
In this context in 2024 again we will be led by the purpose of achieving high quality, productivity
and profitability and thus to retain our market positions and at the same time to preserve the persons
employed in the companies. We will continue offering competitive prices, tailored customer
approach, high quality and operational delivery times.
In 2023 investments of our companies reached BGN 35.5 million, with a 37 % growth on an annual
basis, mainly focused on continuous technological renewal, introduction of highly profitable products and
productions, acquisition of enterprises and assets, innovations for green and digital transition, increase
of labor productivity and corresponding increase of remuneration of employed persons.
Investments (Quarterly, BGN’000s)
17.
* forecast
In 2024, in the context of the great uncertainty on national and global level, we plan to reduce
investments by 23 % to BGN 27.3 million. The main part of the planned investments is intended for new
technological equipment and reconstruction, new technologies for digitalization of processes, green
transition and expansion of production possibilities with a view to increase the productivity and quality of
the manufactured products and reduce the cost price, optimization of the production process and
stimulating employees.
The companies plan to participate in procedures under existing and new European operational
programs aimed at developing human resources and increasing competitiveness.
Achieving good financial results at the expected sales volumes is a major task to achieve so as to
ensure stability in the market capitalization of the companies in the group, in order to guarantee
shareholders’ investments and their profitability.
V. Research and Development Activity
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations. The holding company provides support to the enterprises in the Group in the research and
development activity since it views this activity as an integral part of the annual business plans of the
companies.
The companies have departments and units developing operations for process improvement, and
research and development of new products. In 2023 as well, the main objectives of the units carrying out
R&D activities were focused on meeting the growing requirements of the customers by developing new
types of products.
VI. Company shares
1. Own shares. Buy-back
The General Meeting of Shareholders, held on 16.05.2019, adopted a resolution to buy back up to
3 % of the total number of shares issued by the company for a period not longer than 5 years and
appointed the Board of Directors to define the specific parameters.
In 2023 Stara Planina Hold Plc has not acquired its own shares. During the reporting year the
company has not sold own shares.
As of 31.12.2023 Stara Planina Hold Plc owns 225 337 own shares, representing 1.07 % of the
capital of the holding company. 50 000 shares are also hold by the subsidiary company SPH Invest Jsc.
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000
22000
2022 2023 2024*
18.
Pursuant to the provision of Art. 187a, Para. 3 of the Commercial Act, the exercise of any rights,
including the right to vote, on these 225 337 shares shall cease until their transfer.
2. Changes in the company share prices
The shares of Stara Planina Hold Plc are traded on the main market, “Standard” segment of the
Bulgarian Stock Exchange. BSE code: SPH.
Stara Planina Hold Plc has a free float of 67.04% and its shares are among the most actively traded
on the BSE-Sofia where liquidity continues being a major issue.
In 2023, the movement of the share price was variable between BGN 8.60 and BGN 10.70. The
graph shows the movement of the price of the shares of Stara Planina Hold Plc on the BSE for the period
01.01.2023 - 31.12.2023.
Share price over Y2023
Source: BSE-Sofia AD
------- closing price
------ weighted-average price
The graph shows the price movement of the shares of Stara Planina Hold Plc on the Bulgarian
Stock Exchange for the period 01.09.2023 – 31.12.2023.
• Start price: BGN 9.6676 (01.09.2023)
• Last price: BGN 10.30 (31.12.2023)
• Max price: BGN 10.70 (11.08.2023)
• Min price: BGN 8.6042 (24.04.2023)
• Value change: BGN 0.6324
• Percentage change: 6.5414 %.
The market capitalization of the holding as of 31.12.2023 is BGN 216.3 million compared to BGN
195.3 million as of 31.12.2022.
Market capitalization (BGN million)
19.
Four of the companies in the investment portfolio of the holding company are public companies
and their market capitalization is being set by the stock exchange. This allows for the ratio between the
market capitalization of the holding company and the market capitalization of its holdings to be calculated.
Traditionally the price of the holding is lower than the total price of its holding.
Closing price per share (in BGN) at year-end
2015
2016
2017
2018
2019
2020
2021
2022
2023
3.95
6.49
8.01
6.55
4.76
5.45
10.10
9.30
10.30
3. Dividend policy
Stara Planina Hold Plc follows a policy of annual dividend distribution. The Board of Directors
assumes that at the annual general meeting of the shareholders, the tradition of distributing part of the
financial profit for paying out dividends will be continued.
Every year since its incorporation Stara Planina Hold Plc has paid out dividends. The total amount
of the distributed dividends up to and including 2022 is BGN 49.07 million. The initial investment in the
holding company has a dividend coverage of 28 times.
Distributed dividends (BGN million)
Stara Planina Hold Plc pays out dividends in accordance with the requirements of the Public
Offerings of Securities Act and the other applicable regulations – under an agreement with the Central
Depository and through the branch network of International Asset Bank AD in regional cities.
0
50
100
150
200
2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
0.82
0.16
0.19
0.21
0.23
0.23
0.23
0.24
0.24
0.25
0.26
0.18
0.25
0.27
0.29
0.32
1.02
2.10
4.27
4.53
4.75
5.04
5.09 5.09
5.16
6.18
6.54
1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019 2020 2021 2022
20.
VIІ. Branches. Employees
Stara Planina hold Plc does not have any registered branches in the country and abroad.
As of 31.12.2023 Stara Planina Hold Plc has a total of 7 employees under employment contracts.
The company has outsourced the legal services of a law firm. All company employees possess university
degrees and adequate qualifications for the positions occupied. During the last calendar, year the
company has not employed any temporary employees.
No arrangements for participation of the employees in the capital of the issuer have been made,
including through issuance of shares, options or other securities of the issuer.
VІІI. Financial instruments used by the company
1. Accounting policy
In compliance with the accounting legislation in force in Bulgaria, since the beginning of 2003 Stara
Planina Hold Plc has been applying the International Financial Reporting Standards.
These annual financial statements are prepared in compliance with the International Financial
Reporting Standards adopted by the European Union. The company continues applying the same
accounting policy as for the preparation of the 2023 annual financial statements.
The accounting policy of the Company is described in the Explanatory Notes presented together
with the Annual Financial Statements.
In accordance with the accounting policy applied, investments in subsidiaries and associates are
reported under the historical cost method and the capital growth of these companies is not reflected in
the separate statements of Stara Planina Hold Plc.
Major business operations of the company are sale, purchase and management of shareholdings
in companies. Main part of the 2023 revenues is formed by dividend revenues.
This current income is mainly used for financing the companies in the holding's portfolio, meeting
the commitments under the adopted dividend policy, as well as for administrative needs.
In the reporting year, the accounting policy of the company has not been changed compared to the
previous reporting period. No errors have been found for both the current and previous reporting periods.
Therefore, there are no adjustments due to errors.
2. Major indicators for financial and accounting analysis
Profitability Indicator
31.12.2020 г.
31.12.2021 г.
31.12.2022 г.
31.12.2023 г.
К1
0.128
0.183
0.182
0.197
К2
0.110
0.158
0.156
0.169
К1 Profitability of Shareholders’ equity ratio = Net profit / Shareholders’ equity
К2 Asset capitalization ratio = Net profit / Total assets
Profitability (yield) is the ability of the company to provide economic profit to its owners through the
skillful management of the assets, the shareholders’ equity and the borrowed capital and the other
liabilities. It is the most important indicator for the efficiency of the activity carried out by us.
Return on equity shows the profit obtained from a unit of invested equity and the profitability of the
enterprise from all the activities carried out.
Efficiency Indicator
31.12.2020 г.
31.12.2021 г.
31.12.2022 г.
31.12.2023 г.
К3
4.740
6.277
6.353
6.529
К4
0.211
0.159
0.157
0.153
21.
К3 Expenses efficiency ratio = Total income / Total expenses
К4 Income efficiency ratio = Total expenses / Total income
The analysis of the efficiency of revenues and expenses for 2023 shows that BGN 6.529 revenues
were received per BGN 1.00 of the expenses. Revenues fully cover the expenses of the company which
is a pre-condition for a positive cash flow from operational activity, meeting the undertaken dividend
comitments as well as for partial financing of the companies in the portfolio of the Holding.
Liquidity Indicator
31.12.2020 г.
31.12.2021 г.
31.12.2022 г.
31.12.2023 г.
К5
0.831
1.617
1.471
1.650
К6
0.528
1.304
0.840
0.921
К5 Total liquidity ratio = Current assets / Current liabilities
К6 Absolute liquidity ratio = Cash / Current liabilities
In 2023 again Stara Planina Hold Plc has been covering its current liabilities on time with the
available current assets. The liquid structure of current assets and liabilities allows part of the funds to be
directed to long-term financing of the companies under control.
Financial autonomy Indicators
31.12.2020 г.
31.12.2021 г.
31.12.2022 г.
31.12.2023 г.
К7
6.072
6.185
5.987
5.952
К8
0.165
0.162
0.167
0.168
К7 Financial Autonomy ratio = Shareholders’ equity / Borrowed capital
К8 Debt ratio = Borrowed capital / Shareholders’ equity
The financial autonomy ratios characterize the financial independence of Stara Planina Hold Plc
from creditors and the ability to meets its liabilities. We achieve good financial autonomy which
guarantees the interests of the owners.
3. Financial instruments
The most essential part in the financial instruments used by the company is taken by the holdings
of Stara Planina Hold Plc in the subsidiaries and associates.
Financial instruments of the Company are detailed in the Explanatory Notes presented together
with the Annual Financial Statements.
Typical for the investments of Stara Planina Hold Plc (BSE code SPH) in subsidiaries and
associates is that four of them are public companies with their shared being admitted to trading on the
Bulgarian Stock Exchange: M+S Hydraulic Plc MSH, Hydraulic Elements and Systems Plc HES, Elhim
Iskra Plc ELHM and Bulgarian Rose Plc ROZA.
Next, in terms of significance, come the loans granted to the companies in the portfolio of Stara
Planina Hold Plc. They are filed as per their nominal value as of the date of occurrence. In accordance
with the IFRS 9, loans are classified as financial instruments reported at amortized value. At the end of
the reporting period, the management of the company has made a valuation of the expected credit losses
under these receivables and has found that no impairment must be carried out and therefore no such
impairment has been performed.
Their distribution as of 31.12.2023 is detailed in Section ІХ of the Report.
The Financial Resources Management Policy of Stara Planina Hold Plc is focused mainly in the
management of the companies in the portfolio. The free cash amounts are directed towards financing the
companies.
22.
4. Liquidity
Considering the specifics of the activity, the major part of the incoming cash flows is generally
formed by dividends received and the outgoing cash flows are used for payment of dividends to the
shareholders and for covering administrative overheads related to its maintenance.
It is a long-term corporate governance policy of Stara Planina Hold Plc to use the available cash
resource to fund projects of its portfolio companies.
The company has not undertaken any obligations to incur capital expenses at the end of the
reporting period.
