Annual Report • Jun 29, 2022
Annual Report
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8945007IDGKD0KZ4HD95 2021-12-31 8945007IDGKD0KZ4HD95 2021-01-01 2021-12-31 iso4217:BGN iso4217:EUR xbrli:shares xbrli:pure iso4217:BGN xbrli:shares , false
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ALLTERCO JSCo
Unified Identification Code (UIC): 201047670
Unless otherwise stated, all amounts are in BGN thousand.
| December 31, 2021 | December 31, 2020 | Notes | |
|---|---|---|---|
| ASSETS | |||
| Non-current assets | |||
| Property, plant and equipment | 7 936 | 8 656 | 4.01 |
| Intangible assets | 8 | 439 | 4.02 |
| Investments in subsidiaries | 2 054 | 13 969 | 4.03 |
| Investments in associated companies | 18 | - | 4.04 |
| Other long-term capital investments | 6 | - | 4.05 |
| Long-term trade receivables | - | - | 4.06 |
| Deferred tax assets | 958 | 2 624 | 4.07 |
| Total non-current assets | 12 645 | 25 688 | |
| Current assets | |||
| Receivables from related companies | 1 769 | 3 325 | 4.08 |
| Trade receivables | 38 271 | 3 055 | 4.09 |
| Other receivables | 347 | 16 434 | 4.10 |
| Cash and cash equivalents | 25 146 | 14 612 | 4.11 |
| Prepaid expenses | 1 | 1 | 4.12 |
| Total current assets | 65 534 | 37 427 | |
| Non-current assets classified as held for sale and assets included in disposal groups classified as held for sale | - | 3 906 | 4.13 |
| TOTAL ASSETS | 78 179 | 67 021 |
Date: 25 March 2022
ALBENA BENKOVA BENEVA
Digitally signed by ALBENA BENKOVA BENEVA
Date: 2022.03.25 19:06:25 +02'00'
Dimitar Stoyanov Dimitrov
Digitally signed by Dimitar Stoyanov Dimitrov
Date: 2022.03.25 19:49:10 +02'00'
Compiler of the financial statements:
Executive Director:
/Albena Benkova Beneva/
/ Dimitar Stoyanov Dimitrov/
Audit Company Primorska Audit Company Ltd.
MARIAN VASILEV NIKOLOV
Digitally signed by MARIAN VASILEV NIKOLOV
Date: 2022.03.25 20:28:33 +02'00'
Marian Nikolov
Registered auditor, responsible for the audit
Reg. N: 0601
Ilia Iliev
Digitally signed by Iliya Nedelchev Iliev
Date: 2022.03.25 21:02:06 +02'00'
Iliya Nedelchev Iliev
Reg. N: 086
Managing Director
The statement of financial position should be read together with the explanatory notes set out on pages 8 to 57, which are an integral part of the financial statements.
Page 3 of 115
ALLTERCO JSCo
Unified Identification Code (UIC): 201047670
Unless otherwise stated, all amounts are in BGN thousand.
| December 31, 2021 | December 31, 2020 | Notes | |
|---|---|---|---|
| LIABILITIES | |||
| Non-current liabilities | |||
| Bank loans | 1 615 | 1 900 | 4.14 |
| Total non-current liabilities | 1 615 | 1 900 | |
| Current liabilities | |||
| Current portion of bank loans | 285 | 174 | 4.14 |
| Trade payables | 222 | 276 | 4.15 |
| Payables to employees and social security liabilities | 10 214 | 1 150 | 4.16 |
| Tax liabilities | 665 | 987 | 4.17 |
| Other liabilities | 2 765 | 2 887 | 4.18 |
| Total current liabilities | 14 151 | 5 374 | |
| TOTAL LIABILITIES | 15 766 | 7 274 | |
| EQUITY | |||
| Registered capital | 18 000 | 18 000 | 4.19 |
| Retained earnings | 5 232 | 5 322 | 4.20 |
| Reserves | 1 800 | 1 500 | 4.21 |
| Reserve of issue of shares | 5 403 | 5 703 | 4.22 |
| Other equity components | 1 036 | 4 849 | 4.23 |
| TOTAL EQUITY | 31 471 | 35 374 | |
| TOTAL EQUITY AND LIABILITIES | 78 179 | 67 021 |
Date: 25 March 2022
Dimitar Stoyanov Dimitrov
Digitally signed by Dimitar Stoyanov Dimitrov
Date: 2022.03.25 19:49:33 +02'00'
ALBENA BENKOVA BENEVA
Digitally signed by ALBENA BENKOVA BENEVA
Date: 2022.03.25 19:07:06 +02'00'
Executive Director:
/Albena Benkova Beneva/
/ Dimitar Stoyanov Dimitrov/
Audit Company Primorska Audit Company Ltd.
Ilia Nedelchev Iliev
Digitally signed by Iliya Nedelchev Iliev
Date: 2022.03.25 21:05:24 +02'00'
Marian Nikolov
Registered auditor, responsible for the audit
Reg. N: 0601
MARIAN VASILEV NIKOLOV
Digitally signed by MARIAN VASILEV NIKOLOV
Date: 2022.03.25 20:30:45 +02'00'
Iliya Iliev
Reg. N: 086
Managing Director
The statement of financial position should be read together with the explanatory notes set out on pages 8 to 57, which are an integral part of the financial statements.
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ALLTERCO JSCo
Unified Identification Code (UIC): 201047670
Unless otherwise stated, all amounts are in BGN thousand.
| Notes | 2021 | 2020 | |
|---|---|---|---|
| Revenue | 5.01 | 3 549 | 3 446 |
| Other operating income | 5.02 | 250 | 2 284 |
| Sales expenses | 5.03 | (1 539) | (1 059) |
| Administrative expenses | (25) | (13) | |
| Other expenses | (1 225) | (1 03) | |
| Profit from operating activities | 1 059 | 3 691 | |
| Financial income | 5.04 | - | 108 |
| Financial expenses | 5.05 | (7) | (4) |
| Profit (loss) from the operating activities | 1 052 | 3 795 | |
| Profit (loss) before tax | 1 052 | 3 795 | |
| Tax Savings (Expense) | 5.06 | (421) | 46 |
| Net profit | 3 270 | 3 341 | |
| Items that can be reclassified to profit or loss in subsequent periods | (3 573) | 4 849 | |
| From other long-term equity instruments | (3 573) | 4 849 | |
| Other comprehensive income for the period, after taxation | (3 573) | 4 849 | |
| TOTAL COMPREHENSIVE INCOME FOR THE PERIOD | (303) | 7 179 | |
| Basic income per share in Bulgarian levs | 0.1817 | 0.1517 |
Date: 25 March 2022
Dimitar Stoyanov Dimitrov
Digitally signed by Dimitar Stoyanov Dimitrov
Date: 2022.03.25 19:50:13 +02'00'
ALBENA BENKOVA BENEVA
Digitally signed by ALBENA BENKOVA BENEVA
Date: 2022.03.25 19:07:39 +02'00'
Compiler of the financial statements:
Executive Director:
/Albena Benkova Beneva/
/ Dimitar Stoyanov Dimitrov/
Audit Company Primorska Audit Company Ltd.
Ilia Nedelchev Iliev
Digitally signed by Iliya Nedelchev Iliev
Date: 2022.03.25 21:08:35 +02'00'
Marian Nikolov
Registered auditor, responsible for the audit
Reg. N: 086
MARIAN VASILEV NIKOLOV
Digitally signed by MARIAN VASILEV NIKOLOV
Date: 2022.03.25 20:34:35 +02'00'
Reg. N: 0601
Iliya Iliev
Managing Director
The statement of comprehensive income should be read together with the explanatory notes set out on pages 8 to 57, which are an integral part of the financial statements.
Page 5 of 115
ALLTERCO JSCo
Unified Identification Code (UIC): 201047670
Unless otherwise stated, all amounts are in BGN thousand.
| Registered capital | Retained earnings | Reserves | Reserve from issue of shares | Other equity components | Total | |
|---|---|---|---|---|---|---|
| Balance as of January 1, 2020 | 15 000 | 3 442 | 1 500 | 9 000 | - | 28 942 |
| Increase of registered capital | 3 000 | - | - | - | - | 3 000 |
| Expenses related to capital increase | - | - | - | (450) | - | (450) |
| Total comprehensive income for the period, including: | - | 2 330 | - | - | 4 849 | 7 179 |
| Profit for the period | - | 2 330 | - | - | - | 2 330 |
| Other comprehensive income for the period | - | - | - | - | 4 849 | 4 849 |
| Distribution of dividends | - | (4 849) | - | - | - | (4 849) |
| Balance as of December 31, 2020 | 18 000 | 5 322 | 1 500 | 5 703 | 4 849 | 35 374 |
| Balance as of January 1, 2021 | 18 000 | 5 322 | 1 500 | 5 703 | 4 849 | 35 374 |
| Transfer to reserves | - | (300) | 300 | - | - | - |
| Total comprehensive income for the period, including: | - | 3 270 | - | - | (3 573) | (303) |
| Profit (Loss) for the period | - | 3 270 | - | - | - | 3 270 |
| Other comprehensive income for the period | - | - | - | - | (3 573) | (3 573) |
| Distribution of dividends | - | (3 600) | - | - | - | (3 600) |
| Other movements | - | 240 | - | - | (240) | - |
| Balance as of December 31, 2021 | 18 000 | 5 232 | 1 800 | 5 403 | 1 036 | 31 471 |
Date: 25 March 2022
ALBENA BENKOVA BENEVA
Digitally signed by ALBENA BENKOVA BENEVA
Date: 2022.03.25 19:08:16 +02'00'
Dimitar Stoyanov Dimitrov
Digitally signed by Dimitar Stoyanov Dimitrov
Date: 2022.03.25 19:50:35 +02'00'
Compiler of the financial statements:
Executive Director:
/Albena Benkova Beneva/
/ Dimitar Stoyanov Dimitrov/
Audit Company Primorska Audit Company Ltd.
Ilia Nedelchev Iliev
Digitally signed by Iliya Nedelchev Iliev
Date: 2022.03.25 21:11:33 +02'00'
Marian Nikolov
Registered auditor, responsible for the audit
Reg. N: 086
MARIAN VASILEV NIKOLOV
Digitally signed by MARIAN VASILEV NIKOLOV
Date: 2022.03.25 20:37:05 +02'00'
Reg. N: 0601
Iliya Iliev
Managing Director
The statement of changes in equity should be read together with the explanatory notes set out on pages 8 to 57, which are an integral part of the financial statements.
Page 6 of 115
ALLTERCO JSCo
Unified Identification Code (UIC): 201047670
Unless otherwise stated, all amounts are in BGN thousand.
| Notes | 2021 | 2020 | |
|---|---|---|---|
| Cash flows from operating activity | |||
| Proceeds from customers | 19 177 | 15 374 | |
| Payments to suppliers | (16 393) | (10 936) | |
| Payments/recovered taxes | (783) | (773) | |
| Payments to employees and social security institutions | (37) | (162) | |
| Recovered (paid) corporate profit tax | (445) | (1 637) | |
| Currency exchange rate differences | 279 | 5 | |
| Other proceeds, net | 62 | - | |
| Net cash flows from operating activities | 2 850 | 1 438 | |
| Cash flow from investment activities | |||
| Purchase of noncurrent assets | (930) | (996) | |
| Purchase of investments | (55) | 4 786 | |
| Dividend received | - | (1 760) | |
| Sale of investments | - | 3 226 | |
| Daughter company capital increase | - | 6 553 | |
| Net cash flows from investment activities | (985) | 11 719 | |
| Cash flow from financing activities | |||
| Capital increase | - | 9 000 | |
| Dividend paid | (3 436) | (428) | |
| Loans paid | (276) | (598) | |
| Interest, fees and commissions paid | (58) | (75) | |
| Interest, fees and additional monetary contributions | - | 1 475 | |
| Other proceeds (payments), net | (75) | - | |
| Net cash flow from financing activities | (3 845) | 9 374 | |
| Net increase in available cash and cash equivalents for the period | (1 980) | 22 531 | |
| Available cash and cash equivalents in the beginning of the period | 4.11 | 14 612 | 16 434 |
| Available cash and cash equivalents at the end of the period | 12 632 | 14 612 |
Date: 25 March 2022
Digitally signed by ALBENA Digitally signed by# ALLTERCO JSCo
NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021
Unless otherwise stated, all amounts are in BGN thousand.
The statement of changes in cash flow should be read together with the explanatory notes set out on pages 8 to 57, which are an integral part of the financial statements.
Page 7 of 115
NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021
Unless otherwise stated, all amounts are in BGN thousand.
Page 8 of 115
NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021
Unless otherwise stated, all amounts are in BGN thousand.
Unless otherwise stated, all amounts are in BGN thousand.
Allterco JSCo, Sofia, is entered in the Commercial Register of the Registry Agency with UIC as per Bulstat (Unified Identification Code as per the Bulgarian Statistical Register): 201047670. The company is with seat and address of management in Sofia 1407, 103, Cherni Vrah Blvd. The Company was initially registered with capital of BGN 5,488,000 (five million four hundred and eighty- eight thousand), distributed in 5,488,000 ordinary registered voting shares with nominal value of BGN 1.00 each. The registered share capital of Allterco JSCo was fully paid in. At the end of 2015, the capital was increased to BGN 13,500 thousand through cash and non-cash contributions. At the end of 2016, the capital was increased to BGN 15,000 thousand after the successful initial public offering on the Bulgarian Stock Exchange. In 2020, the capital was increased to BGN 17,999,999 as a result of a procedure for Public Offering of a new issue of shares. Since 22 November 2021 the shares of Allterco are traded on two regulated markets in the EU – Bulgarian Stock Exchange and Frankfurt Stock Exchange. The scope of business of Allterco JSCo includes the acquisition, management, evaluation and sale of participations in Bulgarian and foreign companies; acquisition, management and sale of bonds; acquisition, evaluation and sale of patents, assignment of licenses for use of patents to companies in which the Company participates; financing of companies in which the Company participates. The company is managed by the Board of directors and is represented by Svetlin Todorov and Dimitar Dimitrov. The current individual financial statements had been approved by the Board of Directors on 25 March 2022
The company maintains its current accounting and prepares its financial statements in accordance with the requirements of the Bulgarian commercial and accounting legislation. These financial statements have been prepared in accordance with the requirements of the International Accounting Standards, published by the International Accounting Standards Board and adopted by the European Union. As of December 31, 2021, IASs include the International Accounting Standards (IASs), the International Financial Reporting Standards (IFRSs), the Interpretations of the Standing Interpretation Committee and the Interpretations of the IFRS Interpretation Committee, approved by the IAS Committee and in power since January 1 20201. The IAS Committee issues every year the standards and their interpretations, which after the formal approval by the EC, are valid for the year in which they are issued. However, a big part of them is not applicable to the company's business because of the specific issues that are addressed in them.
The below mentioned amendments in the standards are adopted by the Commission of EU and are valid during 2021:
| Standard or Interpretation, date of amendment and date of implementation | Name of the Standard or Interpretation | Effect on individual financial statements of the Company |
|---|---|---|
| Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, issued on 27 August 2020, valid for the periods starting at and after 1 January 2021 | Interest Rate Benchmark Reform – Phase 2 | No impact on the individual financial statements of the Company |
| Amendments to IFRS 4, issued on 25 June 2020, valid for periods starting at or after 1 January 2021 | Insurance contracts – postponement of implementation of IFRS 9 | No impact on the individual financial statements of the Company |
| Amendments to IFRS 16, issued on 31 March 2021, valid for periods starting at or after 1 April 2021 | COVID 19 – discounts related to rents after 30 June 2021 | No impact on the individual financial statements of the Company |
Impact from the initial implementation of the Interest Rate Benchmark Reform – Phase 2 Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16
Interest Rate Benchmark Reform – Phase 2
During the previous year the Amendments to IFRS 9/ IAS 39 and IFRS 7 Interest Rate Benchmark Reform – Phase 1 change some specific requirements to accounting treatments of hedging in order to allow the accounting treatment of affected hedges to continue in a period of uncertainty, before the hedged positions or instruments be changes as a result of the ongoing Interest Rate Benchmark Reform.
During the current year the Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2, allow the companies to recognize the effect from switching from the existing base interest rates (IBOR) to alternative base interest rates (called also “risk free” rates or RFR), without making accounting changes, which would not provide useful information to the readers of financial statements.
The goals of the amendments from Phase 2 are to help the companies in:
а) the application of IFRS standards when changes are made in the agreed cash flows and hedging relationships due to the reform of the base interest rate; and
б) providing useful information to the readers of financial statements.
The Phase 2 amendments to the requirements of IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 refer to:
а) changes in the principles for determining the contractually agreed cashflows from financial assets, financial liabilities and lease liabilities;
б) reporting of hedging; and
в) related notes.
The amendment made with Phase 2 apply only to changes required by the reform of benchmark interest for financial instruments and hedging relationships. The amendments made with Phase 1 and Phase 2 do not have an effect on the Company as it does not use hedging on the positions owned, which are subject to risk of change in the benchmark interest rate.
Amendment to IFRS 4 Insurance Contracts – postponement of the application of IFRS 9
In June 2020 IASC issued Amendments to IFRS 17 as a response to the importance and challenges for the application, which were identified after the release of IFRS 17. The amendments postpone the initial application of IFRS 17 (including amendments) for the annual financial periods starting at or after 1 January 2023. At the same time IASC issues Prolongation of temporary relief from the application of IFRS 9 (Amendment to IFRS 4), which prolonged the set date for the end of the temporary relief from application of IFRS 9 in IFRS 4 to the annual reporting period starting at or after 1 January 2023. The amendments do not have an effect on the Company as it is not in the insurance business.
Amendments to IFRS 16 COVID 19 – discounts related to rents applicable after 30 June 2021
In May 2020 IASC issued Amendments to IFRS 16 - COVID 19 – discounts related to rents. Those amendments provide relief to tenants for the reporting of discounts related to rent payments, which are a consequence of COVID 19, introducing practical measures in IFRS 16. As practical measure the tenant may choose not to asses if a rent discount related to COVID 19 is change in the rent contract. The tenants that make this choice reports all payments related to the rent after the rent discount, in the same way this change would have been in the application of IFRS 16, should no change in the rent contract was made. The practical measures apply only to the rent discounts resulting from COVID 19 pandemic and only if the below listed conditions are met:
a) The change in rent payments leads to change in the rent contract as the amended remuneration does not exceed the rent remuneration immediately before the change;
b) Any discount of rent payments concerns only the payments which were initially due on or before 30 June 2021 (for example a rent discount meets this requirement if it generates lower rent payments on or before 30 June 2021 as well as higher rent payments after 30 June 2021); and
c) The remaining terms of the rent contract do not change substantially.# NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021
Unless otherwise stated, all amounts are in BGN thousand.
| Standard or interpretation | Date of adoption by EU Commission |
|---|---|
| Amendments to IFRS 3, IAS 16 и IAS 37, Annual improvements 2018-2020 issued on 14 May 2020, applicable to annual financial periods starting at or after 1 January 2022 | 28 June 2021 |
| IFRS 17 issued on 18 May 2017, including Insurance contracts amendments to IFRS 17 issued on 25 June 2020, applicable to annual financial periods starting at or after 1 January 2023 | 19 November 2021 |
The Company did not apply the above-mentioned standards, which are adopted by the EU but still are not in force. The management of the Company expects that the application of the above-mentioned contracts will not have significant effect on the individual financial statements of the Company for future periods.
| Standard or clarification | Adoption status by EU Commission |
|---|---|
| Amendments to IAS 23 January 2020 and 15 July 2020, in effect non-current and classification of assets adoption for annual financial periods starting at or as current and non-current 1 issued on Classification of liabilities as current or Waiting for a date of – after 1 January 2023 postponement of enforcement date | |
| Amendments to IAS 1 issued on Financial statements presentation and Waiting for a date for 12 February 2021, in effect for annual disclosure of accounting policies financial periods starting at or after 1 January 2023 adoption | |
| Amendments to IAS 8 issued on Accounting policies, Amendments in Waiting for a date for 12 February 2021, in effect for annual the accounting assessments and adoption Page 14 of 115 ALLTERCO JSCo Unified Identification Code (UIC): 201047670 NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021 Unless otherwise stated, all amounts are in BGN thousand. financial periods starting at or after mistakes: Definition of accounting 1 January 2023 assessments | |
| Amendments to IAS 12, issued on 7 May Corporate profit tax: Deferred tax Waiting for a date for 2021, in effect for annual financial periods related to assets and liabilities arising adoption starting at on after 1 January 2023 from one deal | |
| IFRS 17 issued on 9 December 2021, in Insurance contracts: Initial application Submitted for adoption by effect for annual financial periods starting of IFRS 17 and IFRS 9 – Comparable the Commission, expected at or after 1 January 2023 data to be adopted during the first quarter of 2022 |
The individual financial statements of the Company have been prepared in accordance with the going concern principle. The latter assumes that the Company will continue to exist in the foreseeable future. During the last reporting period the COVID-19 pandemic did not cause any negative effect on the business activities of Allterco and its subsidiaries. The Management has no plans or intentions to sell the business or discontinue the operations, which could significantly change the book value or classification of the assets and liabilities recognized in the financial statements. The valuation of assets and liabilities and the measurement of income and expenses are carried out in compliance with the principle of historical cost. This principle has been modified in certain cases by revaluing certain assets and / or liabilities to their fair value at December 31 of the current or previous year, as set out below.
