ANNUAL REPORT 2015 - Alcomet AD...3. Analysis of the financial results 3.1. Analysis of the...

ANNUAL REPORT 2015

CONTENTS:

GENERAL INFORMATION .................................................................................................................. 2 ANNUAL REPORT ON THE ACTIVITY ............................................................................................. 3 INDEPENDENT AUDITOR’S REPORT ............................................................................................. 19 INCOME STATEMENT ....................................................................................................................... 21 STATEMENT OF COMPREHENSIVE INCOME .............................................................................. 22 STATEMENT OF FINANCIAL POSITION ........................................................................................ 23 CASH FLOW STATEMENT ............................................................................................................... 24 STATEMENT OF CHANGES IN EQUITY ......................................................................................... 25 NOTES TO THE FINANCIAL STATEMENTS .................................................................................. 26

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GENERAL INFORMATION Supervisory Board

Fikret Ince Fikret Kuzucu Semih Koray Bekir Yucel Hristo Todorov Dechev Osman Kerem Kuzucu Branimir Mladenov Mladenov Managing Board

Huseyin Yorucu Huseyin Umut Ince Semih Baturay Neli Kancheva Toncheva Bulent Karakoc Registered Office

Shumen 9700 Second Industrial Zone Legal consultants

Legal adviser Katya Obretenova Legal adviser Valentin Vasilev Bankers

UniCredit Bulbank AD, Sofia Societe Generale Expressbank AD BNP Paribas SA, branch Sofia BNP Paribas (Swisse) SA,Geneva T.C. Ziraat Bankasi Varna branch Auditors

AndA Consulting Ltd. Address: 55 Aleksandar Stamboliyski Blvd., floor 3 Sofia 1301 Bulgaria

2nd Industrial Zone Phone: (+359 54) 858 601 9700 Shumen Fax: (+359 54) 858 688 Bulgaria www.alcomet.eu

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ANNUAL REPORT ON THE ACTIVITY

Alcomet AD

for the year ended December 31, 2015

The Management Report is prepared according to the requirements of Art. 33 of the

Accountancy Act, Art. 100(n) of the Public Offering of Securities Act and ORDINANCE № 2 from September 17, 2003 of the Financial Supervision Commission

for the prospects in public offering and admission to trading on the regulated securities’ market and for disclosure of information by public companies

and other issuers of securities.

This document is a translation of the original in Bulgarian,

in case of divergence the Bulgarian original is prevailing.

http://www.alcomet.eu


This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing

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Alcomet AD (the Company) is a joint-stock company, registered under company file №41

from 1991 of the Shumen District court and is entered in the Trade Register of the Registry

Agency, Unified Identification Code 837066358.

The main activity of the Company is manufacturing and trade of aluminium, aluminum

products and alloys, used in engineering, construction, food processing and other industries.

The Company is the leading Bulgarian manufacturer of aluminum products and one of the

largest manufacturers in the Balkans. The plant is unique for Bulgaria because it includes

complete production cycle and modern technological equipment for its three main workshops

- casting, rolling and extrusion, produsing a wide range of rolled and extruded products with

technical and qualitative indicators conforming the international standards ISO 9001: 2008,

ISO 14000: 2004, OHSAS 18000: 2007, AA, EN, DIN, BDS. The annual production capacity

of the casting workshop is 78 thousand tons, rolling workshop - 45 thousand tons and

extrusion workshop - 25 thousand tons.

The share capital amounts to BGN 17,952,959, distributed in 17,952,959 voting shares. As of

the latest available data of the Cental Depository the shareholders’ structure of the Company’s

share capital includes 56 entities that possess 99% of the share capital and 2 460 individuals

with 1% of the share capital. The shareholders owning more than 3% of the Company’s

registered capital are presented in the table below:

Аlumetal AD 73.25%

FAF METAL SANAYII VE TICARET AS 16.86%

ALLIANZ BULGARIA Pension Fund 3.69%

Essential contracts leading to actions changing the Company’s control at public offering of

securities, as well as agreements between the Company, the Supervisory Board and the

Managing Board for compensation upon leaving or dismissal concerning public offering of

securities are not concluded.




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During the current reporting period there are no transactions with related parties that could

significantly affect the financial position and results of the Company. The Company has no

pending court, administrative or arbitration proceedings relating to liabilities or receivables

exceeding 10% of equity.

The Management Report is prepared according to the requirements of Art. 33 of the

Accountancy Act, Art. 100(n) of the Public Offering of Securities Act and ORDINANCE № 2

from September 17, 2003 of the Financial Supervision Commission for the prospects in public

offering and admission to trading on the regulated securities’ market and for disclosure of

information by public companies and other issuers of securities.

Alcomet AD has a two-tier system of management – Supervisory board and Managing board.

The Supervisory board consists of 7 members and the Managing board is of 5 members.

Members of the Supervisory board, the control bodies, and the senior management do not own

Company’s shares.

The Company is represented and managed by two Executive Directors - Huseyin Yorucu and

Huseyin Ince.

The report contains analysis and comments on the financial statements, based on the

Company’s management point of view, intended for use by shareholders and investors to help

them to form their assessments of the Company’s position and prospects.

The forecasts and assessments made may differ from the actual future financial results.




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1. Operating results

In 2015 there are no unusual or sporadic events, transactions or substantial economic changes,

that significantly affect the reported Company’s operating results.

The main production raw materials are:

· primary aluminium;

· secondary aluminium;

· scrap;

· extrusion billets;

· products for remelting;

· coils.

The production raw materials purchased and supplied during the reporting period, as well as

comparative data for 2014, are presented in the table bellow:

Raw material 2014 ( MT) 2015 ( MT)

Primary aluminium 51 899 49 600

Secondary aluminium 4 111 5 632

Scrap 462 525

Extrusion billets 9 575 8 624

Products for remelting - 1 979

Coils 610 2 332

Total 66 657 68 693 For 2015 the raw materials quantity as a percentage rate, is presented on the following table:




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For the reporting period the aluminium products produced by the Casting workshop of the

Company are 77 771 MT, a quantity presenting around 0.5% increase in comparison with the

same period in 2014.

Cast shop products 2014 (МТ) 2015 (МТ)

Coils 58 035 56 958

Billets 19 402 20 813

Total 77 437 77 771 In 2015 the produced by the Company in the Rolling and Extrusion workshops finished goods

are 64 894 МТ, that is within the volume of the produced finished goods for the same period

in 2014.

Production Rolling, Extrusion shops 2014 (МТ) 2015 (МТ)

Rolling workshop 42 866 42 665

Extrusion workshop 21 924 22 229

Total 64 790 64 894




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2. Sales

In 2015 the sales of Alcomet AD follow the trend of stability and retain priority aiming more

complete and higher value added products, therefore the observation is for restructuring of the

product mix.

Regrouping the products mix and the priority to more complete products is resulting in

reduction of the production capacity in quantitative terms.

In quantitative terms, sales are as follows:

2014 (МТ) 2015 (МТ) Extruded products 21 928 22 198

Rolled products 42 328 42 462

Casting products 1 304 0

Tooling 79 28

Total 65 639 64 688

For 2015, sales expressed in metric tonnes decrease in general by about 1%, compared to 2014, as the reason is lack of sales for the Casting products, which are not essential to us and are sold only when there is available free casting capacity.

Sales of Rolled and Extruded products are steady, even a slight growth of 0.3% and 1.2% is observed.

Typical for the reporting period is the full 100% coverage with orders of the production capacity of the Company, including new production capacities put into operation.

2.1. Sales analysis by products

2.1.1 Extruded products

During 2015 sales of extruded products increase by 1.2%, as the growth of anodized profiles is 39.6%, while drawing profiles increase about 1%. Standard profiles almost retain their volume of the comparative period, with a slight decrease of about one percent.




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Extruded products increase is due to full utilization of the extrusion capacity of the Company,

where the putting into operation of the new 600 t press has added 200 t / month. Profiles

produced with this press are basically intended for end-customers and require additional

surface processing, anodizing, regrooving, drilling. This explains the high growth of anodized

profiles.

The sales volume comparison for the period is presented in the table bellow:

2.1.2. Rolled products

For the periods being compared sales of rolled products are characterized by a growth of about

0.3%, and particularly, it is expressed in the volume of the foil realized - an increase of 85%

for the lubricated foil, 12% increase for the technical foil and finstock, and around 4% for the

household foil. In future we plan to retain this trend, as it is a consequence of the Company’s

deliberate commercial policy to increase and impose foil products on the European markets to

a level of maximum operation capacity of the Company’s Rolling production facilities.

Therefore, additional product mix regrouping of the produced by the Company finished goods

will be required.




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By purspose is the decline regarding standard rolled products - sheets by 6% and strips by

20%, that reflects the Company’s policy to focus on foil market, products with special quality

characteristics having high value added and requiring higher technology processing.

The comparison for the period is presented on the following graph:

2.2. Sales analysis by markets

For the reporting period Germany remains main market for our products, followed by Poland,

Italy, France, Bulgaria, Austria, Spain, Denmark, the Netherlands and Hungary.

In 2015 the market position of Alcomet AD on the European markets remains relatively

steady, compared to 2014. For 2015 sales are presented in the chart below:




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3. Analysis of the financial results

3.1. Analysis of the Statement of Financial Position of the Company

Analysis of the main items of the Statement of Financial Position of the Company is, as

follows:

· property, plant and equipment - increase of these assets value by about 28%, taking

into account the update of the machinery value for 2015;

· inventories –decreased levels of inventories by about 29% compared to the levels at

the end of 2014, due to reduced need for purchase of raw material in volumes larger

than the capacity needs, because of the search of optimal delivery price;

· trade and other receivables – retained levels of receivables as in 2014;

· short-term loans – compared to 2014, during the current reporting period the value of

short-term financing is decreased by about 27 %, and the short-term bank financing is

decreased by about 29 %, resulting from higher profitability margins, as well as from

improved premium levels of the aluminum suppliers for 2015.




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3.2. Analysis of the Income Statement

Revenue from sales of the Company for 2015 is at the amount of BGN 336 128 thousand, of

which BGN 326 950 thousand is income from sales of products, and the both amounts present

an increase of about 11.5% in comparison with the previous year; a growth, arising from

stronger sales of products with high valued added, as mentioned in the sales analysis, and also

influenced by the

price increase of aluminum on the London Metal Exchange, whose average price rate has

increased about 6.5% for the reporting period.

By analysing the reported expenses by separate items in the Income Statement leads, the

following conclusions could be presented:

· Increase in the cost of materials - caused by the increased value of the main raw

material, mentioned above;

· Reduction in the cost of hired services is observed by about 9 %, as a result of

reduction in fuel prices, as well as a slight increase of about 3.6 % in the remuneration

and personnel insurances levels as absolute figures;

· Improved levels of profitability led to reduced levels of short-term bank financing,

mainly resulting in reduction of interest expenses by about 10.4 %. Another objective

factor regarding the reduced interest payments are the improved interest rates by the

financial institutions and the historically low EURIBOR levels;

Final result for the reporting period is profit realized, after taxation, at the amount of

BGN 9 138 thousand (in 2014 the profit is at the amount of BGN 2 407 thousand).

The table below provides some of the financial ratios, monitored by the Company, noting

improved level of liquidity, significant growth in profitability per share, as well as improved

level of profit before tax and interests, correlated to a ton production sold:




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Rates December 31,

2014 December 31,

2015

Liquidity rate – current assets/current liabilities 1.01 1.15

Earnings per share in BGN – net profit/share number 0.13 0.51

EBITDA / MT, BGN 280.3 380.9

EBITDA / Revenue % 6.3% 7.5%

4. Change of share price of the Company During the last period, according to information published on the site www.investor.bg, on the

Bulgarian Stock Exchange have been registered transactions for 42 947 ordinary shares of the

Company, and the annual turnover is BGN 263 419. The highest registered closing price of

trading for the respective period is BGN 6.70 per share, and the lowest price – BGN 5.40 per

share. The change of the share prices at the closing stock exchange rates might be observed on

the following table:


http://www.investor.bg



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5. Financial instruments, used by the Company, including hedging policy

The Company hedges its main raw material through futures, traded by the use of a few brokers

on the London Metal Exchange. Alcomet AD has no significant foreign currency exposure, as

far as the main raw material is quoted in EUR, and sales are focused entirely on the European

market or Bulgaria (where the Bulgarian lev is pegged to the euro). Foreign currency forward

contracts are used in case of a foreign currency exposure to other foreign currency to hedge

the risk.The Company insures each receivable on deferred payment in credit risk insurance

companies.

6. Human resources, social responsibility of the Company

6.1. Human resources

In 2015 the number of employees in the Company is comparable to the personnel number for

the same period of the previous year.

For 2015 in Alcomet AD are held a total of 51 training courses, and 17 of them are for

continuing professional training, 24 are internal-company trainings and 27 are in other training

organizations, discontinuing the production process for the individuals. The training related to

health and safety, quality and OS - IMS are 34, as 24 of them are internal-company trainings

and 10 are held in other training organizations. Participants in the training programmes were

1344 employees, officials and managers, while the plan has been for 1106 people.

For 2015 in the Company 5courses for a new qualification were performed, where participants

were 57 employees, and 12 courses to maintain qualification were held, participated by 95

employees. An introductory training was performed for 119 new employees to ensure efficient

and swift integration in the organization.




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Expenses on trainings and qualification programmes are over BGN 48 thousand. 11 students

were participants in training programs, and one of them was on paid internship under Project

“Students practices”. 101 students visited the Company to be acquainted with the production

activity and

79 were university students from the Konstantin Preslavky Uneversity of Shumen.

6.2. Corporate and social responsibility

For 2015 the Company’s donation program started with a project budget at the amount of

BGN 280 000 and the actually donated funds are at the amount of BGN 333 762.

Scholarships by the Company have received 38 students, and 10 of them are students at the

Konstantin Preslavky Uneversity of Shumen, according to a Contract for cooperation between

the Company and the university. The funds granted in the form of scholarships is at the

amount of

BGN 42 380.

For social and cultural projects, supported by the Company by donations to the Shumen

theater, museum, library, community centers, foundations and other associations, are

distributed the total of BGN 122 051.

Socially significant events are financed, taking place mainly in the region of Shumen, financed

are donation programs to non-government organizations, renovated are material and technical

fascilities.

Junior sport development in the region is supported by the amount of BGN 34 800.

Alcomet AD is the general sponsor of the “Shumen Basketball Club”, which has received an

annual funding of BGN 25 000 in 2015.

Schools, kindergartens and nurseries received a grant of BGN 31 552 to equip premises, for

construction of new playgrounds, for realization of various cultural and educational projects,

celebrations of anniversaries.




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For 2015 healthcare in Shumen is supported by an amount of BGN 93 769, out of which

BGN 56 400 are donated to the Multi-profile Hospital for Active Treatment - Shumen

(“MBAL Shumen” AD). Purchased is ultrasound equipment for the “Obstetrics and

Gynecology” ward in the hospital. The rest of the amount, planned in favor of the healthcare

in the reagion of Shumen, presents donations, made to individuals for their treatment in the

country and abroad. 11 individuals received help for their treatment.

