ANNUAL ACTIVITY REPORT OF MONBAT AD, SOFIA FOR THE FINANCIAL YEAR 2012 FORWARD LOOKING STATEMENTS The Annual Report may contain statements which reflect the current view of the Company’s Board of Directors in respect of achieving future financial results, execution of business strategy, plans and objectives of the management. These forward-looking statements concern MONBAT AD and the companies included in its economic group as well as the sectors where the Companies operate in Statements that include the words “expects”, “intends”, “plans”, “projects”, “accepts”, “will”, “aims”, “strives”, “can”, “could be”, “continues”, and other such statements with regard to the future presentation of the company and the companies included in the economic group constitute forward-looking statements for the purposes of the Bulgarian securities legislation and for other purposes. In case that forward-looking statements are presented, the latter concern the future presentation and results of the company that involve risks and uncertainties. It is possible for factors and events to arise that could cause the actual results of MONBAT AD to differ significantly from those given in the forward-looking statements. These factors include but are not limited only to the factors described in the section entitled RISK FACTORS and should be considered in their interaction as well as in view of the whole financial and economic information presented in this document. The forward-looking statements are up-to-date as at the date of the Annual Report. In compliance with the obligations under the Bulgarian legislation and the approved policy of MONBAT AD, the company’s Board of Directors will continue announcing publicly, under the legally provided procedure, new forecasts as well as to update already presented forward-looking statements that need to be corrected. Before taking an investment decision, potential investors should carefully consider the factors stated in the Annual Report, which may cause the actual results of MONBAT AD and the companies in its economic group to differ from the ones presented in this document. PRESENTATION OF FINANCIAL, MARKET, ECONOMIC AND STATISTICAL INFORMATION The financial information in the Annual Report has been prepared in compliance with the International Financial Reporting Standards (IFRS). The market, economic and statistical information as well as information regarding the financial and economic situation in the Republic of Bulgaria and the Bulgarian securities market used in the Report has been taken from various sources, explicitly referred in the respective parts where such information is presented. Information presented in this document regarding a part of the systematic risks for MONBAT AD is extracted from publicly available information, including publications and information disclosed in compliance with the requirements of the applicable securities legislation and other regulations. Information presented in this Report regarding the economic sectors where MONBAT AD operates is extracted from publicly available information, including publications and information disclosed in compliance with the requirements of the applicable securities legislation and other regulations. MONBAT AD does not guarantee the accuracy and exhaustiveness of this information as well as the presence of complete uniformity in the information from all these sources. With this regard, MONBAT AD takes responsibility only for the accurate reproduction of extracts from relevant sources of information. The Board of Directors of MONBAT AD confirm that the information extracted from publications and other publicly available sources is reproduced correctly by the relevant sources and, to the best of its knowledge, no facts which could render the reproduced information inaccurate or misleading are missed. Nevertheless, the Board of Directors of MONBAT AD informs that is has relied on the accuracy of this information without conducting an independent review. DEAR SHAREHOLDERS, We, the members of the Board of Directors of MONBAT AD, led by the desire to manage the company in the interest of the shareholders and pursuant to the provisions of art. 33 of the Accountancy Act, article 100m, paragraph 7 of the LPOS and Annex № 10 to art. 32, paragraph 1, item 2 of Ordinance No. 2 of FCS prepared this Activity Report /the Report/. The Report presents comments and analysis of the financial statements and other essential information regarding the financial situation and the operational results of the company. The Report reflects in a credible way the condition and the development prospects of the company. In 2012 circumstances occurred that the Company's management believes could be of relevance for investors in taking a decision to acquire, sell or continue holding publicly traded securities. These circumstances have been disclosed within the terms and in accordance with the procedure as provided by the LPOS to the investors, the regulated securities market and the Financial Supervision Commission. The same are also available on the company’s website www.monbat.com – “Investor Center” section, “News – Important Information”. The financial 2012 was successful for MONBAT AD – the company generated net sales in the amount of BGN 183 371 thousand which represents a 6 % decrease in comparison with the net sales generated by 31.12.2011 in the amount of BGN 194 931 thousand. The individual net profit of MONBAT AD as at 31.12.2012 is in the amount of BGN 9 051 thousand and reports a 45 % increase compared to the individual net profit of the company for 2011 which is in the amount of BGN 6 250 thousand. І. GENERAL INFORMATION ABOUT THE COMPANY The company was filed by a resolution of 13.06.1990 of the District Court of Montana and based on an Order № 45 of 14.05.1990 of the Ministry to Economy and Planning of the PRB (People's Republic of Bulgaria) with the register of state-owned companies and companies of public organizations under № 23 as a state company “AKUMIKAR” with its headquarters Mihailovgrad, scope of activity: production of accumulator batteries and statutory fund – 3 468 thousand Bulgarian levs (state property), provided to the state company in its capacity of the successor of the battery factory - the town of Mihailovgrad from "Pima" company – Mihailovgrad, incorporated by a resolution № 83 of the Council of Ministers as of June, 1989. By a resolution of 16.02.1999 of Montana District Court in the Commercial Register under the batch of “AKUMIKAR” AD was filed the change of the business name of the Company from “AKUMIKAR” AD to “MONBAT” AD. Following that date the company has not changed its legal and business name. According to the provisions of Article 4 of the Articles of Association of MONBAT AD, the Company shall not be limited by time or other resolutive condition. The company was incorporated in the Republic of Bulgaria in accordance with the Bulgarian legislation. The legal and organizational form of MONBAT AD is a joint stock public company. The company has its registered seat and business address at 4, Golo Bardo Str., Lozenetz district, 1407 Sofia. Telephone: + 359 2 962 1150 Fax: + 359 2 962 1146 E-mail : investorrelations@monbat.com Website: www.monbat.com As at the date of this Activity Report the share registered capital of the company is in the amount of BGN 39 000 000 divided in 39 000 000 dematerialized registered shares with a nominal value of BGN 1.00 each of them. Changes in the capital of MONBAT AD since the establishment of the company to date are as follows: On 16.02.1999 by a resolution of Montana District Court in the Commercial Register were filed the following changes under the batch of “AKUMIKAR” AD: the company’s capital was increased form 101 260 000 Bulgarian levs to 749 300 000 Bulgarian levs through issuance of new 64 804 registered voting shares with a nominal value of 10 000 Bulgarian levs each of them. By a resolution № 4 оf 05.07.2000 of Sofia District Court the capital of MONBAT AD was denominated from 749 300 000 Bulgarian levs to BGN 749 300, divided into 74 930 registered voting shares with a nominal value of BGN 10 each of them. By a resolution № 8 of 13.01.2003 of Sofia District Court the capital of MONBAT AD was increased from BGN 749 300 to BGN 800 000 through issuance of new 5 070 shares with a nominal value of BGN 10 each of them. By a resolution № 10 of 29.12.2005 of Sofia District Court the capital of MONBAT AD was increased from BGN 800 000 to BGN 14 800 000 through issuance of 1 400 000 registered voting shares with a nominal value of BGN 10 each of them. By a resolution № 11 of 07.08.2006 of Sofia District Court was filed a change in the type of shares of MONBAT AD from materialized into dematerialized and the nominal value of BGN 10.00 per share was changed to a nominal value of BGN 1.00 per share. By a resolution № 12 of 29.11.2006 of Sofia City Court was filed the company’s capital increase from BGN 14 800 000 to BGN 19 500 000 through issuance of new 4 700 000 dematerialized shares with a nominal value of BGN 1.00 each of them. At the general assembly of the shareholders of MONBAT AD held on 16.05.2008 was approved a resolution a part of the company’s profit for the year 2007, together with the Reserve Fund, to be used for the increase of the Company’s capital and the rest of the profit for the year 2007 to be distributed to the shareholders as dividends. The capital increase of MONBAT AD under the procedure of Art.197, para. 1 and Art. 246, para. 4 of the Commercial Act from BGN 19 500 000 to BGN 39 000 000 was filed with the Commercial Register on 15.06.2008. At its session as of 16.07.2008 the Financial Supervision Commission approved a resolution to file the subsequent issue of shares of MONBAT AD, issued as a result of the company’s capital increase from BGN 19 500 000 to BGN 39 000 000. The overall amount of the share registered capital of the company was admitted to trading on the Bulgarian Stock Exchange – Sofia AD. In 2009, 2010, 2011 and 2012 were not made changes in the amount of the capital of MONBAT AD. As at 31.12.2012 the capital structure of MONBAT AD is the following: Table № 1 Name of shareholder Prista Oil Holding EAD, Sofia Monbat Trading OOD, Sofia Monbat AD – treasury ordinary shares Other physical and legal persons Number of shares Percentage of capital 26 720 129 68.51 % 2 752 800 7.06 % 2 622 865 6.72 % 6 904 206 17.71 % MONBAT AD is a part of an economic group. Major shareholder of the issuer is Prista Oil Holding EAD, Sofia. Prista Oil Holding EAD and Monbat Trading Ltd. are related parties and jointly hold 75.57 % of the votes at the general assembly of MONBAT AD. For further details, please refer to note 18 Share Capital to the audited financial statements. Prista Oil Holding EAD was registered under company’s case N 13825/1994 of Sofia City Court with registered seat and business address at 9, Layosh Koshut Str., Sofia. AS AT 31.12.2012 THE STRUCTURE OF THE ECONOMIC GROUP OF MONBAT AD IS THE FOLLOWING: At the regular annual session of the general assembly of the shareholders of MONBAT AD, held on 25.06.2012 was approved a decision to change the management system of the company, namely to turn form a two-tier to one-tier management system. At the held session of the general assembly of the shareholders was approved a decision for the company to be managed by a Board of Directors consisting of 9 members, namely: Atanas Bobokov – Chairperson of the Board of Directors Petar Petrov – Executive Director Ivan Karageorgiev – Member of the Board of Directors Plamen Bobokov – Member of the Board of Directors Stoyan Stalev – Member of the Board of Directors Alexander Chaushev – Member of the Board of Directors Nikolay Trenchev – Member of the Board of Directors Kamen Zahariev – Member of the Board of Directors Florian Huth – Member of the Board of Directors The members of the Board of Directors of MONBAT AD were filed with the Commercial Register to the Registry Agency on 25.07.2012 under № 20120725103746. At the regular annual session of the general assembly of the shareholders of MONBAT AD, held on 25.06.2012 were adopted new Articles of Association of the company, filed with the Commercial Register to the Registry Agency on 25.07.2012 under № 20120725104818. ІІ. OVERVIEW OF THE ACTIVITIES AND THE CONDITION OF THE COMPANY 1. Principal Activity The principal activity of MONBAT AD is production of lead-acid starter and stationary accumulator batteries and their servicing. The products of the company can be divided in the following main groups: Starter Batteries Comprehensive lineup of starter batteries, featuring the classic construction "Dynamic", "Maintenance Free", "Premium", "Heavy Duty" and "JIS" series and the AGM range under the label GEM. The batteries application cover the entire range of passenger and commercial vehicles, heavy trucks and agricultural machines, operating in normal and harsh environmental conditions. Stationary Batteries Valve-regulated lead-acid (VRLA-AGM) batteries, constructed in accordance with the following standards and reference norms: IEC 60 896-21/22, EN 60896-2, BS 6290-4, IEC 707 FVO, UL 94 VO, BS 6334 FVO, BDS 10457 / 88 and EUROBAT specification: Long life. Product range of 2-, 4-, 6- and 12-volt batteries with capacities from 50 to 600 Ah. Semi-traction Batteries An impressive combination of supperior cycling performance and superb starting power, makes these batteries a multipurpose energy source for applications like small traction, solar systems, cleaning machines, lifting devices, lighting, leisure time, etc. Special Batteries Batteries for military application, suitable for both Russian and NATO designed tanks and armoured vehicles - LAND POWER series, as well as for Russian helicopters and Airplanes - AIR POWER series. Locomotives Batteries Railroad source of starter power - batteries designed to facilitate diesel engines initial cranking and to provide the electronic and control circuits power supply in the electrolocomotives. 2. Major raw materials The major raw materials essential to the Company’s activities are: lead with purity of 99.99% and 99.985%, lead alloys - antimony and calcium, polypropylene trade-mark 7523, polyethylene separator and sulfuric acid. The availability of these materials that MONBAT AD supports ensures the production process for a period of between 15 and 30 days. Prices of lead and lead alloys and polypropylene are variable and directly dependent on the exchange prices of lead on the London Metal Exchange and the stock exchange price of oil. During the last 4 years the management of MONBAT AD has made considerable investment expenses to ensure resource availability of lead and propylene - own production, by means of building its own recycling facilities. In 2009 was completed the overall construction of a powerful industrial product base for recycling of accumulator battery and lead scrap, lead alloys, polyethylene and polypropylene production of lead, lead alloys, polyethylene and polypropylene materials in the town of Montana. The production was put into operation and provides a significant part of the raw material needed by MONBAT AD. On 01.09.2010 in the town of Indjiya, Serbia was officially opened the state-of-the-art plant in the region for recycling of used lead-acid batteries – Monbat DOO. It is expected that the plant will process annually between 15 – 16 000 tones of lead and lead alloys. On 31.01.2011 the second foreign recycling plant in the economic group of MONBAT AD - Monbat Recycling SRL, Romania started production activities. On 09.06.2011 in the city of Bucharest, Republic of Romania was officially opened the state-of-the-art plant for recycling of used lead-acid batteries – Monbat Recycling, Romania. The investment amounts to EUR 13 million and has been made within approximately 3 years. For the construction of the plant have been used the latest technologies in the recycling field, as the equipment was made in Italy, France and Bulgaria. It is expected that initially the plant will produce annually between 15– 16 000 tones of lead and lead alloys. However, the capacity of the installation for crushing used lead and lead alloys is 40 thousand tones annually and that of the metallurgical section – 22 thousand tones annually. The produced lead and lead alloys will be placed on the European Union market as well as in other countries, including for production of batteries of the parent company in Bulgaria. This was the second foreign plant for recycling of used lead-acid batteries that MONBAT AD opened. The share of own recycled lead used in the production process in 2010 was 47% and the share of the recycled polypropylene - own production - almost 100 %. The share of own recycled lead, that MONBAT AD purchases mainly from its subsidiaries, used in the production process in 2011 represents 85% and the share of the recycled polypropylene - own production - almost 100 %. The share of own recycled lead, that MONBAT AD purchases mainly from its subsidiaries, used in the production process in 2012 represents 62% and the share of the recycled polypropylene - own production - almost 100 %. By means of creating own recycling facilities, the management of the company strives to reduce the risk of change in the price of the major raw materials. The movement of the lead price in 2012 is shown in the following diagram: MOVEMENT OF THE LEAD PRICE FOR THE PERIOD JANUARY-DECEMBER 2012 Au gu Se pt st em be r O ct ob N ov e r em be D r ec em be r Ju ly Ja nu a Fe ry br ua ry M ar ch Ao r il M ay Ju ne 2500 2000 1500 1000 500 0 USD/MT The production is dependent on the price of electricity and natural gas, which are currently state-regulated. However, these prices do not significantly affect the cost price formation, as production of accumulator batteries