Eurohold Bulgaria AD

Quarterly Report • Oct 30, 2019

Eurohold Bulgaria AD

INTERIM MANAGEMENT REPORT AND FINANCIAL STATEMENTS

1 January – 30 September 2019

• 1. Interim Management Report for Q3'2019
• 2. Interim Financial Statements as of 30 September 2019 (stand alone)
• 3. Notes to the Interim Financial Statements as of 30 September 2019 (stand alone)
• 4. Information influencing the price of securities
• 5. Additional information
• 6. Annex 9
• 7. Declaration by the responsible persons

Further information on:

About Us Structure Corporate Governance Information for investors Communications and Media

you can find on:

www.eurohold.bg

INTERIM MANAGEMENT REPORT

containing information on important events occurred in the first nine months of 2019 in accordance with Art. 100o, para. 4, item 2 of the POSA

Financial performance (Standalone base)

Eurohold Bulgaria AD as a holding company does not carry out regular commercial transactions, and in this respect, its main (operating) revenues are of a financial nature, as the most significant of them - revenues from financial operations occur in different reporting periods and do not have a permanent occurrence. In this respect, investors and stakeholders should read this individual report together with the consolidated statement giving a clear and complete picture of the results, financial situation and prospects for the development of the Eurohold Group.

FINANCIAL RESULT

As of 30th of September,2019 Eurohold Bulgaria AD reported an improvement of the realized financial result on standalone base with a loss amounting to BGN 11 million versus a loss of BGN 13.1 million for the comparable period last year.

REVENUES

The revenues of the company over the reporting period amounted to BGN 2.9 million, of which dividend income in amount of BGN 0.7 million, profits from financial instruments amounting to BGN 1 million, interest income BGN 0.5 million and other financial income in amount of BGN 0.6 million.

The reported revenues in Q3'2018 amounted to BGN 2.5 million, representing dividend income in amount of BGN 0.2 million, revenue from operations with financial instruments in amount of BGN 0.6 million, interest income of BGN 1.2 million and other income (positive differences from exchange rate changes) in amount of BGN 0.5 million.

EXPENSES

For the reporting period Eurohold Bulgaria managed to decrease the operating expenses by 1.5 million as they amounted to BGN 14.3 million compared to BGN 15.8 million as of 30.09.2018. This decrease in operating expenses by 9.5% is due entirely to the marked decrease in interest expenses by more than BGN 2.4 million. As of 30.09.2019 interest

expenses amounted to BGN 11.9 million, compared to BGN 14.3 million in the previous period. The 17.1% reduction in interest expense was mainly due to reducing the interestbearing liabilities of the company and negotiating better interest rates.

Expenses on external services grew by 74.9%, amounting to BGN 1.7 million at the end of the reporting period, while in the comparable period it amounted to BGN 0.9 million.

The value of other financial expenses reported a double increase, reaching BGN 0.3 million. The increase in other financial expenses was due to the reported negative differences from exchange rates changes amounting to BGN 0.3 million.

Personnel expenses increased by 24.8% reaching BGN 0.4 million. In connection with the expansion of the holding's activity, in the current reporting period new 4 qualified employees were hired.

ASSETS

As of 30th of September 2019 the company's assets increased by 2.4% and amounted to BGN 593.5 million compared to BGN 579.4 million as of the end of 2018.

The growth of the assets was entirely due to an increase of BGN 13.8 million on the investment in the subsidiary Euroins Insurance Group AD. The increase is in connection with the redemption of part of the residual minority interest in the subsidiary insurance holding, as well as in connection with an additional contribution of BGN 3.95 million made in February 2019 from the current capital increase of Euroins Insurance Group AD.

EQUITY AND LIABILITIES

The total equity amounted to BGN 324.3 million compared to BGN 337.8 million at 31.12.2018.

The company's liabilities amounted to BGN 269.2 million increasing for the nine months by 11.4%.

For the reporting period, non-current liabilities remained virtually unchanged from BGN 166.1 million at the end of 2018 to BGN 166.8 million.

The change in liabilities was due to the following factors:

• ➢ Non-current liabilities amounted to 161.1%, decreasing by 3% compared to the end of 2018 (BGN 166.1 million). This was due to a decrease in loans from banking institutions by BGN 10 million due to their reporting in short-term liabilities, as well as an increase in the amount of debt on bonds (within the EMTN Program) by BGN 4.9 million.
• ➢ Current liabilities increased by BGN 32.6 million, amounting to BGN 108.1 million. Current liabilities from loans to financial and non-financial institutions amounted to BGN 42.8 million, as well as the current liabilities to bonds in amount of BGN 7 million. In the same time the amount of related parties' liabilities increased by BGN 12.8 million at the end of the reporting period.

Liabilities mainly represented loan commitments, and the table below provides information on their size and structure of loans.

	Change	30.9.2019	31.12.2018
	%	000'BGN	000'BGN
Liabilities for financial and non-financial loans, including:	5%	68 308	65 007
- Non-current liabilities to banks		25 526	35 549
- Current liabilities to banks		10 493	9 253
- Other current borrowings (Euro Commercial Papers – ECPs) is 03.2020-04.2020 and the interest rate is 2,0%		32 289	20 205
Bond Loan Obligations (EMTN Programme), including:	8%	140 692	129 832
- Non-current liabilities on bond loans		133 725	128 832
- Current liabilities on bond loans (interests)		6 967	752
Liabilities to related parties - current	29%	56 998	44 214
Total loans obligations	11%	265 998	239 053

IMPORTANT EVENTS FOR EUROHOLD BULGARIA AD OCCURRED IN THE PERIOD 1 JANUARY - 30 SEPTEMBER 2019

During the reporting period, the following important events took place, affecting the results in the financial statement of Eurohold Bulgaria AD as of 30.09.2019:

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H1 2019

1. On 24th of October 2019, the Commission for the Protection of Competition banned the concentration, the acquisition by Eurohold Bulgaria AD of the companies of the Czech energy company CEZ Group

In connection with the ban on concentration by the Commission for Protection of Competition (CPC) in the transaction for the acquisition of the business of CEZ Group in Bulgaria, Eurohold Bulgaria AD stated that as a public company with a lot of international and institutional investors, Eurohold will wait for a decision of the company's supervisory board for the further steps related to the deal and the development of its investment strategy in the energy sector.

2. Eurohold filed additional documents with the CPC related with the indepth probe into the deal with CEZ

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The holding company welcomes the decision of the competition authority and is ready to collaborate

On 15th of October 2019, with reference to the decision of the Commission for Protection of Competition (CPC) to launch an in-depth probe into the acquisition of CEZ Group's companies in Bulgaria, Eurohold Bulgaria filed additional documents

with the antitrust regulator. The documents provide evidence about the applied regulatory requirements and provisions in the insurance and energy market, the restrictive provisions of Solvency II directive and the restrictive legal framework that regulates public companies as well as the rules that concern the control of the transactions between related parties.

Eurohold provided additional information about: the geographical extent of the researched markets in which the holding and its Bulgaria-based insurance subsidiaries (ZD Euroins AD and EIG Re EAD) operate; the products the insurers offer; the gross written premiums accumulated by them and the share of the insurance premiums in the holding's total revenue, the market shares of the insurers in the different insurance segments and others.

3. Eurohold will manage the assets of CEZ responsibly and invest in innovations in favor of the consumers

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The holding company will develop a regional utility company

On 9th of October, 2019, at a press conference, Eurohold Bulgaria AD commits itself to managing responsibly CEZ Group's companies in Bulgaria and aims at developing Eastern European Electric Company into a regional utility services provider after the completion of the deal with the Czech company. This is part of the holding's strategy for the development of the energy business of the group, which was presented to experts and journalists.

Eastern European Electric B.V. (EEE) is 100% owned by Eurohold and will consolidate the energy business of the holding. Bulgaria-based holding company's strategy for EEE is developed by its energy board that includes experts with solid international experience - Gary Levesly, Dan Catalin Stancu and Georgi Mikov (more than 25-year experience). The energy board supports the integration of the acquired CEZ Group's companies and will merge into part of the supervisory board of the companies within the group of EEE.

4. Bulgaria's antitrust body opened proceedings concerning Eurohold 's planned acquisition of CEZ Group's subsidiaries in Bulgaria

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Bulgaria's Commission for Protection of Competition announced on October 3rd , 2019 that it has opened proceedings concerning Eurohold Bulgaria's planned acquisition of CEZ Group's subsidiaries in Bulgaria.

Eurohold will acquire CEZ Group's companies in Bulgaria through Eastern European Electric Company B.V., a newly established Dutch-based company that is 100% owned by Eurohold Bulgaria and is especially established for the purpose of the deal with CEZ Group. Eastern European Electric Company B.V. will operate as a Eurohold's subholding and will take over the operations of all CEZ Group's subsidiaries in Bulgaria after obtaining the necessary regulatory approvals. It is

set up in the Netherlands according to the requirements of the two global investment banks that will finance the transaction.

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5. ANNOUNCEMENT FOR DIVIDEND PAYMENT

With reference to the adopted decision by the General Meeting of Shareholders of EUROHOLD BULGARIA AD, held on 30.06.2019, the Management Board of the Company approved the following conditions for dividend payment:

• Issue identification ISIN BG1100114062
• Number of shares 197 525 600
• Nominal value per share BGN 1.00
• Total amount of dividend BGN 2 469 070
• Gross dividend per share BGN 0.0125
• Net dividend per share BGN 0.011875
• Commercial Bank for payment of dividend Unicredit Bulbank AD
• Date, according Article 115v, para 3 of POSA 14.07.2019
• Initial date for dividend payment 27.08.2019
• Final date for dividend payment 27.11.2019
• Way of dividend payment To shareholders whose securities accounts are located in personal accounts, the dividend will be paid through the branches of Unicredit Bulbank AD, to shareholders whose securities accounts are located in accounts with an investment intermediary, dividend will be paid by the investment firm in cooperation with the Central Depository.
• After expiration of the final date for payment of the dividend 27.11.2019, all shareholders which had not received their dividends for the year 2018 will have the right to receive their dividends from the company. Unclaimed and unreceived dividends after the expiry of the five-year limitation period shall be taken in the Company's Reserve Fund.

6. Eurohold has already submitted to the Commission for Protection of Competition (СPC)

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Eurohold has already submitted to the Commission for Protection of Competition (СPC) the documents in relation with the acquisition of CEZ Group's subsidiaries in Bulgaria. On 20th of June 2019, Eurohold signed a contract with CEZ Group for the acquisition of Czech energy group's business in Bulgaria. The transaction is subject to approval from the Bulgarian antitrust body.

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7. Eurohold agreed to acquire CEZ Group's assets in Bulgaria

On 20th of June 2019 Eurohold Bulgaria AD signed an agreement with CEZ Group, the Czech energy group, to acquire CEZ Group's assets in Bulgaria.

Eurohold Bulgaria AD will pay EUR 335 million for the acquisition of CEZ Group's assets in Bulgaria.

Eurohold Bulgaria AD will finance the acquisition through a combination of equity and debt financing.

Eurohold Bulgaria AD has mandated two global investment banks with significant experience in raising similar debt financing to arrange the funding for the transaction.

Eurohold has already set up an advisory board comprising of experts with solid international experience in power distribution business that will consult the process of integrating CEZ Bulgaria's operations into the structure of Eurohold. Additionally, Eurohold has secured that CEZ Bulgaria's current senior management, including the chief executive officer, will remain in the company in order to ensure a smooth transition period.

CEZ's assets in Bulgaria comprise power utility CEZ Distribution Bulgaria, power supplier CEZ Electro Bulgaria, licensed electricity trader CEZ Trade Bulgaria, IT services company CEZ ICT Bulgaria, solar park Free Energy Project Oreshetz, biomass-fired power plant Bara Group and CEZ Bulgaria.

Eurohold's acquisition of CEZ Group's assets in Bulgaria is expected to be finalized after obtaining regulatory approvals.

Morrison & Foerster in London is representing EuroHold, led on the corporate side by partner Gary Brown and associate Carlo Pia, and led on the finance side by partner Christopher Kandel and counsel John Burge. Stoeva, Tchompalov & Znepolski, led by partners Iordan Tchompalov and Irina Stoeva, and senior associate Miroslava Iordanova, is advising EuroHold on Bulgarian legal matters.

ČEZ is represented by Czech firm Skils s.r.o, with a team led by partners Karel Dřevínek and Vladimír Kykal, and associate Tomáš Bayer. Penkov, Markov & Partners, led by partner Ivan Markov, is advising ČEZ on Bulgarian legal matters.

