alcomet · bulgarian stock exchange, sofia. the company was established under the name of alumina...
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ALCOMET AD
ANNUAL SEPARATE
FINANCIAL STATEMENT
December 31, 2016
Unofficial translation of the original in Bulgarian
CONTENTS:
GENERAL INFORMATION
SEPARATE INCOME STATEMENT .................................................................................................... 1
SEPARATE STATEMENT OF COMPREHENSIVE INCOME ............................................................ 2
SEPARATE STATEMENT OF FINANCIAL POSITION ..................................................................... 3
SEPARATE STATEMENT OF CASH FLOWS ..................................................................................... 4
SEPARATE STATEMENT OF CHANGES IN EQUITY ...................................................................... 5
NOTES TO SEPARATE FINANCIAL STATEMENTS ........................................................................ 6
2
GENERAL INFORMATION
Supervisory Board
Fikret Ince
Fikret Kuzucu
Semih Koray
Bekir Yucel
Hristo Todorov Dechev
Osman Kerem Kuzucu
Branimir Mladenov Mladenov
Managing Board
Huseyin Yorucu
Huseyin Umut Ince
Semih Baturay
Neli Kancheva Toncheva
Bulent Karakoc
Registered Office
Shumen 9700
Second Industrial Zone
Legal consultants
Legal adviser Katya Obretenova
Legal adviser Valentin Vasilev
Bankers
UniCredit Bulbank AD, Sofia
Societe Generale Expressbank AD
BNP Paribas SA, Sofia branch
BNP Paribas (Swisse) SA,Geneva
T.C. Ziraat Bankasi Varna branch
Auditors
Deloitte Audit OOD
Management address: 103, Aleksandar Stambolijski Blvd., floor 6
Sofia 1303
Bulgaria
ALCOMET AD
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 1
SEPARATE INCOME STATEMENT
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
Note
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Revenue 4 309,799 325,134
Cost of sales 5 (259,296) (296,955)
Gross profit 50,503 28,179
Other income 6 8,294 6,237
Administrative expenses 7 (11,396) (9,636)
Distribution expenses 8 (11,373) (10,493)
Other expenses 9 (4,132) (2,871)
Foreign exchange rate gain, net 11 40 632
Interest expenses, net 12 (1,615) (3,205)
Other financial expenses, net 13 (407) (89)
Profit before tax 29,914 8,753
Income tax expense 14 (2,986) (990)
Profit for the period 26,928 7,763
Earnings per share (BGN) 15 1,50 0.43
Approved for issuance by the Managing Board of Alcomet AD on March 22, 2017:
Huseyin Yorucu (signed)
Huseyin Umut Ince (signed) Semih Baturay (signed) Vencislav Petrov (signed)
Executive Directors Financial Director Preparer
Desislava Dinkova (signed)
Registered Auditor
Date: March 31, 2017
The accompanying notes are an integral part of these separate financial statements.
ALCOMET AD
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 2
SEPARATE STATEMENT OF COMPREHENSIVE INCOME
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
Note
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Profit for the period 26,928 7,763
Other comprehensive income
Items that will not be reclassified subsequently
to profit or loss:
Revaluation of property, plant and equipment 16 - 40,447
Tax effect on revaluation of property, plant and
equipment
-
(4,045)
Actuarial loss, incurred during the period 25 (10) (204)
Tax effect on actuarial loss, incurred during the
period
1
20
Decrease in revaluation reserve as a result of
impairment of investment property
-
(1,088)
Tax effect on decrease in revaluation reserve - 109
(9) 35,239
Items that may be reclassified subsequently
to profit or loss:
Adjustment of the hedging reserve for the
loss/(gain) from forward contracts, transferred to
the initial carrying amount of the hedged items 24
182
(832)
Tax effect on the adjustment of the hedging reserve
for the result from forward contracts, transferred
to the initial carrying amount of the hedged items
(18)
83
Unrealized profit/(loss) on forward contracts,
recognized in the hedging reserve 24
644
(182)
Tax effect on the unrealized profit/(loss) on
forward contracts, recognized in the hedging
reserve 24
(64)
18
744
(913)
Total other comprehensive income for the period,
net of tax
736
34,326
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD
27,664
42,089
Approved for issuance by the Managing Board of Alcomet AD on March 22, 2017:
Huseyin Yorucu (signed)
Huseyin Umut Ince (signed) Semih Baturay (signed) Vencislav Petrov (signed)
Executive Directors Financial Director Preparer
Desislava Dinkova (signed)
Registered Auditor
Date: March 31, 2017
The accompanying notes are an integral part of these separate financial statements.
ALCOMET AD
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 3
SEPARATE STATEMENT OF FINANCIAL POSITION
as of December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
Notes
December
31, 2016
December 31,
2015
restated
January 1,
2015
restated
ASSETS
Non-current assets
Property, plant and equipment 16 148,934 146,042 113,662
Intangible assets 17 59 199 340
Investment property 18 3,370 3,638 4,935
Receivables on loans granted 19 5,943 5,793 5,644
Investments in subsidiaries and associated
companies 19
6 6
6
Deferred tax assets 14 166 239 201
158,478 155,917 124,788
Current assets
Inventories 20 55,623 50,344 67,142
Trade and other receivables, net 21 45,242 43,364 45,871
Derivative financial instruments 24 644 - 879
Cash and cash equivalents 22 475 412 4,709
101,984 94,120 118,601
TOTAL ASSETS 260,462 250,037 243,389
EQUITY AND LIABILITIES
Capital and reserves
Share capital 23 17,953 17,953 17,953
Legal reserve 23 1,795 1,795 1,795
Revaluation reserve 23 91,030 91,069 55,830
Hedging reserve 23 580 (164) 749
Retirement benefits obligation reserve 23 (1,115) (1,106) (922)
Retained earnings 55,355 30,216 23,179
165,598 139,763 98,584
Non-current liabilities
Retirement benefits obligation 25 837 889 884
Long-term borrowings 26 17,403 16,842 20,412
Deferred income and government grants 27 2,189 1,777 1,882
Deferred tax liabilities 14 6,934 7,451 4,119
27,363 26,959 27,297
Current liabilities
Trade and other payables 28 12,467 12,670 21,294
Short-term borrowings 26 53,701 69,440 95,409
Deferred income and government grants 27 456 130 129
Derivative financial instruments 24 - 182 -
Income tax liability 29 262 320 41
Accruals 30 615 573 636
67,501 83,315 117,508
TOTAL EQUITY AND LIABILITIES 260,462 250,037 243,389
Approved for issuance by the Managing Board of Alcomet AD on March 22, 2017:
Huseyin Yorucu (signed)
Huseyin Umut Ince (signed) Semih Baturay (signed) Vencislav Petrov (signed)
Executive Directors Financial Director Preparer
Desislava Dinkova (signed)
Registered Auditor
Date: March 31, 2017
The accompanying notes are an integral part of these separate financial statements.