is not energy consuming - up to 3.56 % of the cost price of the output is determined by electricity consumption and 1.37 % of the natural gas consumption. MARKETS AND SALES The marketing channels of MONBAT AD are built primarily on the basis of distribution trading for the domestic and foreign market. The company has granted deferred payment terms for the domestic market up to 30 days and for the foreign market – up to 90 days. In case of deferred payments, sales are being insured by BAEZ AD (the Bulgarian Export Insurance Agency). MONBAT AD produces a wide range of products and has international positions in the markets of the Balkan countries and expanded market presence in the Western European markets, including Germany, France, Italy, Great Britain, Belgium, Switzerland, Norway, England, Sweden, Italy, Poland. Direct competitors on the regional market are the Bulgarian producers which are significantly inferior both in terms of capacity and quality to MONBAT AD. The largest among them is Elhim-Iskra AD. In 2007 MONBAT AD acquired the third largest producer in the accumulator batteries business in Bulgaria – START AD, Dobrich. The net sales generated by the company in 2012 are in the amount of BGN 183 371 thousands which represents a decrease by 6 % compared to 2011 when the generated net sales revenues were in the amount of BGN 194 931 thousands. The generated sales revenues on the domestic market in 2012 are in the amount of BGN 46 793 thousand and represent 25.52 % of the total sales and the generated revenues from exports including intra-community supplies are in the amount of BGN 136 578 thousand and represent 74.48 % of the company’s net sales revenues. BREAKDOWN OF THE NET SALES REVENUES ON THE DOMESTIC AND FOREIGN MARKETS 31.12.2012 25,52 % 74,48% Export Domestic market For the period 01.01.2012 - 31.12.2012 MONBAT AD has generated individual revenues from exports totaling BGN 136 578 thousand which represents 74.48 % of the total net sales revenues. For the period 01.01.2012 - 31.12.2012 the major market for MONBAT AD was France with EUR 9.85 mln. sales revenues which represents 14.10 % of the totals exports of the company on an individual basis. Breakdown of the markets of MONBAT AD in 2012 is presented in the following table: Тable № 2 31.12.2012 Country FRANCE GERMANY OTHER TURKEY GREECE GREAT BRITAIN HOLLAND SPAIN SERBIA UKRAINE POLLAND ROMANIA HUNGARY ITALY BELGIUM SOUTH AFRICA Export (EUR, mln) 9.85 7.01 7.69 4.94 4.17 4.02 3.49 2.78 2.43 2.39 2.30 2.15 2.08 1.99 1.95 1.88 31.12.2011 % 14.11 10.04 11.01 7.07 5.97 5.76 5.00 3.98 3.48 3.42 3.29 3.08 2.98 2.85 2.79 2.69 Export (EUR, mln) 13.23 13.18 5.79 4.49 2.13 4.03 2.97 2.24 1.07 1.50 3.40 2.56 1.64 1.89 1.77 0.50 % 18.94 18.86 8.29 6.43 3.05 5.77 4.25 3.21 1.53 2.15 4.87 3.66 2.35 2.70 2.53 0.72 CZECH IRELAND FINLAND DENMARK NORWAY EGYPT LITHUANIA TOTAL 1.68 1.55 1.44 1.27 1.11 0.88 0.78 69.83 2.41 2.22 2.06 1.82 1.59 1.26 1.12 100 1.26 1.51 1.56 1.26 1.09 0.1 0.7 69.87 1.80 2.16 2.23 1.80 1.56 0.14 1.00 100 BREAKDOWN OF SALES BY TYPES OF BATTERIES AS AT 31.12.2012 Specialized batteries arm y power range; 1,50% Sem i-traction batteries; 3% Locom otive batteries; 0,50% Stationary batteries for telecom application; 26% Starter batteries; 69% BREAKDOWN OF SALES BY TYPES OF BATTERIES AS AT 31.12.2011 Specialized batteries army power range; 1,50% Locomotive batteries; 0,50% Semi-traction batteries; 3% Stationary batteries for telecom application ; 18 % Starter batteries; 77% OPERATING RESULTS As a result of its business activities carried out in 2012 MONBAT AD reports profit before taxes in the amount of BGN 10 236 thousand which represents a growth by 45 % compared to the profit before taxes generated in 2011 in the amount of BGN 7053 thousand. The individual net profit of MONBAT AD for 2012 is in the amount of BGN 9051 thousand and registers a growth by 45 % compared to the company’s individual net profit for 2011. NET SALES REVENUES, EBITDA, NET PROFIT 120 104,06 93,76 99,67 100 80 Net sales revenues 60 40 EBITDA Net profit 9,61 5,85 7,19 20 3,20 6,36 0 2010 2011 *Data presented in EUR mln. 2012 4,63 Table №3 SHAREHOLDERS' EQUITY, MINORITY HOLDINGS AND LIABILITIES 2010 1 а А. SHAREHOLDERS' EQUITY I. Share capital II. Reserves III. Retained earnings 1. Retained earnings from previous periods undistributed profit loss not covered one-time effect from changes in accounting policy 2. Current year profit 3. Current year lost Total retained earnings TOTAL SHAREHOLDERS' EQUITY "А" (I+II+III): 2011 2 2012 3 % 37326 72005 -1% 7% 36858 76978 -1% -3% 36377 74893 0 0 0 0 0% 0% 0% 0 0 0 0 0% 0% 0% 0 0 0 0 14064 0 14064 0% -56% 0% -56% 6250 0 6250 0% 45% 0% 45% 9051 0 9051 123395 -3% 120086 0% 120321 Table № 4 2010 14 223 Operational profit 2011 7 227 2012 6 965 The operating profit of MONBAT AD for 2010 is in the ammount of BGN 14 223 thousand. In 2011 was reported a decrease in the amount of the generated operating profit as it was in the amount of BGN 7227 thousand. The individual operating profit of the company generated in 2012 is in the amount of BGN 6965 thousand. In 2012 compared to 2011 the company’s net sales revenues decreased by 6 % as the as the operating expenditures of the company also decreased by 6 %. Table №5 Operating revenues by ca tegory REVENUES А. Operating revenues I. Net revenues from the sale of: 1. Finished goods 2. Goods for sale 3. Services 4. Other I: Total net revenues from sale II. Revenues from financing for fixed assets incl. government grants II: Total III. Financial income 1. Interest revenue 2. Divident income 3. Gains from operations with financial assets and instruments 4. Gains from foreign exchange operations 5. Other financial income III: Total financial income B. Total revenues before extraordinary activities (I+II+III) 2010 1 2011 2 % (in thousand BGN) 2012 3 156855 5669 1370 39627 203 521 -6% -80% 5% 12% -4% 147840 1150 1439 44502 194 931 0% -75% -33% -23% -6% 147916 284 966 34205 183 371 0 0% 0 0% 498 1733 0 59% 0% 2757 0 74% 0% 4807 0 1011 0 94 1254 4 092 0% 101% 0% -28% 189 0 2 946 0% -82% 0% 69% 0 34 150 4 991 207 613 -5% 197 877 -5% 188 860 Operating expenditures by category Table № 6 ЕXPENSES а 2010 1 Expenditures I. Operating expenses 1. Materials 2. External services 3. Depreciation 4. Salaries 5. Social secutiry 6. Net book value of assets sold (finished goods excluded) 7. Assets under construction and write off of assets 8. Other expenses incl. impairment of assets incl. provisions Total: 2011 2 % (in thousand BGN) 2012 3 119431 12586 4582 6952 1269 0% -4% -8% -16% -16% 119163 12063 4210 5862 1071 4% 12% 18% -16% -18% 123703 13465 4969 4952 875 39145 100% 35863 -39% 21745 3282 100% 5618 -123% -1310 2051 0 0 189 298 88% 0% 0% -1% 3854 0 0 187 704 108% 0% 0% -6% 8007 0 0 176 406 FINANCIAL INDICATORS 1. LIQUIDITY Table № 7 As of 31.12.2010 As of 31.12.2011 As of 31.12.2012 Total liquidity ratio 1,69 As of 31.12.2010 1,28 As of 31.12.2011 1,23 As of 31.12.2012 Quick ratio 1,08 As of 31.12.2010 0,80 As of 31.12.2011 0,75 As of 31.12.2012 Immediate ratio 1,08 As of 31.12.2010 0,80 As of 31.12.2011 0,75 As of 31.12.2012 0,02 0,06 0,03 Absolute liquidity ratio LIQUIDITY INDICATORS 1,80 1,60 1,40 1,20 1,00 0,80 0,60 0,40 0,20 0,00 1,69 1,08 1,28 1,08 0,80 1,23 0,80 0,75 0,06 0,03 0,02 As of 31.12.2010 As of 31.12.2011 0,75 As of 31.12.2012 Total liquidity ratio Quick ratio Immediate ratio Absolute liquidity ratio The trend of the liquidity indicators over time provides the most valuable information. Liabilities to creditors of MONBAT AD are being paid off in cash rather than using inventories or equipment. I.e., these factors describe the company's ability to pay off its debts on time. TOTAL LIQUIDITY RATIO The total liquidity ratio is one of the earliest formulated indicators and is considered to be universal. The total liquidity ratio represents the ratio of current assets to current liabilities. It could be expected that current assets will be at least equal to current liabilities, whereas actually it is normal for them to be even slightly higher than the current liabilities. Therefore, optimal values of this ratio are over 1-1,5. However, some types of companies are able to operate at odds of less than 1. For 2012 the value of the total liquidity ratio from 1.23 decreased compared to the rate, reported for the previous period, of 1.28 and remains lower compared to the rate achieved in 2010 of 1.69. The rate decrease of this ratio for 2012 compared to 2011 is due to the increase in the amount of the company’s current assets by 6% and the increase in the amount of the company’s current liabilities by 10 %. IMMEDIATE LIQUIDITY RATIO The value of the immediate liquidity ratio of MONBAT AD for 2012 is 0.75 which is slightly lower compared to its rate of 0.80 in 2011 and remains lower compared to the rate of 1.08 achieved in 2010. The decrease in the value of the immediate liquidity ratio for 2012 compared to 2011 is due to the increase in the amount of the current receivables of MONBAT AD by 5 %, cash decrease by 35 % and increase in the amount of the current liabilities by 10 %. QUICK LIQUIDITY RATIO The quick liquidity ratio represents the ratio of current assets minus inventories to current liabilities. Its traditional rate, setting stability for the company, is about 0, 5 but much higher rates would indicate that company’s assets are not being used in the best way. The quick liquidity ratio of the company for 2012 is 0.75 and has decreased if compared to the rate of 0.80 for 2011. In the 2012 compared to 2011 the group of inventories increased by 12 %. ABSOLUTE LIQUIDITY RATIO The absolute liquidity ratio is calculated as the ratio of cash and short term liabilities and indicates company’s ability to meet its short term liabilities with its available cash. The absolute liquidity ratio of the company for 2012 is 0.03. For 2012 the company’s cash apposition is decreased by 35 % compared to 2011 while the short term liabilities increased by 10 %. 2. Capital resources Table № 8 As of 31.12.2010 As of 31.12.2011 As of 31.12.2012 Financial leverage indicator 0,55 As of 31.12.2010 0,50 As of 31.12.2011 0,53 As of 31.12.2012 Debt/Assets 0,35 As of 31.12.2010 0,33 As of 31.12.2011 0,35 As of 31.12.2012 1,83 1,99 1,88 Financial autonomy indicator LEVERAGE INDICATORS 2,50 1,99 2,00 1,88 1,83 1,50 1,00 0,55 0,35 0,53 0,50 0,50 0,35 0,33 0,00 As of 31.12.2010 As of 31.12.2011 Financial leverage indicator As of 31.12.2012 Debt/Assets Financial autonomy indicator The financial autonomy and financial leverage indicators report on the ratio between own funds and borrowed funds in the capital structure of the company. High rates of the financial autonomy inicator, respectively, the low rates of the financial leverage indicator, provide guarantee both for investors /creditors/ and for the owners themselves, on the ability if the company to pay regularly its long-term liabilities. The effect of using borrowed funds (debt) by the company with a view to increase the final total net income from the funds involved in the activity (equity and borrowings) is called financial leverage. The benefit of using financial leverage appears when the company benefits from the investment of borrowed funds more than the expenses (interest) on their attraction. When a company achieves higher yields when using borrowed funds in its capital structure than the expenses on their attraction are, leverage is justified and should be considered in a positive way (with the reservation that the rate of leverage does not significantly negatively influence other financial indicators of the company). FINANCIAL AUTONOMY RATIO The financial autonomy ratio shows what percentage of the total liabilities represents the shareholders’ equity of the company. As at 31.12.2012 the value of the financial autonomy ratio of the company is 1.88, compared to its rate of 1.99 achieved in 2011 and its rate of 1.83, reported for 2010. During the analyzed financial period the value of the financial autonomy ratio decreased compared to the previous 2011. The indicated decrease in 2012 compared to 2011 is due to the increase of the company’s debt by 6 %. FINANCIAL LEVERAGE RATIO The indicators for the share of capital, obtained through loans show what part of the total capital represent the borrowings. The higher the share of long-term debt compared to shareholders’ equity is, the higher will be the likelihood of failure in the payment of fixed liabilities. The value of the financial leverage ratio of MONBAT AD for 2012 is 0.53 slightly increased if compared with 2011 (0.50). In 2012 the current liabilities of the company grew by 10%, the non-current liabilities decreased by 3 % and the value of the shareholders’ equity of the company reported an increase by 0.002 % if compared with 2011. DEBT TO TOTAL ASSETS RATIO The rate of the ratio shows what part of the assets is being financed through debt. Table № 9 Debt/ Assets 2010 2011 2012 0.35 0.33 0.35 As at 31.12.2012 the value of the Debt/Assets ratio is higher compared to its rate for 2011. The increase in the value of this ratio is due to the increase of the company’s total debt by 6 % with an increase in the value of the company’s assets by 2 %. 3. KEY INDICATORS Summarized information on the financial indicators of MONBAT AD for the last three financial years is presented in the following table: Table № 10 Indicators Net sales EBITDA EBIT Net profit Shareholders’ equity Long-term liabilities Short-term liabilities Long-term (non-current) assets Short-term (current) assets Working capital Cash Total debt Total assets Interest expenses 2010 2011 2012 203 521 18 805 14 223 14 064 123 395 18 619 48 918 108 473 82 459 33 541 732 67 537 190 932 1 938 194 931 11 437 7 227 6 250 120 086 15 495 44 811 123 168 57 224 12 413 2630 60 306 180 392 2 379 183 371 12 432 7 463 9 051 120 321 14 956 49 185 123 806 60 656 11 471 1 713 64 141 184 462 1 800 Inventories Short-term receivables Operating expenditures Materials Profitability of sales ROA Return on assets ROE Return on equity Inventory Turnover Period Receivable Collection Period Working capital Turnover Period Interest Coverage – interest expenses/EBIT Total Turnover of Working Capital 29 297 52 120 189 298 119 431 6.91 % 7.37 % 11.40 % 51.82 33.88 59.33 0.14 6.07 21 045 33 415 187 704 119 163 3.20 % 3.46 % 5.20 % 38.87 41.98 22.92 0.33 15.70 23 581 35 244 176 406 123 703 4.94 % 4.91 % 7.52 % 46.29 48.42 22.52 0.24 15.99 RETURN ON EQUITY (ROE) The Return on Equity indicator is calculated as the profit after taxation from the total income statement as a percentage of the company's shareholders’ equity. This ratio measures the return to shareholders in terms of their absolute investments. This ratio reports stable high rates for the last three financial periods due to the generated profit for these years. For 2012 the value of the Return on Equity ratio from 7.52 reports a growth compared to its rate of 5.20 % in 2011. The increase in the value of the Return on Equity ratio is due to the increase of the company’s net profit by 45% with a increase of the shareholders’ equity by 0.002 %. RETURN ON ASSETS (ROA) The Return on Assets indicator shows the effectiveness of using the total assets in the company. The ratio operating profit to total assets increased its rate in 2012 compared to 2011 from 3.46 % to 4.91 %. The increase in the value of the Return on Assets indicator in 2012 compared to 2011 is due to the increase of the company’s net profit by 45 % and the increase of the total assets by 2 %. ІІІ. PRINCIPAL RISKS WHICH THE ISSUER FACES Risks relevant to the Company and its operations can generally be divided into common (systematic) and specific (unsystematic) risks. Systematic risks are related to the macro environment where MONBAT AD operates, therefore they are not subject to control by the management team. Unsystematic risks are directly relevant to the operations of the Company and largely depend on the corporate Board. For their minimization it is relied on increasing the effectiveness of internal business planning and forecasting, which will provide opportunities to overcome the potential negative consequences of risk event occurring. The general risk management plan of the Company’s management is focused on the unpredictability of the financial markets and is aimed at minimizing the potential negative impact over the Company’s financial standing. Each of the risks associated with the state – political, economic, credit, inflation, monetary - has its own importance, but their aggregate consideration and interaction form an overall picture of the economic fundamentals, market conditions, and competitive conditions in the country where the respective company operates. SYSTEMIC RISKS OVERALL MACROECONOMIC RISK In 2012, the GDP amounted to BGN 77 583 million in current prices. Recalculated in Euro, GDP is EUR 39 667 million which is EUR 5 436 per person. GDP in 2012 grew in real terms by 0.8 per cent compared to 2011. Pursuant to data of the National Statistical Institute in December 2012, the industrial production index, calculated based on seasonally adjusted data, grew by 2.4 % compared to November 2012. In December 2012, the callendary adjusted industrial production index registered a 4.1 % growth compared to the respective month of 2011. Industrial production Index Percentage change in the Industrial production Index compared to the previous month Construction Production Indexes Percentage change in the Construction Production Indexes compared to the previous month In December 2012 the construction production index, calculated by seasonally adjusted data, reported lower rates compared to the previous month as the civil/engineering construction production decreased by 18.6 % and the building constructin production decreased by 2.9 %. On a