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Eurohold Bulgaria AD
Quarterly Report • Apr 30, 2024
2576_rns_2024-04-30_7425a405-b1fa-4de6-9114-b46467abb4c7.pdf
Quarterly Report
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EUROHOLD BULGARIA
Activity report
31 March 2024
1
TABLE OF CONTENTS
1
Interim condensed individual
activity report as at 31 March 2024
Operational review
- Significant events
- Activity results
Activity Report
- Review of the main risks
- Events after the date of the reporting period
- Concluded significant transactions with related parties
2
Interim condensed separate financial statements as at 31 March 2024
Interim condensed separate statement of profit or loss and other comprehensive income
Interim condensed separate statement of financial position
Interim condensed separate statement of cash flows
Interim condensed separate statement of changes in equity
3
Notes to the interim condensed separate financial statements
4
Internal information
5
Additional information
6
Appendix 4
7
Declaration by the responsible persons
ABOUT THIS REPORT
The interim separate financial statements of Eurohold Bulgaria AD (Eurohold, Company, Holding) have been prepared in accordance with applicable accounting standards and give a true and fair view of the assets, liabilities, financial position and results of the Company.
Further information about Eurohold Bulgaria can be found on our website www.eurohold.bg
Eurohold Bulgaria AD also prepares a consolidated annual report including the results of the parent company, subsidiaries and associates.
In order to obtain a complete view of the financial position of the Eurohold Group, users of this interim condensed separate report should read it together with the consolidated report of the Eurohold Group as at the same reporting period
2
Eurohold Bulgaria AD
3
1 Interim condensed individual activity report – 31 March 2024
Activity Report
OPERATIONAL REVIEW
BUSINESS HIGHLIGHTS
Eurohold Bulgaria AD,
- ✓ is a leading independent business group in Central and Southeastern Europe (CEE/SEE) with leading positions in the insurance and energy businesses
- ✓ has a main activity relating to the creation, acquisition and management of participations and the financing of related undertakings
- ✓ owner of a large energy group in Bulgaria the Electrohold group
- ✓ is the owner of a large independent insurance group in CEE/SEE by gross premium income Euroins Insurance Group
- ✓ has an experienced management team
- ✓ has a high level of corporate governance in accordance with best practices
- ✓ is a public joint-stock company within the meaning of the Public Offering of Securities Act (POSA), the company's shares are registered for trading on:
- » Bulgarian Stock Exchange (BSE) stock code EUBG
- » Warsaw Stock Exchange (WSE) with stock code EHG
Q1'2024
BUSINESS OPERATIONS
- ▪ 3 business sectors
- ▪4 subsidiaries
- ▪ 2 dedicated energy business development companies
- ▪ 17 operating companies
- ▪ 12 countries in Europe
- ▪9 400 shareholders
- ▪28 years of history
- ▪ 12 countries in Europe
- ▪ 17 operating companies
BUSINESS ASSETS
Eastern European Electric Company II B.V. - Energy Group
Company uniting the energy companies acquired in 2021.
Euroins Insurance Group
CEE and SEE insurer with leading positions in Romania and Bulgaria. Active operations in 9 markets in Europe.
Euro-Finance - investment intermediation and asset management
Market turnover leader on the Bulgarian Stock Exchange, Member of Deutsche Börse Group.
ACTIVITY REVIEW
MAIN ACTIVITY
Eurohold Bulgaria AD is a holding company primarily engaged in financial activities related to the acquisition, sale and management of interests and financing of related companies.
The Company has a subject of activity: acquisition, management, evaluation and sale of participations in Bulgarian and foreign companies, acquisition, management and sale of bonds, acquisition, evaluation and sale of patents, assignment of licenses for the use of patents to companies in which the Company participates, as well as financing of companies in which the Company participates.
The Company does not engage in any activities subject to special permitting regimes requiring patents, licenses or other authorizations from regulatory authorities.
In order to optimize management, business processes and fixed costs, the Company has structured its businesses into subholding structures depending on the sector in which they operate. Eurohold Bulgaria AD together with its subsidiary subholding companies and their operating companies form an economic group, the Eurohold Group.
Eurohold manages and supports the business of its economic group through its strategy, risk, financing of affiliates, control, communication, legal advice, human resources, information systems and technology and other functions.
ЕCONOMIC GROUP
The organizational structure of Eurohold is structured on three levels:
- ✓ parent company;
- ✓ subsidiary companies; and
- ✓ operating companies;
Each of the three levels has its specific functions, business activities and objectives.
Existing business activities as of 31.03.2024
The subsidiary companies represent holding structures, uniting the investments of Eurohold Bulgaria AD in the following sectors:
- Energy;
- Insurance; and
- Financial and investment (Investment brokerage and asset management)
As of 31.03.2024 and as of the date of this report, Eurohold Bulgaria AD has holdings in 24 companies*
| direct participation | indirect participation |
|---|---|
| 4 subsidiaries » |
2 dedicated energy business development » companies |
| ✓ two sub-holding structures (energy and insurance), |
17 operating companies* » |
| ✓ two operating companies (finance - investment mediation and energy) |
(8 energy and 9 insurance) |
CHANGES IN THE ECONOMIC GROUP COMPARED TO THE COMPARABLE REPORTING PERIOD
Discontinued operations in 2023
Discontinued business operations in existing businesses
At the end of 2023, EIG AD, a subsidiary of Eurohold Bulgaria AD, concluded a preliminary agreement for the sale of the subsidiary EIG Re EAD. As of 31.12.2023, the control of "IC EIG Re" EAD, a subsidiary of "Euroins Insurance Group" AD, has been lost, and all necessary notifications to the competent authority have been made, according to the applicable legislation.
ASSIGNED CREDIT RATINGS
| EuroHold | EuroHold | |
|---|---|---|
| Issuer Default Rating "B" Outlook: stable |
Long-term: BBB Outlook: stable Short-term: A-3 |
|
| ISIN: BG2100013205; | bonds issues | |
| ISIN: BG2100002224 | Long-term: BBB Outlook: stable |
|
| Short-term: A-3 |
IMPORTANT EVENTS
INFORMATION ON SIGNIFICANT EVENTS, ACCORDING TO ARTICLE 100o, 4, S.2 OF THE POSA
IMPORTANT EVENTS FOR THE ACTIVITIES OF EUROHOLD BULGARIA DURING THE REPORTING PERIOD
January
✓ In January 2024, Eurohold Bulgaria was awarded at an event organized by the Bulgarian Stock Exchange. Eurohold was ranked second among the most liquid companies on the Bulgarian Stock Exchange (BSE) for 2023. Eurohold's books are traded on the "Standard" segment, which is the largest on the BSE by number of listed companies.
✓ Pursuant to the Agreement dated 18.3.2024, an additional capital contribution of 940,000 euros was made to the subsidiary Eastern European Electric Company II B.V. The amount was paid to EEEC II B.V. in two tranches - EUR 600,000 on March 14, 2024 and EUR 340,000 on March 15, 2024.
March
✓ On March 29, 2024, IC Euroins AD (Euroins Bulgaria), part of the insurance group of Eurohold - Euroins Insurance Group AD (EIG) applied for an increase of its capital by BGN 20 million for registration in the State Register.
The capital increase is through the issuance of 5,000,000 new shares with an issue value of BGN 4 each, of the same type and class as the company's existing share issue, with a nominal value of BGN 1. The amount of capital is increased from 410,971 BGN 200 to BGN 44,721,200, and the shareholding of Euroins Insurance Group AD in the capital of IC Euroins after registration in the Republic of Tatarstan will be 98.88%. The funds from the capital increase were deposited into the collection account on 27.03.2024.
✓ In 29.03.2024, at a meeting of the Company's management board, a decision was taken to convene an extraordinary general meeting of shareholders regarding the adoption of a decision to issue warrants in the amount of up to 260,500,000 (two hundred and sixty million and five hundred thousand ) the number of non-available, registered, freely transferable warrants under the conditions of a public offering in accordance with the Law on the Public Offering of Securities (PLPAC). The warrants have an issue value of BGN 0.50 (fifty cents) each and entitle the warrant holders to exercise within a 10-year period their right to subscribe for the corresponding number of shares (of the same type and class as the company's existing share issue - non-available, registered, nonprivileged, with the right to 1 (one) vote in the general meeting of the company's shareholders, with the right to a dividend and the right to a liquidation share) - the underlying asset of the warrants at an issue value of BGN 2.00 (two) per share at a conversion ratio warrant/share 1:1, which "Eurohold Bulgaria" AD will issue in future increase(s) of its capital, under the condition, only in favor of the owners of the warrants.
The public offering of the warrant issue will be considered successfully completed only if at least 78,150,000 of the warrants offered, representing 30% (thirty percent) of the securities offered, are subscribed and fully paid. It is not possible to subscribe for warrants above the maximum permissible amount of securities applied for issuance in the amount of 260,500,000 warrants.
SIGNIFICANT EVENTS OCCURRING AFTER THE REPORTING PERIOD DATE
✓ None
The Management Board of Eurohold Bulgaria AD is not aware of any other important or significant events for the Eurohold group that occurred during the reporting period or after the date of its completion.
ACTIVITY RESULTS
Results on an individual basis
Eurohold Bulgaria AD is a holding company with significant investments in subsidiary companies and as such does not carry out independent and regular commercial transactions. The main (operating) income of the holding company is of a financial nature, with the most significant of them - profits from operations with financial instruments and subsequent assessments appearing in different accounting periods and not of a permanent nature.
As of 31.03.2024, Eurohold manages a portfolio of companies in the sectors: energy, insurance, investment mediation and asset management (financial and investment services).
Eurohold Bulgaria AD has a long-term approach to its investments and holds leading positions on the markets in the segments in which it operates.
In this regard, investors and interested parties should analyze the results of this individual financial report together with the consolidated report, giving a clear and complete view of the results, financial position, strategies and development prospects of the Eurohold group.
FINANCIAL OVERVIEW
ANALYSIS OF THE FINANCIAL CONDITION
ACTIVITIES
| ∆ | 31.03.2024 | ∆ | 2023 | ||
|---|---|---|---|---|---|
| ASSETS | % | thousand BGN |
thousand BGN |
thousand BGN |
|
| Non current assets |
Investments in subsidiaries |
(0.3)% | 610 760 | 1 838 | 608 922 |
| Property, plant and equipment |
(4.9)% | 997 | (51) | 1 048 | |
| Current assets |
Receivables from related parties |
(7.1)% | 18 800 | (1 435) | 20 235 |
| Other receivables | 7.6% | 1 648 | 116 | 1 532 | |
| Cash and cash equivalents |
(4.3)% | 89 | (-4) | 93 | |
| Total Assets | 0.1% | 632 294 | 463 | 631 831 |
ANALYSIS OF SUBSTANTIAL ASSETS
» Investments in subsidiaries
| Net value of the investment as of 01.01.2024 |
Increase | Decrease | Net value of the investment as of 31.03.2024 |
Share capital of the subsidiary |
% of share capital |
|
|---|---|---|---|---|---|---|
| BGN thousand. | BGN thousand |
BGN thousand |
BGN thousand | BGN thousand | % | |
| Euroins Insurance Group AD | 471 100 | - | - | 471 100 | 576 243 | 90.10% |
| Eastern European Electric | ||||||
| Company II B.V. | 113 157 | 1 838 | - | 114 995 | 4 | 100.00% |
| Euro-Finance AD | 24 645 | - | - | 24 645 | 14 100 | 99.99% |
| Electrohold Green EOOD | 20 | - | - | 20 | 20 | 100.00% |
| 608 922 | 1 838 | - | 610 760 |
In the first quarter of 2024, there was a change in the value of the investments in the subsidiary uniting the energy companies, after an additional contribution was made to the capital Eastern European Electric Company II B.V. in the amount of BGN 1.8 million (EUR 940 thousand).
» Current receivables from related enterprises
The value of current receivables from related enterprises decreased by BGN 1.4 million, amounting to BGN 18.8 million at the end of March 2024 (BGN 20.2 million at the end of 2023).
Primarily, these receivables represent receivables from the subsidiary insurance company Euroins Insurance Group AD and arose under a loan agreement and a debt substitution agreement under the following parameters:
| Creditor | Liable person | Currency | Contract limit |
Principal due 31.03.2024 BGN thousand |
Principal due 31.02.2023 BGN thousand |
Interest rate |
Due date |
|---|---|---|---|---|---|---|---|
| Borrowing under a loan agreement with related parties: | |||||||
| Eurohold Bulgaria AD | Euroins Insurance Group AD | BGN | 8 010 000 | 4 555 | 4 555 | 8.00% | 08.11.2024 |
| Collection under assignment agreement with related parties: | |||||||
| Eurohold Bulgaria AD | Euroins Insurance Group AD | BGN | 14 425 523 | 13 152 | 13 152 | 2.50% | 01.01.2025 |
| Total claims on loans/assignments from related parties: | 17 707 | 17 707 |
» Other receivables (current)
Other receivables amount (after impairment) to BGN 1.6 million (2023: BGN 1.5 million).
Cash and cash equivalents
As of March 31, 2024, cash and cash equivalents decreased insignificantly to BGN 0.89 million at the end of the reporting period compared to BGN 0.93 thousand as of December 31, 2023.
EQUITY AND LIABILITIES
| ∆ | 31.03.2024 | ∆ | 2023 | ||
|---|---|---|---|---|---|
| EQUITY AND LIABILITIES | % | thousand BGN |
thousand BGN |
thousand BGN |
|
| Equity | Share capital | - | 260 500 | - | 260 500 |
| Share premium | - | 144 030 | - | 14 030 | |
| General reserves | - | 7 641 | - | 7 641 | |
| Retained loss | 3% | (199 205) | (5 741) | (193 464) | |
| Total Equity | (2.6)% | 212 966 | (5 741) | 218 707 | |
| Non current |
Bond liabilities | (0.4)% | 240 902 | (853) | 241 755 |
| liabilities | Loans and borrowings | (16.6)% | 17 733 | (3 538) | 21 271 |
| Related party payables | (1.3)% | 391 | 5 | 386 | |
| Other payables | 0% | 58 675 | 0 | 58 675 | |
| Lease liabilities | (5.5)% | 867 | (50) | 917 | |
| Pension liabilities | 0% | 33 | - | 33 | |
| Current | Loans and borrowings | 9% | 37 917 | 3 123 | 34 794 |
| liabilities | Bond liabilities | 236.4% | 5 278 | 3 709 | 1 569 |
| Related parties' payables | 6.9% | 42 519 | 2 727 | 39 792 | |
| Trade and other payables | 8.8% | 14 684 | 1 192 | 13 492 | |
| Lease liabilities | (25.3)% | 201 | (68) | 269 | |
| Liabilities to personnel | (24.7)% | 128 | (42) | 170 | |
| Total liabilities | 1.5% | 419 328 | 6 205 | 413 123 | |
| Total Equity and Liabilities | 0.1% | 632 294 | 464 | 631 830 |
Analysis of capital and material liabilities
» Share capital
Eurohold's share capital remains unchanged at BGN 260.5 million. The Company's registered capital consists of 260,500,000 fully paid ordinary shares with a par value of BGN 1 per share. All shares are entitled to receive a dividend and a liquidation share and represent one vote at the Company's shareholders' meeting.
