Industrial Holding Bulgaria Plc
Interim Separate Financial Statements
For the period ended 31 December 2013
INDUSTRIAL HOLDING BULGARIA PLC
STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDED 31 DECEMBER 2013
In BGN thousand
Note
Income from interest, dividends and investment
transactions
Other operating income
Payroll costs
Costs of hired services
Other operating expenses
8,368
18,302
26,670
22,203
134
22,437
7
(584)
(393)
(692)
(536)
(268)
(160)
Net operating income
9
9
Profit before taxation
Tax expenses
Profit for the period
10
Other comprehensive income for the period, net of
taxes
Other comprehensive income that is not subject to
reclassification to profit or loss in subsequent periods
Actuarial losses on non-funded pension plan
Total comprehensive income for the period, net of
taxes
Basic earnings per share
Basic net earnings per share (in BGN)
31.12.2012
5
6
8
Financial income
Financial expenses
31.12.2013
25,001
21,473
(2,130)
(1,845)
22,871
19,619
(1,824)
21,047
(1,337)
18,282
(9)
21,038
17 (а)
Diluted Earnings Per Share (in BGN)
18,282
0,3114
0,2689
0,2284
0,2520
The Notes on pages 2 to 34 are an integral part of these financial statements.
The financial statements were approved for publication by the Managing and Supervisory Boards on 29
January 2014.
Daneta Zheleva
Chief Executive Officer
Ms. Toshka Vassileva
Prepared by
5
INDUSTRIAL HOLDING BULGARIA PLC
STATEMENT OF FINANCIAL POSITION
FOR THE PERIOD ENDED 31 DECEMBER 2013
In BGN thousand
Note
31.12.2013
31.12.2012
324
130,325
1,584
1,078
62,853
1
196,165
365
124,143
1,584
1,275
57,497
3
654
3,963
85
104
4,809
200,974
3
74
2,104
242
2,054
4,477
189,341
Assets
Non-current assets
Non-current tangible and intangible assets
Investments in subsidiaries
Investments in associates
Other long-term receivables
Loans to related parties
Deffered tax assets
Total non-current assets
11
12
13
14
21
Current assets
Materials
Receivables from related parties
Long-term loans of related parties
Other receivables
Cash and cash equivalent
Total current assets
TOTAL ASSETS
21
21
15
16
EQUITY AND LIABILITIES
Equity
Share Capital
Premium reserves
Shares buy-back
Reserves
Retained earnings
Total equity
17
17
17
17
67,978
30,604
(771)
7,989
60,396
166,196
67,978
30,604
7,398
39,949
145,929
Non-current liabilities
Debenture loan
Long-term payables
Total non-current liabilities
18
19
29,912
19
29,931
6
6
18
20
21
401
100
4,076
270
4,847
34,778
200,974
21,946
18,401
2,120
939
43,406
43,412
189,341
Current liabilities
Debenture loan
Trade and other payables
Payables to related parties
Tax payables
Total current liabilities
Total liabilities
TOTAL EQUITY AND LIABILITIES
184,864
The Notes on pages 2 to 34 are an integral part of these financial statements.
The financial statements were approved for publication by the Managing and Supervisory Boards on 29
January 2014.
Daneta Zheleva
Chief Executive Officer
In BGN thousand
Ms. Toshka Vassileva
Prepared by
Note
31.12.2013
31.12.2012
2
INDUSTRIAL HOLDING BULGARIA PLC
STATEMENT OF FINANCIAL POSITION
FOR THE PERIOD ENDED 31 DECEMBER 2013
Operating cash flow
Receivables from sale of shares and other trade
receivables
Dividends received
Loans repaid
Interest received
Payments related to acquisition of shares and stocks
Loans granted
Payments related to payroll
Foreign exchange gain (loss)
Profit taxes paid
Cash flows related to unexercised rights of
shareholders
Payments to suppliers, others
Net operating cash flow
Investment cash flow
Purchase sale of non-current tangible assets
Sale of non-current tangible assets
Net investment cash flow
226
4,009
2,686
283
(6,182)
(6,506)
(556)
(3)
(2,492)
14,791
6,254
20,804
578
(32,497)
(5,606)
(522)
(22)
(563)
(9,120)
(252)
(601)
2,466
(129)
(129)
(286)
(286)
(492)
Financial cash flow
Payment for redemption of securities
Received debenture loan
(771)
30,000
(21,714)
(2,131)
3,290
(67)
(1,308)
Repaid debenture loan
Interest paid
Received cash loans and accepted deposits
Repaid cash loans, released deposits and interest paid
Other payments
Net financial cash flow
Increase/ (decrease) in cash and cash equivalents
Cash and cash equivalents on 1 January
Cash and cash equivalents on 31 December
16
(1,739)
1,850
(44)
(247)
7,299
(180)
(1,950)
2,054
104
2,000
54
2,054
The Notes on pages 2 to 34 are an integral part of these financial statements.
The financial statements were approved for publication by the Managing and Supervisory Boards on 29
January 2014.
Daneta Zheleva
Chief Executive Officer
Ms. Toshka Vassileva
Prepared by
3
INDUSTRIAL HOLDING BULGARIA PLC
EQUITY STATEMENT
FOR THE PERIOD ENDED 31 DECEMBER 2013
In BGN thousand
Note Share capital Premiu Share buyback
m
reserves
Reserves
Retained
earnings
Total
6,801
34,632
140,015
-
5,914
5,914
-
-
-
-
-
5,914
5,914
Transactions
with
shareholders
reported in the Statement of Equity
Distribution of retained profit to
reserve
Capital increase
Total transactions with shareholders
Balance as at 31 December 2012
17
67,978 30,604
-
597
597
7,398
(597)
(597)
39,949
145,929
Balance as at 1 January 2013
67,978 30,604
-
7,398
39,949
145,929
Balance as of 1 January 2012
Comprehensive income for the period
Profit for the period
Other comprehensive income for the
period
Total comprehensive income for the
period
Total comprehensive income for the
period
Profit for the period
Other comprehensive income for the
period
Total comprehensive income for the
period
Transactions
with
shareholders
reported in the Statement of Equity
Transfer of retained profit to reserve
Issue of equity
Total transactions with shareholders
Balance as of 31 December 2013
17
67,978 30,604
-
-
-
-
-
-
-
-
-
21,047
21,047
-
-
-
(9)
(9)
-
-
-
21,038
21,038
591
591
7,989
(591)
(591)
60,396
(771)
(771)
166,196
67,978 30,604
(771)
(771)
The Notes on pages 2 to 34 are an integral part of these financial statements.
The financial statements were approved for publication by the Managing and Supervisory Boards on 29
January 2014.
Daneta Zheleva
Chief Executive Officer
Ms. Toshka Vassileva
Prepared by
6
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
1. Corporate information
The financial statements for the year ending on 31 December 2013 were approved for publication by the
Managing and Supervisory Boards on 29 January 2014.
Industrial Holding Bulgaria Plc (the Company or the Holding) is a joint-stock company registered in the
Republic of Bulgaria – company file No 13081 of 1996 having its seat in Sofia and address of management at 42
Damyan Gruev Str., Sofia. The financial year ends on 31 December.
Initially the Company was established as a privatization fund in compliance with the Law on Privatization Funds
under the name of Privatization Fund Bulgaria AD.
The General Meeting of Shareholders made a decision on rearrangement of the activities of Privatization Fund
Bulgaria AD as a holding company and change of the name of the latter to Industrial Holding Bulgaria Plc at a
session held on 27 February 1998. The capital of the Company amounts to BGN 67,978,543. The Company has
a two-tier system of management including a Management Board and a Supervisory Board.
The scope of operations of the Company includes acquisition, management, assessment and sale of shares in
Bulgarian and foreign companies, acquisition, assessment and sale of patents, cession of licenses for usage of
patents of companies in which the Company holds interests, financing of companies in which the Company
holds interests, as well as any other activity not prohibited by law.
The activity of the Company is bound by no term or other termination clause.
The Company is entered into the BULSTAT Unified Public Classifier of Economic Entities under Identification
No BG 121631219 and is registered with the State Public Social Security Office. The Company is also registered
in compliance with the Law on Value Added Tax. The shares of the Company are traded on the Bulgarian Stock
Exchange AD, Sofia.