yearly basis the decrease of the construction production in December 2012 was determined by the negative rate of the building construction where the decrease, calculated by seasonally adjusted data, was by 15.4 % ans the building construction registered a decrease by 14.7 %. In 2012 the export of Bulgaria for the EU decreased by 3.6 % compared to 2011 and was in the amount of BGN 23.8 billion and the import increased by 7.5 % and amounted to BGN 29.2 billion. In December 2012, exports to the EU decreased by 10.0 % compared to the same month of the previous year and amounted to BGN 1.7 billion and the imports decreased by 7.9 % and were in the amount of BGN2.2 billion. Nominal change in the value of exports to the EU for the period 2011 – 2012 Nominal change in the value of imports from the EU for the period 2011 – 2012 INTEREST RATE RISK The interest rate risk is related to possible, contingent adverse changes in the interest rates, set by the financial institutions in the Republic of Bulgaria. At the session held on 04.10.2012 the Management Board of the European Central Bank adopted a resolution to leave the main interest rate unchanged – 0.75 %. The European Central Bank preserved unchanged also the deposit rate – 0 % and the marginal lending rate - 1.50 %. At the session of the European Central Bank held on 09.11.2012 was adopted a resolution the main interest rate to remain unchanged – 0.75 %. According to the President of the European Central Bank, the Eurozone economic activity is expected to remain weak and the recent economic researches do not show signs for improvement at the end of the year. On 06.12.2012 was held a session of the European Central Bank where the Bank left the main interest rate unchanged – 0.75 % and the President of the Bank expressed an opinion that probably the economy of the Eurozone will decrease in 2013, as he sharply reduced his growth forecast. The new evaluation of the European Central Bank for the GDP in 2013 ranges from a 0.9 % decrease and a growth by slightly 0.3 %. In particular, the European Central Bank has lowered its forecast for the Eurozone economy in 2013 up to minus 0.3 per cent compare to the earlier expected growth of 0.5 per cent. THE BASE INTEREST RATES OF THE BULGARIAN NATIONAL BANK FOR THE PERIOD JANUARY – DECEMBER, 2012 ARE THE FOLLOWING: Table № 11 Month Interest rate January, 2012 February, 2012 March, 2012 April, 2012 May, 2012 June, 2012 July, 2012 August, 2012 September, 2012 October, 2012 November, 2012 December, 2012 0.22 % 0.18 % 0.15 % 0.15 % 0.14 % 0.14 % 0.16 % 0.08 % 0.04 % 0.03 % 0.04 % 0.04 % *Source: BNB INFLATION RISK Inflation risk is the overall increase in prices, where money is devalued and there is likelihood for households and businesses to suffer a loss. According to data of the National Statistical Institute the consumer prices index (CPI) for December, 2012 compared to November, 2012 was 100.4 %, i.e. monthly inflation was 0.4 %. The yearly inflation for December 2012 compared to December 2011 was 4.2 %. INFLATION MEASURED BY THE CONSUMER PRICE INDEX (CPI) BY MONTHS The consumer prices index (CPI) for November 2012 compared to October 2012 was 99.9 %, i.e. monthly inflation was minus 0.1 %. The inflation from the beginning of the year (November, 2012 compared to December, 2011) was 3.8 % and the yearly inflation for November, 2012 compared to November, 2011 was 3.9 %. The consumer prices index for October, 2012 compared to September, 2012 was 100.3 %, i.e. monthly inflation was 0.3 %. The inflation from the beginning of the year (October, 2012 compared to December, 2011) was 4.0 % and the yearly inflation for October, 2012 compared to October, 2011 was 4.4 %. INFLATION IN THE COUNTRY FOR THE PERIOD JANUARY – DECEMBER 2012 IS THE FOLLOWING: Table № 12 Month January, 2012 February, 2012 March, 2012 April, 2012 May, 2012 June, 2012 July, 2012 August, 2012 September, 2012 October, 2012 November, 2012 December, 2012 % of inflation 0.2 % 0.4 % 0.3 % 0.2 % -0.1 % -1.0 % 1.5 % 0.5 % 1.1 % 0.3 % -0.1 % 0.4 % *Source: NSI POLITICAL RISK Political risk is related to the stability of the Government of the country and to eventual adverse changes in its long term foreign and internal economic policy that might affect negatively the investment environment. The unstable political situation in the country as of the beginning of 2013 and the continuing civil protests are factors that inevitably adversely affects all economic actors in 2013. CURRENCY RISK Exposure to currency risk is the dependence on and the effects from changes in the currency exchange rates. Systematic currency risk is the likelihood of any possible change of the currency regime in the country (currency board) which would either lead to devaluation of the BGN or the appreciation of the BGN against foreign currencies. Currency risk will have impact over companies having market shares, payments to which are made in currencies different from the Bulgarian lev and the euro. In view of the fact that according to the current legislation in the country the Bulgarian lev is pegged to the euro at the rate of EUR 1 = BGN 1.95583 and the Bulgarian National Bank is obliged to maintain a level of Bulgarian lev in circulation equivalent to the foreign exchange reserves of the Bank, the risk of devaluation of the lev against the European currency is minimal and consists in a possible elimination of the currency board in Bulgaria ahead of term. At this stage it appears to be unlikely since the the Currency Board is expected to be repealed upon adoption of the euro as an official legal tender in Bulgaria, which was planned for 2012. Theoretically, currency risk could increase when Bulgaria joines the second phase of the European Exchange Rate Mechanism (ERM II). This is a regime under which the country must maintain the currency rate against the euro within a + / -15% from central parity. In practice, all countries which are currently in the mechanism (Denmark, Estonia, Cyprus, Lithuania, Latvia, Malta) have witnessed fluctuations that were significantly smaller than the allowed ± 15%. The fixed rate of the BGN to the EUR does not eliminate the risk for the Bulgarian currency of adverse movements in the euro exchange rate against other major currencies (U.S. dollar, British pound, Swiss franc) in the international financial markets, but at present the company does not consider that this risk would be significant in terms of its activity due to the fact that all purchases and sales of MONBAT AD being carried out in euro. The company might be affected by the currency risk, depending on the type of currency of its cash and the type of currency of the company’s contingent loans. NON-SYSTEMIC RISKS RISK OF PRICE CHANGES IN THE BASIC PRIME AND RAW MATERIALS The principal activity of MONBAT AD is production and trading with accumulator and lead-acid batteries – starter batteries, stationary batteries for telecom application, semi-traction batteries, specialized batteries – army power range and locomotive batteries. Major prime and raw materials for the company’s production process are lead and lead alloys, polypropylene, polyethylene separator and sulfuric acid. For the last three years, lead takes the following percentage of the cost structure per unit: 2010 - 85% 2011 - 87% 2012 – 70-72 % MOVEMENT OF THE LEAD PRICE FOR THE PERIOD JANUARY-DECEMBER 2012 Au gu Se pt st em be r O ct ob N ov e r em be D r ec em be r Ju ly Ja nu a Fe ry br ua ry M ar ch Ao r il M ay Ju ne 2500 2000 1500 1000 500 0 USD/MT * Average lead price for 2012 is 2202.76 USD/MT The risk of price change in the basic raw material – lead is being managed by means of construction of company’s own recycling facilities. DEPENDENCE CUSTOMERS OF MONBAT AD ON DISTRIBUTORS, SUPPLIERS, There is no dependence of MONBAT AD on customers due to the fact that company’s sales are not being made directly with customers but through the mediation of an extensive distribution network in the country and abroad. Sales with deferred payment in the country and for export are insured in the Bulgarian Export Insurance Agency (BAEZ) by reason of which the risk of non-payment on the part of the customers is completely eliminated. MONBAT AD is an export-oriented company. The company exports most of its products as the most important markets as Germany, Britain and France. DEPENDENCE OF MONBAT AD ON KEY PERSONNEL The professional activities and efforts, qualifications, motivation and reputation of the members of the corporate boards and the senior officials of MONBAT AD and the companies within the economic group are essential for achieving the strategic and investment objectives of the Company. The leave or release of any member of corporate boards or key executive official would, in the short term, negatively affect the smooth conduct of the company’s business activities. Nevertheless, the established management system and consistently applied corporate policy for provision of incentives to motivate employees within the structure, guarantee to a great extent the long-term participation of the corporate boards’ members and key management personnel in the activities of the company. RISK OF CHANGE IN THE DEMAND AND INTRODUCTION OF NEW TECHNOLOGIES This risk is related to demographic, economic and technological changes and determines the fact that the demand for company’s products might change over time also as a result of the introduction of new products. With the introduction of new technologies in the automotive industry (hybrid and electric cars), consistent with environmental protection and reduction of the separate carbon dioxide emissions to a minimum, the need for alternative energy sources such as new generation lead-acid batteries grows. At the same time, the need for multifunctional products - accumulator batteries - as a spare source for the photovoltaic power supply and lighting systems also grows. These new generation products could negatively affect the demand for an existing and approved product as a result of the fact that they are or at least they are perceived by consumers as more effective, more refined, combining new features, as well as due to the fact that they are more advertised. Monbat AD has not yet been exposed to such a risk, but in the future could be relatively exposed to such a risk since the principal products of the company are lead-acid batteries for various applications: starter batteries, stationary batteries for telecommunication application, semi-traction batteries, special batteries for military application and locomotive batteries. In case of introduction of new generation of products and hence of new competitive participants in the accumulator batteries market, and if the company fails to oppose such a pressure, it is possible the demand for its products to decrease over time. However, a large-scale introduction of new technologies in the automotive industry - hybrid and electric cars is not expected in short term. Irrespective of that, the company's management understands that in order to respond to these challenges MONBAT AD and its subsidiary Start AD are necessitated to extend the range of produced batteries. To date the Issuer has successfully developed and increased its sales, which indicates the ability of the management team to anticipate and oppose such a pressure. LIQUIDITY RISK Liquidity risk consists of the likelihood that MONBAT AD is unable to pay its current liabilities. The absolute liquidity ratio is calculated as the ratio of cash and short term liabilities and indicates company’s ability to meet its short term liabilities with its available cash. The absolute liquidity ratio of the company for 2012 is 0.04. For 2012 the company’s cash reports a dcrease by 34 % compared to the previous 2011 while the rate of the short term liabilities reports an increase by 2 %. ECOLOGICAL RISK The responsibility of MONBAT AD as the largest producer of accumulator batteries in Bulgaria and a dynamically developing public company finds expression also in the attitude towards environment. The management of MONBAT AD considers the activities directed towards pollution prevention or reduction aimed at achieving a maximum level of human health and environmental protection as a major priority and a crucial factor in the long-term and sustainable development. It is a company’s practice of long standing to provide clear and accurate environmental information on its products, services and activities to customers, suppliers and the general public. The management of MONBAT AD makes efforts to reduce the impact of the company on the environment through: Effective use of electricity and heat power/thermal energy; minimizing and recycling waste; preventing pollution through reducing and minimizing detrimental emission in the air and water; useing the best available techniques and best management practices when expanding the production; internal monitoring in terms of air, water and soil pollution; Self-control system - the establishment and operation of an internal control system is designed to achieve continuous compliance with the environmental, health and safety regulations on the basis of the Integrated Management System. The self-control system evaluates the efficiency and effectiveness of the management system and the operations of MONBAT AD in general. Pursuant to the requirements of the Law on Health and Safe Labor Conditions and the respective subordinate legislation and the Disaster Protection Act, MONBAT AD has developed an emergency plan to carry out rescue and emergency recovery activities in case of disasters, emergencies and accidents which have occurred in the production process. The purpose of the protection plan is to preventively ensure the necessary materials, equipment and resources for effective activities to prevent the consequences of disasters and accidents; preparation of the personnel on the site for action; way of announcing and preparing the personnel; managing the personnel’s activities; procedures for putting the plan into action and informing the competent authorities; ways, means and procedures for notifying, when possible, the endangered population near the site; the procedure for carrying out the relevant rescue and emergency recovery activities on the territory of the site; procedures for restoring the activities on the site; ensuring the necessary measures for recreation of the environment. By a letter ref. № 26-00-614/30.06.2006, the Ministry of Environment and Water classified the plant of MONBAT AD in Montana as "a company and/or facility of low risk potential”. The development strategy of MONBAT AD includes participation in long-term socially useful projects in the environment protection area. In 2009 the Company set up a system for separate waste collection and disposal by means of building a network of containers for collecting old accumulator batteries with the distributors of MONBAT AD. Old batteries are among the widespread harmful waste and the company significantly contributes to environmental protection by collecting, neutralizing and recycling such batteries. Lead and polypropylene derived form recycling are put again in the production of new accumulator batteries and thus waste has been efficiently utilized. The company has established the only individual system for collecting old batteries in Bulgaria and operates under its own Program for management of spent lead-acid accumulator batteries. FORCE MAJEURE A number of force majeure circumstances such as natural disasters, accidents or intentional acts, could cause substantial property damages that could lead to temporary suspension and even cessation of the activities of the company. MONBAT AD has a full property insurance of the production facilities and storages of materials and production but in case of a continuous violation of the sequence of production activities, that fact could hardly compensate the lost profits. ІV. IMPORTANT EVENTS, OCCURRED AFTER THE DATE OF THE ANNUAL FINANCIAL STATEMENTS All important events, which have occurred after the date of the annual financial statements, were disclosed through the information disclosure system of MONBAT AD, namely - to the regulated securities market, the Financial Supervision Commission and the public. The information is also available on the website of the company www.monbat.com. V. CURRENT TRENDS AND PROBABLE FUTURE DEVELOPMENT OF THE COMPANY 2010 INVESTMENTS In 2010 MONBAT AD made investments in the plants for recycling of used batteries in the Republic of Serbia and the Republic of Romania as follows: o Investments for construction of the recycling facilities in Romania – EUR 3 265 000 o Investments related to commencement of the production in Serbia – EUR 238 000 In 2010 MONBAT AD made investments in the form of incorporation of subsidiaries, increasing their capital, granting loans or acquisition of stock or equity from the issuer and its subsidiaries in the following companies as the value of these investments was not included in the total amount of the investments for 2010: o Capital increase of the subsuduary company Monbat Recycling SRL, Romania from EUR 3 010 000 to EUR 3 510 000. o Acquisition of 25 500 shares or 51 % of the capital of the company Octa Light Bulgaria AD. o Participation in the capital increase of Octa Light Bulgaria AD upon preserving the size of its participation, by subscribing and acquiring new 2 320 500 shares with nominal value of BGN 1.00. The capital increase was filed with the Commercial Register to the Registry Agency on 14.06.2010. o Capital increase of Monbat DOO, Serbia from EUR 2 285 000 to EUR 2 485 000. o Acquisition, on the part of Monbat DOO, Indjia – 100 % owned by MONBAT AD, of new 8 % from the capital of U Monbat OOD, Serbia, Yagodina. o Capital increase of Monbat Recycling EAD from BGN 50 000 to