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8. The energy advisory board called by Eurohold started its activity officially

Sofia, July 19th 2019 - The energy advisory board called by Eurohold Bulgaria AD with reference to the deal for the acquisition of CEZ Group's business in Bulgaria held its working meeting with the management of the holding company.

For the moment the energy board formed by Eurohold consists of three experts with solid international experience in the energy business and the distribution of electricity - Garry Levesley, Dan Catalin Stancu and Georgi Mikov. The three experts will support the company on the acquisition process of CEZ Group's business in Bulgaria and will oversee the integration of CEZ assets into the structure of the Bulgarian holding. The board will also elaborate a strategy for the development of the energy company that will be set up within Eurohold and will consolidate the operations of CEZ's subsidiaries in Bulgaria.

Here is a short bio of each of the three experts:

Garry Levesley

Garry Levesley is British and has over 40-year experience in the energy sector on a global level. He has been an executive vice president, operating and executive director for Europe and Central Asia of the US-based ContourGlobal, the majority shareholder of Bulgaria-based Maritsa East 3 Power Plant. As a senior manager of ContourGlobal Levesley has been working in Sofia since 2011 and has built an in-depth view over the development of the energy sector in Bulgaria. He has lead and closed the EUR 230 million acquisition of MW Maritsa East 3 Thermal Power Plant from Italy-based Enel and has participated directly in the development and implementation of the 3-year business plan that significantly improved the business operational KPI's, safety performance and financial results of the Bulgarian power plant. He has started his career as a marine

engineer on Shell's oil and liquefied natural gas tankers. He has been a vice president, operating director and general director of AES Corporation, where he has consecutively managed several company's power plants in 5 countries - Great Britain, Hungary, Kazakhstan, Russia and Ukraine. Levesley has also been a managing director of AES Drax power plant, the largest coal fired plant in Western Europe, producing 4000 MW. He has managed the construction of renewable and thermal power plants in Brazil, Nigeria, Togo, Ukraine, Poland, Romania, Italy and N. Ireland. Garry Levesley holds a BSc in Engineering from the Open University in Great Britain and has passed Executive Management Training at Darden Business School, University of Virginia.

Dan Catalin Stancu

Dan Catalin Stancu is Romanian and has 30-year experience in the energy sector in Romania, including employment in listed energy companies. He has been the group CEO and chairman of the board of the three electro distribution subsidiaries of Electrica Energetica SA. a listed company that generates more than EUR 1.2 billion annually and has over 9000 employees - Transylvania Nord, Transylvania Sud и Muntenia Nord, each of which accumulates over EUR 250 million annually and employs more than 2000 employees. He has sat on the board of E.ON Moldova and CEZ Oltenia S.A. Stancu has also been a board member of E.ON Romania where he has managed the strategic and corporate development of two of the company's subsidiaries - - E.ON Distributie Romania и E.ON Renewables. He has graduated the Faculty of Energetics at the Polytechnic Institute of Bucharest. He holds a UK-diploma in Management from Codecs-Open University and EMBA in Management and Business Administration from Sheffield University.

Georgi Mikov

Georgi Mikov is Bulgarian and has 28-year experience in the energy sector in Bulgaria. He has been CEO of the National Electricity Company EAD (NEC) in 2009-2012. He has woked in Electro Distribution Stolichno and CEZ Distribution Bulgaria. He has been a member of the management board of CEZ Bulgaria EAD. He is an engineer in Electroengineering. He holds an MBA degree in Business Administration from the American university in Bulgaria.

The number of the seats on Eurohold's energy advisory board is expected to grow up to five. The names of the other two experts will be announced later.

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9. Fіtсh placed Eurohold's rating under observation

1st July 2019 - With reference to the agreement that Eurohold Bulgaria AD signed to acquire CEZ's assets in Bulgaria, Fitch Ratings, the international credit rating agency, placed Eurohold Bulgaria AD's Rating under observation.

Eurohold is publishing Fitch Ratings' statement directly:

Fitch Ratings has placed Eurohold Bulgaria AD's (Eurohold) Long-Term Issuer Default Rating (IDR) and Insurance Company Euroins AD's (Euroins Bulgaria), Euroins Romania Asigurare Reasigurare S.A.'s, and Insurance Company EIG Re AD's Insurer Financial Strength (IFS) Ratings on Rating Watch Negative (RWN).

The RWN follows the announcement that Eurohold plans to acquire the Bulgarian assets of the Czech power utility company CEZ a.s. (CEZ assets) for EUR335 million (BGN655

million). The completion of the transaction is subject to approvals from the Bulgarian Competition Authority and the Bulgarian energy regulator.

KEY RATING DRIVERS

The RWN reflects Fitch's view that the proposed acquisition of CEZ assets could give rise to financial risks due to the expected high debt proportion in the financing structure as well as integration and execution risks.

The planned high debt proportion in the financing structure (minimum 75% of the acquisition price) could significantly reduce distributable earnings from CEZ assets especially in the initial period. However, power distribution, the largest and most profitable business in the transaction, is regulated and produces stable cash flows, and therefore the acquisition of CEZ assets should over time contribute to higher stability and predictability of Eurohold's earnings. This could contribute positively to the group's credit profile in the medium- to long-term.

Eurohold lacks previous management experience in power utilities and will therefore rely on current management of CEZ assets to ensure smooth operations. Fitch understands from management that Eurohold aims to retain the existing management team of CEZ assets. Additionally, Eurohold has formed an advisory board of energy experts, which is supporting the company on the acquisition process and will oversee the integration of CEZ assets during and after transaction closing.

However, we expect the integration will also require significant management resources from Eurohold. As a predominantly financial investor, Eurohold is also likely to look for cost-saving opportunities to further improve its return on investment, which could give rise to additional execution risks.

Fitch expects the transaction to be broadly neutral to Eurohold's insurance-related financial leverage ratio and capitalisation, which would exclude both the equity and debt financing relating to the acquisition of CEZ assets. Eurohold's capitalisation based on Fitch's Prism Factor Based Model was 'Weak' and the group's Fitch-calculated financial leverage stood at 65% at end-2018 (2017: 64%).

However, Fitch expects the transaction to increase financial leverage at consolidated Eurohold level due to the highly leveraged nature of the transaction. Fitch also believes Eurohold would provide additional support to the financing structure (with or without a legal obligation) if necessary to protect its investment. Such a scenario could put additional pressure on Eurohold's capitalisation and/or financial leverage.

Eurhold plans to issue EUR80 million (BGN156 million) preferred shares to partly fund the acquisition of CEZ assets. These shares would carry fixed dividends to be covered by Eurohold's net or retained earnings. Fitch expects this to be slightly negative for Eurohold's insurance-related fixed charge coverage ratio, which would have been 1.2x calculated on a pro-forma basis at end-2018 after inclusion of these expenses (end-2018 actual: 1.3x).

Fitch expects interest costs arising from financial debt related to the transaction to be covered by revenues generated by CEZ assets. However, Fitch sees high execution risk associated with the debt servicing capability of CEZ assets.

RATING SENSITIVITIES

Fitch will resolve the RWN on the regulatory approvals of the transaction and after completing its assessment of the standalone credit profile of CEZ assets and the final financing structure.

Interim Management Report, 30 September 2019

FULL LIST OF RATING ACTIONS Insurance Company Euroins AD --IFS Rating 'BB-' placed on RWN Euroins Romania Asigurare Reasigurare S.A. --IFS Rating 'BB-' placed on RWN Insurance Company EIG Re AD --IFS Rating 'BB-' placed on RWN Eurohold Bulgaria AD --Long-Term IDR 'B' placed on RWN --Long-term senior debt 'B'/'RR4' rating placed on RWN

10.EUROHOLD BULGARIA LAUNCHES THE CAPITAL INCREASE PROCEDURE BY PUBLIC OFFERING OF 80 MILLION NEW SHARES

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Eurohold Bulgaria AD is in the procedure of increasing its capital through public offering of nearly 80 million new shares. At its extraordinary session of the General Meeting of Shareholders, held on 22 of April,2019, a decision was taken to increase the company's capital up to BGN 277 million through issuing of preferred shares.

The public offering of a share issue of a capital increase provides for the subscription of a new issue of shares up to a maximum of 79,010,240 shares. The nominal value of each share is BGN 1.00 (one) and the issue price per share is 1.95 (one and 0.95 BGN). The maximum amount that Eurohold can raise in case the issue will be subscribed and paid up to a maximum amount is BGN 154,069,968 (one hundred and fifty four million sixty nine thousand nine hundred and sixty eight). The capital increase of Eurohold will be deemed successful if at least 25.3% (20 million) of the shares offered will be subscribed and paid in full.

The new preferred shares will not give voting rights to the general shareholders' meeting but will guarantee to their holders receiving dividend every year under the following scheme: 6% of the nominal value per share for the first five years after the entering of the issue in the Commercial Register; 3% of the nominal value between the sixth and the tenth year; and 1% after the tenth year of the entry.

All funds raised from the current public offering of shares will be fully utilized for the planned expansion of the company in new regulated business segments offering great opportunities for sustainable growth. The long-term investment strategy of the company includes investment in the energy sector, namely acquisition of CEZ's assets in Bulgaria.

The manager of the issue will be Euro-Finance AD, one of the largest investment intermediaries in Bulgaria.

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11.EUROHOLD SUBMITTED AN INDIVIDUAL OFFER TO ACQUIRE CEZ GROUP'S ASSETS IN BULGARIA AND OBTAINED EXCLUSIVITY

On 1st of April 2019, after an in-depth research and analysis on the financial performance of the Bulgarian units of CEZ Group, the Czech power utility, Eurohold Bulgaria AD submitted a binding offer to acquire the assets of CEZ Group in Bulgaria.

Eurohold is participating in the procedure individually and is not in partnership with another candidate in the tender.

Eurohold will finance the transaction through own funds and additional funding to be extended by Western European banks.

The intention to acquire CEZ Group's assets in Bulgaria is part of holding company's longterm strategy to penetrate in new regulated business segments that provide large opportunities for growth. Simultaneously with the acquisition of CEZ Group's assets in Bulgaria, Eurohold is analysing the opportunity to divest part of its assets outside the insurance business in order to focus on the segments with the highest potential.

On 17th of April 2019, Eurohold Bulgaria obtained exclusivity for the acquisition of CEZ Group's assets in Bulgaria.

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DESCRIPTION OF MAIN RISKS AND UNCERTAINTIES

1. Systematic risks

Influence of the international environment

Over the last few years, economists from different countries have been united around the thesis that the prosperity of the world economy depends on all the big ones as well as on a growing number of developing and smaller players. Issues of aging populations in all parts of the world, instability in energy and agricultural products prices, unequal distribution of income among members of the population and the risk of systematic global financial fluctuations are central topics for discussion in many international forums. These trends are inextricably linked with the Bulgarian macroeconomic environment and have a constant influence on the results of the local companies and their future development. Another outstanding issue is the excessive exhaustion and neglect of the importance of using limited global resources. Against the backdrop of these facts, economists are united around the thought that ultimately the change in the way in which global business operates will be dictated and imposed by the worsening environment and the reduction of beneficial opportunities for single entrants. The exit from the realization of certain risks related to the international environment will depend to a large extent on the previously established plans and the preventive measures of individual states and international institutions as evidenced by the last global economic crisis. The risk of the impact of the international environment on firms can not be diversified and affects all players, but on the other hand it can become an engine for innovation development and implementation that dramatically changes and increases business efficiency on a global scale.

Macroeconomic risk

The macroeconomic situation and the economic growth in Bulgaria and Europe are of main importance for the development of the Eurohold Bulgaria AD, and this includes also the governmental policies of the respective countries, and in particular the regulations and decisions made by the respective Central Banks, which influence the monetary and

interest rate policy, exchange rates, taxes, GDP, inflation, budget deficit and foreign debt, the unemployment rate and the income structure.

Potential internal risk remains the theoretical liberalization of fiscal policy, which would lead to a serious further increase in the deficit and violation of the currency board principles.

Macroeconomic risks include: The political one; the credit risk of the state; inflation, currency and interest rate risk; emerging market risks and the risks associated with the Bulgarian securities market.

Political risk

The political risk reflects the influence of the political processes in the country on the economic and investment process and in particular on the return on investments. The degree of political risk is determined by the likelihood of changes in the unfavorable direction, of the government led long-term economic policy, which may have a negative impact on investment decisions. Other factors related to this risk are the possible legislative changes concerning the economic and investment climate in the country.

The Republic of Bulgaria is a country with political and institutional stability based on contemporary constitutional principles such as a multiparty parliamentary system, free elections, ethnic tolerance and a clear system of separation of powers. Bulgaria is a member of NATO and since 1 January 2007 is a member of the European Union (EU). The desire for European integration, the presence of a dominant political formation, the pursuit of strict fiscal discipline and adherence to moderate deficits, create predictability and minimize political risk.