2.1 Basis of preparation
These Financial Statements have been prepared based on historical cost.
These financial statements are presented in BGN. The functional currency of the Company is the Bulgarian lev.
The financial data are given in thousands of BGN, if not stated otherwise.
Compliance
These Financial Statements have been prepared in compliance with the International Financial Reporting Standards
(IFRS) adopted by the European Union (EU).
7
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
2.1 Basis of preparation (continuation)
Compliance (continuation)
This is a separate financial statement where investments in subsidiaries and associates are presented at
acquisition cost.
In accordance with IAS 27 Consolidated and Separate Financial Statements and the Accountancy Act, Industrial
Holding Bulgaria AD prepares and presents consolidated financial statements. The consolidated financial
statements for the period ended 30 June, 2013 will be presented by 30 July, 2013.
These Interim Financial Statements should be read in relation to the annual financial statement of the Company
as of 31 December 2012.
2.2 Summary of significant accounting policies
а) Foreign currency transactions
These financial statements are presented in BGN which is the functional currency of the Company.
Operations in foreign currencies are reported in the functional currency, at the exchange rate applicable on the day of the
transaction. Monetary assets and liabilities denominated in foreign currencies are reported in the functional currency at the
closing foreign exchange rate of the National Bulgarian Bank on the date of drafting of the statement of financial position.
Foreign currency gain or loss are recognised in the profit or loss for the period
b) Revenue recognition
Revenue is recognised to the extent that it is probable that the economic benefits will flow to the Company and
the revenue can be reliably measured, regardless of when payment is received. Revenue is measured at fair
value of the received or receivable on the basis of the agreed terms of payment, excluding discounts, rebates and
other sales taxes or duty. The company analyses the sales agreements by specific criteria to determine whether it
is acting as principal or agent. It has come to the conclusion that it acts as a principal in all agreements. Before
revenue is recognised following specific recognition criteria must also be met:
Income from services
Revenues from provided services are recognized in proportion to the degree of completion of the transaction as
of the reporting date. The state of completion is usually determined through an analysis of the work performed.
When the agreed services are provided in different reporting periods, the liabilities are referred at fair value to
the services.
The stage of completion of the transaction is defined as a proportion of cost incurred for work performed to the
estimated total cost. When the outcome of the transaction (contract) cannot be estimated in a reliably way,
revenue is recognised insofar as the incurred expenses are refundable.
8
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
2.2 Summary of significant accounting policies (continued)
b) Revenue recognition (continued)
Interest income
Interest income is reported under the effective interest rate method which represents the rate that discounts estimated
future cash payments through the expected life of the financial instrument or for shorter period where appropriate, to the
net carrying amount of the financial asset. Interest income is included in the financial statement of comprehensive income.
Dividend income
Dividend income is recognised on the date of establishment of the Company’s right to receive the payment.
в) Taxation
Current tax on income
Current tax assets and liabilities for the current and prior periods are recognised at the amount expected to be
refunded from or paid to the taxation authorities. Current tax assets and liabilities are measured at the amount
expected to be paid to (recovered from) taxation authorities, using the rates/laws that have been enacted or
substantively enacted as the balance sheet date.
Current tax is recognised directly in equity statement (not in comprehensive income statement) when the tax is
related to items that are directly recognised in equity. The management analyses various items in the tax form
where tax legislation regulations are subject to interpretation and recognises provisions where appropriate.
Deffered tax
Deferred tax is calculated on the temporary differences between the amount of assets and liabilities for
financial reporting purposes and the amounts used for taxation purposes.
Deferred tax liabilities are not recognised for:

time differences from the initial recognition of tax liabilities for a transaction different than a business
combination which does not affecting the profit and loss, neither for accounting, nor for taxation purposes;
and

differences related to investments in subsidiaries, associates and jointly controlled companies, as
long as it is probable that there will be no reversal in the foreseeable future.
A deferred tax asset is recognised for deductible temporary differences, tax credits and unused tax losses, and to
the extent that it is probable that future taxable profits will be available against which they can be utilised:

except for time differences from the initial recognition of tax assets for a transaction different than a business
combination which does not affecting the profit and loss, neither for accounting, nor for taxation purposes; and

for deductible temporary differences arising from investments in subsidiaries, associates, and joint ventures
should be recognised to the extent that it is probable that the temporary difference will reverse in the foreseeable
future and that taxable profit will be available against which the temporary difference will be utilised.
The carrying amount of deferred tax assets should be reviewed at the end of each reporting period and reduced to
the extent that it is no longer probable that sufficient taxable profit will be available to allow the benefit of part
or all of that deferred tax asset to be utilised. Unrecognised deferred tax assets are reviewed at each reporting
date and are recognised to the extent that it is probable that taxable profit will be available to allow the benefit of
that deferred tax asset to be utilised.
9
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
2.2 Summary of significant accounting policies (continued)
b) Revenue recognition (continued)
Deffered tax (continued)
Deferred tax assets and liabilities should be measured at the tax rates that are expected to apply to the period
when the asset is realised or the liability is settled, based on tax rates/laws that have been enacted or
substantively enacted by the end of the reporting period.
Deferred tax related to items that are not included in the profit or loss are not recognised in profit and loss.
Deferred tax is recognised either in other comprehensive income, or directly in equity depending on the type of
transaction.
The company offsets deferred tax assets and liabilities only if has a legally enforceable right to offset current tax
liabilities and assets, and the deferred tax liabilities and assets relate to income taxes levied by the same tax
authority on the same taxable entity;
Value Added Tax (VAT)
Revenues, expenses and assets are recognised net of the amount of value added tax (VAT), except:
 where the amount of VAT incurred on a purchase of assets or services is not recoverable from the
taxation authority, in which case VAT is recognised as part of the cost of acquisition of an asset or as
part of an item of expense if appropriate; and
 for receivables and payables which are recognised inclusive of VAT.
The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables
or payables in the financial statement.
c) Retirement benefits
Pursuant to these provisions of the Bulgarian labour legislation upon termination of the labour contract of an
employee who has obtained the right to a pension, the employer has to pay to this employee a remuneration
amounting to two or six monthly gross salaries. If an employee has worked for the same employer for 10 or more
years as at the date of retirement, the retirement benefit amounts to six gross monthly salaries. If an employee
has worked for the same employer for less than 10 years, the retirement benefit amounts to two gross monthly
salaries. The Management estimates the total amount of potential payables to all employees as of the report date
based on an actuarial report using the projection credit unit method.
The Company recognizes all actuarial profit and loss arising from the defined income plan in the profit or loss.
The past service cost is recognised as an expense on a straight-line basis over the average period until the benefits become
vested. To the extent that the benefits are already vested immediately following the introduction of, or changes in the plan
for
retirement,
the
Company
recognises
the
cost
of
past
service
cost
immediately.
Liability for employee benefits at retirement consists of the present value of the obligation to pay such income, less
expenses unrecognized past service cost.
10
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
2.2 Summary of significant accounting policies (continued)
d) Financial instruments – initial recognition and subsequent measurement
Financial assets
Initial recognition
Financial assets within the scope of IAS 39 Financial Instruments: Recognition and Measurement are classified as
financial assets at fair value through profit or loss, or loans and receivables or held to maturity investments or financial
assets available for sale or as derivatives designated as hedging instruments in an effective hedge, as is appropriate. The
Company determines the classification of its financial assets at initial recognition.
All financial assets are recognized initially at fair value plus, in the case of investments not at fair value through profit or
loss, transaction costs that are directly attributable to the acquisition of the financial asset.
Purchases or sales of financial assets that require delivery of assets within the time frame generally established by
regulation or convention in the marketplace (regular purchases) are recognized on the trade date (the transaction), ie on the
date on which the Company has committed to purchase or sell the asset.
Subsequent measurement
Subsequent measurement of financial assets depends on their classification as follows:
Loans and receivables
Loans and receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in
an active market. After initial recognition, loans and receivables are measured at amortized cost using the method of
effective interest rate (ELP), less provision for impairment. Amortized cost is calculated taking into account any
discounts or premium on acquisition and fees or costs that are an integral part of the ELP. Depreciation ELP is
included in finance income in the statement of comprehensive income. Losses arising from impairment are
recognized in other comprehensive income as expenses.