5. Risk Exposition of the Company
Market risk comprises three types of risk:
Currency risk – the risk that the value of a financial instrument will fluctuate due to changes in the
currency exchange rates
Interest risk – the risk that the value of a financial instrument will fluctuate due to changes in the
market interest rates
Price risk – the risk that the value of a financial instrument will fluctuate as a result of changes in
the market prices.
As of 31.12.2023 Stara Planina Hold Plc does not have any financial instruments in foreign
currency. Interest bearing financial instruments of Stara Planina Hold Plc are primarily the granted loans.
All of them are with fixed annual interest rate of 2.5 – 3.5 %.
Investments in subsidiary and associated enterprises are reported and presented as per the
acquisition price method. The nature of the financial instruments used by the company indicates that
market risk does not have a significant effect on the financial results.
The risk of changes in the market prices of equity instruments arises from equity stocks classified
as reported at fair value through other comprehensive income (FVOCI), held for long-term investment.
Credit risk – Stara Planina Hold Plc has granted loans to companies in its portfolio which have
longstanding and unblemished credit reputation which minimizes the credit risk.
Due to the nature of the financial instruments used by Stara Planina Hold Plc, the liquidity risk and
the interest risk of the cash flow are also kept at a minimum.
ІX. Corporate Governance Declaration
1. National Corporate Governance Code
Stara Planina Hold Plc implements its own long-term Good Corporate Governance Program. The
Program provides for the implementation of a number of initiatives in several main areas, the
implementation of which is subordinated to its priority objectives: responsibility and independence of the
corporate Board, shareholders' rights protection; ensuring equal treatment of each shareholder (including
minority and foreign shareholders); ensuring recognition of the rights of the parties interested in the
management and sustainable development of the company and promoting the co-operation with them;
ensuring prompt and accurate disclosure of the statutory required information related to Stara Planina
Hold Plc regarding important issues of the financial standing, activity results, ownership and management
of the company; supporting the strategic management of Stara Planina Hold Plc, the efficient control over
the activity of the Board of Directors and its accountability to all stakeholders.
On 30.10.2007 the Board of Directors of Stara Planina Hold Plc considering the important role of
modern corporate governance to support the sustainable development of the national economy of the
Republic of Bulgaria and lead by its willingness to continue implementing the internationally recognized
good corporate governance standard, resolved that the holding company will carry out its activity in
23.
compliance with the principles and provisions of the National Corporate Governance Code
(CGCode_July2021_BG.pdf (nkku.bg).
2. Implementation of the Code
The management of Stara Planina Hold Plc applies the National Code based on the “comply or
explain” principle. The application of this principle is based on the Recommendation of the EU
Commission on the quality of reporting in corporate governance.
The main direction when executing the commitments of the code was to bring the internal acts of
the company and its overall activity in accordance with the changing legal regulations. All of the internal
regulations listed below may be found in the Corporate Governance section on the company website.
Stara Planina Hold Plc participates in discussions of draft amendments and supplements or
projects for new acts in the field of public offering of securities presented by the competent authorities.
As a member of the National Corporate Governance Committee, Stara Planina Hold Plc participates
through its representative in the process of discussion and adoption of amendments to the National Code,
effective as of July 1, 2021.
Chapter One
Corporate Boards
The Board of Directors of Stara Planina Holc Plc directs and controls the company in a responsible
and independent manner according to the vision, objectives and strategies of the company and in the
best interest of all shareholders. It monitors the results of the company's performance and initiates
changes in the management of its operations, when necessary. The Board of Directors treats all
shareholders equally, acts in their best interest and in a diligent manner. The members of the Board of
Directors are guided in their activities by the generally accepted principles of integrity and managerial
and professional competence. The company has adopted and adheres to a Code of Ethics.
The Board of Directors promotes the implementation and monitors the observance of the adopted
principles for sustainable development by the companies in the group; provides and controls the
establishment and proper functioning of a risk management system; ensures and controls the integrated
functioning of the accounting and financial reporting systems; gives guidelines, approves and controls
the business plans implementation of the companies in the Group, the material transactions as well as
other activities, required by the company's Rules of Procedure.
The Board of Directors reports on its activities to the General Meeting of Shareholders. In case of
proposals for election of new members of the Board of Directors, the principles of compliance of the
competence of the nominees with the nature of the company’s activities are observed. The contracts for
assignment of the management, concluded with the members of the Board of Directors, define their
responsibilities and tasks, the criteria for the amount of their remuneration, their obligations for loyalty to
the company and the grounds for dismissal.
The number of members of the Board of Directors is defined by the company’s Articles of
Association. The composition of the Board is structured in a way that guarantees the professionalism,
impartiality and independence of its decisions related to the management of the company. The Board of
Directors has allocated the tasks and responsibilities between its members. The company has adopted
general rules for the members of the board of directors where the functions and obligations of the board,
the procedure for election and dismissal of members are defined. The election of board members takes
place through a transparent procedure that provides timely and sufficient information on the personal and
professional qualities of the nominees.
The independent directors control the executive management and participate effectively in the
company's performance in accordance with the shareholders’ interests and rights. The Chairman of the
Board of Directors is an independent director. The members of the Board of Directors have appropriate
knowledge and experience and after their election the new members are acquainted with the main legal
and financial issues related to the company's performance. Enhancing the competence and qualification
24.
of the Board members is a constant practice and their training is encouraged. The succession of
mandates ensures efficient operation of the company and compliance with the legal requirements.
The members of the Board of Directors have sufficient time to perform their tasks and duties. The
Rules of Procedure of the Board of Directors define the maximum number of companies outside the
portfolio of Stara Planina Hold Plc where Board members may hold management positions, as well as
the number of consecutive mandates of the independent members.
The amount and the structure of the remuneration to the members of the Board of Directors are
defined by the General Meeting of the Shareholders. They take into account the responsibilities and
contribution of each member, the possibility of selection and retention of qualified and loyal members, the
need to align the interests of members with the long-term interests of the company. The remuneration of
the independent members of the Board of Directors is permanent (fixed). Pursuant to a decision of the
Shareholders, it may also have a variable part.
The General Meeting of Shareholders held on 20 May, 2021 adopted a new Remuneration Policy
for the members of the Board of Directors which is consistent with the amendments to the regulation and
aims to support the long-term business objectives of the company and promote behavior that supports
the value creation for shareholders, while providing competitive remuneration sufficient to attract and
retain directors with qualities necessary for the successful management and development of the
company.
The Remuneration Policy defines the principles for setting the amount and the structure of the
remuneration and specifies the particular additional incentives which are based on clear criteria and
indicators related to the results of the company and the economic group. Information on the
remunerations of the members of the Board of Directions is disclosed in an annual report which is a
separate document to the Annual Financial Statements of the company. Shareholders and stakeholders
have easy access to the adopted policy for defining the remuneration of the board members and the
report on its implementation which are published on the company's website.
The Board of Directors of Stara Planina Hold Plc has adopted procedures to avoid and disclose
conflicts of interest. They impose obligations for the members to avoid and not to admit actual or potential
conflicts of interest and, if necessary, to immediately disclose conflicts of interest and provide
shareholders with access to information on transactions between them and the company or any related
party. On the other hand, each conflict of interests in the company should be disclosed to the Board of
Directors.
Stara Planina Hold Plc does not and will not allow transactions between the company and members
of the Board of Directors and any related parties.
Chapter Two
Audit And Internal Control
In accordance with the requirements of the current legislation and based on the criteria defined
thereof Stara Planina Holc Plc has established an operating audit committee with members that meets
the legal requirements and specific needs of the company. The audit committee supervises the internal
audit activities and monitors the overall relations with the external auditor, including the nature of non-
audit services provided by the latter. Its activities are aimed at increasing the efficiency of the financial
reporting processes, the internal control and risk management systems.
The Audit Committee prepares a written recommendation, based on which the corporate board
proposes to the General Meeting the election of an independent auditor to verify and certify the annual
financial statements. In the proposals for election of an external auditor, the rotation principle is applied
in accordance with the requirements of the relevant regulation.
The Board of Directors, with the assistance of the Audit Committee, ensures compliance with the
applicable legislation in terms of the independent financial audit. The company has developed an internal
control system that ensures the effective functioning of the reporting and disclosure systems in order to
identify the risks associated with the company's activities and support their effective management.
Chapter Three
25.
Shareholders' Rights Protection
The corporate Board of Stara Planina Hold Plc ensures the equal treatment of all shareholders,
including minority and foreign shareholders and is responsible for the protection of their rights. The Board
facilitates the exercising of these rights within the limits permitted by the applicable legislation and in
accordance with the company's internal rules. The corporate Board has provided information to all
shareholders about their rights, the financial results of the company and corporate events through the
information disclosure system and the company's website.
All shareholders have access to information about the rules under which General meetings are
convened and held, including voting procedures. The company provides sufficient and timely information
on the date and venue of the General meeting, as well as detailed information on the issues to be
discussed and decided on at the meeting. The corporate Board ensures the right of all shareholders to
express their opinion, as well as to ask questions at the general meeting.
The invitation for the general meeting of shareholders contains the information required under the
Commercial Act and the Public Offering of Securities Act, as well as additional information on exercising
the right to vote and the possibility to add new items to the agenda under Art. 223a of the Commercial
Act.
The invitation and the materials for the general meeting of the shareholders of Stara Planina Hold
Plc are announced through the X3 News media to the public, the Financial Supervision Commission and
the regulated securities market. Pursuant to the legal requirements the company announces a notice for
holding a general meeting of the shareholders and for dividend payment, upon a decision adopted by the
GMS, also through the corporate actions announcement system of the Central Depository. After
presenting the invitation and the materials for the general meeting of shareholders, they are available on
the company's website. The texts of the written materials related to the agenda of the General Meeting
are particular and clear and do not mislead shareholders. All proposals regarding major corporate events
are presented as separate items on the agenda of the General Meeting, including the profit distribution
proposal.
Shareholders with voting rights have the opportunity to exercise their voting rights at the General
Meeting of the company in person or through representatives/proxies. As part of the materials for the
General Meeting of Shareholders, the Board of Directors presents a sample power of attorney and Proxy
Voting Rules.
Rules for Organization and Holding Regular and Extraordinary Sessions of the General Meeting of
Shareholders have been adopter in order to guarantee equal treatment of all shareholders and the right
of each shareholder to express opinion on the items in the agenda of the meeting. The rules and
procedures for holding a general meeting of shareholders do not complicate or increase the cost of voting
unnecessarily. These procedures encourage the participation of shareholders in the general meeting but
do not provide the possibility of remote attendance by technical means, insofar as this would make
holding of the meeting more expensive. Proxy Voting Rules have been adopted. Following the adopted
amendments to the Articles of Association of the company in 2021, the right to vote at the General
Meeting of Shareholders may be exercised by correspondence based on a decision of the Board of
Directors. All members of the corporate Board attend the general meetings of the shareholders. When
necessary, they assist shareholders with the inclusion of additional items in the agenda of the General
Meeting and guarantee the right of the shareholders to be informed on the adopted resolutions.
The Rules for Organizing and Holding General Meetings provide a mechanism for assisting the
shareholders who have exercised the right to include additional items and propose resolutions on issues
already included in the agenda of the meeting. The resolutions of the General Meeting are published on
the company’s website for a period of 10 years. The company has not issued shares of a different class.