In the report for the fourth quarter of 2023, there was no substantial change in the ownership of shareholders with more than 5% of the shares of Eurohold Bulgaria AD.
Shareholders structure as of 31.03.2024:
| Shareholders | Number of shares /Voting rights/ |
% of the share | |
|---|---|---|---|
| Total shareholders legal entities, incl: | 255 974 943 | 98.26% | |
| >Total shareholders over 5% (legal entities) | 214 267 725 | 82.25% | |
| >Other legal entities | 41 707 218 | 16.01% | |
| Total shareholders natural persons | 4 525 057 | 1.74% | |
| Total number of shares with voting rights | 260 500 000 | 100.00% |
Eurohold's equity as of 31.03.2024 is BGN 213 million, with a decrease of 2.6% compared to the end of 2023 due to the loss realised for the reporting period.
» Liabilities
The company's liabilities increased slightly by 1.5%, and their amount was BGN 419.3 million (2023: BGN 413 million). The increase is primarily due to an increase in payables to related parties and trade and other payables. Interest on bond loans also increased in relation to accrued interest for the reporting period.
Liability analysis
Non-current liabilities decrease by 1.4%. (BGN 4.4 million), which is mainly due to the following changes: Reduction in the size of obligations under bond loans by 3.3% (BGN 7.6 million).
- » Non-current obligations under issued bond loans decrease during the reporting period as a result of bond transactions, as follows:
- o 4,000 units were sold. purchased own bonds with ISIN XS1731768302.
- o Pursuant to the Agreement, a subsidiary of Eurohold Bulgaria AD replaces another subsidiary of Eurohold Bulgaria AD in its capacity as a lender under a loan agreement for financial instruments with 2,126 units owed by Eurohold Bulgaria AD. securities from the EMTN Program in EUR with ISIN XS1731768302 with a total nominal value of EUR 2,126 thousand and unpaid interest in the amount of BGN 91 thousand.
- Increase in non-current liabilities to financial institutions by 16.6% (BGN 3.5 thousand), as a result of:
- » Reduction of the liability for two loans to the International Investment Bank by BGN 3.5 million, due to the accounting of the reduced amount in current liabilities;
Current liabilities marked a decrease of 11.8% (BGN 10.6 million), which is mainly due to the following changes:
Increase in current obligations under bond loans by BGN 3 thousand (charged interest for the reporting period)
Increase in current liabilities to financial institutions by 9% (BGN 3 million)
During the reporting period, no principal payments were made on loans to financial and non-financial institutions. The increase is a result of the transfer of long-term liabilities to short-term liabilities.
- The amount of liabilities to related parties increased by 6.9% (BGN 2.7 million) in connection with:
- » an increase of BGN 2 million in the obligation to Starcom Holding AD under a loan agreement.
» Structure of loan obligations by type and nature:
| Loans liabilities | ∆ | 31.13.2024 | ∆ | 31.03.2023 | |
|---|---|---|---|---|---|
| % | thousand BGN | thousand BGN. | thousand BGN | ||
| Liabilities under bank loans: | (0.7)% | 55 650 | (415) | 56 065 | |
| Non-current payables to banks | (16.6)% | 17 733 | (3 538) | 21 271 | |
| Current liabilities to banks | (9.0)% | 37 917 | 3 123 | 34 794 | |
| Debt loan liabilities: | 1.2% | 246 180 | 2 856 | 243 324 | |
| Non-current liabilities on debenture loans: | 0.4% | 240 902 | (853) | 241 755 | |
| EMTN Programme ISIN: XS1731768302 | (1.0)% | 84 463 | (853) | 241 755 | |
| EMTN Programme ISIN: XS1542984288 | - | 19 558 | - | 19 558 | |
| Bond loan with ISIN code BG2100013205 | - | 58 675 | - | 58 675 | |
| Bond loan with ISIN code BG2100002224 | - | 78 206 | 1 | 78 205 | |
| Current liabilities on bonded loans: | 236.4% | 5 278 | 3 709 | 1 569 | |
| Interest Obligations on Bonded Loans | 236.4% | 5 278 | 3 709 | 1 569 | |
| Liabilities to non-financial institutions: | 1.7% | 4 400 | 72 | 4 328 | |
| Non-current liabilities to transferors | 0.0% | 58 689 | - | 58 675 | |
| Current liabilities under a receivables assignment agreement |
1.7% | 4 400 | 72 | 4 328 | |
| Loans liabilities to related parties: | 6.8% | 42 910 | 2 732 | 40 178 | |
| Non-current | (1.3)% | 391 | 5 | 386 | |
| Current incl. interest | 6.9% | 42 519 | 2 727 | 39 792 | |
| Total amount of loan commitments | (1.3)% | 407 815 | 5 245 | 402 570 | |
| Non-current liabilities | (1.4)% | 317 701 | (4 386) | 322 087 | |
| Current liabilities | 12.0% | 90 114 | 9 631 | 80 483 |
! Information on the bond loans issued is available in the Appendices to the Interim condensed individual financial statement for the first quarter of 2024 (Appendix: 15. Bond loans).
Information on Loans from financial and non-financial institutions is available in the Appendices to the Interim Condensed Individual Financial Statement for the first quarter of 2024 (Appendix: 16. Loans from financial and nonfinancial institutions).
Information on Loan obligations to related parties is available in the Appendices to the Interim Condensed Individual Financial Statement for the first quarter of 2024 (Appendix: 20.3. Liabilities to related parties).
ACTIVITY RESULTS
FINANCIAL RESULT
For the period January 1 - March 31, 2024, Eurohold Bulgaria AD reduced the loss for the reporting period by 24.4% or BGN 1.4 million, reporting a financial loss of BGN 5.7 million. BGN (for the same period of 2023: loss BGN 7.6 million).
INCOME AND EXPENSES
» Income
| ∆ | 31.03.2024 | 31.03.2023 | |
|---|---|---|---|
| Income from operating activities | % | thousand BGN | thousand BGN |
| - Gains / (losses) from operations with financial instruments, net |
(102)% | (1) | 55 |
| - Other incomes |
(100)% | - | 17 |
| - Financial income (Income from interest on loans granted to related parties) |
(29)% | 173 | 243 |
| Total operating income | (12)% | 172 | 315 |
» Expenses
Eurohold's operating expenses are mainly related to the costs of carrying out specific ongoing projects, interest expenses on borrowed funds used/raised to finance the Holding's operations and the development and support of its subsidiaries, as well as expenses from operations with financial instruments and other financial items.
Eurohold also records fixed costs for personnel and other external services such as office rents, consumables and other costs related to the normal course and conduct of business.
| ∆ | 31.03.2024 | 31.03.2023 | |
|---|---|---|---|
| Operating expenses | в % | thousand BGN | thousand BGN |
| - Hired services expenses |
(22)% | (832) | (1 060) |
| - Employee benefits expenses |
15% | (264) | (230) |
| - Depreciation expense |
(9)% | (51) | (56) |
| - (Expense)/ Reversal of expenses from impairment of financial assets, net |
(448)% | 278 | (80) |
| - Other expenses |
(13)% | (66) | (76) |
| - Finance expenses, including: |
(22)% | (4 978) | (6 342) |
| o Interest on loans from banks and non-bank financial institutions |
(55)% | (1 404) | (3 131) |
| o Interest on bond loans |
10% | (2 854) | (2 605) |
| o Interest on loans received from related parties |
3% | (613) | (593) |
| Interest on loans and leases received from third o parties |
546% | (84) | (13) |
| o Other finance expenses (bank fees, loss from exchange rate changes, others) |
(64)% | (23) | (64) |
| Total operating expenses | (25)% | (5 913) | (7 844) |
Interest expense analysis:
Interest expenses:
Interest expenses decreased for the reporting period by nearly BGN 1.7 million in connection with principal payments on loans in 2023. Interest expenses can be grouped into three categories depending on the financing, namely:
- Interest on loans from banks and non-bank financial institutions in the amount of BGN 1.4 million, reporting a decrease of BGN 1.7 million (55%) compared to BGN 3.1 million for the same period of 2023;
- Interest on bond loans in the amount of BGN 2.8 million with a reported increase of BGN 0.2 million. BGN compared to BGN 2.6 million for the same period in 2023;
- Interest on received loans and leases from related and third parties in the amount of BGN 0.7 million – an increase of BGN 0.1 million compared to BGN 0.6 million for the same period of 2023 was recorded.
CASH FLOWS
Cash flows for the nine months of 2023 are mainly generated from the Company's financing and investing activities related to the restructuring of long-term debt, as well as in the accumulation of free cash from subsidiaries and directing it to finance the current and investing activities of other subsidiaries.
Cash flow analysis
| ∆ | 31.03.2024 | 31.03.2023 | |
|---|---|---|---|
| Cash flows | % | thousand BGN | thousand BGN |
| - Net cash flow from operating activities |
(192)% | 1 869 | (2 033) |
| - Net cash flow from investing activities |
- | (1 788) | - |
| - Net cash flow from financing activities |
(11)% | (85) | (96) |
| Net cash flows | (100)% | (4) | (2 129) |
| - Effect of expected credit losses |
(100)% | - | (1) |
| - Cash and cash equivalents at the beginning of the year |
(96)% | 93 | 2 238 |
| Cash and cash equivalents at the end of the period | (18)% | 89 | 108 |
NON-CASH TRANSACTIONS
The non-cash transactions carried out by the Company for the first quarter of 2024 can be traced in appendix 21. "Non-cash transactions" of the Appendices to the interim condensed individual financial statement for the reporting period.
THE RELATED PARTIES' TRANSACTIONS (transactions with subsidiaries and other related parties under common control)
The Company's transactions with related parties for the first three months of 2024 and the comparable period of 2023 can be traced in note 20.1. "Transactions with related parties" from the Appendices to the condensed individual financial statements for the first quarter of 2024.
LITIGATIONS
As of 31.03.2024, there are no legal cases filed against the Company.
WARRANTIES AND PROVIDED GUARANTEES
The company is a co-debtor/guarantor for loans received from related parties as follows:
| Business | Third / | Amount in EUR'000 |
Amount in BGN'000 |
Amount in EUR'000 |
Amount in BGN'000 |
MATURITY AS OF 31.03.2024 (EUR'000) | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| area | Related parties |
as of 31.03.2024 |
as of 31.03.2024 |
as of 31.12. 2023 |
as of 31.12.2023 |
2024 | 2025 | 2026 | 2027 | 2028 | after 2028 |
| Energy sub-holding |
| Corporate payment |
Related | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| guarantee | parties | 3 500 | 6 845 | 3 500 | 6 845 | - | 3 500 | - | - | - | - |
| Working capital loans |
Related parties |
13 965 | 27 313 | 20 189 | 39 486 | 13 965 | - | - | - | - | - |
| Corporate guarantee in connection with an acquisition |
Related parties |
220 000 | 430 283 | 220 000 | 430 283 | - | - | - | 220 000 | - | - |
| Parent company | |||||||||||
| Bank loans for | |||||||||||
| investment | Related | ||||||||||
| purposes | parties | 5 000 | 9 779 | 5 000 | 9 779 | 5 000 | - | - | - | - | - |
| Group of leasing | |||||||||||
| companies* | |||||||||||
| Related | |||||||||||
| For financing | parties until | ||||||||||
| leasing activity | 30.06.2022 | 18 393 | 35 974 | 18 519 | 36 220 | 6 987 | 5 525 | 3 596 | 1 625 | 613 | 47 |
| Group of automotive companies |
|||||||||||
| Related | |||||||||||
| Working capital | parties until | ||||||||||
| loans | 30.06.2022 | 5 307 | 10 380 | 5 167 | 10 106 | 2 716 | 557 | 557 | 557 | 557 | 363 |
| TOTAL: | 266 165 | 520 574 | 272 375 | 532 719 | 28 668 | 9 582 | 4 153 222 182 | 1 170 | 410 |
In connection with financing as part of a package deal, a pledge of 35% shares of a subsidiary was established.
In connection with a concluded contract for financing by a financial institution, a pledge of shares of a subsidiary company was established.
In connection with a loan contract by a credit institution in 12.2022, renegotiated in 09.2023, a pledge of shares of a subsidiary company and a pledge of bonds was established.
The company is a guarantor under issued bank guarantees, as follows:
| Company of: | Amount in EUR'000 as of 31.03.2024 |
Amount in BGN'000 as of 31.03.2024 |
Amount in EUR'000 as of 31.12.2023 |
Amount in BGN'000 as of 31.12.2023 |
MATURITY OF EXPOSURE AS OF 31.03.2024 (EUR'000) |
|---|---|---|---|---|---|
| Automotive subholding (related party until 30.6.2022) |
2 050 | 4 009 | 2 050 | 4 009 | 2026 |
| Automotive subholding (related party until 30.6.2022) |
1 662 | 3 251 | 1 662 | 3 251 | 2024 |
| TOTAL: | 3 712 | 7 260 | 3 712 | 7 260 |
The liabilities of the Company have guaranteed by related parties are as follows:
| Company/ Guarantor | Currency | Guaranteed liability | Guaranteed amount as of 31.12.2023 in original currency (EUR'000) |
Maturity date |
|---|---|---|---|---|
| Issue of bonds (EMTN | ||||
| Euroins Insurance Group AD | EUR | programme) | 70 000 | 07.2026 |
| Issue of bonds (EMTN | ||||
| Euroins Insurance Group AD | EUR | programme) | 10 000 | 12.2026 |
| Euroins Insurance Group AD | ||||
| Pledge of shares of a subsidiary and pledge of | Loan from financial | |||
| debt notes | EUR | institution | 15 084 | 06.2025 |
Established guarantees in favour of the Company:
| Company/ Guarantor | Currency | Guaranteed liability | Guaranteed amount as of 31.12.2023 in original currency |
Maturity date |
|---|---|---|---|---|
| Milena Milchova Cuentcheva, Procurator | BGN | Management guarantee | 3 330 | 03.2025 * |
* Automatic renewal with 1 year.
REVIEW OF THE MAIN RISKS
This section describes our risks and uncertainties that are considered to have the most significant potential effect on Eurohold's individual operations.
This list of risks is not intended to be exhaustive. The order in which the risks are presented does not indicate their likelihood of occurring, nor their possible degree of impact on the Company's business, prospects, results of operations and financial condition.
Additional risks and uncertainties that are not currently known or that are currently considered immaterial could individually or cumulatively have a material adverse effect. In the event that any of the risks described in this section occur, even partially or in combination with other risk factors or circumstances, it may have a significant negative effect on the Company.
The future results of the Company's activities may differ significantly from past results as a result of the occurrence of the risks described here. Although the Company monitors risks, some are beyond our control.