Investments in subsidiaries and associates
In the separate financial statements of the Company, investments in subsidiaries and associates are stated at cost less
impairment losses (according to IAS 27, paragraph 37 (a)). Investments in subsidiaries and associated companies are
derecognised and the net result (proceeds of disposal less the carrying amount of the investment) are recognized in
profit or loss when the Company loses control or significant influence over the company in which it has invested.
Additional information is provided in Note 12 and Note 13.
Derecognition
Financial asset (or, where applicable, a part of a financial asset or a group of similar financial assets) is derecognisedwhen:
•the
rights
to
receive
cash
flows
from
the
asset
have
expired;
• the rights to receive cash flows from the asset transferred or the Company has a duty to fully pay the cash flows
without material delay to a third party through an agreement to transfer, in which (a) has transferred substantially
all risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards
of the asset, but has not retained control.
11
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
2.2 Summary of significant accounting policies (continued)
d) Financial instruments – initial recognition and subsequent measurement
Financial assets (continued)
Derecognition (continued)
Where the Company has transferred its rights to receive cash flows from an asset or has intervened in the transfer
agreement and neither transferred nor retained substantially all the risks and rewards of the asset, but has retained
control over it, it continues to recognize the transferred financial asset to the extent of its continuing involvement
in it. In this case, the Company recognizes the related obligation. The transferred asset and the associated liability
are measured on a basis that reflects the rights and obligations that the Company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of
the original carrying amount of the asset and the maximum amount of consideration that may have to be
reimbursed by the Company.
Impairment of financial assets
At each reporting date, the Company assesses whether there is objective evidence that a financial asset or group
of financial assets may be impaired. Financial asset or group of financial assets is deemed to be impaired when
there is objective evidence of impairment as a result of one or more events that occurred after the initial
recognition of the asset (an "event of loss") and that the loss event has an impact on the estimated future cash
flows of the financial asset or group of financial assets that can be reliably measured. Evidence of impairment
may include indications that the debtors or groups of debtors experiencing serious financial difficulties or are in
default or delinquency in the payment of interest or principal, or likely to declare insolvency / over-indebtedness
or take financial reorganization and where observable data indicate measurable decrease in the estimated future
cash flows, such as changes in arrears or economic conditions that are related to defaults by borrowers.
Financial assets carried at amortised cost
For financial assets measured at amortized cost, the Company first assesses whether objective evidence of impairment
exists individually for financial assets that are individually significant, or collectively for financial assets that are not
individually significant. If it is determined that no objective evidence of impairment exists individually assessed financial
asset, whether it is significant or not, the asset is included in a group of financial assets with similar credit risk
characteristics and that group of financial assets are assessed for impairment collective basis. Assets that are individually
assessed for impairment and for which an impairment loss has been and continues to be recognized are not included in a
collective
assessment
of
impairment.
If there is objective evidence that an impairment loss, the amount of the loss is measured as the difference between the
asset's carrying amount and the present value of estimated future cash flows (excluding future expected losses on loans
that have not yet been incurred). Present value of estimated future cash flows discounted at the original effective interest
rate of financial assets. If a loan has a variable interest rate, the discount rate for evaluation of the impairment loss is the
current effective interest rate.
12
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
2.2 Summary of significant accounting policies (continued)
d) Financial instruments – initial recognition and subsequent measurement
Financial assets (continued)
Impairment of financial assets (continued)
Financial assets carried at amortised cost (continued)
The carrying amount of the asset is reduced through use of an allowance account and the amount of the loss is
recognised in profit or loss. Interest income continues to be accrued on the reduced carrying value using the
interest rate used to discount the future cash flows for the assessment of impairment. Interest income is recorded
as part of finance income in the statement of comprehensive income. Loans together with the associated
provisions are written off when there is no realistic possibility that they be collected in the future and all
securities are sold or transferred to the Company. If in a subsequent year, the amount of the estimated
impairment loss increases or decreases because of an event occurring after the impairment was recognized, the
previously recognised impairment loss is increased or reduced by adjusting the allowance account. If a future
write-off be restored at a later stage, the recovery is recognised in profit or loss.
Investments in subsidiaries and associates
If there is objective evidence that an impairment loss on an unquoted equity instrument that is not carried at fair
value because it cannot be reliably measured, the amount of the impairment loss is measured as the difference
between the carrying amount of the financial asset and the amount, which is expected to be recovered from it, if
it can be estimated reliably. Impairment losses are recognized in profit or loss.
Financial liabilities
Initial recognition and measurement
Financial liabilities within the scope of IAS 39 are classified as financial liabilities at fair value through profit or
loss, or loans and borrowings, or as derivatives that are effective hedges, as is appropriate. The Company
determines
the
classification
of
its
financial
liabilities
at
initial
recognition.
Financial liabilities are initially recognized at fair value plus, in the case of loans and borrowings, transaction
costs
that
are
directly
attributable
to
the
acquisition
of
the
financial
liability.
The Company's financial liabilities include trade and other payables and debt securities issued.
Subsequent measurement
Subsequent measurement of financial liabilities depends on their classification as follows:
Loans and borrowings
After initial recognition, loans and borrowings are measured at amortized cost using the method of ELP. Gains and
losses on loans and borrowings are recognized in the income statement when the liability is derecognised as well as
through the amortization process.
Amortised cost is calculated taking into account any discounts or premium on acquisition and fees or costs that are an
integral part of the ELP. Depreciation ELP is included in finance costs in the statement of comprehensive income.
13
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
2.2 Summary of significant accounting policies (continued)
d) Financial instruments – initial recognition and subsequent measurement
Financial assets (continued)
Derecognition
A financial liability is derecognised when it is extinguished, ie when the obligation specified in the contract is discharged
or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or the
terms of an existing liability are substantially modified, such an exchange or modification is treated as a derecognition of
the original liability and the recognition of a new liability, and the difference in the respective carrying amounts is
recognized in the profit or loss.
е) Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount presented in the statement of financial
position when, and only when there is a legally enforceable right to offset the recognized amounts and the
Company intends to settle on a net basis, or to realize the asset simultaneously and settlement of liabilities.
f) Fair value of financial instruments
At each reporting date, the fair value of financial instruments traded in active markets is determined based on quoted
market objectives or quotes from dealers ("buy" prices for long positions and prices "sell" for short positions) without
deduction transaction costs.
The fair value of financial instruments for which no active market is determined using valuation techniques. These
techniques include using recent market transactions, reference to the current fair value of another instrument that is
substantially the same, analysis of discounted cash flows and other valuation models.
Analysis of fair values of financial instruments and further details of how they are evaluated is provided in Note 23.
g) Share capital
Share capital is represented at the nominal value of the issued and paid-up shares. Proceeds from shares issued over their
nominal value are recorded as share premium. Costs directly attributable to the issue of ordinary shares are recognized as a
deduction from equity, net of any tax effects.
h) Share buyback
Own equity instruments which are re-acquired (treasury shares) are recognized at the fair value of the consideration
transferred and deducted from equity. The Company does not recognise gain or loss on the purchase, sale, issue or
cancellation of own equity instruments. Any difference between the face value and the fair value of the consideration
transferred in the event of cancellation of treasury shares are recognised as a decrease / increase in share premium. For
treasury shares with voting rights dividends are not distributed .
14
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
2.2 Summary of significant accounting policies (continued)
i) Convertible bonds
Convertible bonds are divided into passive component and equity component depending on the conditions of the
contract.
Upon issuance of convertible bonds, the fair value of the liability component is determined using the market
price for an equivalent non-convertible bond. This amount is classified as a financial liability measured at
amortized cost (net of transaction costs), the conversion or redemption of the instrument.
Remainder of the proceeds is allocated to the conversion option that is recognized as an equity instrument.
Conversion
option
recognised
as
equity
is
not
remeasured
subsequently.