Municipalities from the region received BGN 9 210 mainly for implementation of projects,

contributing to improving the quality of life in the regional municipalities.

Alcomet AD will continue to prove its commitment to the town of Shumen and the region.

The social responsibility of the Company will be recognized in the participations and support

of significant projects for the town of Shumen and its citizens.

7. Research and development, quality control systems, information regarding

the environment

7.1. Research and development

As the Company is a large producer of rolled and extruded semi-finished products from

aluminum and aluminum alloys, the Company has experts from the Technology Department

to research and develop new products, complying with the market requirements and adapted to

the needs of each client. In 2015 over 400 new profiles have been developed. In the product

mix increased is the share of aluminum profiles, additionally processed by accurate cutting

and milling. Continuing is the development of new alloys and new rolled products. The new

products are well accepted in the European market.




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7.2. Quality control systems

In Alcomet AD is developed and implemented an Integrated Management System (IMS),

certified by the internationally acknowledged auditor SGS, for the production of aluminum

products: coils, round billets, rolled sheets, strips and foil, extruded tubes, rods and profiles,

painted profiles and sheets, anodized profiles. IMS covers a Quality control system ISO

9001:2008, first certification date January 15, 2002, a System of environmental management

ISO 14001:2004 and a Health and safety management system BS OHSAS 18001:2007, first

certification date December 16, 2010. The Company is certified under EN 15088: 2005 from

March 1, 2012 in accordance with Regulation 305/2011 of the European Union for conformity

of the production control system 2+ for structural construction products for the construction

industry. Control audits under ISO 14001: 2004 and BS OHSAS 18001: 2007, as well as a

recertification audit under ISO 9001: 2008 were successfully conducted in November. The

conclusion in the report of the SGS certification organization is that the control system

demonstrates full compliance with the standards requirements.

7.3. Environment protection The Integrated Management System (IMS) developed and implemented in Alcomet AD is also

in compliance with the requirements of the ISO 14001:2004 standard. Regarding the

environment protection Alcomet AD operates pursuant to an issued Complex permit (CP). By

a decision of the Executive Environment Agency (ExEA) dated March 20, 2015, updated

version of CP 341-H1/2012 is enforceable. The new methodology embedded in the

development of the updated CP, under decision 341-H1-IO-A2/2015, imposed adjustment in

the Company’s operation, directed to compliance with the newly set requirements. Developed

and agreed with the competent authorities are plans for: monitoring of the emissions into the

atmosphere; monitoring of the soil and groundwater. In September the annual audit under the

Complex permit was conducted by the Regional Inspection of Environment and Water

(RIEW). The audit was successfully completed, with a high appreciation of the commitment

of the Company’s management with respect to issues concerning environment protection in

the region.




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8. Future Company’s development

Anticipated development of the Company is based on the business plan for 2016 and the

related investment intentions.

8.1 Estimated sales, financial ratios

Based on assumption of maintaining the current prices of the main raw material and maintain

the regulatory framework dealing with its customs clearance, as well as assumptions regarding

the selling prices and market shares of the Company, the anticipated sales volume is, as

follows:

- extrusion products of around 22 800 MT, an increase of about 3%, focused on higher sales

of anodized and special profiles, products bearing higher value added;

- rolled products - estimated sales of around 43 800 MT, possible growth of around 3%,

focused on increased sales of foils, products with steady market positions in the European

market and having high value added.

After evaluation of the above mentioned estimated volumes, while preserving the rates of the

aluminium on the London Metal exchange, the management expectations for 2016 are for

sales of around BGN 330 million, rates percentage in terms of EBIDTA around 10%, and net

revenue of around 5 %.

8.2 Investment program

For 2016 the investment program is currently being finalized and is consistent with the market

demand trends for the Company’s products. Intended is an increase in the capacity of the foil

and extrusion products.

Signed on behalf of Alcomet АD on March 7, 2016.

Executive Director: Executive Director:

Huseyin Yorucu (signed) Huseyin Ince (signed)


ANDA CONSULTING Ltd. Office Sofia Office Varna

Audit. Consulting. Tax. Legal. 55 Al. Stamboliyski Blvd., 3rd floor 2A Al. Konstantinov Str., office 26 1301 Sofia, Bulgaria 9000 Varna, Bulgaria [email protected] T +359 (2) 859 0122 T +3559 (52) 607 681 www.andaconsulting.bg T/F +359 (2) 859 2093 T/F +359 (52) 607 459

This document is a translation of the original in Bulgarian,

in case of divergence the Bulgarian original is prevailing. INDEPENDENT AUDITOR’S REPORT To the Shareholders of Alcomet AD Report on the financial statements

1 We have audited the accompanying financial statements of Alcomet AD (the “Company”), which comprise the statement of financial position as at December 31, 2015, income statement, statement of comprehensive income, statement of changes in equity and cash flow statement for the year then ended, and a summary of significant accounting policies and other explanatory information. Management’s responsibility for the financial statements

2 Management is responsible for the preparation and fair presentation of these financial statements in accordance with International Financial Reporting Standards, endorsed for application by the European Union Commission, and for such internal control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s responsibility

3 Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management, as well as evaluating the overall presentation of the financial statements.

mailto:[email protected]

http://www.andaconsulting.bg

This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 20

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion

4 In our opinion, the financial statements present fairly, in all material respects, the financial position of the Alcomet AD as of December 31, 2015, and its financial performance and its cash flows for the year then ended, in accordance with International Financial Reporting Standards, endorsed for application by the European Union Commission. Other Reports on regulatory requirements - Annual report on the activity of the Company according to article 33 of the Accountancy Act

5 Pursuant to the requirements of the Bulgarian Accountancy Act, article 38, paragraph 4 we have read the accompanying Annual report on the activity of the Company. The Annual report on the activity of the Company, prepared by the management, is not a part of the financial statements. The historical financial information presented in the Annual report on the activity of the Company prepared by the management is consistent, in all material respects, with the annual financial information disclosed in the financial statements of the Company as of December 31, 2015 prepared in accordance with International Financial Reporting Standards, endorsed for application by the European Union Commission. Management is responsible for the preparation of the Annual report on the activity of the Company dated March 7, 2016. The original auditor’s report has been signed by Antoaneta Bazlyankova Managing Director at AndA Consulting Ltd., on March 7, 2016.

АLCOMET AD


INCOME STATEMENT for the year ended December 31, 2015 All amounts in thousand of BGN, unless otherwise stated

Notes

Year ended December 31,

2015


2014

Revenue 4 326,950 293,535 Cost of sales 5 (297,585) (269,026) Gross margin 29,365 24,509 Other income 6 9,132 7,579 Administrative expenses 7 (9,636) (9,664) Distribution expenses 8 (10,493) (11,592) Other expenses 9 (5,557) (4,204)

Exchange rate gain, net 11 632 70 Interest expenses, net 12 (3,205) (3,666) Other financial expenses, net 13 (89) (347) Profit before taxation 10,149 2,685 Income tax expense 14 (1,011) (278) Profit for the period 9,138 2,407 Earning per share (BGN) 15 0.51 0.13

Approved for issuance by the Managing Board of Alcomet AD on March 7, 2016

Huseyin Yorucu (signed) Huseyin Umut Ince (signed) Semih Baturay (signed) Vencislav Petrov (signed) Executive Directors Financial Director Chief Accountant Antoaneta Bazlyankova (signed) Managing Director AndA Consulting Ltd March 7, 2016, Sofia The accompanying notes are an integral part of these financial statements.

АLCOMET AD


STATEMENT OF COMPREHENSIVE INCOME for the year ended December 31, 2015 All amounts in thousand of BGN, unless otherwise stated

Notes


2015


2014

Profit for the period 9,138 2,407

Other comprehensive income Items,that will not be reclassified subsequently

to profit or loss:

Revaluation of property, plant and equipment 16 40,447 - Tax effect on revaluation of property, plant and

equipment (4,045)

- Actuarial loss, incurred during the period 25 (204) (53) Tax effect on actuarial loss, incurred during the

period 20

5 36,218 (48)

Items,that may be reclassified subsequently to profit or loss:

Adjustment of the hedging reserve for the loss/(gain) from forward contracts, transferred to the initial carrying amount of the hedged items 24 (832)

1,157 Tax effect on the adjustment of the hedging reserve

for the result from forward contracts, transferred to the initial carrying amount of the hedged items 83

(116) Unrealized profit/(loss) on forward contracts,

recognized in the hedging reserve 24 (182)

832 Tax effect on the unrealized profit/(loss) on

forward contracts, recognized in the hedging reserve 24 18

(83)

(913) 1,790 Total other comprehensive income for the period, net of tax 35,305

1,742

TOTAL COMPREHENSIVE INCOME FOR THE PERIOD 44,443

4,149

Approved for issuance by the Managing Board of Alcomet AD on March 7, 2016 Huseyin Yorucu (signed) Huseyin Umut Ince (signed) Semih Baturay (signed) Vencislav Petrov (signed) Executive Directors Financial Director Chief Accountant Antoaneta Bazlyankova (signed) Managing Director AndA Consulting Ltd March 7, 2016, Sofia The accompanying notes are an integral part of these financial statements.

АLCOMET AD


STATEMENT OF FINANCIAL POSITION as of December 31, 2015 All amounts in thousand of BGN, unless otherwise stated

Notes

December 31, 2015

December 31, 2014

ASSETS Non-current assets

Property, plant and equipment 16 146,042 113,662 Intangible assets 17 199 340 Investment property 18 4,935 4,935 Financial assets 19 5,799 5,650 Deferred tax assets 14 239 201

157,214 124,788 Current assets

Inventories 20 42,972 60,400 Trade and other receivables, net 21 52,436 53,127 Derivative financial instruments 24 - 879 Cash and cash equivalents 22 412 4,709

95,820 119,115 TOTAL ASSETS 253,034 243,903

EQUITY AND LIABILITIES Capital and reserves

Share capital 23 17,953 17,953 Legal reserve 23 1,795 1,795 Revaluation reserve 23 92,048 55,830 Hedging reserve 23 (164) 749 Retirement benefits obligation reserve 23 (1,106) (922) Accumulated profit 32,213 23,693

142,739 99,098 Non-current liabilities

Retirement benefits obligation 25 889 884 Long-term borrowings 26 16,842 20,412 Deferred income 27 1,777 1,882 Deferred tax liabilities 14 7,472 4,119

26,980 27,297 Current liabilities

Trade and other payables 28 12,670 21,294 Short-term borrowings 26 69,440 95,409 Deferred income 27 130 128 Derivative financial instruments 24 182 - Income tax liability 29 320 41 Accruals 30 573 636

83,315 117,508 TOTAL EQUITY AND LIABILITIES 253,034 243,903


Huseyin Yorucu (signed)

Huseyin Umut Ince (signed) Semih Baturay (signed) Vencislav Petrov (signed) Executive Directors Financial Director Chief Accountant

Antoaneta Bazlyankova (signed) Managing Director, AndA Consulting Ltd.

March 7, 2016, Sofia The accompanying notes are an integral part of these financial statements.

АLCOMET AD


CASH FLOW STATEMENT for the year ended December 31, 2015 All amounts in thousand of BGN, unless otherwise stated


2015


2014 Cash flows from operating activities

Profit before taxation 10,149 2,685 Adjustments for: Depreciation of property, plant and equipment (PPE) 11,776 11,619 Amortization of intangible assets 181 200 (Profit)/ loss on disposal of property, plant and equipment (106) 6 Impairment and carrying amount of obsolete PPE 1,047 1 Receivables and payables written-off, net of impairment of receivables 277 95 Income from government grants (128) (47) Income from dealing with securities (409) - Interest expense, net 3,205 3,666 Changes in accruals and retirement benefits obligation (288) (428) Exchange rate loss (974) 136 24,730 17,933

Increase in inventory 17,428 (13,706) Increase in current accounts receivable 256 (5,119) Increase/(decrease) in current liabilities (7,566) 8,170

Cash, generated from operating activities

34,848 7,278 Interest received 71 8

Interest paid (3,303) (4,114) Income tax paid (1,341) (884) Dividends paid (801) (559)

Net cash, (used in)/generated from operating activities 29,474 1,729 Cash flows from investing activities

Purchase of property, plant and equipment and intangible assets (4,860) (5,427) Government grants 25 2,057 Proceeds from sales of property, plant and equipment 280 21

Net cash used in investing activities (4,555) (3,349) Cash flows from financing activities

Proceeds from borrowings 697,945 698,323 Repayments of borrowings (724,191) (689,704) Payments of finance lease obligations (2,934) (2,835)

Net cash, generated from financing activities (29,180) 5,784

Net (decrease)/ increase in cash and cash equivalents (4,261) 4,164 Cash and cash equivalents at the beginning of the period 4,673 509 Cash and cash equivalents at the end of the period (see note 22) 412 4,673 Approved for issuance by the Managing Board of Alcomet AD on March 7, 2016 Huseyin Yorucu (signed) Huseyin Umut Ince (signed) Semih Baturay (signed) Vencislav Petrov (signed) Executive Directors Financial Director Chief Accountant

Antoaneta Bazlyankova (signed) Managing Director AndA Consulting Ltd March 7, 2016, Sofia

The accompanying notes are an integral part of these financial statements.

АLCOMET AD


STATEMENT OF CHANGES IN EQUITY for the year ended December 31, 2015 All amounts in thousand of BGN, unless otherwise stated

Share capital Reserves

Accumulated profit Total

Balance at December 31, 2013 17,953 56,025 21,531 95,509

Changes in equity for 2014

Dividends - - (560) (560) Revaluation reserve of

obsolete property, plant and equipment - (315) 315 - Comprehensive income for

the period - 1,742 2,407 4,149


Changes in equity for 2015

Dividends - - (802) (802) Revaluation reserve of

obsolete property, plant and equipment - (184) 184 -

Comprehensive income for the period - 35,305 9,138 44,443



Huseyin Yorucu (signed) Huseyin Umut Ince (signed) Semih Baturay (signed) Vencislav Petrov (signed) Executive Directors Financial Director Chief Accountant Antoaneta Bazlyankova (signed)

Managing Director AndA Consulting Ltd March 7, 2016, Sofia

The accompanying notes are an integral part of these financial statement

АLCOMET AD


NOTES TO THE FINANCIAL STATEMENTS for the year ended December 31, 2015 All amounts in thousand of BGN, unless otherwise stated

1 General information

1.1 Organization Alcomet AD (the Company) is a joint-stock company registered in Bulgaria in 1991. The Company is entered in the Trade Register of the Registry Agency under Unified Identification Code 837066358. The address of the Company’s principal place of business and head office is Shumen, Second Industrial Zone. Alcomet AD is a public company, registered in the Public Companies Register, as per decision of the Financial Supervision Commission dated July 1, 1998. The Company’s shares are traded on the Bulgarian Stock Exchange, Sofia. The Company was established under the name of Alumina EAD and the sole shareholder of the Company was the Government of Bulgaria. On September 13, 1999 the Privatization Agency sold 1,116,361 shares of the Company to private investors, which presented 75 % of the share capital of the Company. As of December 31, 2015 and 2014 the structure of the share capital of the Company is as follows:

December 31,

2015 December 31,

2014

Alumetal AD 73.25% 73.25% FAF Metal Sanayj Ve Ticaret AS, Turkey 16.86% 16.86% ZUPF Allianz Bulgaria 3.69% 3.59% Other 6.20% 6.30%

Total 100.00% 100.00%

1.2 Operations The main operations of the Company include production and sale of castings, rolled and extruded aluminum products, used in machine building, construction, food industry, etc. The Company is the leading Bulgarian producer of aluminum products and one of the largest manufacturers on the Balkans. The plant is unique in Bulgaria as it includes entire production cycle and by the modern technological equipment of the three main workshops - casting, rolling and extrusion, produces a wide range of rolled and extruded products, which technical parameters and quality conform to the international standards ISO 9001:2008, ISO 14000:2004, OHSAS 18000:2007, AA , EN, DIN, BDS. The annual production capacity of the casting workshop is 78 thousand tons, rolling workshop - 45 thousand tons and extrusion workshop - 25 thousand tons.