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Influence of group risks
Please note that "Eurohold Bulgaria" JSC develops its activities through its subsidiaries, in this regard, the Company's financial condition, operational results and prospects for development are directly dependent on the condition, results and prospects of its subsidiaries. Every business sector, including the segments in which we operate, are subject to common risks, such as: changes in the macroeconomic environment, social, political, financial, regulatory and legislative changes. Our principal risks and uncertainties are those that may have the greatest impact on our Group key priorities. The most significant risks, basic for each business group and affecting the activity of the companies part of the Eurohold group, as well as the estimated group risks arising in general, can be found in the consolidated reports of Eurohold Bulgaria.
***
a) NON-SYSTEMATIC RISKS
Non-systematic risks are associated with the general investment risk specific to a company, as well as the sector (industry) of the economy in which it operates.
Risks related to Eurohold's operations and structure
Insofar as the activity of "Eurohold Bulgaria" AD is related to the management of other companies, it cannot be attributed to a separate sector of the national economy and is exposed to the sectoral risks of the subsidiaries. Eurohold Bulgaria AD group companies operate in the following sectors: "energy", "insurance" and "investment brokerage and asset management".
The Company's financial results are directly related to the financial results and development trends of the business units of its economic group. The influence of the individual risks of the subsidiary companies is proportional to the share of the respective industry in the structure of Eurohold's long-term investment portfolio.
The main risk related to the activity of "Eurohold Bulgaria" AD is the possibility of reducing the income of the companies in which it participates and the receipt of dividends. In this regard, it can have an impact on the company's revenue growth as well as the change in its profitability.
Deteriorated performance of one or more subsidiaries could lead to a deterioration of results on a consolidated basis. This, in turn, is related to the price of the company's shares, as a result of investors' expectations about the prospects of the company and the Eurohold group, since the market price of the shares takes into account the business potential and assets of the economic group as a whole.
Risks related to Eurohold's development strategy
Eurohold's future earnings and economic value depend on the strategy adopted by the senior management team of the company and its subsidiaries. Unsuitable strategy choice could lead to significant losses.
Eurohold Bulgaria AD aims to manage the risk of strategic errors by continuously monitoring the various stages in the implementation of its market strategy, and the results thereof. This is essential in order to be able to react in a timely manner if a change is required at a particular stage in the strategic development plan. Untimely or inappropriate changes in strategy could also have a material adverse effect on the Company's business, operating results and financial condition.
Risks related to the management of Eurohold
The Company's management risks might be:
- making the wrong decisions about the day-to-day investment management and liquidity of the Company and the Group as a whole, both by Eurohold's senior management and operational staff;
- management's inability to start the implementation of planned projects or lack of suitable staff for specific projects;
- possible technical errors of the unified management information system;
- possible errors of the internal control system;
- the key staff leaving and the inability to recruit staff with the necessary qualities;
- risk of excessive increases in management and administration costs leading to a reduction in the overall profitability of the company.
Risks associated with Eurohold's inability to raise capital to fund its strategic objectives
Operational risk is the risk of direct and indirect losses for the Group arising from various internal factors related to operations, the integration of newly acquired companies, personnel, technology and infrastructure, as well as external factors other than credit, market and liquidity risk and originate from legal requirements and generally accepted rules of corporate ethics.
The risks related to the management of the Company can be: making wrong decisions; the impossibility of launching and/or implementing planned projects; possible technical errors of the information system; departure of key employees; risk of excessive growth of operating expenses; risk of fraud; as well as other events.
The probability of such events is considered to be relatively low. Eurohold performs continuous analysis and monitoring of the management of subsidiary companies.
The company, including The Group pays particular attention to security and personal responsibility, particularly in relation to access to information (including classified information and personal data information), information system and cyber security.
Risks related to financing the activity
The possibilities of "Eurohold Bulgaria" AD to grow and implement its strategies depend to a great extent on the possibility of attracting capital. The instability of financial markets, as well as the possible apparent lack of trust between financial institutions, could make it significantly more difficult to attract long-term capital on reasonable terms.
The management of "Eurohold Bulgaria" AD supports the efforts of the subsidiary companies in the Group to attract bank resources for investments and use the opportunities that this type of financing provides for securing working capital. The volumes of these borrowed funds are maintained at certain levels and are allowed after proving the economic efficiency for each company.
The management's policy is aimed at raising financial resources from the market in the form of equity securities (shares), debt instruments (bonds) and loans from banking and non-banking institutions, which it invests in its subsidiaries to finance their projects. by increasing their capital or providing loans. Apart from that, Eurohold Bulgaria monitors the capital structure of each company and takes actions to maintain the regulatory capital requirements for each business segment by increasing their capital.
Risk of lack of liquidity
Liquidity risk is related to the possibility that "Eurohold Bulgaria" AD will not repay its obligations in the agreed amount and/or on time when they become due. Eurohold strives to minimize this risk through optimal cash flow management within the group itself. The group applies an approach that aims to provide the necessary liquid resource to meet obligations under normal or extraordinary conditions, without incurring unacceptable losses or damaging the reputation of individual companies and the economic group as a whole.
Subsidiaries make financial planning, with which they seek to meet the payment of expenses and their current obligations, including the servicing of financial obligations. This financial planning minimizes or completely excludes the potential effect of the occurrence of extraordinary circumstances.
In the process of liquidity risk management, the group companies carry out intra-group financing with free cash resources.
Risk of possible transactions between companies in the group, the terms of which differ from the market's
Relationships with related parties arise from contracts for temporary financial assistance to the subsidiaries and on the occasion of transactions related to the usual commercial activity of the subsidiaries.
The risk of possible transactions between the companies in the Group under conditions that differ from those of the market is expressed in taking the risk of achieving a low yield from intra-group financing provided. Another risk that can be taken is that during the implementation of intra-group commercial transactions, sufficient revenues will not be realized, and hence a good profit for the respective company. At a consolidated level, this may reflect negatively on the profitability of the entire group.
Within Eurohold, transactions between the parent company and the subsidiaries and between the subsidiaries themselves, arising from the nature of their main activity, are constantly carried out. All transactions with related parties are carried out under conditions that do not differ from usual market prices and in compliance with IAS 24 "Disclosure of related parties".
Eurohold Bulgaria AD operates through its subsidiaries, which means that its financial results are directly dependent on the financial results, development and prospects of the subsidiaries. Poor performance of one or more subsidiaries could lead to deterioration of financial results on a consolidated basis.
b) SYSTEMATIC RISKS
Macroeconomic risk
Macroeconomic risk is the risk of shocks that may affect economic growth, population income, supply and demand, the realization of profits by economic entities, etc. These shocks include global economic and business conditions, fluctuations in national currencies, political events, changing legislation and regulatory requirements, priorities of national governments, etc. Trends in the macroeconomic environment affect the market performance and the final results of the activity of all sectors of the economy.
The risk of the influence of the international environment on companies cannot be diversified and affects all economic entities, but on the other hand, it can become an engine for the development and implementation of innovations and digitalization that drastically change and increase the efficiency of business on a global scale .
Examples of macroeconomic shocks can be: the global economic crisis; the impact of the global Covid-19 pandemic that occurred at the beginning of 2020, incl. the measures taken by the governments of the affected countries; slowing economic growth; the risk of systematic global financial fluctuations; periodic fiscal imbalances; high inflation rates; changes in exchange rates for certain currencies; volatility in the prices of energy products; economic and political uncertainty in some regions of the world; the reduction of economic and consumer activity.
Bulgaria has an open economy and its development depends directly on international market conditions. The development of Bulgaria's economy faces the risk of external influences and depends directly on international market conditions.
The macroeconomic situation and economic growth on a global scale are of fundamental importance for the development of "Eurohold Bulgaria" AD and its subsidiaries, including the government policies of the respective countries in which the Group operates and, in particular, the regulations and decisions made by the respective Central Banks that influence monetary and interest policy, exchange rates, taxes, GDP, inflation, budget deficit and external debt, unemployment rate and income structure.
The presence in Bulgaria and in the countries of our operations of unfavorable macroeconomic conditions, including an increase in unemployment and inflation, as well as fiscal instability, may have a material adverse effect on the business of the Company/Group, the financial condition and/or the results of the activity or the expected growth of The group.
The Eurohold Group carries out operations in addition to Bulgaria and in a number of other European countries, respectively its overall financial position and the results of its operations are affected by the economic, legal and political conditions in these countries. Any deterioration in macroeconomic conditions in such countries or in the wider CEE / SEE region could adversely affect certain products and services offered by the group and result in lower revenues than originally planned. In addition, general changes in government policy and regulatory systems in any such jurisdiction may increase the Group's operating costs and capital requirements. Any future periods of economic slowdown or slow economic growth in any of the markets in which the Group operates could have an adverse effect on the Group's business, financial condition, cash flows, results of operations or prospects.
Eurohold Bulgaria strives to monitor the probability of the manifestation of macroeconomic risk and develops group measures to mitigate as much as possible the impact of the effects that the presence of this risk may have. However, the Holding cannot completely exclude and limit its influence on the business, financial position, profits and cash flows at the group level. There is also the possibility that the occurrence of this risk may exacerbate other risks or a combination of risks.
Macroeconomic risks monitored by management
Military actions on the territory of Ukraine and the Middle East
The military conflicts in Ukraine and the Middle East give rise to possible manifestations of risks at the global level related to the reduction of economic activity and financial markets, problems with the supply chain, the growth of prices and inflation, etc.
The effects and economic consequences of hostilities between Russia and Ukraine and those in the Middle East cannot be fully assessed at this stage of development, but indicate an extremely serious impact on the global economy. Weaker economic activity globally or a further slowdown in global trade could also dampen growth in the eurozone.
If the conflict continues to develop, the economic damage will be significant for all sectors of the economy, both of Bulgaria and the EU, including sectors them and the regions in which the Eurohold group operates. The management of Eurohold is following with concern the development of the military conflict between Russia and Ukraine, and is evaluating its impact on the Group's business, with the aim of taking measures, decisions and specific actions to mitigate the effects on the Group. Eurohold Bulgaria AD, through its subsidiary Euroins Insurance Group AD, owns investments in two insurance companies in Ukraine, and by the end of 2022 it also owned one company in Belarus and one with a minority stake in Russia.
The management of Eurohold, as far as possible, provides assistance and support to the staff in Ukraine and their relatives.
At the end of 2022, the management of Eurohold Bulgaria and the subsidiary Euroins Insurance Group decided to release the insurance group from its participation in the companies in Belarus (100%) and Russia (associated participation 48.61%). On December 30, 2022, Euroins Insurance Group (EIG) signed an agreement for the sale of the two companies. These participations added insignificant values to the consolidated results against the background of the assets of the insurance subholding and the assets of Eurohold Bulgaria AD. EIG's business in the two countries accounted for less than 1% of the insurance group's 2022 revenue.
Macroeconomic forecast
According to the latest Economic Bulletin of the ECB, no. 2/2024 - Economic activity remains weak as consumers continue to refrain from spending, investment declines, exports also decline due to a slowdown in external demand and some loss of competitiveness. Nevertheless, according to the ECB, with inflation falling and wages continuing to rise, real incomes will recover, supporting growth in 2024. Unemployment is also falling, reaching its lowest level in the last quarter of 2023, and employment increased by 0.3%. In the medium term, the recovery is also expected to be supported by the gradual fading of the impact of the ECB's monetary policy tightening. Overall, average annual growth in real GDP is expected to be 0.6% in 2024 and to accelerate to 1.5% in 2025 and to 1.6% in 2026. Risks to economic growth still lean towards its lowering. Growth is likely to be weaker if the effect of monetary policy turns out to be stronger than expected. Weaker economic activity globally or a further slowdown in global trade could also dampen growth in the eurozone. Hostilities between Russia and Ukraine and the conflict in the Middle East are major sources of geopolitical risk. As a result, the confidence of economic entities and households about future developments is likely to decline and global trade may be disrupted.
Source: www.ecb.europa.eu
In the Macroeconomic Forecast of the BNB from December 2023, the expectations for the growth of the real GDP in Bulgaria for 2023 is to finally amount to 1.8% (compared to 3.9% in 2022), which will be determined mostly by the growth of the private consumption and the positive contribution of net exports, while the change in inventories will have a significant negative contribution to the change in economic activity. In 2024, the growth of economic activity is expected to accelerate to 2.5%. The main contributors to higher real GDP growth in 2024 will be the cessation of the negative contribution of inventory changes, continued growth in domestic demand at a pace similar to the previous year, and a shift in exports of goods and services from decline in 2023 to growth in 2024. Labor market conditions remain tight in the first nine months of 2023, reflecting an increase in economic activity in the country with limited opportunities to increase the number of employed persons. Employment growth is expected to reach 0.6% in 2023, supported mainly by the services sector.
Source: www.bnb.bg
Political risk
Political risk reflects the impact of political processes in the country on the economic and investment process and, more specifically, on the return on investment. The degree of political risk is determined by the probability of changes in an unfavorable direction of the government's long-term economic policy, which may have a negative impact on investment decisions. Other factors related to this risk are possible changes in the legislation and in the tax system regarding the economic and investment climate in the country.
The Republic of Bulgaria is a country with political and institutional stability, based on modern constitutional principles such as a multi-party parliamentary system, free elections, ethnic tolerance and a clearly defined system of separation of powers.
Among the political risks are the successful continuation of Bulgaria's integration into the European Union (EU). After the admission of our country to the EU at the beginning of 2007, economic reforms were imposed in the name of the integration of our country into the European Union. In the future, economic growth will depend on the political will to continue economic reforms, with the aim of introducing the best market practices of the EU in economic, political, social, legal, financial terms.
Despite the stable policy pursued so far, there is no certainty that factors will not appear in the country that will cause social and political tension, lead to a significant and abrupt change in the political and economic conditions, which may have a significant adverse effect on business. Currently, the political situation in Bulgaria is not particularly stable. This instability manifested itself in April 2021 since the country faced the inability to form a regular and stable government. This also contributes to falling behind in Bulgaria's preparations for joining the Eurozone.
Given the current political situation, it is possible that political and public disagreements may arise in the country regarding possible legislative changes, and in particular those concerning the economic and investment climate in the country. Also, at this moment, there is no political consensus in the country regarding the complicated geopolitical situation in the region due to the development of the Russian-Ukrainian crisis.
A potential political instability in the country and in Europe could have a significant adverse effect on the Company and its group's business, operating results and financial condition. The company through its subsidiaries operates in the regions affected by the military conflict and in this sense is also vulnerable to foreign policy risks and their effects on the economy of the country, the regions affected by the conflict and Europe as a whole.
Given the uncertainty of the outcome of the emerging dynamic political and economic environment, users of this Report should consider the presence of political risk according to their own understanding and expectations.
Country's credit risk
Credit risk is the likelihood of a country's international credit ratings deteriorating. Low credit ratings of the country can lead to higher interest rates, more difficult financing conditions for economic entities, including Eurohold.