Transaction costs are allocated to the liability and equity components of the convertible bonds in proportion to
the proceeds on initial recognition of the instrument.
j) Plant and equipment
Plant and equipment are reported at acquisition cost, less accumulated depreciation and accumulated impairment
losses, if any. The acquisition cost includes the cost of replacing parts of the plant and equipment and borrowing
costs on long-term construction contracts, provided that they meet the criteria for recognition of an asset. When
replacement of major components of plant and equipment at regular interval is needed, the Company recognises
these components as individual assets with specific useful lives and, respectively, depreciation. Similarly, the
expenditures for basic overview of the machine and / or equipment shall be included in the carrying amount of
the asset as a replacement cost, provided they meet the criteria for recognition of an asset. All other repairs and
maintenance are recognized in profit or loss in the period in which they are incurred.
Depreciation is calculated on a straight-line basis over the useful life of the assets, which are defined as follows:
Motor vehicles /cars/
Computers and computer equipment
Fixtures and fittings and all others
5 years
2 – 5 years
6 - 10 years
Plant and equipment is derecognised upon disposal or when no future economic benefits from its use or disposal are
expected. Gains or losses arising from derecognition of the asset (calculated as the difference between the net disposal
proceeds, if any, and the carrying amount of the asset) is included in profit or loss when the asset is derecognised.
At each financial year-end the residual values, useful lives and methods of depreciation are reviewed and, if expectations
differ from previous estimates, the later change in future periods.
15
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
2.2 Summary of significant accounting policies (continued)
k) Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take
a substantial period of time to prepare for their intended use or sale to be capitalised as part of its cost. All other
borrowing costs are expensed in the period in which they arise. Borrowing costs include interest and other costs
that the Company incurs in obtaining borrowed funds.
l) Intangible assets
Intangible assets acquired separately are measured initially at acquisition cost. After initial recognition,
intangible assets are carried at acquisition cost less accumulated depreciation and accumulated impairment
losses.
The useful lives of intangible assets are assessed to be finite as follows:
Patents and trademarks
4 - 7 years
Software
4 - 7 years
Intangible assets with finite lives are amortised over their useful lives and tested for impairment whenever there is an
indication that their value is impaired. The amortization period and method of amortization of intangible assets with a
finite useful life are reviewed at least at each financial year. Changes in the expected useful life or pattern of consumption
of future economic benefits embodied in the asset is accounted for by changing the amortization period or method, and
treated as changes in accounting estimates.
m) Impairment of non-financial assets
At each reporting date, the Company assesses whether there is any indication that an asset may be impaired. If
any such indication exists, or when required annual impairment testing for an asset, the Company estimates the
recoverable amount of that asset. Recoverable amount is the higher of fair value less costs to sell of an asset or
cash-generating unit (CGU) and its value in use. Recoverable amount is determined for an individual asset,
unless the use of that asset does not generate cash flows that are largely independent of the cash inflows from
other assets or groups of assets. Where the carrying amount of an asset or CGU is higher than its recoverable
amount, it is considered impaired and its carrying amount is reduced to its recoverable amount.
In assessing value in use, the estimated future cash flows are discounted to their present value using a discount
rate before tax that reflects current market assessments of the value of money and the risks specific to the asset.
Fair value less costs to sell is determined on the basis of recent market transactions, if any. If such transactions
cannot be identified, apply appropriate valuation model. These calculations are corroborated by valuation
multiples or other available sources of information on the fair value of an asset or cash-generating unit.
Impairment calculations are based on detailed budgets and forecast calculations are made separately for each CGU to
which the individual assets are distributed. These budgets and forecast calculations generally cover a period of five years.
For longer periods calculated index for long-term growth and applies it after the fifth year of the future cash flows.
16
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
2.2 Summary of significant accounting policies (continued)
m) Impairment of non-financial assets
Impairment losses are recognised as other expenses in the statement of comprehensive income, or as a separate
item, if material.
At each reporting date, the Company assesses whether there is any indication that an impairment loss of an asset
other than goodwill recognized in prior periods may no longer exist or may have decreased. If such indication
exists, the Company estimates the recoverable amount of the asset or the cash-generating streams. An
impairment loss is reversed only if there has been a change in the estimates used to determine the recoverable
amount of the asset since the last impairment loss. Recovery of an impairment loss is limited so that the carrying
amount of the asset does not exceed its recoverable amount or nor does not exceed the carrying amount (net of
depreciation) that would be determined if it was recognized impairment loss for asset in prior years. Recovery of
an impairment loss is recognized in profit or loss, unless the asset is carried at a revalued amount, in which case
the reversal is treated as a revaluation increase.
n) Cash and cash equivalents
Cash and cash equivalents in the statement of financial position include cash at bank, cash and short-term deposits with
original maturities of three or fewer months.
For the purposes of the cash flow statement, cash and cash equivalents include cash and cash equivalents as defined above.
o) Provisions
General
Provisions are recognised when the Company has a present obligation (legal or constructive) as a result of past
events, it is likely to settle the obligation will be required outflow of resources embodying economic benefits
when it can be reliably measured amount of the obligation. Where the Company expects some or all of a
provision to be reimbursed, for example under an insurance contract, the reimbursement is recognized as a
separate asset but only when it is virtually certain that these costs will be refunded. Cost of provision is presented
in the statement of comprehensive income net of any reimbursement. Where the effect of the time value of
money is material, provisions are discounted using a current discount rate before tax that reflects, where
appropriate, the risks specific to the liability. Where discounting is used, the increase in the provision due to the
passage of time is recognised as a finance cost.
p) Earning per share
Basic earnings per share is calculated by dividing the net profit or loss for the period attributable to holders of ordinary
shares by the weighted average number of shares outstanding for the period.
17
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
5. Income
from interest, dividends and investment transactions
In BGN thousand
Dividend income
Interest income
Income from investment transaction (net)
31.12.2013
4,633
3,735
8,368
31.12.2012
6,254
3,961
12,088
22,303
The reported dividend income amounting to BGN 4,633 (31.12.2012: BGN 6,254 thousand) comprises dividends
distributed by Maritime Holding AD - BGN 598 thousand (31.12.2012: BGN 486 thousand); by ZMM Bulgaria
Holding AD - BGN 3,411 thousand (31.12.2012: BGN 5,648 thousand) and Dockyard Port Burgas – BGN 624
(31.12. 2012:BGN 0,00).
Interest income relates to interest-bearing receivables from subsidiaries at the amount of BGN 3,679 thousand,
deferred receivables from commercial contracts at the amount of BGN 55 thousand and current accounts
amounting to BGN 1 thousand .
Net income from investment transactions comes from the sale of shares owned by IHB AD in Augusta Mebel
AD and share in associate Dunav Tours AD.
6. Other operating income
In BGN thousand
Income from sales of services
Liabilities written-off
Other income
31.12.2013
31.12.2012
41
18,260
1
59
72
3
18,302
134
Obligations on rights sold to shareholders result from the increase of share capital in 2007. These shareholders
have not exercised their rights to subscribe for shares in the capital increase and as a result, the unexercised
rights were sold on the official auction of the Bulgarian Stock Exchange - Sofia, and Industrial Holding Bulgaria
PLC receives the funds in January 2008 and began paying amounts to the holders of unexercised rights as of 4
February 2008. In February 2013 Industrial Holding Bulgaria AD stopped the payment for unexercised rights in
relation with capital increase of the Company in 2007 because the limitation period of the obligation for
payment expires on 04.02.2013 These liabilities are written off from profit in the current period.
7. Payroll costs
In BGN thousand
Salaries
Social security costs and other social payments
31.12.2013
31.12.2012
527
486
50
398
584
8. Other operating expenses
In BGN thousand
31.12.2013
31.12.2012
18
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
Depreciation and amortization (Note 11)
Costs of materials
Other operating expenses
121
57
50
26
521
77
692
160
The larger amount of depreciation and materials cost compared with the same period last year is a result of
moving the company into a new office, and of other operating expenses as a result of recognition during this
period the balance of deferred costs incurred in the issuance of bonds issue ISIN code BG 2100018113 due to
altered maturity and early repayment of the bond issue amounting to BGN 122 thousand, and derecognition of
receivables related to the terminated project for research into renewable energy sources and the reduced amount
for sale of shares of Augusta Mebel AD amounting to BGN 200 thousand.
