alcomet.italcomet.it/.../2013/09/Alcomet-AD-2011-FS_AR_ENG.docx · Web viewAlcomet AD. NOTES TO THE...

ALCOMET AD

FINANCIAL STATEMENTS

December 31, 2011

(Unofficial translation of the original in Bulgarian)

CONTENTS:

GENERAL INFORMATION...................................................................................................................2INDEPENDENT AUDITOR’S REPORT................................................................................................3INCOME STATEMENT..........................................................................................................................5STATEMENT OF COMPREHENSIVE INCOME.................................................................................6STATEMENT OF FINANCIAL POSITION...........................................................................................7CASH FLOW STATEMENT...................................................................................................................8STATEMENT OF CHANGES IN EQUITY............................................................................................9NOTES TO THE FINANCIAL STATEMENTS...................................................................................10

ALCOMET AD

GENERAL INFORMATION

Supervisory BoardFikret InceFikret KuzucuSemih KorayBekir YucelHristo Todorov DechevOsman Kerem KuzucuBranimir Mladenov Mladenov

Managing BoardHuseyin YorucuHuseyin Umut InceSemih BaturayNeli Kancheva TonchevaIvan Hristov PapazovMehmet Dedeoglu

Registered OfficeShumen 9700Second Industrial Zone

SolicitorsKatya ObretenovaValentin Vasilev

BankersUniCredit Bulbank AD, SofiaSociete Generale Expressbank ADBNP Paribas SA, branch SofiaBNP Paribas (Swisse) SA,GenevaMKB Unionbank ADD Commerce Bank ADCommercial Bank Allianz AD Sofia T.C. Ziraat Bankasi Varna branch

AuditorsDFK AndA Consulting Ltd. 63G, Bulgaria Blvd, floor 3Sofia 1680Bulgaria

2

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 separate 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, 2011, and the income statement, 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.

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, 2011, 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 31 December 2011 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 5, 2012.

The original auditor’s report has been signed by Dimitar Bazlyankov, Registered Auditor and Antoaneta Bazlyankova Managing Director at DFK AndA Consulting Ltd., on March 5, 2012.

This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 4

ALCOMET AD

INCOME STATEMENTfor the year ended December 31, 2011All amounts in thousand of BGN, unless otherwise stated

Notes

Year ended December 31,

2011


2010

Revenue 4 267,508 225,564Cost of sales 5 (240,137) (201,194)Gross margin 27,371 24,370Other income, net 6 6,166 4,203

Administrative expenses 7 (8,498) (6,003)Distribution expenses 8 (8,646) (7,226)Other expenses 9 (4,108) (3,199)

Exchange rate gain/ (loss), net 11 83 (537)Interest expenses, net 12 (3,626) (3,304)Other financial incomes /(expenses), net 13 (365) 176

Profit before taxation 8,377 8,480

Income tax expense 14 (470) (868)

Profit for the period 7,907 7,612

Earning per share (BGN) 15 0.44 0.42

Approved for issuance by the Managing Board of Alcomet AD on March 5, 2012.

Huseyin Yorucu (signed)

Huseyin Umut Ince (signed) Semih Baturay (signed) Teodora Petrova (signed)Executive Directors Financial Director Chief Accountant

Antoaneta Bazlyankova (signed) Dimitar Bazlyankov (signed)Managing Director Registered AuditorDFK AndA Consulting Ltd

March 5, 2012, Sofia

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


ALCOMET AD

STATEMENT OF COMPREHENSIVE INCOMEfor the year ended December 31, 2011All amounts in thousand of BGN, unless otherwise stated

Notes


2011


2010

Profit for the period 7,907 7,612

Other comprehensive incomeDecrease of revaluation reserve from impairment

of property, plant and equipment 16 (101) -Deferred tax effect on revaluation of property,

plant and equipment 10 -Adjustment of the hegding reserve for the

(gain)/loss from forward contracts, transferred to the initial carrying amount of the hedged items 24 (1,782) (1,590)

Tax effect on the adjustment of the hegding reserve for the gain/(loss) from forward contracts, transferred to the initial carrying amount of the hedged items 24 178 159

Unrealized (loss)/profit on forward conctracts, recognized in the hedging reserve 24 (738) 1,782

Tax effect on the unrealized profit on forward conctracts, recognized in the hedging reserve 24 74 (178)

Total other comprehensive income for the period, net of tax (2,359) 173

TOTAL COMPREHENSIVE INCOME for the period 5,548 7,785








ALCOMET AD

STATEMENT OF FINANCIAL POSITIONas of December 31, 2011All amounts in thousand of BGN, unless otherwise stated

NotesDecember 31,

2011December 31,

2010ASSETSNon-current assets

Property, plant and equipment 16 108,296 109,315Intangible assets 17 656 6Investment property 18 4,935 4,935Financial assets 19 5,098 3,232Derivative financial instruments 24 35 -Deferred tax assets 14 198 117

119,218 117,605Current assets

Inventories 20 38,903 27,528Trade and other receivables 21 42,169 47,980Derivative financial instruments 24 22 1,782Cash and cash equivalents 22 2,497 4,256

83,591 81,546

TOTAL ASSETS 202,809 199,151

EQUITY AND LIABILITIESCapital and reserves

Share capital 23 17,953 17,953Share premium - 1,500Legal reserve 23 1,795 86Revaluation reserve 57,191 58,038Hedging reserve 24 (664) 1,604Accumulated profit 16,281 8,937

92,556 88,118Non-current liabilities

Retirement benefits obligation 25 140 164Long-term borrowings 26 24,275 19,745Derivative financial instruments 24 - 34Deferred tax liabilities 14 5,418 6,291

29,833 26,234Current liabilities

Trade and other payables 27 13,169 10,550Short-term borrowings 26 65,766 72,725Derivative financial instruments 24 738 12Income tax liability 28 51 719Accruals 29 696 793

80,420 84,799

TOTAL EQUITY AND LIABILITIES 202,809 199,151




Antoaneta Bazlyankova (signed) Dimitar Bazlyankov (signed)Managing Director Registered AuditorDFK AndA Consulting LtdMarch 5, 2012, Sofia



ALCOMET AD

CASH FLOW STATEMENTfor the year ended December 31, 2011All amounts in thousand of BGN, unless otherwise stated


2011


2010Cash flows from operating activities

Profit before taxation 8,377 8,480Adjustments for:Depreciation of property, plant and equipment 9,350 8,683Amortization of intangible assets 6 37Net book value of disposed assetss and impairment of assets

обезценка на активи161 216

Profit on disposal of property, plant and equipment (18) (22)Receivables and payables written-off, net (1) 310Income from dealing with securities (209) (241)Interest expense, net 3,626 3,304Changes in accruals and retirement benefits obligation (173) (534)Exchange rate income (350) (32)

20,769 20,201

Increase in inventory (11,375) (7,034)Decrease /( increase) in current accounts receivable 4,321 (17,915)Increase /( decrease) in current liabiities 4,110 (130)

Cash, generated from /( used in) operating activities 17,825 (4,878)

Interest received 8 5Interest paid (3,831) (3,179)Income tax paid (1,111) (66)Dividends paid (1,108) (429)

Net cash, generated from /( used in) operating activities 11,783 (8,547)

Cash flows from investing activitiesPurchase of property, plant and equipment and intangible assets (6,677) (3,180)Payments for investment property modernization - (144)Proceeds from sales of property, plant and equipment 15 25

Net cash used in investing activities (6,662) (3,299)

Cash flows from financing activitiesProceeds from borrowings 264,865 232,014Repayments of borrowings (271,646) (218,365)Payments of finance lease obligations (79) (94)

Net cash, (used in)/ generated from financing activities (6,860) 13,555

Net (decrease)/ increase in cash and cash equivalents (1,739) 1,709Cash and cash equivalents at the beginning of the period 4,225 2,516Cash and cash equivalents at the end of the period (see note 22) 2,486 4,225




Antoaneta Bazlyankova (signed) Dimitar Bazlyankov (signed)Managing Director Registered AuditorDFK AndA Consulting LtdMarch 5, 2012, Sofia



ALCOMET AD

STATEMENT OF CHANGES IN EQUITYfor the year ended December 31, 2011All amounts in thousand of BGN, unless otherwise stated