Unemployment

In market economy countries, unemployment is recognized as a social risk on the labor side. As a socially assessed risk, unemployment is subject to compulsory social security and benefits under certain conditions. The overall activity on the formation and implementation of the state policy on unemployment insurance, as well as the promotion and support of the unemployed, when seeking and starting work and / or other type of economic activity, gives the content of the process of management of this social risk.

The unemployment rate in Bulgaria is selling steadily to decline as a result of the achieved economic growth. According to the latest published NSI data, the unemployment rate in the country for the first quarter of 2019 is 5.0% or 0.7 percentage points lower than in the first quarter of 2018. The number of people unemployed equals 165.3 thousand or a decrease in the number of unemployed persons by 23.4 thousand compared to the first quarter of 2018. During the same period the unemployment rate decreased by 1.0 percentage points for men and women. by 0.5 percentage points for women. Of the total number of unemployed persons, 95.0 thousand (57.47%) are men and 70.3 thousand (42.53%) are women. Of all unemployed persons, 15.37% have tertiary education, 44.34% have secondary and 40.29% have primary or lower education. The unemployment rates by degrees are 2.4% for higher education, 4.0% for secondary education and 36.7% for primary and lower education respectively.

Source: www.nsi.bg

Credit risk of the country

The credit risk is the possibility for deterioration of the international credit ratings of given country. The low credit ratings of the country might lead to higher interest rates,

tougher financing conditions for the economic subjects, including Eurohold and its economic group.

On March 22, 2019, Fitch Ratings upgraded Bulgaria's credit rating outlook. The Agency affirmed Bulgaria's BBB long-term credit rating of BBB- in foreign and local currency and confirmed the country's BBB + credit rating ceiling as well as its short-term foreign and local credit rating "F2". Raising the outlook as positive reflects Fitch Ratings' assessment that indicators for the development of Bulgaria's foreign sector have improved significantly. The prolonged period of steady decline in the external debt-to-GDP ratio and positive current account trends led to a better performance of Bulgaria's external finances compared to the BBB group. Compared to other countries with similar ratings, the country's public finance indicators have a positive effect on raising the rating score. Government debt to GDP will continue to fall below that of BBB countries.

On May 31, 2019, the rating agency S&P Global Ratings evaluated the outlook for Bulgaria's credit rating as positive. At the same time, the agency upgraded its long-term and short-term foreign currency and local currency credit rating "BBB- / A-3". The strengthened outlook for Bulgaria's credit rating reflects S&P Global Rartings' expectation that fiscal and external indicators will continue to improve and that authorities will take further steps to strengthen the financial sector, where the level of non-performing loans remains high. The agency notes that in 2018, the country's economic recovery will continue with a growing contribution of domestic demand to net exports. Improvements are reflected in the labor market, thereby increasing disposable income and private consumption. Public investments financed through European funds will also be an important factor for economic recovery. At the same time, Bulgaria continues to face structural constraints on demographic challenges. Net emigration, especially in the skilled labor force and the aging population, poses challenges to economic policy and social cohesion opportunities.

Source: www.minfin.bg

Inflation risk

The inflation risk is related to the possibility of inflation influencing the real return of investments. The main risks associated with the inflation forecast refer to the dynamics of international prices and the rate of economic growth in Bulgaria. International commodity prices may increase more significantly as a result of political crises or increased demand. The limited supply of certain agricultural commodities, especially of cereals, internationally, in connection with adverse climatic events, may additionally cause higher inflation in the country.

With the recovery of domestic demand, higher relative consumer prices of services are expected compared to food and non-food goods. According to the Ministry of Finance forecast for macroeconomic indicators by 2020, the growth rate of the economy is expected to slow down gradually and the projected average growth for the period 2017- 2020 to amount to 2.0%. Inflation might influence the expenses of the Company, since quite a big portion of the company's liabilities are interest-bearing. Their servicing is related to the current interest rates which reflect the inflation level in the country. That is why keeping low inflation levels in the country is considered as a significant factor for the activity of Eurohold Bulgaria AD.

At the moment and as a whole, the currency board mechanism provides guarantees that inflation in the country will remain under control and will have no adverse effect on the country's economy, and in particular on the Company's activities.

Given this, every investor should well understand and take into account both the current levels of inflation risk and future opportunities for its manifestation.

Currency risk

This risk is related to the possibility for depreciation of the local currency. Specifically for Bulgaria this is the risk of untimely cancelation of the conditions of the Currency Board at fixed national currency exchange rate. Considering the policy adopted by the government and the Bulgarian National Bank, it is expected for the Currency Board to be maintained until entering of the country in the Eurozone.

Each considerable depreciation of the Bulgarian Lev might have a considerable unfavorable effect on the economic subjects in the country, including the Company. Risk exists also when the income and costs of an entity are formed in different currencies. Exposure of the economic entities operating on the territory of Bulgaria to the US dollar, which is the main currency of a significant part of the world markets for raw materials and products, is particularly pronounced.

Changes in the different exchange rates did not materially affect the Company's operations until controlling interests were acquired in the countries of Romania, Macedonia and Ukraine. The financial results of these companies are denominated in local currency, Romanian leya (RON), Macedonian denarius (MKD), Ukrainian hryvnia (UAH), and Georgian lary (GEL), the exchange rate of which is almost freely determined on the local currency market. Consolidated revenue of Eurohold Bulgaria AD will be exposed to currency risk depending on the movement of these currencies against the Euro.

Interest rate risk

The interest risk is related to the possibility for change in the predominating interest levels in the country. Its influence is related to the possibility for decrease in the net income of the companies as a result of the increased interest rates, at which the Company finances its activity. Interest rate risk is included in the category of macroeconomic risks due to the fact that the main precondition for a change in interest rates is the emergence of instability in the financial system as a whole. This risk can be managed through balanced use of different sources of financial resource. A typical example of the emergence of this risk is the global economic crisis caused by the liquidity problems of large mortgage institutions in the United States and Europe, with the result that interest rate credit risk rewards were rethought and increased globally. The effect of this crisis had a tangible manifestation in Eastern Europe and the Balkans, expressed in limiting free access to borrowed funds.

All other conditions equal, the increase in interests would reflect on the cost of the financial resource used by the Eurohold Bulgaria AD for the realization of different business projects. Moreover, it can influence the amount of expenses of the company, since quite a big portion of the company's liabilities are interest-related and their servicing is related to the current interest rates.

2. Unsystematic risks

Risks related to the activity and structure of Eurohold Bulgaria AD

Eurohold Bulgaria AD is a holding company and an eventual worsening of operating results, financial position and perspectives for development ofits subsidiaries might have a negative effect on the operating results and the financial position of the company.

As far as the activity of the Company is related to the management of the assets of other companies, it cannot be related to a specific sector from the domestic economy and it is

exposed to the sectoral risks of the subsidiaries. In general, the companies in the group of Eurohold Bulgaria AD operate in two main sectors: the financial sector, including insurance, leasing, investment intermediation and the car sales sector.

The main risk related to the activity of Eurohold Bulgaria AD is the ability to reduce the sales revenue of the companies in which it participates. It influences the dividends received. In this regard, this might influence the growth of company revenue, as well as the change in profitability.

The greatest risk is concentrated in the insurance sector where the significant part of the group's revenue is generated. The companies with the largest share in the revenues, respectively - in the financial results of the insurance field are the companies operating in the Bulgarian and Romanian market, part of the group of Euroins Insurance Group AD.

The main risk in the leasing business is the ability to provide at an affordable price a sufficient financial means to expand the leasing portfolio and to provide the financing of the rented car rental services (rent-a-car services). The leasing Sub-Holding "Eurolease Group" EAD has issued a bond issue registered for trading on BSE-Sofia AD. The leading company of the leasing sub-holding "Eurolease Auto" EAD has issued bond issues, registered for trading on BSE-Sofia AD.

The Automotive Sub-Holding "Avto Union" AD operates mainly in the sphere of sale of new cars, warranty and after-sales service of cars, sale of spare parts and oils. The activity is directly dependent on the availability of permits and authorizations granted by the respective car manufacturers to the companies of the Auto Union AD group. Termination or revocation of such rights may abruptly reduce sales of the car group. This is particularly relevant in the context of the global restructuring of the automotive industry. The business environment in the automotive industry is also influenced by purely internal factors related to the purchasing power of the population, access to finance, business mood, stock availability and other.

The financial direction of the group is presented by the investment intermediary Euro-Finance AD. The risk in the financial intermediation and asset management sector is related to the high volatility of debt and capital markets, changes in the financial sentiment and investment culture of the population.

Deteriorated results of one or more subsidiaries could lead to a deterioration of the results on a consolidated basis. This in turn, is related to the price of the Company's shares, as the share market price reflects the business potential and the assets of the economic group as a whole.

Risks associated with the company's development strategy

The future profits and economic value of the Eurohold Bulgaria AD depend on the strategy selected by the senior management of the company and its subsidiaries. Selecting an inappropriate strategy might lead to considerable losses.

Eurohold Bulgria AD tries to manage the risk of strategic errors through continuous monitoring of the different stages upon implementation of its marketing strategy and the results thereof. This is extremely important, so that they can react in a timely manner, in case a change in the strategic development plan is needed at a certain stage. Untimely or inappropriate changes to the strategy may also have a significant negative effect on the company's operations, operating results and financial condition.

Risks related to the management of Eurohold Bulgaria AD

The risks related to the management of the company are the following:

• making wrong decisions about the current management of investments and the liquidity of the company, both on the part of the senior management and the operating officers of the Company;

• inability of the management to start the implementation of the projects planned or lack of suitable management for specific projects;

• possible technical errors in the unified management information system;
• possible errors in the internal control system;

• key employees leaving the company and inability to employ personnel with the necessary qualities;

• risk of excessive increase in the expenses for management and administration, which leads to a decrease in the total profitability of the company.

Financial risk

The financial risk is the additional uncertainty with regard to the investor in obtaining income, when the company uses borrowed or borrowed funds. This additional financial insecurity adds to the business risk. When part of the funds used for financing of the activity of the company are in the form of loans or debt securities, the repayment of these funds represents a fixed liability. The financial autonomy and financial indebtedness indicators take into account the ratio between own funds and attracted funds in the capital structure of the company. The high level of the financial autonomy ratio, respectively the low level of the financial indebtedness ratio, is a kind of guarantee to investors for the company's ability to pay its long-term liabilities on a regular basis. The indicators show how much of the total capital represents the attracted funds. The larger the share of long-term debt compared to equity, the greater the probability of problems with the payment of fixed obligations. The increase in the value of this indicator also shows an increase in the financial risk. Another set of indicators refers to the revenue stream that makes it possible to pay the Company's liabilities. An indicator that can be used is the coverage ratio of the fixed interest payable (interest). This indicator shows how many times fixed interest payments are included in the value of earnings before interest payments and taxation. It gives a good indication of the company's ability to pay its long-term liabilities. The effect of using borrowed funds (debt) to increase the final net income attributable to shareholders is called financial leverage. The benefit of financial leverage occurs when the company benefits from the attracted funds more than the costs (interest) on attracting them. The risk indicator in this case is the degree of financial leverage, which is expressed as the ratio of the income before interest and taxes to the income before the payment of taxes, the so called interest rate burden. The acceptable or "normal" degree of financial risk depends on business risk. If there is a small business risk for the firm, it may be expected that investors would agree to take a higher financial risk and vice versa.

Currency risk

As a whole, the activity of Eurohold Bulgaria AD on the territory of the Republic of Bulgaria does not generate currency risk due to the current currency board and the fixing of the national currency to the euro. Currency risk exists for the Group's investments made outside the country, mainly from the insurance business in Romania, Macedonia, Ukraine, Georgia and Poland, as well as the leasing business in Macedonia, where each of the countries has a freely convertible currency whose relative price to other currencies are determined by free financial markets. A dramatic change in the macro-framework of any of the countries where the Company through its subsidiaries is active can have a negative effect on its consolidated results. In the end, however, the Company reports its

consolidated financial results in Bulgaria, in Bulgarian leva, which in turn are pegged through a fixed exchange rate to the euro. On the other hand, the euro is also changing its value relative to other global currencies, but is significantly less exposed to drastic fluctuations.

Liquidity risk

The liquidity risk is related to the possibility that Eurohold Bulgaria AD, is not able to repay its liabilities in the amount agreed and/or within the stipulated deadline. The presence of good financial indicators of profitability and capitalization of a certain company does not guarantee the smooth coverage of current payments. Liquidity risk might occur in case of late customer payments.