A subsidiary is a company that is controlled by the parent company. Control is the power to govern the financial and operating policies of a subsidiary so as to obtain benefits from its activities. As of December 31, 2021 the Company has three subsidiaries registered in Bulgaria, 2 subsidiaries abroad and 1 associated company abroad. In these individual financial statements, investments in subsidiaries are reported at acquisition cost and these statements do not constitute consolidated financial statements within the meaning of IFRS 10 Consolidated Financial Statements. In order to gain a complete picture of the financial position, results of operations, and changes in the Page 15 of 115 ALLTERCO JSCo Unified Identification Code (UIC): 201047670 NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021 Unless otherwise stated, all amounts are in BGN thousand. financial position of the group as a whole, users of these individual financial statements need to read it together with the consolidated financial statements of the company for the period ending on December 31, 2021. The company prepares consolidated financial statements, which according to regulatory requirements in Bulgaria are presented after the individual financial statements are approved.
Functional currency is the currency of the main economic environment in which a company operates and in which most of its revenues and costs are incurred. The functional currency reflects the main deals, events and term significant for the company. The Company reports the transactions in the accounting and prepares its financial statements in the national currency of the Republic of Bulgaria - the Bulgarian lev, adopted by the Company as a functional currency. The present individual financial statements are prepared in thousand BGN, unless something different is stated. Income per share is presented in BGN.
The transactions in foreign currencies are booked initially as the amount in foreign currency is translated in reporting currency by applying the currency fixing of Bulgarian National Bank as of the date of the transaction. Currency exchange differences that arise at settlement of foreign currency open positions or at time of reporting such positions when the currency exchange rate is different than the initial exchange rate reported in the profit, loss or other comprehensive income for the respective period. The cash positions in foreign currencies as of 31 December 2020 and 2021 are evaluated in the current financial statements at the closing exchange rate of Bulgarian National Bank.
The application of IAS stipulates that management of the Company should use some accounting assumptions and estimates in the process of preparing financial statements in order to the value of some assets, liabilities, revenues, costs and of balance sheet assets and liabilities. This is done on the basis on best judgment by management based on historic experience and analysis of all relevant factors as of the date of preparing the financial statements. Actual values may differ from the management estimates Page 16 of 115 ALLTERCO JSCo Unified Identification Code (UIC): 201047670 NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021 Unless otherwise stated, all amounts are in BGN thousand. presented in the financial statements.
Bulgarian accounting legislation stipulates that the financial year ends on December 31 and all companies are obliged to prepare and present financial statements as of this date together with comparative data for the same period of previous year. If necessary, the comparative data for the previous year is amended in order to achieve better comparability between the two periods.
Property, plant and equipment (non-current tangible assets), except for land, are presented in the financial statements at acquisition price (cost) less the accumulated depreciation and eventual impairment losses.
Upon their initial acquisition, the properties, plant and equipment are valued at acquisition price (cost), which includes the purchase price, incl. customs duties and any direct costs necessary to bring the asset to working condition. The direct costs are: costs for site preparation, costs for initial delivery and processing, installation costs, costs for fees of persons related to the project, non-refundable taxes, etc. The Company has set a value threshold of BGN 700, below which the acquired assets, regardless of the fact that they have the characteristics of a non-current asset, are treated as a current expense at the time of their acquisition.
The expenses for repair and maintenance are recognized as current expense in the period in which they are incurred. Subsequent expenses related to property, plant and equipment, which have the characteristics of replacement of some key parts or reconstruction and that meet the criteria for recognition as a long-term asset are capitalized increasing the book value if the corresponding asset. Also, the remaining useful life of the asset is reassessed at the time of capitalization. At the same time, the undepreciated part of the substituted parts is written off from the book value of the assets and is recognized as current expense for the period. Page 17 of 115 ALLTERCO JSCo Unified Identification Code (UIC): 201047670 NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021 Unless otherwise stated, all amounts are in BGN thousand.
The depreciation of properties, plant, equipment and intangible assets is calculated using the straight-line method.# NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021
Unless otherwise stated, all amounts are in BGN thousand.
The depreciation periods are determined by the management of the Company based on estimated useful life of assets. No depreciation is recognized on land, fully depreciated assets and assets that are in process of acquisition as well as on assets held for sale in accordance with IFRS 5 Non-current assets held for sale and discontinued operations. The following depreciation rates are applied by asset groups:
| Asset Group | 2021 | 2020 |
|---|---|---|
| Vehicles | 4% | 4% |
| Computers, peripherals and software | 2 | 2 |
| Office equipment | 5 | 5 |
| Other | 6.67% | 6.67% |
| Intangible assets | 5 – 6.67% | 6.67% |
At the end of each year a review of the book value is made on all long-term assets that are not reported at fair value in order to determine if there are evidences of impairment. If such evidences exist the Company estimates the recoverable amount of each asset and determines the resulting loss from impairment. When is impossible to calculate the recoverable value of an asset the Company estimates the recoverable value of the cash generation object of which the asset is part. If the so calculated recoverable value of the asset (that generates cash flows) is lower than its book value, the book value is decreased to the level of recoverable amount of the asset (that generates cash flows). The loss from impairment is recognized in the statement of comprehensive income in the year of occurrence. In case the loss of impairment is subsequently recovered the book value of the asset (that generates cash flows) is increased up to the revalued recoverable amount but not higher than the value of the asset if no impairment was recognized. Recovered impairment loss is recognized as a revenue in the statement of comprehensive income in the year when it the recovery was incurred, unless the revaluation of corresponding asset is reported in the revaluation reserve. In this case the revaluation reserve is amended.
The long-term investments in shares of daughter and associated companies are presented in the individual financial statements at acquisition cost, which is the fair value of amount paid, including direct costs incurred for the acquisition of the investment, less the accumulated impairment. The investments in daughter and associated companies are subject to annual assessment for impairment. In case there are evidences for impairment it is recognized in the statements of comprehensive income. In case of sale or purchase of investments in daughter or associated companies the effective date of the deal is the date of closing. The investments are written off when the rights associated with them are transferred to another party when the legal requirements for such transfer are met and the control over the investments is lost. The profit (loss) from the sale of investments is reported as part of financial income or financial expenses in the statement of comprehensive income for the year.
Other long-term financial investments are non-derivative financial assets in the form of shares and stakes of other companies (minority interest) held with a long-term perspective.
Initially, equity investments are recognized at acquisition price, which is the fair value of the consideration paid, including direct expenses of the investment acquisition (the financial asset). All purchases and sales of equity investments are recognized on the “settlement date” of the transaction.
The capital investments held by the company are subsequently measured at fair value. The effects of the subsequent measurement to fair value are presented in the statement of comprehensive income (in other components of comprehensive income) and respectively in the reserve related to financial assets at fair value, through the other comprehensive income. These effects are transferred to retained earnings on the disposal (sale) of the respective investment.
Non-current assets are classified as held for sale if their book value will be recovered through sale rather than through continuing use in the Company's operations. This condition is considered to exist only when the sale is highly secure and the relevant non-current assets are available for immediate sale in their present condition. Non-current assets classified as held for sale are measured at the lower value between the fair value and the book value less the costs to sell.
A financial instrument is any contract that gives rise to both a financial asset in one enterprise and a financial liability or equity instrument in another enterprise. Financial assets and liabilities are recognized in the statement of financial position when the company becomes a party to the contractual provisions of the financial instrument that gave rise to the asset or liability. Financial assets are derecognized from the statement of financial position after the contractual rights to receive cash flows have expired or the assets have been transferred and their transfer meets the derecognition requirements in accordance with IFRS 9 Financial Instruments. Financial liabilities are written off from the statement of financial position when and only when they are repaid - i.e., the obligation specified in the contract has been canceled, annulled or its term has expired. The activity of the company does not presuppose the existence of various financial instruments. The main financial instruments included in the statement of financial position of the company are presented below.
Trade receivables are amounts owed by customers for goods and services sold in the ordinary course of business. They are usually due for short-term settlement and are therefore classified as current. Trade receivables are initially recognized in the amount of unconditional remuneration due, unless they contain significant financing components. The Company holds trade receivables for the purpose of collecting contractual cash flows and therefore measures them at depreciated cost using the effective interest method. Discounting is not performed when its effect is insignificant. As of the date of preparation of the financial statements, the company assesses whether there is objective evidence of impairment of trade receivables that are individually significant. An impairment loss is recognized whenever there is objective evidence that the company will not be able to collect all amounts due according to the original terms of the receivable. The amount of impairment is the difference between the book value and the recoverable amount. The latter represents the present value of the expected cash flows, discounted with the effective interest rate. The amount of impairment of trade receivables during the current period is reported as an expense. When a receivable is expected to be collected within one year, it is reported as a current asset. In other cases, receivables are reported as non-current assets. Future cash flows designated for a group of financial assets that are collectively measured for impairment are determined based on historical information about financial assets with credit risk characteristics similar to those of the reviewed financial assets group. Assets that are individually impaired are not included in an impairment group. The Company uses a simplified approach in accounting the impairment of trade and other receivables and recognizes an impairment loss as expected credit losses for the entire term. They represent the expected shortfall in contractual cash flows, given the possibility of default at any time during the term of the financial instrument. Significant financial difficulties of the debtor, probability of bankruptcy and liquidation, financial restructuring or inability to repay the debt (more than 30 days) are considered as indicators that the trade receivable should be impaired. In estimating expected credit losses on trade receivables, the company uses a provision matrix as well as its past experience with losses on trade receivables to estimate the expected credit losses for the entire term of the financial assets. The significant part of the contracts with clients and additional cash installments are with daughter companies and because of this the Management assesses the possibility of occurrence of credit losses as rather minimal.
Cash and cash equivalents in BGN are valued at their nominal value, and cash in foreign currency - at the closing exchange rate of the BNB at the end of each reporting period. Cash for the purposes of compiling the statement of cash flows are monetary funds in cash and in bank accounts.
Interest-bearing loans are initially recognized at fair value formed from the received cash receipts less the costs to sell.# NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021
Unless otherwise stated, all amounts are in BGN thousand.
The registered capital of the company is presented at the nominal value of issued shares and it corresponds to the value in the last court registration.
As reserves in the statement of financial position of the company are presented the accumulated financial results from previous years, the reserves from premiums, related to the issue of shares, reserves from investments reported at fair value though other comprehensive income, as well as statutory reserves required by the Commercial Law and the Articles of the Company. The shareholders of the company may dispose capital reserves after a decision of the General Meeting.
On the date of entry into force of the contract, the Company assesses whether the contract represents or contains a lease. In particular, whether the contract transfers the right to control the use of the identified asset for a certain period of time.
The Company applies a unified approach to the recognition and assessment of all leases, except for short- term leases (i.e., leases with a lease term of up to 12 months) and leases of low-value assets. The Company recognizes lease liabilities for the payment of lease installments and assets with the right of use, representing the right to use the assets.
The Company recognizes assets with a right of use from the date of the lease (i.e., the date on which the main asset is available for use). Assets with the right of use are assessed at the acquisition price less the accumulated depreciation and impairment losses and adjusted for any revaluation of lease obligations. The acquisition price of the assets with the right of use includes the sum of the recognized lease obligations, the initial direct costs incurred and the lease payments made on or before the start date of the lease, an estimate of the costs to be incurred by the lessee in dismantling and relocating the asset, the restoration of the site on which it is located or the restoration of the asset to the condition required under the terms of the lease, reduced by any incentives received under the lease. The assets with the right of use are depreciated on a straight-line basis over the lease term.
If at the end of the lease term the ownership of the leased asset is transferred to the Company, or the acquisition price reflects the exercise of a purchase option, the depreciation is calculated using the expected useful life of the asset.
From the starting date of the lease, the Company recognizes lease liabilities measured at the present value of the lease payments that will be made during the lease term. Lease payments include fixed installments (including fixed payments on the merits) less any eligible lease incentives, variable lease payments that depend on an index or interest rate, and amounts that are expected to be paid under guarantees for residual value. Lease payments also include the price of exercise of a purchase option about which it is reasonably certain that it will be exercised by Company, as well as penalties for termination of the lease if the lease term reflects the Company's exercise of an option of termination. Variable lease payments that do not depend on an index or interest rate are recognized as an expense in the period in which the event or condition that triggers the payment occurs. In calculating the present value of lease payments, the Company uses the intrinsic interest rate on loans at the start date of the lease, as the interest rate set in the lease cannot be reliably determined. After the starting date, the amount of the lease liabilities increases with the interest and decreases with the lease payments made. In addition, the book value of leased liabilities is revalued if there is a modification, change in the lease term, change in lease payments (for example, changes in future payments as a result of a change in the index or interest rate used to determine those lease payments) or a change in the valuation of the option to purchase the main asset.
The Company applies the exemption from recognition of short-term leases in respect of its short-term leases of buildings (for example, leases with a lease term of 12 months or less from the starting date and which do not contain a purchase option). The Company also applies the exemption from recognizing leases of low- value assets to leases of office equipment that is considered to be of low value. Lease payments on short- term leases and leases of low-value assets are stated as an expense on a straight-line basis over the term of the lease.
The government of the Republic of Bulgaria undertakes the liability to ensure pension payments on the basis of defined contribution plans. The liability of the Company to pay the amounts booked under the defined contribution plans for the employees is recognized the in statement of comprehensive income at the time of occurrence of the liability.
The Company recognize as a liability undiscounted amount of estimated cost of annual paid leave, in accordance with the Labor Code and its internal rules, which is expected to be paid to employees in return to their labor for the past reporting period.
In compliance with the Labor Code, when a labor contract of an employee that obtained the right for pension is terminated, the Company pays a compensation at the amount of two gross monthly salaries, if the employee worked for the Company less than 10 years, or six gross monthly salaries if the employee worked for the Company more than 10 years. The Company estimates that the amount is not significant and therefore it is not included in the financial report.
Revenue from sales and operating costs are accrued at the time of their occurrence, regardless of the timing of monetary receipts and payments. The reporting and recognition of income and expenses are applied in compliance with the requirements for casual connection between them. Revenue is measured at the fair value of the consideration received or receivable, less the amount of any discounts granted. The Company recognizes revenues when the amount of the revenue can be measured reliably, when it is possible for the company to obtain future economic benefits and when it meets specific criteria for each activity of the company specified here below. The amounts collected on behalf of third parties, such as sales taxes, as value added tax is, are excluded from revenue.
Revenues from services (administrative or other) are recognized on a monthly basis in the month when the services were performed.
Dividend income is recognized in the period when the Company become aware of the right to receive dividend. The dividend income I s recognized as other revenue in the statement of comprehensive income.
The government donations or help which are received by the Company as a compensation for expenses made are recognized in the profit or loss for the period during which the expenses were made. The revenue from government donations, representing compensation for investment expenses for acquiring assets, are recognizes in the current profit and loss for the whole period of useful life of the assets, which usually is equal to the amortization period of each asset. The profit (loss) from sales of plant, machinery, equipment and intangible assets is recognized as other revenue (expenses).# ALLTERCO JSCo
When assets are exchanged, the Company recognizes revenue (expenses) from the transaction at the amount equal to the difference between the fair value of the assets received and the book value of the asset exchanged. When economic benefits are expected to be spread over several financial periods and their relation to the revenues could be determined only in general or indirectly, the expenses are recognized in the profit and loss on the basis of procedures for systematic and rational distribution.
The expenses related to a loan, which can be linked to an asset for which the process of acquisition, construction, or production, before it is ready for the intended use, takes a significant amount of time, should be capitalized as part of this asset. All other financial income and expenses are reported in the profit or loss for all instruments held at amortization value through the use of the effective interest rate method. The effective interest rate method is a method of calculating the amortized value of a financial asset or liability in order to distribute the interest income or expenses over the respective period of time. The effective interest rate is the rate that is used for discounting the expected future cash income or expense throughout the expected useful life of the financial instrument, or in certain cases for a shorter period of time, to the net book value of the financial asset or liability. When calculating the effective interest rate, the Company assesses the cash flows by considering all contractual terms of the financial instrument but without including any potential future losses or impairments. The calculation includes taxes, transaction costs, premiums, or discounts paid or received by the contractual parties, which are inseparable parts of the effective interest rate.
The expenses in the Company are recognized at the moment of their occurrence and on the basis of the principles of accrual and comparability. Expenses are recognized when there is a decrease in future economic benefits associated with a decrease in an asset or an increase in a liability that can be measured reliably. Recognition of expenses for the current period is performed when their corresponding income is accrued. An expense is recognized immediately in the income statement when the expense does not create a future economic benefit or when and to the extent that the future economic benefit does not meet the requirements or ceases to meet the requirements for recognition of an asset in the balance sheet. Expenses are reported on the principle of current accrual and comparability with the reported revenues. They are measured at the fair value of the remuneration paid or payable.
Income tax expense represents the sum of the current income taxes and the tax effect on temporary tax differences. Current income tax is determined on the basis of the taxable profit for the period, applying the tax rate according to the tax legislation as of the date of the financial statements. Deferred tax assets and/or liabilities are the amounts of recoverable and payable income taxes for future periods in respect of deductible and taxable temporary tax differences. Temporary tax differences are established by comparing the book value of an asset or liability presented in the Statement of financial position with its tax base when applying the tax rules. Deferred income taxes are calculated using the balance sheet liability method. Deferred tax liabilities are calculated and recognized for all taxable temporary differences, while deferred tax assets are recognized only if it is probable that they will be recovered and if the company will be able to generate sufficient profit in the future from which they can be deducted.
The effect of recognizing the deferred tax assets and/or liabilities is reflected where the effect of the event that gave rise to them is presented. For events that affect the statement of profit or loss and other comprehensive income, the effect of deferred tax assets and liabilities is also recognized in the statement of comprehensive income. For events that are initially reported in equity (revaluation reserve), and deferred tax assets and liabilities are recognized at the expense of equity. In the Statement of financial position, deferred tax assets and/or liabilities are presented as compensation, as they are subject to a single taxation regime. According to the Bulgarian tax legislation, the company pays corporate profit tax, which is set at 10% of the taxable profit for the respective year. The corporate tax rate for 2021 remained at 10%.
In the process of applying the accounting policy, the management of the Company makes judgments that have a significant effect on these financial statements. Such judgments are by definition rarely equal to actual results. As a result, they are subject to constant review and updating and summarize historical experience and other factors, including expectations of future events that management believes are reasonable in the current circumstances. The estimates and assumptions that carry a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year are set out below.
The Management analyzes and evaluates the existence of indicators for impairment of its investments in subsidiaries. The main indicators of impairment are: significant reduction of the volume or cessation of the activity of the Company in which the investment is made; reporting losses for a longer period of time, as well as reporting negative net assets or assets below the registered share capital. Management's tests and judgments for impairment of investments are made through the prism of its plans and intentions regarding the future economic benefits that are expected to be received by the subsidiaries, incl. trade and production experience, securing positions in foreign markets, expectations for future sales, etc. For this purpose, variants of forecasts are developed, which take into account the various assumptions about risks, uncertainties, and probabilities for the future realization of cash flows and income from these investments. Each of the options is carefully analyzed by the management, and the results are weighed when calculating the recoverable amount of the respective investment.
The liability for employee’s income on retirement is determined by actuarial valuation. This assessment requires assumptions to be made about the discount rate, future wage growth, staff turnover, and mortality rates. Due to the long-term nature of employee’s income on retirement, these assumptions are subject to significant uncertainty. As of the end of the reporting period, no such assessment is made because most of the employees of the Company are far from retirement age.
The financial reporting of property, plant and equipment and intangible assets includes the use of estimates of their expected useful lives and carrying amounts, which are based on judgments by the management of the Company.
The Management estimates the amount and period of expected future cash flows related to receivables based on experience and considering current circumstances. Due to the inherent uncertainty of this estimate, actual results may differ from those expected. The management of the Company reviews the estimates from previous years and compares them with the actual results.
Determining the term of the lease for contracts with options for renewal and termination - the Company as a lessee
The Company defines the lease term as the irrevocable lease term, together with any periods covered by the option to extend it, if it is reasonably certain that the option will be exercised, or any periods covered by the option of termination of the lease if it is reasonably certain that the option will not be exercised.
Some of the Company's accounting policies and disclosures require a fair value measurement of financial and non-financial assets and liabilities. When measuring the fair value of an asset or liability, the company uses observable data as far as possible. Fair values are categorized at different levels in the fair value hierarchy based on the inputs to the valuation techniques as follows:
Unless otherwise stated, all amounts are in BGN thousand.
If the inputs used to measure the fair value of an asset or liability can be categorized at different levels of the fair value hierarchy, then the fair value measurement is categorized in its entirety at that level of the fair value hierarchy whose input information is relevant to the overall assessment. The Company recognizes transfers between levels of the fair value hierarchy at the end of the reporting period in which the change occurs. More information on the assumptions made in measuring fair values is included in the relevant notes.
Basic incomes per share are calculated by dividing the net profit or loss for the period to be distributed among the shareholders holding ordinary shares by the weighted average number of ordinary shares held for the period. The weighted average number of shares represents the number of ordinary shares held at the beginning of the period, adjusted by the number of repurchased ordinary shares and the number of newly issued shares during the period multiplied by the average time factor. This factor expresses the number of days during Page 30 of 115 ALLTERCO JSCo Unified Identification Code (UIC): 201047670 NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021 Unless otherwise stated, all amounts are in BGN thousand. which the specific shares were held, compared to the total number of days during the period. The Company has increased its capital to 17 999 999 shares during 2020. The decision for the capital increase is announced on 13.11.2020 by the Trade Registar, which makes the weighted-average number of shares for 2020: 15 361 664 shares Income on impaired shares is not calculated as no impaired shares have been issued.