Sharecapital

Sharepremium

Legal reserve

Revaluation reserve

Hedging reserve

Accumulated profit Total

Balance at December 31, 2009 17,953 1,500 - 58,101 1,431 1,777 80,762

Changes in equity for 2010 Allocation to legal reserve - - 86 - - (86) -Dividends - - - - - (429) (429)Revaluation reserve of

property, plant and equipment disposed - - - (63) - 63 -

Comprehensive income for the period - - - - 173 7,612 7,785

Balance at December 31, 2010 17,953 1,500 86 58,038 1,604 8,937 88,118

Changes in equity for 2011

Allocation to legal reserve - (1,500) 1,709 - - (209) -

Dividends - - - - - (1,110) (1,110)Revaluation reserve of

property, plant and equipment disposed - - - (756) - 756 -Comprehensive income for

the period - - - (91) (2,268) 7,907 5,548

Balance at December 31, 2011 17,953 - 1,795 57,191 (664) 16,281 92,556








ALCOMET AD

NOTES TO THE FINANCIAL STATEMENTSfor the year ended December 31, 2011All 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, 2011 and 2010 the structure of the share capital of the Company is as follows:

December 31, 2011

December 31, 2010

Alumetal AD 73.25% 73.25%FAF Metal Sanayj Ve Ticaret AS, Турция 16.86% 16.86%ZUPF Allianz Bulgaria 2.45% 2.25%Other 7.44% 7.64%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, and 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 - 36 thousand tons and extrusion workshop - 17 thousand tons.


ALCOMET AD

NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)for the year ended December 31, 2011All 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 (EU).

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 2011 and applicable for the activities of the Company. All changes in IFRS, effective for 2011, 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, 2011.

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 2011:

Standard or interpretation ,date of revision and effective date

Name of the standard or interpretation

Effect on the Company’s activity

Revisions of IFRS 1, restructured January 2010, effective for annual periods beginning on or after July 1, 2010

First time adoption of IFRS – Limited Exemption from Comparative IRFS 7 Disclosures for First-time Adopters

No effect on the Company’s financial statements

IAS 24, revised November 2009, effective for annual periods beginning on or after January 1, 2011

Related Party Disclosures – revised definition of related parties


IAS 32, revised 2009, effective for annual periods beginning on or after February 1, 2010

Financial Instruments: Presentation – amendments relating to classification of rights issues


ALCOMET AD


2 Basis for preparation of the financial statements (continued)

2.1 Financial reporting framework (continued)

2.1.1 Standards and Interpretations effective in the current period (continued)



Effect on the Company’s activity

IFRIC 14, revised November 2009, effective for annual periods beginning on or after January 1, 2011

IAS 19 – the Limit on a Defined Benefit Asset, Minimum Funding Requirements and their Interaction - amendments regarding the recognition as assets of some prepayments for minimum funding contributions


IFRIC 19, effective for annual periods beginning on or after July 1, 2010

Extinguishing Financial Liabilities with Equity Instruments


Improvements to IFRS, issued in May 2010

Annual IFRS improvements No effect on the Company’s financial statements

2.1.2 Standards and Interpretations adopted by the Commission, not yet effective



Status of adoption by the EU Commission

IFRS 9, original issue November 2009 and subsequent amendments to IFRS 9 and IFRS 7, issued in December 2011, effective for annual periods beginning on or after January 1, 2015

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

The endorsement is postponed

Deferred tax: Recovery of underlying assets (Amendments to IAS 12), issued in December 2010, effective for annual periods on or after January 1, 2012

Limited scope amendments Proposed for adoption by the Commission, expected adoption in Q2 2012

Amendments to IFRS 7 Financial instruments, issued in October 2010, effective for annual periods on or after July 1, 2011

Amendments enhancing disclosures about transfers of financial assets

Adopted by the EU Commission


ALCOMET AD




2.1.2 Standards and Interpretations adopted by the Commission, not yet effective (continued)




Amendments to IFRS 1, issued in December 2010, effective for annual periods beginning on or after July 1, 2011

First time adoption of IFRS – Replacement of 'fixed dates' for certain exceptions with 'the date of transition to IFRSs'; additional exemption for entities ceasing to suffer from severe hyperinflation

Proposed for adoption by the Commission, expected adoption in Q2 2012

IFRS 10, issued in May 2011, effective for annual periods beginning on or after January 1, 2013

Consolidated Financial Statements

Will be proposed for adoption by the Commission in Q1 2012, expected adoption in Q3 2012


Joint Arrangements Will be proposed for adoption by the Commission in Q1 2012, expected adoption in Q3 2012


Disclosure of Interests in Other Entities



Fair Value Measurement Will be proposed for adoption by the Commission in Q1 2012, expected adoption in Q3 2012

IAS 27, issued in May 2011, effective for annual periods beginning on or after January 1, 2013

Separate Financial Statements Will be proposed for adoption by the Commission in Q1 2012, expected adoption in Q3 2012


ALCOMET AD








IAS 28, issued in May 2011, effective for annual periods beginning on or after January 1, 2013

Investments in Associates and Joint Ventures


Amendments to IAS 1, issued in June 2011, effective for annual periods beginning on or after July 1, 2012

Presentation of Financial Statements – Amendments to revise the way other comprehensive income is presented

Proposed for adoption by the Commission, expected adoption in the Q1 2012

Amendments to IAS 19, issued in June 2011, effective for annual periods beginning on or after January 1, 2013

Employee Benefits – amendments, resulting from the Post-Employment Benefits and Termination Benefits projects


Amendments to IFRS 7, issued in December 2011, effective for annual periods beginning on or after January 1, 2013 and interim periods within these periods

Financial Instruments: Disclosures— Amendments enhancing disclosures about offsetting of financial assets and financial liabilities


Amendments to IAS 32, issued in December 2011, effective for annual periods beginning on or after January 1, 2014

Financial Instruments: Presentation— Amendments to application guidance on the offsetting of financial assets and financial liabilities


IFRIC 20, issued in October 2011, effective for annual periods beginning on or after January 1, 2013

Stripping costs in the Production Phase of a Surface Mine



ALCOMET AD


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



The more significant changes in the above-mentioned standards refer mainly to IFRS 10 Consolidated Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interest in Other Entities, IAS 27 Separate Financial Statements, IAS 28 Investments in Associates and Joint Ventures. These amendments do not affect the Company, as it does not prepare consolidated financial statements (see note 19) and has not planned undertaking of engagements for joint ventures.

IFRS 13 Fair Value Measurement: IFRS 13 defines fair value, sets out in a single IFRS a framework for measuring fair value and requires disclosures about fair value measurements. This standard is applicable to annual reporting periods beginning on or after January 1, 2013. Entities may apply IFRS 13 to an earlier accounting period, but if doing so they must disclose the fact. Application is required prospectively as of the beginning of the annual reporting period in which the IFRS is initially applied from the respective entity. Comparative information need not be disclosed for periods before initial application.

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, the impact of which has not yet been completely evaluated.

During 2011 the Company has not elected early adoption of standards, revisions and interpretations, effective for annual periods beginning on or after January 1, 2012.

2.2 Accounting convention

The accompanying separate financial statements have been prepared on the historical cost basis modified with subsequent revaluation to fair value of some property, plant and equipment, investment property and derivative financial instruments as further described in notes 3.7, 3.9 and 3.12 below.

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.


ALCOMET AD


3 Definition and valuation of the financial statements items

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.

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 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.

Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use are complete.


ALCOMET AD


3 Definition and valuation of the financial statements items (continued)

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 for the period in which they arise.

3.5 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

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 income is accrued.

Unused paid annual leaves accruals

As of the reporting period end, the Company recognizes as liability the non-discounted amount of the estimated expenses on paid leaves, expected to be paid to employees during the following reporting periods as compensation to their labor in the previous reporting period, as well as the respective to these incomes expenses on social security contributions

Long-term employee benefits

Defined contribution plans

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 employee 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.


ALCOMET AD



3.5 Employee benefits (continued)

Defined benefit plans

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 is equal to the net present value of the defined retirement benefits liability as of the date of the statement of the financial position less any adjustments for unrecognized actuarial gains/losses and expenses for past service cost. 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 similar maturity. The cumulative unrecognized actuarial gains and losses at the end of the previous reporting period in excess of 10 % of the present value of the defined benefits obligation are recognized on the basis of the expected average remaining working lives of the employees participating in that plan (corridor approach).

The retirement benefits obligation is recognized and reported in the income statement during the period of the respective employee service. Past service cost is 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 benefit liability of the Company.

3.6 Taxation

According to the Bulgarian tax legislation, the Company is subject to corporate income tax. The rate for corporate income tax for 2011 and 2010 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.