Eurohold Bulgaria AD strives to minimize this risk through optimal cash flow management within the group itself. The Group applies an approach which should provide the liquid resource needed to cover the liabilities which have occurred from normal or exceptional conditions, without realizing unacceptable losses or damaging the reputation of the separate companies and the business group as a whole.

The companies are making financial planning to meet the expenses and their current liabilities for a period of thirty days, including the servicing of financial obligations. This financial planning minimizes or totally excludes the potential effect of emerging extraordinary circumstances.

The management of Eurohold Bulgaria AD supports the efforts of the subsidiaries in the group to attract bank resources for investments and to use the opportunities that this type of financing provides for the provision of working capital. The volumes of these borrowed funds are maintained at certain levels and are allowed after proof of economic efficiency for each company.

The policy of the Company's management is aimed at raising financial resources from the market in the form of mainly equity securities and debt instruments (bonds) to invest in its subsidiaries by granting them loans to finance their own projects. The raised funds are also used for capital increases of subsidiaries.

Risk of possible realization of transactions between the companies in the Group, whose conditions differ from the market conditions, as well as risk of codependence on the activity of the subsidiaries

The relationships with related parties result from contracts for temporary financial assistance for the subsidiaries and transactions related to the ordinary commercial activity of the subsidiaries.

The risk of possible realization of transactions between the companies in the Group, under conditions which differ from the market conditions, is the risk of achieving low profitability from the provided inter-group financing. Another risk which may be assumed is not obtaining enough revenue from the inter-group commercial transactions, and subsequently not making good profit for the respective company. On a consolidated level, this might have a negative impact on the profitability of the whole group.

Within the Group are performed transactions between the Parent Company and the subsidiaries, as well as between the subsidiaries themselves, which originate from the nature of their main activity. All transactions with related parties are made under conditions which do not differ from the usual market prices and in compliance with IAS 24.

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. One of the main goals of Eurohold Bulgaria AD is to realize significant synergy between its subsidiaries as a consequence of the integration of the three business lines - insurance, leasing and car sales. Poor results of one or several subsidiaries could lead to a deterioration in financial results on a consolidated basis. This in turn is also related to the share price of the Company, which may change as a result of the investors' expectations about the company's prospects.

RISK MANAGEMENT

The elements through which the Group manages risks, are directly related to specific procedures for prevention and solving any problems in the operations of EuroHold in due time. These include current analysis in the following directions:

• Market share, pricing policy and marketing researches for the development of the market and the market share;
• Active management of investments in different sectors;
• Comprehensive policy in asset and liabilities management aiming to optimize the structure, quality and return on assets;
• Optimization of the structure of raised funds aiming to ensure liquidity and decrease of financial expenses for the group;
• Effective management of cash flows;
• Administrative expenses optimization, management of hired services;
• Human resources management.

Upon occurrence of unexpected events, the incorrect evaluation of current market tendencies, as well as many other micro- and macroeconomic factors could impact the judgment of management. The single way to overcome this risk is work with experienced professionals, maintain and update of fully comprehensive database on development and trends in all markets of operation.

The Group has implemented an integrated risk management system based on the Enterprise Risk Management model. The risk management process covers all the Group's organizational levels and is aimed at identifying, analyzing and limiting risks in all areas of the Group's operations. In particular, the Group minimizes insurance risk through proper selection and active monitoring of the insurance portfolio, matching the duration of asset and liabilities as well as minimizing F/X exposure. An effective risk management system allows the Group to maintain stability and a strong financial position despite the ongoing crisis on the global financial markets.

Risk management in the Group aims to:

• identify potential events that could impact the Group's operations in terms of achieving business objectives and achievement related risks;
• manage risk so that the risk level complies with the risk appetite specified and accepted by the Group;

ensure that the Group's objectives are attained with a lower than expected risk level.

Date: 28 September 2019

Asen Minchev,

Executive Member of the Management Board

Eurohold Bulgaria AD

Interim separate statement of profit or lost and other comprehensive income For the period ended September 30, 2019

		30.9.2019	30.9.2018
	Notes	BGN '000	BGN '000
Revenue from operating activities
Dividend income	3	669	209
Gains from sale of investments and subsequent revaluation	4	1 070	570
Interest income	5	524	1 206
Other financial revenue	6	618	543
		2 881	2 528
Expenses on operating activities
Interest expenses	7	(11 865)	(14 319)
Losses on sale of investments and subsequent revaluation	8	(34)	(54)
Other financial expenses	9	(327)	(156)
Hired services expenses	10	(1 656)	(947)
Salaries and related expenses		(413)	(331)
Depreciation	13	(30)	(19)
Revenue / (Expenses) from impairment of financial assets,
net	11	-	-
		(14 325)	(15 826)
Profit / (Loss) from operating activities		(11 444)	(13 298)
Other revenue/(expenses),net	12	395	160
Net Profit /(Loss)		(11 049)	(13 138)
Other comprehensive income		-	-
Total comprehensive income for the period		(11 049)	(13 138)

Prepared by: Signed on behalf of BoD: Procurator:

/I. Hristov/ /А. Minchev/ /H.Stoev/

28.10.2019

Eurohold Bulgaria AD Interim separate statement of financial position As at September 30, 2019

		30.9.2019	31.12.2018
	Notes	BGN '000	BGN '000
ASSETS
Non-current assets
Property, machinery and equipment	13	210	82
		210	82
Investments
Investments in subsidiaries and other companies	14	581 280	567 465
Current assets
Loans granted to third parties	15	10 052	9 877
Receivables from related parties	16	116	1 408
Other receivables	17	1 668	328
Cash and cash equivalents	18	134	282
		11 970	11 895
TOTAL ASSETS		593 460	579 442

Eurohold Bulgaria AD Interim separate statement of financial position (continued) As at September 30, 2019

		30.9.2019	31.12.2018
	Notes	BGN '000	BGN '000
EQUITY AND LIABILITIES
Equity
Share capital	19.1	197 526	197 526
Share premium	19.2	49 568	49 568
General reserves	19.2	7 641	7 641
Retained earnings		80 582	81 393
Profit / (Loss) for the year		(11 049)	1 660
Total equity		324 268	337 788
Non-current liabilities
Interest-bearing loans and borrowings	20	25 526	35 549
Bond liabilities	21	133 725	128 832
Non-current related parties' liabilities	22	1 809	1 717
Other non-current liabilities	23	6	6
		161 066	166 104
Current liabilities
Interest-bearing loans and borrowings	20	42 782	29 458
Bond liabilities	21	6 967	752
Trade payables	24	469	384
Related parties liabilities	25	56 998	44 214
Other current liabilities	26	910	742
		108 126	75 550
Total liabilities		269 192	241 654
TOTAL EQUITY AND LIABILITIES		593 460	579 442
Prepared by: Signed on behalf of BoD:		Procurator:

/I.Hristov/ /А.Minchev/ /H.Stoev/

28.10.2019

Eurohold Bulgaria AD Interim separate statement of cash flows For the period ended September 30, 2019

		30.9.2019	30.9.2018
	Notes	BGN '000	BGN '000
CASH FLOWS FROM OPERATING ACTIVITIES
(Loss) / Profit before tax		(11 049)	(13 138)
Adjusted for:
Depreciation		30	19
Interest income	5	(524)	(1 206)
Interest expenses	7	11 865	14 319
Dividend income	3	(669)	(209)
(Gains)/ Losses from sale of investments, net		(91)	(516)
(Gains)/ Losses from revaluation of investments, net		-	-
Foreign exchange differences		(313)	(543)
Adjustments in working capital:
Change in trade and other receivables		48	1 405
Change in trade and other payables, other adjustments		(2 086)	(2 506)
Net cash flows from operating activities		(2 789)	(2 375)
CASH FLOWS FROM INVESTING ACTIVITIES
Payments for investments		(13 815)	(10 435)
Borrowings granted		(993)	(29 159)
Proceeds/ (payments) of borrowings		1 384	25 060
Proceeds from interests		1 090	347
Dividends received		669	209
Other cash receipts/ payments from investing activities		20	-
Net cash used by investing activities		(11 645)	(13 978)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from loans		34 253	73 122
Repayments of loans		(13 297)	(47 483)
Interest and commissions paid, net		(4 194)	(7 824)
Dividends paid		(2 438)	(1 700)
Repayment of liabilities under leasing contracts		(14)	-
Other cash receipts/ payments from financing activities		(24)	436
Net cash generated/(used) by financing activities		14 286	16 551
Net increase/(decrease) in cash and cash
equivalents		(148)	198
Cash and cash equivalents at the beginning of the year	18	282	206
Cash and cash equivalents at the end of the period	18	134	404

Prepared by: Signed on behalf of BoD: Procurator:

/I.Hristov/ /А.Minchev/ /H.Stoev/

28.10.2019

Eurohold Bulgaria AD Interim separate statement of changes in equity For the period ended September 30, 2019

	Share	General	Share	Retained	Total
	capital	reserves	premium	earnings	Equity
	BGN '000	BGN '000	BGN '000	BGN '000	BGN '000
Balance as at 01 January 2017	127 345	7 641	38 714	102 218	275 918
Capital issue	70 181	-	10 854	-	81 035
Loss for the period	-	-	-		(17 306) (17 306)
Dividends	-	-	-	(1 613)	(1 613)
Other comprehensive income for the year	-	-	-	-	-
Balance as at 31 December 2017 *	197 526	7 641	49 568	83 299	338 034
Adjustment upon initial application of IFRS 9	-	-	-	(106)	(106)
Balance as at 1 January 2018
(recalculated)	197 526	7 641	49 568	83 193	337 928
Profit for the year	-	-	-	1 660	1 660
Dividends	-	-	-	(1 800)	(1 800)
Balance as at 31 December 2018	197 526	7 641	49 568	83 053	337 788
Balance as at 1 January 2019	197 526	7 641	49 568	83 053	337 788
Loss for the period	-	-	-		(11 049) (11 049)
Dividends				(2 471)	(2 471)
Balance as at 30 September 2019	197 526	7 641	49 568	69 533	324 268

Prepared by: Signed on behalf of BoD: Procurator:

/I.Hristov/ /А.Minchev/ /H.Stoev/

28.10.2018

Notes to the interim separate financial statements for the period ended September 30, 2019

Founded in 1996, Eurohold Bulgaria operates in Bulgaria, Romania, Northern Macedonia, Ukraine, Georgia and Greece. The company owns a large number of subsidiaries in the insurance, financial services and car sales sectors.

1. INFORMATION ABOUT THE GROUP

Eurohold Bulgaria AD 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.

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, Iskar Region, 43 Hristofor Kolumb Blvd., EIK 175187337.

The governing bodies of the company are: the general meeting of shareholders, the supervisory board /twotier system/ and the management board comprising the following members as at 30.09.2019:

Supervisory board:

Asen Milkov Christov – Chairman; Dimitar Stoyanov Dimitrov – Deputy Chairman; Radi Georgiev Georgiev – Member; Kustaa Lauri Ayma – Independent Member; Lyubomir Stoev – Independent Member; Louis Gabriel Roman – Independent Member.

Management board:

Kiril Ivanov Boshov - Chairman, Executive Member; Asen Mintchev Mintchev – Executive Member; Velislav Milkov Hristov – Member; Assen Emanouilov Assenov – Member; Dimitar Kirilov Dimitrov – Member; Razvan Stefan Lefter – Member.

As at 30.09.2019, the Company is represented and managed by Kiril Ivanov Boshov and Assen Mintchev Mintchev – Executive Members of the Management Board, and Hristo Stoev – Procurator, jointly by the one of the executive members and the Procurator of the Company only.

1.1 Scope of Activities

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.

1.2. Types of Activities

As a holding company with a main activity of acquisition and management of subsidiaries, Eurohold Bulgaria AD performs mainly financial activities.

The companies within the issuer's portfolio operate on the following markets: insurance, leasing, finance and automobile.

Insurance and Health Insurance line:

• Insurance services
• Health insurance services
• Life insurance services

Leasing line:

• Leasing services
• Car rentals

Financial line:

• Investment intermediation

Automobile line:

• Sales of new cars
• Car repairs

2. SUMMARY OF THE GROUP'S ACCOUNTING POLICY

2.1 Basis for Preparation of the Financial Statement

The separate financial statements of Eurohold Bulgaria AD are prepared in compliance with the Accounting Act and all International Financial Reporting Standards (IFRS), International Accounting Standards (IAS), interpretations of the Standing Interpretation Committee (SIC), interpretations of the IFRS interpretation committee (IFRIC), which are effectively in force since 01 January 2019 and are adopted by the Commission of the European Union.