Page 31 of 115 ALLTERCO JSCo Unified Identification Code (UIC): 201047670 NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021 Unless otherwise stated, all amounts are in BGN thousand.
| January 01, 2020 | December 31, 2020 | January 01, 2021 | Written of during the period | Depreciation for the period | Changes in depreciation | December 31, 2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Acquisition value | Depreciation | Book value | Acquisition value | Depreciation | Book value | Acquisition value | Depreciation | Book value | Acquisition value | Depreciation | Book value | ||||
| Computer equipment | 6 | (1) | 5 | 6 | (2) | 4 | 6 | (2) | 4 | (1) | (1) | 5 | (5) | - | |
| Office equipment | 5 | (5) | - | 5 | (5) | - | 5 | (5) | - | (1) | (1) | 5 | (5) | - | |
| Vehicles | 57 | (57) | - | 57 | (57) | - | 57 | (57) | - | (3) | (3) | 57 | (57) | - | |
| Others | 69 | (63) | 6 | 69 | (65) | 4 | 69 | (65) | 4 | 69 | (63) | 6 | |||
| Total | 69 | (63) | 6 | 69 | (65) | 4 | 69 | (65) | 4 | (6) | (6) | 63 | (63) | - |
| January 01, 2020 | December 31, 2020 | January 01, 2021 | Acquisitions during the period | Depreciation for the period | December 31, 2021 | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Acquisition value | Depreciation | Book value | Acquisition value | Depreciation | Book value | Acquisition value | Depreciation | Book value | Acquisition value | Depreciation | Acquisition value | Depreciation | Book value | |
| Intellectual property rights | 4 | (2) | 2 | 4 | (2) | 2 | 4 | (2) | 2 | 5 | (2) | 9 | (4) | 5 |
| Company | Ownership % 31 December 2020 | BGN’000 31 December 2020 | Ownership % 31 December 2021 | BGN’000 31 December 2021 |
|---|---|---|---|---|
| Allterco Trading Ltd., Bulgaria | 100 | 1 | 100 | 1 |
| Allterco Robotics Ltd., Bulgaria | 100 | 1 500 | 100 | 1 500 |
| Allterco Properties Ltd., Bulgaria | 100 | 5 405 | 100 | 5 405 |
| Allterco Robotics Inc., USA | 100 | 52 978 | - | - |
| Allterco Europe GMBH, Germany | 100 | 7 936 | 100 | 6 958 |
| Total | 100 | 67 820 | 100 | 13 867 |
During 2021 Allterco JSCo has participated in the establishment of a new company in China named Allterco Asia Ltd. with a seat at Shenzhen. The registered capital of the new company is CNY 100 000 and the participation of Allterco JSCo is 30 % with an option to acquire additional up to 50% and reach a controlling stake of 80%.
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Ordinary registered shares - Link Mobility Group Holding ASA, in the beginning of the period | 6 | 3 053 |
| Increase | 3 | - |
| Reserves from subsequent valuation of financial instruments | - | 4 849 |
| Decrease | (369) | (1 336) |
| Expenses on operations with financial assets and instruments | (3 573) | 2 624 |
| Effect from subsequent revaluation of financial assets | (1 336) | 6 566 |
| Ordinary registered shares - Link Mobility Group Holding ASA, at the end of the period | 6 566 |
In September 2021 the Company sold its investments in ALLTERCO PTE, Singapore, ALLTERCO SDN Malaysia и ALLTERCO CO. LTD Thailand. In accordance with the requirements of IFRS 5 Non-current assets held for sale and discontinued operations, as of 31 December 2020 in the individual financial statements those assets were disclosed as assets that were subject to immediate sale (see also 4.13). The terms of the contract stipulate that 50% if the agreed price, at the amount of 1 050 thousand EUR (2 054 thousand BGN) is payable in a period after 2021 (525 thousand EUR (1 027 thousand BGN) is due in 18 months after the date of the deal and the remaining 525 thousand EUR (1 027 thousand BGN) is due in 36 months after the date of the deal). For this reason, in the current individual financial statements the receivable related to the sale of the mentioned subsidiaries which are due after 2022 are presented and long- term receivables. The management of the company assumes that all other long-term receivables are presented in the financial individual statements as of 31 December 2021 at fair value.
Deferred taxes arise as a result of temporary differences and can be presented as follows:
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Tax effect from impairment of receivables | 16 | 2 |
| Tax effect from accruals for unused leave | 2 | - |
| Tax effect form impairment of investments and receivables | 1 438 | 439 |
| Total: | 1 456 | 441 |
Receivables from related persons are presented as follows:
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Allterco PTE. Ltd., Singapore | - | 38 |
| Allterco SDN, Malaysia | - | 24 |
| Allterco Robotics Inc., USA | - | 19 |
| Allterco Co, Thailand | - | 25 |
| Allterco Properties EOOD (Solely-owned LLC) | - | - |
| Allterco Robotics EOOD (Solely-owned LLC), including - Dividends | 5 | 5 |
| Allterco Trading OOD (Ltd.), including - Funds provided for additional installments under Art. 134 of the CA and accrued interest | 1 764 | 1 764 |
| Total: | 1 769 | 1 875 |
The receivables form related parties are in the following currencies:
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| By types of currency | ||
| in BGN | 5 | 5 |
| in EUR | 1 764 | 1 866 |
| Total: | 1 769 | 1 871 |
The trade receivables of the company from related companies for 2021 and 2020, which is the comparative period in the current individual financial statements, arise from the provision of services. The company usually agrees with its subsidiaries on a 60 days payment period for services provided. The Management assesses the collectability by analyzing the counterparty's exposure, repayment options and decides whether to accrue impairment. Pursuant to Article 134 of the provisions of the Commercial Act, clauses of the Articles of Association and the articles of association in subsidiaries, as of December 21, 2021 Allterco JSCo has a receivable from a subsidiary in relation with an additional cash contribution made in the amount of BGN 1 764 thousand. The additional cash contribution provided is intended to help the development of the subsidiary. The additional cash contribution is extended at 1% annual interest rate and a term of 1 year, due to which it is treated as current receivable. At the end of September 2021 Allterco sold its participations in Allterco PTE Singapore, Allterco SDN Malaysia and Allterco Co. Thailand. Following the completion of the transaction receivables from those subsidiaries at the total amount of 87 thousand BGN were written off. The net book value of receivables from related companies is considered by the management as a reasonable estimate of fair value. All receivables of Allterco from related companies had been assessed for potential default events and no impairments had been recognized.
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Receivables from clients | 3 477 | 3 055 |
| including Impairment of receivables | (152) | - |
| Receivables from clients, net | 3 325 | 3 055 |
| Total trade receivables – current portion | 3 325 | 3 055 |
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| By currency | ||
| In BGN | 423 | - |
| In EUR | 2 902 | 3 055 |
| Total: | 3 325 | 3 055 |
The movement of impairment of trade receivables for the year is as follows:
| December 31, 2020 | December 31, 2021 | |
|---|---|---|
| Impairment as of the beginning of the period | - | - |
| Recovered and written off impairment | - | - |
| Impairment for the period | - | 152 |
| Impairment as of the end of the period | - | 152 |
The management recognized impairment of a receivable related to the sale of European telco business of the Company, which was due in August 2021 and as of December 31, 2021 was not paid. The management of the Company undertakes actions for collecting the due amount as per the terms of the share purchase agreement, which is opening an arbitrage proceeding in front of International Arbitrage in Vienna. The impairment recognized in 2021 is at the amount of 152 thousand BGN (5% of due amount).# Ageing analysis of trade receivables is presented below:
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Current | 423 | 3 054 |
| Overdue up to 90 days | - | 3 055 |
| Overdue up to 180 days | - | 3 477 |
| Overdue up to 360 days | - | 3 055 |
The management believes that the book value of trade receivables presented in the statement of financial position equals their fair value as of December 31, 2021 and 2020.
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| VAT receivable | 35 | 55 |
| Corporate tax | - | - |
| Receivables in litigation | 13 | - |
| Other | 279 | 3 |
| Total: | 347 | 58 |
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| CASH, including | 16 428 | 11 228 |
| Cash in BGN | 6 6 | 5 200 |
| Cash in foreign currency | 1 5 | 2 4 |
| CASH IN CURRENT BANK ACCOUNTS, including | 16 434 | 14 606 |
| Current bank account in BGN | 12 977 | 12 977 |
| Current bank account in foreign currency | 1 629 | 1 629 |
| Total: | 16 434 | 14 612 |
By currency
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| in BGN | 12 979 | 11 229 |
| in USD | 3 055 | 3 055 |
| in EUR | 2 150 | 1 633 |
| Total: | 16 434 | 14 612 |
The company's cash is in bank accounts with trade banks with a stable long-term rating. The Management has assessed the expected credit losses on Cash and cash equivalents. The estimated credit losses are insignificant compared to the gross value of the cash deposited with financial institutions, therefore they are not recognized in the financial statements of the company as of December 31, 2021.
The prepaid expenses disclosed in the individual statement of financial position as of December 31, 2021 are related to a subscription to information channels used for the disclosure of information though Frankfurt Stock Exchange.
In 2020 and previous periods the management of the company has decided to sell certain investments in subsidiaries, with a total book value as of December 31, 2020 at the amount of BGN 3 906 thousand, assuming that their value will be reimbursed through a sale transaction rather than through continued use. In accordance with the requirements of IFRS 5 Non-current Assets Held for Sale, these assets are presented in the individual financial statements as subject to direct sale as of December 31, 2020. In September 2021, the Company has finalized a deal with Skylight Venture Capitals Pte Ltd., Singapore for the sale of its 3 Asian subsidiaries at the following terms:
The book value of assets held for sale as of the end of reporting periods were as follows:
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Assets | ||
| ALLTERCO PTE, Singapore | - | 3 620 |
| ALLTERCO SDN Malaysia | - | 260 |
| ALLTERCO CO. LTD Thailand | - | 26 |
| Total: | - | 3 906 |
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Raiffeisen bank (Bulgaria) EAD, including.: | 285 | 1 615 |
| — to one year | 285 | 1 615 |
| — over one year | 276 | 1 900 |
| Total bank loans – non-current part: | 276 | 1 900 |
| Total bank loans – current part | – | – |
The depreciable part of the bank loan is obtained under the following conditions:
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Suppliers | 147 | 10 |
| Total: | 147 | 10 |
By currency
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| in BGN | 47 | 10 |
| in EUR | 100 | - |
| Total: | 147 | 10 |
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Liabilities for non-used leaves | 15 | 13 |
| Social security and health contributions | 5 | 6 |
| Social security contributions on non-used leaves | 2 | 2 |
| Total: | 22 | 21 |
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Personal income tax | 3 | 3 |
| Other taxes - entertainment expenses and tax under Art. 204 | 1 | 2 |
| Total: | 4 | 5 |
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Liabilities for participations, including | 665 | 675 |
| — to one year | 665 | 675 |
| Total | 665 | 675 |
Allterco JSCo was registered in 2010. The registered capital of the Company as of December 31, 2021 amounts to BGN 17,999,999 (seventeen million nine hundred ninety-nine thousand nine hundred ninety- nine) and is distributed in 17,999,999 (seventeen million nine hundred ninety-nine thousand nine hundred ninety- nine) ordinary registered shares with par value of BGN 1 each. The registered capital is fully paid in four installments:
As of December 31, 2021 the shareholders in the company are:
| Name/business name | Number of shares: | % in the capital |
|---|---|---|
| Svetlin Todorov | 5 847 120 | 32.48% |
| Dimitar Todorov | 5 847 120 | 32.48% |
| Persons possessing 5% of the capital | 6 305 759 | 35.04% |
| Other physical persons and legal entities | ||
| Total | 17 999 999 | 100.00% |
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| 1. Initial balance | 5 322 | 3 270 |
| 2. Adjustments for prior periods | 240 | (3 600) |
| 3. Profit for the reporting period | 3 442 | 2 330 |
| 4. Reclassified other comprehensive income | - | (450) |
| 5. Distribution of dividends | - | - |
| 6. Retained earnings | 5 322 | 5 232 |
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Initial balance of general reserves | 1500 | 1500 |
| Reserve Fund | - | 300 |
| Transfer of reserve from share premium reserves | 1 800 | - |
| Closing balance of general reserves – Reserve Fund | 1 500 | 1 800 |
As of December 31, 2021 the reserves from issue of shares of the company amounts to BGN 5 403 thousand. It is formed as a difference between the issue price and the nominal value of shares issued in 2020 at the amount of BGN 6 000 thousand reduced by the issue costs which amounted to BGN 297 thousand and by BGN 300 thousand that were transferred to Reserve Fund by a decision of General meeting of shareholders held on June 28, 2021.# NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021
Unless otherwise stated, all amounts are in BGN thousand.
| 2021 | 2020 | |
|---|---|---|
| Revenue from participations – dividend | 5,000 | 136 |
| Foreign exchange rate gains | 67 | - |
| Interest | - | 35 |
| Rents | 26 | 3 |
| Other | 22 | 12 |
| Total: | 5,115 | 186 |
| 2021 | 2020 | |
|---|---|---|
| Material expenses | 853 | 669 |
| External services, incl. | 319 | 257 |
| Advisory, legal, accounting and auditing services | 91 | 33 |
| Membership fee, Communications Regulation Commission, Competition Protection Commission, Consumer Protection Commission, Financial Control Commission, etc. | 9 | 3 |
| Civil contracts | 30 | 18 |
| Internet infrastructure maintenance | 23 | - |
| Vehicle rent and maintenance | 4 | 3 |
| Advertising | 3 | 1 |
| Communication expenses | 17 | 2 |
| Other | 33 | 40 |
| Depreciation expenses | 525 | 144 |
| Salary expenses | 389 | 252 |
| Social security expenses | 40 | 87 |
| Other expenses, incl. | 152 | 23 |
| Written off receivables | 13 | 1 |
| Impairment of receivables and investments | 539 | 225 |
| Representative expenses | 1 | - |
| Other | - | - |
| Total: | 2,407 | 1,725 |
The agreed remuneration for the independent financial audit of the Company for 2021 amounts to BGN 11 thousand. During the year the auditors of the Company did not provide tax advice or other services not related to the annual audit. This disclosure is made in compliance with the requirements of Art. 30 from the Accountancy Act. As of December 31, 2021 the Company has written off receivables from its former Asian subsidiaries at the total amount of BGN 87 thousand. Also, the managements of the Company have recognized a 5% (BGN 153 thousand) impairment of a receivable related to the sales of its European telco business, which was due in August 2021 and as of the date of the report it is still unpaid. The management of the Company initiated legal actions in accordance with the provisions of the share purchase agreements, which is initiation of an arbitration proceeding at Vienna International Arbitrage.
| 2021 | 2020 | |
|---|---|---|
| Bank fees | 25 | 13 |
| 2021 | 2020 | |
|---|---|---|
| Income from sale of financial assets, including: | ||
| Sales price | 4,526 | 4,949 |
| Book value of assets soled | (4,276) | (1,336) |
| Expenses related to the sale of financial assets | - | (167) |
| Total: | 250 | 3,446 |
During 2021 the Company sold its participations in 3 daughter companies (see 4.13 above) as well as part of its long-term financial investments. The result of both transactions was profit at the amount of 250 thousand BGN.
| 2021 | 2020 | |
|---|---|---|
| Interest expense on bank loans | 61 | 45 |
| Bank fees on cash balances | 2 | 7 |
| FX related expenses | 20 | 4 |
| Total Financial expenses | 108 | 103 |
The breakdown of corporate profit tax income(expense) as of December 31, 2021 is as follows:
| Year ending on December 31, 2021 | Year ending on December 31, 2020 | |
|---|---|---|
| Accounting profit before tax | 3,691 | (369) |
| Corporate tax expense at applicable tax rate | (52) | 284 |
| Effect from permanent differences | (228) | 274 |
| Corporate tax income/(expense) | (421) | 46 |
| Corporate profit tax income (expense) | (421) | 46 |
Corporate profit tax income (expense) as of December 31, 2020 consists of the following components:
| Year ending on December 31, 2021 | Year ending on December 31, 2020 | |
|---|---|---|
| Current corporate profit tax | - | (421) |
| Effect from recognized deferred tax differences, net | - | 2 |
| Corporate profit tax income(expense) | - | (421) |
During the year the company has carried out transactions with the following related companies:
| Company | Relationship |
|---|---|
| Allterco Trading OOD | Subsidiary |
| Allterco Properties EOOD | Subsidiary |
During the period the Company has carried out transactions with related companies, the data for which are presented below:
| 2021 | 2020 | |
|---|---|---|
| Deliveries form related entities, including: | ||
| Delivery of services from: | ||
| · Allterco Properties EOOD | 17 | 18 |
| Total: | 17 | 18 |
| 2021 | 2020 | |
|---|---|---|
| Interest revenue, including: | ||
| Interest from received additional cash contribution from Allterco Properties EOOD | - | 17 |
| Interest from received additional cash contribution from Allterco Trading EOOD | 18 | 18 |
| Total: | 18 | 35 |
The outstanding amount related to the additional cash contributions extended by the Company are disclosed in note 4.08, and the remuneration paid to the members of the Board of Directors is disclosed in note 8.
The contingent liabilities and commitments for the reporting period include:
| Creditor | Debtor | Borrower / solidary company | Amount / Limit | Contract Annex | Term | Financial conditions |
|---|---|---|---|---|---|---|
| Raiffeisen bank Bulgaria EAD | Allterco JSCo | Allterco Properties EOOD | 1,620,000 EUR | Annex No.1 October 31, 2018 | August 25, 2017 Feb 10, 2028 | Fixed interest rate for the whole period 3% per year; Management fee; Investment credit |
| Raiffeisen bank Bulgaria EAD | Robotic EOOD | Allterco JSCo | 1,000,000 EUR | Annex No.1 of August 28, 2020 | September 30, 2019 September 29, 2022 | One-month EURIBOR, increased by 2.5 percentage points, but not less than 2.5%; management fee; guarantor commitment fee; commission for issuing guarantees |
COLLATERAL PROVIDED BY THE SOLIDARY DEBTOR / GUARANTOR
In relation with the finalized in 2019 deal with Link Mobility Group AS for sale of 5 subsidiaries, in July 2020 the Buyer made a claim to the Company. Currently the claim is not raised in accordance with the provisions of the contract neither is brought to arbitrage or court proceeding. The opinion of the management is that even the claim is made official through a court or arbitrage it will be rejected. Therefore, no provision expense is recognized in the financial statements. On its side, during the reporting period, Allterco initiated a process for collecting the due final payment by the buyer -Link Mobility Group SA, in accordance with the provisions of the share purchase agreement, which is a proceeding in the International Arbitrage of Vienna (see also point 5.02 above).
The members of the Board of Directors as of December 31, 2021 are as follows:
Executive director of the Company is Dimitar Stoyanov Dimitrov. The members of the Board of Directors have received remuneration that was withing the limits set by the Remuneration policy that was approved by the General meeting of shareholders. The total gross amount of remuneration paid to the members of Board of Directors for 2021 was BGN 130 thousand. During the reporting period the members of the Board of Directors have not received bonuses or any other benefits from the Company.
Structure of the financial assets and liabilities by categories:
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Financial assets reported at fair value through profit or loss | Financial assets reported at fair value through other comprehensive income | |
| Financial assets according to the Statement of financial position | ||
| Cash equivalents and cash | 16,434 | - |
| Long term trade receivables | - | - |
| Other receivables | - | - |
| Other long-term capital investments | 2,624 | 2,624 |
| Non-current assets held for sale | - | - |
| Receivables from related companies | - | 1,769 |
| Trade receivables | - | - |
| TOTAL FINANCIAL ASSETS | 19,058 | 4,393 |
Note: The provided text had inconsistencies in table formatting and content. The above markdown attempts to represent the data as clearly as possible based on the structure. The totals in the last row of the table seem to be calculated differently or based on a broader scope than just the rows above them in the original text, creating a discrepancy. The "TOTAL FINANCIAL ASSETS" row in the original input seems to sum up categories in a way that doesn't directly match the sum of the rows above it for the given years and categories. This markdown preserves the original numbers.# NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021
Unless otherwise stated, all amounts are in BGN thousand.
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Financial liabilities reported at a specific value (aggregate category) | ||
| Financial liabilities reported at depreciated value | ||
| Assets reported at fair value through profit or loss | ||
| Financial liabilities reported at depreciated value | ||
| Assets reported at fair value through profit or loss | ||
| Liabilities reported at a specific value (aggregate category) | ||
| Total |
| Financial liabilities according to the Statement of financial position | December 31, 2021 | December 31, 2020 |
|---|---|---|
| Bank loans | 1 900 | 2 176 |
| Trade liabilities | 174 | 10 |
| Other liabilities | - | - |
| TOTAL FINANCIAL LIABILITIES | 2 739 | 2 861 |
The fair value of the bank loan that the company is using, is determined based on the interest rate that the Company expects to receive at the reporting date. The management of the Company believes that these interest rates do not differ significantly from those in force at the time of concluding the loan agreement. The company has no practice of working with derivative instruments.
The Company's activities are exposed to a number of risks related to objective conditions such as market unpredictability, general economic trends, changes in exchange rates. To minimize the potential negative effects, the Company has adopted policies for overall risk management and assessment and establishing procedures for addressing the identified risks. The overall risk management is focused on forecasting the results of certain areas of the markets where the Company operates in order to minimize the potential negative effects that could affect the financial results. Financial risks are currently identified, measured and monitored using various control mechanisms to adequately assess market conditions and their effects on Company’s and to maintaining enough liquid funds and to avoid unjustified concentration of any specific risk. Risk management is carried out on an ongoing basis under the direct supervision of the Executive Director and the Company's financial experts in accordance with the policy set by the Board of Directors. The risk management strategy is regularly reviewed in order to update the policies to the dynamics in the market and economic conditions. The company aims to develop discipline and a constructive control environment in which all employees understand their responsibilities through periodic training and application of established standards.