ALCOMET AD
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 4
SEPARATE STATEMENT OF CASH FLOWS
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Cash flows from operating activities
Profit before tax 29,914 8,753
Adjustments for:
Depreciation of property, plant and equipment (PPE) 12,559 11,776
Amortization of intangible assets 167 181
(Profit)/ loss on disposal of property, plant and equipment 49 (106)
Impairment and carrying amount of obsolete PPE 2,028 1,047
Impairment of investment property 268 209
Receivables and payables written-off, net of impairment of receivables 21 277
Income from government grants and deferred income (241) (128)
Income from dealing with securities - (409)
Interest expense, net 1,615 3,205
Changes in accruals and retirement benefits obligation (42) (288)
Exchange rate gains/ (loss) 39 (974)
46,377 23,543 (Increase)/ decrease in inventory (13,150) 16,798
(Increase)/ decrease in current receivables (2,153) 2,073
Increase/ (decrease) in current liabilities 252 (7,566)
Cash, generated from operating activities 31,326 34,848
Interest received 56 71
Interest paid (1,857) (3,303)
Income tax paid (3,570) (1,341)
Dividends paid (1,828) (801)
Net cash from operating activities 24,127 29, 474 Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets (10,203) (4,860) Proceeds from rentals 978 - Government grants - 25
Proceeds from sales of property, plant and equipment 41 280
Net cash used in investing activities (9,183) (4,555) Cash flows from financing activities
Proceeds from borrowings 447,530 558,472
Repayments of borrowings (440,183) (571,414)
Payments of finance lease obligations (3,091) (2,934) Net cash, generated from/ (used in) financing activities 4,256 (15,876)
Net increase in cash and cash equivalents 19,200 9,043
Cash and cash equivalents, net of overdrafts at the beginning of the period (27,116) (36,171)
Cash and cash equivalents, net of overdrafts at the end of the period (see note
22)
(7,916) (27,116)
Approved for issuance by the Managing Board of Alcomet AD on March 22, 2017:
Huseyin Yorucu (signed)
Huseyin Umut Ince (signed) Semih Baturay (signed) Vencislav Petrov (signed)
Executive Directors Financial Director Preparer
Desislava Dinkova (signed)
Registered Auditor
Date: March 31, 2017
The accompanying notes are an integral part of these separate financial statements.
ALCOMET AD
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 5
SEPARATE STATEMENT OF CHANGES IN EQUITY
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
Share
capital
Reserves Retained
earnings
Total
Balance at December 31, 2014
restated 17,953 57,452 23,179 98,584
Changes in equity for 2015
Dividends distributed - - (802) (802)
Revaluation reserve of obsolete
property, plant and equipment - (184) 184 -
Comprehensive income for the period
restated - 34,326 7,763 42,089
Balance at December 31, 2015
restated 17,953 91,594 30,216 139,763
Changes in equity for 2016
Dividends distributed - (1,828) (1,828)
Revaluation reserve of obsolete
property, plant and equipment - (39) 39 -
Comprehensive income for the period - 735 26,928 27,663
Balance at December 31, 2016 17,953 92,290 55,355 165,598
Approved for issuance by the Managing Board of Alcomet AD on March 22, 2017:
Huseyin Yorucu (signed)
Huseyin Umut Ince (signed) Semih Baturay (signed) Vencislav Petrov (signed)
Executive Directors Financial Director Chief Accountant
Desislava Dinkova (signed)
Registered Auditor
Date: March 31, 2017
The accompanying notes are an integral part of these separate financial statements.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 6
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, 2016 and 2015 the structure of the share capital of the Company is as follows:
December 31,
2016
December 31,
2015
Alumetal AD 73.25% 73.25%
FAF Metal Sanayj Ve Ticaret AS, Turkey 16.86% 16.86%
ZUPF Allianz Bulgaria 3.69% 3.69%
Other 6.20% 6.20%
Total 100.00% 100.00%
1.2 Operations
The main operations of the Company include production and sale of castings, rolled and extruded
aluminum products, used in machine building, construction, food industry, etc. The Company is the
leading Bulgarian producer of aluminum products and one of the largest manufacturers on the
Balkans. The plant is unique in Bulgaria as it includes entire production cycle and by the modern
technological equipment of the three main workshops - casting, rolling and extrusion, produces a
wide range of rolled and extruded products, which technical parameters and quality conform to the
international standards ISO 9001:2008, ISO 14000:2004, OHSAS 18000:2007, AA , EN, DIN, BDS.
The annual production capacity of the casting workshop is 78 thousand tons, rolling workshop -
45 thousand tons and extrusion workshop - 25 thousand tons.