BGN 19 571 520 divided into 19 571 520 registered, ordinary voting shares with nominal value of BGN 1 each of them, as the increase was made by means of a non-cash contribution in the capital of Monbat Recycling EAD. The capital increase was filed with the Commercial Register to the Registry Agency on 19.08.2010. o Capital increase of Monbat Recycling EAD from BGN 19 571 520 to BGN 35 182 402 by means of non-cash contribution. The capital increase was filed with the Commercial Register to the Registry Agency on 05.11.2010. o Capital increase of Monbat DOO, Serbia from EUR 2 485 000 to EUR 7 735 000. The investments made in 2010 for modernization and construction of recycling facilities are in the amount of EUR 3 503 000, out of which: o Construction of recycling facilities in Romania – EUR 3 265 000 o Investments related to starting up the production in Serbia – EUR 238 000 2011 INVESTMENTS As a result of the successfully completed by MONBAT AD Project “Increasing the competitiveness of Monbat Plc by investing in new equipment for grid and plate for dry charged and gravity casted lead acid batteries producing”, approved with a Resolution No ТМГ-011/27.05.2009 of the Executive Director of the Bulgarian Small and Medium Enterprises Promotion Agency under an open procedure for a competitive selection of projects with “Technological Modernization in Big Enterprises”, the company received a grant in the amount of BGN 4 227 266.23. The Project has been implemented on the basis of a contract signed with the Bulgarian Small and Medium Enterprises Promotion Agency № ТМГ-02-4/09.07.2009 within 18 months and the management of MONBAT AD acknowledges successful completion of both the specific and the main purpose of the tender offer, namely providing competitiveness and sustainable development of the company by means of introducing new and innovative equipment and technologies within the conditions of the world financial and economic crisis. In 2011 the total amount of the investments made in MONBAT AD and Monbat Recycling EAD is BGN 19 626 000 out of which BGN 17 451 000 investments in MONBAT AD and BGN 2 175 000 investments in Monbat Recycling EAD. 2012 INVESTMENTS In 2012 the overall amount of the investments made by MONBAT AD amounts to EUR 1 844 000. VІ. RESEARCH AND DEVELOPMENT ACTIVITIES The management of MONBAT AD highly appreciates the importance of continuous development through elaborating new technologies and continuously invests significant resources and efforts in this direction. The company does not have a separate “Research and Development” Department. The activities related to development and adoption of new products is being carried out jointly by the Marketing and Trade Department, Technical Department, Production Department and Testing Laboratory. The company works through a consultations agreement with world-renowned specialist from BAS (the Bulgarian Academy of Sciences) – section CLEPS (electrochemical power sources), under the guidance of the Academician Dechko Pavlov. With their methodological assistance is being carried out the development of new products from conceptual design to test production. In 2007 in Start AD, Dobrich was introduced a special technology to charge accumulator batteries. The new "block formation" technology for starter accumulator batteries allows in the battery box to be set the so-called green (unformed plates) and after an article is completed with a lid and shaped pole terminals to proceed with the formation of the plates. The equipment was designed, developed and put into operation by specialists of the company "INBATEC" Germany and is the first its kind in Europe. The company’s own research and development laboratory is equipped with modern, specialized electronic devices: o o o o o o o o o Spectrophotometer with inductively coupled plasma (ICP-OES) "VARIAN" for measuring the content of chemical elements in solutions. Atomic absorption spectrophotometer "GBC" for measuring metals in water samples or samples dissolved in mineral acids. Spectrophotometer "NOVA 400" Merk" for measuring concentration of elements in water and water samples. Emission Spectrometer "Metalys" for measuring the concentration of elements in solid samples based on lead. Conventional analytical chemical laboratory. Stands for testing electrical characteristics (charge / discharge) Bitrode TPN650/1500-12 and Bitrode TPN12-25/600-12. Stand for simulation of a complete short circuit Cameras for thermal impact on test specimens TBV 2000. Equipment for mechanical impact on test specimens - shock and vibrostands. The amount spent on research and development activities within the period 2009 – 2012 form a part of the overall amount spent on remunerations for the experts in the separate departments Marketing and Trade Department, Technical Department, Production Department and Testing Laboratory. Investments in research and development activities form a part of the overall investment expenses of the company for the respective periods. With this regard the same can not be separated. VІІ. INFORMATION REQUIRED PURSUANT TO ART. 187D AND ART. 247 OF THE COMMERCIAL LAW 1. The number and the nominal value of the acquired and transferred through the year own stocks; the share of the capital which they represent, as well as the price at which the acquisition or transfer have been executed As at 31.12.2012 the company holds 2 622 865 own shares, each of them with nominal value of BGN 1.00, representing 6.73 % of the capital of MONBAT AD. The shares were acquired at the average price of BGN 5.82 per share. 2. The grounds for the acquisitions made through the year The acquisition of company’s own shares in 2012 was performed on the grounds of respective resolutions approved by the corporeta board of MONBAT AD. Purcuant to the provisions of the company’s Articles of Association the Board of Directors of MONBAT AD has the power to initiare redemption procedures based on respective particular resolutions. 3. The number and the nominal value of the possessed own stocks and the share of the capital which they represent As at 31.12.2012 the company holds 2 622 865 own shares, each of them with nominal value of BGN 1.00, representing 6.72 % of the capital of MONBAT AD. 4. The total remuneration received during the year by the members of the boards In 2012 the members of the Supervisory Board (SB) of MONBAT AD have received the following remunerations: Table № 13 Full name Plamen Stoilov Bobokov Alexandar Viktorov Chaushev Nikolay Georgiev Trenchev Stoyan Zhivkov Stalev Position Chairperson of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Net/BGN 274 000 24 000 24 000 24 000 By a resolution of the regular annual general assembly of shareholders as of 25.06.2012 was voted an additional remuneration/bonus to the Supervisory Board in the amount of BGN 250 000. The additional remuneration/bonus for the members of the SB, voted at the general assembly of shareholders, held on 25.06.2012, was included in the above stated amount. In 2012 the members of the Management Board (MB) of MONBAT AD have received the following remunerations: Table № 14 Full name Atanas Stoilov Bobokov Chavdar Dochev Danev Ivan Petrov Karageorgiev Petar Hristov Petrov Krasimir Stoyanov Krulev Position Chairperson of the Management Board Member of the Management Board Member of the Management Board Executive director Member of the Management Board Net/BGN 268 000 6 000 18 000 18 000 1 762 By a resolution of the regular annual general assembly of shareholders as of 25.06.2012 was voted an additional remuneration/bonus to the Management Board in the amount of BGN 250 000. The additional remuneration/bonus for the members of the MB, voted at the general assembly of shareholders, held on 25.06.2012, was included in the above stated amount. At the regular annual session of the general assembly of the shareholders of MONBAT AD, held on 25.06.2012 was approved a decision to change the management system of the company, namely to turn form a two-tier to one-tier management system. At the held session of the general assembly of the shareholders was approved a decision for the company to be managed by a Board of Directors consisting of 9 members, namely: Atanas Bobokov – Chairperson of the Board of Directors Petar Petrov – Executive Director Ivan Karageorgiev – Member of the Board of Directors Plamen Bobokov – Member of the Board of Directors Stoyan Stalev – Member of the Board of Directors Alexander Chaushev – Member of the Board of Directors Nikolay Trenchev – Member of the Board of Directors Kamen Zahariev – Member of the Board of Directors Florian Huth – Member of the Board of Directors The members of the Board of Directors of MONBAT AD were filed with the Commercial Register to the Registry Agency on 25.07.2012 under № 20120725103746. For 2012 Kamen Zahariev and Florian Huth have not received any remuneration. During 2012 an additional amounts of BGN 360 thousand as per contract with member of Board of directors has been charged. 5. The acquired, possessed and transferred stocks and bonds of the company by the members of the Board of Directors during the year As at 31.12.2012 the shares of the capital of MONBAT AD hold by members of the Board of Directors are as follows: Atanas Bobokov – Chairperson of the Board of Directors – 150 000 shares Alexandar Chaushev – Member of the Supervisory Board - 8 630 shares 6. The rights of the members of the Board of Directors to acquire stocks and bonds of the company Members of the Board of Directors of the Company may freely acquire shares of the company’s capital on the regulated securities market subject to the provisions of the Law against Market Abuse with Financial Instruments and the Law on Public Offering of Securities. THE PARTICIPATION OF THE MEMBERS OF THE BOARD OF DIRECTORS IN COMMERCIAL COMPANIES AS UNLIMITED LIABLE PARTNERS, THE POSSESSION OF MORE THAN 25 PERCENT OF THE CAPITAL OF ANOTHER COMPANY, AS WELL AS THEIR PARTICIPATION IN THE MANAGEMENT OF OTHER COMPANIES OR COOPERATIONS AS PROCURATORS, MANAGERS OR MEMBERS OF BOARDS A/Atanas Stoilov Bobokov – Chairperson of the Board of Directors Member of the Board of Directors of PRISTA OIL HOLDING EAD, UIC: 121516626, No20, Zlaten Rog Str., Lozenets district, Sofia Managing partner - MIX OIL Ltd., UIC: 831015922, No1 Han Kubrat Str., floor 6, office 5, Rousse, holding 50 % of the capital Managing Director of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Koshut Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia Executive member of the Board of Directors of PRISTA REAL ESTATES AD, UIC: 175021319, No9, Layosh Koshut Str., Krasno Selo district, Sofia. Member of the Board of Directors of START AD, UIC: 124712007, 4, Golo Burdo Str., Lozenets district, Sofia. Member of the Board of Directors of OCTA LIGHT BULGARIA AD, UIC: 201133233, N 22, Veslets Str., Oborishte district, 1000 Sofia. Member of the Board of Directors of MONBAT RECYCLING EAD, UIC: 200801562, 4, Golo Burdo Str., Lozenets district, Sofia. Member of the Board of Directors of VUELTA EUROPE AD, UIC: 117546396, No 106, Lipnik Str., 7013 Rousse. Member of the Board of Directors of WINERY HOUSE RUSE AD, UIC: 117630264, No 73, Borisova Str., 7012 Rousse. Member of the Supervisory Board of MARINE ANTIPOLLUTION ENTERPRISE AD, UIC: 813109299, South Industrial Area, Base oil terminal, Asparuhovo district, 9000 Varna. Partner – LEVENTA Ltd., UIC: 117632621, No 73, Borisova Str., 7012 Rousse, holding 50 % of the capital. Partner – PRISTA OIL TRADING Ltd., UIC: 130343881, No9, Layosh Koshut Str., Krasno Selo district, 1606 Sofia, holding 36 % of the capital. Contribution in kind in INVESTMENTS AND DEVELOPMENT INTERNATIONAL COMPANY AD, UIC: 175153395, No 7, Borisova Str., 7000 Rousse. Mr. Atanas Bobokov was elected to be a Chairparson of the Board of Directors of MONBAT AD on 25.06.2012. No coercive administrative measures or administrative penalties have been imposed on Mr. Atanas Bobokov with regard to his activities during the previous five years. B/ Petar Hristov Petrov – Executive Member of the Board of Directors Managing partner - BELNIKOLOV, PETROV AND PARTNERS Ltd., UIC: 175217702, 4, Golo Burdo Str., Lozenets district, 1407 Sofia, holding 25 % of the capital. Single owner and Manager of LOPUSHANSKA SEKVOYA Ltd., UIC: 200280522, No 76, Industrialna Str., 3400 Montana. Mr. Petar Hristov Petrov was elected to be an executive member of the Board of Directors of MONBAT AD on 25.06.2012. No coercive administrative measures or administrative penalties have been imposed on Mr. Petar Hristov with regard to his activities during the previous five years. C/ Ivan Petrov Karageorgiev - Member of the Board of Directors Managing partner of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Kosht Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia, holding 10 % of the capital. Member of the Board of Directors of START AD, UIC: 124712007, 4, Golo Burdo Str., Lozenets district, 1000 Sofia. Mr. Ivan Petrov Karageorgiev was elected to be a member of the Board of Directors of MONBAT AD on 25.06.2012. No coercive administrative measures or administrative penalties have been imposed on Mr. Ivan Karageorgiev with regard to his activities during the previous five years. D/ Plamen Stoilov Bobokov - Member of the Board of Directors Member of the Board of Directors of PRISTA OIL HOLDING EAD, UIC: 121516626, No20, Zlaten Rog Str., Lozenets district, 1407 Sofia Managing partner - MIX OIL Ltd., UIC: 831015922, No1 Han Kubrat Str., floor 6, office 5, Rousse, holding 50 % of the capital Managing Director of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Koshut Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia Member of the Board of Directors of PRISTA REAL ESTATES AD, UIC: 175021319, No9, Layosh Koshut Str., Krasno Selo district, Sofia. Member of the Board of Directors of VUELTA EUROPE AD, UIC: 117546396, No 106, Lipnik Str., 7013 Rousse. Member of the Board of Directors of WINERY HOUSE RUSE AD, UIC: 117630264, No 73, Borisova Str., 7012 Rousse. Member of the Supervisory Board of MARINE ANTIPOLLUTION ENTERPRISE AD, UIC: 813109299, South Industrial Area, Base oil terminal, Asparuhovo district, 9000 Varna. Partner – LEVENTA Ltd., UIC: 117632621, No 73, Borisova Str., 7012 Rousse, holding 50 % of the capital. Partner – PRISTA OIL TRADING Ltd., UIC: 130343881, No9, Layosh Koshut Str., Krasno Selo district, 1606 Sofia, holding 36 % of the capital. Contribution in kind in INTERNATIONAL COMPANY FOR INVESTMENTS AND DEVELOPMENT AD, UIC: 175153395, No 7, Borisova Str., 7000 Rousse. Mr. Plamen Bobokov was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012. No coercive administrative measures or administrative penalties have been imposed on Mr. Plamen Bobokov with regard to his activities during the previous five years. E/ Stoyan Zhivkov Stalev – Member of the Board of Directors Mr. Stalev does not participate in management and supervisory bodies of other companies. Mr. Stoyan Stalev was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012. No coercive administrative measures or administrative penalties have been imposed on Mr. Stoyan Stalev with regard to his activities during the previous five years. F/ Alexander Viktorov Chaushev – Member of the Board of Directors Member of the Board of Directors of SOPHARMA AD, UIC: 831902088, No 16 Iliensko Shose, nadezhda district, 1220 Sofia. Member of the Board of Directors of MANAGEMENT AND ADVERTIZING AGENCY IN SPORTS EAD, UIC: 130969084, No 42, Todor Alexandrov Blvd., Vuzrazhdane district, 1303 Sofia. Member of the Board of Directors of DK – DOMOSTROENE AD, UIC: 102148397, Pobeda housing estate, 8000 Burgas. Partner – SOFSERVICE Ltd., UIC 131407109, No 339, Tzar Boris III Blvd., Knyazhevo housing estate, Vitosha district, 1618 Sofia, holding 78 % of the company’s capital. Mr. Alexander Chaushev was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012. No coercive administrative measures or administrative penalties have been imposed on Mr. Alexander Chaushev with regard to his activities during the previous five years. G/ Nikolay Georgiev Trenchev – Member of the Board of Directors Partner – EKOTEH Ltd., UIC: 125026751, No 39, Tzar Osvoboditel Str., entr. D, floor 2, app. 11, 7700 Turgovishte, holding 75 % of the company’s capital. Partner - BELNIKOLOV, PETROV AND PARTNERS Ltd., UIC: 175217702, 4, Golo Burdo Str., Lozenets district, 1407 Sofia, holding 25 % of the capital. Mr. Nikolay Trenchev was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012. No coercive administrative measures or administrative penalties have been imposed on Mr. Nikolay Trenchev with regard to his activities during the previous five years. H) Kamen Zahariev – Member of the Board of Directors Mr. Kamen Zahariev participates in the management of the following companies: o Uksnab Ltd, Ukraine o SPS Investment NY, Holland o Prista Oil Holding EAD, Sofia, registered under company case № 13825/1994 of Sofia City Court, having its registered seat and business address at No 20, Zlaten Rog Str., Sofia, with UIC: 121516626 Mr. Kamen Zahariev was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012. No coercive administrative measures or administrative penalties have been imposed on Mr. Kamen Zahariev with regard to his activities during the previous five years. I) Florian Huth – Member of the Board of Directors Mr. Florian Huth participates in the management of the following companies: o Penkon Gida A.S., Turkey – Member of the Board of Directors and Vice Chairperson o ADM GNG East Ukraine Ltd, BVI – Member of the Board of Directors o Setcar Holdings Ltd, Cyprus – Member of the Board of Directors Mr. Florian Huth was elected to be a memer of the Board of Directors of MONBAT AD on 25.06.2012. No coercive administrative measures or administrative penalties have been imposed