The following describes the different types of risks to which the company is exposed in carrying out its business operations, as well as the approach taken in managing these risks.
Market risk is the risk that the fair value or future cash flows of financial instruments will fluctuate due to changes in market prices.
The company carries out its transactions mainly on the domestic market and in the European Union. It is not exposed to significant currency risk because almost all its operations and transactions are denominated in Bulgarian levs and euros, and the latter has a fixed exchange rate against the lev by law. During the last financial year, the Company transferred part of its cash in USD in order to optimize bank fees levied on excess cash in bank accounts. The company makes its main deliveries in BGN. The tables below summarize the exchange rate exposure:
December 31, 2021
| In other foreign currency | In Bulgarian levs | |||
|---|---|---|---|---|
| in EUR | in USD | total | ||
| Cash and cash equivalents | 2 150 | 2 054 | 1 764 | 3 055 |
| Long term trade receivables | 8 870 | 11 229 | ||
| Receivables from related companies | 16 434 | 16 434 | ||
| Trade receivables | 2054 | 1 769 | 3 325 | 23 582 |
| TOTAL ASSETS | 3 055 | 11 238 | 1 900 | 127 |
| In other foreign currency | In Bulgarian levs | |||
|---|---|---|---|---|
| in EUR | in USD | total | ||
| Bank loans | - | - | - | 1 900 |
| Trade liabilities | 174 | 174 | ||
| Other liabilities | 665 | 665 | ||
| TOTAL LIABILITIES | 2 739 | 2 739 |
December 31, 2020
| In other foreign currency | In Bulgarian levs | |||
|---|---|---|---|---|
| in EUR | in USD | total | ||
| Cash and cash equivalents | - | - | 1 633 | 12 979 |
| Other receivables | - | 55 | 2 265 | |
| Receivables from related companies | - | 14 612 | ||
| Trade receivables | 55 | 2 371 | 3 055 | 20 093 |
| TOTAL ASSETS | 4 794 | 15 299 | 4 794 |
| In other foreign currency | In Bulgarian levs | |||
|---|---|---|---|---|
| in EUR | in USD | total | ||
| Bank loans | - | - | - | 2 176 |
| Trade liabilities | 10 | 10 | ||
| Other liabilities | 675 | 675 | ||
| TOTAL LIABILITIES | 2 861 | 2 861 |
Currency sensitivity analysis
The Company is not exposed to currency risk with respect to its euro exposures.
The Company owns shares that are subject to trading on a regulated market, and during 2020 and the nine months of 2021 the Company sold part of its shares and made a profit from the transactions. For the remainder of the shares, the Company is exposed to risks of negative changes in the stock markets.
The company does not have a significant concentration of interest-bearing assets, except for free cash on current accounts with banks, so revenues and inflows of operating cash flows are not largely dependent on changes in market interest rates. At the same time, the outgoing cash flows of Allterco JSCo for the nine months of 2021 are not exposed to interest rate risk from using a bank loan in EUR, agreed with a fixed interest rate. Cash on current accounts with banks bear interest at interest rates according to the tariffs of the respective banks. The management of the Company currently monitors and analyzes its exposure to changes in market interest rates. Different refinancing scenarios, renewal of existing interest-bearing positions and alternative financing are simulated. Calculations are made for significant interest-bearing positions.
December 31, 2021
| With floating interest % | With fixed interest % | Interest-free | total | |
|---|---|---|---|---|
| BGN '000 | BGN '000 | BGN '000 | BGN'000 | |
| Cash and cash equivalents | 16 434 | 2 054 | 9 | 18 497 |
| Long term trade receivables | - | - | 1 760 | 1 760 |
| Receivables from related companies | - | - | 1 769 | 1 769 |
| Trade receivables | - | - | 3 325 | 3 325 |
| TOTAL ASSETS | 16 434 | 2 054 | 25 113 | 43 574 |
| Bank loans | - | 174 | 1 900 | 2 074 |
| Trade liabilities | - | - | 665 | 665 |
| Other liabilities | - | - | 1 900 | 1 900 |
| TOTAL LIABILITIES | - | 174 | 4 530 | 4 704 |
December 31, 2020
| With floating interest % | With fixed interest % | Interest-free | total | |
|---|---|---|---|---|
| BGN '000 | BGN '000 | BGN '000 | BGN'000 | |
| Cash and cash equivalents | 14 612 | 55 | - | 14 667 |
| Other receivables | - | - | 611 | 611 |
| Receivables from related companies | - | - | 1 760 | 1 760 |
| Trade receivables | - | - | 3 055 | 3 055 |
| TOTAL ASSETS | 14 612 | 55 | 5 426 | 20 093 |
| Bank loans | - | 10 | 2 176 | 2 186 |
| Trade liabilities | - | - | - | - |
| Other liabilities | - | - | 675 | 675 |
| TOTAL LIABILITIES | - | 10 | 2 851 | 2 861 |
Credit risk is the risk that one party to a financial instrument will fail to meet its obligation and thereby cause a loss to the other party. The financial assets that potentially expose the company to credit risk are mainly receivables from services provided and sales of investments. The company is exposed to credit risk in the event that customers fail to meet their obligations. The financial assets of the company are concentrated in three groups: monetary funds (cash and bank accounts), receivables from clients and additional cash contributions provided to a subsidiary. About 25% of receivables are from related party deals and transactions (subsidiaries), and therefore the management believes that the credit risk associated with these receivables is not high. Nearly 70% of receivables are related to the sale of long-term investments in subsidiaries and part of them are secured. The collection and concentration of receivables is monitored on an ongoing basis, according to the established policy of the company. For this purpose, the open positions by clients, as well as the received receipts, are periodically reviewed by the financial and accounting department and the management, and an analysis of the unpaid amounts is performed. The Management follows an internal policy for assessing credit losses. For receivables from related parties and trade receivables the simplified method is applied, as the percentages are determined on the basis of past experience. As of December 31, 2020 the Company reports written off receivables at the amount of BGN 14 thousand. As of December 31, 2021 receivables at the amount of BGN 87 thousand are reported as written off and an BGN 152 are recognized as impairment of receivables.
The liquidity risk is expressed in the negative situation that the Company will not be able to meet unconditionally all its obligations, according to their maturity. It pursues a conservative liquidity management policy, through which it constantly maintains an optimal liquidity reserve of monetary funds and a good ability to finance its business activities. In order to control the risk, the company monitors the timely payment of the incurred liabilities. The company monitors and controls the actual and projected cash flows for periods ahead and maintains a balance between the maturity limits of the assets and liabilities of the company.# NOTES TO THE INDIVIDUAL FINANCIAL STATEMENTS AS OF 31 DECEMBER 2021
Unless otherwise stated, all amounts are in BGN thousand.
With the capital management the Company aims to create and maintain opportunities for it to continue to operate as a going concern and to ensure the appropriate return on investment of shareholders, and to maintain optimal capital structure, to reduce capital expenses. The company currently monitors the security and capital structure based on the debt ratio. This ratio is calculated between the net debt capital and the total amount of capital. Net debt capital is defined as the difference between all borrowings (current and non-current) as stated in the statement of financial position and the cash and cash equivalents. The total amount of capital is equal to the equity and net debt capital. The table below presents the debt ratios based on the capital structure as of December 31:
| December 31, 2021 | December 31, 2020 | |
|---|---|---|
| Total debt capital, including: | 2 738 | 2 887 |
| Reduced with: cash and cash equivalents | 16 434 | 14 612 |
| Net debt capital | (13 696) | (11 725) |
| Total equity | 2 738 | 2 887 |
| Total capital | 17 802 | 35 374 |
| Debt ratio | 0,00% | 0,00% |
As the cash is larger than the debt capital, the company has no indebtedness.
For the purposes of disclosing fair value, the Company determines different classes of assets and liabilities depending on their nature, characteristics and risk and the respective level of the fair value hierarchy specified in item 3.14 from the Notes to the financial statements. The Company's management has determined that the book values of cash and cash equivalents, receivables from affiliated companies, liabilities to affiliated companies, trade receivables and payables approach their fair values due to the short-term nature of these financial instruments. The attached table shows the book values and fair values of financial assets and liabilities, including their levels in the fair value hierarchy. Fair value information is not included if the book value is reasonably close to the fair value.
The table below presents the hierarchy of the fair value of the Company's assets and liabilities in accordance with IFRS 13:
As of December 31, 2021
| Financial assets | Book value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Long term receivables | 2 054 | - | - | - |
| Other long - term capital investments | 2 624 | - | 2 624 | - |
| Cash and cash in bank | 16 434 | - | - | - |
| Receivables from related companies | 1 769 | - | - | - |
| Trade receivables | 3 325 | - | - | - |
| Total: | 26 206 | - | 2 624 | - |
| Financial liabilities | Book value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Bank loans | 1 900 | - | 1 900 | - |
| Trade liabilities | 174 | - | - | - |
| Other liabilities | 665 | - | - | - |
| Total: | 2 739 | - | 1 900 | - |
As of December 31, 2020
| Financial assets | Book value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Assets classified as held for sale | 3 906 | - | - | - |
| Other long - term capital investments | 6 566 | - | 6 566 | - |
| Cash and cash in bank | 14 612 | - | - | - |
| Other receivables | 55 | - | - | - |
| Receivables from related companies | 2 371 | - | - | - |
| Trade receivables | 3 055 | - | - | - |
| Total: | 30 565 | - | 6 566 | - |
| Financial liabilities | Book value | Level 1 | Level 2 | Level 3 |
|---|---|---|---|---|
| Liabilities to related companies | 0 | - | 0 | - |
| Deposit received from group companies | 0 | - | 0 | - |
| Bank loans | 2 176 | - | 2 176 | - |
| Trade liabilities | 675 | - | - | - |
| Other liabilities | 2 861 | - | - | - |
| Total: | 5 712 | - | 2 176 | - |
A transfer from Level 3 to Level 1 is made during 2020, related to a long-term financial investment in shares, which were listed on a regulated market.
The fair value of the financial liabilities included in Level 2 in the table above is determined in accordance with the generally accepted valuation model based on discounted cash flows.
The following important events occurred after the date of the individual financial statements:
The Company announced invitation for an extraordinary General meeting of shareholders and provided the supporting materials for the meeting that will be held on 8 April 2022 starting at 11.00 o’clock at the following address: Sofia 1304, 1 Macedonia Square, Floor 2, Congress center «Globus», Hall «Europe». The agenda for the meeting is as follows:
In February 2022, following the start of military conflict between Russia and Ukraine, some countries announced new packages of sanctions against the sovereign debt of Russian Federation, a number of Russian banks and a number of Russian citizens. As a result of increasing geopolitical tension, a significant volatility of financial markets and depreciation of Russian ruble against USD and EUR is observed since February 2022. It is expected that those events will affect the activities of the Russian and Ukrainian companies in different economic sectors The Company is not exposed directly, or through related parties, or through key clients and suppliers, to the countries involved in the conflict. The Company considered this event as non-adjusting event after the end of the reporting period the effect of which cannot be assessed at this time with an acceptable level of accuracy.
The management is analyzing the possible impact of the changing micro and macroeconomic conditions on the financial and operating results of the Company.
The Company owns long-term investments in financial instruments (shares of Link Mobility Group Holding ASA), which are traded on a regulated market. After the date of current financial statements, a drop in the price of those financial instruments is observed, which, to some extent, according to the management of the Company, is due to the overall negative trend of financial markets as a consequence of the military conflict in Ukraine. The management monitors the financial performance of Link Mobility Group Holding and believes that the drop in its share price is temporary. In this context the event is considered as a non-adjusting event after the end of reporting period.
The board of directors of Allterco JSCo decided to increase the capital of its wholly owned subsidiary Allterco Robotics Ltd. The goal of the capital increase is to accelerate the development of new products, to increase the production capabilities and finance the entrance to new markets. The registered capital of Allterco Robotics will be increased from the current level of BGN 1 500 000 to BGN 7 000 000 by issuing new 5 500 000 shares at par value of BGN 1,00 each. The whole new emission will be subscribed by Allterco JSCo and will be done entirely with own funds of Allterco JSCo.
THIS BUSINESS ACTIVITY REPORT IS PREPARED IN ACCORDANCE WITH THE PROVISIONS OF ART. 39 ET SEQ. FROM THE ACCOUNTING ACT, ART. 100N, PARAGRAPH 7 OF THE PUBLIC OFFERING OF SECURITIES ACT AND ANNEXES No 2 AND No 3, OF ORDINANCE No 2 DATED 9 NOVEMBER 2021 ON PROSPECTUSES FOR PUBLIC OFFERING AND ADMISSION TO TRADING ON A REGULATED SECURITIES MARKET AND DISCLOSURE OF INFORMATION.
DEAR SHAREHOLDERS,
We, the members of the Board of Directors of ALLTERCO JSCo., committed to manage the company in the best interest of the shareholders, as well as on the basis of the requirements of the provisions of Art. 39 et seq. of the Accounting Act (in force since 01.01.2016), Art. 100n, Paragraph 7 of the Public Offering of Securities Act and Annex No. 2 and No. 3 of Ordinance No.# INDIVIDUAL ANNUAL ACTIVITY REPORT AS OF 31 DECEMBER 2021
This Report on the activity of Allterco JSCo presents information about the company on an individual basis as of 31 December 2021 and covers the period 01.01.2021-31.12.2021 (“reporting period”).
ALLTERCO JSCo is a public limited company with the following main business activity: Acquisition, management, evaluation and sale of participations in Bulgarian and foreign companies; acquisition, management and sale of bonds; acquisition, evaluation, sale and assignment of licenses for the use of patents and other intellectual and industrial property rights; financing of companies in which the Company participates; purchase of goods and other goods for resale in the raw, processed or treated form; sale of goods from own production; foreign trade transactions; commissions, forwarding, warehousing and leasing transactions; transport transactions in the country and abroad; transactions of commercial representation and mediation of local and foreign individuals and legal entities; consultancy and marketing transactions; providing management and administration services to local and foreign legal entities; as well as any other commercial transactions not prohibited by the law.
The Company was entered in the Commercial Register on 11 February 2010. As of 31.12.2020 ALLTERCO JSCo has its registered office, telephone, fax, e-mail, web site as follows:
As of the end of the reporting period, the issued, subscribed, paid up and registered capital of the Company amounts to BGN 17 999 999 (seventeen million nine hundred and ninety-nine thousand nine hundred and ninety-nine leva), divided into 17 999 999 (seventeen million nine hundred and ninety-nine thousand nine hundred and ninety-nine) dematerialized ordinary registered voting shares with par value of 1 (one) BGN for each share. The share capital was fully paid in by five contributions:
The public offering of shares from the capital increase of Allterco JSCo was held in the period 28.09.2020 – 30.10.2020 on the basis of a Prospectus together with its supplements as affirmed by the Financial Supervision Commission with Ordinance No 148-Е of 18.02.2020, Decision No 405- Е of 11.06.2020, Decision No 601-Е of 13.08.2020 and Decision No 791-Е of 29.10.2020.
As of 31 December 2020, the capital structure of ALLTERCO JSCo is as follows:
| SHAREHOLDER NAME | PERCENTAGE OF CAPITAL |
|---|---|
| Svetlin Todorov | 32.48 % |
| Dimitar Dimitrov | 32.48 % |
| Other individuals and legal entities | 35.04 % |
In the last three financial years, no in-kind contributions have been made to the company's capital.
As of 31.12.2021, ALLTERCO JSCo has a one-tier management system - 3-member Board of Directors, according to a resolution of the General Meeting of Shareholders dated 20.12.2020, entered in the Commercial Register under No. 20210105090633
As of 31.12.2021, the members of the Board of Directors are:
As of 31.12.2021, Allterco JSCo reports investments in the following companies:
During the reporting period Allterco JSCo has participated in the establishment of a company (associated company) in China, Allterco Asia Ltd. 91440300MA5GMK2T5B, with domicile and registered office: number 716, Building A, XingHe Shiji, Cai Tian road 3069, Gangxia, Futian, Shenzhen, Guangdong Province China. The capital of the new company is CNY 100 000, as the participation of Allterco JSCo is 30% with an option to acquire additional up to 50% and reach a controlling stake of up to 80% in case of good development of the project.
During the reporting period there was change in the economic group of Allterco JSCo:
As of the end of the reporting period, ALLTERCO JSCo reported on an individual basis a net profit at the amount of BGN 3 270 thousand, compared to the net profit of BGN 2 330 thousand for 2020, and BGN 4 483 thousand for 2019. The increase of the profit in 2021 compared to 2020 is mainly due to dividends at the amount of BGN 5 million received from a subsidiary company and the realized profit from operation with financial instruments in the amount of BGN 250 thousand. The profit in 2020 and 2019 is also to a great extent influenced by the realized profit from sale of financial instruments.
| EQUITY | 12/31/2019 | BGN thousand | 12/31/2020 | BGN thousand | % | 12/31/2021 | BGN thousand | % |
|---|---|---|---|---|---|---|---|---|
| Registered capital | 15,000 | 18,000 | 18,000 | |||||
| Retained earnings | 3,442 | 5,322 | 5,232 | |||||
| Reserves | 1,500 | 1,500 | 0% | 1,800 | 0% | |||
| Share premium reserves | 20% | 20% | ||||||
| Other equity components | 5,703 | 55% | 4,849 | -79% | ||||
| Total | 19,942 | 31,471 | 77.4% | 35,374 | -11.03% |
In 2021 the Company records a decrease in other equity components, which is mainly due to revaluation of financial assets that are presented at fair value in the statement of financial position
| 2019 BGN thousand | change % | 2020 BGN thousand | change % | 2021 BGN thousand | change % | |
|---|---|---|---|---|---|---|
| Sales revenue | 272 | 0 | -100% | 2 | 650% | |
| Other revenue | 851 | 186 | -78% | 5 | 115% | |
| Total operating revenue | 1 123 | -83% | 186 | 2650% | ||
| Profit form operation with financial assets | 8 475 | -59% | 3 446 | -93% | 250 | |
| Total financial income | 8 475 | -59% | 3 446 | -93% | 250 |
As of the end of the reporting period, ALLTERCO JSCo does not report revenue from sale of goods or services on an individual basis. The company reports only other revenue at the amount of BGN 5 115 thousand, of which BGN 5 000 thousand are dividends.As of the end of 2021 the Company reports gains from operations with financial instruments, which include:
- BGN 49 thousand from sale of shares of Link Mobility Group
- BGN 201 thousand from the sale of its participation in 3 subsidiaries;
Operating expenses by economic elements
Table No 3
| EXPENSES | 2019 BGN thousand | change % | 2020 BGN thousand | change % | 2021 BGN thousand |
|---|---|---|---|---|---|
| Materials | 7 | -85.7% | 1 | 100.0% | 2 |
| External services | 303 | 5.3% | 1 319 | 167.4% | 2 853 |
| Depreciation | 11 | -81.8% | 2 338 | 50.0% | 3 389 |
| Salaries | 40 | -27.2% | 40 | 15.1% | 40 |
| Social security | 0.0% | 0.0% | |||
| Other administrative expenses | 7 303 | -86.6% | 525 | -52.0% | 252 |
| Total administrative expenses | 7 664 | -74.1% | 4 223 | 25.6% | 6 536 |
| Other operating expenses | 1 | -86.6% | 1 225 | 25.6% | 1 539 |
| Sales and marketing expenses | 9 | -71.4% | 7 | 25.8% | 2 |
| Total Operating Expenses | 7 682 | -71.4% | 5 455 | 25.8% | 8 077 |
As of the end of the reporting period the total operating expenses of ALLTERCO JSCo increased by 25.8% compared to the previous year. This increase is mainly due to the increase of external services, which increased by 167.4%. Other operating expenses include written off receivables at the amount of BGN 87 thousand and impairment of receivables in the amount of BGN 152 thousand. The external services hold the biggest share in the total operating expenses for the period with 54,5 %, followed by the expenses for salaries and social security with 27,4 % and other administrative expenses with 16.1%.
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FINANCIAL INDICATORS
 is estimated to increase to 6.0% in 2021, before slowing to 4.5% in 2022, 3.9% in 2023 and 3.7% in 2024. Euro area foreign demand is projected to expand by 8.9% in 2021, 4.0% in 2022, 4.3% in 2023 and 3.9% in 2024. However, foreign demand has been revised downwards for 2021 and 2022 compared with the previous projections².
The interest rate risk is related to possible, eventual, adverse changes in the interest rates established by the financial institutions of the Republic of Bulgaria. At its meeting in October, 2021, the Board of Directors of the ECB, confirmed its other measures to support the ECB’s price stability mandate, namely the level of the key ECB interest rates and the forward guidance on the future path of policy rates. This is crucial for maintaining the appropriate degree of accommodation to stabilize inflation at the ECB’s 2% inflation target over the medium term.³
| Date | Percentage |
|---|---|
| 01.11.2021 | 0.00 |
| 01.11.2021 | 0.00 |
| 01.10.2021 | 0.00 |
| 01.09.2021 | 0.00 |
| 01.08.2021 | 0.00 |
| 01.07.2021 | 0.00 |
| 01.06.2021 | 0.00 |
| 01.05.2021 | 0.00 |
| 01.04.2021 | 0.00 |
| 01.03.2021 | 0.00 |
| 01.02.2021 | 0.00 |
| 01.01.2021 | 0.00 |
*Source: BNB⁴
Inflation risk is a general rise in prices in which money depreciates and there exists a probability of loss to households and firms. The consumer price index (CPI) is an official measure of inflation in the Republic of Bulgaria. It estimates the total relative change in the prices of goods and services used by households for personal (non-production) consumption and the index is calculated by applying the structure of the final cash consumer expenditure of Bulgarian households.