АLCOMET AD NOTES TO THE FINANCIAL STATEMENTS (CONTINUED) for the year ended December 31, 2015 All amounts in thousand of BGN, unless otherwise stated


2 Basis for preparation of the financial statements

2.1 Financial reporting framework The Company prepares and presents its financial statements in accordance with the International Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board (IASB) and the Interpretations, issued by the International Financial Reporting Interpretations Committee (IFRIC), adopted by the European Union Commission (the Commission). During the current year the Company has adopted all new and revised standards and interpretations issued by the International Accounting Standards Board (IASB), effective for 2015 and applicable for the activities of the Company. All changes in IFRS, effective for 2015, are approved by the Commission (see note 2.1.1). These financial statements are prepared for general purpose and provide information for the financial position, results and cash flows, generated by the Company for the year ended December 31, 2015.

2.1.1 Standards and Interpretations effective in the current period

The following amendments to the existing standards and interpretations are adopted by the EU Comission and are effective for 2015: Standard or interpretation, date of revision and effective date

Name of the standard or interpretation

Effect on the Company’s activity

Annual Improvements 2011-2013 Cycle, issued by the IASB on December 12, 2013, applicable to annual periods beginning on or after January 1, 2015

Improvements to IFRS (IFRS 1, IFRS 3, IFRS 13 and IAS 40)

No effect on the Company’s financial statements

2.1.2 Standards and Interpretations, issued by the International Accounting Standards Board (IASB),

adopted by the EU Commission, not yet effective Standard or interpretation, date of revision and effective date


Date of adoption by the EU Commission

Annual Improvements 2010-2012 Cycle, issued by the IASB on December 12, 2013, applicable to annual periods beginning on or after February 1, 2015

Improvements to IFRS (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS 38)

January 9, 2015

Defined Benefit Plans: Employee Contributions issued on November 21, 2013, effective for annual periods beginning on or after February 1, 2015

Amendments to IAS 19 January 9, 2015

Amendments to IAS 1 (issued on December 18, 2014), effective for annual periods beginning on or after January 1, 2016

Disclosure Initiative December 18, 2015



2 Basis for preparation of the financial statements (continued)

2.1 Financial reporting framework (continued)

2.1.2 Standards and Interpretations, issued by the International Accounting Standards Board (IASB), adopted by the EU Commission, not yet effective (continued) Standard or interpretation, date of revision and effective date


Date of adoption by the EU Commission

Annual Improvements 2012-2014 Cycle, issued by the IASB on September 25, 2014, applicable to annual periods beginning on or after January 1, 2016

Improvements to IFRS (IFRS 5, IFRS 7, IAS 19 and IAS 34)

December 15, 2015

Amendments to IAS 27, issued on August 12, 2014, effective for annual periods beginning on or after January 1, 2016

Amendments to IAS 27: Equity Method in Separate Financial Statements

December 18, 2015

Amendments to IAS 16 and IAS 38, issued on May 12, 2014, effective for annual periods beginning on or after January 1, 2016

Amendments to IAS 16 and IAS 38: Clarification of Acceptable Methods of Depreciation and Amortization

December 2, 2015

Amendments to IFRS 11, issued on May 6, 2014, effective for annual periods beginning on or after January 1, 2016

Amendments to IFRS 11: Accounting for Acquisitions of Interests in Joint Operations

November 24, 2015

Amendments to IAS 16 and IAS 41, issued on June 30, 2014, effective for annual periods beginning on or after January 1, 2016

Amendments to IAS 16 and IAS 41: Bearer Plants

November 23, 2015

2.1.3 Standards and Interpretations, issued by the IASB, expected endorsement by the EU Commission

Standard or interpretation, date of revision and effective date


Status of adoption by the EU Commission

IFRS 9 Financial Instruments (issued on July 24, 2014), effective for annual periods beginning on or after January 1, 2018

Financial Instruments – Classification and Measurement, the standard will supersede completely IAS 39

Endorsement expected in the first half of 2016

IFRS 14, issued in January, 2014, effective for annual periods beginning on or after January 1, 2016

Regulatory Deferral Accounts - applicable to an entity's first annual IFRS financial statements for a period beginning on or after January 1, 2016

The endorsement date is yet to be determined




2.1 Financial reporting framework (continued) 2.1.3 Standards and Interpretations, issued by the IASB, expected endorsement by the EU Commission

(continued) Standard or interpretation, date of revision and effective date


Status of adoption by the EU Commission

IFRS 15, issued in May, 2014, effective for annual periods beginning on or after January 1, 2017

Revenue from Contracts with Customers - applicable to an entity's first annual IFRS financial statements for a period beginning on or after January 1, 2017

Endorsement is expected in Q 2 2016

Amendments to IFRS 10, IFRS 12 and IAS 28 (issued on December 18, 2014), effective for annual periods beginning on or after January 1, 2016

Investment Entities: Applying the Consolidation Exception

Endorsement is expected in Q 2 2016

Amendments to IFRS 10 and IAS 28, issued on September 11, 2014, effective for annual periods beginning on or after January 1, 2016

Amendments to IFRS 10 and IAS 28: Sale or Contribution of Assets between an Investor and its Associate or Joint Venture

Deferred indefinitely

2.1.4 Impact of the new and revised standards on the financial statements The more significant amendments to IFRSs issued by the International Accounting Standards Board (IASB) and adopted by the EU Commission that are mandatorily effective for an accounting period that begins on or after 1 January 2015 are, as follows: Annual Improvements to IFRSs 2011 -2013 Cycle The Annual Improvements include amendments to a number of IFRSs, which have been summarized below. IFRS 3 Business Combinations The subject of the amendment is the scope exceptions for joint ventures. The amendments clarify that IFRS 3 does not apply to the accounting for the formation of all types of joint arrangement in the financial statements of the joint arrangement itself. IFRS 13 Fair Value Measurement The subject of the amendment is the scope of paragraph 52 (portfolio exception). The amendments clarify that the scope of the portfolio exception for measuring the fair value of a group of financial assets and financial liabilities on a net basis includes all contracts that are within the scope of, and accounted for in accordance with, IAS 39 or IFRS 9, even if those contracts do not meet the definitions of financial assets or financial liabilities within IAS 32.




2.1 Financial reporting framework (continued)

2.1.4 Impact of the new and revised standards on the financial statements (continued) IAS 40 Investment Property The amendments are related to the clarifying the interrelationship between IFRS 3 and IAS 40 when classifying property as investment property or owner-occupied property. The amendments clarify that IAS 40 and IFRS 3 are not mutually exclusive and application of both standards may be required. Consequently, an entity acquiring investment property must determine whether: (i) the property meets the definition of investment property in terms of IAS 40; and (ii) the transaction meets the definition of a business combination under IFRS 3. With regard to the amendments to IAS 40 Investment Property, the amendments require the assessment of whether the acquisition of an investment property is an asset acquisition or a business combination to be made by reference to IFRS 3. IFRS 3 defines a business as an integrated set of activities and assets that is capable of being conducted and managed for the purpose of providing a return in the form of dividends, lower costs or other economic benefits directly to investors or other owners, members and participants. Specifically, IFRS 3 states that a business consists of inputs and processes that have the ability to create outputs. To qualify for the definition of a business, the integrated set of activities and assets should have two essential elements - inputs and processes; outputs are not necessarily required (although businesses usually have outputs). In considering whether the acquisition of an investment property is an asset acquisition or a business combination, significant judgement is required taking into account the specific facts and circumstances surrounding each transaction. It is important to distinguish an asset acquisition from a business combination because their respective accounting treatments are very different. The Company has applied the amendments to IFRSs included in the Annual Improvements to IFRSs 2011-2013 Cycle for the first time in the current year. The application of the amendments has had no impact on the disclosures or amounts recognized in the Company’s financial statements, During 2015 the Company has not elected early adoption of standards, revisions and interpretations, effective for future reporting annual periods. The Company anticipates that the adoption of these standards, amendments to the existing standards and interpretations would have no material impact on its financial statements in the period of initial application, except for IFRS 9 and IFRS 15, the impact of which has not yet been evaluated.



2. Basis for preparation of the financial statements (continued)

2.2 Historical cost and fair value The present financial statements have been prepared on the historical cost basis except for certain property, plant and equipment, investment property and derivative financial instruments that are measured at revalued amounts or fair values, as explained in notes 3.7, 3.9 and 3.12 below. Historical cost is generally based on the fair value of the consideration given in exchange for goods and services. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date, regardless of whether that price is directly observable or estimated using another valuation technique. In estimating the fair value of an asset or a liability, the Company takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes in these financial statements is determined on such a basis, except for share-based payment transactions that are within the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that have some similarities to fair value but are not fair value, such as net realizable value in IAS 2 or value use in IAS 36. In addition, for the financial reporting purposes, fair value measurements are categorized into Level 1, 2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the significance of the inputs to the fair value measurement in its entirely, which are described as follows:

- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company can access at the measurement date;

- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for the asset or liability, either directly or indirectly;

- Level 3 inputs are unobservable inputs for the asset or liability.

2.3 Functional and presentation currency

Functional currency is the currency of the primary economic environment, in which an entity operates and in which it generates and expends cash. The entity carries out its transactions mainly in Bulgarian Lev, and for this reason the functional and presentation currency is the Bulgarian Lev, which since January 1, 1999 has been pegged to the EURO at a fixed exchange rate of EUR 1: BGN 1.95583. These financial statements are presented in thousands of BGN.



3 Significant accounting policies

3.1 Revenue and expense recognition Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts, Value Added Tax (VAT) and other sales related taxes. Revenue is recognized when the entity has transferred all risks and rewards related to the ownership of the production and goods to the buyer and the costs incurred in respect of the transaction can be measured reliably. Expenses are recognized in the income statement when a decrease of the future economic benefits arise, regarding decrease of an asset or increase of a liability, which can be reliably measured. Expenses are recognized on the basis of a direct association between the costs incurred and the revenue. When economic benefits are expected to incur during more than one financial period and the corresponding revenue cannot be measured precisely but only indirectly, the expenses shall be recognized based on procedures for rational and systematic allocation. Income from government grants related to assets is recognized in profit or loss on a systematic basis over the whole useful lives of the related assets (see also note 3.14).

3.2 Interest income Interest income is accrued on a time basis, based on the outstanding principal and the applicable effective interest rate, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to the net carrying amount of the asset.

3.3 Borrowing costs Borrowing costs are recognized in the period in which they are incurred and are determined on the basis of the outstanding principal and the applicable effective interest rate, which is the rate that exactly discounts estimated future cash payments through the expected life of the financial liability to the net carrying amount of the liability. Borrowing costs that are directly attributable to the acquisition, construction or production of an asset, that takes a substantial period of time to get ready for its intended use or sale, are capitalized as part of the cost of the asset in accordance with the requirements of IAS 23 Borrowing costs. The borrowing costs that are directly attributable to the acquisition or production of a qualifying asset are those borrowing costs that would have been avoided, if the expenditure on the qualifying asset had not been made. The amount of borrowing costs eligible for capitalization is determined as the actual borrowing costs incurred on the borrowings during the period less any investment income on the temporary investment of those borrowings. To the extent that funds are borrowed generally and used for the purpose of obtaining a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by applying a capitalization rate to the expenditures on that asset. The capitalization rate is the weighted average of the borrowing costs applicable to the borrowings that are outstanding during the period.



3 Significant accounting policies (continued)

3.3 Borrowing costs (continued)

Investment income earned on the temporary investment of specific borrowings pending their expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All other borrowing costs are recognized in profit or loss in the period in which they are incurred. Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use are complete.

3.4 Foreign currency Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the transactions. At the end of each reporting period, monetary assets and liabilities that are denominated in foreign currencies are retranslated at the closing exchange rates of the Bulgarian National Bank. The foreign exchange rate differences, arising upon the settlement of these monetary positions or at restatement of these positions at rates, different from those when initially recorded, are reported as current financial income or current financial expense in the period in which they arise.

3.5 Employee benefits Short-term employee benefits Labor and social relationships between the employees and the Company are arranged under the provisions of the Labour Code (LC) and the social security legislation requirements enforceable in the Republic of Bulgaria. Short-term employee benefits including remunerations, bonuses and social payments and benefits (payable within 12 months after the period in which employees have rendered their service or satisfied the necessary conditions) are recognized as an expense in the income statement for the period in which the service is rendered or the vesting conditions are met, and as a current liability (after reduction of any amounts paid and deductions) to its undiscounted amount. The Company’s contributions for social security and health insurance are recognized at their undiscounted amount as current expense and liability together with and for the period, when the respective employee benefits are accrued. Unused paid annual leaves accruals As of the reporting period end, the Company recognizes as a liability the non-discounted amount of the estimated expenses on paid leaves, expected to be paid to employees during following reporting periods as compensation to their labor in the previous reporting period, as well as the respective to these accruals expenses on social security contributions.




3.5 Employee benefits (continued)

Long-term employee benefits Defined contributions plan The Bulgarian government has responsibility to ensure retirement benefits based on definite contributions. Expenses, concerning the Company’s responsibility to transfer installments on the definite contributions plan, are recognized in the income statement for the period in which they arise. Additionally, the Company takes part in a defined contributions plan, which is a retirement plan. The Company pays additional defined contributions to an independent company (pension fund) in favor of the employees, included in the plan and has no legal or constructive obligation to pay additional contributions in case the fund has insufficient assets to pay all employees the compensations, regarding their length of service from the current or previous periods. The Company’s contributions for this definite contributions plan are reported in the income statement for the respective period and are included in employee benefits. Defined benefits plan Under the provisions of the Labor Code, the employees are entitled to retirement benefits amounting to two gross monthly salaries on attainment of retirement age if the accumulated length of service in the Company is under 10 years, or six gross monthly salaries if the length of service in the Company is over 10 consecutive years. Additionally, on early retirement due to disability, the employees are entitled to benefits amounting to two monthly salaries, provided that their length of service is at least five years, and they have received no other such benefits during the last five years of service. Based on the Company’s Collective Labor Agreement dated 2006, the employees that due to disease are disabled to perform the work assigned and in case of length of service over ten consecutive years, are entitled to an additional benefit from the Company, amounting to one minimal monthly salary determined for the country. In accordance with requirements of IAS 19 Employee benefits, the Company recognizes a retirement benefits liability, which is determined estimated by a licensed actuary using the Projected Unit Credit Method. The retirement benefits liability presents the present value of the defined retirement benefits liability as of the date of the statement of financial position. The present value of the defined liability is estimated based on the expected future cash outflows, using the interest rate of the government bonds, which have a maturity term similar to the maturity of the respective liability.