The company has considered all standards and interpretations applicable to its activity as at the date of preparation of the present financial statement. The adopted accounting policies are consistent with those applied during the previous reporting period

The separate financial statements are drafted in compliance with the historic cost principle, excluding those financial instruments and financial liabilities, which are measured at fair value. The report is drafted in accordance with the principle of going concern, which assumes that the company will continue to operate in the near future.

The management of the Company is in the process of assessing the effect of the application of IFRS 16 and cannot yet provide quantitative information.

2.2 Comparative Data

Eurohold Bulgaria AD presents comparative information for a single previous period. Whenever needed, comparative data are reclassified in order to achieve comparability between the changes in the presentation for the current year.

2.3 Functional and Reporting Currency

The Bulgarian Lev (BGN) is the functional and reporting currency of the group. Data presented in the statement and the attachments thereto are in thousand BGN (000'BGN). Since 1 January 1999, the Bulgarian Lev is pegged to the EURO at the exchange rate: BGN 1,95583 for EUR 1.

Notes to the Interim Separate Financial Statements for the period ended September 30, 2019

Upon initial recognition, a foreign currency transaction is recorded in the functional currency by applying to the amount in foreign currency the exchange rate at the time of the transaction or operation. Cash, receivables and payables denominated in foreign currency are reported in the BGN equivalent on the basis of the exchange rate as at the date of the operation and are revaluated on annual basis using the official exchange rate of the Bulgarian National Bank on the last working day of the year.

Non-monetary reporting items of the separate statement of financial position that have been initially denominated in foreign currency are stated in the functional currency by applying the historical exchange rate as at the date of the operation and are not subsequently revaluated at the closing exchange rate.

The effect of foreign exchange losses and gains related to the settlement of business transactions in foreign currency or the reporting of business transactions at exchange rates different from those that have been initially recognized is stated in the separate statement of profit or loss and other comprehensive income at the time of occurrence thereof under Other financial revenue/( expenses)

2.4 Accounting Assumptions and Accounting Estimates

The presentation of the non-consolidated financial statements in accordance with International Financial Reporting Standards requires management to make the best estimates, accruals and reasonable assumptions that affect the reported amounts of assets and liabilities, income and expense and disclosure of contingent receivables; liabilities at the reporting date. These estimates, accruals and assumptions are based on the information available at the date of the unconsolidated financial statements, which is why the future factual results could be different from them (as in a financial crisis, uncertainties are more significant).

2.5 Income

Revenue in the Company is recognized at an amount that reflects the remuneration the Company expects to be entitled to in exchange for the goods or services transferred to the customer.

To determine whether and how to recognize revenue, the Company uses the following 5 steps:

• 1. Identify the contract with a client;
• 1. Identify performance obligations;
• 1. Determining the transaction price;
• 1. Distribution of the transaction price to the execution obligations;
• 1. Recognition of revenue upon satisfaction of performance obligations.

The Company recognizes as contract liabilities remuneration received in respect of unmet performance obligations and presents them as other liabilities in the separate statement of financial position. Similarly, if the Company meets a performance obligation before receiving the remuneration, it recognizes in the separate statement of financial position either as asset under the contract or receivable, depending on whether or not something other than a specified time is required to receive the remuneration.

Dividend incomes are recognized upon certifying the right to obtain them .

Eurohold Bulgaria AD generates financial income mainly from the following activities :

• Income from operations with investments;
• Gains from financial operations;
• Income from dividends;
• Income from loan interest granted to subsidiaries and third parties;
• Income from Services granted to subsidiaries.

2.6 Expenses

Expenses are recognized at the time of occurrence thereof and on the accrual and comparability basis.

Administrative expenses are recognized as expenses incurred during the year and are relevant to the management and administration of the company, including expenses that relate to the administrative staff, officers, office expenses, and other outsourcing.

Deferred expenses (prepaid expenses) are carried forward for recognition as current expenses for the period in which the contracts they pertain to are performed.

Financial expenses include: expenses incurred in relation to investment operations, negative differences from financial instruments operations and currency operations, expenses on interest under granted bank loans and obligatory issues, as well as commissions. Other operating income and expenses include items of secondary character in relation to the main activity of the Company.

2.7 Interest

Interest income and expenses are recognized in the Statement of profit or lost and other comprehensive income using the effective interest rate method. The effective interest rate is the rate for discounting the expected cash payments and proceeds during the term of the financial asset or liability up to the net book value of the respective asset or liability. The effective interest rate is calculated upon the initial recognition of the financial asset or liability and is not adjusted subsequently.

The calculation of the effective interest rate includes all received or paid commissions, transaction costs, as well as discounts or premiums, which are an integral part of the effective interest rate. Transaction costs are the inherent costs directly attributable to the financial asset or liability acquisition, issue or derecognition.

The interest income and expenses stated in the Statement of profit or lost and other comprehensive income include interest recognized on the basis of effective interest rate under financial assets and liabilities carried at amortized value.

2.8 Fees and Commissions

Fees and commissions costs, which are an integral part of the effective interest rate for a financial asset or liability, are included in the calculation of the effective interest rate.

Other fees and commissions incomes, including logistic services fees, insurance and other intermediation fees, are recognized upon providing the respective services.

The other fees and commissions cost relevant mainly to banking services are recognized upon receipt of the respective services.

2.9 Taxes

Income Tax

The current tax includes the tax amount, which should be paid over the expected taxable profit for the period on the basis of the effective tax rate or the tax rate applicable on the day of preparation of the balance sheet and all adjustments of due tax for previous years.

The company calculates the income tax in compliance with the applicable legislation.

The income tax is calculated on the basis of taxable profit after adjustments of the financial result in accordance with the Corporate Income Tax Act.

Current income taxes are defined in compliance with the Bulgarian tax legislation – the Corporate Income Taxation Act. The nominal tax rate for 2019 is 10% of the taxable profit (2018: 10%).

Deferred Tax

Deferred tax is calculated using the balance sheet

method for all temporary differences between the net book value as per the financial statements and the amounts used for taxation purposes.

The deferred tax is calculated on the basis of the tax rate that is expected to be effective upon the realization of the asset or the settlement of the liability.

The effect from changes in the tax rates on the deferred tax is reported in the income statement, except in cases when it concerns amounts, which are earlier accrued or reported directly in equity. Based on IAS 12, Income Taxes, the Company recognizes only the portion of a current tax asset or liability from the acquisition or sale of financial instruments for which the Company expects to realize a reverse benefit in the foreseeable future, or does not control the timing of the reverse benefit. The Company's policy applies equally to each class of financial instruments.

VAT

Eurohold Bulgaria AD has a VAT registration and charges 20% tax upon delivery of services.

Withholding tax

Pursuant to the Corporate Income Tax Act, payment of incomes to foreign individuals or legal entities is subject to withholding tax within the territory of the Republic of Bulgaria. Withholding tax is not due provided the foreign legal entity has proved grounds for application of the Agreements for Avoidance of Double Taxation before tax rate or applicable tax rate on the day of expiration of the tax payment term.

2.10 Fixed Assets

2.10.1 Fixed Tangible Assets

Fixed tangible assets are measured at acquisition cost, less the amount of accrued amortization and possible impairment losses.

The company has fixed value capitalization threshold to BGN 700, under which acquired assets, regardless if they have the characteristics of fixed assets, are reported as current expenses at the time of acquisition thereof.

Initial Acquisition

Fixed tangible assets are initially measured:

• at acquisition cost, which includes purchase price (including duties and nonrefundable taxes) and all direct costs for bringing the asset into working condition according to its purpose: for assets acquired from external sources;

• at fair value: for assets obtained as a result of a charitable transaction;

• at evaluation: approved by the court and all direct costs for bringing the asset into working condition according to its purpose – for assets acquired as a contribution of physical assets.

Notes to the Interim Separate Financial Statements for the period ended September 30, 2019

Borrowing costs directly related to acquisition, construction or production of eligible assets are included in the acquisition cost (cost) of this asset. All other borrowing costs are reported on current basis in the profit or loss for the period.

Further Measurement

Further costs for repairs and maintenance are accounted in statement of financial position when the same criteria as at initial recognition are in place.

Subsequent expenses

Subsequent expenses for repairs and maintenance are stated in the separate statement of financial position where the same criteria as at the initial acquisition exist.

Sales profits and loss

Upon sales of fixed assets, the difference between the net book value and the sales price of the asset is reported as profit or loss in the statement of profit or lost and other comprehensive income, in "Other Incomes" item.

Fixed tangible assets are derecognized from the balance sheet upon sale or when the asset is finally decommissioned and no further economic benefits are expected after derecognition.

2.10.2 Amortization Methods

The company applies the straight-line method of depreciation/amortization. Depreciation/Amortization of assets begins from the month following the month of acquisition thereof. Land and assets in process of construction are not depreciated.

The useful life by groups of assets depends on: the usual wear and tear, equipment specificity, future intentions for use and the probable moral aging.

The estimated useful lives by groups of assets are as follows:

Buildings	25 years
Machinery and equipment	3–10 years
Vehicles	4–6 years
Fixtures and fittings	3–8 years
Computers	2–3 years

2.12.3 Impairment

Net book values of fixed tangible assets are subject to review for impairment, when events or changes in circumstances have occurred, which evidence that the net book value might permanently differ from their recoverable amount. If there are indicators that the estimated recoverable value is less than their net book value, the latter is adjusted up to the recoverable value of assets.

Impairment losses are recognized as expense in the statement of profit or lost and other comprehensive income during the year of occurrence thereof.

2.11 Employment Benefits

Other long-term employee benefits

Defined contribution plans

Defined contribution plan is a plan for post-employment benefits in accordance with which the Company pays contributions to another person and does not have any legal or constructive obligations to make further payments. The Bulgarian government is responsible for providing pensions under the defined contribution plans. The company's engagement costs for transferring contributions under defined contribution plans are recognised currently in profit and loss.

Defined benefit plans

These are post-employment benefit plans other than defined contribution plans.

The net payable of the Company with regard to defined benefit plans is calculated by estimating the amount of future benefits the employees are entitled to in return for their services during the current and previous years; and these benefits are discounted in order to define their present value.

The Company has the obligation to pay retirement benefits to those of its employees who retire in compliance with the requirements of article 222, § 3 of the Labour Code (LC) in Bulgaria. In accordance with these provisions of the LC, upon termination of the employment agreement of an employee who is entitled to pension, the employer pays them compensation in the amount of two monthly gross salaries. Provided the worker or employee has 10 or more years' length of service as at the date of retirement, such compensation is in the amount of six monthly gross salaries. As at the date of the separate statement of financial position, the Company measures the approximate amount of potential expenses for all employees by using the estimate credit units.

Retirement benefits

Retirement benefits are recognised as an expense when the Company has clear engagements, without actual opportunity to withdraw, with an official detailed plan either for termination of employment relations before the normal retirement date, or for payment of compensation upon termination as a result of proposal for voluntary retirement.

Benefits upon voluntary retirement are recognised as an expense if the Company has made an official proposal for voluntary termination and the offer would be probably accepted, and the number of employees who has accepted the offer may be reliably measured. If compensations are payable for more than 12 months after the end of the reporting period, they are discounted up to their present value.

Short-term employee benefits

Payables for short-term employee benefits are measured on non-discounted basis and are stated as an expense when the related services are provided. Liability is recognised for the amount that is expected to be paid as a short-term bonus in cash or profit distribution plans, provided the Company has legal or constructive obligation to pay such amount as a result of previous services rendered by an employee, and such obligation may be reliably measured.

The company recognises as payable the non-discounted amount of measured paid annual leave expenses that are expected to be paid to the employees in return of their services for the past reporting period.

2.12 Financial Assets

2.12.1 Investments in subsidiaries, associates and joint ventures

A subsidiary is a company that is subject to the control of the Company as an investor. Having control means that the investor is exposed to or has rights to the variable return of its shareholding in the investee and is able to influence this return by means of its powers over the investee. Long-term investments, being shares in subsidiaries, are stated in the separate financial statements at acquisition price (cost), which is the fair value of paid consideration, including the direct expenses for acquisition of the investment.

These investments are not traded at stock exchanges.

Notes to the Interim Separate Financial Statements for the period ended September 30, 2019

The investments in subsidiaries held by the Company are subject to review for impairment. Upon finding conditions for impairment, it is recognised in the separate statement for profit or loss and other comprehensive income as financial expense.

Upon purchase and sale of investments in subsidiaries, the "date of entering into" the transaction applies.

Investments are derecognised upon transferring the pertaining rights to other entities upon occurrence of legal grounds to this effect thus losing the control over the economic benefits from the investments. The revenue from their sales is stated in "financial revenue" or "financial expenses", respectively, in the separate financial statement for profit or loss and other comprehensive income.