ALCOMET AD



3.6 Taxation (continued)

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.

The carrying amount of deferred tax assets is reviewed at each year end 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 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 the initial recognition, the land and buildings and plant and equipment are measured at revalued amount, which is their fair value as of the date of revaluation, less accumulated depreciation and any impairment losses.

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.

A valuation of property, plant and equipment and assets under construction as at December 31, 2008 was performed by a licensed appraiser. A valuation of separate groups of assets from property, plant and equipment as at December 31, 2009 was performed by the same appraiser, as well as a valuation of the assets under construction as at December 31, 2009, 2010 and 2011.


ALCOMET AD



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 from 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 notes 3.9 and 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 in years of the asstes are as follows::

2011 2010

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

Depreciation is not provided for land, fully depreciated assets and assets in process of acquisition or construction.

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.

European Union Emissions Trading Scheme and emmission 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 emmissions 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 emmissions of greenhouse gases are not depreciated.

As of each reporting period end, 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 the statement of comprehensive income (in the financial result for the year).


ALCOMET AD



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. (see note 18).

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 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.

3.11 Impairment of property, plant and equipment, intangible assets and investment property

At the reporting period end, 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.

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.


ALCOMET AD



3.11 Impairment of property, plant and equipment, intangible assets and investment property (continued)

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.

3.12 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 removed 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.

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: financial assets available for sale; trade and other 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.

Impairment of financial assets

As of the financial statements date 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.


ALCOMET AD



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 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. 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 as profit or loss and is stated as a decrease of the item, in which the impairment has been previously recorded.

The Company’s financial instruments include cash on hand and cash at bank accounts, equity investments, loans granted, receivables, payables, borrowings and derivatives.

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 each reporting period end. The fair value of such forward contracts is determined by reference to the current prices of similar contracts.

The portion of the gain or loss on the forward contracts that are determined to be effective hedge is recognized directly in equity. The gain or losses that are recognized in equity are transferred to the income statement in the same period, in which the hedged transaction affects the net profit or loss. Hedge accounting is discontinued when the forward contract expires, is sold, terminated or exercised.

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.


ALCOMET AD




Derivative financial instruments (continued)

The effective interest rate method is a method of calculating the amortized cost of a financial asset or a financial liability (or group of financial assets or financial liabilities) and of allocating the interest income or interest expense 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 financial liability.

The Management believes that the carrying amount of such financial instruments approximates their fair value. Fair value for this purpose is defined as the amount for which an asset can be exchanged, or a liability settled, between knowledgeable and willing parties in an arm’s length transaction.

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 negotiated interest rate.

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. The amortized cost of the current receivables, which will be settled in the normal credit term, 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. The amortized cost of the of the current payables, which will be settled in the normal credit term, approximates their nominal value.


ALCOMET AD




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.

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. The Company’s borrowings are contracted with a floating interest rate and thus expose the Company to possible interest rate risk (see note 27).

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.

3.12.8 Foreign currency risк

The Company enters into international transactions related mainly to the purchases of raw materials, sales of finished goods and loans (note 3.12.5). 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.


ALCOMET AD




3.12.9 Liquidity risк

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.

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 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 3.11), fair value of investment property (note 3.9), fair value of derivatives (note 3.12) and the retirement benefits obligation (note 3.5).


ALCOMET AD


4 Revenue

Revenue can be analyzed by markets as follows:


2011


2010

Export 246,126 210,439Domestic 21,382 15,125

Total revenue 267,508 225,564

Revenue can be analyzed by products as follows:


2011


2010

Foils 98,761 95,042Strip and sheets 85,437 63,863Extrusion, pipes and other 83,310 66,659

Total revenue by products 267,508 225,564

5 Cost of sales

Cost of sales consists of the following:Year ended

December 31, 2011


2010

Materials, fuels and electricity 222,866 185,149Depreciation 8,397 7,728Personnel costs 8,663 7,839Other 211 478

Total cost of sales 240,137 201,194

Cost of sales can be analyzed by products as follows:


2011


2010

Foils 81,336 79,860Strip and sheets 81,460 61,139Extrusion, pipes and other 77,341 60,195

Total cost of sales by products 240,137 201,194


ALCOMET AD


6 Other income, net

Other income, net consists of the following:Year ended

December 31, 2011


2010

Sales of materials 4,964 3,287Sales of services 289 194Payables written-off 219 130Sales of insurances 196 257Profit on sales of allowances for emmissions of greenhouse gases 130 -Income from rents 119 100Profit on sales of property, plant and equipment 18 22Sales of goods 1 98Other 230 115

Total other income, net 6,166 4,203

In 2011 the Company sold 6,610 tonns EU Allowances for emmissions of greenhouse gases from the quotas received under the National plan(see note 17).

7 Administrative expenses

Administrative expenses consist of the following:Year ended

December 31, 2011


2010

Personnel expenses 4,124 2,522Depreciation and amortization 613 511Repairs and maintenance 516 396Insurance expenses 510 375Transportation and business travel 413 389Security 400 398Taxes 331 330Donations 239 106Consulting services 202 151Materials 152 65Ecology 136 34Communication expenses 113 131Rents 58 13Receivables written-off 55 232Carrying amount of property, plant and equipment written-off 27 32Fines and tax audits expenses - 93Other 609 225

Total administrative expenses 8,498 6,003

Expenses for services, provided by Company’s registered auditor and presented as part of the administrative expenses for 2011 and 2010 amount to BGN 50 thousand and BGN 52 thousand, respectively.


ALCOMET AD


8 Distribution expenses

Distribution expenses can be analyzed as follows:Year ended

December 31, 2011


2010

Transportation 6,160 4,947Sales commissions 801 522Personnel expenses 594 570Insurances 471 229Impairment of trade receivables and claims paid 278 358Advertisement expenses 163 354Materials 75 17Depreciation and amortization 20 11Other 84 218

Total distribution expenses 8,646 7,226

9 Other expenses

Other expenses are as follows:Year ended

December 31, 2011


2010

Cost of materials and services sold 3,843 2,942Impairment of property, plant and equipment 134 184Cost of used EUA and CER allowances for emmissions of

greenhouse gases 130 -Cost of goods sold 1 73

Total other expenses 4,108 3,199

10 Operating expenses by nature

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


2011


2010

Materials 230,834 192,366Personnel costs 13,509 11,318Depreciation 9,356 8,720Hired services 10,229 9,001Other expenses 1,950 1,634Changes in inventories of finished goods and work in progress (8,597) (8,616)Total 257,281 214,423

Сost of sales 240,137 201,194Administrative expenses 8,498 6,003Distribution expenses 8,646 7,226Total 257,281 214,423


ALCOMET AD


11 Exchange rate gain/(loss), net

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


2011


2010

Exchange rate gain 778 315Exchange rate loss (695) (852)

Total exchange rate gain/(loss), net 83 (537)

12 Interest expenses, net

Interest expenses, net include the following:


2011


2010

Interest expense on loans (3,835) (3,512)Interest income 261 260Financial costs on retirement benefits obligation (52) (52)

Total interest expenses, net (3,626) (3,304)

13 Other financial gains/(losses), net


2011


2010

Gain from derivative financial instruments 103 443Bank charges (677) (508)Gain arising from transactions with securities 209 241

Total other financial gains net (365) 176

Gain arising from transactions with securities are due to repayments of principal and interest related to the ZUNK loan (see note 26).


ALCOMET AD


14 Income taxes

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

December 31, 2011


2010Deferred tax assets:

Accrual for unutilized paid leaves and provision for retirement benefits obligation 83 94

Derivative financial instruments 74 -Receivables written-off 41 23

Total deferred tax assets 198 117

Deferred tax liabilities:Derivative financial instruments - 178Investment property 248 248Property, plant and equipment 5,170 5,865

Total deferred tax liabilities 5,418 6,291

Total deferred tax liabilities, net 5,220 6,174

A reconciliation of the effective tax rate is provided in the table below:


2011


2010

Profit before taxation 8,377 8,480Statutory tax rate 10% 10%

Income tax (838) (848)

Tax effect of permanent differences (5) (20)Tax effect from deferred tax assets recognized in the current

period, not recognized during prior periods 373 -

Recorded tax expense (470) (868)

Effective tax rate 5.61% 10.24 %

Income tax expense is as follows:Year ended

December 31, 2011


2010

Current tax expense on taxable profit (1,162) (1,008)

Deferred tax income relating to the origination and reversal of temporary differences during the current period 692 140

Income tax expense (470) (868)


ALCOMET AD


14 Income taxes (continued)

The deferred tax for 2011 and 2010, charged directly to equity is at the amount of BGN 262 thousand and BGN 19 thousand, respectively (see the Statement of Comprehensive Income). In 2011 the Company recognized deferred tax assets not recognized in prior periods, relating to impairment of property, plant and equipment at the amount of BGN 373 thousand.