9. Financial income and expenses
In BGN thousand
Foreign exchange gains, net
Financial income
In BGN thousand
Debenture loan interest expenses ( ISIN code
BG2100018113 and ISIN code BG 2100006134)
Interest expenses on deposits and loans from
related parties
Other income/expenses related to bond issues
Financial expenses
31.12.2013
31.12.2012
-
-
31.12.2013
31.12.2012
(1,933)
(1,737)
(144)
(53)
(2,130)
(51)
(66)
(1,854)
10. Income tax expense
Main components of income tax expense for the periods ended December 31, 2013 and 2012:
In BGN thousand
Current tax expense
Deferred tax relating to origination and reversal of
temporary differences
Income tax expense reported in the profit or loss
31.12. 2013
31.12.2012
(1,824)
(1,337)
-
(1,337)
Current tax expense comprises income tax accrued at 10% (2012: 10%). In 2013 the applicable tax rate remain
unchanged.
Reconciliation of income tax expense to accounting profit multiplied by the applicable tax rate for the period ended
31.12.2013 and 31.12.2012 is given below:
In BGN thousand
Profit before tax
Income tax expense at tax rate of 10% for 2012 (2011: 10%)
Income not taxable - dividends
31.12.2013
31.12.2012
22,871
(2,287)
463
19,619
(1,962)
625
19
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
Income tax expense at effective tax rate of 7,98% (2012: 6.81
%)
(1,824)
(1,337)
As at 31.12.2013 the Company report deferred taxes in the amount of BGN 1 thousand recognised in Other
comprehensive income. The company does not have unrelieved tax losses from previous years.
11. Non-current tangible and intangible assets
In BGN thousand
Book value
Balance as at 1 January 2012
Assets acquired
Assets written-off
Transfer to intangible assets
Balance as at 31 December 2012
Computers
and
equipment
Transport
vehicles
Fixtures Assets under
and fittings and construction
other
Total
70
27
97
182
182
58
1
59
125
414
(242)
(61)
236
435
442
(242)
(61)
574
97
3
182
-
59
9
236
68
574
80
(304)
-
(2)
61
713
Balance as at 1 January 2013
Assets acquired
Assets written-off
Transfer
Movements of intangible assets
Balance as at 30 September 2013
15
-
115
182
287
61
416
Balance as at 1 January 2013
Depreciation costs
Depreciation of assets written-off
Balance as at 31 March 2013
Balance as at 1 January 2013
62
13
75
98
42
140
55
2
57
-
215
57
272
75
15
140
36
57
68
-
272
119
90
176
125
22
25
42
6
2
291
Balance as at 1 January 2013
Depreciation costs
Depreciation of assets written-off
Balance as at 31 December 2013
391
Carrying amount
Balance as at 31 December 2012
Balance as at 30 September 2013
236
-
11. Non-current tangible and intangible assets (continued)
The Company has no limitations imposed in respect of the title of ownership of tangible non-current assets, and
there are no assets pledged as collateral on liabilities or for other reasons.
The increase is due to reported acquisition costs associated with improvements to new leased office in which the
Company moved earlier in 2013.
Intangible Assets
20
302
322
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
As the non-current intangible assets held by the Company represent an insignificant portion, no detailed note on their
movement for the period has been prepared. The carrying amount of non-current intangible assets as at 31 September
2013 is BGN 1 thousand (31.12.2013: BGN 2 thousand).
12. Investments in subsidiaries
Investments held by the Company as of 31 December 2013 and 31 December 2012 are as follows:
In BGN thousand
ZMM Bulgaria Holding AD
Privat Engineering AD
Dockyard Port Burgas AD
Bulyard AD
Maritime Holding AD
International Industrial Holding Bulgaria
AG
KLVK AD
Rekolta 2011 EAD
AGRO MONEY AD
Country
Bulgaria
Bulgaria
Bulgaria
Bulgaria
Bulgaria
Switzerland
Bulgaria
Bulgaria
Bulgaria
31.12.2013
Amount of Percentage
participation
of
participation
7,885
99.998
56,992
99.790
4,774
99.640
11,682
61.500
400
61.000
130
46,096
2,300
66
130,325
100.000
67,96%
100.00%
66,00%
31.12.2012
Amount of Percentage
participation
of
participation
7,885
99.998
56,992
99.790
4,774
99.640
11,682
61.500
400
61.000
130
39,980
2,300
124,143
100.000
64.47
100.00%
-
In April 2013 the General Meeting of KLVK AD voted for the capital increase of the company by 2 200 000
new ordinary registered voting shares with a nominal value of BGN 1 each and issue price of BGN 2,78. All
shares are subscribed for by Industrial Holding Bulgaria. On 20 May 2013 the Registry Agency entered the
capital increase.
The Company holds 2 shares from the capital of Leyarmash AD, subsidiary of ZMM Bulgaria Holding.
In September 2013 the company AGRO MONEY was set up with capital of 10 000 ordinary registered voting
shares with a nominal value of BGN 10 each. The scope of activity is consultancy in relation with real estate as
well as any other activity not prohibited by the law. IHB subscribed for 6 600 shares which represent 66% from
the capital of AGRO MONEY AD.
Impairment test
As of 31.12.2012, the Company has made an analysis and has concluded that there are indications of impairment of
investments in subsidiaries. As at 31.12. 2012 the Company has recognised an impairment loss on its investment in
Bulyard at the amount of BGN 12,161 thousand.
13. Investments in associates
In BGN thousand
Country
Odesos PBM AD
Bulgaria
31.12.2013
Amount of Percentage
participation
of
participation
1,584
30.00
1,584
31.12.2012
Amount of Percentage
participation
of
participation
1,584
30.00
4,345
21
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
14. Other long-term receivables
Other interest-bearing long-term receivables at the amount of BGN 1,078 are associated with the sale of IHB
shares in the subsidiary Augusta Mebel AD. Receivables from the sale amounted to BGN 1,115 thousand (EUR
588 thousand) and is deferred and depending on the payment periods is represented as long-term, respectively
short-term receivable.
As of 31.12.2013 additional agreement was signed between Industrial Holding Bulgaria AD and the buyer of the
shares of Augusta Mebel AD, with which the initially agreed price was reduced by BGN 200 thousand The
amount is reported under Other operating expenses in item 8 of the statement of comprehensive income. The
discount from the original price is a result of out-of-court settlement reached between the parties in pending
lawsuit № 512/2012 concerning co-owned property and reached preliminary agreement on monetary equivalent
by Augusta Mebel AD for shares of District Cooperative Union and Central Cooperative Union from that
property.
15. Other receivables
In BGN thousand
Short-term receivables from sale of investment
(Note 14)
Guarantees provided
Prepaid services and advance payments
Other receivables
31.12.2013
31.12.2012
77
8
85
155
73
6
8
242
31.12.2013
31.12.2012
7
97
104
10
2,044
2,054
16. Cash and cash equivalents
In BGN thousand
Cash in hand
Cash at banks
Cash in BGN is valued at its nominal value, and cash in foreign currency - at the closing exchange rate of BNB
at the end of the reporting period. Foreign currency gains and loss are reported as current income and expenses
respectively.
17. Share Capital
The share capital is reported at nominal value in accordance with the legal registrationof the Company.
In BGN thousand
31.12.2013
2012
67,978,543 ordinary shares of BGN 1 nominal value each
67,978
67,978
67,978
67,978
The capital of the Company comprises 67,978,543 dematerialized registered voting shares of BGN 1 nominal
value each. The share capital has been subscribed at its par value and is fully paid. There are no preference or
bearer shares.
Shareholders holding over 5% of the capital of IHB Plc as of 31 December 2013:
Shareholder
Number of shares
2012
22
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
as at 31.12.2013
Venside Enterprises AD
BULLS AD
MUPF Allianz Bulgaria AD
DZH AD
STOCK TOURS AD
Other
20,399,604
9,537,921
4,646,278
3,977,174
3,540,523
25,877,043
67,978,543
31.12.2013
30.01%
14.03%
6.83%
5.85%
5.21%
38.07%
100.00%
30.01%
14.03%
6.83%
5.85%
5.21%
38.07%
100.00%
Statutory and other reserves.