on Mr. Florian Huth with regard to his activities during the previous five years. MANAGEMENT EXPERTISE AND EXPERIENCE OF THE MEMBERS OF THE BOARD OF DIRECTORS Atanas Stoilov Bobokov – Chairperson of the Board of Directors Table № 15 Education Higher economic education - 1985 г. Higher Institute of Economics “Karl Marx”, Sofia Relevant professional experience o Member of the Board of Directors of PRISTA OIL HOLDING EAD, UIC: 121516626, No20, Zlaten Rog Str., Lozenets district, Sofia o Managing partner - MIX OIL Ltd., UIC: 831015922, No1 Han Kubrat Str., floor 6, office 5, Rousse, holding 50 % of the capital o Managing Director of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Koshut Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia o Executive member of the Board of Directors of o o o o o o o o o PRISTA REAL ESTATES AD, UIC: 175021319, No9, Layosh Koshut Str., Krasno Selo district, Sofia. Member of the Board of Directors of START AD, UIC: 124712007, 4, Golo Burdo Str., Lozenets district, Sofia. Member of the Board of Directors of OCTA LIGHT BULGARIA AD, UIC: 201133233, N 22, Veslets Str., Oborishte district, 1000 Sofia. Member of the Board of Directors of MONBAT RECYCLING EAD, UIC: 200801562, 4, Golo Burdo Str., Lozenets district, Sofia. Member of the Board of Directors of VUELTA EUROPE AD, UIC: 117546396, No 106, Lipnik Str., 7013 Rousse. Member of the Board of Directors of WINERY HOUSE RUSE AD, UIC: 117630264, No 73, Borisova Str., 7012 Rousse. Member of the Supervisory Board of MARINE ANTIPOLLUTION ENTERPRISE AD, UIC: 813109299, South Industrial Area, Base oil terminal, Asparuhovo district, 9000 Varna. Partner – LEVENTA Ltd., UIC: 117632621, No 73, Borisova Str., 7012 Rousse, holding 50 % of the capital. Partner – PRISTA OIL TRADING Ltd., UIC: 130343881, No9, Layosh Koshut Str., Krasno Selo district, 1606 Sofia, holding 36 % of the capital. Contribution in kind in INVESTMENTS AND DEVELOPMENT INTERNATIONAL COMPANY AD, UIC: 175153395, No 7, Borisova Str., 7000 Rousse. Petar Hristov Petrov – Executive member of the Board of Directors Table №16 Education Higher economic education In 1989 graduated from the Senior Financial and Economic Institute, Svishtov, Master degree in Accounting Relevant professional experience o August 2008 until present - Executive Director of MONBAT AD o 02.1998 - 08.2008 – Chief accountant - o o o o o o o o MONBAT AD 09.1996 - 02.1998 – Procurator, chief accountant - “Postbank” AD, branch Montana 01.1995 - 09.1996 – Credit Inspector - Postbank AD, branch Montana 04.1992 - 01.1995 – Financial Controller TU “State Financial Control”, Montana 03.1991. - 01.1992 – Economist - Pretsiz EOOD, Montana 09.1990 - 03.1991 – Deputy Chief accountant Pretsiz EOOD, Montana 05.1990 - 09.1990 - Cost price planner in Pretsiz EOOD, Montana Managing partner - BELNIKOLOV, PETROV AND PARTNERS Ltd., UIC: 175217702, 4, Golo Burdo Str., Lozenets district, 1407 Sofia, holding 25 % of the capital. Single owner and Manager of LOPUSHANSKA SEKVOYA Ltd., UIC: 200280522, No 76, Industrialna Str., 3400 Montana. Ivan Petrov Karageorgiev – Member of the Board of Directors Table № 17 Education Higher engineering education In 1990 graduated from the Higher Institute of Chemical Technology, Sofia, Master degree in Engineering Relevant professional experience Managing partner in Monbat Trading Ltd. 1997 - 2000 - GERMANOS S.A., Greece 1995 - 1997 - VARTA Industriebatterien 1990 - 1995 - Energy EOOD, Traction and stationary batteries o Managing partner of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Kosht Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia, holding 10 % of the capital. o Member of the Board of Directors of START AD, UIC: 124712007, 4, Golo Burdo Str., Lozenets o o o o district, 1000 Sofia. Plamen Stoilov Bobokov – Member of the Board of Directors Table № 18 Education Higher Legal education In 1993 graduated from Sofia University “St. Kliment Ohridski” Relevant professional experience o Member of the Board of Directors of PRISTA OIL HOLDING EAD, UIC: 121516626, No20, Zlaten Rog Str., Lozenets district, 1407 Sofia o Managing partner - MIX OIL Ltd., UIC: 831015922, No1 Han Kubrat Str., floor 6, office 5, Rousse, holding 50 % of the capital o Managing Director of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Koshut Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia o Member of the Board of Directors of PRISTA REAL ESTATES AD, UIC: 175021319, No9, Layosh Koshut Str., Krasno Selo district, Sofia. o Member of the Board of Directors of VUELTA EUROPE AD, UIC: 117546396, No 106, Lipnik Str., 7013 Rousse. o Member of the Board of Directors of WINERY HOUSE RUSE AD, UIC: 117630264, No 73, Borisova Str., 7012 Rousse. o Member of the Supervisory Board of MARINE ANTIPOLLUTION ENTERPRISE AD, UIC: 813109299, South Industrial Area, Base oil terminal, Asparuhovo district, 9000 Varna. o Partner – LEVENTA Ltd., UIC: 117632621, No 73, Borisova Str., 7012 Rousse, holding 50 % of the capital. o Partner – PRISTA OIL TRADING Ltd., UIC: 130343881, No9, Layosh Koshut Str., Krasno Selo district, 1606 Sofia, holding 36 % of the capital. o Contribution in kind in INTERNATIONAL COMPANY FOR INVESTMENTS AND DEVELOPMENT AD, UIC: 175153395, No 7, Borisova Str., 7000 Rousse. Stoyan Zhivkov Stalev – Member of the Board of Directors Table № 19 Education Higher Legal education In 1978 graduated from “St.Kliment Ohridski” Relevant professional experience Sofia University o For the period 1980 - 1991 - Research Associate and Senior Research Associate /Associate Professor/ in the BAS Institute of Legal sciences o 1985 - Doctor of Legal Sciences o 1990 - 1991 – Legal advisor to the President of the Republic of Bulgaria Zhelyo Zhelev o 1991 - 1998 – ambassador of the Republic of Bulgaria in Germany o 1997 – Minister of the Foreign affairs in the government of Mr. Stefan Sofiyanski o 1998 – 2006 – ambassador of the Republic of Bulgaria in Turkey o 2006 – 2010 Executive director of the Bulgarian Investment Agency Alexander Viktorov Chaushev – Member of the Board of Directors Table № 20 Education Higher Economic education In 1991 graduated from Moscow State Institute of International Relations Relevant professional experience o 1993 - Expert in the Ministry of Commerce o 1994 -1996 - Manager of Agroengineering 90 EOOD o In 1997 – Manager of “Nafta Trading” AD o In 1998 – Vice-president of “Agrohold” AD o 1999 - 2001 - First Deputy Executive Director of “Lukoil Bulgaria” EOOD o 2001 - 2004 Manager of “Litasko Bulgaria” EOOD o 2004 – 2006 Executive Director of “Agrohold” AD o Member of the Board of Directors of SOPHARMA AD, UIC: 831902088, No 16 Iliensko Shose, nadezhda district, 1220 Sofia. o Member of the Board of Directors of MANAGEMENT AND ADVERTIZING AGENCY IN SPORTS EAD, UIC: 130969084, No 42, Todor Alexandrov Blvd., Vuzrazhdane district, 1303 Sofia. o Member of the Board of Directors of DK – DOMOSTROENE AD, UIC: 102148397, Pobeda housing estate, 8000 Burgas. o Partner – SOFSERVICE Ltd., UIC 131407109, No 339, Tzar Boris III Blvd., Knyazhevo housing estate, Vitosha district, 1618 Sofia, holding 78 % of the company’s capital. Nikolay Georgiev Trenchev – Member of the Board of Directors Table № 21 Education Higher Legal education In 1976 graduated from Sofia University “St. Kliment Ohridski” Relevant professional experience o December 1976 - until present – lawyer, registered with the Sofia Bar Association o 1992 - until present - partner in law office Malchev, Trenchev and Partners o For the period 1992 - 1996 - legal advisor of numerous Bulgarian and foreign companies, including advisor on privatization transactions. o Partner – EKOTEH Ltd., UIC: 125026751, No 39, Tzar Osvoboditel Str., entr. D, floor 2, app. 11, 7700 Turgovishte, holding 75 % of the company’s capital. o Partner - BELNIKOLOV, PETROV AND PARTNERS Ltd., UIC: 175217702, 4, Golo Burdo Str., Lozenets district, 1407 Sofia, holding 25 % of the capital. Kamen Zahariev – Member of the Board of Directors Table №22 Education University Degree in International and Comparative Law, Moscow Institute of International Relations (Diploma "with distinction", top 5% of class), 1982 Ph.D. (Doctor Juris) in international law, Institute of Law, Academy of Science, Berlin, Germany, 1987 (Award: "Summa cum laude"). Further Education in Banking and Finance: 1. Imperial College, University of London, Diploma in mining projects appraisal and finance. 2. Attendance at several training and further education courses: Relevant professional experience EUROMONEY courses on corporate and project finance, syndicated loans, European Bank in-house credit training and courses in negotiation and presentation skills, Completed all EBRD senior management and leadership skills training courses inhouse, Personal coaching. Participates in the management of the following companies: o Uksnab Ltd, Ukraine o SPS Investment NY, Holland o Prista Oil Holding EAD, Sofia, registered under comnay case № 13825/1994 of Sofia City Court, having its registered seat and business address at No 20, Zlaten Rog Str., Sofia, with UIC: 121516626 o member of the Board of Directors of MONBAT AD. Florian Huth – Member of the Board of Directors Table №23 Education Relevant professional experience Master in Business Administration and a CFA charter holder as well as a Certified Public Accountant Participates in the management of the following companies: o Penkon Gida A.S., Turkey – Member of the Board of Directors and Vice Chairperson o ADM GNG East Ukraine Ltd, BVI – Member of the Board of Directors o Setcar Holdings Ltd, Cyprus – Member of the Board of Directors o member of the Board of Directors of MONBAT AD. OTHER INFORMATION As at the date of this document Atanas Stoilov Bobokov is: Member of the Board of Directors of PRISTA OIL HOLDING EAD, UIC: 121516626, No20, Zlaten Rog Str., Lozenets district, Sofia Managing partner - MIX OIL Ltd., UIC: 831015922, No1 Han Kubrat Str., floor 6, office 5, Rousse, holding 50 % of the capital Managing Director of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Koshut Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia Executive member of the Board of Directors of PRISTA REAL ESTATES AD, UIC: 175021319, No9, Layosh Koshut Str., Krasno Selo district, Sofia. Member of the Board of Directors of START AD, UIC: 124712007, 4, Golo Burdo Str., Lozenets district, Sofia. Member of the Board of Directors of OCTA LIGHT BULGARIA AD, UIC: 201133233, N 22, Veslets Str., Oborishte district, 1000 Sofia. Member of the Board of Directors of MONBAT RECYCLING EAD, UIC: 200801562, 4, Golo Burdo Str., Lozenets district, Sofia. Member of the Board of Directors of VUELTA EUROPE AD, UIC: 117546396, No 106, Lipnik Str., 7013 Rousse. Member of the Board of Directors of WINERY HOUSE RUSE AD, UIC: 117630264, No 73, Borisova Str., 7012 Rousse. Member of the Supervisory Board of MARINE ANTIPOLLUTION ENTERPRISE AD, UIC: 813109299, South Industrial Area, Base oil terminal, Asparuhovo district, 9000 Varna. Partner – LEVENTA Ltd., UIC: 117632621, No 73, Borisova Str., 7012 Rousse, holding 50 % of the capital. Partner – PRISTA OIL TRADING Ltd., UIC: 130343881, No9, Layosh Koshut Str., Krasno Selo district, 1606 Sofia, holding 36 % of the capital. Contribution in kind in INVESTMENTS AND DEVELOPMENT INTERNATIONAL COMPANY AD, UIC: 175153395, No 7, Borisova Str., 7000 Rousse. Mr. Atanas Bobokov was elected to be a Chairparson of the Board of Directors of MONBAT AD on 25.06.2012. During the previous five years Atanas Stoilov Bobokov has not been a member of administrative, managing or supervisory body or a partner in companies, other than those indicated above. As at the date of this document Petar Hristov Petrov is: Executive member of the Board of Directors of MONBAT AD, Sofia, registered under company’s case № 4636/1999 of Sofia City Court, having its registered seat and management address at 4, Golo Burdo Str., Sofia, with UIC: 111028849. Managing partner - BELNIKOLOV, PETROV AND PARTNERS Ltd., UIC: 175217702, 4, Golo Burdo Str., Lozenets district, 1407 Sofia, holding 25 % of the capital. Single owner and Manager of LOPUSHANSKA SEKVOYA Ltd., UIC: 200280522, No 76, Industrialna Str., 3400 Montana. During the previous five years Petar Hristov Petrov has been a member of the Management Board of Start AD, with a registered seat and business address at 4, Golo Burdo Str., Sofia, UIC: 124712007 until 08.12.2008. As at the date of this document Ivan Petrov Karageorgiev is: Member of the Board of Directors of MONBAT AD, Sofia, registered under company’s case № 4636/1999 of Sofia City Court, having its registered seat and management address at 4, Golo Burdo Str., Sofia, with UIC: 111028849. Managing partner of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Kosht Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia, holding 10 % of the capital. Member of the Board of Directors of START AD, UIC: 124712007, 4, Golo Burdo Str., Lozenets district, 1000 Sofia. During the previous five years Ivan Petrov Karageorgiev has been a member of the Supervisory Board of Start AD, with a registered seat and business address at 4, Golo Burdo Str., Sofia, with UIC: 124712007 until 08.12.2008. As at the date of this document Plamen Stoilov Bobokov is: Member of the Board of Directors of MONBAT AD, Sofia, registered under company’s case № 4636/1999 of Sofia City Court, having its registered seat and management address at 4, Golo Burdo Str., Sofia, with UIC: 111028849. Member of the Board of Directors of PRISTA OIL HOLDING EAD, UIC: 121516626, No20, Zlaten Rog Str., Lozenets district, 1407 Sofia Managing partner - MIX OIL Ltd., UIC: 831015922, No1 Han Kubrat Str., floor 6, office 5, Rousse, holding 50 % of the capital Managing Director of MONBAT TRADING Ltd., UIC: 130137657, No 9, Layosh Koshut Str., Krasno Selo district, h.e. Krasno Selo, 1606 Sofia Member of the Board of Directors of PRISTA REAL ESTATES AD, UIC: 175021319, No9, Layosh Koshut Str., Krasno Selo district, Sofia. Member of the Board of Directors of VUELTA EUROPE AD, UIC: 117546396, No 106, Lipnik Str., 7013 Rousse. Member of the Board of Directors of WINERY HOUSE RUSE AD, UIC: 117630264, No 73, Borisova Str., 7012 Rousse. Member of the Supervisory Board of MARINE ANTIPOLLUTION ENTERPRISE AD, UIC: 813109299, South Industrial Area, Base oil terminal, Asparuhovo district, 9000 Varna. Partner – LEVENTA Ltd., UIC: 117632621, No 73, Borisova Str., 7012 Rousse, holding 50 % of the capital. Partner – PRISTA OIL TRADING Ltd., UIC: 130343881, No9, Layosh Koshut Str., Krasno Selo district, 1606 Sofia, holding 36 % of the capital. During the previous five years Plamen Stoilov Bobokov has been a member of the Board of Directors of Project Ruse AD, with its registered seat and business address at No 3 Lipnik Str., Rousse, with UIC: 117684479 until 14.05.2010. As at the date of this document Stoyan Zhivkov Stalev is: o Member of the Board of Directors of MONBAT AD, registered under company case № 4636/1999 of Sofia City Court, having its registered seat and business address at No 4, Golo Burdo Str., Sofia, with UIC: 111028849. o 2006 – 2010 Mr. Stoyan Stalev was Executive Director of the Bularian Investment Agency. During the previous five years Mr. Stalev has not been a member of administrative, managing or supervisory body or a partner in companies, other than those indicated above. As at the date of this document Alexander Viktorov Chaushev is: Member of the Board of Directors of MONBAT AD, Sofia, registered under company’s case № 4636/1999 of Sofia City Court, having its registered seat and management address at 4, Golo Burdo Str., Sofia, with UIC: 111028849. Member of the Board of Directors of SOPHARMA AD, UIC: 831902088, No 16 Iliensko Shose, nadezhda district, 1220 Sofia. Member of the Board of Directors of MANAGEMENT AND ADVERTIZING AGENCY IN SPORTS EAD, UIC: 130969084, No 42, Todor Alexandrov Blvd., Vuzrazhdane district, 1303 Sofia. Member of the Board of Directors of DK – DOMOSTROENE AD, UIC: 102148397, Pobeda housing estate, 8000 Burgas. Partner – SOFSERVICE Ltd., UIC 131407109, No 339, Tzar Boris III Blvd., Knyazhevo housing estate, Vitosha district, 1618 Sofia, holding 78 % of the company’s capital. During the previous five years Alexander Viktorov Chaushev has been a member of administrative, managing or supervisory body or a partner in the following companies, other than those indicated above: o 2004 - 2006 – Executive Director of Agrohold AD. As at the date of this document Nikolay Georgiev Tranchev is: Member of the Board of Directors of MONBAT AD, Sofia, registered under company’s case № 4636/1999 of Sofia City Court, having its registered seat and management address at 4, Golo Burdo Str., Sofia, with UIC: 111028849. Partner – EKOTEH Ltd., UIC: 125026751, No 39, Tzar Osvoboditel Str., entr. D, floor 2, app. 11, 7700 Turgovishte, holding 75 % of the company’s capital. Partner - BELNIKOLOV, PETROV AND PARTNERS Ltd., UIC: 175217702, 4, Golo Burdo Str., Lozenets district, 1407 Sofia, holding 25 % of the capital. During the previous five years Nikolay Georgiev Tranchev has been a member of administrative, managing or supervisory body or a partner in the following companies: o Until 08.12.2008 – member of the Supervisory Board of Start AD, having its registered seat and business address at No 4, Golo Burdo Str., Sofia, with UIC: 124712007. o Member of the Supervisory Board of Incoms-Telecom Holding AD. As at the date of this document Kamen Zahariev is: o Uksnab Ltd, Ukraine o SPS Investment NY, Holland o Prista Oil Holding EAD, Sofia, registered under comnay case № 13825/1994 of Sofia City Court, having its registered seat and business address at No 20, Zlaten Rog Str., Sofia, with UIC: 121516626 o member of the Board of Directors of MONBAT AD. During the previous five years Kamen Zahariev is has been a member of administrative, managing or supervisory body or a partner in the following companies: o Uksnab Ltd, Ukraine o SPS Investment NY, Holland As at the date of this document Florian Huth is: o o o o Penkon Gida A.S., Turkey – Member of the Board of Directors and Vice Chairperson ADM GNG East Ukraine Ltd, BVI – Member of the Board of Directors Setcar Holdings Ltd, Cyprus – Member of the Board of Directors member of the Board of Directors of MONBAT AD. During the previous five years Florian Huth is has been a member of administrative, managing or supervisory body or a partner in the following companies: o Penkon Gida A.S., Turkey – Member of the Board of Directors and Vice Chairperson o ADM GNG East Ukraine Ltd, BVI – Member of the Board of Directors o Setcar Holdings Ltd, Cyprus – Member of the Board of Directors 7. Executed contracts in 2012 with members of the Management Board, respectively the Board of Directors or their related persons beyond the usual activity of the company or substantially diverted from the market requirements In 2012 have not been executed transaction with members of the Management Board, respectively the Board of Directors or the Supervisory Board or their related persons beyond the usual activity of the company or substantially diverted from the market requirements. 