Credit ratings serve as a basis for measuring and determining a country's credit risk. The latest credit ratings awarded to Bulgaria are as follows:
On 25.11.2023, the international rating agency S&P Global Ratings raised the outlook for the country's rating to positive from stable and confirmed Bulgaria's long-term and short-term credit rating in foreign and local currency 'BBB/A-2'.
The positive outlook reflects the opinion of the rating agency that there is at least a one in three probability that Bulgaria will join the Eurozone in the next 24 months. One of the main political goals of the government is the country's accession to the Eurozone, which is planned to be achieved from January 1, 2025. Bulgaria may not meet all the criteria for convergence, especially that of price stability. Even if Bulgaria does not join the eurozone in 2025, the rating agency expects that the accession will likely be delayed until January 1, 2026.
S&P Global Ratings rates Bulgaria's fiscal performance as one of the best among Central and Eastern European countries and expects current fiscal plans to result in deficits below 3% of GDP in the period to 2026, keeping net government debt below 20 % of GDP. They expect the current account deficit to remain low and overfinanced by EU funds and foreign direct investment flows, limiting the need for external financing and maintaining a stable external position.
Source: www.minfin.bg
On 28.10.2023, the international rating agency Fitch Ratings confirmed the long-term credit rating of Bulgaria in foreign and local currency 'BBB' with a positive outlook
Bulgaria's rating is supported by the country's strong external and fiscal position compared to countries with the same rating, the reliable political framework of EU membership and the long-term functioning of the currency board regime. On the other hand, the low share of investment relative to GDP and unfavorable demographic factors weigh on potential economic growth and public finances in the long term.
The positive outlook reflects the country's plans for eurozone membership, which could lead to further improvements in the country's external position indicators. Despite the delay in the process of joining the euro area, the analysts of the rating agency believe that there is a broad political commitment to adopt the euro in 2025. After the formation of the new government, the parliament has accepted all the remaining commitments after the country's entry into ERM II, and the amendment of the central bank law is expected to be approved by the end of 2023.
Factors that could lead to negative rating actions are: lack of progress in joining the Eurozone due to continued political instability or failure to meet convergence criteria; lower medium-term growth prospects, caused for example by a significant adverse macroeconomic shock or inflation that has persisted at high levels.
Source: www.minfin.bg
The adoption of a consistent and long-term economic policy in Bulgaria would be a valid reason for the potential increase in the country's credit rating, which in turn would have a favorable impact on the economic group of Eurohold expressed in the Group's financing opportunities. In the event of a downgrading of Bulgaria's credit rating, as a result of the unstable governance of the country, there may be a negative impact on the Group and on the cost of financing, except in the case that its loan agreements are with fixed interest rates.
Inflation risk
Inflation risk is associated with the likelihood that inflation will affect real investment returns. The main risks related to the inflation forecast relate to the dynamics of international prices and the rate of economic growth in Bulgaria. International prices of raw materials and food products may rise more significantly as a result of political crises such as are currently available or an increase in demand. The limited supply of some agricultural goods and especially cereals internationally in connection with adverse climatic events or force majeure circumstances may additionally cause higher inflation in the country.
Inflation and consumer price index for February 2024 (according to NSI data)
| Consumer Price Index (CPI) | |||||
|---|---|---|---|---|---|
| Monthly inflation | March 2024 / February 2024 | +0.2% | |||
| Annual inflation | March 2024 / March 2023 | +3.0% | |||
| Inflation from early 2024 | March 2024 / December 2023 | +1.0% | |||
| Average annual inflation | April 2023 - March 2024 / April 2022 - March 2023 | +6.5% | |||
| Harmonized Index of Consumer Prices (HICP) | |||||
| Monthly inflation | March 2024 / February 2024 | +0.2% | |||
| Annual inflation | March 2024 / March 2023 | +3.1% | |||
| Inflation from early 2024 | March 2024 / December 2023 | +0.7% | |||
| Average annual inflation | April 2023 - March 2024 / April 2022 - March 2023 | +6.2% | |||
| Price index for the small basket (ICPM) |
| Monthly inflation | March 2024 / February 2024 | -0.4% | |||
|---|---|---|---|---|---|
| Inflation from early 2024 | March 2024 / December 2023 | +1.1% | |||
| Source: www.nsi.bg |
The macroeconomic forecast of the BNB
According to the March 2024 BNB Macroeconomic Forecast, annual inflation, measured by the Harmonized Index of Consumer Prices (HICP), is expected to slow to 2.3% at the end of 2024, and average annual inflation to reach 3.0%. Apart from the base effects of the strong increase in prices in the previous year, the slowdown in inflation in 2024 is also due to the assumed declines in the international prices of energy raw materials, as well as the cheapening of some groups of goods and services with administratively determined prices.
Source: www.bnb.bg
In general, inflation can affect the amount of the Company's expenses, since part of the company's liabilities are interest-bearing. Their service is linked to the current interest rates, which also reflect the inflation rates in the country. Therefore, the maintenance of low inflation levels in the country is considered a significant factor for the activity of the Eurohold group.
At the present moment and in general, the currency board mechanism provides guarantees that the inflation in the country will remain under control and will not have an adverse impact on the economy of the country, and in particular on the activities of the Company and its group, and from there on its possibility to service its debt positions.
However, the current geopolitical situation in Europe makes the outlook for inflation in the Eurozone very uncertain and depends crucially on the development of the military conflict, the impact of current sanctions and possible further measures.
Given this, users of this Report should carefully consider and account for both current levels of inflation risk and future opportunities for its manifestation.
Currency risk
This risk is related to the possibility of depreciation of the local currency. For Bulgaria, specifically, this is a risk of premature rejection of the conditions of the Currency Board at a fixed exchange rate of the national currency, which would lead either to a devaluation of the leva or to an appreciation of the leva compared to foreign currencies. Any significant depreciation of the BGN may have a significant adverse effect on business entities in the country, including the Company. Risk also exists when the income and expenses of a business entity are formed in different currencies.
Given the policy adopted by the government and the BNB, expectations are for the currency board to be retained until the country's admission to the Eurozone. Bulgaria is expected to join the currency mechanism with its existing currency board regime, where the Bulgarian lev is fixed at 1 euro = 1.95583 leva. The National Plan for the introduction of the euro in Bulgaria describes the principles, the institutional and legalnormative framework for the adoption of the euro, as well as the main activities for the successful introduction of the euro from January 1, 2024. The document examines all the important operational activities and measures that participants in the preparation for the introduction of the euro - the private, public sector and citizens - should carry out as part of the process of introducing the euro.
The activity of the Company does not presuppose exposure to significant currency risk, because almost all its operations and transactions are denominated in Bulgarian levs and euros, and the latter has a fixed exchange rate against the lev.
Significant changes in the various exchange rates of subsidiaries outside Bulgaria, namely in North Macedonia, Ukraine, Georgia and Romania, respectively - Macedonian denar (MKD), Ukrainian hryvnia (UAH), Georgian lari (GEL) and Romanian leu (RON), whose exchange rate is determined almost freely in the local currency market would have a corresponding reflection in the group results of Eurohold. The consolidated revenues of "Eurohold Bulgaria" AD will be exposed to currency risk depending on the movement of these currencies against the euro.
Interest rate risk
Interest rate risk is related to the possibility of a change in the prevailing interest rates in the country. Its impact is expressed by the chance that the net income of companies may decrease due to an increase in the interest rates at which the Issuer finances its operations. Interest rate risk is included in the category of macroeconomic risks due to the fact that the main prerequisite for a change in interest rates is the occurrence of instability in the financial system as a whole. This risk can be managed through the balanced use of different sources of financial resources.
An increase in interest rates would, all other things being equal, affect the cost of the financial resources used by the Company in implementing various business projects. It may also affect the Company's cost base as a significant portion of the Company's liabilities are interest bearing and their servicing is linked to current interest rates. The current trend is towards gradual increase in interest rates by the Central Banks.
Trends on interest rates, according to the ECB, are for a significant increase at a steady pace until reaching restrictive levels in order to ensure a timely return of inflation to the medium-term target of 2%.
Risk of high levels of unemployment
The risk associated with unemployment is characterized by a drop in the demand for labor force, influenced by the real aggregate demand in the economy, as a result of which the real purchasing activity of a part of the economic entities decreases.
High levels of unemployment can seriously threaten economic growth in the country, which in turn can lead to a contraction of consumption and a decrease in the revenues realized by economic entities in the country, including the revenues realized by the Company and its subsidiaries.
Data on unemployment in Bulgaria (according to the latest data of NSI)
| Amendment 2023/ 2022 |
total | men | women | |
|---|---|---|---|---|
| Unemployment rate in 2023 | +0.2% | 4.3% | 4.4% | 4.2% |
| Unemployed persons | 132.4 thousand. |
71.7 thousand. |
60.7 thousand. |
|
| The long-term unemployment rate | 2.3% | 2.4% | 2.1% | |
| The relative share of the long-term unemployed among all unemployed |
52.3% | |||
| Source: www.nsi.bg |
Risks associated with regulatory changes. Regulatory risk
The Company's results may be impacted by regulatory changes. The Eurohold Group operates in a highly regulated environment in various European countries. The possibility of more radical changes in the regulatory framework, in the interpretation or practice of implementing legislation, and in the divergence of legislation and regulations in Bulgaria and in the countries in which the Company operates and his Group, could have an adverse effect on its business as a whole, its operating results, and its financial condition.
Financial risk
Financial risk represents the additional uncertainty to the investor of receiving revenue in cases where the company uses borrowed or leveraged funds. This additional financial uncertainty adds to the business risk. Where part of the funds with which the company finances its activities are in the form of loans or debt securities, the payments for these funds represent a fixed obligation.
Risk of increased competition
All sectors in which the Eurohold Group subsidiaries operate are characterised by a highly competitive environment. The future success of the Group will depend on the ability of Eurohold and its subsidiaries to remain competitive compared to other companies operating in a given market segment.
c) RISK MANAGEMENT AND MINIMISATION MECHANISMS
The elements outlining the framework for the management of individual risks are directly related to specific procedures for the timely prevention and resolution of potential difficulties in the operations of Eurohold Bulgaria AD. They include ongoing analysis in the following areas:
- market share, pricing policy, market research and market development and market share studies;
- active investment management in different sectors and industries;
- a comprehensive asset and liability management policy for the Company and the Group to optimise the structure, quality and return on assets;
- optimising the structure of funds raised with a view to ensuring liquidity and reducing financial costs across the Group;
- effective cash flow management at group level;
- optimising administration, management and external service costs;
- human resources management
Overall risk management is focused on minimising potential negative effects that could impact the Group's financial performance. Financial risks are identified, measured and monitored on an ongoing basis using various controls to determine appropriate pricing for the services and products offered by Eurohold's Group companies and for the borrowed capital raised by them. An adequate assessment of the market
circumstances, the borrowed capital, the investments and the forms of maintenance of the free liquid funds is carried out, without allowing unjustified concentration of a given risk.
The occurrence of unforeseen events, incorrect assessment of current trends, as well as a host of other microand macroeconomic factors, may affect the judgement of the Company's management team.
INFORMATION ON LARGE RELATED PARTY TRANSACTIONS IN THE REPORTING PERIOD OF 2024
All concluded transactions with related parties, including material ones, are disclosed in this report and in the Appendices to the interim condensed individual financial report for the first quarter of 2024.
26 April 2024
KIRIL BOSHOV,
Chairman of the Board and Executive Director of Eurohold Bulgaria AD
ASSEN MINCHEV, Executive Director of Eurohold Bulgaria AD
Interim condensed separate statement of profit or loss and other comprehensive income for the first quarter of 2024
| Total comprehensive loss for the period | (5 741) | (7 593) | |
|---|---|---|---|
| Loss for the period | (5 741) | (7 593) | |
| Finance costs | 9 | (4 978) | (6 406) |
| Finance income | 8 | 173 | 243 |
| Other expenses | 7 | (66) | (76) |
| Reversal of expenses /(expenses) from impairment of financial assets, net |
12, 20.2 | 278 | (80) |
| Depreciation and amortisation charges | 11 | (51) | (56) |
| Employee benefits expenses | 6 | (264) | (230) |
| Hired services expenses | 5 | (832) | (1 060) |
| Gain / (loss) on transactions with financial instruments, net | 4 | (1) | 55 |
| Other income | 3 | - | 17 |
| Notes | BGN '000 | BGN '000 | |
| 31.03.2024 | 31.03.2023 |
This interim condensed separate financial statement was approved by the Management Board of Eurohold Bulgaria AD on 26.04.2024.
Prepared by: Signed on behalf of BoD:
Interim condensed separate statement of financial position as of 31 March 2024
| 31.03.2024 | 31.12.2023 | ||
|---|---|---|---|
| Notes | BGN '000 | BGN '000 | |
| ASSETS | |||
| Non-current assets | |||
| Investments in subsidiaries | 10 | 610 760 | 608 922 |
| Property, plant and equipment | 11 | 997 | 1 048 |
| 611 757 | 609 970 | ||
| Current assets | |||
| Related party receivables | 20.2 | 18 800 | 20 235 |
| Other receivables | 12 | 1 648 | 1 532 |
| Cash and cash equivalents | 13 | 89 | 93 |
| 20 537 | 21 860 | ||
| TOTAL ASSETS | 632 294 | 631 830 |
This interim condensed separate financial statement was approved by the Management Board of Eurohold Bulgaria AD on 26.04.2024.
Prepared by: Signed on behalf of BoD:
Interim condensed separate statement of financial position as of 31 March 2024 (continued)
| 31.03.2024 | 31.12.2023 | ||
|---|---|---|---|
| Notes | BGN '000 | BGN '000 | |
| EQUITY AND LIABILITIES | |||
| Equity | |||
| Share capital | 14.1 | 260 500 | 260 500 |
| Share premium | 14.2 | 144 030 | 144 030 |
| General reserves | 14.2 | 7 641 | 7 641 |
| Accumulated loss | (199 205) | (193 464) | |
| Total equity | 212 966 | 218 707 | |
| Non-current liabilities | |||
| Bond liabilities | 15 | 240 902 | 241 755 |
| Loans and borrowings | 16 | 17 733 | 21 271 |
| Related party payables | 20.3 | 391 | 386 |
| Other payables | 19 | 58 675 | 58 675 |
| Lease liabilities | 17 | 867 | 917 |
| Pension liabilities | 18 | 33 | 33 |
| 318 601 | 323 037 | ||
| Current liabilities | |||
| Loans and borrowings | 16 | 37 917 | 34 794 |
| Bond liabilities | 15 | 5 278 | 1 569 |
| Related party payables | 20.3 | 42 519 | 39 792 |
| Trade and other payables | 19 | 14 684 | 13 492 |
| Lease liabilities | 17 | 201 | 269 |
| Liabilities to personnel | 18 | 128 | 170 |
| 100 727 | 90 086 | ||
| Total liabilities | 419 328 | 413 123 | |
| TOTAL EQUITY AND LIABILITIES | 632 294 | 631 830 |
This interim condensed separate financial statement was approved by the Management Board of Eurohold Bulgaria AD on 26.04.2024.