Statutory reserves are formed by joint stock companies, such as Industrial Holding Bulgaria AD as profit
distribution under Art. 246 of the Commercial Code. It is set aside until it reaches one-tenth or more of the
capital. Sources to form statutory reserve are at least one-tenth of the net profits, share premium on shares and
funds provided by the statutes or by resolution of the General Meeting of Shareholders. Statutory reserves can
only be used to cover losses in the current and prior periods. As of March 30, 2013 statutory and additional
eserves amounted to BGN 7,989 thousand (31.12. 2012: BGN 7,398 thousand). The increase is a result of the
vote of the General Meeting of Shareholders for allocation of 10% of the profit for 2012, equivalent to BGN 591
thousand to the Reserve Fund.
Share buyback
In connection with the decision of the General Meeting of Shareholders for share buyback, the Managing Board
of Holding Bulgaria AD decided that the number of shares that will be bought for 2013 is 3% of the registered
capital of the Company, which currently is 67,978,543 shares, namely 2,039,356 shares.
Selected
investment
firm
to
buy
back
own
shares
Allianz
Bank
Bulgaria
AD.
The chosen investment intermediary is Alianz Bank Bulgaria AD.
For the period 01.01.2013- 31.12.2013 967 141 shares were bought back at average price of BGN 0,794 per
share and acquisition cost of BGN 3 thousand.
17 (а). Basic earning per share
Basic earnings per share is calculated by dividing the financial result for the year by the weighted average
number of ordinary shares outstanding for the year.
The calculation of basic earnings per share as at 30 September 2013 is based on the net profit amounting to BGN
21,047 (31 December 2012: profit of BGN 18,282 thousand) and the weighted average number of ordinary
shares available for the period ended 31 December 2013 of 67,572 thousand (31 December 2012: 67,978
thousand).
The calculation is made as following:
In BGN thousand
Net profit for the period
Net profit attributable to holders of ordinary shares
In thousand
Number of issued ordinary shares as of 1 January
Number of by back shares for the period 01.01-31.12.2013
Number of ordinary shares as at 31 December
Weighted average number of shares as at 31 December
Basic earning per share (in BGN)
31.12.2013
21,047
31.12.2012
18,282
21,047
18,282
31.12.2013
67,978
(967)
67, 011
67,572
0,3114
31.12.2012
67,978
67,978
67,978
67,978
0, 2689
23
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
18. Debenture loan
In BGN thousand
Debenture loan
Costs
Interest charged
31.12.2013
30,000
(88)
401
30,313
29,912
401
including short-term
including long-term
The Extraordinary General Meeting of Shareholders of Industrial Holding Bulgaria plc held on 17.12.2012
adopted the following decisions:
1. Decision to begin an initial public offering of up to 300 000 dematerialized, interest-bearing, convertible,
freely transferable, unsecured bonds;
2. Decision to amend the conditions of bond issue ISIN BG 2100018113;
3. Decision for share buyback of IHB shares
On the grounds of Art.214, para 1 of the Commerce Code Antoaneta Mihailova Dimolarova, elected as a
Representative of the bondholders on the First General Meeting of Bondholders held on 10.11.2011, convenes a
General Meeting of the Bondholders of convertible bonds issue ISIN BG 2100018113, under the following
Agenda and following adopted decisions:
1.Decision for the issuance under the conditions of an initial public offering of an issue of dematerialized,
interest-bearing, convertible, freely-transferable and unsecured bonds with the following parameters and
purpose:
 Total nominal and issue value of the debenture loan: up to BGN 30,000,000 /thirty million/;
 Nominal value per bond: BGN 100 /one hundred/.
 Issue value per bond: BGN 100 /one hundred/.
 Number of bonds: Up to 300,00;
 Term (maturity of the debenture loan: 2 /two/ years (24months);
 Interest rate: 6.5% per year;
 Interest payment period: 6 months;
 Procedure for conversion of bonds into shares (conversion procedure): conversion - on the maturity
date of the bonds, each bond holder shall be entitled, under the terms of the debenture loan and
prospectus for public offering of the issue of convertible bonds, instead of repayment of the bonds held,
to exchange (convert) them for such a number of shares as would correspond to the conversion ratio
valid at the time of the exchange.
 Purpose of the debenture loan: the funds raised through the issue will be used to reimburse the
debenture loan under a previous issue of convertible bonds - ISIN 2100018113, issued by Industrial
Holding Bulgaria Plc, partial refinancing of Diamond Sky ship, expansion of Dockyard Burgas and
other small projects of its subsidiaries
2. Decision to amend the conditions of bond issue ISIN BG 2100018113, as follows:
If the issue is successfully subscribed and paid for, the General Meeting of the shareholders adopts a decision to
change the maturity of bond issue ISIN BG 2100018113 as follows: the payment of the principal of the
debenture loan amounting to BGN 21,718,000 (twenty-one million seven hundred and eighteen thousand
Bulgarian levs) will be paid within 10 days following the absorption of funds under the new bond issue together
with the due interest until the payment of the principal.
The prospect for public offering for the new issue of convertible bonds is approved with a decision of FSC 138Е/20.02.2013.
The Prospect for public offering was approved with a decision of FSC 138-Е/20.02.2013.
The public offering of convertible bonds of Industrial Holding Bulgaria PLC closed successfully with the
following results:


Closing date of the public offering – 17.04.2013.
Total number issued rights – 67,978,543.
24
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013



Total number of convertible bonds offered for subscription - 300,000.
Number of subscribed and paid convertible bonds – 299,998.
Amount received from the subscribed and paid convertible bonds in the special account in Allianz Bank
Bulgaria AD – BGN 29,999,800.00;
The issuer and the investment intermediary for the offering did not meet any difficulties, there were no disputes
and other of the kind during the trading of rights and subscription of shares.
On 24.04.2013 the Trade Register published announcement for opening of debenture loan and invitation to the
First General Meeting of Bondholders for issue of convertible bonds ISIN code BG 2100006134 issued by
Industrial Holding Bulgaria, decision of the Managing Board to summon the First General Meeting of
Bondholders, and conditions for principal payment of debenture loan ISIN code BG 2100018113 in accordance
with decisions of the General Meeting of Shareholders as of 17.12.2012 and General Meeting of
Bondholders of issue of corporate convertible bonds ISIN code BG2100018113 as of 17.12.2012.
In compliance with decisions of the General Meeting of Shareholders as of 17.12.2012 and General Meeting of
Bondholders issue of corporate convertible bonds ISIN code BG2100018113 as of 17.12.2012, payment of
principal will be made on 26.04.2013 together with the accrued interest for the period between 19.04.2013 –
26.04.2013.
The right of interest and principal payment will be entitled to all bondholders registered with the Central
Depository as of 19.04.2013 (Record Date). The interest rate is 8 % annually.
Of 18.10. 2013 the first interest payment in the amount of BGN 977 thousand was paid under bond issue with
ISIN code BG2100006134.
19. Retirement benefit payables
The estimated retirement compensations in compliance with the provisions of the Labour Code and IAS 19
amounts to BGN 19 thousand as at 31.12.2013 (31.12.2012 – BGN 6 thousand).
20. Trade and other payables
In BGN thousand
Payables on rights sold to shareholders
Payables to suppliers
Other payables
31.12.2013
31.12.2012
60
26
14
100
18,342
59
18,401
Payables on rights sold to shareholders as result of capital increase in 2007 were written off in February 2013 as
Industrial Holding Bulgaria stopped the payment because the limitation period of the obligation for payment
expired. These liabilities are written off from profit for the first quarter of 2013 (see Note 6)
Payables on rights sold to shareholders as result of capital increase in 2011 and issuance of bond issue ISIN
code BG 2100018113 which was successfully ended on 17.10.2011 and bond issue ISIN code
BG2100006134 amounts to BGN 60 thousand as at 31.12.2013. The payment still continues.
25
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
21. Related party disclosures
Shareholders
As at 31.12.2013 and 31.12.2012 the overall structure of the subscribed and paid up capital is presented in Note
17.