15 Earnings per shareEarnings per share are as follows:


2011


2010

Average number of shares 17,952,959 17,952,959Profit for the period (BGN’000) 7,907 7,612

Earnings per share (BGN) 0.44 0.42

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

Land andBuildings

Plant andEquipment

Vehiclesand other

Assets under construction Total

Cost or Revalued amount

Balance at December 31, 2009 36,835 116,846 2,095 19,672 175,448Acquisitions - 464 265 4,355 5,084Disposals - (59) (340 (36) (435Transfers 172 14,413 50 (14,635) -

Balance at December 31, 2010 37,007 131,664 2,070 9,356 180,097Acquisitions - 338 185 8,072 8,595Disposals - (391) (90 (27) (508Transfers 404 804 - (1,208) -

Balance at December 31, 2011 37,411 132,415 2,165 16,193 188,184

Accumulated depreciation and impairment

Balance at December 31, 2009 (10,579) (50,552) (1,124 - (62,255Depreciation for the period (1,106) (7,321) (256 - (8,683Disposals - 60 280 - 340Impairment - - - (184) (184

Balance at December 31, 2010 (11,685) (57,813) (1,100 (184) (70,782Depreciation for the period (1,112) (7,975) (263 (9,350Disposals 389 90 - 479Impairment - (101) - (134) (235

Balance at December 31, 2011 (12,797) (65,500) (1,273 (318) (79,888

Carrying amount atDecember 31, 2010 25,322 73,851 970 9,172 109,315

Carrying amount atDecember 31, 2011 24,614 66,915 892 15,875 108,296


ALCOMET AD


16 Property, plant and equipment (continued)

As of December 31, 2008 an independent valuation of the Company’s buildings and 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. As of December 31, 2009 valuation of separate groups of the Company’s property, plant and equipment including assets under construction was performed by the same licensed appraiser and as of December 31, 2009, 2010 2011 the appraiser has also determined the fair value of assets under construction.

Assets under construction include expenses amounting to BGN 4,369 thousand 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, 2011 and 2010 the recoverable amount of the secondary aluminum workshop and machinery and equipment were determined by independent appraiser, and, the impairment loss was assessed to BGN 134 thousand and BGN 184 thousand, respectively (see note 9).

As of December 31, 2011 and 2010 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, except for a group of machines for which impairment is charged at the amount of BGN 101 thousand. The amount is recognized directly in equity as a decrease of the revaluation reserve, because the impairment does not exceed the revaluation reserve for the respective assets.

As of December 31, 2011 and 2010 the capitalized borrowings costs in the acquisition cost of property, plant and equipment includes capitalized borrowing costs to the amount of BGN 107 thousand and BGN 12 thousand, respectively (see note 3.3).

Property, plant and equipment with gross book value at the amount of BGN 1,374 thousand are fully depreciated as of December 31, 2011 (2010 BGN 1,173 thousand).

Property, plant and equipment have been pledged as security of the Company’s borrowings (see note 26).


ALCOMET AD


17 Intangible assets

Intangible assets are as follows:

Allowances for emmissions of

greenhouse gasesSoftware Total

CostBalance at December 31, 2009 and 2010 - 185 185Acquisitions 130 656 786Disposals (130) - (130)

Balance at December 31, 2011 - 841 841

Accumulated amortizationBalance at December 31, 2009 - (142) (142)Amortization for the period - (37) (37)

Balance at December 31, 2010 - (179) (179)Amortization for the period - (6) (6)

Balance at December 31, 2011 - (185) (185)

Net book value atDecember 31, 2010 - 6 6

Net book value atDecember 31, 2011 - 656 656

As of December 31, 2011, under the National Plan for allocation of allowances for trade with emissions of greenhouse gases the Company received 59,076 tons EU Allowances for the period from 2008 to 2011. In 2011 the Company sold allowances for 6,610 tons from the received EUA quotas(see note 6) and bought CER allowances for emissions of greenhouse gases for 9,180 tons at the amount of BGN 130 thousand (see note 9). For the period from 2008 to 2011, according to the Annual reports on the emissions, prepared by the Company and verified by an authority, accredited by the Executive Agency Bulgarian Accreditation Service, 61,612 tons greenhouse gases were emmitted. As of December 31, 2011 as a result of the above mentioned, the Company has avaulabe 34 tons allowances for emissions of greenhouse gases.

Intangible assets with gross book value and respectively accumulated depreciation at the amount of BGN 185 thousand are fully depreciated as of December 31, 2011 (2010 BGN 80 thousand).

18 Investment property

December 31, 2011

December 31, 2010

Balance at beginning of year 4,935 4,791

Costs for investment property imrovements - 144

Balance at end of year 4,935 4,935

The investment properties comprise of a hotel and a restaurant in the village of Kranevo, Varna district.


ALCOMET AD


18 Investment property (continued)

As at December 31, 2011 and 2010 a revaluation of investment property has been made by Mr. Simeon Kutsarov, independent appraiser. The valuation conforms to the International Valuation Standards, and was arrived at by reference to market evidence of transaction prices for similar properties. As at December 31, 2011 and 2010 the revaluation of the Company’s investment property confirms that their fair value does not differ significantly from the carrying amount as at December 31, 2011 and 2010.

The Company recognized income from rental of investment property for 2011 at the amount of BGN 63 thousand (2010: BGN 54 thousand). Rental income from investment property is presented in other income, net. During the years ended December 31, 2011 and 2010 there have been no operating costs incurred with respect of investment property.

19 Financial assets

Financial assets consist of the following:December 31,

2011December 31,

2010

Long-term loan granted to a related party 5,092 4,839Short-term part of a long-term loan to a related party (note 21) - (1,613)

Equity investments 6 6

Total financial assets 5,098 3,232

As at December 31, 2011 and 2010 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 receivables as of December 31, 2011 include a principal and interest to the amount of BGN 2,300 thousand (2010: BGN 2,300 thousand) and BGN 2,792 thousand (2010: BGN 2,539 thousand), respectively, related to a loan granted to a related party. According to an annex dated January 15, 2009 the principal will be repaid at three equal six- monthly instalments till December 31, 2012, due to which as of December 31, 2010 the current portion, at the amount of BGN 1,613 thousand is included in trade and other receivables (see note 21). In 2011 an annex was signed to prolonge the repaiment of the full amount of the principal and interest due till December 31, 2013.

Interest is charged at 11 % per annum and is payable on the repayment date of the loan.


ALCOMET AD


20 Inventories

Inventories consist of the following:

December 31, 2011

December 31, 2010

Work in progress 15,834 11,368Materials 12,941 9,000Finished goods 7,023 6,780Dispatched materials 3,060 337Goods 45 43

Total inventories 38,903 27,528

Breakdown of work in progress is presented below:

December 31, 2011

December 31, 2010

Work in progress in rolling workshop 7,623 6,842Work in progress in casting workshop 4,805 3,102Work in progress in extruding workshop 3,403 1,402Work in progress in repair workshop 3 22

Total work in progress 15,834 11,368

Further breakdown of materials is presented below:

December 31, 2011

December 31, 2010

Raw materials 4,318 2,211Spare parts 3,049 2,419Moulds and samples 3,819 2,856Auxiliary materials 937 651Fuel and lubricants 306 228Packaging materials 50 144Other 462 491

Total materials 12,941 9,000

Further breakdown of finished goods is presented below:

December 31, 2011

December 31, 2010

Extruded products 2,605 2,142Rolled products 4,417 4,500Other 1 138

Total finished goods 7,023 6,780

As at December 31, 2011 and 2010 inventories up to the amount of EUR 30,000 thousand (work in progress, finished goods and goods for resale), have been pledged as security of the Company’s borrowings (see note 26).