3.5 Employee benefits (continued) Defined benefits plan (continued) By the use of the Projected Unit Credit Method:

• is determined what portion of the benefits is attributable to the current period and the portion for previous periods, and estimates are made (actuarial assumptions) about demographic variables (such as employee turnover and mortality of employees) and financial variables (such as future increases in salaries and expenses on medical services) that will affect the cost of the benefits;

• so defined benefits are discounted to determine the present value of the obligation for defined benefits and the expenses for current service cost;

The current and past service costs and the interest on the liability of the defined benefits plan are recognized in profit or loss for the period. Revaluations of liabilities on the defined benefits plan (actuarial gain or loss) are recognized through other comprehensive income in equity as a reserve for retirement benefits liabilities. Released from this reserve amounts are transferred through other comprehensive income to retained earnings. Pension costs are charged or reflected in profit or loss for the period of service of the respective employees. Past service costs are recognized immediately to the extent that the benefits are already vested. The amount of the retirement benefits obligation, reported in the statement of the financial position represents the present value of the defined benefits obligation of the Company.

3.6 Taxation

According to the Bulgarian tax legislation, the Company is subject to corporate income tax. The corporate income tax rate for 2015 and 2014 is 10 % on the taxable profit. Income tax expense represents the sum of the tax currently payable and deferred tax. The tax currently payable is based on the taxable profit for the year. Taxable profit differs from profit before taxes as reported in the income statement because it excludes items of income or expenses that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted by the end of the reporting period. Deferred tax is the tax expected to be payable or recoverable on differences between the carrying amounts of assets and liabilities in the financial statements and the corresponding tax bases used in the computation of taxable profit, and is accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax assets are recognized to the extent that it is probable that taxable profits will be available, against which deductible temporary differences can be utilized.




3.6 Taxation (continued) The carrying amount of deferred tax assets is reviewed at the end of each year and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to be recovered. Furthermore at the end of each reporting period deferred tax assets not-recognized in previous reporting periods are reviewed. Such assets are recognized to the extent that it is probable to generate sufficient taxable profit in future, against which the deferred tax assets to be recovered. Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realized. Deferred tax is recognized charged or credited in the income statement, except when it relates to items charged or credited directly to equity, in which case the deferred tax is also dealt with in equity. Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.

3.7 Property, plant and equipment Property, plant and equipment are initially carried at cost, including purchase cost and any related costs, less any subsequently accumulated depreciation and any impairment losses. After initial recognition, land, buildings, plants and equipment are stated at their revalued amounts, being the fair value at the date of revaluation, less any subsequent accumulated depreciation and subsequent accumulated impairment losses. Revaluations are performed by licensed appraisers with sufficient regularity so that the carrying amounts do not differ materially from that which would be determined using fair values at the end of each reporting period. Increases in the carrying amount of assets as a result of the revaluation are credited directly to equity as a revaluation surplus. Decreases in carrying amounts of assets as a result of the revaluation are recognized as expenses. However, a revaluation decrease is debited directly to revaluation reserve to the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of those assets. The accumulated depreciation of revalued assets at the date of the revaluation is restated proportionally with the change in the gross carrying amount of the assets, so that the carrying amount of the assets after the revaluation equals the revalued amount. On subsequent disposal of a revalued property, plant and equipment the attributable revaluation surplus remaining in the revaluation reserve is transferred to retained earnings, net of deferred taxes.



3 Significant accounting policies (continued) 3.7 Property, plant and equipment (continued)

At the end of each reporting period, the management of the Company reviews the carrying amounts of property, plant and equipment, which have not been valuated by a licenced appraiser and determines whether there is any indication for impairment of these assets. Land and buildings, which are held to earn rentals are presented as investment property (see also note 3.9 and note 18). The depreciation charge starts after putting the respective assets into operation and commences on the earlier of their date of reclassification as held for sale, as required by IFRS 5 Non-current assets held for sale and discontinued operations and their date of disposal. Depreciation of property, plant and equipment is charged over their estimated useful lives under the straight-line method. The estimated useful lives of the assets in years are, as follows: 2015 2014

Buildings 25 - 30 25 - 30 Plant and equipment 5 - 25 5 - 17 Vehicles 10 10 Office equipment 6-7 6-7 Other non-current assets 5 5

Assets held under finance leases are depreciated over their expected useful lives on the same basis as owned assets. However, when there is no reasonable certainty that ownership will be obtained by the end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives. Depreciation is not provided for land, fully depreciated assets and assets in process of acquisition or construction. Assets are derecognized upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognized in the income statement.

3.8 Intangible assets Intangible assets are carried at cost less accumulated amortization and any subsequent impairment losses. Amortization of intangible assets is charged over their estimated useful lives, under the straight-line method, which period is from 2 to 7 years.



3 Significant accounting policies (continued) 3.8 Intangible assets (continued)

European Union Emissions Trading Scheme and emission reduction units of greenhouse gases The EU Allowances (EUA), received under the National Plan for allocation of allowances for trade with emissions of greenhouse gases, are reported as intangible assets. Upon their initial acquisition, the allocated allowances for emissions of greenhouse gases are recognized as intangible assets at nominal value (zero value). The purchased allowances are recognized upon their acquisition at purchase price. The allowances for emissions of greenhouse gases are not depreciated. As at the end of each reporting period, for the amount of greenhouse gases emitted during the period over the available distributed and purchased allowances, the Company recognizes a liability in the statement of financial position. The liability is valued at cost of the allowances purchased, used to cover the excess and on market prices as at the date of the statement of financial position for the excess over the available allowances, as the liability amount and the changes therein are recognized in profit or loss for the reporting period.

3.9 Investment property

Investment property is property held to earn rentals and is carried at fair value. As a part of property, plant and equipment of the Company, investment properties are revaluated to their fair value by licensed appraisers to the date of their classification as investment property. If an asset’s carrying amount is increased as a result of such revaluation, the increase is credited directly to equity as revaluation surplus. The revaluation decrease is recognized in the income statement or is debited directly to equity as revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect of that asset. After transfer of assets to investment property, subsequent gains or losses from changes in fair value are recognized in the net profit for the period when they arise. An investment property is derecognized upon disposal or when the investment property is permanently withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss arising on derecognition of the property is calculated as the difference between the disposal proceeds and the carrying amount of the asset and is included in the income statement. Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised on a straight-line basis over the lease term.

3.10 Impairment of property, plant and equipment, intangible assets and investment property At the end of the reporting period, the Company reviews the carrying amounts of its property, plant and equipment, intangible assets and investment property to determine whether there is any indication of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss. Where the recoverable amount of an asset cannot be reliably measured, the Company estimates the recoverable amount of the cash-generating unit, to which the asset belongs.




3.10 Impairment of property, plant and equipment, intangible assets and investment property (continued) Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount. The impairment loss is recognized as expense immediately, unless the relevant asset is carried at a revalued amount, in which case the impairment loss is treated as a revaluation decrease. When an impairment loss is subsequently reversed, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying amount does not exceed the carrying amount that would have been determined, had no impairment loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognized as income immediately, unless the relevant asset is carried at a revalued amount, in which case the reversal of the impairment loss is treated as a revaluation increase.

3.11 Inventories Inventories are valued at the lower of cost and net realizable value. Cost comprises of all costs of purchase, transportation, customs duties and other related costs. Net realizable value represents the estimated selling price less all estimated costs of completion and costs to sell. The costs of conversion of inventories include costs directly attributable to the units of production. They also include a systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. The costs of conversion of each product, which are not separately identifiable, are allocated between the products on a rational and consistent basis. Assignment of the cost is determined on a weighted average basis.

3.12 Financial instruments Financial assets and financial liabilities are recognized in the Company’s statement of financial position only when the Company becomes a party to the contractual provisions of the instrument. Financial assets are derecognized from the statement of financial position when the contractual rights to receive the cash flows from the financial asset expire, or the assets are transferred and the transfer qualifies for derecognition in accordance with the derecognition requirements of IAS 39 Financial Instruments: Recognition and Measurement. Financial liabilities are derecognized from the statement of financial position only when they are extinguished – i.e. when the obligation specified in the contract is discharged or cancelled, or expired.



3 Significant accounting policies (continued) 3.12 Financial instruments (continued)

On initial recognition financial assets/(liabilities) are measured at fair value plus, in the case of financial assets/(liabilities) not reported at fair value through profit or loss, transaction costs, which are directly attributable to the acquisition or issue of the financial assets/(liabilities). For the purposes of subsequent measurement, in the current and prior reporting periods the Company classifies the financial assets and financial liabilities into the following categories: loans and receivables, and other financial liabilities (other than those, reported at fair value through profit or loss). The classification under each category depends on the purpose and term of the respective contract. Debt and equity instruments issued by the Company, are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument. An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Financial assets Financial assets comprise cash on hand and in bank accounts, loans granted, trade and other receivables and derivative financial instruments. Financial liabilities Financial liabilities include trade and other payables, loans received, finance lease liabilities and derivative financial instruments. Effective interest rate The effective interest method is a method of calculating the amortized cost of a financial asset or a liability (or group of financial assets/liabilities) and of allocating the interest expense or interest income over the relevant period. The effective interest rate is the rate that exactly discounts the estimated future cash payments or receipts through the expected life of the financial instrument or, when appropriate, a shorter period to the net carrying amount of the financial asset or liability. Impairment of financial assets As of the date of the financial statements the Company assesses whether there is any objective evidence for impairment of all financial assets, except for financial assets reported at fair value through profit or loss. A financial asset is impaired if, and only if, there is objective evidence of impairment as a result of one or more events that have occurred after the initial recognition of the asset, resulting in a decrease of the estimated future cash flows. It may not be possible to identify a single, discrete event, rather than a combined effect of several events that may have caused the impairment.



3 Significant accounting policies (continued) 3.12 Financial instruments (continued)

Impairment of financial assets (continued) The Company recognizes impairment of trade and other receivables, whether there is objective evidence, that the Company would not be able to collect all amounts due at their maturity date. The Company considers as indications for potential impairment significant financial problems of the debtor, the probability that the debtor will be a subject to a bankruptcy procedure or non-fulfillment of the contract terms, as well as payment delay. If any of these indications for impairment occurs, the impairment loss is calculated as a difference between the carrying amount and the present value of the expected future cash flows, discounted by the original effective interest rate for similar assets. For trade receivables that are insured, the impairment equals the difference between the carrying amount of the receivables and their insurance value. The impairment is recorded by using a separate impairment account, which is shown as a reduction to receivables in the statement of financial position and the impairment expenses are stated as Administrative expenses or Distribution expenses in the income statement depending on the type of the impaired receivable. If a receivable is non-collectable and there is a recognized impairment loss for it, the receivable is written off by decrease of the respective allowance account. The recovery of the loss from impairment of trade receivables is reported in profit or loss and is stated as a decrease of the item, in which the impairment has been previously recorded. Derivative financial instruments The Company uses forward contracts to hedge risks, associated with changes in market prices of the aluminum on the London Metal Exchange. Such contracts are classified as cash flow hedges as they hedge the Company’s exposure to variability in cash flows that is attributable to the particular price risk associated with forecasted sale and purchase transactions. Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The fair value of such forward contracts is determined by reference to the current prices of these contracts on the London Metal Exchange. The unrealized gain or loss on the forward contracts that are determined to be effective hedge is recognized through other comprehensive income and is accumulated in a hedging reserve. When a hedged transaction affects the net profit or loss, the unrealized gain or loss recognized beforehand in a hedging reserve, is included in the purchase price of the respective acquired inventory. The Company uses foreign currency swap contracts to hedge its risks associated with the changes in the foreign currency rates of a long-term debt, denominated in USD. These contracts are classified as fair value hedges and are initially recognized based on the fair value as of the contract date and subsequently remeasured to their fair value as of the end of the reporting period. The realized gains and losses, and the differences in fair value of the foreign currency swap contracts as at the end of the reporting period are charged in the income statement. Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or exercised.



3 Significant accounting policies (continued) 3.12 Financial instruments (continued) 3.12.1 Cash and cash equivalents

For the purposes of cash flow presentation, cash and cash equivalents represent unrestricted cash on hand and at banks. For the purposes of the cash flow statement presentation cash receipts from customers and cash payments to suppliers are presented as gross amounts, including value added tax (VAT). VAT on purchase of property, plant and equipment and intangible assets is presented as payments to suppliers in the cash flows from operating activities.

3.12.2 Equity investments and loans granted The equity investments are non-tradable and are stated at cost less any impairment loss. Long-term loans granted are initially carried at fair value and subsequently measured at amortized cost using effective interest rate, which, due to the substance of the loan agreement, coincides with the interest rate negotiated.

3.12.3 Trade and other receivables Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are originated when the Company provides cash, goods for sale or services having no intention to trade them. Receivables are stated at amortized cost, calculated under the effective interest rate method. For current receivables, which will be settled within normal credit terms, the amortized cost approximates their nominal value.

3.12.4 Trade and other payables Trade and other payables incurred as a result of purchases of goods or services, which are not classified as financial liabilities measured at fair value through profit or loss, are stated in the statement of financial position at amortized cost, calculated under the effective interest rate method. For current payables, which will be settled whithin normal credit terms, the amortized cost approximates their nominal value.

3.12.5 Borrowings and leasing

All borrowings are initially recognized at cost, being the fair value of the consideration received net of issue costs associated with the borrowing. After initial recognition, interest bearing loans and borrowings are subsequently measured at amortized cost using the effective interest rate method. Amortized cost is calculated by taking into account any issue costs, and any discount or premium on settlement. Gains and losses are recognized in the net profit or loss when the liabilities are derecognized or impaired, as well as through the amortization process.



3 Significant accounting policies (continued) 3.12 Financial instruments (continued) 3.12.5 Borrowings and leasing (continued)

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases. Assets held under finance leases are recognised as assets of the Company at the lower of the present value of the minimum lease payments and their fair value at the date of acquisition. The corresponding liability to the lessor is included in the statement of financial position as a finance lease obligation. Finance costs, which represent the difference between the total leasing commitments and the fair value of the assets acquired, are charged to the income statement over the term of the relevant lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations for each accounting period.

3.12.6 Interest rate risk Interest rate risk is the risk that the value of the Company’s borrowings will fluctuate due to changes in market interest rates. Part of the Company’s borrowings are contracted at a floating interest rate and thus expose the Company to eventual interest rate risk (see also notes 26 and 31).