Prepared by: Signed on behalf of BoD:
Interim condensed separate statement of cash flows for the first quarter of 2024
| 31.03.2024 | 31.03.2023 | ||
|---|---|---|---|
| Notes | BGN '000 | BGN '000 | |
| CASH FLOWS FROM OPERATING ACTIVITIES | |||
| Loss before tax | (5 741) | (7 593) | |
| Adjusted for: | |||
| Depreciation and amortisation charges | 51 | 56 | |
| Interest income | 8 | (173) | (243) |
| Interest expenses | 9 | 4 955 | 6 330 |
| (Gain) / loss on sale of investments, net | - | 8 | |
| (Gain) / losses on revaluation of investments, net | 1 | (63) | |
| Foreign exchange differences | 5 | 6 | |
| (Reversal) / expenses for impairment of financial assets, net | (278) | 80 | |
| Adjustments to working capital: | |||
| Decrease in trade and other receivables | 1 440 | 454 | |
| Increase/(decrease) in trade and other liabilities, other | |||
| adjustments | 1 609 | (1 068) | |
| Net cash flows from operating activities | 1 869 | (2 033) | |
| CASH FLOWS FROM INVESTING ACTIVITIES | |||
| Purchase of investments | (1 838) | - | |
| Interest received from loans granted | 50 | - | |
| Net cash flows from /(used in) investing activities | (1 788) | - | |
| CASH FLOWS FROM FINANCING ACTIVITIES | |||
| Proceeds from loans | 5 474 | 18 604 | |
| Repayments of loans | (3 363) | (14 139) | |
| Interest and commissions paid | (1 892) | (4 348) | |
| Lease payments | (137) | (64) | |
| Other payments from financing activities | (167) | (149) | |
| Net cash flows/(used in)/ from financing activities | (85) | (96) | |
| Net change in cash and cash equivalents | (4) | (2 129) | |
| Effect of expected credit losses | - | (1) | |
| Cash and cash equivalents at the beginning of the period | 13 | 93 | 2 238 |
| Cash and cash equivalents at the end of the period | 13 | 89 | 108 |
This interim condensed separate financial statement was approved by the Management Board of Eurohold Bulgaria AD on 26.04.2024.
Prepared by: Signed on behalf of BoD:
Interim condensed separate statement of changes in equity for the first quarter of 2024
| Share | General | Retained | Total | ||
|---|---|---|---|---|---|
| Share capital | premium | reserves | earnings | Equity | |
| BGN '000 | BGN '000 | BGN '000 | BGN '000 | BGN '000 | |
| Balance as of | |||||
| 1 January 2023 | 260 500 | 144 030 | 7 641 | (169 569) | 242 602 |
| Loss for the period | - | - | - | (7 593) | (7 593) |
| Total comprehensive loss | |||||
| for the period | - | - | - | (7 593) | (7 593) |
| Balance as of | |||||
| 31 March 2023 | 260 500 | 144 030 | 7 641 | (177 162) | 235 009 |
| Balance as of | |||||
| 1 January 2024 | 260 500 | 144 030 | 7 641 | (193 464) | 218 707 |
| Loss for the period | - | - | - | (5 741) | (5 741) |
| Total comprehensive loss | |||||
| for the period | - | - | - | (5 741) | (5 741) |
| Balance as of | |||||
| 31 March 2024 | 260 500 | 144 030 | 7 641 | (199 205) | 212 966 |
This interim condensed separate financial statement was approved by the Management Board of Eurohold Bulgaria AD on 26.04.2024.
Prepared by: Signed on behalf
of BoD:
Notes to the condensed separate financial statements for the first quarter of 2024
1. General Company Information and Scope of Activities
Eurohold Bulgaria AD (the Company) is a public joint stock company established pursuant to the provisions of article 122 of the Law for Public Offering of Securities and article 261 of the Commerce Act.
Founded in 1996, Eurohold Bulgaria AD operates in Bulgaria, Northern Macedonia, Ukraine, Georgia, Greece, Romania and the Netherlands through a large number of subsidiaries in the sectors of energy, insurance, and financial services.
The company is registered in the Sofia City Court under corporate file 14436/2006 and is formed through the merger of Eurohold AD registered under corporate file № 13770/1996 as per the registry of Sofia City Court, and Starcom Holding AD, registered under corporate file № 6333/1995 as per the registry of Sofia City Court.
Eurohold Bulgaria has its seat and registered address in the city of Sofia, P.B. 1592, Iskar Region, 43 Hristofor Kolumb Blvd., UIC 175187337.
The governing bodies of the company are the General Meeting of Shareholders, the Supervisory Board and the Management Board /two-tier system/ comprising the following members as at 31.03.2024:
Supervisory Board:
Asen Milkov Christov, Bulgaria – Chairman; Dimitar Stoyanov Dimitrov, Bulgaria – Deputy Chairman; Radi Georgiev Georgiev, Bulgaria – Member; Kustaa Lauri Ayma, Finland – Independent Member; Ivaylo Krasimirov Angarski, Country: Bulgaria - Independent member; Louis Gabriel Roman, USA – Independent Member.
Management Board:
Kiril Ivanov Boshov, Bulgaria - Chairman, Executive Member; Asen Mintchev Mintchev, Bulgaria – Executive Member; Velislav Milkov Hristov, Bulgaria – Member; Razvan Stefan Lefter, Romania – Member.
As of 31.03.2024 the Company is represented by Kiril Ivanov Boshov and Asen Minchev Minchev, Executive Directors, and Milena Milchova Guentcheva - Procurator, only jointly by the two executive directors or by one executive director and procurator.
The Audit Committee supports the work of the Company, monitors and supervises the Company's internal control system, risk management and financial reporting system.
As of 31.03.2024, the Audit Committee of the Company comprises the following members: Ivan Georgiev Mankov, Bulgaria– Chairman; Dimitar Stoyanov Dimitrov, Bulgaria – Member; Rositsa Mihaylova Pencheva, Bulgaria – Member.
The number of employees in the Company as of 31.03.2024 is 27 (31.12.2023: 28 employees).
The scope of activities of Eurohold Bulgaria AD is acquisition, management, assessment and sales of participations in Bulgarian and foreign companies, acquisition, management and sales of bonds, acquisition, assessment and sales of patents, granting patent use licenses to companies in which the company participates, funding companies, in which the Company participates.
Eurohold Bulgaria AD, as a holding company with its main activity being the acquisition and management of subsidiary companies, primarily engages in financial activities. Eurohold Bulgaria AD, as a holding company, does not conduct regular trading activities and does not provide financial services.
The interim condensed separate financial statements of Eurohold Bulgaria AD have been prepared in accordance with IAS 34 Interim Financial Reporting, developed and published by the International Accounting Standards Board and adopted by the European Union. It does not contain all the information required to prepare an annual financial statement in accordance with International Financial Reporting Standards (IFRS) and should be read in conjunction with the company's annual financial statements as of 31 December 2023.
This interim condensed financial statement is individual, where investments in subsidiaries are presented at cost.
The Company also prepares consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), developed and published by the International Accounting Standards Board (IAS) and adopted by the European Union (EU), in which investments in subsidiaries are reported and disclosed in in accordance with IFRS 10 "Consolidated Financial Statements".
The interim condensed separate financial statements are prepared in Bulgarian levs, which is the functional and reporting currency of the Company. All amounts are presented in thousands of BGN (thousands of BGN) (including comparative information for 2023), unless otherwise stated. As of 1 January 1999, the Bulgarian lev has a fixed exchange rate against the euro: BGN 1.95583 per 1 euro.
These interim condensed separate financial statements have been prepared on a historical cost basis, modified in certain cases by revaluation of certain assets and / or liabilities at their fair value at the date of preparation of the interim separate financial statements, as set out in the relevant notes.
The interim condensed separate financial statements have been prepared in accordance with the going concern principle.
As at the date of preparation of these interim condensed separate financial statements, the management has assessed the ability of the Company to continue its activities as an operating enterprise based on the available information and the foreseeable future. Following the review of the Company's activities, the management expects that the Company will have sufficient financial resources to continue its operational activities in the near future and continues to apply the going concern principle in preparing the interim condensed separate financial statements.
Management believes that the Company is operational and will remain so for the foreseeable future. It has no intention or need to eliminate or make changes beyond its normal course of business.
Eurohold Bulgaria AD as a holding company does not perform regular commercial activity and does not provide financial services.
2.1. Changes in accounting policies
These annual separate financial statements have been prepared in accordance with the adopted accounting policies in the latest annual financial statement of the Company as of 31 December 2023. The Company has not made any changes to its accounting policies in connection with the application of new and/or revised IFRS, which are effective for the current reporting period starting on 1 January 2024, as there have been no assets or operations affected by the changes in IFRS during the period.
2.1.1. New standards, interpretations and amendments effective 1 January 2024, which are approved for implementation by the EU
The Company applies the following new standards, amendments and interpretations, which came into force during this period and are as follows:
o Amendments to IAS 1 "Presentation of financial statements: Classification of liabilities as current or non-current", effective from 1 January 2024, adopted by the EU;
- o Amendments to IAS 1 "Presentation of financial statements: Non-current liabilities with covenants", effective from 1 January 2024, adopted by the EU;
- o Amendments to IFRS 16 "Leases: Lease Liability in a Sale and Leaseback", effective not earlier than 1 January 2024, adopted by the EU.
2.1.2. Documents issued by IASB / IFRIC, which are not endorsed in the EU
At the date of authorisation of these interim condensed separate financial statements, certain new standards, amendments and interpretations to existing standards have been issued, but are not effective or adopted by the EU for the financial year beginning on 1 January 2024 and have not been applied early by the Company. They are not expected to have a material impact on the Company's financial statements. Management anticipates that all relevant pronouncements will be adopted in the Company's accounting policies for the first period beginning after the effective date of the pronouncement. A list of the changes in the standards is provided below:
- o Amendments to IAS 7 "Statement of cash flows" and IFRS 7 "Financial instruments: Disclosures: supplier finance arrangements", effective from 1 January 2024, not yet adopted by the EU;
- o Amendments to IAS 21 "The effects of changes in foreign exchange rates: Lack of exchangeability", effective from 01 January 2025, not yet adopted by the EU.
2.2. Material accounting policy information
2.2.1. Changes to the approximate estimates
In the course of preparation of the interim condensed separate financial statement the management makes a number of assumptions, estimates and presumptions regarding the recognition and measurement of assets, liabilities, income and expenses.
Actual results may differ from the management's assumptions, estimates and presumptions and, in rare cases, entirely correspond to the previously assessed results.
In the preparation of the current interim condensed separate financial statement presented, the significant judgments of the management in the application of the Company's accounting policies and the main sources of uncertainty of the accounting estimates do not differ from those disclosed in the annual financial statements of the Company as at 31 December 2023.
For the purposes of presenting these interim condensed separate financial statements, reviews for impairment of trade and other receivables have been determined.
2.2.2. Risk management
The Company is exposed to various types of risks with respect to its financial instruments. The most significant financial risk to which the Company is exposed are market risk, credit risk and liquidity risk.
The interim condensed separate financial statement does not include the entire information on risk management and disclosures required in the preparation of annual financial statements and should be read together with the Company's annual financial statements as at 31 December 2023. There were no changes in the risk management policy related to financial instruments during the period.
2.2.3. Macroeconomic forecast and macroeconomic risks
In the mid-term, real incomes are expected to improve. Leading to an anticipated upturn in economic growth supported by strengthening external demand and the resolution of remaining supply difficulties, despite less favorable financing conditions. The labor market is expected to remain relatively resilient during the upcoming moderate recession. Overall, the annual growth of real GDP is expected to significantly slow down – from 3.4% in 2022 to 0.5% in 2023, followed by an acceleration to 1.9% in 2024 and 1.8% in 2025.
Eurohold Bulgaria AD aims to monitor the likelihood of macroeconomic risk occurrences and develops grouplevel measures to mitigate the impact of the effects that this risk may have. However, the Holding cannot completely exclude or limit its influence on the business, financial condition, profits, and cash flows at a group level. There is also the possibility that the emergence of this risk may exacerbate other risks or a combination of risks.
2.2.4. Effect on economic growth
The table below presents information on the expectations for economic growth of the Republic of Bulgaria, according to the data of the International Monetary Fund April 2024: https://www.imf.org/en/Publications/WEO/Issues/2024/04/16/world-economic-outlook-april-2024
| Historical data | Forecast | |||||||
|---|---|---|---|---|---|---|---|---|
| 2018 | 2019 | 2020 | 2021 | 2022 | 2023 | 2024 | 2025 | |
| Economic GDP growth |
1.9% | 1.5% | (6.3)% | 5.2% | 3.3% | 0.4% | 0.8% | 1.5% |
2.2.5. Effect on credit ratings
As a result of the expected economic effects of the slowdown in overall activity, some rating agencies worsened their forecast on long-term debt positions, both in terms of government debt and in terms of corporate debt positions. The table below provides information on the change in the credit rating (including forecast) assigned by Fitch to the Republic of Bulgaria and the Company.
| Rating | Outlook | |
|---|---|---|
| Republic of Bulgaria (27 October 2023) | BBB+ | Positive |
| Eurohold Bulgaria AD (20 June 2023) | B | Stable |
2.2.6. Analysis of the expected effect on the IFRS model 9
The Company's management periodically performs an analysis of the expected effect on the general model of IFRS 9. The latest results are detailed below. It should be noted that the focus of the analysis in question was placed on:
- o The assessment of the deterioration of the credit quality of the counterparties.
- o The assessment of the potential effect on the expected credit losses from the exposures to the counterparties.
With respect to the model (including the full and simplified model) for calculating expected credit losses, management believes that no change to the overall model is necessary. The management takes into account the possible short-term risks on the general development of the economy of the main countries in which the Company operates, and in some of the markets the expected reduction of the Gross Domestic Product would be significant, but also takes into account the general expectations for business normalization in 2023, as it is already happening in 2023 with the prices of energy resources.
As of 31 March 2024, sufficient reliable macroeconomic statistics and information on medium-term default probability levels are not available, Management has not recalculated/changed the model regarding Expected credit losses compared to those as of 3112.2023.
2.2.7. Military conflict between Ukraine and Russia
There are force majeure circumstances that can affect business activities in all spheres worldwide. This was caused by the military actions taken by Russia and its invasion of the territory of Ukraine.
As a result of the war that started, a number of countries from around the world, including countries from the European Union, took drastic sanctions against Russia, and partially against Belarus, which supports it. Management will continue to monitor the potential impact and will take all possible steps to mitigate the potential effects.
2.2.8. Climate - related matters
Climate change may affect the entity's assets and liabilities in the reporting period or in the future. Changes in legislation resulting from climate issues may be known (e.g. regulations or negotiated commitments to mitigate the effects of pollution) or only anticipated (e.g. potential changes in business models as well as consumer behaviour, commercial counterparties, creditors and investors). They affect the fair value of assets/liabilities regardless of whether the risks or opportunities associated with them are real or perceived.