As at 31.12.2013 the Company holds direct control (holds more than 50%) and indirect control to the following
subsidiaries:
Country of registration
Industrial Holding Bulgaria AD
Bulgaria
Privat Engineering AD
Bulgaria
ZMM Bulgaria Holding AD
Bulgaria
ZMM Sliven AD
Bulgaria
ZMM Nova Zagora AD
Bulgaria
Leiarmach AD
Bulgaria
Mashstroy AD-in liquidation
Bulgaria
Elprom ZEM AD
Bulgaria
Dockyard Port Burgas AD
Bulgaria
KLVK AD
Bulgaria
International Industrial Holding Bulgaria
AG
Switzerland
Maritime Holding AD
Bulgaria
Bulgarian Register of Shipping AD
Bulgaria
Bulgarian Lloyd AD
Bulgaria
Bulyard AD
Bulgaria
Bulyard Shipbuilding Industry AD
Bulgaria
Bulkari EAD
Bulgaria
IHB Shipping CO EAD
Bulgaria
Emona LTD
Marshal Islands
Karvuna LTD
Marshal Islands
Marciana LTD
Marshal Islands
Odria LTD
Marshal Islands
Tirista LTD
Marshal Islands
Rekolta 2011 ЕАD
Bulgaria
Serdika LTD
Marshal Islands
Bulport Logistics AD
Bulgaria
AGRO MONEY AD
Bulgaria
Percentage of ownership
31.12.2013
2012
%
%
Компания –
майка
100.00
100.00
100.00
100.00
95.98
95.98
93.57
93.57
100.00
100.00
80.81
80.81
80.78
80.78
99.64
99.64
100.00
100.00
100.00
61.00
61.00
61.00
61.50
61.50
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
51%
66%
100.00
61.00
61.00
61.00
61.50
61.50
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
-
* In June 2013 a decision was taken to change the trade name of Elprom ZEM, subsidiary of IHB.
The new company name is IHB Elektric AD which is entered to the Trade Register on 22 July 2013.
Associates
Odesos PBM is an associate of IHB. Additional information is presented in Note 13
The total amount of related parties transaction and outstanding balances for the reporting and previous periods
are presented as follows:
21.1 Receivables from and payables to related parties
26
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
In BGN thousand
Long-term loans granted to related parties
31.12.2013
2012
62,853
57,497
31.12.2013
2012
3,963
3,963
2,104
2,104
30
624
4,617
74
2,178
Related parties current receivables
In BGN thousand
Receivables from loans granted, with accrued
interest
Receivables from services provided
Dividends receivable
In the first nine months of 2013 cash loans were granted to Bulyard Shipbuilding Industry AD at the amount of
BGN 5,195 thousand in relation with three contracts with repayment term by the end of 2015 and annual
interest rate of 5%, respectively.
The cash loans granted to KLVK AD amounts to BGN 809 thousand with repayment term by 03.05.2015 and
annual interest rate of 6%. At the same time the company repaid cash loan amounting to BGN 1,435 thousand
and interest amounting to BGN 99 thousand.
During the period IHB granted loans to Emona Ltd at the amount of BGN 74 thousand (USD 50 thousand) with
repayment term by 31.12.2013 and annual interest rate of 3%; to Dockyard Burgas AD at the amount of BGN
100 thousand with repayment term by 31.12.2013 and annual interest rate of 6%, and to IHB Shipping Co EAD
at the amount of BGN 328 thousand with repayment term by 31.12.2013 and annual interest rate of 4%. Emona
Ltd, IHB Shipping Co EAD and Dockyard Port Burgas paid off the loans early.
In September 2013 the company Agro Money AD was established with scope of activity - consulting services in
connection with the management of real estate, and any other activity not prohibited by law. IHB Plc subscribed
shares on incorporation of the Company entitling possession of 66% of its capital. The Company is registered in
the Registry Agency in October 2013 thus the capital subscription is presented as a receivable as at 30.09.2013
in the balance sheet of Industrial Holding Bulgaria AD.
Related party payables
In BGN thousand
Accepted deposits (including due interest)
31.12.2013
2012
3,358
3,408
2,120
2,120
In March 2013 IHB received deposit from Rekolta 2011 EAD amounting to BGN 260 thousand with repayment
term by 29.03.2014 with annual interest rate of 4%. In April 2013 the amount was increased to BGN 1 310
thousand.
In March 2013 IHB received deposit from Maritime Holding AD amounting to BGN 350 thousand. The deposit
is held for one year with annual interest rate of 5%.
27
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
In October 2013 IHB AD received deposit from Dockyard Port Burgas in the amount of BGN 616 thousand. The
deposit is held for one year with annual interest rate of 5%.
In April and August IHB Electric repaid BGN 508 thousand with outstanding balance in the amount of BGN
747 thousand.
21.2 Transaction with related parties
In BGN thousand
Dividend income
Interest income
Interest expense
Income from sale of services
Loans granted
Loans repaid
Accepted deposits
Released deposits
Contribution for capital increase of KLVK AD and
Agro Money AD
In BGN thousand
31.12.2013
4,633
3,679
144
42
6,622
2,803
3,290
1,373
6,182
31.12.2012
Dividend income
Interest income
Interest expense
Income from sale of services
Loans granted
Loans repaid
Accepted deposits
Released deposits
6,254
3,916
51
59
5,606
20,802
1,850
245
Contribution for capital increase
32,497
22. Commitments and contingent liabilities
Legal claims
There are no legal claims against the Company.
Guarantees
Under a contract signed with a commercial bank for extension of a credit limit for issuance of bank guarantees,
letters of credit and working capital funding for the Holding and/or companies from its Group amounting to a
maximum of BGN 10,000 thousand as of 31.12.2013 bank guarantees amounting to BGN 748 thousand were
issued (31.12.2012: BGN 30), letters of credit were opened to IHB Elektric, Leyarmash AD and Bulyard
Shipbuilding Industry EAD for BGN 573 thousand (31.12.2012: BGN 4,685 thousand), letters of credit were
28
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
opened to Bulyard Shipbuilding Industry EAD for BGN 837 thousand (31.12.2012: BGN 4,685 thousand) and a
revolving credit line was established for BGN 3,000 thousand (31.12.2012: BGN 3,000 thousand). The contract
with the bank is secured with a second ranking special pledge on company Dockyard Port Burgas AD as a set of
rights, obligations and factual relations, with registration of the main assets with the respective registries.
In February 2010 and in August 2011 Industrial Holding Bulgaria AD signed contracts with a commercial bank
pursuant to which it became the guarantor for a signed credit contract for USD 20,000 thousand granted by the
bank to subsidiary Privat Engineering AD with remaining balance of USD 12,472 thousand as of 31.12.
2013(31.12.2012: USD 13,030 thousand).
IHB provided a guarantee in connection with optional participation of its subsidiary Rekolta 2011 EAD in
investment plan in partnership with Alfa Finance Holding Diamond Solar Europe Limited (100% owned by
Mitsubishi Corporation). The guarantee amounts to EUR 3,700 thousand and is secured. In April 2013 the loan
was repaid to Rekolta AD and the guarantee provided by IHB was cancelled.
Other
The management does not consider that there are significant risks as a result of dynamic fiscal and
regulatory environment in Bulgaria, which would require adjustments to the individual financial statements for
the period ended 30.09. 2013.
23. Financial
instruments
Risk management
Overview
The Company is exposed to the following risks from the use of financial instruments:
 credit risk
 liquidity risk;
 market risk.
This Note gives information on the Company’s exposure to each of the aforementioned risks, the purposes of the
Company, policies and processes related to risk assessment and management and management of the capital of
the Company.
General risk management considerations
The Managing Board is responsible for identification and management of the risks to which the Company is
exposed.
The Company’s risk management policy is elaborated in such a way as to identify and analyse the risks facing
the Company, to set limits for assuming risks and controls, to monitor the risks and the compliance with the set
limits. This policy is subject to regular review to identify possible changes in the risk for the Company. The
Company, through its training and management standards and procedures, aims to develop a constructive control
environment where all employees understand their roles and duties.
The Audit Committee of the Company observes how the management ensures compliance with the risk
management policies and reviews the adequacy within the risk management framework regarding the risks
facing the Company. The Audit Committee of the Company uses the support of the Internal Audit Department.