3.12.7 Credit risk Financial assets, which potentially expose the Company to credit risk, consist mainly of trade receivables and advance payments. The Company is primarily exposed to credit risk in the event where its customers fail to perform their obligations. The Company’s policy is to enter into sales transactions with customers having favorable credit reputation. In addition, the trade receivables are secured against future risks by credit limits, which are defined by the insurance company based on preliminary client research. The Company would receive 90 % of the respective trade receivable as a compensation, if the clients fail to pay their obligations (see also note 31).

3.12.8 Foreign currency risk The Company enters into international transactions related mainly to the purchases of raw materials, sales of finished goods and loans (see note 2.3). Metal hedge operations are completed at cross currency rates to eliminate the currency risk between the selling price currency and purchase currency of metals for each order. Therefore, metal hedge operations cover both risk associated with changes in market prices of the metals on the London Metal Exchange and foreign currency risk (see also notes 24 and 31).



3 Significant accounting policies (continued) 3.12 Financial instruments (continued) 3.12.9 Liquidity risk

The liquidity risk arises from the time difference in the contracted maturities of the monetary liabilities and the possibility that the liabilities are not settled on maturity. The Company manages this risk by using appropriate methods of planning, including providing overdrafts, daily liquidity reports, short-term and mid-term cash flows forecasts (see also note 31).

3.13 Accruals

Accruals are recognized when the Company has a present obligation as a result of a past event, and it is probable that the Company will be required to settle that obligation. Accruals are measured at the management’s best estimate of the expenditure required to settle the obligation at the end of the reporting period, and are discounted to present value where the effect is material.

3.14 Government grants Government grants, (financing, government grants), are assistance by the government, government agencies and similar bodies in the form of transfers of resources to the Company in return for future compliance with certain conditions relating to the operating activities of the Company. Government grants may be (i) related to assets and (ii) related to income. Government grants are recognized when there is reasonable assurance that: (i) the Company will comply with the conditions attaching to them; and (ii) the grants will be received. The government grants received by the Company are related to assets and the main condition is to purchase, produce or acquire in other manner property, plant and equipment. They are presented in the statement of financial position as deferred income, that are recognized as income on a systematic and rational basis over the useful life of the acquired assets.

3.15 Critical accounting judgements and key sources of estimation uncertainty The application of IFRS requires management to apply certain accounting assumptions and accounting estimates in the preparation of the financial statements, which affect the reported assets, liabilities and disclosures of contingent assets and liabilities as at the end of the reporting period and the amounts of revenue and expenses reported during the period. All of them are based on the best estimate of management as of the date of the preparation of the financial statements. The actual results may differ from those presented in these financial statements. The key assumptions concerning the future and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within the next financial year, are: the useful lives and fair value of property, plant and equipment (note 3.7), impairment of assets (note 3.10), fair value of investment property (note 3.9), fair value of derivatives (note 3.12) and the retirement benefits obligation (note 3.5).



4 Revenue

Revenue can be analyzed by markets as follows:


2015


2014

Export 304,895 272,091 Domestic 22,055 21,444

Total revenue 326,950 293,535 Revenue can be analyzed by products as follows:


2015


2014

Foils 138,990 115,746 Extrusion, pipes and other 113,523 99,271 Strip and sheets 74,437 78,518

Total revenue by products 326,950 293,535

5 Cost of sales Cost of sales consists of the following:


2015


2014 Materials, fuels and electricity 270,420 241,950 Personnel costs 14,485 13,541 Depreciation 11,228 11,055 Other 287 304 Changes in inventories of work in progress, finished goods,

net of capitalized expenses

883

2,176 Impairment of property, plant and equipment 282 -

Total cost of sales 297,585 269,026

Cost of sales can be analyzed by products as follows:


2015


2014

Foils 121,642 97,965 Extrusion, pipes and other 99,419 93,045 Strip and sheets 76,524 78,016

Total cost by products 297,585 269,026



6 Other income

Other income consists of the following:


2015


2014

Sales of materials 7,965 6,630 Insurances indemnities 242 294 Sales of services 325 248 Payables written-off 38 55 Income from rents 53 48 Income from government grants (note 27) 128 47 Other 381 257

Total other income 9,132 7,579

7 Administrative expenses Administrative expenses consist of the following:


2015


2014

Personnel expenses 4,930 5,149 Depreciation and amortization 701 738 Insurance expenses 902 519 Repairs and maintenance 457 508 Security 446 429 Transportation and business travel 359 421 Taxes 291 299 Donations 334 289 Ecology 164 213 Materials 130 155 Communication expenses 82 124 Receivables written-off 43 150 Consulting services 98 112 Fines and tax audits expenses 10 104 Rents 73 77 Other 616 377

Total administrative expenses 9,636 9,664 Expenses on audit of the financial statements of the Company, presented as part of the administrative expenses for 2015 and 2014 amount to BGN 38 thousand and BGN 36 thousand, respectively.



8 Distribution expenses

Distribution expenses are, as follows:


2015


2014

Transportation 7,484 8,546 Sales commissions 1,145 1,357 Personnel expenses 749 735 Impairment of trade receivables and claims paid 438 216 Insurances 347 353 Advertisement expenses 96 178 Materials 50 74 Depreciation and amortization 15 12 Other 169 121

Total distribution expenses 10,493 11,592 9 Other expenses

Other expenses are, as follows:


2015


2014

Cost of materials and services sold 4,792 4,198 Impairment of assets under construction 765 - Loss on sales of property, plant and equipment - 6

Total other expenses 5,557 4,204

10 Operating expenses by nature The expenses classified by function can be further analyzed by nature, as follows:


2015


2014

Materials 270,154 242,239 Personnel costs 19,920 19,220 Depreciation 11,957 11,819 Hired services 12,061 13,255 Other expenses 2,099 2,106 Impairment of property, plant and equipment 1,047 - Changes in inventories of finished goods and work in progress 1,317 1,986 Capitalized expenses (76) (343) Total 318,479 290,282

Сost of sales 297,585 269,026 Administrative expenses 9,636 9,664 Distribution expenses 10,493 11,592 Impairment of assets unser construction (Other expenses) 765 - Total 318,479 290,282



11 Exchange rate gain, net

Exchange rate gain/(loss) net comprises of the following:


2015


2014 Exchange rate gain 2,029 564 Exchange rate loss (1,397) (494)

Total exchange rate gain, net 632 70

12 Interest expenses, net Interest expenses, net include the following:


2015


2014

Interest expenses on loans, gross (3,398) (3,882) Less capitalized interest (note 16) - 100 Interest expense on loans (3,398) (3,782) Interest income 220 158 Financial costs on retirement benefits obligation (27) (42)

Total interest expenses, net (3,205) (3,666)

13 Other financial expenses, net


2015


2014

Bank charges (451) (421) Gain/(loss) from derivative financial instruments (47) 74 Gain arising from transactions with securities 409 -

Total other financial expenses, net (89) (347) Gains arising from transactions with securities are due to repayments of principal and interest related to the ZUNK loan (see also note 26).



14 Income taxes

The deferred tax assets and liabilities accrued, are as follows:

December 31,

2015 December 31,

2014 Deferred tax assets:

Expenses regarding employee benefits 146 152 Receivables written-off 54 30 Accrued and unpaid remunerations 21 19 Derivative financial instruments 18 -

Total deferred tax assets 239 201

Deferred tax liabilities: Property, plant and equipment 7,224 3,788 Investment property 248 248 Derivative financial instruments - 83

Total deferred tax liabilities 7,472 4,119 Total deferred tax liabilities, net 7,233 3,918 A reconciliation of the effective tax rate is provided in the table below:


2015


2014

Profit before taxation 10,149 2,685 Statutory tax rate 10% 10%

Income tax (1,015) (269) Tax effect of permanent differences 4 (9)

Recorded tax expense (1,011) (278)

Effective tax rate 9.96% 10.35% Income tax expense is as follows:


2015


2014

Current tax expense on taxable profit (1,620) (690) Deferred tax income relating to the origination and reversal of

temporary differences during the current period 609 412

Income tax expense (1,011) (278) Deferred tax for 2015 and 2014, charged directly to equity is at the amount of BGN 3,924 thousand and BGN 194 thousand decrease, respectively (see also the Statement of Comprehensive Income).



15 Earnings per share

Earnings per share are as follows:


2015


2014

Average number of shares 17,952,959 17,952,959 Profit for the period (BGN’000) 9,138 2,407

Earnings per share (BGN) 0.51 0.13 16 Property, plant and equipment

Property, plant and equipment, owned by the Company, are as follows:

Land and Buildings

Plant and Equipment

Vehicles and other

Assets under construction

Total Cost or Revalued amount

Balance at December 31, 2013 37,404 166,007 2,584 11,279 217,274 Acquisitions - 514 367 4,631 5,512 Disposals - (698) (156) - (854) Transfers - 8,170 - (8,170) -

Balance at December 31, 2014 37,404 173,993 2,795 7,740 221,932 Acquisitions - 665 269 3,997 4,931 Disposals (172) (403) (44) - (619) Revaluation to fair value - 40,447 - - 40,447 Transfers - 1,755 - (1,755) -

Balance at December 31, 2015 37,232 216,457 3,020 9,982 266,691

Accumulated depreciation and impairment

Balance at December 31, 2013 (15,042) (80,479) (1,638) (318) (97,477) Depreciation for the period (1,124) (10,255) (240) - (11,619) Disposed - 698 128 - 826

Balance at December 31, 2014 (16,166) (90,036) (1,750) (318) (108,270) Depreciation for the period (1,122) (10,404) (250) - (11,776) Impairment - (282) - (765) (1,047) Disposed 25 378 41 - 444

Balance at December 31, 2015 (17,263) (100,344) (1,959) (1,083) (120,649) Carrying amount at December 31, 2014 21,238 83,957 1,045 7,422 113,662 Carrying amount at December 31, 2015 19,969 116,113 1,061 8,899 146,042



16 Property, plant and equipment (continued) As of December 31, 2008 an independent valuation of the Company’s buildings, plant and equipment was performed by Mr. Simeon Kutsarov, licensed appraiser, to determine the fair value of buildings, plant and equipment. The valuation, which conforms to the International Valuation Standards, was determined by reference to market values. Due to the specific characteristics of certain items of plant and equipment and the absence of an active market for them, reference has also been made to their purpose and the Company’s overall condition as such assets constitute, and could be realized as, an integral part of the Company as a whole. Valuation was performed by the same licensed appraiser of separate groups of assets from property, plant and equipment as at December 31, 2015, as well as a valuation of the assets under construction as at December 31, 2014 and 2015. As of December 31, 2015 and 2014 assets under construction include expenses amounting to BGN 3,546 thousand and BGN 4,311 thousand, respectively related to construction of secondary aluminum workshop. The construction project dated as of the beginning of 1990 was suspended before being fully accomplished. Management of the Company intends to fulfill the project by the financial support of investors. Machinery and equipment of the secondary aluminum workshop are impaired to their liquidation amount. As of December 31, 2015 and 2014 the recoverable amount of the secondary aluminum workshop and machinery and equipment was determined by an independent appraiser. As at December 31, 2015 impairment is accrued at the amount of BGN 765 thousand, and as at December 31, 2014 the recoverable amount of these assets did not differ significantly from their fair value. As of December 31, 2015 and 2014 the management of the Company has analyzed the carrying amount of its property, plant and equipment, that have not been evaluated as described above, and assessed that it does not differ significantly from their fair value. For the purposes of IFRS 13 the Company classifies its property, plant and equipment into Level 2 – inputs, other than quoted prices in active markets included within Level 1, that are observable, either directly or indirectly; except for the Secondary aluminum workshop at the amount of BGN 3,546 thousand, included in assets under construction, which is classified into Level 3 - unobservable inputs. Had the Company’s property, plant and equipment been measured on a historical cost basis, their carrying amount would have been:

Land and Buildings

Plant and Equipment

Vehicles and other

Assets under construction

Total

Carrying amount at December 31, 2014 2,562 41,302 1,081 7,421 52,366

Carrying amount at December 31, 2015 1,294 33,365 1,093 8,899 44,651 For 2014 in the acquisition cost of property, plant and equipment are included capitalized borrowing costs to the amount of BGN 100 thousand (see also notes 3.3 and 12). Property, plant and equipment at gross book value amounting to BGN 3,191 thousand are fully depreciated as of December 31, 2015 (2014: BGN 8,414 thousand). Property, plant and equipment have been pledged as security of the Company’s borrowings (see also note 26).



17 Intangible assets Intangible assets are as follows:

Allowances for emissions of

greenhouse gases

Software

Total

Cost Balance at December 31, 2013 5 1,003 1,008 Disposals - (173) (173) Balance at December 31, 2014 5 830 835 Disposals - 40 40 Balance at December 31, 2015 5 870 875 Accumulated amortization Balance at December 31, 2013 - (468) (468) Amortization for the period - (200) (200) Disposals - 173 173

Balance at December 31, 2014 - (495) (495) Amortization for the period - (181) (181) Disposals - - - Balance at December 31, 2015 - (676) (676) Carrying amount at December 31, 2014

5 335 340

Carrying amount at December 31, 2015

5 194 199

Under the National Plan for allocation of allowances for trade with emissions of greenhouse gases for the period from 2013 to 2020 the Company has available 116,152 tons EU allowances. In 2015 and 2014, according to Annual reports on the emissions, prepared by the Company and verified by an authority, accredited by the Executive Agency Bulgarian Accreditation Service, respectively 22,688 and 21,445 tons greenhouse gases were emmitted. For the emmitted in 2015 and 2014 greenhouse gases were used EU Allowances from the received ones for the period from 2014 to 2020. Intangible assets at reporting amount of BGN 110 thousand are fully depreciated as of December 31, 2015 (2014: BGN 4 thousand).



18 Investment property

As at December 31, 2015 and 2014 investment property comprises of a hotel and a restaurant, situated in the village of Kranevo, Varna district, at the amount of BGN 4,935 thousand. As at December 31, 2015 and 2014 revaluations of investment property has been made by MEng. Simeon Kutsarov, independent appraiser. The valuations conform to the International Valuation Standards, and were arrived at by reference to market evidence of transaction prices for similar properties. The revaluation of the Company’s investment properties confirms that their fair value does not differ significantly from their carrying amount as at December 31, 2015 and 2014. For the purposes of IFRS 13 the Company classifies its investment property into Level 2 – inputs, other than quoted prices in active markets included within Level 1, that are observable, either directly or indirectly. Had the Company’s investment property been measured on a historical cost basis, their carrying amount would have been at the amount of BGN 3,847 thousand as at December 31, 2015 and 2014.

19 Financial assets Financial assets consist of the following:

December 31, 2015

December 31, 2014

Long-term loan granted to a related party 5,793 5,644 Equity investments 6 6

Total financial assets

5,799 5,650

As at December 31, 2015 and 2014 the Company’s investments include BGN 5 thousand, representing 100 % of the capital of Euromet EOOD and other investments amounting to BGN 1 thousand. As Alcomet AD holds 100 % of the shares in a subsidiary, in accordance with the requirements of IAS 27 Consolidated and Separate Financial Statements, the Company has to prepare consolidated financial statements. The consolidation adjustments related to the subsidiary Euromet AD would include only elimination of the share capital of the Subsidiary against the investment recorded in the Parent. This adjustment should not lead to any material changes in the financial position of the Company and financial results and cash flows of the Company would not be changed, and thus, consolidated financial statements have not been prepared.