ALCOMET AD


21 Trade and other receivables, net

Trade and other receivables, net, are as follows:December 31,

2011December 31,

2010

Trade receivables, gross 35,225 35,914Less impairment (163) -Trade recivables, net 35,062 35,914VAT refundable 5,694 8,997Advances to suppliers and prepayments 1,062 1,157Short-term portion of a long-term loan granted to a related party - 1,613Advances to personnel 312 259Customs receivables 28 7Receivables from related parties 5 5Other debtors 6 28

Total trade and other receivables, net 42,169 47,980

As at December 31, 2011 and 2010 trade and other receivables have been pledged as security of Company’s borrowings (see note 26).

22 Cash and cash equivalents

Cash and cash equivalents consist of the following:December 31,

2011December 31,

2010

Cash at banks 2,452 4,170Cash on hand 17 42Deposits 11 31Cash equivalents 17 13

Total cash and cash equivalents in the Statement of financial position

2,497 4,256

Less deposits (11) (31)Total cash and cash equivalents in the Cash Flow Statement 2,486 4,225

Deposits as at December 31, 2011 and 2010 include mainly amounts deposited in favor of customs relating to VAT and customs duties.

23 Capital and legal reserves

The Company’s share capital as at December 31, 2011 and 2010 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 capital 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.


ALCOMET AD


23 Capital and legal reserves (continued)

Disbursements from the reserve fund may be made only for covering losses. When the amount of the reseve fund exceed one-tenth of the Company’s share capital, the excess amount may be used for increase of the share capital.

In 2010 based on a decision of the Company’s General meeting of the shareholders a reserve fund at the amount of BGN 86 thousand was set up, and dividend was distributed at the amount of BGN 429 thousand from the realized in 2009 profit at the total amount of BGN 856 thousand. The outstanding of BGN 341 thousand is not distributed. In 2011 based on a decision of the Company’s General meeting of the shareholders a reserve fund at the amount of BGN 209 thousand was set up, and dividend was distributed at the amount of BGN 1,110 thousand from the realized in 2010 profit amounting to BGN 7,612 thousand. The outstanding of BGN 6,293 thousand is not distributed. Based on a decision of the Company’s General meeting of the shareholders the premiums from the emission of shares at the total amount of BGN 1,500 thousand are transferred to the legal reserve.

24 Derivative financial instruments

Derivative financial instruments consist of the following:

December 31, 2011

December 31, 2010

Cash flow hedge derivative financial (liabilities)/assets (738) 1,782

Fair value hedge derivative financial assets/(liabilities) 57 (46)

Including:Non-current derivative financial assets/(liabilities) 35 (34)

Current derivative financial assets/(liabilities) 22 (12)

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, 2011 the Company has outstanding forward contracts for sale of metal from January till December 2012. Under the terms of the forward contracts the Company will sell 9,575 tons of aluminum with contracted value of BGN 27,461 thousand.

From January 2012 till the date of the current financial statements the Company sold forward contracts for 4,975 tons of aluminum. The remaining 4,600 tons are expected to be realized until December 2012. The Company does not expect any deals that would not be finalized.


ALCOMET AD


24 Derivative financial instruments (continued)

As at December 31, 2011 and 2010 the Company has assessed the hedge as highly effective, and, as a result the losses on changes in fair value of hedging instruments have been reported as other comprehensive incomes as follows:


2011


2010

(Losses)/gains arising during the period (2,520) 192Adjustment for amounts transferred to the initial carrying amount of

the hedged items 1,782 1,590

Unrealized (losses)/gains on hedging at the end of the period (738) 1,782

Less: Tax effect 74 (178)

Total unrealized (losses)/gains on hedging at the end of the period, net of tax (664) 1,604

The Company has a foreign currency swap contract 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 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, 2011

December 31, 2010

Balance at the beginning of the period 46 489Gain from fair value hedges (103) (443)

Balance at the end of the period (57) 46

Less short-term portion 22 (12)

Long-term portion at the end of the period (35) 34

25 Retirement benefits obligation

The financial assumptions used for the calculation of the provision are as follows:

December 31, 2011

December 31, 2010

Discount rate 6% 6%Expected rate of salary increase for 2011 - 9%Expected rate of salary increase for 2012 7% 5%Expected rate of salary increase for 2013 2% 5%Expected rate of salary increase for 2014 2% 2%Expected rate of salary increase for per year, after 2014 2% 2%


ALCOMET AD


25 Retirement benefits obligation (continued)

As of December 2011, the demographic actuarial assumptions used are based on the following:

a) mortality of the Bulgarian population during the period 2008 - 2010 (2010: during the period 2000 – 2002), 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


2011


2010

18 – 30 years 13% 13%31 – 40 years 5% 5%41 – 50 years 3% 3%51 – 60 years 1% 1%over 60 years - -

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

December 31, 2011

December 31, 2010

Balance at the beginning of the period 164 219Current service cost 59 61Payments for the period (163) (188)Interest costs 52 52Actuarial loss recognized for the period 28 20

Balance at the end of the period 140 164

The retirement benefits obligation at December 31, 2011 and 2010 comprises of the following:

December 31, 2011

December 31, 2010

Benefits on attainment of retirement age 131 156Benefits on early retirement 9 8

Total retirement benefits obligation 140 164


ALCOMET AD


25 Retirement benefits obligation (continued)

The amount included in the statement of financial position arising from the Company’s retirement benefits obligation is as follows:

December 31, 2011

December 31, 2010

Present value of retirement benefits obligation 932 872Unrecognized actuarial loss (792) (708)

Total retirement benefits obligation 140 164

26 Borrowings

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

December 31, 2011

December 31, 2010

Short-term bank loans 61,613 66,571

Current portion of long-term bank loans 2,684 3,368Current portion of trade loans - 1,494Current portion of lease agreements 83 76Current portion of long-term debt to the State (ZUNK) 1,386 1,216

Total current portion of long-term loans 4,153 6,154

Long-term bank loans 12,984 8,160Long-term trade loans and lease agreements 9,076 8,101Long-term debt to the State (ZUNK) 2,215 3,484

Total long-term loans 24,275 19,745

Total loans 90,041 92,470


ALCOMET AD


26 Borrowings (continued)

Loans of the Company can be analysed as follows:

December 31, 2011Principal Interest Total

Bank loans - Long-term bank loans 12,984 - 12,984 - Current portion of long-term bank loans 2,684 - 2,684 - Short-term bank loans 61,613 - 61,613

Total 77,281 - 77,281

Trade loans and lease agreements - Long-term trade loans and lease agreements 7,154 1,922 9,076 - Current portion of lease agreements 83 - 83

Total 7,237 1,922 9,159

Debt to the State (ZUNK)

- Long-term debt 1,022 1,193 2,215 - Current portion of long-term debt 1,360 26 1,386

Total 2,382 1,219 3,601

Total loans 86,900 3,141 90,041

December 31, 2010Principal Interest Total

Bank loans - Long-term bank loans 8,160 - 8,160 - Current portion of long-term bank loans 3,356 12 3,368 - Short-term bank loans 66,571 - 66,571

Total 78,087 12 78,099

Trade loans - Long-term trade loans and lease agreements 6,257 1,844 8,101 - Current portion of long-term trade loans and lease

agreements 1,570 - 1,570

Total 7,827 1,844 9,671

Debt to the State (ZUNK)

- Long-term debt 2,321 1,163 3,484 - Current portion of long-term debt 1,178 38 1,216

Total 3,499 1,201 4,700

Total loans 89,413 3,057 92,470


ALCOMET AD



December 31, 2011 December 31, 2010Principal Interest Total Principal Interest Total

Bank loans

- Loan А 52 - 52 115 - 115 - Loan B 1 3,912 - 3,912 3,912 - 3,912 - Loan B 2 - - - 890 - 890 - Loan B 3 5,402 - 5,402 4,381 - 4,381 - Loan C 762 - 762 1,178 - 1,178 - Loan D 25,256 - 25,256 17,622 - 17,622 - Loan E 420 - 420 1,258 - 1,258 - Loan K 2,783 - 2,783 4,603 - 4,603 - Loan K 1 704 - 704 1,408 - 1,408 - Loan N 879 - 879 1,360 - 1,360 - Loan О - - - 391 - 391 - Loan P1 2,293 - 2,293 2,445 - 2,445 - Loan P2 978 - 978 867 - 867 - Loan R 6,670 - 6,670 2,189 12 2,201 - Loan S - - - 305 - 305 - Loan U 2,327 - 2,327 3,912 - 3,912 - Loan F 21,933 - 21,933 31,251 - 31,251 - Loan H 2,910 - 2,910 - - -

Total 77,281 - 77,281 78,087 12 78,099

Trade loans

- Loan G 1,300 1,300 1,300 - 1,300 - Loan J 5,735 1,922 7,657 5,735 1,843 7,578 - Loan I - - - 522 1 523 - Lease agreements 202 - 202 270 - 270Total 7,237 1,922 9,159 7,827 1,844 9,671

Debt to the State (ZUNK) 2,382 1,219 3,601 3,499 1,201 4,700Total loans 86,900 3,141 90,041 89,413 3,057 92,470

Loan А

On September 14, 2009 the Company concluded an agreement for a long-term bank loan (Loan A) with a Bulgarian commercial bank to the total amount of EUR 105 thousand, equal to BGN 205 thousand. The repayment is in 36 equal monthly installments payable for a three-year period, starting from September 30, 2009. As of December 31, 2011 and 2010 the outstanding liability in respect to the loan is EUR 27 thousand (BGN 52 thousand) and EUR 59 thousand (BGN 115 thousand), respectively. The loan is secured by a pledge contract between the Bank and a related party.