The company does not have shareholders with control rights.
Increasing the trust of shareholders, investors and stakeholders has been one of the major
commitments of the corporate Board. In this regard, the company is continually strengthening its position
of a stable institution. In 2023, we continued endorsing and applying various ways to disclose current
26.
information on the financial and economic standing of the company and important corporate events as
well as their promotion.
Chapter Four
Disclosure of Financial and Non-financial Information
Stara Planina Hold Plc has approved a policy and an information disclosure system in accordance
with legal requirements. It guarantees equal access to information to all addressees (shareholders,
stakeholders, investment community) and prevents inside information abuse. The holding has internal
rules for preparation of the annual and interim reports and rules for financial and non-financial information
disclosure. The company annually discloses a non-financial statement on a consolidated basis where
detailed information on the activities and initiatives of all companies in the holding's portfolio in the field
of non-financial reporting is provided.
The company maintains its own website providing information about the company, the
management bodies, shareholder structure and the companies in the portfolio of Stara Planina Hold Plc.
The corporate governance section includes internal regulatory documents, information on the
shareholders' rights and their participation in the general meeting, financial statements for the last 10
years, information for dividend payments as well as personal data protection information. A special
section includes materials on forthcoming general meetings of the shareholders, information on the
resolutions adopted at the general meetings. Data on the company's initiatives, auditors and media
publishing news about the holding company is publicly available. The Q&A system for shareholders,
stakeholders via electronic means proves its efficiency. A procedure has been provided for receiving
dividends from previous years by the shareholders. We continue the practice of sending prompt replies
to letters and inquiries from shareholders, including to those received by e-mail and their storage in a
register dully kept by the Investor Relations Director. A practice has been introduced for the answers to
any questions, regardless of their nature, to include a detailed explanation of the shareholders’ rights.
The procedure for shares inheritance is described in detail. Each shareholder who addresses the holding
on a different occasion is being provided with comprehensive information about his rights and receives
information on various issues regarding the business activities and the current standing of the company,
including the historical prices of the shares of Stara Planina Hold Plc on the stock exchange. The
company uses the X3 News media which provides equal and timely access to the relevant information to
all users.
The information disclosure system ensures full, timely, accurate and understandable information
which provides a possibility for objective and informed decisions and assessments.
Chapter Five
Stakeholders. Sustainable Development
The corporate governance of Stara Planina Hold Plc ensures effective interaction with the
stakeholders, identified by the company as such. The stakeholders’ policy complies with the legal
requirements in accordance with the principles of transparency, accountability and business ethics. A
policy has been developed that takes into account the stakeholders’ interests that ensures their attraction
and guarantees the balance between the development of the company and the environment where it
operates. Effective relations are maintained with the stakeholders. The company periodically informs
shareholders, stakeholders and the investment community about various important issues. The internal
rules were supplemented by commitments regarding the provision of comprehensive information and the
interaction of the company with its shareholders - institutional investors, as well as with the Bulgarian
Stock Exchange – Sofia Plc, which is a regulated market of financial instruments and with the investment
intermediaries on this market. The company’s shares are not admitted to trading in a different jurisdiction.
Stara Planina Hold Plc takes active part in various forms of joint collaboration with state institutions
and non-government organizations engaged with corporate governance in the country. Throughout the
reporting year we, once again, recognize the benefit from our co-operation and membership in the
Bulgarian Industrial Capital Association. The Investor Relations Directors of the holding and the public
subsidiaries are members of the Association of Bulgarian Investor Relations Directors.
27.
The control related to the information disclosure process on the part of Stara Planina Hold Plc is
multidirectional. No violations of the provisions and deadlines for disclosure have been found so far. The
financial reports are published on the website of the holding immediately after they are presented to the
regulating authority and the public which provides a possibility for control by the shareholders, investors
and all stakeholders. Another form of control in terms of the information disclosure process is exercised
by the members of the Board of Directors over the Investor Relations Director.
The overall policy of the Board of Directors of Stara Planina Hold Plc regarding the management
of the companies in the economic group is in accordance with the principles of socially justified and
environmentally friendly economic development. The corporate Boards of the companies in the group
annually develop and approve business plans of the enterprises which envisage the specific actions and
policies regarding the sustainable development of each company. In their investment programs, projects
aimed at the environmentally friendly development of the respective company are set and implemented
annually, as well as social projects aimed mainly at employees.
In compliance with the requirements of the Law on the Protection of Whistleblowers or Persons
Publicly Disclosing Information on Violations (Whistelblower Protection Act), in 2023 the Board of
Directors of Stara Planina Hold Plc approved Whistleblowing Rules relevant for the company and for the
subsequent actions thereto. The company has created an internal channel through which a signal can be
submitted - in writing or verbally. A form for registering a signal for submitting information on violations
according to the Whistelblower Protection Act can be found on the company's website, on the website of
the Commission for Protection of Personal Data or can be provided in the company's office. Signals are
submitted to the responsible employee, designated by a decision of the company's Board of Directors.
Stara Planina Hold AD maintains on its website up-to-date information under Art. 12, para. 4 of
Whistelblower Protection Act which is also available at the company's office.
3. Assessment of the Implementation of the Code
Applying the National Corporate Governance Code is a process to continue throughout the current
year as well.
The review of the Code in relation to the implementation of the underlying “comply or explain”
principle leads to the conclusion that the company complies with the Code as a whole.
Implementation of the recommendations in the Code is responsibility of the corporate Board. In this
sense, applying particular texts of the Code does not depend on the corporate Board, insofar as the
appointment of members of the Board of Directors is a right and prerogative of the shareholders.
In conclusion, we can summarize that the activities of the Board of Directors of Stara Planina Hold
Plc throughout 2023 complied with the National Corporate Governance Code.
4. Description of the Internal Control and Risk Management System
The internal control and risk management systems of the holding ensure effective reporting and
information disclosure, identification of the risks accompanying the activity of the company and their
effective management. Their purpose is to ensure compliance between legal and regulatory requirements
and the proper functioning of internal processes. These systems are established in accordance with the
specifics of the company - its activities, financial characteristics, industry, needs and resources.
The Board of Directors has the primary responsibility for the internal control and risk management
systems. The Board performs both a management and guidance function as well as ongoing monitoring,
assessing whether the systems are suitable for the company in a changed environment, whether they
operate as well as expected and whether they are being adapted periodically to the changed conditions.
The management’s responsibility includes implementing an internal control system to prevent,
detect and correct errors and misstatements resulting from the actions of the accounting system. In this
regard, the management observes the following basic principles in its activity:
28.
• Adherence to a specific management and accounting policy, disclosed in the financial
statements;
• Performance of all operations in accordance with the laws and statutory regulations;
• Recording all events and transactions in a timely manner, with the exact amount in the relevant
accounts and for the relevant reporting period, so as to allow the financial statements to be
prepared in accordance with the specified accounting framework;
• Observing the principle of prudence in valuation of assets, liabilities, income and expenses;
detection and termination of fraud and errors;
• Completeness and correctness of the accounting information;
• Preparation of reliable financial information; adherence to international financial reporting
standards and compliance with the going concern principle.
The company's Board of Directors is responsible for the risk management which includes
identifying, assessing and controlling potential events or situations that may adversely affect the
achievement of the organization's objectives, and is designed to give reasonable assurance that the
company's business objectives will be achieved.
The management of the holding prepares an annual activity report as well as a financial statement
for every financial year which gives an accurate and honest estimate of the financial standing of the
company at the end of the year, operational financial results, and the cash flows in compliance with the
applicable accounting framework. In order to ensure an independent and objective assessment of the
financial statements the annual audit of the holding is performed by an independent statutory auditor. All
financial statements are prepared in accordance with the International Accounting Standards. The current
financial and accounting activity of the company is subject to periodic control and analysis by the
management body. There is an established practice for periodic discussion at meetings of the Board of
Directors of the current financial results of the company's activities, including the implementation of the
investment program.
5. Information under Art. 10 of Directive 2004/25/EC
The company does not have significant direct or indirect shareholdings (including indirect
shareholdings through pyramid structures and cross-shareholding) within the meaning of Art. 85 of
Directive 2001/34/EC.
There are no holders of securities with special control rights.
There are no restrictions on the voting right.
The rules that regulate the appointment and replacement of members of the Board of Directors and
the introduction of amendments to the memorandum of association are specified in the published Articles
of Association of the company and are not regulated by the corporate Board. According to the Articles of
Association of Stara Planina Hold Plc, only the General Meeting of Shareholders has the right to elect
and dismiss members of the Board of Directors of the company and decisions are taken by a majority of
2/3 of the shares represented.
Only the General Meeting of Shareholders has the right to make amendments and supplements to
the Articles of Association of the company. Decisions are taken by a majority of 2/3 of the shares
represented.
Resolutions for buy-back procedures or issuance of shares are to be adopted by the shareholders
in accordance with the legislation in force.
The powers of the Board of Directors are regulated in detail under Art. 43, para. 2 of the Articles of
Association of the company. The Board of Directors, without being expressly authorized to do so by the
General Meeting, may not carry out transactions specified under Art. 114 of the Public Offering of
Securities Act.
Transactions of the company with the participation of interested parties, other than those mentioned
above, are subject to prior approval by the Board of Directors.
29.
The Articles of Association also provide for the powers of the Board of Directors to increase the
capital of the company by issuing shares.
6. Diversity policy
The management structure of Stara Planina Hold Plc is defined in the company's Articles of
Association. The Board of Directors consists of three individuals and one legal entity, which has
respectively appointed a physical person as its representative. The members of the Board of Directors
have the education, qualification, knowledge and professional experience necessary for the responsible
and competent performance of their functions and responsibilities. The company does not apply a
diversity policy regarding the management body in relation to aspects such as age and gender.
The election of the members of the board of directors is the right and prerogative of the
shareholders in accordance with the requirements of the law and the Articles of Association.
7. Information about the members of the Board of Directors
Stara Planina Hold Plc has a one-tier management system. The Board of Directors is the managing
body of Stara Planina Hold Plc, responsible for the planning and coordination of the company’s overall
performance, as laid down in the scope of its business activity, by means of undertaking all actions for
organization, management and control, provided by law and the Articles of Association.
As of 31.12.2023 the Board of Directors of Stara Planina Hold Plc includes the following members:
• Evgeniy Vasilev Uzunov – Chairman of the Board of Directors
• Vasil Georgiev Velev – Member of the Board of Directors and Executive Director
• Finance Invest LTD, Plovdiv, UIC 115016144; represented in the Board of Directors by Spas
Borisov Videv
• Stefan Atanasov Nikolov – Member of the Board of Directors
During the reporting year no changes in the members of the Board of Directors have been made.
The organization of work, as well as all duties, responsibilities and competences are regulated and
specified by the Rules of Regulation of the of the Board of Directors of Stara Planina Hold Plc. The Board
of Directors takes its decisions at meetings, held at least once every three months, in accordance with
the statutory requirements of the terms and procedures for their convocation and holding.