According to the NSI the consumer price index for December 2021 compared to November 2021 is 100.9%, i.e., monthly inflation is 0.9%. The annual inflation for December 2021 compared to December 2020 is 7.8%. The average annual Inflation for the period January - December 2021 compared to the period January – December 2020 is 3.3.%.⁵
| The respective month of the previous year | The previous month |
|---|---|
*Source: NSI
The harmonized index of consumer prices (HICP) is a comparable measure of inflation in EU countries. It is one of the criteria for price stability and for Bulgaria’s accession to the euro area. The HICP, like the CPI, measures the overall relative change in the price level of goods and services.
According to the NSI the harmonized index of consumer price index for December 2021 compared to November 2021 is 100.8%, i.e., monthly inflation is 0.8%. The annual inflation for December 2021 compared to December 2020 is 6.6%. The average annual Inflation for the period January - December 2021 compared to the period January – December 2020 is 2.8%. In November 2021 the inflation keeps increasing to 4.9 %. During most of 2022 it will stay above 2% whereas in the near future the inflation is expected to stay high, but to decrease in the course of the present year. ⁶
The December 2021 Eurosystem staff macroeconomic projections foresee annual inflation at 2.6% in 2021, 3.2% in 2022, 1.8% in 2023 and 1.8% in 2024 – significantly higher than in the previous projections in September. Inflation excluding food and energy is projected to average 1.4% in 2021, 1.9% in 2022, 1.7% in 2023 and 1.8% in 2024, also higher than in the September projections.⁷
Exposure to currency risk is the dependence and effects of changes in exchange rates. Systemic currency risk is the probability of a possible change in the currency regime of the country (currency board), which would lead either to BGN devaluation or to BGN appreciation compared to foreign currencies.
Currency risk will have an impact on companies with market shares, the payments of which are made in a currency other than BGN and EUR. Since, according to the current legislation in the country the Bulgarian lev is fixed to the euro in the ratio EUR 1 = BGN 1.95583, and the Bulgarian National Bank is obliged to maintain a level of Bulgarian levs in circulation equal to the bank’s foreign exchange reserves, the risk of devaluation of the BGN compared to the European currency is minimal and consists in the eventual early abolition of the currency board in the country. At this stage, this seems unlikely, as the currency board is expected to be abolished upon the adoption of the EUR in Bulgaria as an official unit of payment. Theoretically, currency risk could increase when Bulgaria joins the second stage of the European Exchange Rate Mechanism (ERM II). This is a regime in which the country must maintain the exchange rate compared to the EUR within +/- 15% on the background of the central parity. In practice, all countries currently in this mechanism (Denmark, Estonia, Cyprus, Lithuania, Latvia, Malta) are witnessing fluctuations that are significantly less than the allowed ones of ± 15%.
On July 10, 2020, Bulgaria joined the ERM II exchange rate mechanism, known as the ‘euro area’s waiting room’. The central rate of the Bulgarian lev is fixed at EUR 1 = BGN 1.95583. Around this central exchange rate of the BGN, the standard range of plus or minus 15 percent will be maintained.
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INDIVIDUAL ANNUAL ACTIVITY REPORT AS 31 DECEMBER 2021
Bulgaria joins the exchange rate mechanism with its existing currency board regime, as a unilateral commitment and without additional requirements to the ECB.⁸ At the same time, our country must enter into close cooperation with the unified banking supervision. The fixed exchange rate of the BGN to the EUR does not eliminate for the Bulgarian currency the risk of unfavorable movements of the euro exchange rate against other major currencies (US dollar, British pound, Swiss franc) on the international financial markets, but at present the company does not consider that such a risk would be material to its business.
The company may be affected by currency risk depending on the type of cash flow currency and the type of currency of the company’s potential loans. The Allterco JSCo Group companies operate in Bulgaria as well as in EU countries and first countries, mainly in the USA and the Asia-Pacific region. At present, the main revenues from the Group’s IoT business are in BGN or EUR, and the costs of delivery of goods in this segment are mainly in US dollars and are largely tied to the Chinese yuan, which is why the appreciation of the US dollar or Chinese yuan would have an adverse effect on the business performance. In terms of US dollar exposure, the Group companies are expected to have significant US dollar sales revenue in the US and other non-EU markets in the future, which to some extent balances the Group’s net exposure to this major currency. To limit the effects of the currency risk, the companies of the Group have introduced a system for planning the deliveries from countries inside and outside the EU, as well as procedures for ongoing monitoring of the movements in the exchange rates of the foreign currencies and control over the forthcoming payments. Currently, the Group companies do not use derivative instruments for hedging the currency risk but, if necessary, the management is ready to enter into such transactions.
¹ http://nsi.bg/bg/content/14830/общ-показател-на-бизнес-климата
² https://www.bnb.bg/bnbweb/groups/public/documents/ecb_publication/publications_ecb_mb_202108_bg.pdf
³ https://www.bnb.bg/bnbweb/groups/public/documents/ecb_publication/publications_ecb_mb_202108_bg.pdf
⁴ https://www.bnb.bg/Statistics/StBIRAndIndices/StBIBaseInterestRate/index.htm
⁵ https://www.nsi.bg/sites/default/files/files/pressreleases/Inflation2021-09_8M1FIED.pdf
⁶ https://www.nsi.bg/sites/default/files/files/pressreleases/Inflation2021-09_8M1FIED.pdf
⁷ https://www.bnb.bg/bnbweb/groups/public/documents/ecb_publication/publications_ecb_mb_202108_bg.pdf
⁸ https://www.bnb.bg/bnbweb/groups/public/documents/ecb_publication/publications_ecb_mb_202108_bg.pdf
Page 68 of 115# Credit risk of the state
Credit risk is the probability of deterioration of Bulgaria’s international credit ratings, caused by the government’s inability to repay its liabilities regularly. Low credit ratings of the country can lead to higher interest rates, more difficult financing conditions, both for the state and for individual economic entities, including the Issuer. Credit ratings are prepared by specialized credit rating agencies and serve to determine and measure a country’s credit risk. Bulgaria’s credit rating is presented in the following table:
| Credit agency | Date of last change | Long-term rating | Prospects |
|---|---|---|---|
| Standard & Poor‘s | 30.11.2021 | BBB | Stable |
| Fitch | 22.01.2022 | BBB | Stable |
Source: Ministry of Finance
The international credit rating agency S&P Global Ratings affirmed its long-term and short-term foreign and local currency sovereign credit ratings on Bulgaria at “BBB/A-2”. The outlook remains stable. According to the credit rating agency, the economic effects of the pandemic have been manageable, despite a significant health impact. Domestic demand, particularly private consumption, has recovered strongly and the increased absorption of EU funds will lift the medium-term growth outlook. The funds under the previous and current EU Multiannual Financial Framework (EU MFF) and the additional funds under the new Next Generation EU (NGEU) instrument available to the country are estimated at about 40% of the expected 2021 GDP. S&P forecasts the fiscal deficit to remain significant in 2021, too, as a result of the support measures during the pandemic. Although some measures are projected to continue into 2022, the credit rating agency expects the deficits to start narrowing from 2022 and notes Bulgaria’s established record of fiscal prudence under several governments. Despite the fiscal loosening and the increased public leverage, Bulgaria’s net government debt levels remain low at around 20% of GDP, whereas sovereign funding costs have reduced to record-lows. According to S&P, in line with global trends, inflation in Bulgaria has increased in 2021, due to a combination of rising food and energy prices, as well as strengthening domestic demand weighing on core inflation. Price increases should reduce in the second half of 2022. External risks are manageable after several years of external net deleveraging, thanks to recurring current and capital account surpluses, which the credit rating agency expects to continue. The credit rating agency also considers positive that the lev was included in the ERM II and Bulgaria joined the Banking Union in 2020. The ratings are constrained by the country's GDP per capita, which is moderate by global standards and the remaining structural and institutional impediments. The stable outlook indicates the expectation that Bulgaria's economic recovery will progress over the next two years, backed by further absorption of additional EU funds. Although several fiscal support measures will extend into 2022, the credit rating agency expects fiscal balances to narrow over the next two years, which will keep public debt low. The stable rating outlook also reflects the expectations that the economy will not incur any external or financial sector imbalances. The credit rating agency could raise the ratings if Bulgaria's economic recovery coincides with quicker fiscal consolidation or stronger external performance than it currently projects. In the long term, the ratings on Bulgaria could be raised in the course of its accession to the eurozone. The ratings could be lowered if the economic recovery is delayed, for example, because the pandemic's direct effects prove more long-lasting than currently expected. This would likely result in protracted fiscal consolidation and continuously rising net public debt over the next few years. Although unlikely over the medium term, S&P could take negative rating actions in case of emergence of imbalances in Bulgaria's financial sector.
The international credit rating agency Fitch Ratings has affirmed Bulgaria’s long-term foreign and local currency Issuer Default Ratings (IDR) at “BBB” with a Positive Outlook. The Positive Outlook reflects the dissipation of macroeconomic risks stemming from the Covid-19 pandemic and a more resilient economy, as well as continued progress towards the euro adoption. According to the credit rating agency, short-term downside risks tied to the pandemic and electoral uncertainty are more than offset by prospects of substantial funding from the EU and a commitment to macro and fiscal stability. Bulgaria's ratings are supported by its strong external and fiscal position, the credible policy framework, underpinned by EU membership and a long-standing currency-board arrangement. The ratings are constrained by the potential growth due to unfavorable demographics, which could weigh on government finances over the long term. Governance indicators and income levels are slightly above the median for peers. Fitch expects Bulgaria’s economic growth to accelerate to 4.7% in 2021, compared to the estimate for 3% from February. The upward revision reflects better-than-expected 1Q21 GDP and the expected strengthening of domestic demand and exports in the second half of the year. Bulgaria´s low vaccination rate compared to the EU average raises some downside pandemic-related risks; however, according to the agency, authorities are unlikely to put in place more severe containment measures that would significantly affect economic activity in the country. Investment is expected to be a key driver of growth over the medium-term, as Bulgaria will be one of the main beneficiaries of EU transfers in the coming years. The analysts of Fitch believe that the significant amount of funds under the Recovery and Resilience Facility (RRF) would support the growth of the economy which is estimated at 3.9% in 2022-23. The credit rating agency projects the fiscal deficit (on accrual basis) at 5% of GDP in 2021, versus 5.5% for the BBB median, reflecting mostly the Covid-19 related expenditure. It expects the deficit to narrow to 2% in 2023, keeping public debt/GDP at below 30% (versus 57% for BBB peers). Fitch considers the plan for euro adoption in 2024 realistic. The country's banking sector is estimated as liquid and well capitalized. The main factors that could lead to positive rating action/upgrade are: progress toward euro area accession and improvement in the economy’s growth potential that leads to faster convergence with income levels of higher rated peers. The factors that could lead to negative rating action/downgrade are: adverse policy developments that reduce confidence in economic recovery; a prolonged rise in public debt; the materialization of contingent liabilities on the sovereign's balance sheet or weaker growth prospects.
As a major factor influencing consumers’ purchasing power, rising unemployment would reduce demand for IoT products. On the other hand, the demand for staff by the business remains extremely active, so that such a risk appears to be negligible within the next year.
According to the statistics published by Eurostat 13.984 million men and women in the EU, of whom 11.829 million in the euro area, were unemployed in November 2021. Compared with October 2021, the number of persons unemployed decreased by 247 000 in the EU and by 222 000 in the euro area. Compared with November 2020, unemployment decreased by 1.659 million in the EU and by 1.411 million in the euro area.
The level of registered unemployment in the country continued to be low in December – 4.8%, as shows the administrative statistics of the Employment Agency for the month. The decline on an annual basis is by 1.9 percentage points. The registered persons unemployed in the last month of 2021 were 157 283, which is 964 less than in November and 63 009 or 28.6% less than a year earlier. In December, 21 505 new unemployed persons registered with the labor offices, which is 3 145 people less than in the previous month, and compared to December 2020 there was a decrease of 11 102 people.
Although Bulgaria has introduced a number of significant legislative changes since joining the EU and most of the Bulgarian legislation has been harmonized with EU legislation, the legal system in the country is still in the process of reform. Judicial and administrative practices remain problematic and it is difficult to effectively resolve property disputes, breaches of laws and contracts and other. Deficiencies in the legal infrastructure can result in uncertainties arising from the implementation of corporate actions, the implementation of supervision and other issues. It is essential for the financial performance of the companies to maintain the current tax regime. There is no guarantee that the tax legislation, which is directly relevant to the core business of the Company, will not be changed in a direction that would lead to significant unforeseen expenses and, accordingly, would adversely affect its profit. The taxation system in Bulgaria is still developing, as a result of which a contradictory tax practice may arise.
Such risks are: risk of shortage of key personnel, risk of strong competition, risk related to personal data security and hacker attacks, risk of technology change.# Risk Factors
One of the biggest challenges for technology companies, such as the companies of the Group, as well as given the specific scope of their business in the field of telecommunications and engineering and software development, is the shortage of skilled personnel. Insufficient availability of suitable staff in the subsidiaries could adversely affect the future development of the Group due to delays in the development of new products/services and the maintenance of existing ones. On the other hand, the high competition in this sector raises the cost of labor. Thus, the financial position and market share of the Group companies could suffer.
After the sale of most of the telecommunication business of the group, the Group companies operate mainly in the segment of the Internet of Things (IoT). This segment is one of the most modern and promising sectors of the industry, which attracts the interest of many technology giants and start-up companies. The loss or inability to gain market share and the fall in final product prices due to increased competition may have a negative effect on revenue, profit and profit margins. Maintaining a competitive position requires investment in the creation of devices with new utilities, improvement of existing solutions and expansion of market share and it cannot be taken for granted that new developments will be established among the competing ones on the market.
The technology industry is characterized by digital transmission of information that could be strictly confidential, containing personal data of users of products, financial information of companies, information about new products and other. The protection of such information is a critical factor for the normal operation of companies in the industry, including of the Group. The sales of the devices and the use by the users of the accompanying mobile applications and cloud services provided by the Group are related to the exchange and storage of personal data. Potential breaches in information security can lead to: i) Loss of customers and/or partners and their migration to competing companies; (ii) Imposing sanctions and lawsuits related to breaches of applicable data protection and privacy laws; iii) Lost or delayed orders and sales; iv) Adverse effects on reputation, business, financial position, profits and cash flows.
The supply of IoT devices is related to regulation regarding the certification of products for sale in the respective country. In the European Union, products are required to bear the ‘CE’ marking, which indicates that the product has been evaluated and meets the requirements of safety, health and environmental protection. In the US, the equivalent is ‘UL’ certification. For certification purposes, accredited laboratories are assigned compliance tests, which involve significant costs. In addition, specifics in the requirements of local regulators and contractors (especially mobile operators) may require additional tests and certification to be performed, which increases the cost of entering a particular market or particular distribution channel. Sales of the Group companies’ products cover an increasing number of markets, which often have local regulation regarding the certification of similar products in the respective country. Meeting the requirements of local regulation is related to time and resources and may delay the Company in entering new markets or require additional costs in order to meet different standards. The change in regulatory requirements for devices may involve additional costs for making them compliant with the new requirements, including costs for withdrawing products from the market to making them compliant with these requirements. The Group companies and their local partners regularly monitor planned changes in the legislation and take timely measures to ensure the compliance of products with them. Eventual changes in the regulations in the telecommunications sector, could have some impact on the operation of the Group as mobile operators are one of the main sales channels for existing MyKi series products. Big part of the devices developed and sold by the companies in the IoT Group use Internet-based technology and can work with the services of any Internet provider. To that effect, the Group is now less dependent on regulations in the field of telecommunications, insofar as the companies in its structure are not providers of telecommunication services and mobile operators are only one of the channels for trade and distribution of IoT devices.
The Issuer and its subsidiaries operate in an extremely dynamic segment, in which technologies have a significant impact and are a source of competitive advantage. To that effect, there is a risk of delayed adaptation to new technologies due to lack of knowledge, experience or sufficient funding, which may have a negative impact on the Issuer. The slow adaptation to the new realities may lead to a loss of competitive positions and market shares, which in turn will lead to a deterioration of the Group’s performance.
Such risks are: operational risk, risk related to business partners, risks arising from new projects and liquidity risk.
Operational risk can be defined as the risk of loss as a result of inadequate or non-functioning internal management procedures. Such risks may be caused by the following circumstances:
* Adoption of wrong operational decisions by the management staff related to the management of current projects;
* Insufficient amount of skilled personnel needed for the development and implementation of new projects;
* Leaving key employees and inability to replace them with new ones;
* Risk of excessive increase in management and administration costs, leading to a decrease in the overall profitability of the Issuer;
* Technical damages leading to prolonged interruption of the provided services may lead to termination of contracts with clients.
The effects of such circumstances would be a decrease in the Issuer’s revenues and deterioration of its business performance.
Production activities in the IoT segment is outsourced, mainly to China, concentrated in several manufacturers. Potential risks associated with key subcontractors are related to the accurate and timely execution of deliveries or termination of business relationships. Although management believes that there is a wide range of alternative suppliers, the possible transfer of production to new partners and diversification of subcontractors may lead to delivery delays and additional costs, which may affect the ability of the Group companies to perform agreed orders from customers and adversely affect the Group’s reputation and financial performance.
The main business activity of Allterco JSCo is related to investments in subsidiaries. There is a risk that some of the subsidiaries will not be able to meet their goals, which will lead to lower or negative return on investment. The development of new products and services by the subsidiaries of Allterco JSCo is related to the investment in human resources, software, hardware, materials, goods and services. Should new products and services fail to be marketed, such investments would be unjustified. This in turn would have a negative impact on the costs and assets of the Company, as well as on the performance of its business activities. In order to manage the risk arising from new projects, the Group companies perform a market analysis, prepare a financial analysis containing different scenarios, and in some cases discuss with potential customers the concept of the new service/product.
The expression of the liquidity risk in relation to the Group is associated with the possibility of lack of timely and/or sufficient available funds to meet all current liabilities. This risk may appear both in case of significant delay of the payments by the debtors of the Company, as well as in case of insufficiently effective management of the cash flows from the operation of the Company. Some of the Group companies use bank financing in the form of an investment loan, overdraft or revolving credit line, which can be used in case of liquidity problems. The company pursues a conservative liquidity management policy, through which it constantly maintains an optimal liquidity cash reserve and good ability to finance its business activities. In order to control the risk, the Company monitors the timely payment of incurred liabilities. The company monitors and controls the actual and projected cash flows for periods ahead and maintains a balance between the maturity limits of the assets and liabilities.
The events occurring after the reporting date are disclosed in note 12 of the notes to the 2021 individual financial statements.
| 2019 | Change % | 2020 | Change % | 2021 | Change % | |
|---|---|---|---|---|---|---|
| REVENUE | ||||||
| Sales revenue | 272 851 | -100% | 1 123 | -78.1% | 186 | -83.4% |
| Other revenue | 0 | 0% | 186 | 2 650.0% | 5 115 | 2 650.0% |
| Total operating revenue | 0 | 5 115 | 5 115 | |||
| Profit form operation with financial assets | 8 475 | -59% | 3 446 | -93% | 250 | |
| Total financial income | 8 475 | -59% | 3 446 | -93% | 250 |
ALLTERCO JSCo does not carry out direct production activities.# INDIVIDUAL ANNUAL ACTIVITY REPORT AS OF 31 DECEMBER 2021
The production activity is carried out by the subsidiaries. In 2022, Allterco JSCo will continue to operate in the following main areas:
1. Observation, control and decision-making on important issues affecting subsidiaries as sole proprietor or majority owner through:
* applying the principles of good corporate governance;
* organizing conditions for efficient and transparent work;
* improving the quality of services/products offered;
* operational reorganization and optimization;
2. Asset transactions of the company and its subsidiaries
3. Establishment of the management structure
4. Financing of investment activity and operating capital of subsidiaries
5. Financial and accounting policy and reporting
The company did not carry out any activities in the field of research and development and does not plan any in the near future. One of the subsidiaries of Allterco JSCo carried out such activity in 2021. This is Allterco Robotics EOOD.
In 2021, ALLTERCO JSCo did not acquire or transfer its own shares. In 2021, two of the subsidiaries of Allterco JSCo, namely Allterco Robotics EOOD and Allterco Trading EOOD have disposed of shares (ISIN BG1100003166) from the capital of the public listed parent company, which according to Art. 187f, item 2 of the Commerce Act is equivalent to acquisition of own shares.
In December 2020 Allterco Robotics EOOD and Allterco Trading EOOD acquired a total of 20 000 shares of Allterco JSCo, representing 0.11% of the capital of the public company, in order to be provided to employees of the two subsidiaries under conditions additionally determined by the management. The shares were acquired on a regulated market - Bulgarian Stock Exchange AD on 02.12.2020 at market price. Allterco Robotics EOOD has purchase of 13 000 shares and Allterco Trading EOOD - 7 000 shares. The shares were acquired on a regulated market at price of BGN 6.90.
In 2021, within the statutory period of one year from the date of acquisition, the companies have transferred the said number of shares pursuant to a resolution of the Board of Directors to grant shares to employees of these companies. The transfer transactions are as follows:
Allterco Robotics EOOD has transferred:
* in January 2021 – 3883 shares at average price of BGN 6.925 per share outside regulated market;
* in December 2021 – 9117 shares at average price BGN 24.40 per share outside regulated market;
Allterco Trading EOOD has transferred:
* in January 2021 - 2099 shares at average price of BGN 6.916 per share outside regulated market;
* in December 2021 – 4901 shares at average price BGN 24.40 per share outside regulated market;
As of the end of the reporting period, the Company does not hold own shares. As of the end of the reporting period neither of the Company’s subsidiaries, including Allterco Robotics EOOD and Allterco Trading EOOD holds shares of the of the public listed parent company, equal to own shares.