2 Basis for preparation of the financial statements
2.1 Financial reporting framework
The Company prepares and presents its financial statements in accordance with the International
Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board
(IASB) and the Interpretations, issued by the International Financial Reporting Interpretations
Committee (IFRIC), adopted by the European Union Commission (the Commission).
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 7
2 Basis for preparation of the financial statements (continued)
2.1 Financial reporting framework (continued)
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 2016 and applicable for
the activities of the Company. All changes in IFRS, effective for 2016, are approved by the
Commission (see note 2.1.1).
These separate 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,
2016.
The Company also prepares consolidated financial statements in accordance with IFRS, developed and
issued by IASB and adopted by EU, which is in process of preparation.
Changes in IFRS
2.1.1. Initial application of new amendments to the existing Standards and Interpretations effective
for the current financial period
The following amendments to the existing standards and new interpretation issued by the IASB and
adopted by the EU are effective for the current reporting period:
Amendments to IFRS 10 “Consolidated Financial Statements”, IFRS 12 “Disclosure of Interests
in Other Entities” and IAS 28 “Investments in Associates and Joint Ventures” - Investment
Entities: Applying the Consolidation Exception - adopted by the EU on 22 September 2016
(effective for annual periods beginning on or after 1 January 2016),
Amendments to IFRS 11 “Joint Arrangements” – Accounting for Acquisitions of Interests in
Joint Operations - adopted by the EU on 24 November 2015 (effective for annual periods
beginning on or after 1 January 2016),
Amendments to IAS 1 “Presentation of Financial Statements” - Disclosure Initiative - adopted
by the EU on 18 December 2015 (effective for annual periods beginning on or after 1 January
2016),
Amendments to IAS 16 “Property, Plant and Equipment” and IAS 38 “Intangible Assets” -
Clarification of Acceptable Methods of Depreciation and Amortisation - adopted by the EU on 2
December 2015 (effective for annual periods beginning on or after 1 January 2016),
Amendments to IAS 16 “Property, Plant and Equipment” and IAS 41 “Agriculture” - Bearer
Plants - adopted by the EU on 23 November 2015 (effective for annual periods beginning on or
after 1 January 2016),
Amendments to IAS 19 “Employee Benefits” - Defined Benefit Plans: Employee Contributions -
adopted by the EU on 17 December 2014 (effective for annual periods beginning on or after 1
February 2015),
Amendments to IAS 27 “Separate Financial Statements” - Equity Method in Separate Financial
Statements - adopted by the EU on 18 December 2015 (effective for annual periods beginning on
or after 1 January 2016),
Amendments to various standards “Improvements to IFRSs (cycle 2010-2012)” resulting from the
annual improvement project of IFRS (IFRS 2, IFRS 3, IFRS 8, IFRS 13, IAS 16, IAS 24 and IAS
38) primarily with a view to removing inconsistencies and clarifying wording - adopted by the
EU on 17 December 2014 (amendments are to be applied for annual periods beginning on or after
1 February 2015),
Amendments to various standards “Improvements to IFRSs (cycle 2012-2014)” resulting from the
annual improvement project of IFRS (IFRS 5, IFRS 7, IAS 19 and IAS 34) primarily with a view
to removing inconsistencies and clarifying wording - adopted by the EU on 15 December 2015
(amendments are to be applied for annual periods beginning on or after 1 January 2016).
The adoption of these amendments to the existing standards has not led to any material changes in the
Company’s financial statements.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 8
2 Basis for preparation of the financial statements (continued)
2.1 Financial reporting framework (continued)
2.1.2. Standards and amendments to the existing standards issued by IASB and adopted by the EU
but not yet effective
At the date of authorisation of these financial statements, the following new standards and
amendments to standards issued by IASB and adopted by the EU are not yet effective:
IFRS 9 “Financial Instruments” - adopted by the EU on 22 November 2016 (effective for annual
periods beginning on or after 1 January 2018),
IFRS 15 “Revenue from Contracts with Customers” and amendments to IFRS 15 “Effective date
of IFRS 15” - adopted by the EU on 22 September 2016 (effective for annual periods beginning
on or after 1 January 2018).
2.1.3. New standards and amendments to the existing standards issued by IASB but not yet adopted
by the EU
At present, IFRS as adopted by the EU do not significantly differ from regulations adopted by the
IASB except for the following new standards, amendments to the existing standards and new
interpretation, which were not endorsed for use in EU as at the date of publication of these financial
statements (the effective dates stated below is for IFRS in full):
IFRS 14 “Regulatory Deferral Accounts” (effective for annual periods beginning on or after 1
January 2016) - the EU has decided not to launch the endorsement process of this interim
standard and to wait for the final standard,
IFRS 16 “Leases” (effective for annual periods beginning on or after 1 January 2019),
Amendments to IFRS 2 “Share-based Payment” - Classification and Measurement of Share-based
Payment Transactions (effective for annual periods beginning on or after 1 January 2018),
Amendments to IFRS 4 “Insurance Contracts” - Applying IFRS 9 Financial Instruments with
IFRS 4 Insurance Contracts (effective for annual periods beginning on or after 1 January 2018 or
when IFRS 9 “Financial Instruments” is applied first time),
Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in
Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its
Associate or Joint Venture and further amendments (effective date deferred indefinitely until the
research project on the equity method has been concluded),
Amendments to IFRS 15 “Revenue from Contracts with Customers” - Clarifications to IFRS 15
Revenue from Contracts with Customers (effective for annual periods beginning on or after 1
January 2018),
Amendments to IAS 7 “Statement of Cash Flows” - Disclosure Initiative (effective for annual
periods beginning on or after 1 January 2017),
Amendments to IAS 12 “Income Taxes” - Recognition of Deferred Tax Assets for Unrealised
Losses (effective for annual periods beginning on or after 1 January 2017),
Amendments to IAS 40 “Investment Property” - Transfers of Investment Property (effective for
annual periods beginning on or after 1 January 2018),
Amendments to various standards “Improvements to IFRSs (cycle 2014-2016)” resulting from the
annual improvement project of IFRS (IFRS 1, IFRS 12 and IAS 28) primarily with a view to
removing inconsistencies and clarifying wording (amendments to IFRS 12 are to be applied for
annual periods beginning on or after 1 January 2017 and amendments to IFRS 1 and IAS 28 are to
be applied for annual periods beginning on or after 1 January 2018),
IFRIC 22 “Foreign Currency Transactions and Advance Consideration” (effective for annual
periods beginning on or after 1 January 2018).