The composition of the Board of Directors elected by the General Meeting guarantees the
independence and objectiveness of the assessments and actions of its members in terms of the
company’s operation.
During the reporting year, members of the Board of Directors or parties related to them have not
entered into transactions with the company which are beyond its usual business activity or significantly
deviate from the market conditions.
The statutory requirement for at least one third of the members of the Board of Directors to be
independent persons is observed. There are no changes in the special criteria for election of Board
members. In its practice so far, the Board of Directors has not encountered a situation of direct or indirect
conflict of interest between a member of the management body and a shareholder. There has not been
found any instance of direct or indirect conflicts between the interest of a Board member and the
company’s interest.
The next sections of the report contain additional data.
Participation of the members of the Board of Directors
Member of the
Board of Directors
Commercial companies, in
which the member owns
more than 25 percent of
thecapital
Participation in the management of other
companies or co-operations as procurators,
managers or board members
Evgeniy Vasilev
Uzunov
Sostra Engineering Ltd.
Elhim-Iskra Plc. – Pazardzhik, representative of
Garant-5 Ltd.;
30.
Hydraulic elements and systems Plc. - Yambol,
representative of Loma Ltd.;
M+S Hydraulic Plc. – Kazanlak, representative of
Sostra Engineering Ltd.;
Bulgarian Rose Plc. – Karlovo, representative of
Bic Hold Ltd.;
Fazan Jsc. – Ruse, representative of Stara
Planina Hold Plc.;
M+S–97 Jsc. – Kazanlak;
Vasil Georgiev Velev
Velev Invest Ltd.
Hydraulic elements and systems Plc. - Yambol,
representative of Velev Invest Ltd.;
M+S Hydraulic Plc. – Kazanlak, representative of
Velev Invest Ltd.;
Bulgarian Rose Plc. – Karlovo, representative of
„Leasing Company” Jsc;
Fazan Jsc. – Ruse, representative of Bic Hold
Ltd.;
M+S–97 Jsc. – Kazanlak, representative of Bic
Hold Ltd.;
Elhim-Iskra Plc. – Pazardzhik;
Bic Hold Ltd. – Sofia;
Garant-5 Ltd. – Plovdiv;
Velev Invest Ltd. – Sofia;
Finance Invest Ltd
None
None
Spas Borisov Videv
BMP Ltd.
Finance Invest Ltd.
Hydraulic elements and systems Plc. - Yambol,
representative of Maya-PL Ltd.;
Bulgarian Rose Plc. – Karlovo, representative of
Stara Planina Hold Plc.;
M+S Hydraulic Plc. – Kazanlak, representative of
Stara Planina Hold Plc.;
Boryana Jsc, Cherven Bryag – representative of
SPH Invest Jsc
Elhim-Iskra Plc. – Pazardzhik;
Garant 5 Ltd. – Plovdiv;
Finans Invest Ltd. – Plovdiv;
BMP Ltd. – Plovdiv;
Fazan Jsc. – Ruse;
Stefan Atanasov
Nikolov
B&V Coffee Ltd.
Radix Bulgaria Ltd.
Ves Trade Ltd.
Herbstmond Bulgaria Ltd
Fazan Jsc. – Ruse, representative of Garant 5
Ltd. – Executive Director;
Prisma-Lux Ltd.,
B&V Coffee Ltd.,
Radix Bulgaria Ltd.,
ALPA-2000 Ltd.,
Herbstmond Bulgaria Ltd,
Boryana Ltd.;
None of the members of the Board of Directors participates in companies as an unlimited liability
partner.
31.
Х. Additional information under Appendix 2 of Ordinance No 2 of the FSC
1. Information given in value or quantitative terms about the main categories of commodities, products
and/or provided services, with indication of their share in the sales revenues of the issuer as a whole and
the changes that occurred during the reporting fiscal year
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations and has only financial income.
2. Information about the revenues allocated by separate categories of activities, domestic and external
markets as well as information about the sources for supply of materials required for the manufacture of
commodities or the provision of services with indication of the degree of dependence in relation to any
individual seller or buyer/user, where if the share of any of them exceeds 10 per cent of the expenses or
revenues from sales, information shall be provided about every person separately about such person’s
share in the sales or purchases and his relations with the company
As a holding company, Stara Planina Hold Plc does not perform independent commercial
operations and has only financial income.
3. Information on concluded material transactions
In 2023, no transactions of significant importance for the activities of Stara Planina Hold Plc were
concluded, with the exception of lending to companies in the Group. Information regarding loans granted
to subsidiaries and associated enterprises is presented under item 9 of this section of the report.
On 18.07.2023 Stara Planina Hold Plc sold its shareholding, representing 45.00 % of the capital of
Ustrem Jsc., UIC: 206417771, Svishtov at the price of BGN 560 000. Buyer of the shares is the company
"Raykov" Ltd. UIC: 104697074. The investment in Ustrem Jsc was made by Stara Planina Hold Plc in
2017, with the shareholding in the amount of 45.00 % of the company's capital worth BGN 319 077. After
excluding Ustrem Jsc from the consolidation, we expect the consolidated net sales revenues of the
holding to fall by about BGN 1.8 million on an annual basis.
4. Information about the transactions concluded between the company and related parties during the
reporting period, proposals for conclusion of such transactions as well as transactions which are outside
its usual activity or substantially deviate from the market conditions, to which the issuer or its subsidiary
is a party, indicating the amount of the transactions, the nature of relatedness and any information
necessary for an estimate of the influence over the issuer’s financial status
Transactions concluded between Stara Planina Hold Plc and related parties during the reporting
period are only the loans granted to subsidiaries and associates, specified under item 9 of this section of
the Report.
There are no transactions outside the scope of the issuer's usual business activity or transactions
significantly different from the market conditions.
5. Information about events and indicators of unusual for the issuer nature, having substantial influence
over its operation and the revenues realized thereof and expenses made; assessment of their influence
over the results during the current year
As a holding company Stara Planina Hold Plc does not perform independent commercial
operations and the company has focused its activities primarily on the management of the subsidiaries
and associates in the Group. Therefore, a significant effect on the financial standing of Stara Planina
Hold Plc has the direct dependence on the financial standing of the subsidiaries and associates whose
operations are primarily export-oriented - mainly to the countries of the European Union.
In 2023, the operations of the companies in the group were conditioned by serious challenges
caused by the ongoing military conflicts in Ukraine and the Middle East, as well as the obstruction of the
transport route through the Red Sea, and the resulting negative consequences on the national, European
32.
and world economy. Along with difficulties and the possibility of disruption of supply chains, the conflicts
have already caused a significant increase in the prices of basic raw materials, appreciably lower growth
and even recession, mainly in European economies, strong inflationary pressures and a widespread
reduction in investment in most of the economic sectors.
On a national level, the business activity during the year was conditioned by the unceasing political
instability, which continues to be assessed as the main cause negatively affecting economic activity and
the business environment in Bulgaria.
There are no events and indicators of an unusual nature that had a significant impact on the issuer's
activity.
6. Information about off-balance kept transactions – nature and business objective, indication of the
financial impact of the transactions on the operation, if the risk and benefits of these transactions are
substantial for the assessment of the issuer’s financial status
There are no such transactions.
7. Information about holdings of the issuer, about its main investments in the country and abroad (in
securities, financial instruments, intangible assets and real estate), as well as the investments in equity
securities outside its economic group and the sources/ways of financing
Investments of Stara Planina Hold Plc are in securities and shareholdings in Bulgarian companies.
Information on the shareholdings of Stara Planina Hold Plc is provided under Section І of this Report -
Investment Portfolio Standing.
8. Information about the concluded by the issuer, by its subsidiary, in their capacity of borrowers, loan
contracts with indication of the terms and conditions thereof, including the deadlines for repayment as
well as information on the provided guarantees and assuming of liabilities
As of 31.12.2023 Stara Planina Hold Plc has no obligations under loan agreements.
An agreement for undertaking a subordinated contingent liability has been concluded between
Stara Planina Hold Plc and ZAD Asset Insurance AD. Pursuant to this agreement, Stara Planina Hold Plc
shall provide ZAD Asset Insurance AD upon request and upon occurrence of an activating event the
amount up to BGN 294 thousand.
An agreement for undertaking a subordinated contingent liability has been concluded between HES
Plc and ZAD Asset Insurance AD. Pursuant to this agreement, HES Plc shall provide ZAD Asset
Insurance AD, upon request and upon occurrence of an activating event the amount up to BGN 294
thousand.
Loan agreements concluded by the subsidiaries:
Fazan Jsc.: Loan agreement dated 25.04.2019 with Stara Planina Hold Plc granting the amount of
BGN 407 000 with maturity until 25.12.2025, last Annex dated 22.12.2023 at 2.5 % annual interest rate,
unpaid principal as of 31.12.2023 in the amount of BGN 407 thousand.
Fazan Jsc.: Loan agreement dated 09.01.2020 with Stara Planina Hold Plc granting the amount of
BGN 550 000 with maturity until 08.01.2026, last Annex dated 05.01.2024 at 2.5 % annual interest rate,
unpaid principal as of 31.12.2023 in the amount of BGN 550 thousand.
Fazan Jsc.: Loan agreement dated 18.01.2022 with Prizma Lux Ltd. UIC 121194709 granting BGN
340 thousand with maturity until 18.01.2024, last Annex dated 18.01.2023 at 4.8 % annual interest rate,
unpaid principal as of 31.12.2023 in the amount of BGN 235 thousand.
HES Plc: Loan agreement dated 12.07.2023 with Stara Planina Hold Plc - parent company crediting
its subsidiary HES Plc under the terms of Art. 114, para. 10, item 3 of the Public Offering of Securities
Act by providing a cash loan in the amount of BGN 4 000 000 (одки million) for a period until 30.06.2024
at an annual interest on the principal amount of the used loan in the amount of 3.5% starting from
13.07.2023; unpaid principal as of 31.12.2023 in the amount of BGN 4 million.
33.
Elhim-Iskra Plc: Loan agreement dated 15.11.2022 with Stara Planina Hold Plc - parent company
crediting its subsidiary Elhim-Iskra Plc under the terms of Art. 114, para. 10, item 3 of the Public Offering
of Securities Act by providing a cash loan in the amount of BGN 1 200 000 (one million and two hundred
thousand) for a period of five years at an annual interest on the principal amount of the used loan in the
amount of 2.5 % starting from 15.11.2022; unpaid principal as of 31.12.2023 in the amount of BGN 1 150
million.
SPH Invest Jsc: Loan agreement dated 01.11.2023 with Stara Planina Hold Plc - parent company
crediting its subsidiary SPH Invest Jsc under the terms of Art. 114, para. 10, item 3 of the Public Offering
of Securities Act by providing a cash loan in the amount of up to BGN 1 000 000 (one million) for a period
of two years, with an annual interest on the principal of the used loan in the amount of 3.5 % starting from
01.11.2023; unpaid principal as of 31.12.2023 in the amount of BGN 700 thousand.