The companies in which the company holds between 20% and 50% of the voting rights and may significantly affect, but not perform control functions, are considered associated companies.

Investments in associated companies are reported by using the equity method. By using the equity method, the investment in the associated company is carried in the statement of financial position at acquisition cost, plus the changes in the share in the net assets of the associated entity after the acquisition. The goodwill related to the associated entity is included in the net book value of the investment and is not amortized.

The investments in associates and other companies held by the Company are subject to review for impairment. Upon finding conditions for impairment, it is recognised in the separate statement for profit or loss and other comprehensive income.

Investments in associates and other companies are derecognised upon transferring the pertaining rights to other entities upon occurrence of legal grounds to this effect thus losing the joint control over the economic benefits from the investments.

The revenue from their sale is stated under the item Gains from financial operations, or under the item Losses from financial operations, respectively, in the separate financial statement for profit or loss and other comprehensive income.

2.12.2 Financial Instruments

Classification and measurement

Under IFRS 9, after initial recognition, debt instruments are measured at fair value through profit or loss or amortized cost or at fair value in other comprehensive income.

The classification is based on two criteria: the asset management business model of the asset management company and whether the contractual cash flows of the instrument represent 'only principal and interest payments' on the outstanding amount of the principal.

Impairment

IFRS 9 requires the Company to recognize a provision for expected credit losses for all debt instruments that are not carried at fair value through profit or loss and for contract assets.

Instruments that fall under the new requirements include loans and other financial assets measured at amortized cost / fair value through other comprehensive income, trade receivables, contract assets recognized and measured under IFRS 15, and credit commitments and some financial guarantee contracts (with the issuer) that are not reported at fair value through profit or loss.

Notes to the Interim Separate Financial Statements for the period ended September 30, 2019

Recognition of credit losses is no longer dependent on the occurrence of a credit loss event. Instead, the Company considers a wider range of information in assessing credit risk and assessing expected credit losses, including past events, current conditions, reasonable and supportive forecasts that affect the expected future cash flow of the instrument.

In implementing this forward-looking approach, a distinction is made between:

• financial instruments whose credit quality has not significantly deteriorated since the initial recognition or have low credit risk (Phase 1), and

• financial instruments whose credit quality has deteriorated significantly since the time of initial recognition or where the credit risk is not low (Phase 2)

• "Phase 3" covers financial assets that have objective evidence of impairment at the reporting date. None of the Company's financial assets fall into this category. 12-month expected credit losses are recognized for the first category, while the expected losses over the life of the financial instruments are recognized for the second category. Expected credit losses are determined as the difference between all contractual cash flows attributable to the Company and the cash flows it is actually expected to receive ("cash deficit"). This difference is discounted at the original effective interest rate (or the effective interest rate corrected to the credit).

The calculation of expected credit losses is determined on the basis of the probability-weighted estimate of credit losses over the expected period of the financial instruments.

Trade and other receivables, contracted assets and receivables under leasing contracts

The Company uses a simplified approach to accounting for trade and other receivables as well as contract assets and recognizes impairment losses as expected credit losses over the entire period. They represent the expected shortfall in contractual cash flows, given the possibility of default at any time during the term of the financial instrument. The Company uses its accumulated experience, external indicators and long-term information to calculate the expected credit losses through customer allocation by industry and time structure of receivables and using a maturity of provisions.

2.13 Short-Term Receivables

Receivables are measured at amortized cost, which usually corresponds to the nominal value. Impairment is envisaged to meet the expected loss on the basis of an individual assessment of the individual arrangements on the basis of a management-based model of expected credit losses.

2.14 Cash and cash equivalents

Cash and cash equivalents comprise cash on hand, current accounts and short-term deposits, including repos at banks whose original maturity is up to 3 months. For the purposes of the separate statement of cash flows, bank deposits are analysed and presented in compliance with the Company's purposes and intentions for earning therefrom, as well as the actual maintained duration of investing in such type of deposits.

2.15 Liability Provisions

Liability provisions include expected costs related to obligations under guarantees, restructuring, etc., as well as deferred tax assets.

2.16 Tax and Deferred Tax Liabilities

Current tax liabilities and current tax receivables are recognized in the statement of financial position as tax calculated on taxable income for the year adjusted for the tax on taxable income for previous years and paid taxes.

2.17 Equity

Equity is presented at its nominal value pursuant to the court decisions for its registration.

In accordance with the requirements of the Commerce Act and the Articles of Association, the Company is obliged to establish a Reserve Fund and the sources of such fund may be as follows:

• o At least one tenth of the profit being allocated until the fund amount reaches one tenth or bigger part of the capital as set out in the Articles of Association;
• o The received funds exceeding the nominal value of shares upon issue thereof (premium reserve);
• o Other sources as set out by resolution of the general meeting.

The funds may be used for covering annual losses or losses from previous years only. When the fund reaches the minimum amount as set out in the Articles of Association, the excess may be used for capital increase.

2.18 Liabilities

Financial liabilities include loans (loans), liabilities to suppliers and other counterparties.

Financial liabilities are recognized over the period of the loan by the amount of receipts received, the principal, less the transaction costs. In subsequent periods, financial liabilities are measured at amortized cost equal to the capitalized value when applying the effective interest method. In the unconsolidated profit and loss account and other comprehensive income, loan costs are recognized over the period of the loan.

Current liabilities, such as payables to suppliers, subsidiaries and associates and other payables, are measured at amortized cost that is usually in line with the nominal value.

2.19 Earning per share

The basic earnings per share are calculated by dividing the net profit or loss for the period that is subject to distribution among shareholders – holders of ordinary shares, by the average weighted number of ordinary shares held during the period.

The average weighted number of shares is the number of ordinary shares held at the beginning of the period adjusted with the number of redeemed ordinary shares and the number of newly issued shares multiplied by the average time factor. Such factor expresses the number of days in which the respective shares have been held towards the total number of days during the period.

Upon capitalisation, bonus issue or fractioning, the number of outstanding ordinary shares until the date of such event is adjusted to reflect the proportionate change in the number of outstanding ordinary shares as if the event has occurred at the beginning of the earliest period presented. Earnings per shares with decreased value are not calculated as no potential shares with decreased value are issued.

2.20 Judgements that are crucial for the application of the Company's accounting policy. Key estimates and assumptions with high uncertainty.

Deferred tax assets

Tax loss

The assessment of probability for future taxable income for the utilisation of deferred tax assets is based on the last approved budget forecast adjusted with regard to material untaxable income and expenses and specific restrictions for carrying forward unused tax losses or credits. If a reliable estimate for taxable income suggests the probable use of deferred tax asset, in particular in case the asset may be used without time limit, then the deferred tax asset is recognised in full. The recognition of deferred tax assets that are subject

Notes to the Interim Separate Financial Statements for the period ended September 30, 2019

to specific legal or economic restrictions or uncertainty should be judged by the management on case by case basis on the grounds of specific facts and circumstances. On the basis of this approach and applying high level of conservatism, the management has judged not to recognise deferred tax asset for tax losses to be carried forward to the separate financial statement for Q3.2019.

Impairment of investments in subsidiaries

The amount with which the book value of an asset or a cash flow generating unit exceeds their replacement cost, which is the higher of the fair value less the sale cost of an asset, and its value in use, is recognised as impairment loss. For the purposes of defining the value in use, the Company's management calculates the expected future cash flows per cash flow generating unit and defines an appropriate discount factor for the purposes of calculating the present value of these cash flows. Upon calculating the expected future cash flows, the management makes assumptions about the future gross profits. These assumptions are related with future events and facts. The actual results may differ and require significant adjustments in the Company's assets during the next reporting year.

In most cases, when defining the applicable discount factor, an assessment of appropriate adjustments with regard to the market risk and the risk factors inherent to different assets should be made.

The Company uses external appraisals to determine the fair values of investments in subsidiaries for each calendar year. In Q3.2019 and Q3.2018 the Company has not reported impairment losses of investments in subsidiaries.

Impairment of borrowings and receivables

The Company uses an adjustment account to report the impairment of difficultly collectible and uncollectible receivables from counterparties. The management judges the adequacy of this impairment on the basis of age analysis of receivables, previous experience about the level of derecognition of uncollectible receivables, and analysis of the counterparty's solvency, amendments of contractual payment terms and conditions, etc. If the financial position and performance of the counterparties become worse than the expected, the value of receivables that should be derecognised during the next reporting periods may be higher than the one expected as at the reporting date.

Fair value of financial instruments

The management uses techniques to measure the fair value of financial instruments if here are no quoted prices at active market. Detailed information about the assumptions used are presented in the explanatory notes to the financial assets and liabilities. When applying assessment techniques, to the maximum extent, the management uses market data and assumptions that market stakeholders would assumed upon assessing a financial instrument. In case there are no applicable market data, the management uses its best estimate of assumptions that the market stakeholders would make. These assessments may differ from the actual prices that would be defined in an arm's length transaction between informed and willing parties at the end of the reporting period.

2.21 Consolidated financial statements of the Company

The Company has started the process of preparation of its interim consolidated financial statements for Q1.2019 in accordance with IFRS effective for 2019, which statements also comprise these interim separate financial statements. In accordance with the scheduled dates, the company expects that its interim consolidated statements will be approved by the Company's management board for publication not later than 30.5.2019 and then the statements will be made available to third persons.

2.22 Financial Risk Management

2.22.1 Factors Determining Financial Risk

In the implementation of its activity, the Company is exposed to diverse financial risks: market risk (including currency risk, risk from change of financial instruments fair value under the impact of market interest rates and price risk), credit risk, liquidity risk and risk from change of future cash flows due to a change in market interest rates. The overall risk management program emphasizes the unpredictability of financial markets and is aimed at mitigating the possible adverse effects on the Company's financial result.

Notes to the Interim Separate Financial Statements for the period ended September 30, 2019

Currency risk

The Company is exposed to currency risk as a result of the settlements in foreign currency and through its assets and liabilities denominated in foreign currency.

The Company has borrowings in foreign currencies – EURO and Polish zloty. As the BGN/ EUR exchange rate is fixed at 1.95583, the currency risk caused by the euro expositions of the Company is minimum.

The Company makes payments under a bond loan in Polish zloty. There is a significant risk of change in the exchange rates under this borrowing. Therefore, the Company's exposition to changes in the Polish zloty exchange rate is possible, although the Company could hedge its exposition through derivatives, such as swaps, in case of occurrence of future excessive fluctuations.

Interest Risk

The Company's policy is aimed at minimizing the interest risk with regard to long-term funding. Therefore, the long-term borrowings are with fixed interest rates. All investments in Company's bonds are paid on the basis of fixed interest rates.

Credit Risk

Credit risk is mainly related to trade and financial receivables.

The amounts stated in the statement of financial position are on net basis, excluding the provisions for doubtful receivables determined as such by the management on the basis of previous experience and current economic conditions.

The credit risk in terms of cash and cash equivalents, cash on the monetary market of derivative financial instruments is considered minor as the counterparties are banks with good reputation and high credit rating.

Liquidity Risk

Liquidity risk is the risk that the company may encounter difficulties in servicing its financial obligations when they become payable. Policy in this field is aimed at ensuring that there will be enough cash available to service its maturing obligations, including in exceptional and unforeseen conditions. The management's objective is to maintain continuous balance between continuity and flexibility of financial resources by using adequate forms of funding.

The company's management is responsible for managing the liquidity risk and involves maintaining enough cash available, arranging adequate credit lines, preparation of analysis and update of cash flows estimates.

2.23 Capital risk management

By managing its capital, the Company is aimed at creating and maintaining opportunities to continue operating as going concern and to ensure the respective return of invested funds for the shareholders and economic benefits for the other stakeholders and participants in its business, as well as at maintaining optimal capital structure.

The Company continuously monitors the availability and the structure of the capital based on the debt ratio, and namely the net debt capital to the total amount of capital.

2.24 Measuring Fair Values

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date.

The fair value measurement is based on the presumption that the transaction to sell the asset or transfer the liability takes place either:

• In the principal market for the asset or liability,

or

• In the absence of a principal market, in the most advantageous market for the asset or liability.

The principal or the most advantageous market must be accessible to the Company.

A fair value measurement of a non-financial asset takes into account a market participant's ability to generate economic benefits by using the asset in its highest and best use or by selling it to another market participant that would use the asset in its highest and best use.

The Company uses valuation techniques that are appropriate in the circumstances and for which sufficient data are available to measure fair value, maximising the use of relevant observable inputs and minimising the use of unobservable inputs.