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 9
2 Basis for preparation of the financial statements (continued)
2.1 Financial reporting framework (continued)
The Company anticipates that the adoption of these new standards and amendments to the existing
standards will have no material impact on the financial statements of the Company in the period of
initial application.
Hedge accounting for a portfolio of financial assets and liabilities whose principles have not been
adopted by the EU remains unregulated.
According to the Company’s estimates, the application of hedge accounting to a portfolio of financial
assets or liabilities pursuant to IAS 39: “Financial Instruments: Recognition and Measurement”
would not significantly impact the financial statements, if applied as at the reporting date.
During 2016 the Company has not elected early adoption of standards, revisions and interpretations,
effective for future reporting annual periods. The Company anticipates that the adoption of these
standards, amendments to the existing standards and interpretations would have no material impact on
its separate financial statements in the period of initial application, except for IFRS 9 and IFRS 15, the
impact of which has not yet been evaluated.
2.2 Historical cost and fair value
The present separate financial statements have been prepared on the historical cost basis except for
certain property, plant and equipment, investment property and derivative financial instruments that
are measured at revalued amounts or fair values, as explained in notes 3.7, 3.10 and 3.13 below.
Historical cost is generally based on the fair value of the consideration given in exchange for goods
and services.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly
transaction between market participants at the measurement date, regardless of whether that price is
directly observable or estimated using another valuation technique. In estimating the fair value of an
asset or a liability, the Company takes into account the characteristics of the asset or liability if market
participants would take those characteristics into account when pricing the asset or liability at the
measurement date. Fair value for measurement and/or disclosure purposes in these separate financial
statements is determined on such a basis, except for share-based payment transactions that are within
the scope of IFRS 2, leasing transactions that are within the scope of IAS 17, and measurements that
have some similarities to fair value but are not fair value, such as net realizable value in IAS 2 or value
use in IAS 36.
In addition, for the financial reporting purposes, fair value measurements are categorized into Level 1,
2 or 3 based on the degree to which the inputs to the fair value measurements are observable and the
significance of the inputs to the fair value measurement in its entirely, which are described as follows:
- Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities
that the Company can access at the measurement date;
- Level 2 inputs are inputs, other than quoted prices included within Level 1, that are observable for
the asset or liability, either directly or indirectly;
- Level 3 inputs are unobservable inputs for the asset or liability.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 10
2 Basis for preparation of the financial statements (continued)
2.2 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 separate financial statements are presented in thousands of BGN.
3 Significant accounting policies
3.1 Revenue and expense recognition
Revenue is measured at the fair value of the consideration received or receivable and represents
amounts receivable for goods and services provided in the normal course of business, net of discounts,
Value Added Tax (VAT) and other sales related taxes.
Revenue is recognized when the entity has transferred all risks and rewards related to the ownership of
the production and goods to the buyer and the costs incurred in respect of the transaction can be
measured reliably.
Expenses are recognized in the income statement when a decrease of the future economic benefits
arise, regarding decrease of an asset or increase of a liability, which can be reliably measured.
Expenses are recognized on the basis of a direct association between the costs incurred and the revenue.
When economic benefits are expected to incur during more than one financial period and the
corresponding revenue cannot be measured precisely but only indirectly, the expenses shall be
recognized based on procedures for rational and systematic allocation.
Income from government grants related to assets is recognized in profit or loss on a systematic basis
over the whole useful lives of the related assets (see also note 3.15).
3.2 Interest income
Interest income is accrued on a time basis, based on the outstanding principal and the applicable
effective interest rate, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying amount of the asset.
3.3 Borrowing costs
Borrowing costs are recognized in the period in which they are incurred and are determined on the
basis of the outstanding principal and the applicable effective interest rate, which is the rate that
exactly discounts estimated future cash payments through the expected life of the financial liability to
the net carrying amount of the liability.
Borrowing costs that are directly attributable to the acquisition, construction or production of an asset,
that takes a substantial period of time to get ready for its intended use or sale, are capitalized as part of
the cost of the asset in accordance with the requirements of IAS 23 Borrowing costs. The borrowing
costs that are directly attributable to the acquisition or production of a qualifying asset are those
borrowing costs that would have been avoided, if the expenditure on the qualifying asset had not been
made.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 11
3 Significant accounting policies (continued)
3.3 Borrowing costs (continued)
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.
Investment income earned on the temporary investment of specific borrowings pending their
expenditure on qualifying assets is deducted from the borrowing costs eligible for capitalization. All
other borrowing costs are recognized in profit or loss in the period in which they are incurred.
Capitalization of borrowing costs ceases when substantially all the activities necessary to prepare the
qualifying asset for its intended use are complete.
3.4 Foreign currency
Foreign currency transactions are recorded at the rates of exchange prevailing on the dates of the
transactions. At the end of each reporting period, monetary assets and liabilities that are denominated
in foreign currencies are retranslated at the closing exchange rates of the Bulgarian National Bank. The
foreign exchange rate differences, arising upon the settlement of these monetary positions or at
restatement of these positions at rates, different from those when initially recorded, are reported as
current financial income or current financial expense in the period in which they arise.