9. Information on the loans granted by the issuer or its subsidiaries, provision of guarantees or assuming
of liabilities in total to one person or its subsidiary, including to related parties, indicating the name or title
and UIC of the person, the nature of relationship between the issuer or their subsidiaries and the
borrower, the amount of outstanding principal, interest rate, date of conclusion of the contract, repayment
period, amount of commitment, specific conditions other than those specified in this provision, and the
purpose for which they were granted, in case they are concluded as targets
Loan agreement dated 25.04.2019 granting Fazan Jsc, UIC:827182916 – subsidiary company, the
amount of BGN 407 thousand with maturity until 25.12.2025, last Annex as of 21.12.2023, at 2.5 % annual
interest rate, unpaid principal as of 31.12.2023 in the amount of BGN 407 thousand.
Loan agreement dated 09.01.2020 granting Fazan Jsc, UIC:827182916 – subsidiary company, the
amount of BGN 550 thousand with maturity until 08.01.2026, last Annex as of 05.01.2023, at 2.5% annual
interest rate, unpaid principal as of 31.12.2023 in the amount of BGN 550 thousand.
Loan agreement dated 01.07.2022 with Boryana Jsc, UIC: 114006352 – associated company,
including the following loans under the following parameters:
1. Loan in the amount of BGN 470 thousand with maturity until 16.09.2027 at 2.5% annual interest
rate, unpaid principal as of 31.12.2023 in the amount of BGN 430 thousand.
2. Loan to finance the purchase of machines in the amount of BGN 483 thousand with a maturity
until of 01.03.2027 at 2.5 % annual interest, unpaid principal as of 31.12.2023 in the amount of
BGN 112 thousand.
Loan agreement dated 01.10.2013 granting Leasing Company Jsc, UIC: 121126583 - a company
with a minority stake in the portfolio of Stara Planina Hold Plc, the amount of BGN 2 400 thousand with
maturity until 01.10.2025, last Annex as of 06.10.2023, at 2.5 % annual interest, unpaid principal as of
31.12.2023 in the amount of BGN BGN 4250 thousand.
Loan agreement dated 28.04.2015 granting Leasing Company Jsc, UIC: 121126583 - a company
with a minority stake in the portfolio of Stara Planina Hold Plc, the amount of BGN 6500 thousand with
maturity until 28.04.2025, last Annex as of 28.04.2023, at 2.5 % annual interest, unpaid principal as of
31.12.2023 in the amount of BGN BGN 5 000 thousand.
Loan agreement dated 12.03.2023 with Stara Planina Hold Plc - parent company crediting its
subsidiary HES Plc under the terms of Art. 114, para. 10, item 3 of the Public Offering of Securities Act
by providing a cash loan in the amount of BGN 4 000 000 (four million) for a period until 30.06.2024 at
an annual interest on the principal amount of the used loan in the amount of 3.5 % starting from
13.07.2023; unpaid principal as of 31.12.2023 in the amount of BGN 4 million.
Loan agreement dated 15.11.2022 with Stara Planina Hold Plc - parent company crediting its
subsidiary Elhim-Iskra Plc under the terms of Art. 114, para. 10, item 3 of the Public Offering of Securities
Act by providing a cash loan in the amount of BGN 1 200 000 (one million and two hundred thousand)
for a period of five years at an annual interest on the principal amount of the used loan in the amount of
2.5 % starting from 15.11.2023; unpaid principal as of 31.12.2023 in the amount of BGN 1 150 million.
34.
Loan agreement dated 01.11.2023 with Stara Planina Hold Plc - parent company crediting its
subsidiary SPH Invest Jsc under the terms of Art. 114, para. 10, item 3 of the Public Offering of Securities
Act by providing a cash loan in the amount of up to BGN 1 000 000 (one million) for a period of two years,
with an annual interest on the principal of the used loan in the amount of 3.5 % starting from 01.11.2023;
unpaid principal as of 31.12.2023 in the amount of BGN 700 thousand.
Loan agreements concluded by the subsidiaries:
Elhim-Iskra Plc. Loan agreement dated 04.10.2021 granted to ELBAT Jsc, Dolna Banya, UIC:
175407160 in the amount of BGN million with maturity until 31.12.2024 at 1.3 % annual interest, unpaid
principal as of 31.12.2023 in the amount of BGN 1 million. The relations between the company and the
borrower are commercial.
Dionisiy Jsc. Loan agreement dated 30.04.2019 with Vinprom Jsc., UIC: 104055430, in the amount
of BGN 35 thousand with maturity until 30.04.2023 at 3 % annual interest; purpose of granting: financing
the production operations. Fully paid as of 31.12.2023.
10. Information on the use of the funds from a new issue of securities carried out during the reported
period
During the reporting period has not been issued a new issue of securities.
11. Analysis of the ratio between the achieved financial results reflected in the financial statement for the
fiscal year, and previously published forecasts for these results
Stara Planina Hold Plc publishes monthly forecasts for the sales of the companies in the Group,
the gross profit and accordingly reports the real results compared to the forecasts. Forecasts are being
updated on a quarterly basis based on the reported results. The achieved financial results in the financial
statements for the financial year do not differ from the published forecast results.
12. Analysis and assessment of the policy concerning the management of the financial resources with
indication of the possibilities for servicing of the liabilities, eventual jeopardizes and measures which the
issuer has undertaken or is to undertake with a view to their removal
The policy of Stara Planina Hold is focused mainly on the management of the companies in its
portfolio. Free funds are used for financing the companies. The loans are specified under item 9 of this
section of the Report. An expression of this policy is also the deferred dividend payment to Stara Planina
Hold Plc in its capacity of a majority or major shareholder on the part of the respective companies.
Stara Planina Hold Plc services all of its liabilities in a timely manner hence there is no possible
threats which necessitate measures for their elimination.
13. Assessment of the possibilities for realization of the investment intentions, indicating the amount of
the available funds and stating the possible changes in the structure of the financing of this activity
The activity of Stara Planina Hold is focused mainly on the management of its current investments.
As of the date of this Report, there are no close plans for new investments to be made by the company.
The holding gives priority to the development of the companies in the portfolio.
14. Information about occurred during the reporting period changes in the basic management principles
of the issuer and its group of enterprises within the meaning of the Accountancy Act
Stara Planina Hold manages its investments by setting high but achievable goals in terms of quality,
output and profitability. Particular attention is being paid to the aspect of environmental protection, human
resources development and corporate and social responsibility. During the reporting period there are no
changes in the basic principles of management of Stara Planina Hold AD and the companies of the
economic group.
35.
15. Information about the main characteristics of the internal control system and risk management system
applied by the issuer in the course of preparation of the financial statements
In order to ensure an independent and objective assessment of the financial statements the annual
audit of the holding is performed by an independent statutory auditor. All financial statements are
prepared in accordance with the International Accounting Standards. The current financial and
accounting activity of the company is subject to periodic control and analysis by the management body.
The holding has an established practice for periodic discussion of the current financial results of the
companies included in its strategic investment portfolio, in order to ensure implementation of their
business programs and accurate analysis of the opportunities for future investment projects.
Detailed information on the internal control and risk management systems is presented under
Section IX, item 4 of this Report.
16. Information on the changes in the management and supervisory bodies during the reporting fiscal
year
Stara Planina Hold Plc has a one-tier management system. The Board of Directors includes 4
persons. During the reporting financial year, were not made changes in the members of the Board of
Directors and the representation of the holding company.
Detailed information on the Board of Directors is specified under Section IX, item 6 of the Report.
17. Information on the shares of the issuer held by the members of the management and control bodies
and the procurators, including the shares held by each of them separately and as a percentage of the
shares of each class, as well as options provided by the issuer on its securities - type and amount of the
securities on which the options are based, exercise price of the options, purchase price, if any, and the
term of the options
Member of the Board of Directors
Number of shares
as of 31.12.2022
% of the
capital
Number of shares
as of 31.12.2023
% of the
capital
Evgeniy Vasilev Uzunov
239342
1.14
256933
1.22
Vasil Georgiev Velev
420000
2.00
420000
2.00
Finance Invest Ltd
219408
1.04
219408
1.04
Stefan Atanasov Nikolov
7000
0.03
7000
0.03
The issuer has not provided options on securities to the members of the Board of Directors.
There are no special rights or restrictions for the members of the management body to acquire
shares of the company. They may freely acquire shares from the capital of the company on a regulated
securities market in compliance with the applicable provisions of the Bulgarian legislation and the
European regulation.
18. Information on the arrangements known to the company (including also after the closure of the fiscal
year), as a result of which in future periods may occur changes in the relative portion of shares or
debentures owned by shareholders or debenture holders – no such arrangements are known
The company is not aware of such arrangements.
19. Information about pending legal, administrative or arbitration proceedings relating to issuer’s liabilities
or receivables at amount at least 10 percent of its equity
Stara Planina Hold Plc is not involved in any pending legal, administrative or arbitration proceedings
as well as in any judgments or requests for dissolution or declaration of liquidation.
20. Information on the Investor Relations Director, including telephone and address for correspondence
36.
Investor Relations Director is Sofia Kirilova Argirova-Atanasova, tel. 02/9634161, 0879899469,
address for correspondence: 20, Frederic Joliot Curie Str. 9th floor, 1113 Sofia, Bulgaria,
investor@sphold.com.
XІ. Information under Appendix 3 of Ordinance No 2 of the FSC
1. Information on the securities that have not been admitted to trading on a regulated market in the
Republic of Bulgaria or another Member State
There are no shares of Stara Planina Hold Plc which have not been admitted to trading on a
regulated market in the Republic of Bulgaria or other Member State.
As of 31.12.2023 the registered capital of the company amounts to BGN 21000000, fully registered
and paid. The capital is distributed in 21000000 registered, dematerialized, ordinary (non-preferred),
freely transferable shares with a nominal value of BGN 1.00, with the right to one vote at the General
meeting of the shareholders, the right to dividend and liquidation share. All shares are of one class.
Pursuant to data received by Central Depository AD, as of 31 December 2023, Stara Planina Hold
Plc has 58 shareholders - legal entities, holding 61.78 % of the capital and 21839 shareholders - physical
persons holding 38.22 % of shares.
2. Information on the direct and indirect holding of 5 or more percent of the voting rights in the
company’s general meeting, including data about the shareholders, the amount of their holding and
the manner in which the shares are owned
Shareholders holding more than 5 % of the voting rights as of 31.12.2023:
• Potbul Invest Foundation - 4655400 shares, representing 22.17 % of the capital;
• Garant-5 Ltd - 2595972 shares, representing 12.36 % of the capital;
• ZUPF Allianz Bulgaria AD - 1376254 shares, representing 6.12 % of the capital.
3. Information about the shareholders with special control rights and description of these rights
There are no shareholders with special control rights.
4. Agreements among the shareholders, which are known to the company and which may result in
limitations over the transfer of shares or the voting right
The company is not aware of any arrangements among the shareholders which may lead to
restrictions on the transfer of shares or voting right.
5. Significant contracts of the company that give rise to action, are amended or terminated due to a
change in the control of the company upon implementation of obligatory tender offer and the
consequences thereof, except for the cases where disclosure of this information may cause serious
damages to the company; the exception under the previous sentence shall not apply in the cases
when the company is obliged to disclose the information by virtue of the law
There are such contracts.