The long-term loan as of December 31, 2015 includes a principal and interest at the amount of BGN 2,300 thousand (2014: BGN 2,300 thousand) and BGN 3,493 thousand (2014: BGN 3,344 thousand), respectively. In 2013 an annex was signed to prolonge the repayment of the full amount of the principal and interests due till December 31, 2017. Interest is charged at 6.5 % per annum.



20 Inventories

Inventories consist of the following:

December 31,

2015 December 31,

2014

Materials 13,760 20,212 Work in progress 17,736 17,274 Finished goods 11,425 13,128 Dispatched materials 51 9,786

Total inventories 42,972 60,400 Breakdown of work in progress is presented below:

December 31, 2015

December 31, 2014

Work in progress in rolling workshop 9,218 9,847 Work in progress in casting workshop 3,206 3,730 Work in progress in extruding workshop 5,312 3,697

Total work in progress 17,736 17,274 Further breakdown of materials is presented below:

December 31,

2015 December 31,

2014

Raw materials 5,465 13,015 Moulds and samples 5,676 5,235 Spare parts 2,040 1,365 Fuel and lubricants 231 272 Packaging materials 206 197 Scrap 20 20 Auxiliary materials 10 11 Other 112 97

Total materials 13,760 20,212 Further breakdown of finished goods is presented below:

December 31, 2015

December 31, 2014

Rolled products 7,568 8,543 Extruded products 3,857 4,585

Total finished goods 11,425 13,128 As at December 31, 2015 and 2014 inventories up to the amount of EUR 30,000 thousand, have been pledged as a security of the Company’s borrowings (see also note 26).



21 Trade and other receivables, net

Trade and other receivables, net, are as follows:

December 31,

2015 December 31,

2014

Trade receivables, gross 46,446 45,099 Less impairment (545) (273) Trade receivables, net 45,901 44,826 VAT refundable 4,083 6,038 Advances to suppliers 2,253 1,859 Receivables on tax audit report - 214 Advances to personnel 135 167 Loan granted 12 2 Receivables from related parties 5 5 Other debtors 47 16

Total trade and other receivables, net 52,436 53,127 The movement of the impairment of trade receivables is presented below:

2015 2014

Balance at the beginning of the period 273 760 Accrued for the period 272 - Written-off for the period - (487)

Balance at the end of the period 545 273 As per a tax audit report, dated November 5, 2012, VAT refundable at the amount of BGN 236 thousand was denied and withholding tax liabilities and interest amounting to BGN 10 thousand and BGN 53 thousand, respectively were set. In 2013 an additional tax audit was conducted, resulting in decrease of the identified liabilities by BGN 40 thousand. In 2014 the Company reports in the profit or loss receivables written-off under the tax audit report, related to a part of the denied VAT refundable and other established tax liabilities at the total amount of BGN 60 thousand. As at December 31, 2014 the receivables under the tax revision act include denied VAT refundable, default interest and legal fees at the total amount of BGN 214 thousand. Under a decision of the Supreme Administrative Court, dated June 11, 2015 the tax audit report was repealed and as at December 31, 2015 the amounts are completely refunded to the Company. As at December 31, 2015 and 2014 trade and other receivables have been pledged as a security of Company’s borrowings (see also note 26).



22 Cash and cash equivalents

Cash and cash equivalents consist of the following:

December 31,

2015 December 31,

2014

Cash at banks 90 373 Cash on hand 14 31 Deposits 288 4,287 Cash equivalents 20 18

Total cash and cash equivalents in the Statement of Financial Position

412 4,709

Restricted cash - (36)

Total cash and cash equivalents in the Cash Flow Statement 412 4,673 As at December 31, 2014 restricted cash comprises of cash on bank accounts amounting to BGN 36 thousand, pledged as a security in favor of a Bulgarian bank for a bank guarantee opened in favour of the Company.

23 Capital and legal reserves The Company’s share capital as at December 31, 2015 and 2014 is BGN 17,952,959 represented by 17,952,959 shares of BGN 1 each. In accordance with the Bulgarian Commerce Act requirements, the Company is obliged to set up a legal reserves (reserve fund). The sources of financing the reserve fund are:

· at least one tenth of the profit which is set aside until the fund’s assets reach one tenth or more of the Company’s share capital or such other larger portion as the Company’s statute may provide;

· the proceeds obtained in excess of the nominal value of shares and debentures upon their issuing;

· the total of the additional payments made by the shareholders for preferences given them with shares;

· other sources provided for by the Company’s statute or by a general meeting resolution. Disbursements from the reserve fund may be made only for covering losses. When the amount of the reserve fund exceeds one-tenth of the Company’s share capital, the excess amount may be used for increase of the share capital. In 2015 based on a decision of the Company’s General meeting of the shareholders dividend was distributed at the amount of BGN 802 thousand (2014: BGN 560 thousand) from the profit reported for 2014 at the total amount of BGN 2,407 thousand (2013: BGN 2,238 thousand). The outstanding of BGN 1,605 thousand (2013: BGN 1,678 thousand) is not distributed. Concerning establishment and use of the revaluation reserve, hedging reserve and reserve on retirement benefits obligation see notes 3.7, 3.12 and 3.5, respectively.



23 Capital and legal reserves (continued)

Movement of the Company’s reserves is, as follows:

Legal

reserve Revaluation

reserve Hedging

reserve

Reserve on retirement

benefits obligation Total

Balance at December 31, 2013 1,795 56,145 (1,041) (874) 56,025

Changes in equity for 2014 Revaluation reserve of

property, plant and equipments disposed - (315) - - (315)

Comprehensive income for the period - - 1,790 (48) 1,742

Balance at December 31, 2014 1,795 55,830 749 (922) 57,452

Changes in equity for 2015 Revaluation reserve of

property, plant and equipments disposed - (184) - - (184)

Comprehensive income for the period - 36,402 (913) (184) 35,305

Balance at December 31, 2015 1,795 92,048 (164) (1,106) 92,573

24 Derivative financial instruments Derivative financial instruments consist of the following:

December 31,

2015 December 31,

2014

Cash flow hedge derivative financial assets/(liabilities) (182) 832

Fair value hedge derivative financial assets/(liabilities) - 47

Including: Non-current derivative financial assets/(liabilities) - -

Current derivative financial assets/(liabilities) (182) 879 The Company has concluded forward contracts for purchase and sale of metal on the London Metal Exchange (LME) to hedge the risk associated with changes in market prices of the metals related to forecasted sales and purchases. As at December 31, 2015 the Company has outstanding forward contracts for sale and purchase of metal from January till December 2016. Under the terms of the forward contracts the Company will sell 4,525 tons of aluminum with contracted value of BGN 12,341 thousand. The Company does not expect any deals that would not be finalized.



24 Derivative financial instruments (continued)

For the period from January 2016 till the date of the current financial statements the Company sold forward contracts for 3,450 tons of aluminum and purchased forward contracts for 12,075 tons of aluminum. The remaining contracts are expected to be realized until December 2016. The Company does not expect any projected deals that would not be finalized. As at December 31, 2015 and 2014 the Company has assessed the cash flow hedge as highly effective, and, as a result the gains and losses on changes in fair value of hedging instruments have been reported as other comprehensive incomes, as follows:


2015


2014

Gains/(losses) arising during the period (1,014) 1,989 Adjustment for amounts transferred to the initial carrying amount of

the hedged items 832 (1,157)

Unrealized gains/(losses) on hedging at the end of the period (182) 832

Less: Tax effect 18 (83)

Total unrealized gains/(losses) on hedging at the end of the period, net of tax (164) 749

The Company has a foreign currency swap contracts with a Bulgarian bank to hedge the risks associated with the changes in the foreign currency rates of a long-term debt, denominated in USD (see also note 26). These contracts are classified as fair value hedge instruments and the Company has assessed the hedge as highly effective. The movement of the fair value hedge derivative financial liabilities is, as follows:

December 31,

2015 December 31,

2014

Balance at the beginning of the period (47) 27 (Gain)/ loss from fair value hedges 47 (74)

Balance at the end of the period - (47) Less short-term portion - (47) Long-term portion at the end of the period - -



25 Retirement benefits obligation

The financial assumptions used for the calculation of the retirement benefits obligation are as follows:

December 31, 2015

December 31, 2014

Discount rate 3.00% 4.00% Expected rate of salary increase for the first year - 2.00% Expected rate of salary increase for the second and third year - 1.00% Expected rate of salary increase for the following years 1.00% 1.00% As of December 31, 2015, the demographic actuarial assumptions used are based on the following:

a) mortality of the Bulgarian population during the period 2011 - 2013, according to data of the National Statistical Institute;

b) statistical data of the National Health Information Center about peoples’ disability and early

retirement. The employee turnover is, as follows:

Age


2015


2014

18 – 30 years 35% 20% 31 – 40 years 25% 15% 41 – 50 years 15% 11% 51 – 60 years 5% 5% over 60 years 1% 1% The amounts, recognized in the statement of comprehensive income regarding retirement benefits obligation are, as follows:


2015


2014

Current service cost 54 50 Net interest 27 42

Expenses, recognized in profit or loss 81 92

Actuarial loss arising from changes in the financial assumptions 48 72 Actuarial (gain)/ loss arising from experience adjustments 156 (19)

Actuarial loss, recognized in other comprehensive income 204 53

Total 285 145



25 Retirement benefits obligation (continued)

An analysis of the movement of retirement benefits obligation is presented below:

December 31,

2015 December 31,

2014

Balance at the beginning of the period 884 1,048 Current service cost 54 50 Payments for the period (280) (309) Interest costs 27 42 Actuarial loss arising from changes in the financial assumptions 48 72 Actuarial (gain)/loss arising from experience adjustments 156 (19)

Balance at the end of the period 889 884 The retirement benefits obligation at December 31, 2015 and 2014 comprises of the following: December 31,

2015 December 31,

2014

Benefits on attainment of retirement age 884 873 Benefits on early retirement 5 11

Total retirement benefits obligation 889 884 The movement of the reserve on retirement benefits obligation is, as follows: December 31,

2015 December 31,

2014

Reserve at the beginning of the period, gross 1,024 971 Actuarial loss, recognized in Other comprehensive income 204 53

Reserve at the end of the period, gross 1,228 1,024



25 Retirement benefits obligation (continued)

Defined benefit plan exposes the Company to the following actuarial risks:

Investment risk The present value of the defined benefit plan liability is calculated

using a discount rate of Bulgarian government securities, denominated in BGN, with maturity up to 10 years, and the data for the following periods is received by data interpolating.

Interest risk A decrease in the interest rate of the Bulgarian government securities will increase the defined benefit plan liability.

Longevity risk The present value of the defined benefit liability is calculated by reference to the best estimate of the mortality of plan participants.

Salary risk The present value of the defined benefit plan liability is calculated by reference to the future salaries of plan participants. An increase in the salary of the plan participants will increase the plan’s liability.

A sensitivity analysis based on reasonably possible changes in the respective assumptions, at the end of the reporting period, assuming all other assumptions held constant is, as follows:

Less % Assumptions

and results used Plus %

Discount rate 2.5% 3.0% 3.5% Amount of the liability (BGN thousand) 943 889 839 Difference (BGN thousand) 54 - (50) Difference (%) 6 % - (6 %) Salary growth 0.5% 1% 1.5% Amount of the liability (BGN thousand) 849 889 944 Difference (BGN thousand) (40) - 55 Difference (%) (4 %) - 6 % Probability of early retirement 19.61% 20.61% 21.61% Amount of the liability (BGN thousand) 898 889 879 Difference (BGN thousand) 9 - (10) Difference (%) 1 % - (1 %) The sensitive analysis presented above may not be representative of the actual change in the retirement benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated. In presenting the above calculations the projected unit credit method is used, the same as that applied in calculating the retirement benefit obligation liability, recognized in the Statement of Financial Position.



26 Borrowings

Borrowings of the Company, including interest can be analyzed as follows:

December 31,

2015 December 31,

2014

Short-term bank loans 63,194 88,395

Current portion of long-term bank loans 3,155 3,458 Current portion of lease agreements 3,091 2,932 Current portion of long-term debt to the State (ZUNK) - 624

Total current portion of long-term loans 6,246 7,014

Total short-term bank loans and leases 69,440 95,409

Long-term bank loans 5,692 6,265 Long-term trade loans and lease agreements 11,150 14,147 Long-term debt to the State (ZUNK) -

16,842 Total long-term loans and leases 20,412 Total loans and leases 86,282 115,821 Loans of the Company can be analyzed as follows:

December 31, 2015 Principal Interest Total

Bank loans - Long-term bank loans 5,692 - 5,692 - Current portion of long-term bank loans 3,155 - 3,155 - Short-term bank loans 63,194 - 63,194 Total 72,041 - 72,041

Trade loans - Long-term trade loans and lease agreements 10,271 879 11,150 - Current portion of long-term trade loans and lease

agreements 3,091 - 3,091

Total 13,362 879 14,241

Total loans 85,403 879 86,282



26 Borrowings (continued)

December 31, 2014 Principal Interest Total

Bank loans - Long-term bank loans 6,265 - 6,265 - Current portion of long-term bank loans 3,458 - 3,458 - Short-term bank loans 88,395 - 88,395 Total 98,118 - 98,118

Trade loans - Long-term trade loans and lease agreements 13,364 783 14,147 - Current portion of long-term trade loans and lease

agreements 2,932 - 2,932

Total 16,296 783 17,079

Debt to the State (ZUNK)

- Long-term debt - - - - Current portion of long-term debt - 624 624

Total - 624 624 Total loans 114,414 1,407 115,821

December 31, 2015 December 31, 2014 Principal Interest Total Principal Interest Total

Bank loans

- Loan А 1,663 - 1,663 2,494 - 2,494 - Loan B1 3,912 - 3,912 3,912 - 3,912 - Loan B2 5,466 - 5,466 402 - 402 - Loan B3 - - - 5,190 - 5,190 - Loan B4 - - - 4,889 - 4,889 - Loan D 23,959 - 23,959 31,481 - 31,481 - Loan E 613 - 613 1,281 - 1,281 - Loan I 3,172 - 3,172 591 - 591 - Loan P1 - - - 458 - 458 - Loan P2 - - - 232 - 232 - Loan P3 2,330 - 2,330 1,678 - 1,678 - Loan F 27,527 - 27,527 40,843 - 40,843 - Loan H 3,399 - 3,399 4,667 - 4,667

Total 72,041 - 72,041 98,118 - 98,118




Trade loans and leases are, as follows:

December 31, 2015 December 31, 2014 Principal Interest Total Principal Interest Total

Trade loans and leases - Loan G 1,300 165 1,465 1,300 140 1,440 - Loan J 5,735 714 6,449 5,735 643 6,378 - Lease agreements 6,327 - 6,327 9,261 - 9,261 Total 13,362 879 14,241 16,296 783 17,079

Loan А

On January 24, 2013 an agreement was concluded for a long-term bank loan (Loan A) between the Company and a Bulgarian bank at the total amount of EUR 2,400 thousand. The loan purpose is financing and purchase of new production equipment and is secured with a first ranking special pledge on the same equipment at a carrying amount of BGN 2,898 thousand as of December 31, 2015. The repayment of the loan is, as follows: one installment amounting to EUR 1,125 thousand, due till December 31, 2014, and the rest of the loan in 36 equal monthly installments payable, starting from January 30, 2015. As of December 31, 2015 and 2014 the outstanding liability in respect to the loan is EUR 850 thousand (BGN 1,663 thousand) and EUR 1,275 thousand (BGN 2,494 thousand), respectively. Loan B On June 12, 2008 the Company concluded a facility agreement with a Bulgarian bank. Subject of the agreement is a revolving facility for working capital of up to EUR 9,000 thousand and the term of the agreement is up to May 31, 2009. In 20115 the limit was increased up to EUR 12,000 thousand. The loan was contracted as a multi-purpose revolving facility for working capital as follows: Sublimit B1 up to EUR 2,000 thousand for financing of VAT related payments, Sublimit B2 up to EUR 7,500 thousand credit line for financing of trade receivables and issuance of bank guarantees and letters of credit, and Sublimit B3 up to EUR 2,500 thousand credit line for financing for working capital and issuance of bank guarantees/letters of credit. According to annexes to the agreement the maturity was prolonged till January 31, 2016. The loan is secured by pledge on machinery and equipment, owned by the Company, with carrying amount at December 31, 2015 of BGN 10,161 thousand in respect of Sublimit B1, pledge on current and future receivables, arising from signed trade agreements with certain contractors at the amount of EUR 5,000 thousand in respect of Sublimit B2, pledge on current and future inventories to 125 % of the utilized amount of Sublimit B3. As of December 31, 2015 and 2014 the total outstanding liability in respect to the loan is EUR 4,795 thousand (BGN 9,378 thousand) and EUR 7,359 thousand (BGN 14,393 thousand), respectively.