ALCOMET AD



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. 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 2,500 thousand for financing of bank guarantees and letters of credit and Sublimit B3 up to EUR 4,500 thousand for financing of contingent liabilities and working capital, including issuance of bank guarantees and letters of credit. According to annexes to the agreement from 2011 the total amount of the utilized facilities under the terms of the contracted sublimits could not exceed EUR 9,000 thousand and the term was prolonged up to May 31, 2012. The loan is secured by pledge on machinery and equipment, owned by the Company, with carrying amount at December 31, 2011 of BGN 2,733 thousand in respect of Sublimit B1, pledge on current and future receivables to 125 % of the utilized amount of Sublimit B2 and pledge on current and future inventories to 125 % of the utilized amount of Sublimit B3. As of December 31, 2011 and 2010 the total outstanding liability in respect to the loan is EUR 4,762 thousand (BGN 9,314 thousand) and EUR 4,695 thousand (BGN 9,183 thousand), respectively.

Loan C

On May 18, 2009 the Company concluded an agreement (Loan C) with a Bulgarian bank to the total amount of EUR 850 thousand. The loan purpose is financing and purchase of production and the collateral of the loan comprises of pledge on the machinery purchased with the loan with carrying amount as of December 31, 2011 of BGN 1,134 thousand. The repayment is in 48 equal monthly installments of EUR 17,7 thousand payable for a four-year period, starting from November 25, 2009. As of December 31, 2011 and 2010 the outstanding liability in respect to the loan is EUR 390 thousand (BGN 762 thousand) and EUR 602 thousand (BGN 1,178 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 2011 and 2010 according to annexes signed, the limit of the credit line was increased to EUR 15,000 thousand and EUR 10,000 thousand, respectively, and the maturity date of the loan has been prolonged up to March 31, 2012 and March 31, 2011, respectively. As at December 31, 2011 and 2010 the utilized portion of the loan amounts to EUR 12,913 thousand (BGN 25,256 thousand) and EUR 9,010 thousand (BGN 17,622 thousand), respectively. Collateral of the loan is a first ranking pledge on machinery and equipment and second ranking mortgage on land and buildings with carrying amount at December 31, 2011 of BGN 18,256 thousand and BGN 21,042 thousand, respectively.


ALCOMET AD



Loan L

On November 23, 2010 the Company entered into a long-term agreement for a revolving credit facility with a Bulgarian bank to be used for issuance of a bank guarantee upon lease contract payments, further described as Loan R. The limit of the credit facility is up to EUR 4,000 thousand. As at December 31, 2010 a bank guarantee is issued at the amount of EUR 4,000 thousand and term of validity to March 31, 2018. Collateral of the loan is a third ranking mortgage on properties of the Company and second ranking pledge on machinery and equipment with carrying amounts at December 31, 2011 of BGN 21,042 thousand and BGN 11,912, respectively.

Loan Е

On June 25, 2007 the Company entered into an agreement (Loan E) with a Bulgarian commercial bank for a long-term borrowing at the amount of EUR 1,500 thousand, with the purpose of financing and purchase of production equipment. The repayment is in 42 equal installments, the first payment is due on January 25, 2009 and the last on June 25, 2012. Collateral of the loan comprises of pledge on the machinery purchased with the loan, and of promissory note at the amount of EUR 1,500 thousand. As of December 31, 2011 and 2010 the outstanding amount of the facility is EUR 215 thousand (BGN 420 thousand) and EUR 643 thousand (BGN 1,258 thousand), respectively.

Loan К and К1

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 (see Loan F) and facility for working capital (Loan K). The credit limit is at the amount of EUR 3,000 thousand and the maturity term is to July 31, 2011. According to an annex to the agreement from 2011 the credit limit of the loan was increased to EUR 4,000 thousands and the maturity of the loan was prolonged to July 31, 2012. As of December 31, 2011 and 2010 the outstanding amount of the facility is EUR 1,423 thousand (BGN 2,783 thousand) and EUR 2,353 thousand (BGN 4,603 thousand), respectively.

On October 31, 2008 an anex to the agreement was signed and a credit sublimit K1 at the amount of EUR 1,500 thousand for the purchase of machinery and equipment was agreed. The sublimit is to be repaid at monthly installments amounting to EUR 30 thousand, first of which is due on October 28, 2008 and the final installment is due on March 31, 2011. In 2011 another annex was signed and the maturity was prolonged till July 31, 2012. As of December 31, 2011 and 2010 the outstanding amount of the credit sublimit is EUR 360 thousand (BGN 704 thousand) and EUR 720 thousand (BGN 1,408 thousand), respectively.

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 at December 31, 2011 of BGN 8,897 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.


ALCOMET AD



Loan N

On August 3, 2006 the Company entered into a bank loan agreement to the amount of EUR 1,700 thousand with the purpose of partial financing of due interest and earlier repayment of due principal under ZUNK loan. The loan is to be repaid in 83 monthly installments, first of which falling due on September 30, 2006 and the last one on July 30 2013. The collateral of the loan comprises of pledge on machinery and equipment, owned by the Company with carrying amount at December 31, 2011 of BGN 2,573 thousand, and as well as a guaranty contract with a related party for the amount of EUR 1,700 thousand. As at December 31, 2011 and 2010 the outstanding amount of the loan is EUR 449 thousand (BGN 879 thousand) and, EUR 695 thousand (BGN 1,360 thousand), respectively.

Loan O

On August 3, 2006 the Company entered into a bank loan agreement to the amount of EUR 1,280 thousand with the purpose of financing of modernization and increase in capacity of the casting production. The loan is to be repaid in 42 monthly installments, first of which falling due on February 28, 2008 and the last one – on July 30, 2011. As at December 31, 2011 the loan is completely repaid and as at December 31, 2010 the outstanding amount of the loan is EUR 200 thousand (BGN 391 thousand).

Loan S

On June 12, 2006 the Company entered into a bank loan agreement to the amount of EUR 1,935 thousand with the purpose of financing of the purchase of production machinery. The loan will be repaid in 46 monthly installments, first of which falling due on September 30, 2007 and the last one – on June 30, 2011. As at December 31, 2011 the loan is completely repaid and as at December 31, 2010 the outstanding amount of the loan amounts to EUR 156 thousand (BGN 305 thousand), respectively.

Loan U

On December 22, 2006 the Company entered into an agreement for a revolving credit (overdraft) limited to the amount of EUR 2,000 thousand for working capital purposes and payments of VAT. According to an annex to the agreement from 2011 the maturity of the loan is prolonged to September 11, 2012. The collateral comprises of a pledge of machinery, owned by the Company, with carrying amount as at December 31, 2011 of BGN 3,331 thousand. As at December 31, 2011 and 2010 the outstanding amount of the loan is EUR 1,190 thousand (BGN 2,327 thousand) and EUR 2,000 thousand (BGN 3,912 thousand), respectively.

Loan F

On October 31, 2007 the Company entered into an agreement with a foreign bank and its branch in Bulgaria for a revolving credit line (Loan F) and facility for working capital (see Loan K). The credit is limited to the amount of EUR 25,000 thousand and the maturity is to March 31, 2011. In 2011 an annex was signed and the credit limit is increased to EUR 30,000 thousand, and the maturity was prolonged till July 31, 2012. As at December 2011 and 2010 the outstanding amount of the loan is EUR 11,214 thousand (BGN 21,933 thousand) and EUR 15,978 thousand (BGN 31,251 thousand), respectively.