All assets and liabilities for which fair value is measured or disclosed in the financial statements are categorized within the fair value hierarchy, described as follows, based on the lowest level input that is significant to the fair value measurement as a whole:

• Level 1 Quoted (unadjusted) market prices in active markets for identical assets or liabilities
• Level 2 Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable
• Level 3 Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

2.25 Cash Flows

The 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 result for the year adjusted with the non-cash operating positions, changes in net turnover capital and corporate tax.

Investment activity cash flows include payments in relation to 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 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.

Notes to the Interim Separate Financial Statements for the period ended September 30, 2019

3. Dividend income	30.9.2019	30.9.2018
	BGN'000	BGN'000
Euro-Finance AD	669	209
	669	209
4. Gains from sale of investments and revaluations
	30.9.2019	30.9.2018
	BGN'000	BGN'000
Gains from sale of investments	125	570
Income from revaluation of investments	945	-
	1 070	570
5. Interest income

	524	1 206
Interest income – from third parties loans	521	474
Interest income – from related parties loans	3	732
	BGN'000	BGN'000
	30.9.2019	30.9.2018

5.1 Interest income on loans to related parties

	30.9.2019	30.9.2018
	BGN'000	BGN'000
Auto Union AD	-	246
Euro Insurance Group AD	2	86
Starcom Holding AD	-	400
Eurolease Group EAD	1	-
	3	732

6. Other financial revenue

	30.9.2019	30.9.2018
	BGN'000	BGN'000
Foreign exchange gains	618	543
	618	543

7. Interest expense

	30.9.2019	30.9.2018
	BGN'000	BGN'000
Interest expense – loans and borrowings	2 340	4 836
Interest expense – bonds, EMTN programme	8 295	8 334
Interest expense – from related parties loans	1 216	138
Interest expense – from third parties loans	14	1 011
	11 865	14 319

7.1. Interest expense on borrowings and related parties leasing

	30.9.2019	30.9.2018
	хил. лв.	хил. лв.
Starcom Holding AD	76	-
Euroins Insurance Group AD	166	-
Auto Union AD	11	-
Auto Union Service EOOD	3	-
Eurolease Group EAD	-	1
EUrolease Auto EAD	725	137
incl. Leasing	3	2
Motobul EAD	228	-
Star Motors EOOD	7	-
	1 216	138

8. Losses from transactions with financial instruments and revaluations

	30.9.2019	30.9.2018
	хил. лв.	хил. лв.
Losses on transactions of investments	11	54
Losses on transactions of investments – related parties	23	-
	34	54
8.1 Losses from transactions with financial instruments – related parties	30.9.2019	30.9.2018
	хил. лв.	хил. лв.
Euro-finance AD	23	-
	23	-

9. Other financial expenses

	30.9.2019	30.9.2018
	BGN'000	BGN'000
Foreign exchange losses	305	67
Other financial expenses – related parties	6	62
Other financial expenses	16	27
	327	156

9.1 Other financial expenses – related parties

	30.9.2019	30.9.2018
	BGN'000	BGN'000
Euro-finance AD	6	62
	6	62

10. Hired services expenses

	30.9.2019	30.9.2018
	BGN'000	BGN'000
Hired services expenses	1 650	946
Hired services expenses – related parties	6	1
	1 656	947

10.1 Hired services expenses – related parties

	30.9.2019	30.9.2018
	BGN'000	BGN'000
Eurolease auto EAD	5	-
Auto Italia EAD	1	-
Bulvaria Holding EAD	-	1
	6	1

11. (Accrued) / Recoverable impairment loss on financial assets, net

	30.6.2019	30.9.2018
	BGN'000	BGN'000
Recoverable loss from impairment of financial assets	-	-
Accrued loss from impairment of financial assets	-	-
	-	-

12. Other revenue/(expenses), net

	30.9.2019	30.9.2018
	BGN'000	BGN'000
Other expenses	(152)	(98)
Other expenses – related parties	(4)	-
Other revenue	285	3
Other revenue – related parties	266	255
	395	160

12.1 Other expenses – related parties

	30.9.2019	30.9.2018
	BGN'000	BGN'000
IC Euroins AD	1	-
Motobul EAD	3	-
	4	-

12.2 Other revenue – related parties

	30.9.2019	30.9.2018
	BGN'000	BGN'000
IC Euroins AD	54	54
Star Motors EOOD	5	5
Euroins Romania	135	135
Bulvaria Varna EOOD	5	5
Auto Union Service EOOD	26	26
Daru Car AD	25	25
Auto Italia EAD	5	5
Eurolease Auto EAD	11	-
	266	255

13. Property, machinery and equipment

			Total
	Vehicles	Equipment
	BGN'000	BGN'000	BGN'000
Cost:
At 1 January 2018	20	65	85
Additions	90	3	93
At 31 December 2018	110	68	178
Additions	154	10	164
Disposals	(20)	-	(20)
At 30 September 2019	244	78	322
Depreciation:
At 1 January 2018	6	63	69
Accrued depreciation	24	3	27
At 31 December 2018	30	66	96
Accrued depreciation	27	3	30
Depreciation - written off	(14)	-	(14)
At 30 September 2019	43	69	112
Carrying value:
At 1 January 2018	14	2	16
At 31 December 2018	80	2	82
At 30 September 2019	201	9	210

	567 465	13 815	-	581 280	-	-
Eastern European Electric Company II B.V.	-	-	-	-	2	100.00%
Eurolease Group EAD	27 368	-	-	27 368	27 241	100.00%
Euro-Finance AD	24 645	-	-	24 645	14 100	99.99%
Avto Union AD	66 775	-	-	66 775	40 004	99.99%
Euroins Insurance Group AD	448 677	13 815	-	462 492	543 446	93.60%
	BGN'000	BGN'000	BGN'000	BGN'000	BGN'000	%
	Value as at 1.1.2019	Increase	Decrease	Value as at 30.9.2019	Share capital of the subsidiary	% control in the subsidiary
14. Investments in subsidiaries

15. Loans granted to third parties, short-term	30.9.2019	31.12.2018
	BGN'000	BGN'000
Loans granted	10 072	9 897
Impairment	(20)	(20)
	10 052	9 877

Loans are not secured and are payable until October 2019 with annual interest rate of 7%

16. Receivables from related paries
	30.9.2019	31.12.2018
16.1 Interest receivables	BGN'000	BGN'000
Euroins Insurance Group AD	-	743
Eurolease Group EAD	-	1
	-	744
Impairment	-	(1)
	-	743

43

16.2 Other receivables

	30.9.2019	31.12.2018
	BGN'000	BGN'000
Auto Italia EAD	5	1
Bulvaria Varna EOOD	12	1
Daru car AD	48	16
IC Euroins AD	2	7
Eurolease Auto EAD	1	1
Star Motors EOOD	13	-
Autoplaza EAD	2	1
Euroins Insurance S.C.Skopje	2	2
Motobul EAD	12	10
Starcom Holding AD	-	219
Euroins Romania	19	19
Auto Union Ad	1	-
Espas Auto OOD	1	-
	118	277
Impairment	(2)	(2)
	116	275

16.3 Loans granted to related parties
	30.9.2019	31.12.2018
	BGN'000	BGN'000
Euroins Insurance Group AD	-	316
Eurolease Group EAD	-	76
	-	392
Impairment	-	(2)
	-	390

17. Other receivables

	30.9.2019	31.12.2018
	BGN'000	BGN'000
Tax receivables	167	16
Other receivables	1 584	395
	1 751	411
Impairment	(83)	(83)
	1 668	328

In the interim financial statements as of 30.09.2019 the value of the Other short-term receivables (BGN 1 584 thousand) includes expenses for acquisition of an investment in the amount of BGN 1 016 thousand.

18. Cash and cash equivalents

	30.9.2019	31.12.2018
	BGN'000	BGN'000
Cash at banks	109	156
Cash in hand	27	32
Short-term deposits	-	96
	136	284
Impairment	(2)	(2)
	134	282

19. Share capital and reserves

19.1 Share capital

Share capital
	30.9.2019	31.12.2018
	BGN'000	BGN'000
Issued shares	197 525 600	197 525 600

The share capital is distributed as follows:

Share holders	%	Number of shares	Par value
Starcom Holding AD	52.88%	104 456 874	104 456 874
KJK Fund II Sicav-Sif Balkan Discovery	14.24%	28 116 873	28 116 873
Blubeard Investments Limited	7.24%	14 297 400	14 297 400
Other legal entities	23.44%	46 301 107	46 301 107
Other individuals	2.20%	4 353 346	4 353 346
	100.00%	197 525 600	197 525 600

19.2 Reserves

	57 209	57 209
General reserves	7 641	7 641
Share premium	49 568	49 568
	BGN'000	BGN'000
	30.9.2019	31.12.2018

20. Interest-bearing loans and borrowings

Non-current interest-bearing loans and borrowings

	25 526	35 549
International Investment Bank	25 526	35 549
	BGN'000	BGN'000
	30.9.2019	31.12.2018

Notes to the Interim Separate Financial Statements for the period ended September 30, 2019

Current interest-bearing loans and borrowings

	42 782	29 458
Other	32 289	20 205
International Investment Bank	10 493	9 253
	BGN'000	BGN'000
	30.9.2019	31.12.2018

Analysis of interest-bearing loans and borrowings

Bank	Type	Curren cy	Size contracted	Principal as of 30.9.2019	Principal as of 31.12.2018	Interest rate	Maturity date	Security
Inter national Investment Bank	Loan - Principal	EUR	15,000,000 €	9,000,000 €	12,600,000 €	6.0%+ EURIBOR	12.2021	Pledge on subsidiary shares; related party guarantee
Inter national Investment Bank	Loan - Principal	EUR	10,000,000 €	9,240,000 €	10,000,000 €	6.0%+ EURIBOR	3.2025	Pledge on subsidiary shares

The maturity of other current borrowings (Euro Commercial Papers – ECPs) is 03.2020-04.2020 and the interest rate is 2,0%.

21. Bond liabilities

Non - current bond liabilities

	133 725	128 832
EMTN Programme in PLN	19 995	20 302
EMTN Programme in EUR	113 730	108 530
	30.9.2019 BGN'000	31.12.2018 BGN'000

Current bond liabilities	30.9.2019 BGN'000	31.12.2018 BGN'000
EMTN Programme in EUR	6 653	15
EMTN Programme in PLN	314	737
	6 967	752

Detailed information about the bonds issued by Eurohold Bulgaria AD is available on the website of the Irish Stock Exchange, Debt section.

22. Non-current liabilities to related parties

	30.9.2019	31.12.2018
Loans principal	BGN'000	BGN'000
Eurolease Auto EAD – loan granted	1 662	1 662
Eurolease Auto EAD – financial lease	147	55
	1 809	1 717

23. Other non-current liabilities
	30.9.2019	31.12.2018
	BGN'000	BGN'000
Retirement benefit obligations	6	6
	6	6
24. Trade payables
	30.9.2019	31.12.2018
	BGN'000	BGN'000
Trade payables	469	384
	469	384
25. Current liabilities to related parties 25.1 Interest payables
	30.9.2019	31.12.2018
	BGN'000	BGN'000
Starcom Holding AD	81	5
Auto Union AD	11	-
Eurolease Auto EAD	497	84
Euroins Insurance Group AD	166	-
Motobul EAD	77	19
Auto Union Service EOOD	3	-
Star Motors EOOD	7	-
	842	108
25.2. Current borrowings
	30.9.2019	31.12.2018
	BGN'000	BGN'000

Starcom Holding AD	3 845	937
Auto Union AD	1 131	-
Eurolease Auto EAD	11 963	11 963
Euroins Insurance Group AD	11 536	-
Motobul EAD	5 323	5 323
Auto Union Service EOOD	314	-
Star Motors EOOD	950	-
	35 062	18 223

25.3 Other payables

	21 094	25 883
Star Motors EOOD	-	950
Avto Union Services EOOD	-	362
Avto Union AD	-	3 620
Motobul EAD	1	-
IC EIG RE EAD	32	-
Eurolease Auto EAD	478	414
IC Euroins AD	47	1
Starcom Holding AD	20 536	20 536
	BGN'000	BGN'000
	30.9.2019	31.12.2018

26. Other current liabilities

	30.9.2019	31.12.2018
	BGN'000	BGN'000
Payables for acquisition of investments	18	18
Interest payables	22	8
Tax payables	373	293
Payables to employees and social security institutions	86	46
Dividends payables	249	211
Dividends payables – related parties – Starcom Holding AD	101	101
Other liabilities	61	65
	910	742

27. Events after the end of the reporting period

The Management Board of Eurohold Bulgaria AD is not aware of significant events occurring after the reporting period.