3.5 Employee benefits
Short-term employee benefits
Labor and social relationships between the employees and the Company are arranged under the
provisions of the Labour Code (LC) and the social security legislation requirements enforceable in the
Republic of Bulgaria.
Short-term employee benefits including remunerations, bonuses and social payments and benefits
(payable within 12 months after the period in which employees have rendered their service or satisfied
the necessary conditions) are recognized as an expense in the income statement for the period in which
the service is rendered or the vesting conditions are met, and as a current liability (after reduction of
any amounts paid and deductions) to its undiscounted amount. The Company’s contributions for social
security and health insurance are recognized at their undiscounted amount as current expense and
liability together with and for the period, when the respective employee benefits are accrued.
Unused paid annual leaves accruals
As of the reporting period end, the Company recognizes as a liability the non-discounted amount of
the estimated expenses on paid leaves, expected to be paid to employees during following reporting
periods as compensation to their labor in the previous reporting period, as well as the respective to
these accruals expenses on social security contributions.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 12
3 Significant accounting policies (continued)
3.5 Employee benefits (continued)
Long-term employee benefits
Defined contributions plan
The Bulgarian government has responsibility to ensure retirement benefits based on definite
contributions. Expenses, concerning the Company’s responsibility to transfer installments on the
definite contributions plan, are recognized in the income statement for the period in which they arise.
Additionally, the Company takes part in a defined contributions plan, which is a retirement plan. The
Company pays additional defined contributions to an independent company (pension fund) in favor of
the employees, included in the plan and has no legal or constructive obligation to pay additional
contributions in case the fund has insufficient assets to pay all employees the compensations,
regarding their length of service from the current or previous periods. The Company’s contributions
for this definite contributions plan are reported in the income statement for the respective period and
are included in employee benefits.
Defined benefits plan
Under the provisions of the Labor Code, the employees are entitled to retirement benefits amounting
to two gross monthly salaries on attainment of retirement age if the accumulated length of service in
the Company is under 10 years, or six gross monthly salaries if the length of service in the Company is
over 10 consecutive years.
Additionally, on early retirement due to disability, the employees are entitled to benefits amounting to
two monthly salaries, provided that their length of service is at least five years, and they have received
no other such benefits during the last five years of service. Based on the Company’s Collective Labor
Agreement dated 2006, the employees that due to disease are disabled to perform the work assigned
and in case of length of service over ten consecutive years, are entitled to an additional benefit from
the Company, amounting to one minimal monthly salary determined for the country.
In accordance with requirements of IAS 19 Employee benefits, the Company recognizes a retirement
benefits liability, which is determined estimated by a licensed actuary using the Projected Unit Credit
Method. The retirement benefits liability presents the present value of the defined retirement benefits
liability as of the date of the statement of financial position. The present value of the defined liability
is estimated based on the expected future cash outflows, using the interest rate of the government
bonds, which have a maturity term similar to the maturity of the respective liability.
By the use of the Projected Unit Credit Method:
• is determined what portion of the benefits is attributable to the current period and the portion for
previous periods, and estimates are made (actuarial assumptions) about demographic variables
(such as employee turnover and mortality of employees) and financial variables (such as future
increases in salaries and expenses on medical services) that will affect the cost of the benefits;
• so defined benefits are discounted to determine the present value of the obligation for defined
benefits and the expenses for current service cost;
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 13
3 Significant accounting policies (continued)
3.5 Employee benefits (continued)
Defined benefits plan (continued)
The current and past service costs and the interest on the liability of the defined benefits plan are
recognized in profit or loss for the period.
Revaluations of liabilities on the defined benefits plan (actuarial gain or loss) are recognized through
other comprehensive income in equity as a reserve for retirement benefits liabilities. Released from
this reserve amounts are transferred through other comprehensive income to retained earnings.
Pension costs are charged or reflected in profit or loss for the period of service of the respective
employees. Past service costs are recognized immediately to the extent that the benefits are already
vested.
The amount of the retirement benefits obligation, reported in the statement of the financial position
represents the present value of the defined benefits obligation of the Company.
3.6 Taxation
According to the Bulgarian tax legislation, the Company is subject to corporate income tax. The
corporate income tax rate for 2016 and 2015 is 10 % on the taxable profit.
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from profit
before taxes as reported in the income statement because it excludes items of income or expenses that
are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted
by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the separate 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 the end of each year and reduced to the
extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of
the asset to be recovered.
Furthermore at the end of each reporting period deferred tax assets not-recognized in previous
reporting periods are reviewed. Such assets are recognized to the extent that it is probable to generate
sufficient taxable profit in future, against which the deferred tax assets to be recovered.
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset realized. Deferred tax is recognized charged or credited in the income statement,
except when it relates to items charged or credited directly to equity, in which case the deferred tax is
also dealt with in equity.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same
taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 14
3 Significant accounting policies (continued)
3.7 Property, plant and equipment
Property, plant and equipment are initially carried at cost, including purchase cost and any related
costs, less any subsequently accumulated depreciation and any impairment losses.
After initial recognition, land, buildings, plants and equipment are stated at their revalued amounts,
being the fair value at the date of revaluation, less any subsequent accumulated depreciation and
subsequent accumulated impairment losses. Revaluations are performed by licensed appraisers with
sufficient regularity so that the carrying amounts do not differ materially from that which would be
determined using fair values at the end of each reporting period.
Increases in the carrying amount of assets as a result of the revaluation are credited directly to equity
as a revaluation surplus. Decreases in carrying amounts of assets as a result of the revaluation are
recognized as expenses. However, a revaluation decrease is debited directly to revaluation reserve to
the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of
those assets. The accumulated depreciation of revalued assets at the date of the revaluation is restated
proportionally with the change in the gross carrying amount of the assets, so that the carrying amount
of the assets after the revaluation equals the revalued amount.