The members of the Board of Directors of Allterco JSCo received the following remunerations in 2021.
Table No. 10
| Full name | Position | Gross/thousand BGN |
|---|---|---|
| Dimitar Stoyanov Dimitrov | Executive Director | 48 |
| Svetlin Iliev Todorov | Chairperson of the Board of Directors | 48 |
| Nikolay Angelov Martinov | Independent member | 34 |
As of the end of the reporting period all remunerations are paid to the members of the Board of Directors. No further remunerations -money and non-cash compensation are paid to the members of the Board of Directors. There are no special rights or any privileges for the members of the Board of Directors stipulated in the Articles of Association of the Company. During the reporting year, some of the members of the Board of Directors received remuneration from the subsidiaries for performing other functions, subject of the Report on the application of the Remuneration Policy.
As of the end of the reporting period, the shares held by members of the Board of Directors of ALLTERCO JSCo are:
Table No. 11
| Name | PERCENTAGE OF THE CAPITAL |
|---|---|
| Dimitar Stoyanov Dimitrov | 32.48 % |
| Svetlin Iliev Todorov | 32.48 % |
| Nikolay Angelov Martinov* | 0 % |
Nikolay Martinov has no direct interest in the capital of the Issuer. The companies Unicom Consult EOOD, in which he is the sole owner of the capital and manager, Impetus Capital OOD and Impetus Partners OOD, in which he is a partner respectively with 50% and 43,75 % of the capital and manager, as well as Imventure I KDA and Imvencher II KDA, in which he is a representative of the legal entity - "IMPETUS CAPITAL" OOD, have respectively: "Unicom Consult “EOOD – 84,750 shares (0.47%), Impetus Capital OOD 27,000. shares and 162,000 voting rights (0.9%), Impetus Partners OOD 405,000 shares (2.25%) ImVenture I KDA 123,288 shares (0.68%), Imventure II KDA - 68,493. shares (0.38%) in the capital of Allterco JSCo and a total 708,531 number of shares and 843,531 voting rights (4.686%) of the voting rights in its General Meeting.
Rights of the members of the Board of Directors to acquire shares and bonds of the Company
The members of the Board of Directors of the company may freely acquire shares from the capital of the company on a regulated securities market in compliance with the provisions of the Law on the enforcement of measures against market abuse of financial instruments, REGULATION (EU) No 596/2014 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL of 16 April 2014 on market abuse (market abuse regulation) and the Public Offering of Securities Act.
On the basis of the provision of Art. 19 of the Market Abuse Regulation the members of the Board of Directors of the company, other persons holding executive functions in the Issuer, and the persons closely related to them, shall notify in writing the Adventure Company and FSC of any transactions concluded on their behalf with shares issued by Allterco JSCo within 3 business days after the transaction. The obligation to notify does not apply when the total amount of transactions concluded by a person performing management functions in the issuer and in the persons closely related to him does not exceed EUR 5 000 within one calendar year.
Table No. 12
| | Dimitar Dimitrov as of 31.12.2021 # INDIVIDUAL ANNUAL ACTIVITY REPORT AS OF 31 DECEMBER 2021
| Participation in the governing and supervisory bodies of other companies | Participation in the capital of other Companies in which the person exercises control |
|---|---|
| Tsarigradsko Shose Blvd., indirect through ALLTERCO JSCo Allterco Robotics US (previous company Web Engine OOD (Ltd.), Unified Allterco Europe GmbH, registration name Global Teracomm Ltd.), USA, with Identification Code (UIC): number HRB 271205, registered office: seat and management address: 5851 W.Charleston Blvd. Las Vegas, NV 89146, USA - indirect through ALLTERCO JSCo | Unified Identification Code (UIC): 200303120, having its registered seat and headquarters address in 5851 W. Charleston Blvd, Las Vegas, NV 89146, USA - direct; |
| Allterco Trading EOOD (Solely-owned LLC) (former name Allterco Finance OOD /Ltd./), Unified Identification Code (UIC): 203348672, having its registered seat and headquarters address in the city of Sofia, 103, Cherni vrah Blvd. – indirect through ALLTERCO JSCo; | # INDIVIDUAL ANNUAL ACTIVITY REPORT AS OF 31 DECEMBER 2021 |
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of flats 48, Entrance B(2), Apt. 47 - indirect through ImVenture I KDA, Unified Identification Code (UIC): 204870431 BROWSWAVE AD (PLC), Unified Identification Code (UIC): 204458374, having its registered seat and headquarters address in the city of Sofia city, Serdica municipal district, 14, Tayga Street - indirect through ImVenture I KDA, Unified Identification Code (UIC): 204870431 and ImVenture II KDA, Unified Identification Code (UIC): 205737996 A4E OOD (Ltd.), Unified Identification Code (UIC): 203608928, having its registered seat and headquarters address in the city of Sofia city, Ovcha Kupel district, zh.k. Ovcha Kupel 1, block 48, entrance B, ap. 47, - indirect through ImVenture I KDA, Unified Identification Code (UIC): 204870431 „ImPuls I“ AD, UIC 206421264, София 1784, district Mladost, Mladost 1, block. 29А, entrance. А, floor 8, ap. 38 – as representative of IMPETUS CAPITAL OOD (Ltd.), (UIC): 203592737 Allterco Asia Ltd. registration number 91440300MA5GMK2T5B, registered office number 716, Building A, XingHe Shiji, Cai Tian road 3069, Gangxia, Futian, Shenzhen, China – indirect through Allterco JSCo Allterco Europe GmbH, registration number HRB 271205, registered office: Lothstr. 5, 80335 München, Germany - – indirect through ALLTERCO JSCo
In 2021, no contracts were concluded with the members of the Board of Directors of the Company or with related persons who go beyond the ordinary activities of the company or significantly deviate from market conditions.
Changes in the economic policy of the Company in 2022 are not foreseen. The revenues of the Company will continue to be generated mainly from dividends. It is expected in 2022 the number of employees in the subsidiaries will increase significantly because of
1. the expanding of the market presence
2. increase of the R/D capacity of the subsidiaries
Page 81 of 115
XIII. AVAILABLE BRANCHES OF THE ENTERPRISE
The Company has no registered branches.
XIV. FINANCIAL INSTRUMENTS USED BY THE COMPANY
Allterco JSCo did not use financial instruments in 2021 to hedge risks from changes in foreign currency exchange rates, interest rates or uncertainty of cash flows. During the reporting year, the company did not perform currency risk hedging transactions. The Company could have exposure to liquidity, market, interest rate, currency and operational risks arising from the use of financial instruments.
Page 82 of 115
XV. ADDITIONAL INFORMATION UNDER APPENDIX No 2 AND No 3 TO ORDINANCE No 2 OF FSC
Allterco JSCo does not carry out direct production activities. The production activity is carried out by the Issuer’s subsidiaries.
2.## Information on revenues broken down by category of activity, internal and external markets as well as information on the sources of supply of materials necessary for the production of goods or the provision of services reflecting the degree of dependence on each individual seller or buyer/user, in case the relative share of any of them exceeds 10 per cent of the costs or revenues from sales, information is provided for each person separately, about their share in the sales or purchases and their relations with the issuer.
Information on revenue, broken down by main categories of activities is presented in the following table:
| REVENUE | 2019 Thousand BGN | change % | 2020 Thousand BGN | change % | 2021 Thousand BGN | change % |
|---|---|---|---|---|---|---|
| Sales revenue | 272 851 | -100% | 1 123 | -78.1% | 186 | -83.4% |
| Other revenue | 0 | 0% | 186 | 2 650.0% | 5 115 | 2 650.0% |
| Total operating revenue | 272 851 | -100% | 1 309 | -78.1% | 5 301 | -83.4% |
| Profit form operation with financial assets | 8 475 | -59% | 3 446 | -59% | 250 | -93% |
| Total financial income | 8 475 | -59% | 3 446 | -59% | 250 | -93% |
In the last two reporting periods the Company does not report revenue from sales on individual basis. The Company reports other revenues, which for 2021 mainly includes dividends received (BGN 5,000 thousand) from subsidiaries In the last three periods the Company reports profit of operations with financial assets.
During the reporting period Allterco JSCo has conclude significant transactions within the ordinary scope of business, which might be considered significant due to their specifics:
During the reporting period Allterco JSCo did not enter into large transactions with related party, nor did it make or received offers for such transactions. During the reporting period the Company did not enter into any related party transactions within the meaning of IAS 24, except for the following transactions entered into with subsidiaries that are in the ordinary course of business, which include:
During the reporting period there were no events or indicators in unusual nature for Allterco JSCo. Allterco JSCo is a joint stock company - holding, whose scope of business includes acquisition, management, assessment and sale of participations in Bulgarian and foreign companies. Within the scope of its business in 2020, the Company has carried out a transaction for sale of participations in companies outside its economic group, namely:
During the reporting period the Company did not enter into transactions that were conducted off- balance sheet beside those reported under item 7 Conditional Liabilities of the individual financial statement of the Company.
As of the end of the reporting period, the economic group of Allterco JSCo consists of the following subsidiaries:
The company holds 695 411 shares of the capital of Victory Partners VIII Norway Holding AS (current name Link Mobility Group Holding ASA, "Link Holding"). The specified number of shares represents the balance of a total of 1 345 180 shares received as part (20%) of the price, under the Share Purchase Agreement (SPA) dated 29.06.2019 for the sale of the telecommunications business of Allterco JSCo in Europe, concluded with Link Mobility Group AS. As of the date of this Report there are no restrictions on the free disposal of the specified number of shares.
In 2019 Allterco JSCo has provided to its subsidiary Allterco Trading EOOD additional cash contributions in the amount of EUR 900 000 each, for a period of 1 year, against an annual interest rate of 1%, the interest being accrued on base of 360 days. The interest income on provided additional cash contributions amounts to BGN 18 thousand. At the end of the reporting period the term of the additional cash contribution provided to Allterco Trading EOOD was extended by another one year. The interest rate not paid at the end of the reposting period amounts to BGN 4 thousand.
The Company has decided on the financing the activity of the associated company Allterco Asia Ltd as follows: a loan amount up to a limit of EUR 250 000, for a period of 1 year against one-month EURIBOR, increased by 2,7 (two point seven) point of allowance per year, but not less than 2,7% (two point seven percent) total annual interest, which is accrued on a 3-month basis to the utilized amount of the loan limit. As of the date of the report, no cash have been transferred to the associated company in connection with the approved financing.
Allterco JSCo did not conclude other loan agreements in its capacity of a lender. The subsidiaries have provided guarantees in the form of joint liability under bank financing agreements, as indicated in the table in the foregoing item 8.
In 2020, the Company issued new securities as a result of a successful capital increase through an initial public offering. In the course of the offer were subscribed and paid 2 999 999 (two million nine hundred and ninety-nine thousand nine hundred and ninety-nine) dematerialized ordinary registered voting shares with a nominal value of one lev.
As of the end of the reporting period, the Company has spent part of the funds from the new issue of shares, as follows:
* Expansion and building of the distribution network: participation in local and international exhibitions and registration of a subsidiary in Germany which will build on the distribution network and develop new sales channels in Western Europe.
* Working capital: increase inventories of production and of critical electronic components for the manufacturing process.
* R&D development: increase of IT and engineering staff; device certification.
Allterco JSCo has not published forecasts for the current financial year on an individual basis. The company has published forecasts for 2021 only on a consolidated basis as part of the Prospectus for public offering of shares from the capital increase of Allterco JSCo, together with the amendments thereto.
ALLTERCO JSCo carries out its operational activities in a way that the management of the two-point financial resources is exclusively subordinated to the maintaining of such a capital structure that will allow the company to combine the lower risk of using only own funds with the higher efficiency and flexibility of cash flow under conditions of debt financing so that the Company is able at any time to switch from one type of financing to another, depending on its specific needs.
In connection with the epidemiological situation in the Republic of Bulgaria and the related measures to combat the COVID 19 pandemic, the Company has taken appropriate measures to limit the impact of this situation on the business operation and to ensure continuity of the work and production processes with minimal delay.
In 2021, the management continued to successfully implement certain stabilization measures to limit potential negative impact on the Company's personnel and/or financial position. As a result of these measures (introduction of a hybrid work option for Group employees; timely resourcing of key production components), the Group is reporting a positive trend in its business development and expects this trend to continue in 2022.
In 2022 the Company plans to continue investing in the development of Internet of Things through its subsidiaries. The investment program will be funded with Company’s own cash and raised funds, if necessary.
During the reporting period, there were no changes in the basic principles for managing the Company and its Group of companies.
The Company has a system of internal control and risk management ("the system") that guarantees the effective functioning of the reporting and disclosure systems as well as an audit committee. The system is built and functioning in order to identify the risks associated with the Company's activities and their effective management.
The Board of Directors has the primary responsibility and role in establishing the internal control and risk management system. It performs both managing and guiding function as well as ongoing monitoring.
The ongoing monitoring by the management consists of assessing whether the system is still appropriate for the company in a changed environment, whether it operates as expected and whether it adapts successfully to the changed conditions. The evaluation of selected areas is in line with the company's priorities. The evaluation is also commensurate with the specifics of the company and the impact of the identified risks. The Board of Directors monitors the main features and characteristics of the system, including identified incidents and the respective applied corrective actions.
The Audit Committee assists the Board of Directors in the exercise of their control functions and powers with regard to the financial reporting process, the internal control system, the audit process and monitoring on compliance with the provisions of applicable national and European legislation, as well as the company's internal policies. The Audit Committee holds regular meetings, fulfilling the functions assigned to it by law and the General Meeting of Shareholders in accordance with the adopted Statutes.
The control environment includes the functions of general management, as well as the attitude, awareness and actions of the corporate management pertaining to internal control.
The executive members of the Board of Directors of the company take care to monitor the levels of competence required for the specific jobs and the ways in which those competences become necessary requisites.
Establishing an appropriate organizational structure involves defining an appropriate number of hierarchical levels and defining the basic powers and responsibilities for each of these levels. The Board of Directors assesses the appropriateness of the organizational structure of the company, taking into consideration the size and nature of the activities performed.
The process of risk assessment is the basis on which the Board of Directors of the Company determines the risks to be managed. The Board of Directors of the Company identifies the following types of risk that affect the Company and its activities: general (systematic) and specific (non-systematic) risks. Systematic risks are related to the macro environment in which the Company operates, which is why in most cases they cannot be controlled by the management team. Non-systematic risks are directly related to the activities of the Company and depend mainly on corporate governance. To minimize them, we rely on increasing the efficiency of internal company planning and forecasting, which provides opportunities to overcome possible negative consequences of a risky event.
Page 88 of 115
INDIVIDUAL ANNUAL ACTIVITY REPORT AS OF 31 DECEMBER 2021
Each of the risks related to the country - political, economic, credit, inflation, foreign exchange, has its own significance, but the interaction between them forms a comprehensive picture of the main economic indicators, market and competitive conditions in the country in which each company operates. A detailed description of the risks typical for the activity of ALLTERCO JSCo is presented in the section MAIN RISKS, WHICH THE COMPANY FACES in this activity report.
During the reporting period, no changes were made to the Board of Directors of the Company and with a decision of the General Meeting of Shareholders dated 21.09.2020 the mandate of the Board of Directors with the same members was extended with a new 5-year term. As of the end of the reporting period, the members of the Board of Directors are:
A) received amounts and non-monetary remunerations
During the reporting period, the members of the Board of Directors received remuneration in the total amount of BGN 130 in accordance with the effective Remuneration Policy.
During the reporting period the following members of the Board of Directors received remuneration from subsidiaries:
The members of the Board of Directors did not receive any non-cash benefits during the reporting period.
B) contingent or deferred wages arising during the year, even if the remuneration is due at a later date;
As of the end of the reporting period, Allterco JSCo has no conditional or deferred remunerations incurred during the year, including remuneration that is due at a later date.
C) an amount owed by the Company or its subsidiaries for the payment of pensions, retirement benefits or other similar benefits.
As of the end of the reporting period, the Company does not report amounts due for payment of pensions, retirement benefits or other similar benefits.
As of the end of the reporting period, the shares held by members of the Board of Directors of ALLTERCO JSCo are:
| Name | PERCENTAGE OF THE CAPITAL |
|---|---|
| Svetlin Todorov | 32,48 % |
| Dimitar Dimitrov | 32,48 % |
| Nikolay Angelov Martinov* | 0 % |
Page 89 of 115
INDIVIDUAL ANNUAL ACTIVITY REPORT AS OF 31 DECEMBER 2021
* Nikolay Martinov has no direct interest in the capital of the Issuer. The companies Unicom Consult EOOD, in which he is the sole owner of the capital and manager, Impetus Capital OOD and Impetus Partners OOD, in which he is a partner respectively with 50% and 43,75 % of the capital and manager, as well as Imventure I KDA and Imvencher II KDA, in which he is a representative of the legal entity - "IMPETUS CAPITAL" OOD, have respectively: "Unicom Consult “EOOD – 84,750 shares (0.47%), Impetus Capital OOD 27,000. shares and 162,000 voting rights (0.9%), Impetus Partners OOD 405,000 shares (2.25%) ImVenture I KDA 123,288 shares (0.68%), Imventure II KDA - 68,493. shares (0.38%) in the capital of Allterco JSCo and a total 708,531 number of shares and 843,531 voting rights (4.686%) of the voting rights in its General Meeting.
The company is not aware of any commitments that may in the future result in a change in the number of shares or bonds held by current shareholders. In October 2020, the majority shareholders and members of the Board of Directors - Svetlin Iliev Todorov and Dimitar Stoyanov Dimitrov concluded an Agreement for blocking the currently owned by them a total of 11 552 240 shares of the company's capital for a period of 3 years, as of the date of entry of the capital increase in the Commercial Register. According to the terms of the agreement, the 6-months lock-up period expired as at the end of the reporting period and the majority shareholders are currently entitled to trade up to 7% of their shareholdings. Svetlin Iliev Todorov and Dimitar Stoyanov Dimitrov have agreed between themselves and in favor of the public listed company. The agreement is still in force during the reporting period.
In connection with the sale in 2019 of five subsidiaries to Link Mobility Group AS, the buyer did not fulfil its obligation to pay the remaining 20% of the price (BGN 3 053 thousand), which was due in August 2021 and as at the end of the reporting period was not paid. Allterco JSCo has decided to undertake the necessary measures for collection of the due amount in accordance with the procedure agreed under the Share Purchase Agreement and namely – by filing a law suit before the Vienna International Arbitral Center
For Bulgaria
Denitsa Stefanova
Tel: +359 2 9571247
e-mail: [email protected]
For Germany
CROSS ALLIANCE communication GmbH, Sven Pauly
Tel: +49 89 125 09 0331, E-Mail: [email protected]
www.crossalliance.de
The Company has no obligation for non-financial reporting.
Other circumstances which the Company considers may be relevant to the investors in deciding whether to buy, sell or continue to hold shares are disclosed publicly, including in the Company's Report on Business Activities and the Notes to the financial statements.
Page 90 of 115
INDIVIDUAL ANNUAL ACTIVITY REPORT AS OF 31 DECEMBER 2021
XVI.# INDIVIDUAL ANNUAL ACTIVITY REPORT AS OF 31 DECEMBER 2021
As of the end of the reporting period, the capital of Allterco JSCo amounts to BGN 17 999 999 (seventeen million nine hundred and ninety-nine thousand nine hundred and ninety-nine) divided into 17 999 999 (seventeen million nine hundred and ninety-nine thousand nine hundred and ninety-ninety) ordinary registered, dematerialized voting shares with a nominal value of BGN 1 each. All shares of the company are of one class and each share gives the right to one vote in the General Meeting of Shareholders, the right to dividend and liquidation share, proportional to the nominal value of the share. The Company has not issued any shares that are not admitted to trading on a regulated market in the Republic of Bulgaria or another Member State. As at the end of the reporting period, the Company's entire share issue was listed for trading on the Bulgarian Stock Exchange and the Frankfurt Stock Exchange
As of the end of the reporting period, the capital structure of ALLTERCO JSCo is as follows:
Table No 15 PERCENTAGE OF THE SHAREHOLDER CAPITAL
| Shareholder | Percentage |
|---|---|
| Svetlin Todorov | 32.48% |
| Dimitar Dimitrov | 32.48% |
| Other individuals and legal entities | 35.04% |
Allterco JSCo has no shareholders with special controlling rights
The Company is not aware of any other shareholders' agreements in force at the date of this document which may result in restrictions on the transfer of shares or voting rights other than those referred to in paragraph XV (point 19) above.
The Company has not entered substantial contracts that are effective, amended or terminated due to change in the Company control in the course of a mandatory tender offer.
Digitally signed by Dimitar Stoyanov Dimitrov
Dimitar Stoyanov
Date: 2022.03.25 19:53:22
+02'00'
Executive Director: (Dimitar Dimitrov)
Page 92 of 115
Detailed information on significant events that occurred during the reporting period for ALLTERCO JSCo, including inside information within the meaning of Article 7 of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014. On Market Abuse (Market Abuse Regulation), as well as other information that could be relevant for investors is regularly disclosed by the Company in accordance with regulatory requirements (“regulated information”). The Company is disclosing the regulated information to the public through a selected information medium. All information provided to the media in full unedited text is available at: http://www.x3news.com/
The required information is submitted to the FSC - through the unified electronic information submission system established and maintained by the FSC - e-Register. The information is also available on the Company's website at: https://allterco.com/en/INVESTORS/, containing a dedicated section about the inside information for the reporting year available in at https://allterco.com/en/INVESTORS/вътрешна-информация-и-уведомления-2022-г/
Date: 25 March 2022
Digitally signed by Dimitar Stoyanov Dimitrov
Dimitar Stoyanov
Date: 2022.03.25 19:53:43
+02'00'
Executive Director
/Dimitar Dimitrov/
Page 93 of 115
reporting period Financial Year 2021
on the grounds of art. 13 of Ordinance No. 48 of the Financial Supervision Commission of 20 March 2013 on remuneration requirements
This report was prepared by the Board of Directors of ALLTERCO JSCo in compliance with the provisions of art. 13 in connection with art. 12, par. 1 of ORDINANCE No. 48 of the Financial Supervision Commission of 20 March 2013 on remuneration requirements; this is an independent document which is part of the annual financial statement of the company by 31 Dec. 2021. The report contains a review of the method of implementation of the remuneration policy in 2021 (the reporting year) and information on the implementation of the remuneration policy for the next year is annexed to it.