Other information at the discretion of the company
The company considers that there is no other information that has not been publicly disclosed by
the company and which would be important for shareholders and investors in making an informed
investment decision.
Media
Stara Planina Hold Plc discloses statutory information to the public through information media X3
News.
37.
The inside information for Stara Planina Hold Plc under Art. 7 of Regulation (EU) № 596/2014 of
the European Parliament and of the Council of 16 April 2014 concerning the circumstances occurred in
2023 is published on the company's website in the News section - https://www.sphold.com/novini, as well
as in the X3News media -
http://www.x3news.com/?page=Company&target=InsiderInformation&BULSTAT=121227995&MESSAGE_T
YPE=2 through which the company publicly discloses inside information.
Vasil Velev, Executive Director
Digitally signed by Vasil
Georgiev Velev
Date: 2024.03.22 12:22:25
+02'00'
1
STARA PLANINA HOLD PLC
REPORT
on the Implementation of the Remuneration Policy for
the Members of the Board of Directors of
STARA PLANINA HOLD Plc
This Report has been prepared on the grounds of Art. 12 of Ordinance No. 48 of the FSC. The
report describes the way the Company implements the Remuneration Policy for the Members of the
Board of Directors adopted at the regular annual General Meeting of Shareholders in 2021.
The Report includes a remuneration policy implementation program for the next financial year
and an overview of the implementation of the remuneration policy throughout the reported year - 2023.
І. Implementation of the Remuneration Policy in the reporting period
Pursuant to the requirements of Ordinance No. 48, the Company shall provide the following
information in relation to the implementation of the Remuneration Policy for the Members of the Board
of Directors in 2023:
1. Information on the decision-making process in defining the remuneration policy, including if
applicable, information on the mandate and composition of the remuneration committee, the names of
external consultants whose services have been used in defining the remuneration policy
The Remuneration Policy for the Members of the Board of Directors has been developed in
compliance with the requirements set out in Ordinance No. 48 of the FSC while taking into account the
recommendations of the National Corporate Governance Code. The Policy was adopted at the regular
annual meeting of the Company’s shareholders in 2021.
According to the current Remuneration Policy for the Members of the Board of Directors, no
Remuneration Committee has been established in the Company, with the remuneration policy being
monitored by the independent members of the Board of Directors. No external advisors have been
involved in the development of the Policy.
2. Information on the relative weight of variable and fixed remuneration of the members of
management and supervisory bodies
Members of the Board of Directors are entitled to remuneration where the type, amount and
period of time it is payable for are to be specified by a resolution of the General Meeting of
Shareholders and is payable subject to the terms and conditions of the Management Contracts
concluded between these members and the Company.
Fixed remuneration comprises payments that are not calculated based on performance
assessment and includes remunerations of permanent nature that have been precisely defined or can
be unambiguously determined and is in compliance with the applicable legislation.
Variable remuneration is a component of the total remuneration in the form of profit-sharing
bonuses, incentives, benefits – related to retirement and other material incentives and financial
instruments which are awarded based on activity performance assessment criteria.
The members of the Board received variable remuneration for their activities in 2023 pursuant to
a decision of the General Meeting of Shareholders.
The proportion between the variable and fixed remuneration is 44/56. 40 % of the variable
remuneration, defined by a resolution of the general meeting of shareholders, is deferred for a period of
three years.
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3. Information on performance criteria, based on which stock options, company shares or other
variable compensation is granted together with an explanation on how the criteria under art. 14, para. 2
and 3 of Ordinance No. 48 of the FSC contribute to the long-term interests of the company
No stock options, including company shares, rights to acquire financial instruments have been
granted to the members of the Board of Directors.
Performance criteria for 2023, based on which another type of variable remuneration is possible
to be granted comprise the business results and other non-financial indicators set out in the company’s
Policy.
4. Explanation of the methods applied to assess whether the performance criteria are met
Fixed remunerations of the members of the Board of Directors are not set out based on
business performance. They are precisely defined or are unambiguously definable and in compliance
with the applicable legislation
Performance criteria for 2023, used as a basis for a possible payout of another type of variable
remuneration, are as follows:
1. Financial indicators:
(а) Level and dynamics of EBITDA (the earnings of the company and its subsidiaries before
interest, tax, depreciation and amortization): 2023 – BGN 64 432 thousand; 2022 – BGN 67 725
thousand; 2021 – BGN 48 600 thousand.
The achieved earnings of Stara Planina Hold Plc and its subsidiaries before interest, tax,
depreciation and amortization for the year 2023 reports a decrease by 4.86 % compared to the value
for the previous year and an increase by 32.58 % compared to 2021.
The 2023 net profit of the company amounts to BGN 9 295 thousand compared to BGN 8088
thousand for 2022 which is a 14.92 % growth compared to the previous year. The profit growth is due to
the reported profit growths of the companies in the Group.
(b) Level and dynamics of subsidiaries' sales:
At the end of 2023 – BGN 378 954 thousand; At the end of 2022 – BGN 375 256 thousand; At
the end of 2021 – BGN 278 366 thousand.
The change in the sales revenues in 2023 is a 1 % growth compared to the record high levels of
the year 2022 and an increase by 36.1% compared to 2021. The higher sales level in 2023 is mainly to
the net sales’ growths achieved by some of the companies in the Group, irrespective the negative
effects of the dynamic global changes and the overlapping crises related to the military conflicts in
Ukraine and the Middle East, the weakening of global demand in the context of tight monetary policy in
many countries and the deterioration of the terms of trade that led to the sharpest contraction in
industrial production in about three years in the second half of 2023.
(c) Level and dynamics of subsidiaries' receivables:
At the end of 2023 – BGN 69 486 thousand; At the end of 2022 – BGN 61 850 thousand; At the
end of 2021 – BGN 56 363 thousand.
In 2023, receivables represent 18.3 % of the sold production by the companies in the Group,
while in 2022 this share is 16.5 %, and in 2021 the share is 20.3 %. At the end of 2023, receivables
reported an increase by 12.4 % compared to the end of 2022 while the reported increase at the end of
2022 compared to 2021 was 9.7 %. The reported results as of 31.12.2023 indicate a trend for an
increase in the percentage share of receivables from the production sold on an annual basis. In addition
to the net increase in sales volume, an additional reason for the growth in accounts receivable
continued to be the increased deferred payment period applied to major customers.
Pursuant to art.4, item 7 of the Remuneration Policy, the assessment on the implementation of
the financial indicators for 2023 was made on the basis of the published consolidated public notice on
the financial standing as of 31.12.2023 and the corresponding values of the indicators are indicated in
accordance with the financial statement thereto.
2. Non-financial indicators as follows:
(a) Compliance with the principles of the National Corporate Governance Code;
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(b) Еnforcement and compliance with the adopted Code of Ethical Conduct, Information
Provision and Disclosure Policy and other internal rules and policies of the company.
Non-financial indicators: as evident from the annual report, based on the report on the
accomplishment of the particularly set initiatives, an assessment has been made of the overall
implementation of the National Corporate Governance Code on the part of the corporate board of Stara
Planina Hold Plc. In 2023 the activity of the Board of Directors has complied with the principles laid
down in the National Corporate Governance Code. The Ethical Code of Conduct, Information Provision
and Disclosure Policy and the other internal rules and policies of the company have been applied and
adhered to. The socially responsible policies and practices of the holding company and the companies
of the Group and the policies related to the sustainable development of the companies lead to creation
of a more favorable social environment and a better quality of life for the employed, annual
improvement of the necessary conditions and prerequisites for the fulfillment of the professional duties
of employees, improvement of good production practices, motivation and satisfaction with the working
conditions and remunerations received.
The results under item 1 report high levels, and the consolidated net sales revenues - record
values in the overall development of the holding and the companies in the Group, and with reference to
the non-financial indicators performance under item 2, we propose to the General Meeting of
Shareholders to distribute part of the company’s 2023 profit as an additional remuneration for each
member of the Board of Directors in the form of profit-sharing bonuses.
On the grounds of Art. 5, para. 3 of the Remuneration Policy, the payout of 40 % of the variable
remuneration defined in the resolution of the General Meeting of Shareholders shall be deferred for a
period of 3 years.
5. Clarification on the relations between remuneration and performance (results achieved)
There are performance criteria in place based on which a payout of another type of variable
remuneration is possible, however, no such has been applied.
6. Main payments and justification of the annual bonus payment scheme and/or any other non-
monetary additional compensations
At the 2019 regular annual General Meeting of Shareholders a resolution was adopted for a
permanent/fixed monthly remuneration to be paid to each member of the Board of Directors. The period
for which the resolution on the fixed remuneration amount shall apply is equal to the mandate of the
members of the Board of Directors. With the adoption of the Remuneration Policy for the members of
the Board of Directors at the regular annual general meeting of shareholders held on 20.05.2021,
effective as of 01.06.2021, a new amount of the permanent remuneration of each member of the Board
of Directors was determined. In 2023, the members of the Board of Directors were paid a fixed monthly
remuneration in accordance with the resolution adopted at the regular annual General Meeting of the
Shareholders held in 2019 and the Remuneration Policy for the members of the Board of Directors,
adopted at the regular annual general meeting of shareholders, held on 20.05.2021.
7. Description of the main characteristics of the supplementary voluntary pension insurance
scheme together with information on the paid and / or payable contributions by the company in favor of
the respective Board member for the respective financial year, if applicable
No provision has been made for additional voluntary pension insurance of the Board members.
8. Information for periods of delayed payment of variable remuneration
Payment of 40 % of the variable remuneration defined in the resolution of the General Meeting
of Shareholders is deferred for a period of 3 years as payout of the deferred part of the variable
remuneration is to be made proportionately over the deferred period.
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9. Information on the severance payment policy
Early contract termination compensation is set out in the Remuneration Policy for the Members
of the Board of Directors adopted by the General Meeting of Shareholders and it is dependent on the
amount of the fixed remunerations paid over the last 24 months.
No compensation is due where the dismissal is due to poor performance or culpable conduct on
the part of the Board member.
Management contracts concluded with members of the Board of Directors and the Executive
Director on behalf of the Company mandatorily include a clause providing the Company with an option
to demand a payback of the variable remuneration paid out based on data which have subsequently
been found to be false. Resolution to demand payback shall be taken by the General Meeting of
Shareholders of the Company.
10. Information on the period during which shares cannot be transferred and stock options
cannot be exercised, in case of variable remuneration based on shares
No provision has been made for remunerations comprising shares, including company shares
and rights to acquire financial instruments.
11. Information on the policy to retain a number of shares until the end of the mandate under
item 10 of the members of the supervisory and managing boards
The Company does not have such a policy.
12. Information on the contracts of the members of the managing and supervisory boards,
including the terms of the individual contracts, termination notice periods and details on any
compensation and/or other redundancy payouts
The contract with each member of the Board of Directors is concluded for a period until the end
of the mandate for which he was elected by the General Meeting of Shareholders. During the reporting
financial year, the company has not terminated contract with a member of the Board of Directors.