Consistent with the previous year, as of 31 March 2024, the Company has not identified significant risks caused by climate change that could have a negative and material impact on the Company's financial statements.
Management continually assesses the impact of climate-related issues. Assumptions could change in the future in response to upcoming environmental regulations, new commitments made and changing consumer demand. These changes, if not foreseen, could have an impact on the future cash flows, financial results and financial condition of the Company.
2.2.9. Cash Flows
The interim condensed separate statement of cash flows shows the cash flows for the year in relation to operating, investment and financial activity during the year, the change in cash and cash equivalents for the year, cash and cash equivalents at the beginning and at the end of the year.
The operating cash flows are calculated as a result of the year adjusted with the non-cash operating positions, changes in net turnover capital and corporate tax.
Investment activity cash flows include payments about purchase and sale of fixed assets and cash flows related to the purchase and sale of entities and operations. Purchase and sale of other securities which are not a cash and cash equivalents are also included in the investment activity.
Financial activity cash flows include changes in the amount or composition of share capital and the related costs, the borrowings and the repayment of interest-bearing loans, purchase, and sale of own shares and payment of dividends.
Cash and cash equivalents include bank overdraft, liquidity cash and securities for term less than three months.
3. Other income
| 31.03.2024 BGN'000 |
31.03.2023 BGN'000 |
|
|---|---|---|
| Other income from related parties, including: | - | 15 |
| IC Euroins AD | - | 3 |
| Euroins Romania Asiguarare – Reasigurare S.A., Romania, (in insolvency) |
- | 12 |
| Other income | - | 2 |
| - | 17 |
4. Net gains/(losses) from financial instrument operations
| 31.03.2024 | 31.03.2023 | |
|---|---|---|
| BGN'000 | BGN'000 | |
| Gains from revaluation of debt instruments measured at fair value | - | 63 |
| Gains from financial instrument operations | - | 63 |
| Losses from financial instrument operations, including: | - | (8) |
| Losses from transactions with investments and financial instruments with Euro-Finance AD, a subsidiary company |
- | (8) |
| Losses from revaluation of financial instruments. | (1) | - |
| Losses from financial instrument operations | (1) | (8) |
| Net gains/(losses) from financial instrument operations | (1) | 55 |
In the first quarter of 2024
Losses from revaluation of financial instruments amounting to BGN 1 thousand are from the revaluation of redeemed own bonds from the EMTN Programme in EUR with ISIN BG2100002224 (Note 15.).
In the first quarter of 2023
Gains from revaluation of debt instruments, valued at fair value, in the amount of BGN 63 thousand are from purchased own bonds from the EMTN Programme in EUR with ISIN XS1731768302 (Note 15.).
Losses from operations with investments and financial instruments in the amount of BGN 8 thousand are from purchased own bonds from EMTN Program in EUR with ISIN XS1731768302 (Note 15.).
5. Hired services expenses
| 2023 | 2022 | |
|---|---|---|
| BGN'000 | BGN'000 | |
| Consultancy services | 394 | 72 |
| Legal services | 1 | 151 |
| Insurance services, incl.: | 82 | 212 |
| IC Euroins AD | 82 | 212 |
| Intermediary services | - | 251 |
| Fees | 48 | 67 |
| Advertising | 215 | 154 |
| Rent and related expenses | 28 | 44 |
| Phone and internet | 16 | 10 |
| Translation services | 1 | 5 |
| Post and courier services | 1 | 1 |
| Other services | 46 | 93 |
| 832 | 1 060 |
6. Employee benefits expense
| 31.03.2024 | 31.03.2023 | |
|---|---|---|
| BGN'000 | BGN'000 | |
| Wages and salaries | 244 | 216 |
| Social security costs | 20 | 14 |
| 264 | 230 |
7. Other costs
| 31.03.2024 BGN'000 Other expenses from related parties, incl.: IC Euroins AD Other costs |
66 | 76 |
|---|---|---|
| 63 | 76 | |
| 3 | - | |
| 3 | - | |
| 31.03.2023 BGN'000 |
8. Finance income
| 31.03.2024 BGN'000 |
31.03.2023 BGN'000 |
|
|---|---|---|
| Interest income from loans provided to related parties, including: | 173 | 243 |
| Euroins Insurance Group AD | 173 | 243 |
| 173 | 243 |
9. Finance expenses
| 31.03.2024 BGN'000 |
31.03.2023 BGN'000 |
|
|---|---|---|
| Interest on loans from banks and non-bank financial institutions | 1 404 | 3 131 |
| Interest on bond loans under the EMTN Programme | 1 748 | 1 508 |
| Interest on bond loans | 1 106 | 1 097 |
| Interest on loans and leases received from related parties (Note 9.1.) | 613 | 593 |
| Interest on loans and leases provided by third parties | 73 | - |
| Interest on lease liabilities | 11 | 13 |
| Interest expenses | 4 955 | 6 342 |
| Bank fees related to loans | 15 | 55 |
| Loss from currency exchange rate fluctuation | 5 | 6 |
| Other finance costs | 3 | 3 |
| 4 978 | 6 406 |
9.1. Interest expenses on loans and leases received from related parties
| 31.03.2024 BGN '000 |
31.03.2023 BGN '000 |
|
|---|---|---|
| Starcom Holding AD – a loans (Note 20.3.2.) | 613 | 465 |
| IC Euroins AD– a financial instrument loan agreements | - | 70 |
| Euroins Romania Insurance - Reinsurance S.A. (insolvency) - financial instrument loan agreements |
- | 56 |
| IC EIG Re EAD – an agreement for the transfer of a financial instrument loan receivable |
- | 2 |
| 613 | 593 |
10. Investments in subsidiaries
31 March 2024
| Net value as of 01.01.2024 |
Increase | Decrease | Net value as of 31.03.2024 |
Share capital of the subsidiary |
% interests in subsidiaries |
|
|---|---|---|---|---|---|---|
| BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | % | |
| Euroins Insurance Group AD | 471 100 | - | - | 471 100 | 576 243 | 90.10% |
| Eastern European Electric Company II B.V. |
113 157 | 1 838 | - | 114 995 | 4 | 100.00% |
| Euro-Finance AD | 24 645 | - | - | 24 645 | 14 100 | 99.99% |
| Electrohold Green EOOD | 20 | - | - | 20 | 20 | 100.00% |
| 608 922 | 1 838 | - | 610 760 |
31 December 2023
| Net value as of 01.01.2023 |
Increase | Decrease | Net value as of 31.12.2023 |
Share capital of the subsidiary |
% interests in subsidiaries |
|
|---|---|---|---|---|---|---|
| BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | % | |
| Euroins Insurance Group AD | 471 100 | - | - | 471 100 | 576 243 | 90.10% |
| Eastern European Electric Company II B.V. |
156 185 | - | (43 028) | 113 157 | 4 | 100.00% |
| Euro-Finance AD | 24 645 | - | - | 24 645 | 14 100 | 99.99% |
| Electrohold Green EOOD | 20 | - | - | 20 | 20 | 100.00% |
| 651 950 | - | (43 028) | 608 922 |
The subject of activity of the subsidiaries is as follows:
- o Euroins Insurance Group AD acquisition, management, evaluation and sale of participations in Bulgarian and foreign companies. The company is active in Bulgaria, Northern Macedonia, Ukraine and Georgia. Euroins Insurance AD, part of Euroins Insurance Group AD, operates on the principle of Freedom of Services in the following Member States of the European Union: Republic of Poland; Republic of Italy; Kingdom of Spain; Germany; Kingdom of the Netherlands.
- o Eastern European Electric Company II B.V., the Netherlands acquisition and management of energy market companies;
- o Euro-Finance AD Providing and performing investment services and activities in the country and abroad. Business direction - Investment intermediation and asset management - Bulgaria;
- o Electrohold Green EOOD consulting and investment activities, construction and maintenance of photovoltaic power plants, trade in solar panels and accessories, real estate transactions. The company has not engaged in activities.
Eastern European Electric Company II B.V.
31 March 2024
According to the Share Premium Contribution Agreement dated 18.03.2024, an additional capital contribution of EUR 940 thousand was made to the subsidiary company Eastern European Electric Company II B.V. The amount was paid in two instalments – EUR 600 thousand on 14 March 2024, and EUR 340 thousand on 15 March 2024.
31 December 2023
In June 2023, the management of Eurohold Bulgaria AD decided to return additional capital contributions from Eastern European Electric Company II B.V. amounting to BGN 43 028 thousand (EUR 22 million).
Electrohold Green EOOD
On 23.05.2022, the Board of Directors of Eurohold Bulgaria AD decided to establish a subsidiary Electrohold Green EOOD with a capital of BGN 20 thousand, divided into 20 equal shares of BGN 1 000 each. The company has not engaged in activities.
Impairment of investments in subsidiaries
The Company performs analysis and assessment for existing indications of impairment of investments in subsidiaries for each calendar year. Independent external evaluators are used. In applying the valuation techniques, management uses to the maximum extent market data and assumptions that market participants would adopt in valuing an instrument. When applicable market data is lacking, management uses its best estimate of assumptions that market participants would make. These estimates may differ from
the actual prices that would have been determined in a fair market transaction between informed and willing parties at the end of the reporting period.
The analysis and assessment are on an individual and/or consolidated basis of the subsidiaries. The changes in the financial position and the results compared to the comparative accounting period of the subsidiaries are examined. The main indicators of impairment are: a significant reduction in the volume or suspension of the activity of the subsidiary company/group; loss of markets, customers or technological problems, trends in the deterioration of fundamental financial indicators, as well as a decrease in market capitalization.
The latest analysis and assessment are as of 31.12.2023 and have not found any indications of impairment of investments in subsidiaries.
11. Property, plant and equipment
| Right-of-use assets | ||||
|---|---|---|---|---|
| – Properties | Vehicles | Equipment | Total | |
| BGN'000 | BGN'000 | BGN'000 | BGN'000 | |
| Cost: | ||||
| As of 1 January 2023 | 1 759 | 287 | 82 | 2 128 |
| Additions | - | 32 | 18 | 50 |
| Disposals | - | - | (2) | (2) |
| As of 31 December 2023 | 1 759 | 319 | 98 | 2 176 |
| Additions | - | - | - | - |
| Disposals | - | - | - | - |
| As of 31 March 2024 | 1 759 | 319 | 98 | 2 176 |
| Depreciation: | ||||
| As of 1 January 2023 | 632 | 211 | 81 | 924 |
| Depreciation | 176 | 27 | 3 | 206 |
| Other changes | - | - | (2) | (2) |
| As of 31 December 2023 | 808 | 238 | 82 | 1 128 |
| Depreciation | 44 | 5 | 2 | 51 |
| Disposals | - | - | - | - |
| As of 31 March 2024 | 852 | 243 | 84 | 1 179 |
| Net book value: | ||||
| As of 1 January 2023 | 1 127 | 76 | 1 | 1 204 |
| As of 31 December 2023 | 951 | 81 | 16 | 1 048 |
| As of 31 March 2024 | 907 | 76 | 14 | 997 |
12. Other receivables
| 31.03.2024 BGN'000 |
31.12.2023 BGN'000 |
|
|---|---|---|
| Trade receivables | 979 | 965 |
| Prepaid expenses, including: | 644 | 562 |
| Prepaid expenses to related parties – IC Euroins AD | 531 | 449 |
| VAT refund | 17 | - |
| Debt securities measured at FVTPL | 7 | 7 |
| Other | 5 | 5 |
| 1 652 | 1 539 | |
| Impairment | (4) | (7) |
| 1 648 | 1 532 |
13. Cash and cash equivalents
| 31.03.2024 | 31.12.2023 |
|---|---|
| BGN'000 | BGN'000 |
| 71 | 74 |
| 18 | 19 |
| 89 | 93 |
| - | - |
| 89 | 93 |
14. Share capital and reserves
14.1. Share capital
The registered share capital of the Company consists of 260 500 000 ordinary shares with a nominal value of BGN 1 per share. All shares have the right to receive a dividend and a liquidation share and represent one vote at the general meeting of the Company's shareholders.
| 31.03.2024 | 31.12.2023 | |
|---|---|---|
| Number of shares | Number of shares | |
| Registered capital at the beginning of the period | 260 500 000 | 260 500 000 |
| Registered capital at the end of the period | 260 500 000 | 260 500 000 |
As of 31.03.2024 the share capital is distributed as follows:
| Shareholders | % Participation in the share capital |
Number of shares /voting rights/ |
Par value BGN |
|---|---|---|---|
| Starcom Holding AD | 50.08% | 130 454 157 | 130 454 157 |
| KJK Fund II SICAV-SIF Balkan Discovery | 10.79% | 28 116 873 | 28 116 873 |
| Boston Management and Research, through the following funds managed by him: Global Opportunities Portfolio, Global Macro Portfolio, Global Macro Absolute Return Advantage Portfolio, Global Macro Capital Opportunities Portfolio. |
8.50% | 22 144 922 | 22 144 922 |
| SLS Holding AD | 7.58% | 19 757 375 | 19 757 375 |
| PENSION ASSURANCE COMPANY-FUTURE through the following funds managed by him: UPF-Future PPF-Future DPF-Future |
5.30% | 13 794 398 | 13 794 398 |
| Other legal entities | 16.01% | 41 707 218 | 41 707 218 |
| Other individuals | 1.74% | 4 525 057 | 4 525 057 |
| Total | 100.00% | 260 500 000 | 260 500 000 |
14.2. Reserves
| 151 671 | 151 671 | |
|---|---|---|
| General reserves | 7 641 | 7 641 |
| Share premium | 144 030 | 144 030 |
| BGN'000 | BGN'000 | |
| 31.03.2024 | 31.12.2023 |
With the minutes of the Board of Directors dated 29.03.2024, a decision was taken to convene an extraordinary session of the General meeting of the shareholders of Eurohold Bulgaria AD, for the issuance by the company of an issue of warrants in the amount of up to 260 500 000 (two hundred and sixty million and five hundred thousand) dematerialized, registered, freely transferable warrants under the terms of a public offering pursuant to the provisions of the Public Offering of Securities Act with an issue value of BGN 0.50 (fifty stotinki) for each warrant, which entitle the warrant holders to exercise within a 10-year period their right to subscribe for the corresponding number of shares (of the same type and class as the existing issue of shares of the company - dematerialized, registered, non-preferred, with the right to 1 (one) vote in the general meeting of the shareholders of the company, with the right to dividend and right to liquidation share) - the underlying asset of the warrants under issue value BGN 2.00 (two Bulgarian lev) per share, at a warrant/share conversion ratio of 1:1, which shares "Eurohold Bulgaria" AD will issue in the future conditional capital increase/s, under the condition, that the new shares are issued only for subscription by the owners of the warrants. The public offering of the issue of warrants of Eurohold Bulgaria AD shall be considered uccessfully completed only if at least 78 150 000 warrants are subscribed and fully paid, representing 30% (thirty percent) of the offered for issuance securities.