Loan D On December 12, 2002 the Company entered into an agreement for a short-term loan (Loan D) with a Bulgarian bank at the amount of EUR 2,800 thousand, from which EUR 2,500 thousand are for working capital purposes and issuance of bank guarantees and/or letters of credit, and the remaining EUR 300 thousand represent a revolving credit facility to be used for hedging of market price risk upon spot and forward transactions related to the purchase and sale of foreign currencies. In 2014 an annex was signed and the limit of the credit line was increased to EUR 20,000 thousand, According to annex to the agreement the maturity date of the loan has been prolonged up to June 30, 2016. Collateral of the loan is a first ranking pledge on land and buildings with carrying amount at December 31, 2015 of BGN 26,901 thousand and BGN 17,233 thousand, respectively. As at December 31, 2015 and 2014 the utilized funds amount to EUR 12,250 thousand (BGN 23,959 thousand) and EUR16,096 thousand (BGN 31,481 thousand), respectively. Loan E On April 23, 2014 the Company entered into an agreement for a long-term loan (Loan E) with a Bulgarian bank at the amount of EUR 883 thousand, to refinance an existing investment credit facility. The repayment is in 31 equal monthly installments, first of which falling due on May 30, 2014 and the last one - on November 30, 2016. Collateral of the loan is a pledge on machinery and equipment, owned by the Company, with carrying amount at December 31, 2015 of BGN 2,551 thousand. As of December 31, 2015 and 2014 the outstanding liability in respect to the loan is EUR 313 thousand (BGN 613 thousand) and EUR 655 thousand (BGN 1,281 thousand), respectively. Loan I On April 23, 2014 the Company entered into an agreement for a long-term loan (Loan I) with a Bulgarian bank at the total amount of EUR 1,700 thousand, to finance investments. The repayment is in 60 equal monthly installments, first of which falling due on May 31, 2016 and the last one - on April 30, 2021. Collateral of the loan is a pledge on machinery and equipment, owned by the Company, with carrying amount at December 31, 2015 of BGN 2,731 thousand. As of December 31, 2015 and 2014 the outstanding liability in respect to the loan is EUR 1,622 thousand (BGN 3,172 thousand) and EUR 302 thousand (BGN 591 thousand), respectively. Loans К and F On October 31, 2007 the Company entered into a tripartite contract with a foreign commercial bank and its branch in Bulgaria for a revolving credit line (Loan F) and a revolving facility for working capital (Loan K). The credit limit is at the amount of EUR 4,000 thousand (Loan K) and EUR 30,000 thousand (Loan F). As of December 31, 2015 and 2014 the outstanding liability on Loan F is at the amount of EUR 14,074 thousand (BGN 27,527 thousand) and EUR 20,883 thousand (BGN 40,843 thousand), respectively. As of December 31, 2015 and 2014 there are no utilized amounts under Loan K. Collateral of all credit facilities, received by the Company upon the tripartite contract, comprises of pledge on goods in turnover (work in progress, production and finished goods) at the amount up to EUR 30,000 thousand, pledge on current and future receivables of the Company at bank accounts in the bank branch in Bulgaria at the amount up to EUR 30,000 thousand, pledge on machinery and equipment with carrying amount as at December 31, 2015 of BGN 19,912 thousand, pledge on receivables of the Company on contracts with clients at the amount of EUR 15,000 thousand and a promissory note at the amount of EUR 30,000 thousand.




Loans P1, P2 and P3 On November 23, 2010 the Company entered into an agreement with a foreign bank with the purpose of financing the Company’s main activity for the amount of EUR 1,750 thousand. In 2013 an annex №1 to the contract was signed to increase the credit limit up to EUR 2,000 thousand The loan is utilized according to three sublimits – P1, P2 and P3. Sublimit P1 is at the amount of EUR 1,250 thousand. The sublimit is to be repaid in 48 monthly installments, first of which falling due on October 31, 2011, and the last one – on October 14, 2015. As at December 31, 2015 the liabilities under the loan sublimit are completely repaid. Sublimit P2 is utilized as credit line limited to the amount of EUR 875 thousand. The term of payment of the sublimit is to November 3, 2016. As at December 2015 the liabilities under the loan sublimit are repaid, and as at December 31, 2014 the outstanding amount of the credit sublimit was EUR 119 thousand (BGN 232 thousand). Sublimit P3 is utilized as an overdraft limited to the amount of EUR 1,125 thousand. The term of repayment of the sublimit is till November 3, 2016. As at December 2015 and 2014 the outstanding amount of the credit sublimit is EUR 1,191 thousand (BGN 2,330 thousand) and EUR 858 thousand (BGN 1,678 thousand), respectively. Collateral of the credit is a mortgage on investment properties of the Company in the village of Kranevo (see also note 18), and a promissory note at the amount of EUR 1,925 thousand (BGN 3,765 thousand), issued by the Company and avalled by related parties. Loan H On August 25, 2011 the Company entered into an agreement with a Bulgarian commercial bank for a long-term bank loan (Loan H) at the total amount of EUR 3,250 thousand with the purpose of financing the delivery of production machines and modernization of the casting and rolling production. The loan has to be utilized in installments till 12 months from the date of the agreement. The loan is to be repaid in 60 monthly installments, first of which falling due on September 30, 2013 and the last one – on August 31, 2018. Collateral of the loan is a first ranking pledge on the machinery purchased, with carrying amount as at December 31, 2015 of BGN 5,911 thousand. As at December 31, 2015 and 2014 the outstanding liability on the loan amounts to EUR 1,738 thousand (BGN 3,399 thousand) and EUR 2,386 thousand (BGN 4,667 thousand), respectively. Loans G and J On May 12, 2003 the Company concluded a long-term loan agreement with a related party at the total amount of USD 10,000 thousand (Loan G). The purpose of the funds is to provide financing for investment activities of the Company. On August 5, 2005 a part of the Loan G at the amount of USD 7,650 thousand was transferred to another related party. The remaining part of the Loan G at the amount of USD 1,125 thousand was converted to EUR at an exchange rate fixed under an annex dated August 6, 2005. According to an annex from 2014 the payment date for the principal and interest due is December 31, 2018. As at December 31, 2015 and 2014 the outstanding liability of the loan amounts to BGN 1,465 thousand (principal BGN 1,300 thousand and interest BGN 165 thousand) and BGN 1,440 thousand (principal BGN 1,300 thousand and interest BGN 140 thousand), respectively.




Loans G and J (continued) In 2002 the Company received from a related party USD 3,178 thousand and EUR 215 thousand as a fulfillment of an agreement for financial support of the business operations and the investment activities of the Company (Loan J). According to an annex from December 2, 2005 the parties have agreed and converted the liability from USD to EUR 2,932 thousand. According to annex from 2014 the payment date for principal and interest due is December 31, 2018. As at December 31, 2015 and 2014 the outstanding liabilities of the loan are at the amount of BGN 6,449 thousand (principal BGN 5,735 thousand and interest BGN 714 thousand) and BGN 6,378 thousand (principal BGN 5,735 thousand and interest BGN 643 thousand), respectively. Lease agreements The Company has signed finance lease agreements for purchase of vehicles and production machinery with carrying amount as of December 31, 2015 of BGN 62 thousand (2014: BGN 78 thousand) and respectively BGN 20,878 thousand (2014: BGN 23,827 thousand). The lease liabilities are repaid on monthly installments, the last of which is due in December 2017. The liabilities on the finance lease agreements are secured with the leased equipment and a bank guarantee at the amount of EUR 4,000 thousand, issued in 2010 with expiry date March 31, 2018. The issued bank guarantee is secured with a second ranking pledge on maschinery and equipment with carrying amount as at December 31, 2015 of BGN 9,069 thousand. Finance lease liabilities as of December 31, 2015 and 2014 are as follows:

Total value of Minimum lease payments

Present value of Minimum lease payments

December 31, 2015

December 31, 2014

December 31, 2015

December 31, 2014

No later than 1 year 3,288 3,354 3,091 2,932Later than 1 year and not later than 5

years 3,306 6,683 3,236 6,329Total 6,594 10,037 6,327 9,261Less: Deferred financial expenses (267) (776) - - Present value of minimum lease

liabilities 6,327 9,261 6,327 9,261Current portion of finance lease

liabilities 3,091 2,932Long-term portion of finance lease

liabilities 3,236 6,329




ZUNK loan The Company received a bank loan for funding of the construction of the secondary aluminum workshop in late 1980. In 1994, in accordance with the Law for Settlement of Unserviced Loans, the loan was transformed into a loan to the State (ZUNK loan). On December 14, 2000 under an annex to the agreement between the Company and the Ministry of Finance of Bulgaria dated January 15, 1997, the ZUNK loan, comprising of principal at the amount of USD 5,305,823 and interest at the amount of USD 3,190,472 was rescheduled for repayment until October 30, 2015. Interest is charged on the outstanding principal at 7 % per annum. As at December 31, 2015 the loan is completely repaid. The Company has foreign currency swap contracts with a Bulgarian bank to hedge the risks associated with the changes in the foreign currency rates (see also note 24).

27 Deferred income

December 31,

2015 December 31,

2014

Deferred income at the beginning of the year 2,010 - Received for the year 25 2,057 Recognized in the Statement of Comprehensive Income (128) (47)

Deferred income at the end of the year 1,907 2,010 Including: Short-term deferred income 130 128

Long-term deferred income 1,777 1,882

In 2014 the Company received BGN 2,057 thousand related to the performance of project “Investments to expand the activity of “Alcomet” AD and protection of the environment” under government grant contract № BG161PO003-2.3.01-0032-С001 dated July 12, 2012 under Operational Programme “Development of the Competiveness of the Bulgarian Economy” 2007-2013. In 2014 the Company concluded a government grant contract № 33 dated July 23, 2014 with the Fund “Working Conditions” for the performance of project “Improving the working environment and working conditions in “Alcomet” AD” and in 2015 the Company received financing at the amount of BGN 25 thousand.



28 Trade and other payables

Trade and other payables consist of the following:

December 31,

2015 December 31,

2014

Trade creditors 9,564 18,317 Payables to employees 1,002 949 Advances from customers 471 781 Social security payables 421 415 Payables to state budget 302 310 Trade payables to related parties (note 32) 6 13 Dividend payable 6 5 Other 898 504

Total trade and other payables 12,670 21,294

29 Income tax liabilities

December 31,

2015 December 31,

2014

Income tax liabilities/( receivables) at the beginning of the period

41

235

Income tax accrued 1,620 690 Income tax paid (1,341) (884)

Income tax liabilities at the end of the period 320 41

30 Accruals

Accruals are as follows:

December 31,

2015 December 31,

2014

Unutilized paid annual leaves’ charges 488 542 Social and health security 85 94

Total accruals 573 636 Further analysis of movements of unutilized paid leaves’ charges is presented below:

December 31, 2015

December 31, 2014

Balance at the beginning of the period 636 805 Accrued 573 138 Utilized (636) (307)

Balance at the end of the period 573 636



31 Financial instruments and risk management

The carrying amounts of financial assets and liabilities as at December 31, 2015 and 2014 by categories as defined in accordance with IAS 39 Financial instruments: Recognition and Measurement are presented in the tables below: Financial assets: December 31,

2015 December 31,

2014 Cash and cash equivalents (note 22) 412 4,709 Interest bearing loans receivables (note 19) 5,793 5,644 Trade and other receivables, net (note 21) 48,171 46,692 Derivative financial instruments for hedging (note 24) - 879

Total 54,376 57,924 Financial liabilities: December 31,

2015 December 31,

2014 Trade and other payables (note 27) 10,945 19,584 Interest bearing loans liabilities (note 26) 79,955 106,560 Finance lease liabilities (note 26) 6,327 9,261 Derivative financial instruments for hedging (note 24) 182 -

Total 97,409 135,405 The financial instruments used expose the Company to market, credit and liquidity risk. Information in regard to purposes, policies and processes concerning the management of those risks, as well as the capital management is provided below. Market risk Market risk is the risk that the fair value or the future cash flows of financial instruments may vary due to the changes in market prices. The associated market risk is foreign currency risk, interest risk or price risk. Foreign currency risk The Company enters into international transactions, denominated in foreign currencies. Therefore, the Company is exposed to market risk related to possible foreign currency fluctuations. Such risk is mainly connected to the USD/BGN exchange rate fluctuations, because the Company’s transactions related to purchases of raw materials and sales of finished goods are denominated in USD. The Company does not have any loans received or granted, denominated in USD, except the ZUNK loan, which is hedged (see also note 26). Transactions in EUR do not expose the Company to foreign currency risk as since January 1, 1999 the Bulgarian lev has been pegged to the Euro at a fixed exchange rate.