On subsequent disposal of a revalued property, plant and equipment the attributable revaluation
surplus remaining in the revaluation reserve is transferred to retained earnings, net of deferred taxes.
At the end of each reporting period, the management of the Company reviews the carrying amounts of
property, plant and equipment, which have not been valuated by a licenced appraiser and determines
whether there is any indication for impairment of these assets.
Land and buildings, which are held to earn rentals are presented as investment property (see also note
3.9 and note 18).
The depreciation charge starts after putting the respective assets into operation and commences on the
earlier of their date of reclassification as held for sale, as required by IFRS 5 Non-current assets held
for sale and discontinued operations and their date of disposal.
Depreciation of property, plant and equipment is charged over their estimated useful lives under the
straight-line method. The estimated useful lives of the assets in years are, as follows:
2016 2015
Buildings 25 - 30 25 - 30
Plant and equipment 5 - 17 5 - 17
Vehicles 10 10
Office equipment 6-7 6-7
Other non-current assets 5 5
Assets held under finance leases are depreciated over their expected useful lives on the same basis as
owned assets. However, when there is no reasonable certainty that ownership will be obtained by the
end of the lease term, assets are depreciated over the shorter of the lease term and their useful lives.
Depreciation is not provided for land, fully depreciated assets and assets in process of acquisition or
construction.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 15
3 Significant accounting policies (continued)
3.7 Property, plant and equipment (continued)
Assets are derecognized upon disposal or when no future economic benefits are expected to arise from
the continued use of the asset. The gain or loss arising on the disposal or retirement of an asset is
determined as the difference between the sales proceeds and the carrying amount of the asset and is
recognized in the income statement.
3.8 Intangible assets
Intangible assets are carried at cost less accumulated amortization and any subsequent impairment
losses.
Amortization of intangible assets is charged over their estimated useful lives, under the straight-line
method, which period is from 2 to 7 years.
European Union Emissions Trading Scheme and emission reduction units of greenhouse gases
The EU Allowances (EUA), received under the National Plan for allocation of allowances for trade
with emissions of greenhouse gases, are reported as intangible assets. Upon their initial acquisition, the
allocated allowances for emissions of greenhouse gases are recognized as intangible assets at nominal
value (zero value). The purchased allowances are recognized upon their acquisition at purchase price.
The allowances for emissions of greenhouse gases are not depreciated.
As at the end of each reporting period, for the amount of greenhouse gases emitted during the period
over the available distributed and purchased allowances, the Company recognizes a liability in the
statement of financial position. The liability is valued at cost of the allowances purchased, used to
cover the excess and on market prices as at the date of the statement of financial position for the
excess over the available allowances, as the liability amount and the changes therein are recognized in
profit or loss for the reporting period.
3.9 Investment property
Investment property is property held to earn rentals and is carried at fair value. As a part of property,
plant and equipment of the Company, investment properties are revaluated to their fair value by
licensed appraisers to the date of their classification as investment property. If an asset’s carrying
amount is increased as a result of such revaluation, the increase is credited directly to equity as
revaluation surplus.
The revaluation decrease is recognized in the income statement or is debited directly to equity as
revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect of
that asset. After transfer of assets to investment property, subsequent gains or losses from changes in
fair value are recognized in the net profit for the period when they arise.
An investment property is derecognized upon disposal or when the investment property is permanently
withdrawn from use and no future economic benefits are expected from the disposal. Any gain or loss
arising on derecognition of the property is calculated as the difference between the disposal proceeds
and the carrying amount of the asset and is included in the income statement.
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant
lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 16
3 Significant accounting policies (continued)
3.10 Impairment of property, plant and equipment, intangible assets and investment property
At the end of the reporting period, the Company reviews the carrying amounts of its property, plant
and equipment, intangible assets and investment property to determine whether there is any indication
of impairment. If any such indication exists, the recoverable amount of the asset is estimated in order
to determine the extent of the impairment loss. Where the recoverable amount of an asset cannot be
reliably measured, the Company estimates the recoverable amount of the cash-generating unit, to
which the asset belongs.
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset
for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount.
The impairment loss is recognized as expense immediately, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation decrease.
When an impairment loss is subsequently reversed, the carrying amount of the asset (cash-generating
unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying
amount does not exceed the carrying amount that would have been determined, had no impairment
loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognized as income immediately, unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as a revaluation increase.
3.11. Investment in subsidiaries
The Company reports its investment in subsidiary at historical cost in these separate financial
statements.
3.12 Inventories
Inventories are valued at the lower of cost and net realizable value. Cost comprises of all costs of
purchase, transportation, customs duties and other related costs.
Net realizable value represents the estimated selling price less all estimated costs of completion and
costs to sell.
The costs of conversion of inventories include costs directly attributable to the units of production.
They also include a systematic allocation of fixed and variable production overheads that are incurred
in converting materials into finished goods. The costs of conversion of each product, which are not
separately identifiable, are allocated between the products on a rational and consistent basis.
Assignment of the cost is determined on a weighted average basis.
3.12 Financial instruments
Financial assets and financial liabilities are recognized in the Company’s statement of financial
position only when the Company becomes a party to the contractual provisions of the instrument.
Financial assets are derecognized from the statement of financial position when the contractual rights
to receive the cash flows from the financial asset expire, or the assets are transferred and the transfer
qualifies for derecognition in accordance with the derecognition requirements of IAS 39 Financial
Instruments: Recognition and Measurement. Financial liabilities are derecognized from the statement
of financial position only when they are extinguished – i.e. when the obligation specified in the
contract is discharged or cancelled, or expired.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 17
3 Significant accounting policies (continued)
3.13 Financial instruments (continued)
On initial recognition financial assets/(liabilities) are measured at fair value plus, in the case of
financial assets/(liabilities) not reported at fair value through profit or loss, transaction costs, which are
directly attributable to the acquisition or issue of the financial assets/(liabilities).