15. Bond liabilities
| Non - current bond liabilities | 31.03.2024 BGN'000 |
31.12.2023 BGN'000 |
|---|---|---|
| EMTN Programme in EUR with ISIN: XS1731768302 - principal | 84 463 | 85 317 |
| EMTN Programme in EUR with ISIN: XS1542984288 – principal | 19 558 | 19 558 |
| Corporate bond with ISIN: BG2100013205 – principal | 58 675 | 58 675 |
| Corporate bond with ISIN: BG2100002224 - principal | 78 206 | 78 205 |
| 240 902 | 241 755 | |
| Current bond liabilities | ||
| EMTN Programme in EUR with ISIN: XS1731768302 - interest | 2 798 | 585 |
| EMTN Programme in PLN/EUR with ISIN: XS1542984288 - interest | 398 | 9 |
| Corporate bond with ISIN: BG2100013205 - interest | 656 | 182 |
| Corporate bond with ISIN: BG2100002224 - interest | 1 426 | 793 |
| 5 278 | 1 569 | |
| 246 180 | 243 324 |
Bond liabilities are presented at amortized cost, net of the repurchased own bonds, which are subsequently measured at fair value based on information from Bloomberg / Eurobank and other sources, reflecting the effect on profit or loss for the period.
Information on the terms of the EMTN programs is publicly available on the Irish Stock Exchange website, Bonds section.
The EMTN program with ISIN XS1731768302 is an extended EMTN program with a maturity date of 07.06.2026, a fixed interest rate of 6.5% (six and a half percent) per annum and an interest payment frequency of once a year in arrears. At the end of 2022, the Company received consent to extend by 42
months the final repayment period of European medium-term notes issued under the European Medium-Term Notes Program (EMTN Programme) and admitted to trading on the Irish Stock Exchange. As of 31.12.2023, the company owns repurchased own securities with a nominal value of EUR 27 000 thousand.
The EMTN program with ISIN: XS1542984288 matures on 29.12.2026, has a fixed interest rate of 8.0% (eight percent) on an annual basis and a frequency of interest payments once a year in arrears. As of 31.12.2021 the EMTN program issue with ISIN: XS1542984288 is a restructured EMTN program with extended maturity date until 29.12.2026, changed currency from PLN to EUR and changed frequency of interest payments from six-month to once a year. As a result of the restructuring in 2021, losses from operations with investments in the amount of BGN 440 thousand were reported.
Bond loan with ISIN: BG2100013205 in the amount of EUR 30 000 000 was registered by Central Depository AD on 26 November 2020. The issue is the second in a row of ordinary, registered, dematerialized, interestbearing, secured, non-convertible, freely transferable bonds under the terms of primary private (non-public) placement within the meaning of Art. 205, para. 2 of the CA. The nominal and issue value of each bond is EUR 1 000 (thousand). The maturity date of the issue is 26.11.2027, and the principal is repaid once at maturity date. Interest payments are made every six months, as of the date of registration of the issue (26.11.2020), at a fixed nominal interest rate - 3.25% on an annual basis.
Bond loan with ISIN: BG2100002224 in the amount of EUR 40 000 000 was registered by Central Depository AD on 08.03.2022. The issue is a third corporate, ordinary, registered, dematerialized, interest-bearing, secured, non-convertible, unprivileged and freely transferable bonds under the conditions of initial private (non-public) offering to less than 150 participants - a predetermined circle of investors according to a decision of the Management Board of the public company dated 23.02.2022 - TBI Bank EAD. The nominal and issue value of each bond is EUR 1 000 (thousand). The maturity date of the issue is 8th March 2029, and the principal is repaid once at maturity. The interest payments are every six months, as of the date of registration of the issue (08.03.2022), at a fixed nominal interest rate - 3.25% on an annual basis.
In 2023 the following bond transactions were concluded:
- o 4 000 pcs. repurchased own notes with ISIN XS1731768302 were sold.
- o Pursuant to an Agreement, a subsidiary of Eurohold Bulgaria AD replace another subsidiary of Eurohold Bulgaria AD in its capacity as a lender under a loan agreement for financial instruments with 2 126 pcs. due from Eurohold Bulgaria AD notes from the EMTN Program in EUR with ISIN XS1731768302 with a total nominal value of EUR 2 126 thousand and unpaid interest in the amount of BGN 91 thousand.
16. Loans and borrowings
| 31.03.2024 | 31.12.2023 | |
|---|---|---|
| Non-current loans and borrowings | BGN'000 | BGN'000 |
| International Investment Bank | 7 899 | 11 437 |
| J.P. Morgan SE | 9 834 | 9 834 |
| 17 733 | 21 271 | |
| Current loans and borrowings | ||
| J.P. Morgan SE | 19 887 | 20 834 |
| International Investment Bank | 13 630 | 9 632 |
| Other | 4 400 | 4 328 |
| 37 917 | 34 794 | |
| 55 650 | 56 065 |
Parameters under the loans and borrowings:
| Principal as of | Principal as of | Maturity | ||||||
|---|---|---|---|---|---|---|---|---|
| Bank | Type | Currency | Contract limit | 31.03.2024 | 31.12.2023 | Interest rate | date | Security |
| International | Loan - | 6.0% + | Pledge on subsidiary |
|||||
| Investment Bank | Principal | EUR | 10 000 000 € | 3 850 000 € | 3 850 000 € | 3m EURIBOR | 03.2025 | shares |
| International Investment Bank |
Loan - Principal |
EUR | 7 000 000 € | 6 192 308 € | 6 192 308 € | 5.0% + 3m EURIBOR |
01.2029 | Pledge on subsidiary shares. Insurance. |
| JP Morgan SE | Loan - Principal |
EUR | 40 000 000 € | 15 084 534 € | 15 084 534 € | 8.75% + 6m EURIBOR |
06.2025 | Pledge on subsidiary shares. Insurance. |
As of 31.03.2024
o Other current loans and borrowings to financial and non-financial institutions represent a liability (principal + interest) under a loan agreement for financial instruments with an annual interest rate of 7.0% and maturity on 05.06.2024.
As of 31.12.2023
o Other current loans and borrowings to financial and non-financial institutions represent a liability (principal + interest) under a loan agreement for financial instruments with an annual interest rate of 7.0% and maturity on 05.06.2024.
17. Lease liabilities
| 31.03.2024 BGN'000 |
31.12.2023 BGN'000 |
|
|---|---|---|
| Lease liabilities – non-current | 867 | 917 |
| Lease liabilities - current | 201 | 269 |
| 1 068 | 1 186 |
18. Pension and other employee obligations
| 31.03.2024 | 31.12.2023 | |
|---|---|---|
| BGN'000 | BGN'000 | |
| Non-current obligations for retirement benefits | 33 | 33 |
| Current employee and social security obligations | 128 | 170 |
| 161 | 203 |
19. Trade and other payables
| 31.03.2024 | 31.12.2023 | |
|---|---|---|
| Other payables - non-current | BGN'000 | BGN'000 |
| Liabilities on contract for transferred receivables | 58 675 | 58 675 |
| 58 675 | 58 675 | |
| Trade and other payables - current | ||
| Trade payables | 13 722 | 11 367 |
| Tax liabilities | 661 | 1 675 |
| Dividend payables | 249 | 249 |
| Liabilities from receivables transfer agreement - current | 14 | 14 |
| Liabilities to transferees | 8 | 8 |
| Other liabilities | 30 | 179 |
| Trade and other payables - current | 14 684 | 13 492 |
| 73 359 | 72 167 |
As of 31.03.2024
o Non-current liabilities on contract for transferred receivables are non-interest-bearing and mature on 20.06.2025.
As of 31.12.2023
o Non-current liabilities on contract for transferred receivables are non-interest-bearing and mature on 20.06.2025.
20. Transactions and balances with related parties
The related parties of the Company are as follows:
- Starcom Holding AD, Bulgaria – major shareholder in Eurohold Bulgaria AD.
- Starcom Finance EAD, Bulgaria subsidiary of Starcom Holding AD;
- Quintar Capital Limited, Hong Kong, China subsidiary of Starcom Holding AD;
- Hanson Asset Management Ltd, United Kingdom subsidiary of Starcom Holding AD;
- Swiss Global Asset Management AG, Switzerland subsidiary of Starcom Holding AD;
- Vedernik EAD, Bulgaria since 17.08.2023;
- Solars Energy AD associate of Starcom Holding.
Subsidiaries of Eurohold Bulgaria AD:
- Euroins Insurance Group AD (EIG) – subsidiary of Eurohold Bulgaria AD;
- IC Euroins AD, Bulgaria subsidiary of EIG;
- Euroins Romania Asiguarare Reasigurare S.A., Romania (in insolvency) subsidiary of EIG;
- Euroins Osigurovanje AD, North Macedonia subsidiary of EIG;
- IC Euroins Life EAD, Bulgaria subsidiary of EIG;
- IC Euroins Ukraine PrAT, Ukraine subsidiary of EIG;
- European Travel Insurance PrAT, Ukraine subsidiary of EIG;
- ECLAIM Settlement Services Single Member P.C. (previous name Euroins Claims I.K.E.), Greece - subsidiary of EIG;
- IC Euroins Georgia JSC, Georgia subsidiary of EIG;
- Shardeni 2017 Ltd., Georgia subsidiary of EIG since 29.02.2023;
- PHOENIX MGA SERVICES S.R.L., Romania subsidiary of EIG established on 12.06.2023;
- IC EIG Re AD, Bulgaria– subsidiary of EIG EIG AD has entered into a preliminary agreement for the sale of EIG RE EAD. As of 31.12.2023, control over EIG RE EAD has been lost, with all necessary notifications made to the competent authority in accordance with applicable legislation;
- Euro-Finance AD – subsidiary of Eurohold Bulgaria AD;
- Eastern European Electric Company II B.V., Netherlands - subsidiary of Eurohold Bulgaria AD;
- Eastern European Electric Company III B.V., Netherlands a subsidiary of Eastern European Electric Company B.V. II, Netherlands;
- Eastern European Electric Company B.V., Netherlands a subsidiary of Eastern European Electric Company B.V. III, Netherlands;
- Electrodistribution Grid West EAD, Bulgaria a subsidiary of Eastern European Electric Company BV, Netherlands;
- Electrohold Information and Communication Technologies EAD, Bulgaria through Electrohold Bulgaria EOOD – a subsidiary of Eastern European Electric Company B.V., Netherlands;
- Electrohold Sales EAD, Bulgaria a subsidiary of Eastern European Electric Company B.V., Netherlands;
- Electrohold Bulgaria EOOD, Bulgaria a subsidiary of Eastern European Electric Company B.V., Netherlands;
- Electrohold EPC EOOD, Bulgaria through Electrohold Bulgaria EOOD, Bulgaria a subsidiary of Eastern European Electric Company B.V., Netherlands;
- Electrohold Trade EAD a subsidiary of Eastern European Electric Company B.V., Netherlands;
- Free Energy Project Oreshets EOOD, Bulgaria a subsidiary of Eastern European Electric Company B.V., Netherlands;
- Bara Group EOOD, Bulgaria a subsidiary of Eastern European Electric Company B.V., Netherlands;
- Electrohold Green EOOD, Bulgaria - subsidiary of Eurohold Bulgaria AD – established in 2022 - No activity at the moment.
20.1. Transactions with related parties
20.1.1. Transactions with subsidiary companies and related parties
In the first quarter of 2023
o Pursuant to an Agreement, a subsidiary of Eurohold Bulgaria AD replace another subsidiary of Eurohold Bulgaria AD in its capacity as a lender under a loan agreement for financial instruments with 2 126 pcs. due from Eurohold Bulgaria AD notes from the EMTN Program in EUR with ISIN XS1731768302 with a total nominal value of EUR 2 126 thousand and unpaid interest in the amount of BGN 91 thousand (Note 21.).
The other related parties' transactions in the first quarter of 2024 and 2023 are disclosed in Notes 3., 4., 5., 7., 8., 9., 10., 12., 15., 20. and 21.
20.1.2. Transactions with key management personnel
The key management personnel of the Company include the members of the Management Board and the Supervisory Board. Remuneration of key management personnel includes the following costs:
| 31.03.2024 '000 BGN |
31.03.2023 '000 BGN |
|
|---|---|---|
| Short-term remunerations: | ||
| Salaries and wages | 88 | 88 |
| Social security costs | 2 | 2 |
| Total short - term remuneration | 90 | 90 |
20.2. Receivables from related parties
| 31.03.2024 | 31.12.2023 | ||
|---|---|---|---|
| Notes | '000 BGN | '000 BGN | |
| Principal on loans granted | 20.2.1. | 4 518 | 4 518 |
| Interest on loans granted | 20.2.2. | 1 139 | 1 018 |
| Other receivables | 20.2.3. | 13 143 | 14 699 |
| 18 800 | 20 235 |
20.2.1.Principal on loans granted
| 31.03.2024 | 31.12.2023 | |
|---|---|---|
| '000 BGN | '000 BGN | |
| Euroins Insurance Group AD | 4 555 | 4 555 |
| Impairment | (37) | (37) |
| 4 518 | 4 518 |
20.2.2. Interest on loans granted
| Impairment | (10) 1 139 |
(8) 1 018 |
|---|---|---|
| Euroins Insurance Group AD | 1 149 | 1 026 |
| '000 BGN | '000 BGN | |
| 31.03.2024 | 31.12.2023 |
20.2.3. Other receivables
| 13 143 | 14 699 | |
|---|---|---|
| Impairment | (635) | (911) |
| 13 778 | 15 610 | |
| IC EIG Re AD | 1 | - |
| Electrohold ICT EAD | 16 | 16 |
| Electrohold EPC EOOD | - | 1 |
| Electrohold Bulgaria EOOD | - | 2 |
| Electrodistribution Grid West EAD | - | 3 |
| Euroins Osigurovanje AD, North Macedonia | 1 | - |
| IC Euroins AD | 98 | 73 |
| Euroins Romania Insurance - Reinsurance S.A. (in insolvency) | 509 | 509 |
| Eastern European Electric Company II B.V. | - | 665 |
| Eastern European Electric Company B.V. | - | 1 173 |
| Euroins Insurance Group AD | 13 153 | 13 168 |
| 31.03.2024 '000 BGN |
31.12.2023 '000 BGN |
The receivable from Euroins Insurance Group AD with a balance of BGN 13 153 thousand as of 31.03.2024 (as of 31.12.2023: BGN 13 168 thousand) includes BGN 13 152 thousand (as of 31.12.2023: BGN 13 152 thousand) receivable under a debt substitution agreement, whereby Eurohold Bulgaria AD received receivables from Euroins Insurance Group AD against the transfer of ownership of 7 375 repurchased own bonds with ISIN BG2100002224, with a nominal value of 1 000 euros each.