In case of early termination of a management contract with a member of the Board of Directors,
respectively with an Executive Director, the total amount of compensations due in relation to the early
termination, as well as payments related to the notice period may not exceed the amount of the paid
annual remuneration for the last 24 months.
13. Full amount of the remunerations and other financial incentives for the members of the
managing and supervisory bodies for the respective financial year
The full amount of the remunerations of the Board members for the financial 2023 stands at a
total of BGN 1474254.36.
The remunerations received by the members of the Board of Directors, including from
subsidiaries, are as follows:
• Evgeniy Vasilev Uzunov – BGN 410563.59
• Vasil Georgiev Velev – BGN 410563.59
• Finance Invest Ltd. – BGN 326563.59
• Stefan Atanasov Nikolov – BGN 326563.59.
The deferred part of the total amount of the remunerations stands at a total of BGN 258835.16
as follows:
• Evgeniy Vasilev Uzunov – BGN 64708.79
• Vasil Georgiev Velev – BGN 64708.79
• Finance Invest Ltd. – BGN 64708.79
• Stefan Atanasov Nikolov – BGN 64708.79
14. Information on the remuneration of each person who had been a member of a managing or
supervisory body of a public company for a certain period in the respective financial year
5
Not applicable for the reporting financial year.
15. Information in respect of shares and/or stock options and / or other incentive schemes based
on shares
The Remuneration Policy for the Members of the Board of Directors adopted by the General
Meeting of Shareholders provides for an option for variable remunerations in the form of shares, stock
options, rights to acquire shares or other financial instruments to be provided. No such options have
been provided so far.
16. annual change in the remuneration, the company’s results and the average amount of the
remunerations of the company’s full-time employees who are not directors, during the previous at least
five financial years, presented together in a way that allows comparison
17. information on exercising the possibility to demand a refund of the variable remuneration
During the reporting financial year, there were no grounds for exercising the possibility to
demand a refund of the variable remuneration from a member of the board of directors, therefore such
an opportunity was not exercised.
18. information on all deviations from the remuneration policy implementation procedure in
connection with extraordinary circumstances under Art. 11, para. 13 of Ordinance 48 of the FSC,
including an explanation of the extraordinary circumstance’s nature and an indication of the specific
components that have not been applied
The Remuneration Policy does not specify extraordinary circumstances under which the
company may temporarily not apply part of the policy and during the reporting financial year no
deviations from the procedure for its implementation have been made.
ІІ. Remuneration Policy Implementation Program for the next financial year
At the regular annual general meeting of shareholders in 2021 a new Remuneration Policy for
the members of the Board of Directors was adopted, in accordance with the amendments to Ordinance
№ 48 of the FSC.
The Remuneration Policy aims to support the long-term business goals of the company and
encourage behavior which facilitates value creation for the shareholders while ensuring competitive
level of the remunerations, sufficient to attract and retain directors possessing qualities required for the
successful management and development of the company.
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The Policy has been developed to be implemented over a long period of time and is subject to
review every four years, except when significant amendments or supplements are necessary.
Amendments to the Policy approved by the General Meeting of Shareholders shall be adopted as per
the rules for its elaboration and approval.
The Board of Directors considers that the Policy principles for setting up the remunerations are
at this point effective considering the financial results achieved in the reporting period. Their
implementation will continue to be a priority of the Board of Directors.
The Board of Directors is responsible for the prompt announcement of the Remuneration Policy
adopted by the General Meeting of Shareholders and any subsequent amendments thereto.
At its meeting, the Board of Directors reviewed the Policy in terms of the remuneration of the
executive directors. The Board of Directors has given its recommendations in setting up the employees’
remunerations occupying other management positions in the administration of the company. It monitors
the level and structure of the employees’ remunerations occupying other management positions in the
administration based on information provided by the executive director of the company and ensures
that the remuneration of each executive member of the board of directors is fairly defined compared to
the remuneration of other board members and the senior managers in the administration.
This report was approved at a meeting of the Board of Directors held on 22.03.2024.
Executive Director:
Vasil Velev
Digitally signed by Vasil
Georgiev Velev
Date: 2024.03.22 12:22:57
+02'00'
DECLARATION
under Art. 100n, para. 4, item 4 of the POSA
The undersigned Vasil Georgiev Velev - Executive Director of Stara Planina Hold Plc
certify that, to the best of my knowledge:
(a) the annual financial statements on the activities of Stara Planina Hold Plc for the
financial year 2023, prepared in accordance with applicable accounting standards, accurately and
fairly reflect the information on the assets and liabilities, financial standing and profit or loss of the
issuer;
(b) the annual activity report of Stara Planina Hold Plc for the financial year 2023 provides
a reliable overview of the issuer's development and performance, as well as the standing of the
issuer, together with a description of the main risks and uncertainties to be faced.
Declarer: Vasil Velev
DECLARATION
under Art. 100n, para. 4, item 4 of the POSA
The undersigned Kremena Gantcheva Dulgerova – Chief Accountant of Stara Planina
Hold Plc certify that, to the best of my knowledge:
(a) the annual financial statements on the activities of Stara Planina Hold Plc for the
financial year 2023, prepared in accordance with applicable accounting standards, accurately and
fairly reflect the information on the assets and liabilities, financial standing and profit or loss of the
issuer;
(b) the annual activity report of Stara Planina Hold Plc for the financial year 2023 provides
a reliable overview of the issuer's development and performance, as well as the standing of the
issuer, together with a description of the main risks and uncertainties to be faced.
Declarer: Kremena Dulgerova
Kremena
Gantcheva
Dulgerova
Digitally signed by Kremena
Gantcheva Dulgerova
Date: 2024.03.22 12:18:12
+02'00'
Digitally signed by Vasil
Georgiev Velev
Date: 2024.03.22 12:23:24
+02'00'
Attn.
The shareholders
of STARA PLANINA HOLD PLC
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REPORT ON THE AUDIT OF THE FINANCIAL STATEMENTS
Opinion
We have audited the financial statements of Stara Planina Hold PLC (the Company), including the
statement of financial position as of 31.12.2023 and the profit and loss, and other comprehensive income
statements, the statements on changes in equity and the cash flows statements for the year then ended and the
explanatory notes to the financial statements including summary of the significant accounting policies.
In our opinion, the enclosed financial statements present fairly, in all material aspects, the financial
position of the Company as of 31.12.2023 and its financial results from business operations and its cash
flows for the year then ended, in accordance with the International Financial Reporting Standards (IFRS)
adopted for use in the European Union (EU).
Basis for the opinion
We conducted our audit in accordance with the International Audit Standards (IAS). Our
responsibilities under these standards are further described in the section of our report "Responsibilities of
the auditor for the audit of the financial statements". We are independent from the Company in accordance
with the Code of Ethics for Professional Accountants of the International Ethic Standards for Accountants
Council (the Code of IESAC), together with the ethical requirements of the Independent Financial Audit Act
(IFAA), applicable to our audit of the financial statements in Bulgaria, while we have also fulfilled our other
ethical responsibilities in accordance with the IFAA and the Code of IESAC. We consider that the audit
evidence we obtained as sufficient and appropriate to provide a basis for our opinion.
Key audit issues
The key audit issues are those which as per our professional judgment were of the greatest significance
in the audit of the financial statements for the current period. These issues are reviewed as part of our audit
of the financial statements as a whole and the formation of our opinion thereof, as we do not provide a
separate opinion on these issues. Key issues are indicated in the "Responsibilities of the auditor for the audit
of the financial statements" section of this report.
Other information different from the financial statements and the auditor report thereon
The management is responsible for this other information. The other information includes an activity
report (incl.) and a corporate governance declaration and a Report on the implementation of the
Remuneration Policy, prepared by the management in accordance with Chapter seven of the Accountancy
Act but does not include the financial statements and our auditor report thereon which we received prior to
the date of our auditor report.
Our opinion on the financial statements does not include the other information and we do not express
any conclusion of certainty related thereto, unless explicitly specified in our report and to the extent stated.
With regard to our audit of the financial statements, our responsibility is to read this other information
and thus to consider whether this other information is materially inconsistent with the financial statements or
with our knowledge, gained during the audit, or otherwise it seems to contain substantially incorrect
reporting. If based on the work we have performed, we conclude that there is materially incorrect reporting
in this other information, we are required to report on this fact.
We have nothing to report with this regard.
Responsibility of the management and the persons engaged with general management in terms
of the financial statements
The management is responsible for the preparation and the fair presentation of these financial
statements in accordance with the IFRS applicable in the EU and for such an internal control system as the
management has considered being necessary to ensure the preparation of financial statements that are free
from material misstatements, whether due to fraud or error.
When preparing the financial statements, the management is responsible for the assessment of the
Company's ability to continue operating as a going concern, disclosing, when applicable, any issues related
to the going concern assumption and using the accounting basis on the grounds of the going concern
assumption unless the management intends to liquidate the Company or to cease its operations, or if the
management does not actually have any alternative but to do so.
The persons engaged with general management are responsible for supervising the financial reporting
processes of the Company.
The management is responsible for the fact that the electronic format of the separate financial
statements of the Company for the year ending on December 31, 2023, comprised in the attached electronic
file „8945006HQ7VN30FUR531-20231231-EN-SEP.zip“ has been prepared in all material aspects in
accordance with the requirements of the Commission Delegated Regulation (EU) 2019/815 of 17 December
2018 supplementing Directive 2004/109 / EC of the European Parliament and of the Council ("EEEF
Regulation").
Responsibilities of the auditor for the audit of the financial statements
Our objectives are to obtain reasonable assurance on whether the financial statements as a whole are
free from material misstatements, whether due to fraud or error, and to issue an auditor report that includes
our audit opinion. Reasonable assurance is a high level of assurance but it does not guarantee that an audit
conducted in accordance with the IAS will always reveal materially incorrect reporting whenever such
reporting exists. Incorrect reporting may occur as a result of fraud or error and are considered to be material
if it could reasonably be expected that they, individually or in the aggregate, could influence the economic
decisions of users based on these financial statements.
As part of the audit in accordance with the IAS, we apply professional judgment and maintain
professional skepticism during the entire audit. We also:
- identify and assess risks from material misstatements in the financial statements, whether due to
fraud or error, develop and implement audit procedures in response to these risks and obtain sufficient and
appropriate audit evidence to provide a basis for our opinion. The risk for a given significant misstatement,
resulting from fraud, not to be revealed is higher than the risk of material misstatements resulting from error
due to the fact that fraud may involve secret collusions, falsification, deliberate omissions, statements
intended to mislead the auditor as well as disregard or circumvention of the internal control.
- obtain understanding of the internal control related to the audit in order to develop audit procedures
that are appropriate under the particular circumstances but not for the purpose of expressing an opinion on
the effectiveness of the Company’s internal control.
- evaluate the appropriateness of accounting policies used and the reasonableness of the accounting
estimates and related disclosures made by the management.