For the purposes of subsequent measurement, in the current and prior reporting periods the Company
classifies the financial assets and financial liabilities into the following categories: loans and
receivables, and other financial liabilities (other than those, reported at fair value through profit or
loss). The classification under each category depends on the purpose and term of the respective
contract.
Debt and equity instruments issued by the Company, are classified as either financial liabilities or as
equity in accordance with the substance of the contractual arrangements and the definitions of a
financial liability and an equity instrument. An equity instrument is any contract that evidences a
residual interest in the assets of an entity after deducting all of its liabilities.
Financial assets
Financial assets comprise cash on hand and in bank accounts, loans granted, trade and other
receivables and derivative financial instruments.
Financial liabilities
Financial liabilities include trade and other payables, loans received, finance lease liabilities and
derivative financial instruments.
Effective interest rate
The effective interest method is a method of calculating the amortized cost of a financial asset or a
liability (or group of financial assets/liabilities) and of allocating the interest expense or interest
income over the relevant period. The effective interest rate is the rate that exactly discounts the
estimated future cash payments or receipts through the expected life of the financial instrument or,
when appropriate, a shorter period to the net carrying amount of the financial asset or liability.
Impairment of financial assets
As of the date of the separate financial statements the Company assesses whether there is any
objective evidence for impairment of all financial assets, except for financial assets reported at fair
value through profit or loss. A financial asset is impaired if, and only if, there is objective evidence of
impairment as a result of one or more events that have occurred after the initial recognition of the
asset, resulting in a decrease of the estimated future cash flows. It may not be possible to identify a
single, discrete event, rather than a combined effect of several events that may have caused the
impairment.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 18
3 Significant accounting policies (continued)
3.12 Financial instruments (continued)
Impairment of financial assets (continued)
The Company recognizes impairment of trade and other receivables, whether there is objective
evidence, that the Company would not be able to collect all amounts due at their maturity date. The
Company considers as indications for potential impairment significant financial problems of the
debtor, the probability that the debtor will be a subject to a bankruptcy procedure or non-fulfillment of
the contract terms, as well as payment delay. If any of these indications for impairment occurs, the
impairment loss is calculated as a difference between the carrying amount and the present value of the
expected future cash flows, discounted by the original effective interest rate for similar assets. For
trade receivables that are insured, the impairment equals the difference between the carrying amount
of the receivables and their insurance value. The impairment is recorded by using a separate
impairment account, which is shown as a reduction to receivables in the statement of financial position
and the impairment expenses are stated as Administrative expenses or Distribution expenses in the
income statement depending on the type of the impaired receivable. If a receivable is non-collectable
and there is a recognized impairment loss for it, the receivable is written off by decrease of the
respective allowance account. The recovery of the loss from impairment of trade receivables is
reported in profit or loss and is stated as a decrease of the item, in which the impairment has been
previously recorded.
Derivative financial instruments
The Company uses forward contracts to hedge risks, associated with changes in market prices of the
aluminum on the London Metal Exchange. Such contracts are classified as cash flow hedges as they
hedge the Company’s exposure to variability in cash flows that is attributable to the particular price
risk associated with forecasted sale and purchase transactions. Derivatives are initially recognised at
fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair
value at the end of each reporting period. The fair value of such forward contracts is determined by
reference to the current prices of these contracts on the London Metal Exchange.
The unrealized gain or loss on the forward contracts that are determined to be effective hedge is
recognized through other comprehensive income and is accumulated in a hedging reserve. When a
hedged transaction affects the net profit or loss, the unrealized gain or loss recognized beforehand in a
hedging reserve, is included in the purchase price of the respective acquired inventory.
The Company uses foreign currency swap contracts to hedge its risks associated with the changes in
the foreign currency rates of a long-term debt, denominated in USD. These contracts are classified as
fair value hedges and are initially recognized based on the fair value as of the contract date and
subsequently remeasured to their fair value as of the end of the reporting period. The realized gains
and losses, and the differences in fair value of the foreign currency swap contracts as at the end of the
reporting period are charged in the income statement.
Hedge accounting is discontinued when the hedging instrument expires or is sold, terminated or
exercised.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 19
3 Significant accounting policies (continued)
3.13.1 Cash and cash equivalents
For the purposes of cash flow presentation, cash and cash equivalents represent unrestricted cash on
hand and at banks, deposits maturing within 3 months. 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.
Bank overdrafts and restricted cash are stated as decrease in cash and cash equivalents in the statement
of cash flows.
3.13.2 Equity investments and loans granted
The equity investments are non-tradable and are stated at cost less any impairment loss.
Long-term loans granted are initially carried at fair value and subsequently measured at amortized cost
using effective interest rate, which, due to the substance of the loan agreement, coincides with the
interest rate negotiated.
3.13.3 Trade and other receivables
Trade and other receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are originated when the Company provides cash, goods
for sale or services having no intention to trade them. Receivables are stated at amortized cost,
calculated under the effective interest rate method. For current receivables, which will be settled
within normal credit terms, the amortized cost approximates their nominal value.
3.13.4 Trade and other payables
Trade and other payables incurred as a result of purchases of goods or services, which are not
classified as financial liabilities measured at fair value through profit or loss, are stated in the
statement of financial position at amortized cost, calculated under the effective interest rate method.
For current payables, which will be settled whithin normal credit terms, the amortized cost
approximates their nominal value.
3.13.5 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.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 20
3 Significant accounting policies (continued)
3.12 Financial instruments (continued)
3.13.6 Interest rate risk
Interest rate risk is the risk that the value of the Company’s borrowings will fluctuate due to changes
in market interest rates. Part of the Company’s borrowings are contracted at a floating interest rate and
thus expose the Company to eventual interest rate risk (see also notes 26 and 31).