The remuneration policy for the members of the Board of Directors of ALLTERCO JSCo as well as amendments and additions thereto are prepared by the Board of Directors of the company and approved by the General Meeting of Shareholders. The current Policy was prepared by the Board of Directors of the company in compliance with regulatory requirements. The policy was approved by the regular annual General Meeting of Shareholders held on 28 June 2021. The applicable Remuneration policy is in force as of 28 June 2021 and repeals the Remuneration Policy, adopted by a Decision of the General Meeting of Shareholders taken on 27.06.2017 and amended by a Decision of the General Meeting of Shareholders taken on 21.09.2020.
Pursuant to the valid remuneration policy for the members of the Board of Directors of ALLTERCO JSCo, the company has no remuneration committee. The Board of Directors has not used external consultants in the process of determining the policy.
The Remuneration policy of the members of the Board of Directors of Allterco JSCo, as well as any amendments and / or supplements or revisions, shall be developed by the Board of Directors of the company and adopted by the Company by a decision of the General Meeting of Shareholders, by including a separate item on the agenda announced in the convocation of the General meeting.
A description and explanation of the significant changes and the way in which the results of the General Meeting votes were taken into account, the opinions of the shareholders and the minutes of the General Meetings at which the Remuneration policy was considered and voted are reflected in Appendix 1 to this Policy, an integral part thereto.
The Company shall disclose the Remuneration Policy of the members of the Board of Directors and any subsequent changes in a clear and accessible manner, without disclosing sensitive commercial information or other information constituting a secret protected by law, by publishing it on the Company's website. The adopted Remuneration Policy with the date of its adoption and the date of its entry into force and the results of the voting at the General Meeting is published on the Company's website and is available free of charge while it is in force
The Remuneration Policy shall be reviewed, amended and / or supplemented at least once every 4 years as well as when substantial changes and / or additions to it are necessary or it is necessary to achieve the objectives set out therein.
Date: 25 March 2022
Digitally signed by Dimitar Stoyanov Dimitrov
Dimitar Stoyanov
Date: 2022.03.25 19:52:59
+02'00'
Date: 25 March 2022
Dimitar Stoyanov Dimitrov
Executive Director: /Dimitar Dimitrov/
Page 91 of 115
| Date | Volume | Turnover | Highest value | Lowest value | Opening value | Closing value |
|---|---|---|---|---|---|---|
| 30.12.2021 | 184925 | 578 825,400 | 24,800 | 24,800 | 24,800 | 25,200 |
| 30.11.2021 | 227350 | 1 476 797,500 | 19,700 | 19,700 | 19,700 | 19,700 |
| 29.10.2021 | 130242 | 1 026 272,200 | 20,600 | 17,200 | 19,700 | 20,600 |
| 30.09.2021 | 96202 | 2 312 406,600 | 17,400 | 17,100 | 20,600 | 17,400 |
| 31.08.2021 | 51497 | 1 477 504,850 | 17,700 | 16,900 | 17,400 | 17,700 |
| 30.07.2021 | 32713 | 1 190 116,700 | 17,100 | 15,800 | 17,700 | 17,100 |
| 30.06.2021 | 87283 | 7 017 515,900 | 16,600 | 13,700 | 17,100 | 15,900 |
| 31.05.2021 | 68960 | 8,750 | 15,800 | 11,000 | 15,900 | 14,400 |
| 29.04.2021 | 177039 | 6,500 | 13,700 | 9,000 | 14,400 | 11,100 |
| 31.03.2021 | 150097 | 8,850 | 11,000 | 9,000 | 11,100 | 9,200 |
| 26.02.2021 | 131599 | 6,850 | 9,000 | 9,000 | 9,200 | 9,200 |
| 29.01.2021 | 1040688 | 9,250 | 9,000 | 8,700 | 9,200 | 8,750 |
Source: Investor.bg
Information on the trading in the shares of Allterco JSCo during the reporting period on the Frankfurt Stock Exchange is available at https://www.boerse-frankfurt.de/equity/allterco-jsco/price-history/historical-prices-and-volumes
Digitally signed by Dimitar Stoyanov Dimitrov
Dimitar Stoyanov
Date: 2022.03.25 19:52:59
+02'00'
Date: 25 March 2022
Dimitar Stoyanov Dimitrov
Executive Director: /Dimitar Dimitrov/
Page 91 of 115# ALLTERCO JSCo
Pursuant to the valid Remuneration Policy for the members of the Board of Directors of ALLTERCO JSCo, through the reporting financial year the Company paid the members of the Board of Directors permanent remuneration which amount was approved by the General Meeting of Company Shareholders, considering the following:
The permanent remuneration (salary) is not related to the achievement of certain results. The amount of remuneration is in accordance with the main activity of ALLTERCO JSCo and revenues from company operation, taking into account that as a holding pursuant to art. 277 and art. 278 of the Companies Act the company has no production or commercial activities of its own but forms its income mainly from dividends and management fees from its subsidiaries.
In view of the financial and economic situation of the Company, as well as considering the specific commitment of each of the members of the Board of Directors of the Company, until the adoption of a new decision by the General Meeting of Shareholders of the Company, the monthly remuneration of the boards shall be defined, regardless of the presence or absence of an executive function, as follows:
Thus as determined, the fixed remuneration represents a sufficiently large part of the total remuneration of each of the members of the Board of Directors, which allows the implementation of a flexible policy by the Company regarding the variable remuneration, including the possibility not to be paid when the criteria are no met, as well as in case a significant deterioration in the financial condition of the company occurs.
In the reported financial year ALLTERCO JSCo did not pay any additional remuneration to the members of the Board of Directors.
In the reporting period the General Meeting of the Shareholders has approved a Remuneration Scheme based on shares of the company for the members of the Board of Directors for 2021. Up to date has not paid any share-based remuneration in execution of this Scheme.
The Board of Directors shall annually propose for approval by the General Meeting of Shareholders a Remuneration Scheme, which shall determine the amount of the remunerations and the criteria for their provision by indicating the specific indicators and their values. Annually the Board of Directors shall propose for voting by the General Meeting the provision to the executive board members of remuneration in shares for the past reporting period, according to the scheme for remuneration in shares approved by the General Meeting. The decision to grant the executive members of the Board of Directors remuneration in shares shall be taken by the General Meeting of Shareholders, and the approval shall have as a subject a specific scheme for remuneration in shares. The terms of the Scheme have been determined with reference to the Group's development strategy and are the same for all executive members of the Board having regard to their roles, their interrelationship and the overall outcome for the Company and its Group companies achieved on that basis. The fulfilment of the conditions for granting the remuneration in shares is reported by the Board of Directors and approved by the General Meeting of Shareholders, and the specific number of shares to be granted is determined according to the degree of fulfilment of the criteria.
According to the applicable Remuneration Policy the Company may pay to the executive members of the Board of Directors (those representing the Company as entered in the Commercial Register at the Registry Agency, in accordance with the Policy) the variable remuneration in shares or rights for shares in order to directly engage the management in achieving the long-term corporate goals. No payment of variable remuneration is provided to the non-executive board members.
The variable remuneration in shares may be paid on the basis of a Scheme approved by the General Meeting of Shareholders and the fulfilment of the conditions set out therein for the receipt of the variable remuneration. The grant of variable remuneration in shares is made on the basis of objective and measurable criteria of the performance achieved by the executive members of the Board of Directors that promote the long-term sustainability of the Company and include both financial and non-financial indicators. The assessment of the performance of financial and non-financial performance indicators is made annually by the General Meeting of Shareholders on the basis of the Company's annual consolidated financial statements certified by a registered auditor, the Company's consolidated management report and the appendices thereto, and other relevant information.
According to the applicable 2021 Share-Based Remuneration Scheme, the following performance criteria must be met:
The realization of the set financial criteria contributes to the long-term interests of the Company by ensuring sustainable growth in the Company's value based on its performance and maintaining investor confidence.
The Non-financial criteria include the accomplishment of any of the following strategic projects alternatively:
The implementation of the set non-financial criteria contributes to the long-term interests of the Company by ensuring:
* a definitive restructuring of the business by concentrating it entirely and exclusively in the IoT area;
* attracting foreign investors;
* sustainable growth and development of the business by expanding the device portfolio and providing access to new markets;
The Scheme defines the indicators of the non-financial and financial criteria (the respective number of shares for each performance level) and its weighting in the total variable remuneration as follows:
The specific number of shares for the financial criteria depends on the stage of performance. The number of shares for each stage of performance of the financial criteria is added to the number of shares from the previous stage of performance.
According to the Remuneration Policy, the permanent remuneration is not linked to the performance. Such a link exists in respect of the variable remuneration in shares as described in the preceding paragraph 4, here above.
The amount of basic payments is fixed in the Remuneration Policy; it contains no options for payment of bonuses and/or other non-monetary additional compensations.
The company has no obligation for paying additional voluntary pension insurance for the members of the Board of Directors of ALLTERCO JSCo and the company is not obliged to make installments in favor of the directors for the reported financial year.
By 31.12.2022, after reviewing the achieved results, the General Meeting of the Shareholders approves the fulfillment of the criteria under the current Scheme for 2021 and decides on the provision of the specific remuneration in shares.The actual transfer of the shares is carried out within the legally established terms - at the earliest three years after the date of the decision of the General Meeting of Shareholders to grant the remuneration.
In accordance with the requirement of Section IV of the current Remuneration Policy for the members of the Board of Directors of ALLTERCO JSCo, the following conditions and compensations are provided for the termination of the contracts with the executive members of the Board of Directors.
The current Board Share-based Remuneration Scheme 2021 does not provide for a lock-up period after the actual transfer of the shares.
Both the Remuneration Policy and the Share-based Remuneration Scheme 2021 do not provide for a number of shares to be retained until the end of the term of office.
The chairperson of the Board of Directors and the deputy-chairperson who is also executive director perform their functions on the grounds of contracts with 2-month notice of termination. The obligations of the independent members of the Board of Directors start with their entry in the Companies Register. All members of the Board of Directors are appointed by the General Meeting of Shareholders with a 5-year mandate and without limit to further appointments. Details on compensations and/or other payments due in case of early termination are set in the Remuneration Policy of the Board of Directors.
The members of the Board of Directors of ALLTERCO JSCo received the following remuneration for 2021:
Table No. 16
| Full name | Position | Gross/thousand BGN |
|---|---|---|
| Dimitar Stoyanov Dimitrov | Executive Director | 48 |
| Svetlin Iliev Todorov | Chairman of the Board of Directors | 48 |
| Nikolay Angelov Martinov | Independent member | 34 |
During the reported financial year part of the members of the Board of Directors received remuneration from subsidiaries for other functions performed in these companies under employment or other employment relations, as follows:
Table № 17
| Full name | Gross/thousand BGN |
|---|---|
| Dimitar Stoyanov Dimitrov | 488 |
| Svetlin Iliev Todorov | 353 |
The members of the Board of Directors of ALLTERCO JSCo. received the following remuneration for 2021 paid by ALLTERCO JSCo:
Table № 18
| Full name | Position | Gross/thousand BGN |
|---|---|---|
| Dimitar Stoyanov Dimitrov | Executive Director | 48 |
| Svetlin Iliev Todorov | Chairman of the BD | 48 |
| Nikolay Angelov Martinov | Independent member | 34 |
During the reported financial year part of the members of the Board of Directors received from subsidiaries remuneration for other functions performed in these companies under employment contracts or other employment relations, as follows:
Table № 19
| Full name | Gross/thousand BGN |
|---|---|
| Dimitar Stoyanov Dimitrov | 488 |
| Svetlin Iliev Todorov | 353 |
In 2021, none of the members of the Board of Directors of ALLTERCO JSCo received remuneration from the company in the form of profit distribution and / or other bonuses.
The contracts with the members of the Board of Directors of ALLTERCO JSCo provide for no additional payments for services provided by them outside their usual functions.
In 2021, no compensation was paid for the dismissal of members of the Board of Directors.
In 2021 none of the members of the Board of Directors of ALLTERCO JSCo received non-cash remuneration in addition to those specified in clauses (a) to (e).
In 2021, there are no loans, payments for social and household expenses and guarantees provided by the company or its subsidiaries or other companies to any of the members of the Board of Directors of ALLTERCO JSCo, that are subject to consolidation in its annual financial statements.
According to the applicable Remuneration Policy the Company may pay to the executive members of the Board of Directors (those representing the Company as entered in the Commercial Register at the Registry Agency, in accordance with the Policy) the variable remuneration in shares or rights for shares in order to directly engage the management in achieving the long-term corporate goals. No payment of variable remuneration is provided to the non-executive board members. The variable remuneration in shares may be paid on the basis of a Scheme approved by the General Meeting of Shareholders and the fulfilment of the conditions set out therein for the receipt of the variable remuneration.16. Annual change in the remuneration, the results of the company and the average amount of remuneration on the basis of full-time work of company employees, who are not directors, during at least five previous financial years is as follows:
Annual change in the remuneration, company results and the average amount of remuneration based on full-time work of company employees who are not directors, during the at least five previous financial years
| 2016 | 2017 | 2018 | 2019 | 2020 | 2021 | |
|---|---|---|---|---|---|---|
| Change in the remuneration Number of employees, excluding BoD members | 4 | 4 | 4 | 4 | 4 | 4 |
| Salary expense, incl. social security contributions, BGN | 208 092 | 224 015 | 230 507 | 374 100 | 245 627 | 298 929 |
| annual % change | 7.7% | 2.9% | 62.3% | -34.3% | 21.70% | 74 732 |
| Average annual remuneration/employee, BGN | 52 023 | 56 004 | 57 627 | 93 525 | 61 407 | |
| Company results | ||||||
| Total revenue (incl. financial), thousand BGN | 1 472 | 1,666 | 1 598 | 9 598 | 4 483 | 3 632 |
| Net profit on individual basis, thousand BGN | 74 | 549 | 713 | 2 330 | 5 365 | 3 270 |
| Salary Expense as % of the revenue | 14% | 13% | 14% | 4% | 7% | 6% |
In 2021, there is a decrease in employee salary costs as a percentage of revenue. Salary costs have increased by an average of about 7.45% on an annual basis in the period 2016 - 2021, except in 2019 when the growth was higher due to the bonuses paid in relation to the successful completion of the sale of 5 subsidiaries.
Information on exercising the possibility to demand a refund of paid variable remuneration
According to the current Remuneration Policy, there is no provision for payment of variable remuneration to the members of the Board of Directors.
Information on all deviations from the procedure for the implementation of the Remuneration Policy in connection with extraordinary circumstances under Art.11, para.13, including an explanation of the nature of the extraordinary circumstances and identification of the specific components that have not been implemented.
In 2021, there were no extraordinary circumstances where the company temporarily suspended the implementation of the Remuneration Policy.
Information on the implementation of the Remuneration Policy for the members of the Board of Directors of ALLTERCO JSCo for the next financial year
On 04.03.2022 the Company has published an Invitation for an Extraordinary General Meeting of Shareholders, which agenda under item 2 contains proposals for changes to the Remuneration Policy.
For ALLTERCO JSCo:
Digitally signed by Dimitar Stoyanov Dimitrov
Dimitar Stoyanov
Date: 2022.03.25 19:54:16 ....D..im...it.r.o.v................................... +02'00'
Dimitar Dimitrov
/Executive Member of the Board of Directors/
IN ACCORDANCE WITH THE PROVISIONS OF ART. 100N, PARA. 8 OF THE PUBLIC OFFERING OF SECURITIES ACT
Information whether ALLTERCO JSCo complies, where appropriate, with the Corporate Governance Code, approved by the Deputy Chairman, or another corporate governance code
ALLTERCO JSCo and its management comply, where appropriate, with the National Corporate Governance Code. Some of the recommendations of the National Code are not yet fully implemented by the corporate management of the company, but the Board of Directors is committed to continue to bring the activities of ALLTERCO JSCo in line with them in 2022.
Information on the corporate governance practices applied by ALLTERCO JSCo in addition to the National Corporate Governance Code
ALLTERCO JSCo does not apply other corporate governance practices in addition to the National Corporate Governance Code.
Explanation by ALLTERCO JSCo which parts of the National Corporate Governance Code are not observed and what are the reasons for this are
In 2021, the activity of the Board of Directors of ALLTERCO JSCo was carried out in full compliance with the regulatory requirements set out in the Public Offering of Securities Act and the acts on its implementation in the Statutes of the Company. The corporate management of ALLTERCO JSCo considers that there are still parts of the National Corporate Governance Code that the Company does not comply with, but in 2021 the management will continue to perform all necessary legal and factual actions to bring the activity in line with the principles and recommendations of the Code, as well as best practices in the field of corporate governance. The Code is applied on the basis of the "observe or explain" principle. This means that the Company complies with the Code, and in case of deviation, its management should clarify the reasons for this.
ALLTERCO JSCo is a Company with a one-tier management system and is managed by a Board of Directors.
The Board of Directors directs and controls independently and responsibly the activity of the Company in accordance with the established vision, goals, strategies of the Company and the interests of the shareholders. The Board of Directors monitors the results of the Company's activities on a quarterly and annual basis and, if necessary, initiates change in the management of the activity. The Board of Directors treats all shareholders equally, acts in their interest and with the care of a good merchant. The members of the Board of Directors are guided in their activities by the generally accepted principles of integrity and managerial and professional competence. The Board of Directors has not adopted a Code of Ethics. The Board of Directors has built and ensured the functioning of a risk management system, including for internal control and internal audit. The Board of Directors has ensured and controls the integrated operation of the accounting and financial reporting systems. The Board of Directors provides guidelines, approves and controls the implementation of the company's business plan, substantial transactions, as well as other activities established in its bylaws. In accordance with the requirements of the Public Offering of Securities Act, the Board of Directors monitors all substantial transactions and approves them. If there are transactions, which individually or collectively exceed those specified in Art. 114, para. 1 of the Public Offering of Securities Act thresholds, the Board of Directors prepares a motivated report and adopts a decision to convene a General Meeting of Shareholders, at which it is authorized by the shareholders to carry out these transactions. The Board of Directors reports on its activities to the General Meeting of Shareholders, submitting the annual activity report and the report on the implementation of the remuneration policy for approval by the shareholders.
The General Meeting of Shareholders elects and dismisses the members of the Board of Directors in accordance with the law and the Statutes of the Company, as well as in accordance with the principles of continuity and sustainability of the work of the Board of Directors. In case of proposals for election of new members of the Board of Directors, the principles of compliance of the candidates’ competence with the nature of the National Corporate Governance Code in the activity of the Company are observed. All members of the Board of Directors meet the legal requirements for holding office. The functions and obligations of the corporate management, as well as its structure and competence are in accordance with the requirements of the Code. The contracts for assignment of the management, concluded with the members of the Board of Directors, define their obligations and tasks, the criteria for the amount of their remuneration, their obligations for loyalty to the company and the grounds for dismissal. During the reporting financial year, ALLTERCO JSCo implemented the Remuneration Policy of the members of the Board of Directors, adopted in 2021 by of ALLTERCO JSCo. The remuneration of the members of the Board of Directors and information on their amount is duly disclosed in the activity report of the Board of Directors as of 31.12.2021, as well as in the Report on the application of the Remuneration Policy of the members of the Board of Directors, which are an integral part of the annual financial report of the Company.
The number of members and the structure of the Board of Directors are determined in the Statutes of the Company. The composition of the Board of Directors is structured in a way that guarantees the professionalism, impartiality and independence of its decisions in relation to the company management. The functions and obligations of the corporate management, as well as its structure and competence are in accordance with the requirements of the Code. The Board of Directors shall ensure the proper distribution of tasks and responsibilities between its members. The independent members of the Board of Directors of ALLTERCO JSCo control the actions of the executive management and participate effectively in the work of the company in accordance with the interests and rights of the shareholders. The Chairperson of the Board of Directors is not an independent director. Given the existing capital structure of the Company, the members of the Board of Directors consider it appropriate that the Chairperson of this body should not be an independent director.The competencies, rights and obligations of the members of the Board of Directors follow the requirements of the law, the by-laws and the standards of good professional and managerial practice. The members of the Board of Directors have the appropriate knowledge and experience required by the position they hold. Information about the professional qualification and experience is disclosed during the election of the members of the Board of Directors with the materials for the General meeting of the shareholders. After the election of new members of the Board of Directors, they get acquainted with the main legal and financial issues related to the Company's activities. Improving the qualification of the members of the Board of Directors is their constant commitment. The members of the Board of Directors have the necessary time to perform their tasks and duties, even though the statutes of the Company do not determine the number of companies in which the members of the Board of Directors may hold managerial positions. This circumstance is taken into account in the proposals and election of new members of the Board of Directors. The election of the members of the Board of Directors of the Company is performed by means of a transparent procedure, which provides, among other things, timely and sufficient information about the personal and professional qualities of the candidates for members. As part of the materials for the General Meeting, at which the election of a new member of the Board of Directors is proposed, all declarations required by the POSA and the Commercial Law, a criminal record certificate and a professional biography of the candidate for elected position are to be submitted. When electing members of the Board of Directors, the candidates confirm with a declaration or in person to the shareholders the accuracy of the submitted data and information. The election procedure is conducted by show of hands and counting the votes "For", "Against" and "Abstentions". The voting results are announced through the minutes of the General Meeting of Shareholders. The number of consecutive terms of office of the members of the Board of Directors ensures efficient operation of the Company and compliance with the legal requirements. The statutes of the Company do not provide for a limit on the number of consecutive mandates of the independent members, but this circumstance is observed in the proposal for election of independent members.