ALCOMET AD



Loans P1 and P2

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. The loan is utilized according to two sublimits – P1 and P2.

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 September 30, 2015. As at December 31, 2011 and 2010 the outstanding amount of the loan sublimit is EUR 1,172 thousand (BGN 2,293 thousand) and EUR 1,250 thousand (BGN 2,445 thousand), respectively.

Sublimit P2 is utilized as credit line limited to the amount of EUR 500 thousand. The term of payment of the sublimit is to September 30, 2015. As at December 2011 and 2010 the outstanding amount of the loan sublimit is EUR 500 thousand (BGN 978 thousand) and EUR 443 thousand (BGN 867 thousand), respectively.

Collateral of the credit is a mortgage on investment properties of the Company (in the village of Kranevo (see note 18) and a promissory note at the amount of EUR 1,925 thousand (BGN 3,765 thousand), issued by the Company and guaranteed by related parties.

Loan R

On October 7, 2010 the Company enters into contract agreement with foreign Supplier for the producing and delivery of production equipment at the total amount of EUR 7,462 thousand. On November 23, 2010 a tripartite agreement was signed between the Company (the Lessee), the Supplier and a Bulgarian lease company (the Lessor), and in accordance with the agreement the Lessor agrees to acquire the production equipment from the Supplier and to grant it to the Lessee upon conditions of a finance lease at the total amount of EUR 8,708 thousand. In accordance with the signed agreement the Lessor should pre-finance the production of the equipment at three installments, the first of which is at the amount of EUR 1,119 thousand (BGN 2,189 thousand) and is paid to the Supplier in December 2010. The remaining portion of the price for the equipment should be paid to the Supplier till June 10, 2012, when is the term for delivery and putting into operation of the equipment. The Company is obliged to interest of 5.3% annually in favor of the Lessor for the period of the pre-financing. After putting of the equipment into operation the Company will repay the lease obligation in 66 monthly lease installments, first of which falling due on July 10, 2012.

As at December 31, 2011 and 2010 the Company presented as Assets under construction and as a loan received (Loan R) the paid amounts for the pre-financing at the amount of EUR 3,410 thousand (BGN 6,670 thousand) and EUR 1,119 thousand (BGN 2,189 thousand), respectively. The accrued interests due for 2011 and 2010, amounting to EUR 61 thousand (BGN 119 thousand), are capitalized to the cost of the assets. Collateral of the loan is a bank guarantee for the term of the contract at the amount of EUR 4,000 thousand (see Loan L).


ALCOMET AD



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)to the 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, 2011 of BGN 2,908 thousand. As at December 31, 2011 the utilized portion of the loan is amounting to EUR 1,488 thousand (BGN 2,910 thousand).

Loan I

On June 25, 2000 the Company entered into an agreement with a related party for a trade loan for working capital purposes to total the amount of BGN 2,000 thousand. The collateral comprises of a promissory note amounting to BGN 2,300 thousand. As stated bellow on August 5, 2005 part of the Loan G at the amount of USD 7,650 thousand was transferred to Loan I and according to an agreement dated August 10, 2005 was converted to BGN and the loan amount was fixed to BGN 12,591 thousand. The maturity of the loan is to December 31, 2012 and the principal and interest accrued thereon will be paid in four equal semi-annual installments starting from June 30, 2011. In 2010 the Company has repaid before the term set, principle amounting to BGN 661 thousand and interest accrued amounting to BGN 72 thousand. As at December 31, 2011 the loan is completely repaid and as at December 2010 the outstanding amount of the loan is BGN 523 (principal BGN 522 thousand and interest BGN 1 thousand).

Loans G and J

On May 12, 2003 the Company concluded a long-term loan agreement with another related party to 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 (to Loan I). 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 2011 the payment date for the principal and interest due is December 31, 2015. As at December 31, 2011 and 2010 the outstanding liability of the loan amounts to EUR 665 thousand (BGN 1,300 thousand).

In 2002 the Company received from a related party (the same as in Loan I) 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). As described above on August 5, 2005 the parties have agreed and converted the liability from USD to EUR 2,932 thousand. According to annex from 2011 the payment date for principal and interest due is December 31, 2015. As at December 31, 2011 and 2010 the outstanding liabilities of the loan are to the amount of BGN 7,657 thousand (principal BGN 5,735 thousand and interest BGN 1,922 thousand) and BGN 7,578 thousand (principal BGN 5,735 thousand and interest BGN 1,843 thousand), respectively.


ALCOMET AD



Lease agreements

The Company has signed finance lease agreements for purchase of vehicles and production machinery with carrying amount as of December 31, 2011 and 2010 amounting to BGN 219 thousand (2010: BGN 260 thousand) and BGN 154 thousand (2010: BGN 161 thousand), respectively. The lease liabilities are repaid on monthly installments, the last of which is due in December 2014. Collateral of the Company’s liabilities on the finance lease agreements are documents, proving the ownership of the Lessor over the leased assets.

Finance lease liabilities as of December 31, 2011 and 2010 are as follows:

Total value ofMinimum lease payments

Present value of Minimum lease payments

December 31, 2011

December 31, 2010

December 31, 2011

December 31, 2010

No later than 1 year 91 88 83 76Later than 1 year and not later than 5

years 125 213 119 194Total 216 301 202 270Less: Deferred financial expenses (14) (31) - -Present value of minimum lease

liabilities 202 270 202 270Current portion of finance lease

liabilities 83 76Long-term portion of finance lease

liabilities 119 194

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 to the amount of USD 5,305,823 and interest to 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. In order to secure the ZUNK debt, property of the Company with a carrying amount as at December 31, 2011 of BGN 5,920 thousand, has been mortgaged. In 2011 the Company has repaid through government bonds and government securities principal and regular interest due, amounting to BGN 595 thousand and BGN 216 thousand, respectively. As at December 31, 2011, and 2010 the total amount of principal and interest is USD 2,382 thousand (BGN 3,601 thousand) and USD 3,191 thousand (BGN 4,700 thousand), respectively.

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 note 24).


ALCOMET AD


27 Тrade and other payables

Trade and other payables consist of the following:

December 31, 2011

December 31, 2010

Trade creditors 11,590 8,097Payables to employees 729 515Social security liabilities 271 259Payables to state budget 153 80Advances from customers 87 712Trade payables to related parties (see note 31) 18 24Other 321 863

Total trade and other payables 13,169 10,550

28 Income tax liability

December 31, 2011

December 31, 2010

Income tax liabilities/(receivables) at the beginning of the period 719 (288)Income tax accrued 1,162 1,008Income tax refunded - 297Income tax set-off with other taxes receivable (719) 65Income tax paid (1,111) (363)

Income tax liabilities at the end of the period 51 719

29 Accruals

Accruals are as follows:

December 31, 2011

December 31, 2010

Unutilized paid annual leaves’ charges 573 638Social and health security 123 155

Total accruals 696 793

Further analysis of movements of unutilized paid leaves’ charges is presented below:

December 31, 2011

December 31, 2010

Balance at the beginning of the period 793 1,220Accrued 18 40Utilized (115) (467)

Balance at the end of the period 696 793


ALCOMET AD


30 Financial instruments and risk management

The carrying amounts of financial assets and liabilities as at December 31, 2011 and 2010 by categories as defined in accordance with IAS 39 Financial instruments: Recognition and Measurement are presented in the tables below:

Financial assets:December 31,

2011December 31,

2010At amortized cost:

Interest bearing loans receivables (note 19) 5,092 4,839Trade and other receivables, net (note 21) 36,129 37,076

At fair value:Derivative financial instruments for hedging (note 24) 57 1,782

Total 41,278 43,697

Financial liabilities:December 31,

2011December 31,

2010At amortized cost:

Trade and other payables (note 27) 11,978 9,484Interest bearing loans liabilities (note 26) 89,839 92,200Finance lease liabilities (note 26) 202 270

At fair value:Derivative financial instruments for hedging (note 24) 738 46

Total 102,757 102,000

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 risк

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 and other price risk.

Foreign currency risк

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 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.