31 Financial instruments and risk management (continued)

Foreign currency risk (continued) Financial assets and liabilities, denominated in USD, are presented in the table below: December 31, 2015 December 31, 2014

Original currency

(in thousands) BGN’000

Original currency

(in thousands)

BGN’000

Trade and other receivables 841 1,506 1,063 1,710

Total financial assets 841 1,506 1,063 1,710 ZUNK - - (388) (624) Trade and other payables (476) (852) (3,538) (5,690)

Total financial liabilities (476) (852) (3,926) (6,314)

Total financial assets/(liabilities), net 365 654 (2,863) (4,604) The sensitivity analysis of foreign currency risk is calculated at a change of 5% of the USD/BGN exchange rate. Management believes that this change is reasonably possible, based on statistical data for the dynamics in variations for the previous year. If as at December 31, 2015 and 2014 the USD/BGN exchange rate had increased by 5%, and, with all other variables held constant, the profit after tax would have increased by BGN 33 thousand for 2015, and for 2014 it would have decreased by BGN 180 thousand, mainly as a result of exchange rate differences arising from revaluation of trade receivables for 2015 and trade liabilities, denominated in USD for 2014. The difference in the sensitivity of the profit after taxation for 2015 to changes in the exchange rate of the USD compared to 2014 is insignificant. In the above analysis the liabilities under the ZUNK loan are excluded, as they are hedged and the exchange rate fluctuations have no effect on the respective period financial result. Most of the sales of the Company are concentrated in countries from the European Union, including Bulgaria, as 97 % of the sales are realized in this region. Transactions with customers from those countries are negotiated in EUR, that basically eliminates foreign currency risk. In addition, owing to the increasing importance of the EUR as a global currency, the Company has the opportunity to realize some of its sales in EUR outside the European Union as well, that further mitigates the foreign currency risk. Interest rate risk The Company is exposed to interest rate risk, because the main part of the loans received are contracted under the terms of floating interest rate, negotiated as a base interest rate (LIBOR, EURIBOR) with a certain mark-up, which varies between 3% and 4%. In 2015 and 2014 the loans with a floating interest rate are denominated in BGN and EUR. The Company continuously monitors and analyses its main interest exposures and develops certain scenarios in regard to their optimization, including re-financing, renewal of existing loans, alternative financing (contracts for sale and lease-back of assets), as well as develops estimates of the impact of the interest rate fluctuations in a certain range over the financial result.




Interest rate risk (continued) As of the date of these financial statements the structure of the interest-bearing financial instruments is as follows: December 31,

2015 December 31,

2014

Instruments with a fixed interest rate

Financial assets 5,793 5,644 Financial liabilities 8,657 11,563

Instruments with a floating interest rate

Financial liabilities 77,625 104,258 If the interest rate increases or decreases by 2 %, the interest amount for the past one-year-period could affect the income statement, as follows:

Accrued interest

Interest amount at a possible fluctuation of the interest

rate with plus 2% minus 2%

Trade loans (fixed interest rate) 150 150 150

Total income from interest 150 150 150

Bank loans 2,981 4,679 996 Trade loans 209 350 69 Lease agreements 348 348 348

Total interest expenses 3,398 5,377 1,413

Total interest expenses, net 3,248 5,227 1,263 Price risk Price risk is related to possible changes in the market prices of equity instruments held for sale and of the Company’s finished goods. Changes in selling prices of finished goods depend vastly on movements in the price of aluminum on the international stock exchange. The Company uses forward contracts to hedge the risks associated with changes in market prices of aluminum on the London Metal Exchange. These contracts are classified as cash flow hedges as they hedge the Company’s exposure to variability in cash flows that is attributable to the particular price risk associated with forecasted sale and purchase transactions (see note 24).




Credit risk Credit risk is the risk that a party to a financial instrument is unable to pay its liabilities and thus cause financial loss to the other party. Financial assets, which potentially expose the Company to credit risk, are mainly trade receivables and interest-bearing loans granted. Primarily, the Company is exposed to credit risk in the event where its customers fail to perform their obligations. In order to mitigate the credit risk the Company has concluded contracts with an international and a Bulgarian insurance companies in regard of trade receivables insurance. Additionally, the Company directs its policy to enter into sales transactions with customers having favorable credit reputation, and, to use adequate collaterals in order to mitigate the risk of possible financial losses. The estimations for favorable credit reputation of the customers are based on the financial position, previous experience and other factors. Credit limits are determined, which are strictly monitored. In 2015 the Company generates approximately 91 % of its revenue through sales to customers with over 2-year business relationships with the Company. As at December 2015 the Company does not have any substantial credit exposure to any counterparty or a group of counterparties with similar characteristics. Counterparties are defined as counterparties with similar characteristics if they are related parties. The credit limits and the carrying amounts from the top five customers of the Company as of December 31, 2015 and 2014 are presented in the tables below: December 31, 2015 Carrying amount Credit

limit

CEDO SP.Z O.O. 4,440 5,183 SPHERE FRANCE S.A.S. 2,905 4,401 WRAP FILM SYSTEMS LTD. 2,141 2,347 THYSSENKRUPP METALSERV GMBH 1,731 3,912 ETF Aluminium GmbH 5 1,956

Total: 11,222 17,799 December 31, 2014 Carrying amount Credit

limit

CEDO SP.Z O.O. 4,705 5,183 SPHERE FRANCE S.A.S. 2,806 3,912 WRAP FILM SYSTEMS LTD. 2,253 2,229 THYSSENKRUPP METALSERV GMBH 1,929 2,738 ETF Aluminium GmbH 612 1,956

Total: 12,305 16,018 During 2015 the Company realizes 21 % of the revenue through sales to the five biggest customers (during 2014: 20 %). As at December 31, 2015 and 2014 trade receivables from these customers amount to BGN 11,222 thousand and BGN 12,305 thousand, respectively, that represent 24 % and 27 % of the gross amount of trade receivables.




Credit risk (continued) Maturities of receivables, based on the latest possible date, on which the Company may receive them are presented in the table below:

December 31,

2015 December 31,

2014

up to 30 days 28,002 28,928 30-90 days 17,854 15,898 up to 120 days 45 - Total amounts receivable 45,901 44,826 The credit risk associated with cash at bank accounts and derivatives is minimal, owing to the fact that the Company operates only with banks having high credit reputation. The carrying amount of financial assets, net of impairment reflects the maximum credit risk, to which the Company is exposed. The Company’s non-derivative financial assets are represented by fixed interest rate long-term loans, whose effective interest rate is 6,5% per annum (see also note 19). Liquidity risk Liquidity risk is the risk that the Company is not able to settle its financial liabilities on maturity. The Company manages this risk by securing enough liquid funds, which should be used to settle the financial liabilities when they become executable, including in extraordinary or unexpected circumstances. The aim of the management is to maintain a stable balance between constant availability and flexibility of the financial resources through use of different forms of financing. Management of the liquidity risk is the responsibility of the Managing and Supervisory Boards. and includes maintaining of sufficient monetary funds, successfully negotiating of adequate credit lines, preparing, analyzing and updating of cash flows forecasts.




Liquidity risk (continued) The maturities of non-derivative financial liabilities on the basis of the earliest date, on which the Company may be obliged to pay them, are presented in the table below. The table presents the undiscounted cash flows, including principal and interest:

December 31, 2015 Up to 1 month

Between 1 and 3 months

Between 3 months and

one year

Between 1 and 5

years

Over 5 years

Total

Long-term bank loans 251 507 2,604 5,834 69 9,265 Short-term bank loans 9,396 - 54,376 - - 63,772 Trade loans - - - 8,542 - 8,542 Finance lease liabilities 271 546 2,471 3,306 - 6,594 Trade payables 6,838 2,649 77 - - 9,564 Advances received from clients 471 - - - - 471 Trade payables to related parties 6 - - - - 6 Other liabilities 904 - - - - 904

Total 18,137 3,702 59,528 17,682 69 99,118

December 31, 2014 Up to 1 month

Between 1 and 3 months

Between 3 months and

one year

Between 1 and 5

years

Over 5 years

Total

Long-term bank loans 308 614 2,800 6,492 - 10,214 Debt to the State (ZUNK) - - 624 - - 624 Short-term bank loans 248 36,751 52,235 - - 89,234 Trade loans - - - 8,504 8,504 Finance lease liabilities 279 559 2,516 6,683 - 10,037 Trade payables 10,180 8,043 94 - - 18,317 Advances received from clients 781 - - - - 781 Trade payables to related parties 13 - - - - 13 Other liabilities 473 - - - - 473

Total 12,282 45,967 58,269 21,679 - 138,197




Fair value measurements Some of the Company’s financial assets and financial liabilities are measured at fair value at the end of each reporting period. The following table gives information about how the fair values of these financial assets and liabilities are determined (valuation techniques and inputs used).

Financial assets/ (liabilities)

Fair values at Level Valuation techniques and inputs

December 31, 2015

December 31, 2014

Derivatives for cash flow

hedging (182) 832 Level 1 Quoted prices on primary

market Derivatives for fair value

hedging - 47 Level 2 Discounted cash flows. Future

cash flows are estimated based on foreign currency exchange rates and the contracted exchange rates

Information about the financial liabilities, measured at fair value as at December 31, 2015 is presented, as follows:

Description

Fair value measurements at the end of the reporting period using:

December 31, 2015

Level 1

Level 2

Level 3

Recurring fair value measurements Derivatives for cash flow hedging 182 182 - - Derivatives for fair value hedging - - - -

Total recurring fair value measurements 182 182 - -




Fair value measurements (continued) The table below presents the fair value of financial assets and financial liabilities, that are not measured at fair value, but its presentation is required by IFRS’s. The management of the Company considers that the fair value of financial assets and liabilities that are not included in the table, is approximately equal to their carrying amount.

31 December 2015 Carrying

amount Fair

value Financial assets

Receivables on interest bearing loans (note 19) 5,793 5,570 Financial liabilities

Interest bearing loans liabilities (note 26) 79,955 74,591 Finance lease liabilities (note 26) 6,327 6,029

31 December 2014 Carrying

amount Fair

value Financial assets

Receivables on interest bearing loans (note 19) 5,644 5,515 Financial liabilities

Interest bearing loans liabilities (note 26) 106,560 95,878 Finance lease liabilities (note 26) 9,261 9,397

Equity management

The Company manages its capital to ensure its operation as a going concern and at the same time strives to maximize shareholder wealth through optimization of the debt-equity ratio (return on invested capital). The purpose of the Management is to support the trust of investors, creditors and market and to guarantee future development of the Company.

The Management of the Company observes the equity structure on the basis of debt-to-equity ratio. Net debt includes long-term and short-term loans, as well as long-term and short-term finance lease liabilities less cash.

The Management of the Company determines the amount of necessary capital proportionally to the risk level, with which the separate activities can be characterized (projects, business segments). Support and correction of equity structure is done in relation with changes in economic conditions as well as the risk level of the respective assets (projects), in which it is invested. Basic instruments which are used for equity management are: issuance of equity and debt instruments, sales of assets with the purpose to decrease level of obligations, debt refinancing through issuance of instruments with longer maturity, etc. All decisions for changes in this direction are based on balance of price and risk, attributable to different sources of financing.




Equity management (continued) Net debt to adjusted equity ratio for 2015 and 2014 is, as follows:

December 31,

2015 December 31,

2014 Debt (see note 26) 86,282 115,821 Cash and cash equivalents (see note 22) (412) (4,709) Net debt 85,870 111,112 Total Equity 142,739 99,098 Amounts accumulated in equity relating to cash-flow hedges (see

note 24)

164

(749) Adjusted Capital 142,903 98,349 Debt-to-adjusted capital ratio 0.60 1.13 In accordance with the requirements of Art. 252 of the Commerce Act, the Company should maintain the value of its net assets above the value of its registered share capital. As at December 31, 2015 and 2014 the Company adheres to these requirements, as its net assets amount to BGN 142,739 thousand and BGN 99,098 thousand, respectively, and the registered share capital amounts to BGN 17,953 thousand. The Company manages its capital in a proper manner in order to ensure its activity as a going concern. As at December 31, 2015 and 2014 the Company’s current liabilities exceed the current assets by BGN 12,505 thousand and BGN 1,607 thousand, respectively. Management of the Company believes that in the future it could sustain its normal activities through self-financing and increase of the operating efficiency.

32 Related parties Related parties of the Company are:

1. Аlumetal АD – Sofia – Parent company; 2. FAF Metal Sanayj Ve Ticaret AS – Istanbul, Turkey – entity with significant influence over

the Company through direct and indirect participation in the Company’s share capital; 3. Euromet ЕООD – Shumen – Subsidiary; 4. Ferroal Limited – Nassau, Bahamas – controlling shareholder of the Parent company.



32 Related parties (continued)

The main transactions with related parties during 2015 and 2014 are as follows:

December 31,

2015 December 31,

2014 Parent company Accrued interest on loans received 181 197 Interest paid on loans received 113 558 Controlling shareholder in the Parent company Accrued interest on loans received 28 32 Entity with significant influence over the Company Services received 21 21 Subsidiaries Interest on loans granted 150 150 There are no unusual terms associated with these transactions or variances from the average market prices contracted with third parties under the same conditions. The outstanding accounts receivable from related parties include:

December 31, 2015

December 31, 2014

Subsidiaries Euromet EOOD – trade receivable (note 21) 5 5 Euromet EOOD – loans granted (note 19) 5,793 5,644 Total receivables from related parties 5,798 5,649 The outstanding amounts payable to related parties are as follows:

December 31,

2015 December 31,

2014

Controlling shareholder of the Parent company Ferroal Limited – trade loan received (note 26) 1,465 1,440 Parent company Alumetal AD – trade loans received (note 26) 6,449 6,378 Entities with significant influence over the Company FAF Metal (note 28) 6 13 Total payables to related parties 7,920 7,831 The remuneration of key management includes only short-term benefits, which as at December 31, 2015 and 2014 are at the amount of BGN 2,107 thousand and BGN 2,998 thousand, respectively. The outstanding payables to key management as at December 31, 2015 and 2014 amount to BGN 208 thousand and BGN 188 thousand, respectively.



33 Contingent liabilities

At December 31, 2015 the Company has an outstanding bank guarantee at the amount of EUR 4,000 thousand, issued on behalf of the Company by a Bulgarian bank as a collateral to a lease liability of the Company. The validity term of the guarantee expires on the maturity date of the lease amount – on March 31, 2018. Pursuant to the signed agreement, the bank guarantee amount shall be reduced proportionately to each payment transaction, that is performed by the bank in favour of the lessor. As at December 31, 2015 the amount of the bank guarantee obligation is EUR 3,223 thousand. The Company has two Letters of credit in Bulgarian banks in favour of suppliers at the amount of USD 40 thousand and EUR 115 thousand with maturity terms, till January 10 and March 10, 2016, respectively. .

33 Events after the date of the financial statements In 2016, a Letter of credit is paid by the Company at the amount of USD 40 thousand. The maturity term of the second Letter of credit has been prolonged from March 10 to April 22, 2016, and the amount is reduced from EUR 115 thousand to EUR 86 thousand. Until the date of these financial statements the Company has renegotiated a short-term loan with a Bulgarian bank (Loan B - see note 26), as the loan maturity term is prolonged for a new one-year period, and the nominal interest rate and management and processing fees are updated.

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