INSIDE INFORMATION

pursuant to Article 7 of Market Abuse Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April in respect of circumstances occurring during the reporting period

EUROHOLD BULGARIA AD has disclosed the following information:

24 October, 2019

Eurohold accepts the decision of Bulgaria's competition authority as a positive assessment for the financial strength of the holding (News Release);

15 October, 2019

Eurohold filed additional documents with the CPC related with the in-depth probe into the deal with CEZ (News Release);

9 October, 2019

Eurohold will manage the assets of CEZ responsibly and invest in innovations in favor of the consumers (News Release);

3 October, 2019

Bulgaria's antitrust body opened proceedings concerning Eurohold 's planned acquisition of CEZ Group's subsidiaries in Bulgaria (News Release);

25 September, 2019

Notification concerning Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014.

13 August, 2019

Eurohold grows sharply revenue and improves profitability in H1 2019 (News Release);

13 August, 2019

Interim Consolidated Financial Report for H1'2019:

• 1. Interim Consolidated Financial Statements as of 30th of June,2019, IFRS;
• 1. Notes to the Interim Consolidated Financial Statements for Q1'2019;
• 1. Interim Consolidated Management Report;
• 1. Interim Consolidated Financial Statements FSC forms;
• 1. Internal Information;
• 1. Additional Information;
• 1. Information according to Annex 9;
• 1. Declaration from the responsible persons;

30 July, 2019

Interim Financial Report for H1'2019:

• 1. Interim Financial Statements as of 30th of June,2019, IFRS;
• 1. Notes to the Interim Financial Statements for Q1'2019;
• 1. Interim Management Report;
• 1. Interim Financial Statements FSC forms;
• 1. Internal Information;
• 1. Additional Information;
• 1. Information according to Annex 9;
• 1. Declaration from the responsible persons;

19 July, 2019

The energy advisory board called by Eurohold started its activity officially (News Release);

1 July, 2019

Notification for dividend payment;

1 July, 2019

Minutes from the regular session of GMS of Eurohold Bulgaria, held on 30th of June, 2019;

1 July, 2019

Fіtсh placed Eurohold's rating under observation (News Release);

20 June, 2019

Eurohold agreed to acquire CEZ Group's assets in Bulgaria (News Release);

14 June, 2019

Notification for shareholding change;

29 May, 2019

Eurohold Bulgaria AD launched an invitation for the Annual session of GMS scheduled for 30th of June, 2019;

27 May, 2019

Eurohold increases revenue and profit in the 1st quarter of 2019 (News Release);

27 May, 2019

Interim Consolidated Financial Report for Q1'2019:

• 1. Interim Consolidated Financial Statements as of 31st of March,2019, IFRS;
• 1. Notes to the Interim Consolidated Financial Statements for Q1'2019;
• 1. Interim Consolidated Management Report;
• 1. Interim Consolidated Financial Statements FSC forms;
• 1. Internal Information;
• 1. Additional Information;
• 1. Information according to Annex 9;
• 1. Declaration from the responsible persons;

30 April, 2019

Interim Financial Report for Q1'2019:

• 1. Interim Financial Statements as of 31st of March,2019, IFRS;
• 1. Notes to the Interim Financial Statements for Q1'2019;
• 1. Interim Management Report;
• 1. Interim Financial Statements FSC forms;
• 1. Internal Information;
• 1. Additional Information;
• 1. Information according to Annex 9;
• 1. Declaration from the responsible persons;

30 April, 2019

Annual Consolidated Financial Report for the year ended on 31 December 2018:

• 1. Annual Consolidated Financial Report as of 31 December 2018, IFRS;
• 1. Notes to the Annual Consolidated Financial Statements;
• 1. Independent Auditor's Report;
• 1. Consolidated management Report for 2018;
• 1. Corporate Governance Declaration;

• 1. Annual Consolidated Financial Report FSC forms;
• 1. Independent Auditor's Declaration;
• 1. Declaration from the responsible persons;

25 April, 2019

Eurohold fully cooperates in the probe launched by Bulgaria's financial regulator (News Release);

23 April, 2019

Minutes from the extraordinary session of GMS of Eurohold Bulgaria, held on 22nd of April, 2019;

22 April, 2019

Eurohold's shareholders approved a capital hike (News Release);

17 April, 2019

Eurohold obtained exclusivity for the acquisition of CEZ Group's assets in Bulgaria (News Release);

1 April, 2019

Eurohold submitted an individual offer to acquire CEZ Groups assets in Bulgaria (News Release);

31 March, 2019

Annual Financial Report for the year ended on 31 December 2018:

• 1. Annual Financial Report as of 31 December 2018, IFRS;
• 1. Notes to the Annual Financial Statements;
• 1. Independent Auditor's Report;
• 1. Management Report for 2018;
• 1. Corporate Governance Declaration;
• 1. Annual Financial Report FSC forms;
• 1. Independent Auditor's Declaration;
• 1. Declaration from the responsible persons;

19 March, 2019

Eurohold plans to increase its share capital by some 80 million new shares (News Release);

19 March, 2019

Eurohold Bulgaria AD launched an invitation for the extraordinary session of GMS scheduled for 22nd of April, 2019;

7 March, 2019

Bulgaria's Euroins acquires Germany's ERGO subsidiaries in Romania, the Czech Republic and Belarus (News Release);

1 March, 2019

Eurohold continued its upward trend in 2018 (News Release)

1 March, 2019

Interim Consolidated Financial Report for Q4'2018:

• 1. Interim Consolidated Financial Statements as of 31st of December,2018, IFRS;
• 1. Notes to the Interim Consolidated Financial Statements for Q4'2018;
• 1. Interim Consolidated Management Report;
• 1. Interim Consolidated Financial Statements FSC forms;
• 1. Internal Information;
• 1. Additional Information;

• 1. Information according to Annex 9;
• 1. Declaration from the responsible persons;

30 January, 2019

Interim Financial Report for Q4'2018:

• 1. Interim Financial Statements as of 31st of December,2018, IFRS;
• 1. Notes to the Interim Financial Statements for Q4'2018;
• 1. Interim Management Report;
• 1. Interim Financial Statements FSC forms;
• 1. Internal Information;
• 1. Additional Information;
• 1. Information according to Annex 9;
• 1. Declaration from the responsible persons;

1 January, 2019

Notification concerning Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014.

28.10.2019

Asen Minchev,

Executive Member of the Management Board of Eurohold Bulgaria AD

ADDITIONAL INFORMATION TO THE INTERIM FINANCIAL REPORT OF EUROHOLD BULGARIA FOR Q3'2019

in accordance with art. 33, par. 1of Ordinance No. 2 of September 17, 2003 on the prospectuses to be published when securities are offered to the public or admitted to trading on a regulated market and on disclosure of information by the public companies and the other issuers of securities

1. Information about the changes in the accounting policy during the reported period, the reasons for carrying them out and how they affect the financial results and equity of the issuer

No changes have been made in the accounting policy of the company during the reported period.

2. Information about changes in the economic group of the issuer, if it belongs to such a group

No changes have been made in the economic group of the issuer.

3. Information about results of organizational changes in the issuer's structure, such as conversion, sale of companies from the same economic group, in-kind contributes from the company, property rental, long-term investments, withdrawal from business

No organizational changes in the issuer's structure during the reported period.

4. Opinion of the Governing Body of the feasibility of published estimates of the results of the current financial year, taking into account the results of the current three months, as well as information on the factors and circumstances, which will affect the achievement of the forecasted results at least in the next three months

No estimates of financial results of the company have been published for 2019.

5. Data on the persons, holding directly and indirectly at least 5 per cent of the votes in the General Meeting as of the end of the reported period, and changes in the votes, held by the persons in the end of the previous three months period

	Shareholder	Number of	% participation
		shares
1.	Starcom Holding AD	104 456 874	52,88%
2.	KJK Fund II Sicav-Sif Balkan Discovery	28 116 873	14.23%
3.	Blubeard Investments Limited	14 647 400	7.42%
4.	Specialized Logistic Systems AD	11 791 234	5.97%

6. Data of the shares, held by the management and supervisory bodies of the issuer at the end of the respective three months and changes, which took place since the end of the previous three months period for each person individually.

	Shareholder	Number of shares	% participation
1.	Dimitar Stoyanov Dimitrov	200	-
2.	Assen Emanuilov Assenov	67 400	0.03%

7. Information about pending judicial, administrative or arbitration proceedings concerning claims or liabilities of at least 10 per cent of the equity of the issuer; if the total amount of the debts or the obligations of the issuer in all proceedings exceeds 10 per cent of its own capital , information about each case separately is provided.

For the reported period the Company has no pending legal, administrative or arbitration proceedings.

8. Information about granted by the issuer or its subsidiary company loans, guarantees or commitments totally to one person or its subsidiary, including to related to it persons, showing the type of relation between the issuer and the person, the amount of unpaid principal, the interest rate, the final maturity, the size of the commitment, the term and conditions.

Loans granted to related parties

	30.9.2019 BGN'000	31.12.2018 BGN'000
Euroins Insurance Group AD	-	316
Eurolease Group EAD	-	76
	-	392
Impairment	-	(2)
	-	390

Non-current liabilities to related parties

	30.9.2019	31.12.2018
Loans principal	BGN'000	BGN'000
Eurolease Auto EAD – loan granted	1 662	1 662
Eurolease Auto EAD – financial lease	147	55

Interest payables

	30.9.2019	31.12.2018
	BGN'000	BGN'000
Starcom Holding AD	81	5
Auto Union AD	11	-
Eurolease Auto EAD	497	84
Euroins Insurance Group AD	166	-
Motobul EAD	77	19
Auto Union Service EOOD	3	-

Star Motors EOOD	7	-
	842	108

Other payables
	30.9.2019	31.12.2018
	BGN'000	BGN'000
Starcom Holding AD	20 536	20 536
IC Euroins AD	47	1
Eurolease Auto EAD	478	414
IC EIG RE EAD	32	-
Motobul EAD	1	-
Avto Union AD	-	3 620
Avto Union Services EOOD	-	362
Star Motors EOOD	-	950
	21 094	25 883

Date:

28.10.2019 г. Asen Minchev,

Executive Director of Eurohold Bulgaria AD

INFORMATION ACCORDING TO ANNEX 9

according to the requirements of Article 33, paragraph 1, item 3 of ORDINANCE № 2 of 17.09.2003 on prospectuses for public offering and admission to trading on a regulated securities market and for the disclosure of information

1. There has no change of persons exercising a control over the Company

2. Opening of insolvency proceedings for the company or its subsidiary and all essential stages of the proceedings

No insolvency proceedings have been opened for the company or its subsidiary

3. Conclusion or execution of significant transactions

On 20th of June, 2019 Eurohold Bulgaria AD signed an agreement with CEZ Group, the Czech energy group, to acquire CEZ Group's assets in Bulgaria. Eurohold Bulgaria AD will pay EUR 335 million for the acquisition of CEZ Group's assets in Bulgaria.

On 24th of October, 2019, the Commission for Protection of Competition in Bulgaria issued a ban on concentration in the transaction for the acquisition of the business of CEZ Group in Bulgaria.

4. No decision on the conclusion or termination of the joint venture agreement

5. Change in company auditors and reasons for change

There has no change in company's auditors.

• 6. No court or arbitration case relating to the debts or claims of the company or its subsidiary has been initiated or terminated at a purchase price of at least 10% of the capital of the company
• 7. There is no purchase, sale or pledge of shareholdings in commercial companies by the issuer or its subsidiary
• 8. There are no other circumstances that the Company believes could be relevant to investors in taking a decision to acquire, sell or continue to hold publicly-traded securities

Date:28.10.2019 г.

Asen Minchev, Executive Director of Eurohold Bulgaria AD

DECLARATION in accordance with article 100o, paragraph 4, item 3 of Public Offering of Securities Act

The undersigned,

• 1. Kiril Boshov Chairman of the Management Board of Eurohold Bulgaria AD
• 1. Asen Minchev Executive member of the Management Board of Eurohold Bulgaria AD
• 1. Ivan Hristov Financial controller of Eurohold Bulgaria AD (complier of the financial statements)
• 1. Hristo Stoev Procurator of Eurohold Bulgaria AD

hereby DECLARE that to our best knowledge:

1. The set of interim financial statements for Q3'2019, composed in accordance with the applicable accounting standards, contain true and fair information regarding the assets and liabilities, the financial standing and the profit of Eurohold Bulgaria AD;

2. The interim management report of Eurohold Bulgaria AD for Q3'2019 contains credible review of the information under article 100o, paragraph 4, item 2 of Public Offering of Securities Act.

Declarers:

1. Kiril Boshov

2. Asen Minchev

3. Ivan Hristov

4. Hristo Stoev