The Internal Audit Department handles both planned and surprise reviews of the risk management controls and
procedures, the results of which are reported to the Audit Committee.
Credit risk
The credit risk, to which the Company is exposed, is the risk of possible loss in case a client or a party
29
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
to financial instrument agreement fails to perform its contractual obligations. The credit risk is mainly
related to receivables from clients and investments in securities.
Credit risk exposure
The carrying amount of financial assets represents the maximum exposure to credit risk. The maxim
exposure as at the reporting date is as follows:
In BGN thousand
Cash and cash equivalents
Other receivables
Investment in subsidiaries
Investment in associates
Related party receivables
31.12.2013
2012
104
1,155
130,325
1,584
67,470
200,638
2,044
1,511
124,143
1,584
59,675
188,957
Credit risk
Other receivables
The Company’s exposure to credit risk is influenced mainly by the individual characteristics of each
customer. However, management also considers the demographics of the Company’s customer base,
including the default risk of the industry and country in which customers operate, as these factors may
have an influence on credit risk, especially is case of deteriorating economic conditions.
Company’s related party receivables as at 30.06.2013 are in connection with investment programme.
Each funding must be approved by the Managing Board.
The Company establishes an allowance for impairment that represents its estimate of incurred losses in
respect of trade and other receivables. The main components of this allowance are a specific loss
component that relates to individually significant exposures, and a collective loss component
established for groups of similar assets in respect of losses that have been incurred but not yet
identified. The collective loss allowance is determined based on historical data of payment statistics for
similar financial assets.
The maximum exposure to credit risk for trade and other receivables at the reporting date by geographic
region was:
Trade and other receivables from third parties registered
in Bulgaria
Receivables from Group’s companies registered in
Bulgaria
31.12.2013
2012
1,155
1,511
67,470
59,675
30
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
68,625
61,186
Impairment loss
Aging analysis of trade receivables as of the reporting date:
In BGN thousand
31 December 2013
31 December 2012
Gross amount Impairment Gross amount Impairment
Neither past due nor impaired
Up to 0 to 180 days past due
180 to 360 days past due
63,508
1,807
2,155
67,470
-
69,596
628
29
61,186
-
Investments
Investments are mainly in businesses and companies where the Holding has control interest and can determine
the strategy for their development. Portfolio investments are mainly in liquid securities. Management does not
expect any default on such investments.
Guarantees
The policy of the Company envisages issuance of financial guarantees only to subsidiaries following
preliminary approval by the Managing and Supervisory Boards.
Liquidity risk
Liquidity risk is the risk that the Company will have difficulties meeting its obligations associated with
financial liabilities which are settled in cash or through another financial asset. The Company's approach to
liquidity management is to ensure wherever possible that it will always have sufficient liquidity to meet its
obligations both under normal and under stress conditions without incurring unacceptable losses or
harming the reputation of the Company.
The Company elaborates financial planning to cover its expenses and current payables for a period of 30
days, including settlement of financial liabilities; this planning excludes the potential effect of
extraordinary circumstances that may not be foreseen under usual conditions.
Below are given the financial assets with agreed maturity, including expected interest payment excluding
the effect of netting arrangements:
31 December 2013
In BGN thousand
Non-derivatives liabilities
Trade and other payables
Debenture loan and interests
Deposit received from
related parties
Carrying Contractual 6
amount cash flows
months
or less
6-12
months
1-2
years
2-5
years
Over 5
years
370
30,401
4,076
(370)
(32,926)
(4,120)
(370)
(977)
(3,345)
(976)
(775)
(30,973)
-
-
-
34,847
(37,416)
(4,692)
(1,751)
(30,973)
-
-
31
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
31 December 2012
In BGN thousand
Non-derivatives liabilities
Trade and other payables
Debenture loan and interests
Deposit received from
related parties
Carrying Contractual 6
amount cash flows
months
or less
6-12
months
1-2
years
2-5
years
Over 5
years
18,401
21,946
2,120
(18,401)
(22,583)
(2,217)
(18,401)
(22,583)
-
(2,217)
-
-
-
42,467
(43,201)
(40,984)
(2,217)
-
-
-
As disclosed in Note 18, the Company has convertible debenture loan. The breach of covenant may require the
Company to repay the loan earlier than indicated in the above table. Bonds are convertible and/or payable at
maturity date. Except for these financial liabilities, it is not expected that the cash flows included in the maturity
analysis could occur significantly earlier, or at significantly different amounts.
Market risk
Market risk is the risk that changes in market prices, such as exchange rates, interest rates or prices of equity
instruments will affect the income of the Company or the value of its investments. The purpose of market risk
management is to control the exposure to market risk within acceptable limits through return rate optimization.
Currency risk
The Company is exposed to currency risk on sales, purchases and borrowings that are denominated in a currency
other than the functional currency of the Company - the BGN. The currencies in which these transactions
primarily are denominated are in (EUR) and (USD). Effective 1999, the Bulgarian Lev (BGN) rate is fixed to the
Euro (EUR). The applicable exchange rate is BGN 1.95583 / EUR 1.0.
Interest on borrowings is denominated in the currency of the borrowing. Generally, borrowings are denominated
in currencies that match the cash flows generated by the underlying operations of the Company, primarily BGN
and Euro, but also USD. This provides an economic hedge without derivatives being entered into and therefore
hedge accounting is not applied in these circumstances.
Exposure to currency risk
Exposure to currency risk based on notional amount is as follows:
In BGN thousand
Trade and other receivables
Related party receivables
Loan receivables from related parties
Cash and cash equivalents
Debenture loan
Payables to related parties
Trade and other payables
BGN
EUR
USD
31 December 2013
5
1,150
653
5,598
61,219
92
10
2
(30,401)
(4,076)
(370)
BGN
EUR
USD
31 December 2012
81
1,430
74
1,702
57,899
2,041
10
3
(21,946)
(2,120)
(18,401)
(28,499)
(38,569)
62,379
2
59,339
3
Financial instruments denominated in EUR are not exposed to currency risk due to the fixed BGN/EUR
exchange rate.
Interest rate risk
32
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
IHB manages the interest rate risk by signing loan contracts with fixed interest rate.
The interest rate profile of the Company’s interest-bearing financial instruments is given below:
In BGN thousand
Fixed rate instruments
Financial assets
Financial liabilities
Variable rate instruments
Financial assets
Financial liabilities
31.12.2013
31.12.2012
57,256
(34,022)
23,234
60,439
(23,696)
36,743
-
-
Sensitivity analysis for fixed rate instruments
The Company does not account for any fixed rate financial assets and liabilities at fair value through
profit or loss. Therefore, a change in interest rates at the reporting date would not affect profit or loss
and equity.
Capital management
The policy of the Managing Board is to maintain a strong capital base so as to maintain investor, creditor and
market confidence and to sustain future development of the business. Capital consists of share capital, reserves
and retained earnings. The Board seeks to maintain a balance between the higher returns that might be possible
with higher levels of borrowings and the advantages and security afforded by a sound capital position.
There were no changes in the Company’s approach to capital management during the year.
Fair values
Fair value is the amount at which a financial instrument could be exchanged or settled between knowledgeable,
willing parties in an arm's length transaction between them, and which serves as the best indicator of its market
price in an active market.
The Company determines the fair value of financial instruments based on available market information or failing
that, through appropriate models. The fair value of financial instruments that are actively traded in organized
financial markets is determined by reference to quoted prices "buy" at the end of the last business day of the
reporting period. The fair value of financial instruments for which no active market is determined using
valuation models. These models include using recent market transactions between knowledgeable, honest and
willing parties using the current fair value of another instrument with similar characteristics, analysis of
discounted cash flows or other valuation techniques.
The management of Industrial Holding Bulgaria AD believes that the fair values of financial instruments which
include cash, loans and other receivables, bond loans and borrowings, trade and other payables do not differ
from their carrying amount, especially if they are short-term or the applicable interest rates vary according to
market conditions.
24. Events after the date of the report
No important events occurred to the date of the annual financial statements that warrants disclosure in the
present financial statement.
33
INDUSTRIAL HOLDING BULGARIA PLC
NOTES TO THE FINANCIAL STATEMENTS
FOR THE PERIOD ENDED 31 DECEMBER 2013
34