Parameters regarding loans/assignments to related parties:
| Lender | Debtor | Currency | Contractual limit |
Outstanding principal 31.03.2024 |
Outstanding principal 31.12.2023 |
Interest rate | Maturity |
|---|---|---|---|---|---|---|---|
| BGN | '000 BGN | '000 BGN | |||||
| Receivable from a loan agreement with related parties: | |||||||
| Eurohold Bulgaria AD | Euroins Insurance Group AD | 4 555 | 8 010 000 | 4 555 | 4 555 | 8.00% | 08.11.2024 |
| Receivable from an assignment agreement with related parties: | |||||||
| Eurohold Bulgaria AD | Euroins Insurance Group AD | 13 152 | 14 425 523 | 13 152 | 13 152 | 2.50% | 01.01.2025 |
| Total receivables from loans/assignments from related parties: | 17 707 | 17 707 | - | - |
20.3. Related party payables
20.3.1. Related party payables – non-current
| 31.03.2024 '000 BGN |
31.12.2023 '000 BGN |
|
|---|---|---|
| Starcom Holding AD - subordinated debt | 391 | 386 |
| 391 | 386 |
20.3.2. Related party payables - current
| 31.03.2024 | 31.12.2023 | |
|---|---|---|
| '000 BGN | '000 BGN | |
| Starcom Holding AD | ||
| Dividends | 101 | 101 |
| Principal | 39 310 | 37 198 |
| Interest | 3 071 | 2 463 |
| IC Euroins Life AD – trade payables | 34 | 30 |
| IC Euroins AD – trade payables | 3 | - |
| 42 519 | 39 792 |
Starcom Holding AD - Subordinated Debt Instruments
The subordinated debt has no definite maturity, and the borrower, Starcom Holding AD, cannot demand their repayment regardless of default. Eurohold Bulgaria AD has the right (but not the obligation) to repay amounts of the principal of the loan corresponding to each sequentially received tranche after 5 years from the date of receiving the respective tranche. Pre-maturity of the principal of the subordinated debt is not allowed except in cases of liquidation or insolvency, after payment of due amounts to all privileged creditors as well as to all remaining ordinary creditors. The interest due on the agreement dated 09.08.2021 is at a rate of 5% annually on the attracted amounts for the term of their actual use.
Starcom Holding AD – Loans
- o Loan 1 BGN 31 096 thousand BGN with an annual interest rate of 5.5%, maturity on 31.12.2024, and an agreed limit of BGN 40 million.
- o Loan 2 BGN 8 214 thousand with an annual interest rate of 6.0% + 3M EURIBOR, maturity on 31.12.2024, and an agreed limit of EUR 4.2 million.
Trade and Other Payables to Related Parties
As of 31.03.2024, the Company has other liabilities to the following related parties:
o BGN 34 thousand liabilities to Euroins Life AD under swap agreements.
As of 31.12.2022, the Company has other liabilities to the following related parties:
- o BGN 30 thousand liabilities to Euroins Life AD under swap agreements.
- o BGN 3 thousand other liabilities to IC Euroins AD.
21. Non-cash transactions
During the reporting periods, the Company has concluded the following investment and financial transactions that do not use cash or cash equivalents and are not reflected in the cash flow statement:
In the first quarter of 2023
o Pursuant to an Agreement, a subsidiary of Eurohold Bulgaria AD replace another subsidiary of Eurohold Bulgaria AD in its capacity as a lender under a loan agreement for financial instruments with 2 126 pcs. due from Eurohold Bulgaria AD notes from the EMTN Program in EUR with ISIN XS1731768302 with a total nominal value of EUR 2 126 thousand and unpaid interest in the amount of BGN 91 thousand (Note 20.1.1.).
22. Contingent, liabilities and commitments
Litigations
As of 31.03.2024, there are no significant lawsuits filed against the Company.
Warranties and provided guarantees
The company is a co-debtor/guarantor for loans received from related parties as follows:
| Business Third / |
Amount in EUR'000 |
Amount in BGN'000 |
Amount in EUR'000 |
Amount in BGN'000 |
MATURITY AS OF 31.03.2024 (EUR'000) | ||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| area | Related parties |
as of 31.03.2024 |
as of 31.03.2024 |
as of 31.12. 2023 |
as of 31.12.2023 |
2024 | 2025 | 2026 | 2027 | 2028 | after 2028 |
| Energy sub-holding | |||||||||||
| Corporate payment guarantee |
Related parties |
3 500 | 6 845 | 3 500 | 6 845 | - | 3 500 | - | - | - | - |
| Working capital loans |
Related parties |
13 965 | 27 313 | 20 189 | 39 486 | 13 965 | - | - | - | - | - |
| Corporate guarantee in connection with an acquisition |
Related parties |
220 000 | 430 283 | 220 000 | 430 283 | - | - | - | 220 000 | - | - |
| Parent company | |||||||||||
| Bank loans for investment purposes |
Related parties |
5 000 | 9 779 | 5 000 | 9 779 | 5 000 | - | - | - | - | - |
| Group of leasing companies* |
|||||||||||
| For financing leasing activity |
Related parties until 30.06.2022 |
18 393 | 35 974 | 18 519 | 36 220 | 6 987 | 5 525 | 3 596 | 1 625 | 613 | 47 |
| Group of automotive companies |
|||||||||||
| Working capital loans |
Related parties until 30.06.2022 |
5 307 | 10 380 | 5 167 | 10 106 | 2 716 | 557 | 557 | 557 | 557 | 363 |
| TOTAL: | 266 165 | 520 574 | 272 375 | 532 719 | 28 668 | 9 582 | 4 153 222 182 | 1 170 | 410 |
In connection with financing as part of a package deal, a pledge of 35% shares of a subsidiary was established.
In connection with a concluded contract for financing by a financial institution, a pledge of shares of a subsidiary company was established (Note 16.).
In connection with a loan contract by a credit institution in 12.2022, renegotiated in 09.2023, a pledge of shares of a subsidiary company and a pledge of bonds was established (Note 16.).
The company is a guarantor under issued bank guarantees, as follows:
| Company of: | Amount in EUR'000 as of 31.03.2024 |
Amount in BGN'000 as of 31.03.2024 |
Amount in EUR'000 as of 31.12.2023 |
Amount in BGN'000 as of 31.12.2023 |
MATURITY OF EXPOSURE AS OF 31.03.2024 (EUR'000) |
|---|---|---|---|---|---|
| Automotive subholding (related party until 30.6.2022) |
2 050 | 4 009 | 2 050 | 4 009 | 2026 |
| Automotive subholding (related party until 30.6.2022) |
1 662 | 3 251 | 1 662 | 3 251 | 2024 |
| TOTAL: | 3 712 | 7 260 | 3 712 | 7 260 |
The liabilities of the Company have guaranteed by related parties are as follows:
| Company/ Guarantor | Currency | Guaranteed liability | Guaranteed amount as of 31.12.2023 in original currency (EUR'000) |
Maturity date |
|---|---|---|---|---|
| Issue of bonds (EMTN | ||||
| Euroins Insurance Group AD | EUR | programme) | 70 000 | 07.2026 |
| Issue of bonds (EMTN | ||||
| Euroins Insurance Group AD | EUR | programme) | 10 000 | 12.2026 |
| Euroins Insurance Group AD | ||||
| Pledge of shares of a subsidiary and pledge of | Loan from financial | |||
| debt notes | EUR | institution | 15 084 | 06.2025 |
Established guarantees in favour of the Company:
| Company/ Guarantor | Currency | Guaranteed liability | Guaranteed amount as of 31.12.2023 in original currency |
Maturity date |
|---|---|---|---|---|
| Milena Milchova Cuentcheva, Procurator | BGN | Management guarantee | 3 330 | 03.2025 * |
| * Automatic renewal with 1 year. |
23. Post-reporting date events
There are no adjusting events or other significant non-adjusting events, which occurred between the date of the separate financial statements and the date of their approval for issue.
4
Internal information 31 March 2024
Eurohold Bulgaria AD
INTERNAL INFORMATION
under Article 7 of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse
Eurohold Bulgaria AD publicly discloses inside information pursuant to Article 7 of Regulation (EU) No 596/2014 of the European Parliament and of the Council to the Financial Supervision Authority, the Bulgarian Stock Exchange and the public through the financial media Extra News at the following internet address: www.x3news.com, where the inside information is available at the following link: http://www.x3news.com/?page=News&uniqid=63d7b765a69b1
Publicly disclosed internal information can also be found on the website of "Eurohold Bulgaria" AD www.eurohold.bg, where it is available in the "Internal Information" section at the following link: https://www.eurohold.bg/internal-information -645.html
The management of Eurohold Bulgaria AD believes that there is no other information that has not been publicly disclosed by it and that would be important to shareholders and investors in making an investment decision.
Kiril Boshov,
Chairman of the Board and Executive Director of Eurohold Bulgaria AD
Assen Minchev, Executive Director of Eurohold Bulgaria AD 5
Additional information
Additional information at 31 March 2024
35
ADDITIONAL INFORMATION
to the interim condensed individual activity report for the period 1 January – 31 March 2024
pursuant to REGULATION No. 2 of 9 November 2021 on initial and subsequent disclosure of information in public offerings of securities and admission of securities to trading on a regulated market
1. Information about changes in accounting policies during the reporting period, the reasons for them and how they affect the issuer's financial result and equity
There are no changes in the accounting policies of Eurohold Bulgaria AD during the reporting period.
2. Information about changes in the issuer's group of companies within the meaning of the Accounting Act, if it participates in such a group
There are no changes in the economic group.
3. Information on the results of organizational changes within the issuer, such as reorganization, sale of a group of companies within the meaning of the Accounting Act, in-kind contributions by the company, lease of property, long-term investments, discontinuation of operations
There are no organizational changes within the Eurohold group.
4. An opinion of the governing body on the feasibility of the published forecasts for the current financial year, taking into account the results of the current quarter, as well as information on the factors and circumstances that will affect the achievement of the forecast results at least until the end of the current year
There are no published projections for 2024.
5. Data on the persons directly and indirectly holding at least 5 per cent of the votes in the general meeting at the end of the relevant quarter and the changes in the votes held by the persons for the period from the beginning of the current financial year to the end of the reporting period
| Name | Shares | % of equity | |
|---|---|---|---|
| 1. | Starcom Holding AD | 130 454 157 | 50.08% |
| 2. | KJK Fund II Sicav-Sif Balkan Discovery | 28 116 873 | 10.79% |
| 3. | Boston Management and Research, through the following funds managed by it: - Global Opportunities Portfolio, - Global Macro Portfolio, - Global Macro Absolute Return Advantage Portfolio, - Global Macro Capital Opportunities Portfolio. |
22 144 922 | 8.50% |
| 4 | SLS Holding AD | 19 757 375 | 7.58% |
| 5 | PAC Future through the following funds managed by it: - UPF Future |
13 794 398 | 5.30% |
| - PPF Future |
|
|---|---|
| - DPF Future |
6. Data on the shares held by the issuer's management and control bodies as of the end of the relevant quarter, as well as the changes that occurred for the period from the beginning of the current financial year to the end of the reporting period for each person separately
| Name | Shares | % of equity | |
|---|---|---|---|
| 1. | Dimitar Stoyanov Dimitrov | 200 | - |
| 2. | Veleslav Hristov | 200 | - |
7. Information on pending judicial, administrative or arbitration proceedings concerning debts or claims amounting to at least 10 per cent of the issuer's equity capital; if the total value of the issuer's debts or claims in all proceedings exceeds 10 per cent of its equity capital, information shall be provided for each proceeding separately
There is no pending litigation or arbitration relating to the Company or any of its subsidiaries, with a value of the claim of at least 10 per cent of the equity of the Company.
8. Information on loans, guarantees or commitments granted by the issuer or its subsidiary to a person or its subsidiary, including related persons, indicating the nature of the relationship between the issuer and the person, the amount of principal outstanding, the interest rate, the final repayment date, the amount of the commitment, the terms and period of
Transactions with related parties for the reporting period are disclosed in the Notes to the condensed separate financial statements for the first quarter of 2024, as well as in the Interim condensed individual activity report as of 31 March 2024.
The conditions under which the transactions were carried out do not deviate from the market conditions for such type of transactions.
26 April 2024
Kiril Boshov,
Chairman of the Board and Executive Director and Executive Director of Eurohold Bulgaria AD
Assen Minchev, Executive Director of Eurohold Bulgaria AD
6
Appendix 4
Appendix 4 31 March 2024
39
APPENDIX 4
to Art. 12, para. 1, point 1, Article 14 and Article 21, point 3, letter "a" and point 4, letter "a" of the REGULATION No. 2 of 9.11.2021 on initial and subsequent disclosure of information in the case of public offer of securities and admission of securities to trading on a regulated market
for the period 1 January - 31 March 2024
- 1. No change in the persons exercising control over the company
- 2. Opening of insolvency proceedings for the company or its subsidiary and all material stages related to the proceedings
No insolvency proceedings have been opened for the company.
3. Conclusion or execution of material transactions
All concluded transactions, including material ones, are disclosed in the Notes to the condensed separate financial statements for the first quarter of 2024, as well as in the Interim condensed individual activity report as of 31 March 2024.
- 4. No decision to enter into, terminate or cancel a joint venture agreement
- 5. No change in the company's auditors and reasons for the change
- 6. There has been no commencement or termination of any legal or arbitration proceedings relating to the debts or claims of the company or its subsidiary, with a cost of the claim of at least 10 per cent of the equity of the company
- 7. Purchase, sale or pledge of shares in commercial companies by the issuer or its subsidiary
- » there is no
- 8. Other circumstances that the company believes may be relevant to investors in deciding whether to acquire, sell or continue to hold the publicly offered securities
All important events for Eurohold Bulgaria AD that occurred during the reporting period of 2024, as well as up to the date of preparation of this document, are disclosed in detail in the Interim condensed individual activity report as of 31 March 2024.
26 April 2024
Kiril Boshov, Chairman of the Board and Executive Director of Eurohold Bulgaria AD
Assen Minchev, Executive Director of Eurohold Bulgaria AD
7 Declaration by the responsible persons
41
Eurohold Bulgaria AD
Declaration by the responsible persons
DECLARATION
Article 100n, paragraph 4, item 4 of POSA
The undersigned,
- 1. Kiril Boshov Chairman of the Board and Executive Director of Eurohold Bulgaria AD
- 2. Assen Minchev Executive Director of Eurohold Bulgaria AD
- 3. Salih Trampov Chief Accountant of Eurohold Bulgaria AD (compiler of the financial statements)
WE DECLARE that to the best of our knowledge:
-
The Interim condensed separate financial statements as at 31.03.2024, prepared in accordance with applicable accounting standards, give a true and fair view of the assets and liabilities, financial position and profit or loss of Eurohold Bulgaria AD.;
-
The Interim condensed individual management report as at 31.03.2024 contains a reliable overview of the development and performance of Eurohold Bulgaria AD, as well as a description of the main risks and uncertainties facing the company.
Declarators:
- 1. Kiril Boshov
- 2. Assen Minchev
- 3. Salih Trampov