- reach a conclusion on the appropriateness of the accounting basis, used by the management, based on
the going concern assumption, and, based on the audit evidence obtained as to whether there is a material
uncertainty related to events or conditions that might provoke significant doubts on the Company's ability to
continue functioning as a going concern. If we reach the conclusion that there is a significant uncertainty, we
are required to draw attention in our audit report to the disclosures related to this uncertainty in the financial
statements or in the event that these disclosures are inadequate to modify our opinion. Our conclusions are
based on audit evidence obtained before the date of our auditor report. Future events or conditions may,
however, cause the Company to suspend its operations as a going concern.
- evaluate the overall performance, structure and contents of the financial statements, including the
disclosures and whether the financial statements present material transactions and events in a manner that
achieves fair presentation.
REPORT RELATED TO OTHER LEGAL AND REGULATORY REQUIREMENTS
Additional issues subject to reporting pursuant to the Accountancy Act and the Public Offering
of Securities Act
In addition to our responsibilities and reporting under the International Audit Standards described
above under the section "Information other than the financial statements and the auditor report thereon" in
terms of the activity report and the corporate governance declaration, we have also implemented procedures,
added to those required under the International Audit Standards as per the Guidelines of the professional
organization for all Certified Public Accountants and Registered Auditors in Bulgaria – Institute of Certified
Public Accountants (ICPA), issued on 29.11.2016 (approved by its Managing Board on 29.11.2016). These
procedures concern verifications on the availability as well as verifications on the form and contents of such
other information with the objective to assist us in forming our opinion on whether the other information
includes disclosures and reports provided for under Chapter Seven of the Accountancy Act and the Public
Offering of Securities Act (Art. 100n, para. 10 of the Public Offering of Securities Act in relation to Art.
100n, para. 8, item. 3 and 4 of the Public Offering of Securities Act) as well as art. 100n, para 13 in relation
to Art.116c, para.1 of the Public Offering of Securities Act, applicable in Bulgaria.
Opinion with regard to Art. 37, Para. 6 of the Accountancy Act
Based on the procedures performed, our opinion is that:
a) The information included in the activity report for the financial year for which the financial
statements are prepared is consistent with the financial statements.
b) The activity report is prepared in accordance with the requirements of Chapter seven of the
Accountancy Act and Art. 100n, Para. 7 of the Public Offering of Securities Act.
c) The corporate governance declaration for the financial year for which the financial statements are
prepared presents the information as required by Chapter seven of the Accountancy Act and Art. 100n, Para.
8 of the Public Offering of Securities Act.
d) The report on the implementation of the Remuneration Policy for the financial year for which the
financial statements are prepared is presented and meets the requirements set out in the ordinance under Art.
116c, para. 1 of the Public Offering of Securities Act.
Opinion with regard to Art. 100n, Para. 10 and in relation to Art. 100n, Para 8, Items 3 and 4 of the
Public Offering of Securities Act
Based on the audit procedures performed and the acquired knowledge and understanding of the
company's activities and the environment it operates in, our opinion is that the description of the main
characteristics of the internal control and risk management systems of the company in relation to the
financial reporting process, which is part of the activity report (as part of the contents of the corporate
governance declaration) and the information under Article 10, Paragraph 1, Letters "c", "d", "f", "h" and "i"
of Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 regarding take-
over offers, does not contain materially incorrect reporting.
Additional reporting on the financial statements audit in connection with Art. 100n, Para. 4,
Item 3 of the Public Offering of Securities Act
Statement with regard to Art. 100n, Para. 4, Item 3, letter "b" of the Public Offering of Securities Act
Information on related parties’ transactions is disclosed under Enclosure to the financial statements.
Based on the audit procedures that we conducted in terms of the related parties’ transactions as part of our
audit of the financial statements as a whole, no facts, circumstances or other information has become known
to us, based on which to conclude that the related parties’ transactions are not disclosed in the accompanying
financial statements for the year ended on 31.12.2023 in all material aspects, in accordance with IAS 24
"Related Party Disclosures". The results from our audit procedures on related parties’ transactions have been
reviewed in the context of forming our opinion on the financial statements as a whole, but not to express a
separate opinion on related parties’ transactions.
Statement with regard to Art. 100n, Para. 4, Item 3, letter "c" of the Public Offering of Securities Act
Our responsibilities for the audit of the financial statements as a whole, described in the section of our
report "Responsibilities of the auditor for the audit of the financial statements" include an assessment on
whether the financial statements present material transactions and events in a manner that achieves fair
presentation. Based on the audit procedures performed on essential transactions underlying the financial
statements for the year ended on 31.12.2023, no facts, circumstances or other information has become known
to us, based on which to conclude that there are cases of materially incorrect reporting and disclosure in
accordance with the requirements of IFRS adopted by the European Union. The results from our audit
procedures on the material to the financial statements transactions and events of the Company are reviewed
by us in the context of forming our opinion on the financial statements as a whole, but not to express a
separate opinion on these material transactions.
Statement with regard to Commission Delegated Regulation (EU) 2019/815 of 17 December 2018
supplementing Directive 2004/109/EC of the European Parliament and of the Council ("EEEF Regulation")
In addition to our responsibilities and our reporting under IAS, described above in the section
"Responsibilities of the auditor for the audit of the financial statements", we have followed the procedures in
accordance with the "Guidelines on the expression of the Audit Opinion with regard to the implementation
of the Single European Electronic Format (EEEF) for the financial statements of companies whose securities
are admitted to trading on a regulated market in the European Union (EU)" of the professional organization
of registered auditors in Bulgaria, the Institute of the Certified Public Accountants (ICPA)". These
procedures concern verification of the format and whether the readable part of this electronic format
corresponds to the audited separate financial statements and expressing an opinion regarding the compliance
of the electronic format of the separate financial statements of Stara Planina Hold Plc for the year ended on
31 December 2023 attached in the electronic file „8945006HQ7VN30FUR531-20231231-EN-SEP.zip“ with
the requirements of Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing
Directive 2004/109 / EC of the European Parliament and of the Council by means of regulatory technical
standards to define the uniform electronic format for reporting ("EEEF Regulation"). Based on these
requirements, the electronic format of the separate financial statements included in the annual separate report
on the activities under Art. 100n, para. 4 of the Public Offering of Securities Act must be provided in
XHTML format.
Based on the performed procedures, our opinion is that the electronic format of the individual financial
statements of Stara Planina Hold AD for the year ending December 31, 2023, contained in the attached
electronic file „8945006HQ7VN30FUR531-20231231-EN-SEP.zip“, has been prepared in all material
aspects in accordance with the requirements of the EEEF Regulation.
Reporting under Art. 10 of Regulation (EC) No 537/2014 in relation to the requirements of Art.
59 of the Independent Financial Audit Act
Pursuant to the requirements of the Independent Financial Audit Act in relation to Art. 10 of
Regulation (EC) No 537/2014, we further report the following information.
- Katya Zlatareva as a key auditor was appointed as a statutory auditor of the financial statement for
the year ended on 31.12.2023 of Stara Planina Hold Plc ("the Company") at the General Meeting of
Shareholders held on 8.06.2023 for a period of one year.
- The audit of the financial statements for the year ended on 31.12.2023 of the Company represents a
third full continuous commitment to a statutory audit of this enterprise, performed by us.
- We confirm that our audit opinion is consistent with the additional report provided to the Audit
Committee of the Company in accordance with the requirements of Art. 60 of the Independent Financial
Audit Act.
- We confirm that we have not provided the banned services except for the audit as specified under
Art. 64 of the Independent Financial Audit Act.
- We confirm that we have preserved our independence in relation to the Company when conducting
the audit.
Responsible auditor:
/Katya Zlatareva, registered auditor, diploma No. 0610/
1000, Sofia, 52, Simeon Radev Str.
Date: 29.03.2024
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by
KATYA RAYKOVA
ZLATAREVA
Date: 2024.03.29
07:26:10 +02'00'
TO
THE SHAREHOLDERS OF
STARA PLANINA HOLD AD
DECLARATION
PURSUANT TO ART. 100N, PARA.4, ITEM.3 OF
THE PUBLIC OFFERING OF SECURITIES ACT
The undersigned Katya Zlatareva, registered auditor, diploma № 0610, appointed statutory auditor of
the financial statements for the year ended 31.12.2023 of Stara Planina Hold Plc (the Company) by the
General Meeting of Shareholders held on 8.06.2023, for period of one year, based on Art. 100n, para. 4, item
3 of the Public Offering of Securities Act I DECLARE that:
1. Art. 100n, para. 4, item 3, letter “a” of the POSA: In our opinion, the attached separate annual
financial statements, prepared in accordance with the applicable accounting standards, accurately and fairly
reflect the information on the assets and liabilities, financial condition and profit or loss of the Company as
of 31.12.2023, in accordance with International Financial Reporting Standards from the European Union.
2. Art. 100n, para. 4, item 3, letter “b” of the POSA: In our opinion, the information relating to
related party transactions has been properly announced and disclosed in accordance with applicable
accounting standards. Based on our audit procedures on related party transactions as part of our audit of the
annual financial statements as a whole, we have not become aware of any facts, circumstances or other
information on the basis of which we can conclude that related party transactions are not disclosed in the
attached separate annual financial statements for the year ended on 31 December 2023, in all material
aspects, in accordance with the requirements of IAS 24 “Related Party Disclosures”. The results of our audit
procedures on related party transactions are reviewed by us in the context of forming our opinion on the
annual financial statements as a whole, and not for the purpose of expressing a separate opinion on related
party transactions.
3. Art. 100n, para. 4, vol. 3, p. "C" of the POSA: In our opinion, the information relating to the
material transactions for the public company for the respective reporting period is duly disclosed in the notes
to the financial statements. Our responsibilities for auditing the separate annual financial statements as a
whole, described in the section Responsibilities of the Auditor for the Audit of the Financial Statements,
include assessment on whether the separate annual financial statements present material transactions and
events in a manner that provides reliable presentation. Based on our audit procedures on the material
transactions underlying the separate annual financial statements for the year ended on 31 December 2023, we
are not aware of any facts, circumstances or other information on the basis of which we can conclude that
there are cases of material misstatement in accordance with the applicable requirements of IFRS adopted by
the European Union. The results of our audit procedures on the material transactions and events of the
Company are considered by us in the context of forming our opinion on the separate annual financial
statements as a whole, and not for the purpose of expressing a separate opinion on these material
transactions.
Certifications made with this declaration should be considered only in the context of the audit report
issued by us as a result of the independent financial audit of the separate annual financial statements of Stara
Planina Hold Plc for the reporting period ending on December 31, 2023, with the date of the auditor's report
March 29, 2024. This declaration is intended only for the above addressee and has been prepared solely in
compliance with the requirements of Art. 100n, para. 4, item 3 of the Public Offering of Securities Act and
should not be taken as a substitute for our conclusions included in the audit report issued by us on March 29,
2024 in relation to the issues covered by Art. 100n, item 3 of the Public Offering of Securities Act.
Responsible auditor: /Katya Zlatareva, registered auditor, diploma No. 0610/
1000, Sofia, 52, Simeon Radev Str.
Date: 29.03.2024
KATYA
RAYKOVA
ZLATAREVA
Digitally signed by KATYA
RAYKOVA ZLATAREVA
Date: 2024.03.29 07:27:04
+02'00'