8. Planned economic policy for the next year, including the expected investments and development of the personnel, the expected revenue from investments and development of the company, as well as the forthcoming transactions of substantial importance for the activity of the company The company prepares annually a consolidated forecast for the respective financial year and also presents information on the sales revenues and the profit on monthly basis. VІІІ. AVAILABILITY OF BRANCHES OF THE ENTERPRISE The company does not have registered branches in the country and abroad. ІХ. FINANCIAL INSTRUMENTS USED BY THE COMPANY MONBAT AD has concluded a transaction for hedging the interest rate risk "Variable SWAP" with an overall limit (cap) 4.50 % per annum with 1M EURIBOR with "EFG Eurobank Bulgaria" AD. Such a transaction is necessary given the fact that the company uses a long-term investment credit from the same bank in EUR, whose debt will bear an interest rate equivalent to 1M EURIBOR plus a margin. Regardless of the fact that the exchange rate BGN / EUR is fixed, the risk of increasing the applicable interest rate - in this case 1M EURIBOR remains. The reason for this is the existence of inflation in the European Union countries and the related changes in the interest rates, set by the European Central Bank. The parameters of the transaction are as follows: nominal: EUR 6,100,000; initial date: 21.12.2008 (after expiry of the grace period and the period for utilization of the investment credit); deadline: 21.12.2013.; Conditions: MONBAT AD pays 4.09 % annually if 1M EURIBOR is less than or equal to 4.50 % per annum and the current 1M EURIBOR if its value is higher than 4.50 % per annum. A specific feature of this transaction is the fact that it is independent from the concluded credit contract. Х. INFORMATION ON THE CORPORATE GOVERNANCE PROGRAM AND ITS IMPLEMENTATION In 2007 MONBAT AD joined the National Corporate Governance Code. The management of MONBAT AD expressed its willingness to observe the good corporate governance principles laid down in the National Corporate Governance Code. The Corporate Board of MONBAT AD strives to implement its corporate policy in accordance with best practices and current standards on good corporate governance as key priorities for the company in this respect are transparency, timely and objective disclosure of information to all investors of the company. The rewards that the company receives annually are also expression of the investors’ trust. For several consecutive years MONBAT AD wins the annual chart of "Dnevnik 100" in the category "Company with Best Corporate Governance". On September 19, 2011 the National Corporate Governance Commission together with the Bulgarian Stock Exchange - Sofia AD introduced an index for companies with best corporate governance - CGIX (Corporate Governance IndeX) which consists of 7 companies. The Commission set MONBAT AD as one of the seven companies that became part of the index in 2011. In the beginning of 2012 were presented the annual awards of the Bulgarian Stock Exchange – Sofia for 2011. As a company that applies high standards for information disclosure and transparency, MONBAT AD was awarded the first place in the category "Issuer with the most essential contribution to the capital market in 2011». INFORMATION ON THE APPLICATION OF THE CODE’S RECOMMENDATIONS: The Code is being applied based on the “comply or explain” principle. This means that the company adheres to the Code and in case of any diversion, its Corporate Board should clarify the reasons for that. MONBAT AD provides this information on the compliance with the Code as the latter will also be posted on the company’s website. CORPORATE BOARD – BOARD OF DIRECTORS At the regular annual session of the general assembly of the shareholders of MONBAT AD, held on 25.06.2012 was approved a decision to change the management system of the company, namely to turn form a two-tier to one-tier management system. At the held session of the general assembly of the shareholders was approved a decision for the company to be managed by a Board of Directors consisting of 9 members, namely: The members of the Board of Directors of MONBAT AD were filed with the Commercial Register to the Registry Agency on 25.07.2012 under № 20120725103746. All members of the Board of Directors meet the legal requirements for taking the position they occupy. The functions and obligations of the Corporate Board as well as its structure and competences are in conformity with the requirements of the Code. The Board of Directors manages the company in accordance with the established vision, goals and strategy of the company and the interests of the shareholders. In their activities the members of the Board of Directors are being guided by the generally accepted principles of integrity and managerial and professional competence. The remunerations of the members of the management are being announced in the Annual Report of the Board of Directors in compliance with the legal requirements, the Company’s bylaws and the Code of Ethics. Shareholders have an easy access to information on the remunerations received by the members of the company’s management. Members of the Board of Directors avoid and do not allow any real or potential conflict of interests. In 2012 the Board of Directors performed its functions as monitoring the compliance with laws and rules laid down in the company’s by-laws. The present composition of the Board of Directors guarantees the independence and objectiveness of the resolutions and actions of its members. The Board of Directors of MONBAT AD consists of nine members as three of them are independent within the meaning of LPOS. The independent members of the Company’s Board of Directors act in the best interest of the company and the shareholders, impartially and in a non-aligned manner. The members of the Board of Directors have appropriate knowledge and experience necessary for the positions they occupy. Four of the members of the Board of Directors have higher legal education and the other member – higher economic education. In this regard, the Company has implemented the requirements of the National Code on the necessary knowledge and experience for the position occupied by members of the Board of Directors. After their election the members of the Board of Directors have not attended an induction program on legal and financial issues related to the company in view of the fact that they have the necessary education, qualifications and experience and are fully awarw with the company’s activities. The general assembly of the shareholders approves the remuneration of the members of the Board of Directors – permanent and additional. The remuneration of the members of the Board of Directors is based on their activities and responsibilities. The remuneration of the independent members is permanent and reflects their participation in Board meetings, performance of their tasks to control the operations of the executive management and effectively participate in the Company’s business. The independent director does not receive any additional remuneration from the company. It is not provided that members of the Board of Directors are to be compensated for their activities with shares or options. Information disclosure on the remuneration of members of the Board of Directors is in compliance with the legal requirements and the Company’s bylaws. MONBAT AD has adopted the following documents with regard to the activities and remunerations of the corporate board’s members: • Rules for setting the remunerations and bonuses of members of the Board of Directors as well as the total cash amount received during the year in relation to the position they occupy. • Rules and restrictions on the value of gifts that members of the Board of Directors may receive. • Rules on interested and related parties transactions. The Company’s Board of Directors is being supported by an audit committee elected by the general assembly of shareholders. 1. Audit Committee At the regular session of the annual general assembly of shareholders of MONBAT AD held in 2011 was approved a resolution for election of the company’s audit committee, namely: the general assembly elected Milen Marinov to be a Chairperson of the Audit Committee and Krasimir Ivanov to be a member of the audit committee. AUDIT AND INTERNAL CONTROL The company has a functioning internal control and risk management system /ICRM system/ that guarantees the effective functioning of reporting and information disclosure systems. The ICRM system was elaborated and functions also with a view to identify risks that pursue the activities of the company and support their effective management. Senior management has the main responsibility and role in terms of developing the internal control and risk management system. It performs both managing and guiding function and also ongoing monitoring. The ongoing monitoring on the part of the senior management consists of assessment whether the ICRM system is still suitable for the company in the conditions of changed environment, whether it acts as expected and whether it is periodically adjusted to changed conditions. Assessment of selected areas, carried out in this context, as a responsibility of the senior management complies with the priorities of the company. The assessment is also proportionate to the characteristics of the company and the impact of the risks identified. The senior management reports to the audit committee on the basic characteristics /features/ peculiarities of the ICRM system and also on key issues, including main incidents established and the respectively approved or applied corrective measures. SHAREHOLDERS' RIGHTS PROTECTION The Corporate Board of MONBAT AD guarantees equal treatment of all shareholders of the Company, including minority and foreign ones. The Company provides protection of the rights of every shareholder through: • Facilitating shareholders to participate effectively in the work of the general assemblies of shareholders by means of timely disclosure of the materials for the GAS through four media agencies - EXTRI NEWS, INFOSTOCK, PROFIT.BG INVESTOR.BG and on its website www.monbat.com. News about the company is also being disclosed through the social network LinkedIn, where a group of MONBAT’s investors was set up. Information disclosure to financial media, analysts, current and potential investors is being made through sending all news and report to a mailing list with over 550 contacts. All news are being made public in Bulgarian and English language. • Carrying out clear procedures for convening and holding general assemblies of the shareholders - ordinary and extraordinary sessions. Every invitaion for holding a general assembly of the shareholders includes explanation in details on the procedures for exercising the right to vote and the possibility to participate in the session of the GAS. Pursuant to the Company’s Articles of Association, exercising the right to vote is also possible through correspondence and electronic means. • The Board of Directors affords an opportunity for all shareholders to participate in the distribution of the company’s profit, in the event that the General Assembly of Shareholders has approved a particular resolution for dividend distribution. • The overall policy of the company to support shareholders in exercising all their rights is being carried out through the Investor Relations Director of the company. INFORMATION DISCLOSURE The Corporate Board applies Rules on the inside information and the insiders for the company that regulate also the obligations, the procedure and responsibility for public disclosure of inside information for MONBAT AD, a prohibition for trading in the presence of inside information and manipulation of the financial instruments market. The Board of Directors of MONBAT AD believes that with its activities in 2012 has created preconditions for sufficient transparency in its relations with investors, financial media and analysts on the capital market. The Corporate Board of MONBAT AD discloses its investment program to the investors for each financial year. During the reported 2012 the company has disclosed any regulated information within the time limits and under the procedure provided for in the LPOS and the respective by-laws. An Investor Center section was set up on the Company’s website. This section of the website aims to facilitate receiving of timely and relevant information from investors of the company - shareholders, potential investors, financial media and analysts, and to create maximum transparency in the relations between them and the company's management. Updated information on the most important corporate events, materials from held and upcoming events can be found in there. This section contains information on the financial and economic standing of the company, the implementation of the internationally acknowledged good corporate governance standards. The Board of Directors of MONBAT AD has drawn up and approved a Corporate Calendar of the Company for 2013 on the most important events for the Company and the deadlines for implementation of the information disclosure obligations. By means of this Calendar the Board of Directors plans separate events and announces them. The business organization of the Board of Directors, of the sessions of the General Assembly of Shareholders enables equal treatment of all shareholders, irrespective of the number of shares they hold. The Investor Relations Director communicates with due care and precision both with the majority shareholder and with individual shareholders holding a small number of shares. The company has established and approved the practice to ensure effective communication with all shareholders. The management of the Company realizes that presentations of the company in various specialized economic editions have a favorable effect over the complete image of the company extending the range of investors and customers, making the production popular. Therefore, it is of utmost importance for the management of the company that the information presented to financial media analysts is accurate, precise and reliable. The Investor Relations Director, as a liaison between the management of the company and its investors, develops the overall policy in terms of relations with financial media, provides direct contact with them, discloses important information to investors on the condition and plans of the company, strictly observing the information disclosure principles, considering what information constitutes a trade secret and what information should be publicly disclosed. This policy will be further developed and regularly updated at the discretion of the Investor Relations Director. STAKEHOLDERS The company identifies as stakeholders all persons interested in the economic prosperity of MONBAT AD – shareholders, workers and employees, customers, suppliers, distributors, bank – creditors and the community as a whole. The Board of Directors encourages the co-operation between the company and the stakeholders aimed at increasing the prosperity of all parties and providing sustainable development of the company. The company provides the stakeholders with the necessary information on its activities, current data on the financial standing and all the information that would contribute to their correct orientation and decision making. With reference to the internal regulations of some stakeholders of the company, MONBAT AD provides them with particular Reports on the SCR policies of the company related to ecology, safe and healthy labor conditions, anti-corruption and human resources. In its stakeholder policy the company complies with the legislative requirements, based on the transparency, accountancy and business ethics principles. MONBAT AD is a member of the UN Global Compact Network, and the management of the company adopted the Global Compact principles and engaged itself with applying in its activities socially responsible practices in all directions, covered by its ten core principles. The management of MONBAT AD has engaged itself to voluntarily, actively and consistently apply socially responsible employment practices that exceed the requirements of the employment legislation. The management of MONBAT AD considers pollution prevention or reduction activities aimed at achieving a maximum level of human health and environmental protection as a fundamental priority of the company and determining factor in its long-term and sustainable development. The Board of Directors of MONBAT AD annually elaborates and makes public, including through the website of the company, a Report (Communication on Progress) on the initiatives undertaken during the reported year in the four main areas of operation of the Global Compact principles, namely: human rights protection, labor rights protection, environmental protection and supporting anti-corruption initiatives and transparency policy. These reports for the respective year are being posted on the website of the company, “About Us” Section, “Corporate Social Responsibility”. ХІ. ADDITIONAL INFORMATION UNDER SECTION VI A OF APPENDIX NO 10 OF ORDINANCE NO 2 OF FSC 1. Information given in value or quantitative terms about the main categories of commodities, products and/or provided services, with indication of their share in the revenues from sales of the issuer as a whole and the changes that occurred during the reporting fiscal year SOLD CONTINGENT ACCUMULATOR BATTERIES 12V55AH FOR THE PERIOD 2010 - 2012 Table № 24 Year Volume of sales equivalent to 12V55Ah, number 2010 2011 2012 1 910 846 1 646 712 1 691 342 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 issuer Information about the revenues allocated by major categories of activities Table № 25 REVENUES 2010 1 А. Operating revenues I. Net revenues from the sale of: 1. Finished goods 2. Goods for sale 3. Services 4. Other I: Total net revenues from sale II. Revenues from financing for fixed assets incl. government grants II: Total III. Financial income 1. Interest revenue 2. Divident income 3. Gains from operations with financial assets and instruments 4. Gains from foreign exchange operations 5. Other financial income III: Total financial income B. Total revenues before extraordinary activities (I+II+III) 2011 2 % (in thousand BGN) 2012 3 156855 5669 1370 39627 203 521 -6% -80% 5% 12% -4% 147840 1150 1439 44502 194 931 0% -75% -33% -23% -6% 147916 284 966 34205 183 371 0 0% 0 0% 498 1733 0 59% 0% 2757 0 74% 0% 4807 0 1011 0 94 1254 4 092 0% 101% 0% -28% 189 0 2 946 0% -82% 0% 69% 0 34 150 4 991 207 613 -5% 197 877 -5% 188 860 Information about the the revenues allocated by local and external markets Breakdown of revenues by markets is presented in Chapter II of this Report. 