Remuneration
The Board of Directors has developed a clear and specific policy for the remuneration of the members of the Board of Directors, which was approved by the Annual General Meeting of Shareholders in 2017, amended in 2021 by the Annual General Meeting of Shareholders of ALLTERCO JSCo and sets the principles for forming the amount and structure of the remuneration. The remuneration of the Executive Member of the Board of Directors consists of a basic remuneration and additional incentives. The additional incentives are subject to clear and specific criteria and indicators regarding the Company's results and/or the achievement of goals set in advance by the Board of Directors. Pursuant to the Remuneration Policy adopted by the General Meeting of Shareholders, the Company may pay executive members of the Board of Directors (members of the Board of Directors representing the Company in its relations with third parties, as recorded in the Commercial Register with the Registry Agency) variable remuneration in shares in order to directly engage management in the achievement of long-term corporate objectives. Variable remuneration in shares is not provided for non-executive members of the Board of Directors. The share-based remuneration of the Company, the criteria for their grant and their amounts are determined on the basis of a Share-based Remuneration Scheme approved by the General Meeting of Shareholders, as adopted in 2021. The independent members of the Board of Directors receive remuneration in accordance with the principles for forming the amount and the structure of remuneration set out in the Remuneration Policy adopted by the Annual General Meeting of the Shareholders in 2021. As mentioned above, the disclosure of information on the remuneration of the members of the Board of Directors is carried out in accordance with the legal norms and bylaws of the Company - by disclosing in the Annual Report on the Business Activities and the Report on the Application of the Remuneration Policy for the members of the Board of Directors. In this way, the shareholders have easy access to the policy observed by the company regarding the permanent and additional remuneration to the members of the Board of Directors.
Conflict of interests
The members of the Board of Directors avoid and do not allow real or potential conflicts of interest. During the reporting period, no transactions have been concluded between the company and members of the Board of Directors or persons related to them. The members of the Board of Directors immediately disclose conflicts of interest and provide the shareholders with access to information on transactions between the Company and members of the Board of Directors or persons related to them by presenting the declaration under Art. 114b of the POSA. The Board of Directors has not established a specific procedure for avoiding conflicts of interest in transactions with interested parties and disclosing information in the event of such, but controls the conclusion of significant transactions through voting and approval of such transactions.
ІІ. Chapter Two – Audit and internal control
The Board of Directors is assisted by an Audit Committee. The Board of Directors and the Audit Committee ensure compliance with the applicable law regarding the independent financial audit. The rotation principle is applied in the proposals and election of an external auditor. The Audit Committee oversees the internal audit activities and monitors the overall relationship with the external auditor, including the nature of non-audit services provided by the Company's auditor. The Company has established and operates an internal control system, which includes identifying the risks associated with the Company's activities and supporting their effective management. It also ensures the effective functioning of the accountability and information disclosure systems. A description of the main characteristics of the internal control and risk management systems is presented in item 4 of this corporate governance declaration.
ІІІ. Chapter Three – Protection of the shareholders’ rights
The Board of Directors ensures equal treatment of all shareholders, including minority and foreign shareholders, protects their rights and facilitates exercising them within the scope permitted by the applicable law and in accordance with the provisions of the Company's statutes. In the reporting period, the Company held one regular and one extraordinary General Meeting of Shareholders, complying with all the requirements of Art. 115 et seq. of the POSA, announcing the decision for its convention and publishing the invitation together with the materials thereto in the manner specified by the law. The shareholders were guaranteed the opportunity to add new items to the agenda under Art. 223a of the CA. The Statutes of the Company provide for the invitation to the General Meeting to contain the information required under the Commercial Act and POSA, as well as additional information on exercising the right to vote and the possibility to add new items to the agenda under Art. 223a of the CA. The corporate management ensures that all shareholders are informed about their rights through the information published on the Company's website, the announced Statutes of the Company and the invitation for each specific General Meeting of Shareholders together with the materials to it.
General Meeting of Shareholders
All shareholders are informed about the rules according to which the General Meetings of Shareholders are convened and held, including the voting procedures through the Statute of the Company and the invitation for each specific general meeting of shareholders. The Board of Directors provides sufficient and timely information on the date and place of the General Meeting, as well as complete information on the issues to be discussed and resolved at the Meeting. The invitation and materials for the General Meeting of Shareholders are announced through the selected media agencies and reach the public, the Financial Supervision Commission and the regulated securities market. After presenting the invitation and the materials for the General Meeting of Shareholders, they are also made available on the Company's website. Shareholders with voting rights have the opportunity to exercise their voting rights at the General Meeting of the Company in person or through representatives and voting by correspondence might be allowed for a specific General Meeting of the Shareholders. As part of the materials for the General Meeting of Shareholders, the Board of Directors provides a sample power of attorney. The Company indicates the Rules for voting by proxy and the Rules for voting by correspondence (when applicable) in the content of the invitation or as a separate document - part of the materials to it. The Board of Directors has undertaken all necessary actions to bring the Company's activities in line with the recommendations of the Code. The Statutes of the Company allow exercising the right to vote by electronic means and/or by correspondence by decision and rules determined by the Board of Directors in the invitation to convene a General Meeting. The Board of Directors exercises effective control by creating the necessary organization for the voting of the authorized persons in accordance with the instructions of the shareholders and in the ways permitted by law.# IV. Chapter Four – Disclosure of financial and nonfinancial information
The Board of Directors has adopted a policy for disclosure of information in accordance with the legal requirements and the bylaws of the Company. In accordance with the adopted policy, the corporate management has created and maintains a system for disclosure of information. The disclosure system ensures equality of the addressees of the information (shareholders, stakeholders, investment community) and does not allow misuse of inside information. The inside information is disclosed in the legally established forms, order and terms through the selected media agencies. The Company uses a single point to disclose information by electronic means, thus the information reaches both the public and the FSC and the regulated securities market in an uncorrected form. Information in uncorrected form and in the same volume is also published on the Company's website. In this way, the company's executive management ensures that the disclosure system provides complete, timely, accurate and understandable information that allows for objective and informed decisions and assessments.
The Executive Management and the Board of Directors promptly disclose the capital structure of the Company and agreements that lead to exercising control in accordance with its disclosure rules. The disclosure is made through the provisions of the Public Offering of Securities Act and the acts for its implementation, as well as the applicable European regulation.
The Board of Directors ensures, by exercising control over the implementation of the disclosure policy, that the rules and procedures according to which the acquisition of corporate control and extraordinary transactions such as mergers and sale of significant parts of assets carried out are clearly and timely disclosed. The Board of Directors approves and together with the independent auditor controls internal rules for the preparation of the annual and interim reports and the procedure for disclosure of information.
The Company maintains a website - www.allterco.com with approved content, scope and frequency of the information disclosed through it. For technical reasons, the content of the Company's website does not fully cover the recommendations of the National Corporate Governance Code, but the Board of Directors has undertaken appropriate measures. The Company also maintains an English language version of the corporate website with similar content. The Company periodically discloses information about the corporate governance.
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The Board of Directors of the Company believes that its activities in the reporting period created prerequisites for sufficient transparency in its relations with investors, financial media and capital market analysts. In the reporting period, the Company disclosed all regulated information within the deadlines and in accordance with the procedure provided for in the Public Offering of Securities Act and the acts on its implementation.
The corporate governance ensures effective interaction with the stakeholders. This category includes certain groups of persons who are directly affected by the company and who in turn can influence its activities. The Company identifies as stakeholders in relation to its activities the following groups of persons: employees, creditors, suppliers and other contractors related to the implementation of the Company's activities. The corporate management shall ensure that all stakeholders are sufficiently informed of their statutory rights. At the end of the reporting period, Corporate Management had not developed specific policies to address stakeholder interests but is committed to taking appropriate action to comply with this requirement in 2022. In its policy regarding the stakeholders, Company complies with the legal requirements based on the principles of transparency, accountability and business ethics.
The corporate management is committed to establishing specific actions and policies regarding the sustainability of the company, including the disclosure of information related to climate and social aspects of their operations. The corporate management maintains effective relations with stakeholders and is prepared to inform the company, when necessary, in accordance with legal standards and good international practice for disclosure of non-financial information, about economic, social and environmental issues of concern to stakeholders, such as: anti-corruption; dealing with employees, suppliers and customers; the company's social responsibility; environmental protection and human rights violations. The corporate management ensures the right to timely and regular access to relevant, sufficient and reliable information about the company when stakeholders are involved in the corporate governance process
When describing the main characteristics of the internal control and risk management systems, it should be borne in mind that neither the POSA nor the National Corporate Governance Code define an internal control framework for public companies in Bulgaria to follow. Therefore, for the purposes of fulfilling the obligations of the Company under Art.# 100n, para. 8, item 4 of POSA, the description of the main characteristics of the systems uses the framework of International Auditing Standard 315.
The company employs a system for internal control and risk management (“the system”), which ensures the effective functioning of the reporting and disclosure systems, as well as an Audit Committee. The system is also built and operates in order to identify the risks associated with the Company's activities and support their effective management.
The Board of Directors bears the main responsibility and has a role in establishing the system of internal control and risk management. It performs both a management and guidance function as well as ongoing monitoring. The ongoing monitoring by the corporate management consists of assessing whether the system is still appropriate in a changed environment, whether it is operating as expected and whether it is periodically adapting to changed conditions. The evaluation of selected areas, performed in this context as the responsibility of senior management, is in line with the Company's priorities.
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The Board of Directors monitors the main characteristics and features of the system, including the identified major incidents and the corrective actions undertaken or implemented, respectively.
The control environment includes the functions of general management, as well as the attitude, awareness and actions of the corporate management.
Establishing an appropriate organizational structure involves defining an appropriate number of hierarchical levels and defining the basic powers and responsibilities for each of these levels. The Board of Directors assesses the appropriateness of the organizational structure of the Company, taking into consideration the size and nature of the activities performed.
The process of risk assessment by the corporate management is the basis on which the Board of Directors of the Company determines the risks to be managed. The Board of Directors of the Company identifies the following types of risk that affect the Company and its activities: general (systematic) and specific (non-systematic) risks.
Systematic risks are related to the macro environment in which the Company operates, which is why in most cases they cannot be controlled by the management team. Non-systematic risks are directly related to the activities of the Company and depend mainly on corporate governance. To minimize them, we rely on increasing the efficiency of internal company planning and forecasting, which provides opportunities to overcome possible negative consequences of a risky event.
Each of the risks related to the country - political, economic, credit, inflation, foreign exchange, has its individual significance, but the interaction between them forms a comprehensive picture of the main economic indicators, market and competitive conditions in the country in which each company operates.
A detailed description of the risks typical for the activity of ALLTERCO JSCo is presented in the section MAIN
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RISKS, WHICH THE COMPANY FACES in this activity report.
The information system, essential for the purposes of financial reporting, which includes the accounting system, consists of procedures and documentation, developed and established for the purpose of:
The Company's communication of the roles and responsibilities in the financial reports and important issues includes the definition of individual roles and responsibilities related to internal control. It includes such matters as the extent to which the accounting team understands how its activities in the financial reporting information system relate to the work of others and the means of reporting exceptions to the corporate governance. The communication is carried out on the basis of financial reporting rules agreed with the registered auditor. Open communication channels help ensure that exceptions are reported and acted upon.
The ongoing monitoring of controls is a process for assessing the effectiveness of the internal control results over time. It includes timely assessment of the effectiveness of controls and undertaking the necessary remedial actions. The corporate management performs ongoing monitoring of the controls. Ongoing monitoring activities are often embedded in the Company's day-to-day recurring activities and include regular managerial and supervisory activities.
At the end of the reporting period, the shareholders holding 5 percent or more of the capital and voting rights in the General Meeting of the Company are:
| SHAREHOLDER | PERCENTAGE OF THE CAPITAL |
|---|---|
| Svetlin Todorov | 32.48% |
| Dimitar Dimitrov | 32.48% |
| Other individuals and legal entities | 35.04% |
The Company has no other shareholders who directly or indirectly hold 5 percent or more than 5 percent of the voting rights in the General Meeting.
ALLTERCO JSCo has no shareholders with special control rights.
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There are no restrictions on the voting rights of the shareholders of ALLTERCO JSCo. To participate in the General Meeting, shareholders must identify themselves with the documents specified in the law, the Statute and the invitation to the General Meeting, certifying their identity and representative power and be registered by a mandate commission in the list of attending shareholders prior to the starting time of the General Meeting.
Pursuant to the provisions of the Statute of the Company, the General Meeting of Shareholders determines the number, elects and dismisses the members of the Board of Directors and determines the remuneration for their work in it. According to Art. 25, para.# 1 of the Statutes of the Company, the term of office of the Board of Directors is determined by the General Meeting, but it cannot be longer than 5 years. The General Meeting of Shareholders may at any time decide to make changes in the number and composition of the Board of Directors, and the members of the Board may be re-elected without restriction. The General Meeting of Shareholders may at any time decide to make changes in the number and composition of the Board of Directors, and members of the Board may be re-elected without restriction. A member of the Board of Directors may be any legally capable individual and a legal entity that meets the requirements of the law and has the necessary professional qualifications in connection with the Company's activities.
The Board of Directors of ALLTERCO JSCo has the following powers: The Board of Directors discusses and resolves all issues other those that falling within the exclusive competence of the General Meeting of Shareholders, including but not limited to:
(i) plans and programs for the Company's activities;
(ii) organizational structure of the Company;
(iii) participation in tenders and competitions;
(iv) adopting and modifying the rules of procedure of the Board of Directors;
(v) election and dismissal of the Executive Members in its staff;
(vi) acquisition of Company's participation in other companies;
(vii) opening and closing of branches of the Company in the country and abroad
(viii) acquisition and alienation of real property and limited real rights owned by the Company;
(ix) creating a mortgage on the Company's real estate or pledge on fixed tangible assets of the Company;
(x) granting loans to third parties, providing guarantees, taking out guarantees and providing collaterals for the obligations of third non-related parties, concluding bank loan agreements for an amount (excluding interest and charges) of above 3% (three percent) of the value of the consolidated revenue of the Company, according to the last audited annual financial statement of the Company;
(xi) the conclusion by the Company of operating or financial leasing contracts for amounts exceeding BGN 250,000 (excluding interest and charges);
(xii) disposal of intellectual property rights, including acquisition, sale and assignment of licenses for the use of patents, know-how and other intellectual property rights (with the exception of intellectual property rights granted to third parties in connection with the granting of products and services to end users within the scope of the Company's purpose of business);
(xiii) determining the conditions for the appointment and adoption of programs for material incentives on an annual basis for key management personnel of the Company's subsidiaries, namely, executive directors, procurators and managing directors of the Company's subsidiaries.
to constitute and reconstitute the Advisory Board, to take decisions on all matters concerning the Advisory Board, except those previously determined by this Statute or by a decision of the General Meeting of Shareholders, including but not limited to: to determine the number and personnel of the Advisory Board, to appoint and dismiss its members at its discretion, to determine the term of its existence, the remuneration and the mandate of its members, to adopt, amend, revoke and monitor the implementation of any and all documents concerning the Advisory Board, including the Rules on the functioning of the Advisory Board.
The Board of Directors takes decisions regarding and authorizes the persons who manage and/or represent the Company to conduct transactions with stakeholders within the meaning of Art. 114, para. 2 of POSA, for which no prior authorization by the General Meeting of Shareholders is required.
With Decision of the General Meeting of Shareholders of 15.10.2021, the Board of Directors is authorized Up to five years as of 27.06.2019, the Board of Directors is entitled to take decisions to increase the capital of the company, under any of the methods provided for under para. 1 except for by converting part of the profit into capital, until reaching a total nominal value of BGN 25,000,000 (twenty-five million) by issuing and public offering of up to 10,000,000 (ten million) new dematerialized ordinary registered shares with the right of one vote, with a nominal value of BGN 1 (one) each and an issue value of one share, determined by an express decision of the Board of Directors of the Company. The restrictions set out here above shall apply in general regardless of which of the methods provided for under para. 1 here above has been used for the capital increase.
The company may buy back its own shares without making a trading offer, acquiring in the course of one calendar year no more than 3 per cent of its treasury voting shares, per decision of the General Meeting of Shareholders, for a term not exceeding eighteen months from the date of the decision of the respective body of the Company. The Company may buy back its own shares by decision of the General Meeting of Shareholders for the purposes the implementation of programs for additional material incentives for the employees within its group with the provision of Company’s shares and the schemes for granting variable remuneration in shares to the executive members of the Board of Directors, in accordance with the Remuneration policy of the members of the Board of Directors of the Company.
ALLTERCO JSCo has a one-tier management system. The Company is managed and represented by a Board of Directors, which, as of the date of preparing this declaration has the following members, according to a decision of the General Meeting of Shareholders of 21.09.2020:
The Board of Directors of ALLTERCO JSCo elects a Chairperson and a Deputy Chairperson from its members. The Board of Directors meets at regular meetings at least once in three months to discuss the state and development of the Company. Each member of the Board may request the Chairperson to convene a meeting to discuss specific issues. The decisions under subitems (v) - (xiii) of item 5 above, as well as the decisions pertaining to transactions with stakeholders are taken unanimously by all members of the Board of Directors. The other decisions of the Board of Directors are taken with a majority of more than half of all members of the Board of Directors. A quorum at meetings of the Board of Directors is present if the number of members present at the meeting is sufficient to make decisions on the items on the agenda. If a quorum is not present on any of the items requiring a qualified majority, the lack of a quorum is noted in the minutes and this item is not considered at the meeting. The Board of Directors may take decisions in absentia.
The Company has an Audit Committee elected by the Annual General Meeting of Shareholders composed of:
The Audit Committee performs its functions in accordance with the Statute adopted by the Annual General Meeting of Shareholders and the requirements of the Independent Financial Audit Act.
In compliance with the last amendments in the Statute of Company the Board of Directors has decided to establish an Advisory Board in the Company and has appointed Mr. Gregor Bieler for its chairman. The Advisory Board is a collective advisory body, which assists the members of the Board of Directors and the senior management of the Company, based on the expertise of each of its members and according to the goals set by the Board of Directors in its constitution, as for this purpose it can (the enumeration is exemplary):
(i) to prepare and provide strategic guidelines and programs for development of the Company;
(ii) to monitor the activity and the results of the activity of the Company, to prepare reports and to give proposals for improvement of some aspects of the Company’s activity;
(iii) to provide information on the current developments and trends in the business sector in which the Company operates;
(iv) to provide information on innovative practices, as well as to recommend and develop programs for introduction of such practices in the activities of the Company;
(v) to propose improvements regarding the products and / or services offered by the Company, as well as the development of new ones;
(vi) to propose strategies for improving the Company's position in the current markets in which it operates, to explore opportunities for access to new markets, as well as for the implementation of new market mechanisms;
(vii) to perform any other activity assigned to it by the Board of Directors, which is in the interest of the development of the Company.
The Advisory Board does not explicitly and cannot be assigned any management, controlling or supervisory functions. The members of the Advisory Board have the right to access information belonging to the Company in the volume determined by the Board of Directors and subject to the requirements for handling such information no less restrictive than the requirements applicable to members of the Board of Directors.
The company has not developed a special diversity policy with regard to the administrative, management and supervisory bodies of the company in relation to aspects such as age, gender or education and professional experience, as it falls within the exceptions of Art. 100n, para. 12 of the POSA. However, there are long-established practices that can be classified as a diversity policy with regard to the governing bodies regarding aspects such as age, gender or education and professional experience.
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In essence, these practices form the Company's diversity policy of the management bodies in relation to aspects such as age, gender or education and professional experience, the objectives of this diversity policy. The adopted practices require the Company to apply a balanced policy for nominating members of the corporate management who have education and qualifications that correspond to the nature of the company's work, its long- term goals and business plan. The adopted practices of the Company encourage the pursuit for gender balance at all management levels. The Company does not discriminate against members of corporate management on the basis of age.
Digitally signed by Dimitar Dimitar Stoyanov Stoyanov Dimitrov
Date: 2022.03.25 19:54:59 +02'00'
Dimitar Dimitrov
…………………………………….
Executive Director of ALLTERCO JSCo
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We, the undersigned, DIMITAR STOYANOV DIMITROV, in my capacity as Chief Executive Director of ALLTERCO JSCo, UIC: 201047670, registered office and address of management: Sofia, 103 Cherni Vrah Blvd. (“the Issuer”) and SVETOZAR GOSPODINOV ILIEV, in my capacity as Chief Financial Officer of ALLTERCO JSCo and preparer of the annual financial report for 2021 of this company on an individual basis in accordance with Art. 100n(o), para. 4 of the Public Offering of Securities Act (POSA)
Hereby DECLARE that to the best of our knowledge:
Declarers:
Digitally signed by Dimitar Stoyanov Dimitrov
Date: 2022.03.25 19:55:46 +02'00'
Dimitar Stoyanov Dimitrov
………………………………………..
Chief Executive Director of Allterco JSCo
Digitally signed by Svetozar Gospodinov Iliev
Date: 2022.03.25 19:18:30 +02'00'
Svetozar Gospodinov Iliev
………………………………………..
Chief Financial Officer
Page 115 of 115
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