ALCOMET AD


30 Financial instruments and risk management (continued)

Financial assets and liabilities, denominated in USD, are presented in the table below:

December 31, 2011 December 31, 2010

Original currency

(in thousands)BGN’000

Original currency

(in thousands)BGN’000

Trade and other receivables 1,487 2,248 1,382 2,035

Total financial assets 1,487 2,248 1,382 2,035

ZUNK 2,382 3,601 3,191 4,700Trade and other payables 90 136 109 160

Total financial liabilities 2,472 3,737 3,300 4,860

Total financial liabilities, net 985 1,489 1,918 2,825

The sensitivity analysis of foreign currency risk is calculated at a change of 3 % of the USD/BGN exchange rate. The 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, 2011 the USD/BGN exchange rate had decreased by 3 %, and, with all other variables held constant, the profit after tax would have decreased by BGN 63 thousand (2010: BGN 93 thousand), mainly as a result of exchange rate differences arising from revaluation of trade receivables and liabilities, denominated in USD. The profit after taxation for 2011 is more sensitive to changes in the exchange rate of the USD as compared to the profit for 2010, mainly due to decrease in trade payables, denominated in USD. 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 91 % 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 (base rate, SOFIBOR, LIBOR, EURIBOR) with a certain mark-up, which varies between 2.3% and 4%. In 2011 and 2010 the loans with a floating interest rate are denominated in BGN and EUR.


ALCOMET AD



Interest rate risk (continued)

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.

As of the date of these financial statements the structure of the interest-bearing financial instruments is as follows:

December 31, 2011

December 31, 2010

Instruments with a fixed interest rate

Financial assets 5,092 4,839Financial liabilities 10,271 5,878

Instruments with a floating interest rate

Financial liabilities 79,770 86,592

If the interest rate increases or decreases by 2 %, the interest amount for a one-year-period could affect the income statement as follows:

Accrued interest

Interest amount at a possible fluctuation of the interest

rate withplus 2% minus 2%

Trade loans (fixed interest rate) 253 253 253

Total interest incomes 253 253 253

Bank loans 3,381 3,480 1,562Trade loans 239 355 123Lease agreements 12 16 8Debt to the State (ZUNK) (fixed interest rate) 203 203 203

Total interest expenses 3,835 4,054 1,896

Total interest expenses, net 3,582 3,801 1,643


ALCOMET AD



Price risк

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. 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 (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 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 2011 the Company generates approximately 82 % of its revenue through sales to customers with over 3-year business relationships with the Company, and another 15 % of the revenue to customers with over 2-year business relationships with the Company.

As at December 2011 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, 2011 and 2010 are presented in the tables below:

December 31, 2011Carrying

amountCredit

limit

ETF TRADE GMBH 1,493 2,640CEDO SP. Z.O.O. 2,686 3,618ALPHA METALL GMBH 1,229 1,760CUKI COFRESCO SPA 1,348 2,934ALUMECO S/A 445 978

Total: 7,201 11,930


ALCOMET AD



Credit risk (continued)

December 31, 2010Carrying

amountCredit

limit

CEDO SP. Z.O.O. 1,499 3,912FOR A FOLIENFABRIK 1,416 1,956CUKI COFRESCO SPA 1,570 2,347ETF TRADE GMBH 1,082 1,858RUL-LET AS 104 685

Total: 5,671 10,758

During 2011 the Company realizes 20 % of the revenue through sales to the five biggest customers (during 2010: 21,3 %). As at December 31, 2011 and 2010 trade receivables from these customers amount to BGN 7,201 thousand and BGN 5,671 thousand, respectively, that represent 21 % and 16 % of the total amount of trade receivables.

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

December 31, 2011

December 31, 2010

up to 30 days 24,847 26,505from 30 to 90 days 10,215 9,409

Total amounts receivable 35,062 35,914

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 a 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 11 % per annum (see 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. The main techniques in managing this risk include maintaining of sufficient monetary funds, successfully negotiating of adequate credit lines, preparing, analyzing and updating of cash flows forecasts.


ALCOMET AD



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, 2011 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 313 611 2,262 13,666 2,557 19,409Debt to the State (ZUNK) 13 36 1,471 2,239 - 3,759Short-term bank loans 5,892 36,818 20,018 - - 62,728Trade loans - - - 9,865 - 9,865Finance lease liabilities 8 16 67 125 - 216Trade payables 9,217 2,252 121 - - 11,590Advances received from clients 87 - - - - 87Trade payables to related parties 18 - - - - 18Other liabilities 283 - - - - 283

Total 15,831 39,733 23,939 25,895 2,557 107,955

December 31, 2010 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 liabilities 324 620 2,763 9,171 232 13,110Debt to the State (ZUNK) 20 40 1,364 3,632 - 5,056Short-term bank loans 1,764 16,833 49,276 - - 67,873Trade loans - - 1,733 8,134 - 9,867Finance lease liabilities 7 15 66 213 - 301Trade payables 8,097 - - - - 8,097Advances received from clients 712 - - - - 712Trade payables to related parties 24 - - - - 24Other liabilities 651 - - - - 651

Total 11,599 17,508 55,202 21,150 232 105,691


ALCOMET AD



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.

Net debt to adjusted equity ratio for 2011 and 2010 is as follows:

December 31, 2011

December 31, 2010

Debt (see note 26) 90,041 92,470Cash and cash equivalents (see note 22) (2,497) (4,256)Net debt 87,544 88,214

Total Equity 92,556 88,118Amounts accumulated in equity relating to cash-flow hedges (see

note 24) 664 (1,604)Adjusted Capital 93,220 86,514

Debt-to-adjusted capital ratio 0.94 1.02

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, 2011 and 2010 the Company adheres to these requirements, as its net assets amount to BGN 92,556 thousand and BGN 88,118 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, 2011 and 2010 the Company has a positive working capital, as its current liabilities exceed the current assets by BGN 3,171 thousand. Management of the Company believes that in the future it could sustain a its normal activities through self-financing and increase of the operating efficiency.


ALCOMET AD


31 Related parties

Related parties of the company are:

1. Аlumetal АД – 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. FFT LIMITED – Great Britain;5. Ferroal Limited – Nassau, Bahamas – controlling shareholder of the Parent company.

The main transactions with related parties during 2011 and 2010 are as follows: December 31,

2011December 31,

2010

Parent companyRepayments of loans received 522 661Accrued interest on loans received 239 264Interest paid on loans received 160 158Entity with significant influence over the Company Services granted 14 14SubsidiariesInterest on loans granted to Euromet EOOD 253 253

There are no unusual terms or conditions 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, 2011

December 31, 2010

SubsidiariesEuromet EOOD – trade receivable 5 5Euromet EOOD – loans granted 5,092 4,839

Total receivables from related parties 5,097 4,844

The outstanding amounts payable to related parties are as follows:December 31,

2011December 31,

2010

Controlling shareholder of the Parent companyFerroal Limited – trade loan received 1,300 1,300Parent companyAlumetal AD – trade loans received 7,657 8,101Entities with significant influence over the CompanyFAF Metal 18 24

Total payables to related parties 8,975 9,425

The remuneration of directors and other members of key management includes only short-term benefits as at December 31, 2011 and 2010 and amounts to BGN 1,944 thousand and BGN 1,121 thousand, respectively. The outstanding payables to key management as at December 31, 2011 and 2010 amount to BGN 62 thousand and BGN 89 thousand, respectively.


ALCOMET AD


32 Contingent liabilities

At December 31, 2011 the Company has seven outstanding bank guarantees at the amount of BGN 4,336 thousand and a letter of credit amounting to USD 1,015 thousand, issued on behalf of the Company by Bulgarian banks.

The Company has issued a letter of credit in favour of suppliers, which is at the total amount of USD 1,325 thousand as at December 31, 2010.

Three of the guarantees at the total amount of BGN 142 thousand are effective till January 2, 2012. Two of the guarantees amounting to BGN 158 thousand are effective till January 31, 2012. One of the guarantees amounting to BGN 36 thousand is effective till December 31, 2012. The seventh guarantee at the amount of BGN 4,000 thousand is issued as a collateral to a loan received by the Company and is effective for the period of the loan agreement (see note 26).

The Company has issued a letter of credit in favour of a supplier, which is at the total amount of USD 1,015 thousand as at December 31, 2011 and is effective till September 30, 2012.

33 Events after the date of the financial statements

During 2012 the Company has terminated bank guarantees amounting to BGN 142 thousand and BGN 158 thousand, respectively and effective till January 2 and January 31, 2012, respectively.


Date post:	19-Mar-2018
Category:	Documents
Upload:	doankiet
View:	215 times
Download:	1 times

alcomet.italcomet.it/.../2013/09/Alcomet-AD-2011-FS_AR_ENG.docx · Web viewAlcomet AD. NOTES TO THE...

Documents