3. Information about concluded big transactions and such of material importance for the issuer’s activity In 2012 MONBAT AD has not concluded big transactions which are of material importance for the issuer’s activity. 4. Information about the transactions concluded between the issuer and related parties during the reporting period, proposals for conclusion of such transactions as well as transactions which are outside its usual activity or substantially deviate from the market conditions, to which the issuer or its subsidiary is a party, indicating the amount of the transactions, the nature of relatedness and any information necessary for an estimate of the influence over the issuer’s financial status In 2012 MONBAT AD has concluded transactions with related parties as follows: Table № 26 Related party START AD START AD Type of relation Subsidiary AD with shares Subsidiary AD with Transactions company of MONBAT Purchase of materials and fixed assets on 91.11 % of the voting the part of MONBAT AD company of MONBAT Sale of fixed assets on the part of 91.11 % of the voting MONBAT AD shares MONBAT DOO Serbia Subsidiary company of Monbat Recycling EAD which is 100 % ownership of MONBAT AD MONBAT RECYCLING, Subsidiary company of Monbat EAD BULGARIA Recycling EAD which is 100 % ownership of MONBAT AD MONBAT RECYCLING, Subsidiary company of Monbat EAD BULGARIA Recycling EAD, Bulgaria which is 100 % ownership of MONBAT AD Purchase of materials on the part of MONBAT AD Sales of materials and others on the part of MONBAT AD Purchase of materials and services on the part of MONBAT AD MONBAT OOD, ROMANIA Related party under joint control Sale of production with MONBAT AD OCTA LIGHT BULGARIA AD Subsidiary company of MONBAT Loan granted on the part of MONBAT AD with 51 % voting shares AD PRISTA OIL, HINGARY Related party under joint control Sale of production on the part of with MONBAT AD MONBAT AD U MONBAT YAGODINA Subsidiary company of Monbat Sale of production on the part of DOO Serbia with 100 % voting MONBAT AD shares. No transactions with related parties have been concluded which are outside its usual activity or substantially deviate from the market conditions. 5. Information about events and indicators of unusual for the issuer nature, having substantial influence over its operation and the realized by it revenues and expenses made; assessment of their influence over the results during the current year During 2012 has not occurred an unpredictable and unforeseen circumstance of an extraordinary nature, which has had an impact on the company. 6. Information about off-balance kept transactions in 2011 – nature and business objective, indication of the financial impact of the transactions on the operation, if the risk and benefits of these transactions are substantial for the assessment of the issuer’s financial status In 2012 were not concluded off-balance kept transactions. 7. Information about holdings of the issuer, about its main investments in the country and abroad (in securities, financial instruments, intangible assets and real estate), as well asthe investments in equity securities outside its economic group and the sources/ways of financing As of 31.12.2012 MONBAT AD has directl and indirect holdings in the following subsidiary companies within the economic group if the issuer: Table № 27 Company’s name Principal activity MONBAT Recycling of accumulator batteries and lead scrap, lead alloys, PLC DOO, polyethylene and polypropylene materials, trading in Serbia accumulator batteries, batteries, lead, polyethylene and polypropylene scrap and materials on the territory of the Republic of Serbia as well as export and import from and to the Republic of Serbia of scrap, materials and finished goods. START AD, Production, service and marketing of accumulator batteries; Sofia engineering and development-implementation activities; production and marketing of equipment for production of accumulator batteries; foreign and domestic trade and setting up commercial networks, specialized stores and representation offices. SC MONBAT Recycling of accumulator batteries and lead scrap, lead alloys, RECYCLING polyethylene and polypropylene materials, trading in SRL – accumulator batteries, batteries, lead, polyethylene and Romania polypropylene scrap and materials on the territory of the Republic of Romania as well as export and import from and to the Republic of Romania of scrap, materials and finished goods. MONBAT Recycling of accumulator batteries and lead scrap, lead alloys, RECYCLING polyethylene and polypropylene materials, trading in EAD – accumulator batteries, batteries, lead, polyethylene and Bulgaria polypropylene scrap and materials on the territory of Bulgaria. OCTA Manufacturing of high power light emitting diodes – LIGHT manufacturing of single color (white), multicolor (blue, red, BULGARIA green), high power (from 0.5W to 5W), highly effective (above AD 100 lumen/Watt) user orientated (<80 lumen/Watt) series of light emitting diodes for general and specific purposes. Engineering in the field of lighting industry in the country and abroad, including marketing, feasibility studies, design. Design and manufacturing of specialized lighting fixtures and luminaries for general purpose for street, architectural, stage and accent lighting Design, manufacturing and installation of whole lighting systems, including implementation of energy-efficient lighting solutions, work with municipalities and private corporations. Complex engineering and exploitation of installations on ESCO agreements within the territory of Bulgaria and abroad (attractive nearby markets as Greece, Serbia, Rumania, future markets as Western Europe). Investment and development in the field of optoelectronics, studies and experimental activities for the implementation of new products and materials for the manufacturing of high power LEDs and their use for general lighting; development of new products and concepts for the introduction of high power light emitting diodes for mass usage. Capital share or percentage of votes at the General Assembly as of 31.12.2012 100 % of the capital 91.11 % of the voting shares 100 % of the capital 100 % of the capital 51 % of the capital MONBAT ROMANIA OOD Trade company with scope of activity: trading, service and 99 % of the capital marketing of accumulator batteries, accumulator, lead, polyethylene and polypropylene scrap. 8. Information about the concluded by the issuer, by its subsidiary or parent undertaking, in their capacity of borrowers, loan contracts with indication of the terms and conditions thereof, including the deadlines for repayment as well as information on the provided guarantees and assuming of liabilities Long-term loans Amount and maturity date of the loans of MONBAT AD as at 31.12.2012 Table № 28 Type of Contract № and Maturity credit date date Eurobank 100Investment EFG 532/16.05.2007 16.05.2017 credit Unicredit 1043/28.11.2006 Bulbank AD Annex 30.06.2013 Credit line 9/31.03.2008 Eurobank EFG 339/07.12.2004 15.03.2013 Credit line Bulgaria AD Unicredit Investment Bulbank AD 1099/14.06.2007 11.06.2017 credit Eurobank 100EFG 242/31.03.2006 15.03.2013 Credit line Bulgaria AD SG Express Bank AD 31.03.2013 Overdraft BNP Pariba S.A., Sofia 869/07.2010 22.07.2013 Overdraft branch Eurobank EFG 100 -972 23.06.2013 Overdraft Bulgaria AD Bank Utilized Currency Amount amount as Collateral of credit of 31.12.2012 EUR Yes 6 100 000 3 367 553 EUR 300 000 300 000 Yes EUR 2 200 000 2 076 716 Yes 6 228 000 3 113 999 Yes EUR 2 200 000 2 139 428 Yes EUR 3 500 000 3 427 277 Yes EUR 3 000 000 2 624 821 Yes EUR 1 000 000 1 000 000 Yes EUR Leasing Detailed information about the lease contracts concluded by 31.12.2012 is presented in Section 9.1. of the Financial Statements of the Company as of 31.12.2012, prepared in accordance with International Accounting Standards. 9. Information about the concluded by the issuer, by its subsidiary or the parent undertaking, in their capacity of lenders, loan contracts, including the provision of guarantees of any type, including to related persons, with indication of the concrete conditions there under, including the deadlines for repayment and the purpose for which they have been granted The main contracts for loans granted to related parties are presented as follows: Monbat Recycling EAD Cession contract, between Monbat AD and Monbat Recycling EAD. The ceded items are as follows: - Receivables on loans granted to subsidiaries – Monbat DOO Serbia and Monbat Recycling Romania at the amount of BGN 13 476 thousand and interest at the amount of BGN 2 135 thousand. The total receivable is at the amount of BGN 15 611 thousand and with it Monbat AD increases its shares owned in Monbat Recycling EAD. In 2010 Monbat AD has sold 100% of the shares of Monbat DOO Serbia for the amount of BGN 15 629 thousand, as well as 99.97% of its owned shares in Monbat Recycling Romania for the amount of BGN 7 373 thousand to Monbat Recycling EAD. In 2012 Monbat AD increased its shares in Monbat Recycling Romania with expenses for the acquisition of assets, trade receivables and receivables on loans granted, totaling to BGN 17 511 thousand. At 12.12.2012 the shares have been transferred to Monbat Recycling EAD. In 2012 Monbat AD increases its shares in Monbat DOO Serbia with payments made for equipment, totaling to TBGN 4 630 At 01.08.2012 the shares have been transferred to Monbat Recycling EAD - - Monbat Romania OOD According to a cession agreement receivables amounting to 968 482.37 ЕUR of Prista Oil Romania from Monbat Romania OOD, for sales of inventory (127 641.42 EUR) and receivables from sales (840 840.95 EUR) have been ceded to Monbat AD. According to an agreement for receivables and payables offsetting, payables of Prista Oil Romania to Monbat AD amounting to 659 327.46 EUR has been offset against payable of Monbat AD to Prista Oil Romania. The remainder of 309 109.91 EUR is payable from Monbat AD to Prista Oil Romania. According to a cession agreement Prista Oil Romania ceded its receivable from Monbat AD to Prista Oil Holding EAD. With appendix from 11.11.2010 between Prista Oil Holding EAD and Monbat AD payable of Monbat AD amounting to 309 109.91 EUR is offset against payable of Prista Oil Holding EAD for a deposit received in June 2009. Octa Light All loan contracts are re-negotiated with the same conditions with new credit term 31.12.2013 Contract, dated 21.02.2012 Utilized principle: BGN 4 660 thousand Credit term: 31.12.2013 Balance on the principle as of 31.12.2012 - BGN 4 660 thousand Collateral: Pledge on the machines and installations, secured with a Promissory Note Redemption: no redemption plan As at 31.12.2012 MONBAT AD has granted the following short-term loans: Contract from 02.01.2008, signed with Inter Keramik OOD and Annex 2/05.01.2012 Utilized principal: BGN 750 thousand Contract duration: two years Balance of principal as of 31.12.2012 - BGN 0 Contract collaterals: none Redemption: within the contract duration without fixed payments. Contract from 01.07.2009 with FK “Montana 1921” – Annex 2/01.07.2012 Utilized principal: BGN 50 thousand. Contract duration: one year Balance of the principle as of 31.12.2012 - BGN 0 Contract collaterals: Pledge at the form of TV rights as a member of "A" PFL season 2010-2011 Redemption: Single payment at the maturity date of the contract 10. Information on the use of the funds from a new issue of securities carried out during the reported period During the reported period the company has not issued a new issue of shares. 11. Analysis of the ratio between the achieved financial results reflected in the financial statement for the fiscal year, and previously published forecasts for these results The management of MONBAT AD has not announced a forecast on the individual 2012 financial results of the company. At its session as of 15.01.2013 the Board of Directors of Monbat Plc approved a Business plan on the development of the companies, included in the economic group of Monbat Plc for 2013. The Business plan also contains a Forecast regarding the expected data on the net sales revenues, net profit and EBITDA on consolidated basis, as follows: Net Sales - 2013 Net Profit - 2013 ЕBITDA - 2013 BGN 283 331 000 BGN 33 773 000 BGN 44 761 000 The 2013 Forecast was made on the basis of the expected average lead price for 2013 – EUR 1850 per ton. 12. Analysis and assessment of the policy concerning the management of the financial resources with indication of the possibilities for servicing of the liabilities, eventual jeopardizes and measures which the issuer has undertaken or is to undertake with a view to their removal The management of the financial resources is subject to the requirement to achieve maximum efficiency with the simultaneous observance of agreed payment terms both with suppliers and customers. This means predominant use of own resources which leads to lower financial costs. A result of such a policy of managing the financial resources is faster reduction of the period for collection of receivables compared to the period for payment of liabilities. This leads to an effective increase of the cash in the company and to the possibility for the investment costs to be financed without this being always at the expense of resources attracted by banks, which reduces the interest costs. On the other hand, this way a significant reserve of unused credits is preserved that can be used for both current and investment expenditures thus maintaining high liquidity of payments. 13. Assessment of the possibilities for realization of the investment intentions, indicating the amount of the available funds and stating the possible changes in the structure of the financing of this activity As a result of the successfully completed by MONBAT AD Project “Increasing the competitiveness of Monbat Plc by investing in new equipment for grid and plate for dry charged and gravity casted lead acid batteries producing”, approved with a Resolution No ТМГ-011/27.05.2009 of the Executive Director of the Bulgarian Small and Medium Enterprises Promotion Agency under an open procedure for a competitive selection of projects “Technological Modernization in Big Enterprises”, the company received a grant in the amount of BGN 4 227 266.23. The Project has been implemented on the basis of a contract signed with the Bulgarian Small and Medium Enterprises Promotion Agency № ТМГ-02-4/09.07.2009 within 18 months and the management of MONBAT AD acknowledges the successful completion of both the specific and the main purpose of the tender offer, namely providing competitiveness and sustainable development of the company by means of introducing new and innovative equipment and technologies within the conditions of the world financial and economic crisis. In 2011 the total amount of the investments made in Monbat Plc and Monbat Recycling EAD is BGN 19 626 000 out of which BGN 17 451 000 investments in Monbat Plc and 2 175 000 investments in Monbat Recycling EAD. In 2012 the total amount of the investments made in MONBAT AD is EUR 1 844 000. 14. Information about occurred during the reporting period changes in the base principles for management of the issuer and its economic group There is no change occured in the base principles for management of the company. 15. Information about the main characteristics of the applied by the issuer in the course of preparation of the financial statements internal controls system and risk management system The company has a functioning internal control and risk management system /ICRM system/ that guarantees the efficient functioning of reporting and information disclosure systems. The ICRM system was elaborated and functions also with a view to identify risks that pursue the activities of the company and support their efficient management. Senior management has the main responsibility and role in terms of developing the internal control and risk management system. It performs both managing and directing function and also ongoing monitoring. The ongoing monitoring of controls by senior management is to assess whether the ICRM system is still suitable for the company in a changed environment, whethet it acts as expected and whether it is periodically adjusted to changed conditions. Evaluation of selected areas, carried out in this context as a responsibility of the senior management complies with the priorities of the company. Evaluation is also proportionate to the characteristics of the company and the impact of the risks identified. The senior management reports to the audit committee on the basic characteristics of the ICRM system and also on key issues, including main incidents established and the respectively approved or applied corrective measures. 16. Information on the changes in the management and supervisory bodies during 2012 At the regular annual session of the general assembly of the shareholders of MONBAT AD, held on 25.06.2012 was approved a decision to change the management system of the company, namely to turn form a two-tier to one-tier management system. At the held session of the general assembly of the shareholders was approved a decision for the company to be managed by a Board of Directors consisting of 9 members, namely: Atanas Bobokov – Chairperson of the Board of Directors Petar Petrov – Executive Director Ivan Karageorgiev – Member of the Board of Directors Plamen Bobokov – Member of the Board of Directors Stoyan Stalev – Member of the Board of Directors Alexander Chaushev – Member of the Board of Directors Nikolay Trenchev – Member of the Board of Directors Kamen Zahariev – Member of the Board of Directors Florian Huth – Member of the Board of Directors The members of the Board of Directors of MONBAT AD were filed with the Commercial Register to the Registry Agency on 25.07.2012 under № 20120725103746. 17. Information on the amount of the remunerations, rewards and/or the benefits of everyone of the members of the management and control bodies for the fiscal year under review, paid by the issuer and its subsidiaries, irrespective of whether they have been included in the issuer’s expenses or rise from profit distribution, including: a) received amounts and non-money remunerations; b) contingent or deferred remunerations, occurred during the year, even if the remuneration is due at a later time; c) amount owed by the issuer or its subsidiaries for payment of pensions, compensations at retiring on a pension or other similar compensations In2012 the members of the Supervisory Board (SB) of MONBAT AD have received the following remunerations: Table № 29 Full name Plamen Stoilov Bobokov Alexandar Viktorov Chaushev Nikolay Georgiev Trenchev Stoyan Zhivkov Stalev Position Chairperson of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Member of the Supervisory Board Net/BGN 274 000 24 000 24 000 24 000 By a resolution of the regular annual general assembly of the shareholders as of 25.06.2012 was voted an additional remuneration/bonus to the Supervisory Board in the amount of BGN 250 000. The additional remuneration/bonus for the members of the SB, voted at the general assembly of shareholders, held on 25.06.2012, was included in the above stated amounts. In2012 the members of the Management Board (MB) of MONBAT AD have received the following remunerations: Table № 30 Full name Atanas Stoilov Bobokov Chavdar Dochev Danev Ivan Petrov Karageorgiev Petar Hristov Petrov Krasimir Stoyanov Krulev Position Chairperson of the Management Board Member of the Management Board Member of the Management Board Executive director Member of the Management Board Net/BGN 268 000 6000 18 000 18 000 1762 By a resolution of the regular annual general assembly of shareholders as of 25.06.2012 was voted an additional remuneration/bonus to the Management Board in the amount of BGN 250 000. The additional remuneration/bonus for the members of the MB, voted at the general assembly of shareholders, held on 25.06.2012, was included in the above stated amounts. The members of the management and control bodies have not received benefits in kind in 2012. For 2012 Kamen Zahariev and Florian Huth have not received any remunerations. Members of the Board of Directors MONBAT AD in their capacity of members of the Board of Directors of START AD have received the following remunerations for 2012: Table № 31 Full name Atanas Stoilov Bobokov Position Member of the Board of Directors Net/BGN 8 400 The company does not have contingent or deferred compensations, incurred during the year. MONBAT AD and its subsidiaries do not owe pension, retirement or other similar benefits. 18. Information about the owned by the members of the management and of the control bodies, procurators and the senior management shares of the issuer, including the shares held by anyone of them separately or as a percent from the shares of each class, as well as provided to them options on securities of the issuer by the latter – type and amount of the securities over which the options have been set up, price of exercising of the options, purchase price, if any, and term of the options As of 31.12.2012 the shares of the capital of MONBAT AD hold by members of the Board of Directors are as follows: Atanas Stoilov Bobokov – Chairperson of the Board of Directors – 150 000 shares Alexandar Chaushev – Member of the Board of Directors - 8 630 shares 19. Information about the known to the company agreements (including also after the fiscal year closing) as a result of which changes may occur at a future time in the owned percent of shares or bonds by current shareholders and bondholder The management of the company does not have information about known to the company agreements as a result of which changes may occur at a future time in the owned percentage of shares by current shareholders, except for the disclosed in a prior reporting period - 2007 five-year Framework Loan Agreement concluded between Prista Group BV, Netherlands and Gramercy. 20. Information about pending legal, administrative or arbitration proceedings relating to issuer’s liabilities or receivables at the amount of at least 10 percent of its equity; if the total amountof the issuer’s liabilities or receivables under all initiated proceedings exceeds 10 per cent of its equity, information shall be submitted for each procedure separately There are not any pending legal, administrative or arbitration proceedings relating to issuer’s liabilities or receivables at the amount of at least 10 percent of its equity. 21. Data about the investor relations director Daniela Ilcheva Peeva tel. +359 2 9882413 ; e-mail investorrelations@monbat.com 102 “Bulgaria” Blvd., Business Centre “Bellissimo”, fl. 7, Sofia ХІІ. CHANGES IN THE PRICE OF THE COMPANY’S SHARES Movement of the shares price for the period 01.01.2012 -31.12.2012 400000 6 350000 5 300000 250000 4 200000 3 150000 2 100000 50000 1 0 0 Quantity Price ХІІІ. INFORMATION UNDER APPENDIX NO 11 OF ORDINANCE NO 2 OF FSC 1. Structure of the company’s capital, including the securities that have not been admitted to trading on a regulated market in the Republic of Bulgaria or another Member State, with indication of the different classes of shares, the rights and liabilities attaching to any of the classes of shares and the portion of the total capital which each individual class constitutes As of 31.12.2012 the capital of MONBAT AD amounts to BGN 39 000 000, divided into 39 000 000 ordinary, registered, dematerialized shares with nominal value of BGN 1.00 each of them. All shares of the company belong to one class and each share entitles to one vote at the general assembly of shareholders, the right to dividend and a liquidation quota, proportionate to the nominal value of the share. The whole issue of 39 000 000 shares, issued by the company was registered for trading on the "Official Market of Equities" Segment "B" of BSE-Sofia AD. MONBAT AD has not issued other securities that have not been admitted to trading on a regulated market in the Republic of Bulgaria or another EU Member State. . Based on the amendments to the Rules and regulations of "BSE Sofia" AD, entered into force on 01.03.2012, as at the date of this document the issue of company’s shares is traded on the Main Market, "Premium" equities segment. 2. Limitations over the securities transfer, such as limitations for holding of securities or a requirement to obtain approval of the company or another shareholder All shares of the company are freely transferable without restrictions or conditions, subject to the requirements of the current legislation in the Republic of Bulgaria. It is not necessary to obtain approval of the company or another shareholder for acquiring and holding shares of the capital of MONBAT AD. 3. Information on the direct and indirect holding of 5 or more percent of the voting rights in the company’s general assembly, including data about the shareholders, the amount of their holding and the manner in which the shares are owned As of 31.12.2012 major shareholder, holding directly shares representing 68.51% of the capital of MONBAT AD is Prista Oil Holding EAD, Sofia, registered under company case No 13825/1994 of Sofia City Court with registered seat and business address at 9, Layosh Koshut Str., Sofia. Another legal entity, holding directly 5 or more than 5 percent of the voting rights at the company’s general assembly is Monbat Trading Ltd., Sofia, registered under company case No13192/1999 of Sofia City Court with registered seat and business address at 9, Layosh Koshut Str., Sofia. The company holds directly 7.06 % of the votes at the general assembly. Prista Oil Holding EAD and Monbat Trading Ltd. are related parties and jointly hold 75.57 % of the votes at the general assembly of MONBAT AD. As of 31.12.2012 the capital structure of MONBAT AD is as follows: Name of shareholder Prista Oil Holding EAD, Sofia Monbat Trading OOD, Sofia Other physical persons and legal entities Number of shares hold Percentage of capital 26 720 129 68.51 % 2 752 800 7.06 % 2 622 865 6.72 % MONBAT AD – treasury ordinary shares 6 904 206 17.71 % 4. Data about the shareholders with special control rights and description of these rights MONBAT AD does not have any shareholders with special control rights. 5. The control system in exercising the voting right in cases when officials of the company are also its shareholders and when the control is not exercised directly by them The company does not have a control system in exercising the voting right in cases when officials of the company are also its shareholders and when the control is not exercised directly by them. Any official who is a shareholder of the company exercise his/her right to vote at his/her own discretion. 6. Limitations over the voting rights, such as limitations over the voting rights of the shareholders with a given percent or number of votes, deadline for exercising the voting rights or systems whereby with the company’s assistance, the financial rights attaching to the shares are separated from the holding of shares There are no limitations over the voting rights of any shareholder of MONBAT AD. The right to vote at the general assembly of the shareholders of MONBAT AD shall be exercised, personally or by proxy, by persons that had acquired shared and had been filed with the book of shareholders latest 14 days prior to the date of the assembly. The proxy holder must dispose of an explicit, notary certified proxy in accordance with the requirements of LPOS. 7. Agreements among the shareholders, which are known to the company and which may result in limitations over the transfer of shares or the voting right The Company is not aware of agreements among shareholders which may result in limitations over the transfer of shares or the voting right. 8. The provisions about the appointment and dismissal of the members of the company’s management bodies and about introduction of amendments and supplements to the articles of association Pursuant to the Articles of Association of MONBAT AD, The following persons are not eligible as members of the BD of the Company: 1. who have been members of managing or controlling body of a company or co-operation, terminated through insolvency, for the last two years preceding the date of the judgment for declaring insolvency, if there are creditors unpaid; 2. who, as at the moment of the election, are sentenced with an effective verdict for crimes against property, against economy or against financial, tax or social security system, committed in the Republic of Bulgaria or abroad, unless they are exculpated. At least one third of the members of the BD must be independent persons. The independent member of the BD may not be a person who: 1. is employee of the Company; 2. is shareholder, holding directly or through related persons at least 25% (twenty five per cent) of the votes in the GM or is a person related to the Company; 3. is in long-term business relationship with the Company; 4. is member of management or controlling body of a company under items 2 and 3 of this paragraph; 5. is a person related to another member of management or controlling body of the Company. The members of the BD are elected for a term of up to five years. The members of the BD may be reelected without limitation and may be released from duty also prior to the expiry of the mandate, for which they are elected, pursuant to resolution of the GM. Amends and supplements the Articles of Association could be adopted by the General Assembly of Shareholders. 9. The powers of the company’s management bodies, including the right to take decisions for the issue and redemption of shares in the company The members of the BD are obligated: 1. to perform their duties with the proper care of good businessman in a way, for which they reasonably believe to be in the interest of all shareholders of the Company and using only information for which they reasonably believe to true and compete; 2. to be loyal to the Company through: a) preferring the interest of the Company before their own interest; b) avoiding direct or indirect conflicts between their interest and the interest of the Company and, in case such conflicts arise – timeously and completely to disclose them in writing before the Board of Directors and not to participate as well as influence the other members of the board when passing resolutions in such cases; c) not disclosing non-public information for the Company including after terminating their membership in the BD until the relevant circumstances are announced by the Company publicly. The Company may buy back its own shares without making a tender offer, through acquisition of not more than 3 per cent own voting shares, both pursuant to a resolution of the General Shareholders Meeting and pursuant to a resolution of the Board of Directors for a term not longer than eighteen months as from the date of the resolution of the relevant body of the Company. The buy-back of own shares pursuant to a resolution of the Board of Directors may be performed without special delegation of powers for that from the General Shareholders Meeting for each separate case, but entirely on the grounds of the powers vested in the Board of Directors by virtue of the present provision of the Articles of Association for a term of up to 2 (two) years after registration of these Articles of Association at the Commercial Register to the Registry Agency. 10. Significant contracts of MONBAT AD which give rise to action, have been amended or terminated due to change in the control of the company upon carrying out of obligatory tender offer and the consequences thereof, save for the cases when the disclosure of such information may cause serious damages to the company; the exception of the previous sentence shall not apply in the cases when the company must disclose information by virtue of the law MONBAT AD has not signed contracts which give rise to action, have been amended or terminated, due to change in the control of the company upon carrying out of obligatory tender offer. 11. Agreements between the company and the members of its management bodies or officials for payment of compensation upon quitting or dismissal without legal grounds or upon termination of the labor relations due to reasons, related to a tender offer There are no agreements between MONBAT AD and the members of its Board of Directors or officials of the company for payment of compensation upon quitting or dismissal without legal grounds or upon termination of the labor relations due to reasons, related to a tender offer. ХІV. OTHER INFORMATION AT THE COMPANY’S DISCRETION The Company estimates that there is no other information that has not been publicly disclosed by the company and that would be important for the shareholders and investors in taking a well-grounded investment decision. Members of the Board of Directors: 1. Atanas Bobokov – Chairman of the Board of Directors 2. Petar Petrov – Executive Director 3. Ivan Karageorgiev – Member of the Board of Directors 4. Plamen Bobokov – Member of the Board of Directors 5.Stoyan Stalev – Member of the Board of Directors 6. Alexander Chaushev – Member of the Board of Directors 7. Nikolay Trenchev – Member of the Board of Directors 8. Kamen Zahariev – Member of the Board of Directors 9. Florian Huth – Member of the Board of Directors