3.13.7 Credit risk
Financial assets, which potentially expose the Company to credit risk, consist mainly of trade
receivables and advance payments. The Company is primarily exposed to credit risk in the event
where its customers fail to perform their obligations. The Company’s policy is to enter into sales
transactions with customers having favorable credit reputation. In addition, the trade receivables are
secured against future risks by credit limits, which are defined by the insurance company based on
preliminary client research. The Company would receive 90 % of the respective trade receivable as a
compensation, if the clients fail to pay their obligations (see also note 31).
3.13.8 Foreign currency risk
The Company enters into international transactions related mainly to the purchases of raw materials,
sales of finished goods and loans (see note 2.3). Metal hedge operations are completed at cross
currency rates to eliminate the currency risk between the selling price currency and purchase currency
of metals for each order. Therefore, metal hedge operations cover both risk associated with changes in
market prices of the metals on the London Metal Exchange and foreign currency risk (see also
notes 24 and 31).
3.13.9 Liquidity risk
The liquidity risk arises from the time difference in the contracted maturities of the monetary liabilities
and the possibility that the liabilities are not settled on maturity. The Company manages this risk by
using appropriate methods of planning, including providing overdrafts, daily liquidity reports, short-
term and mid-term cash flows forecasts (see also note 31).
3.14 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 date of the
separate financial statements, and are discounted to present value where the effect is material.
3.15 Government grants
Government grants, (financing, government grants), are assistance by the government, government
agencies and similar bodies in the form of transfers of resources to the Company in return for future
compliance with certain conditions relating to the operating activities of the Company. Government
grants may be (i) related to assets and (ii) related to income.
Government grants are recognized when there is reasonable assurance that: (i) the Company will
comply with the conditions attaching to them; and (ii) the grants will be received.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 21
3 Significant accounting policies (continued)
3.15 Government grants (continued)
The government grants received by the Company are related to assets and the main condition is to
purchase, produce or acquire in other manner property, plant and equipment. They are presented in the
statement of financial position as deferred income, that are recognized as income on a systematic and
rational basis over the useful life of the acquired assets.
Grants related income are presented as part of profit or loss in the income statement as other income.
3.16 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 separate financial statements, which affect the reported assets,
liabilities and disclosures of contingent assets and liabilities as at the end of the reporting period and
the amounts of revenue and expenses reported during the period. All of them are based on the best
estimate of management as of the date of the preparation of the financial statements. The actual results
may differ from those presented in these financial statements.
The key assumptions concerning the future and other key sources of estimation uncertainty at the end
of the reporting period, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are: the useful lives and fair value of
property, plant and equipment (note 3.7), impairment of assets (note 3.10), fair value of investment
property (note 3.9), fair value of derivatives (note 3.13) and the retirement benefits obligation
(note 3.5).
3.17 Correction of errors from prior periods
In 2016 the Company’s management identified and corrected retrospectively the following accounting
errors and the comparative information for 2015 was restated. Retained earnings, revaluation reserve,
inventory, receivables from clients, revenue, cost of sale, other income, other expenses, current and
deferred taxes, cash and cash equivalents for the purposes of the statement of cash flows are adjusted
as stated in the tables below:
А) Bank overdraft balances of the Company are not reported as decrease in cash and cash equivalents
at the beginning and at the end of the year for the purposes of the statement of cash flows according to
the requirements of IAS 7 Statement of Cash Flows. Cash flows related to utilized and paid pack
overdrafts are disclosed in cash flows from financing activities. In order to correct the error the
statement of cash flows for 2015 was restated and the liabilities under overdrafts are disclosed as
decrease in cash and cash equivalents, and the beginning and the end of the period and the utilized and
paid back overdrafts are removed from cash flows from financing activities.
B) Revenue has been recognized prior meeting the criteria of IAS 19 Revenue for recognition and in
particular, before transferring in major degree risks and rewards from ownership of finished goods to
clients. For correcting the error the income statement and the statement of financial position were
restated with regard to revenue, cost of sales, receivables, inventories.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 22
3 Significant accounting policies (continued)
3.17 Correction of errors from prior periods (continued)
C) In 2015 indications for impairment of Company’s investment properties existed since their fair
value according the evaluation report is lower than their carrying amount and the impairment was not
recorded in the Company’s accounting records for 2015, which contradicts with the requirements of
IAS 40 Investment Property. In order to correct the error investment properties was impaired to their
fair value and the impairment was reflected as a decrease in revaluation reserve and the surplus over it
– to the income statement for 2015.
D) In 2015 the balances and transactions with related party to the Company – an entity under common
control, are not stated in the related party disclosures, trade receivables and trade payables which does
not comply with IAS 24 Related Parties.
E) In 2015 the Company has reported other income and other expenses with regard to operations
related to provision of production waste for processing by third parties and its commitment for
purchase them back in the form of secondary aluminum, which does not comply with IAS 18
Revenue. For correcting the error the Company’s management corrected other income and other
expenses.
F) The Company’s management adjusted tax expenses, current tax payables, deferred tax balances
with the effect of errors specified above.
Reconciliation in the income statement
Note
Year ended
December 31, 2015
before restatement
restatement
Year ended
December 31, 2015
restated
Revenue 4 326,950 (1,816) 325,134
Cost of sales 5 (297,585) 630 (296,955)
Gross profit 29,365 (1,186) 28,179
Other income 6 9,132 (2,895) 6,237
Administrative expenses 7 (9,636) - (9,636)
Distribution expenses 8 (10,493) - (10,493)
Other expenses 9 (5,557) 2,686 (2,871)
Foreign exchange rate gain, net 11 632 - 632
Interest expenses, net 12 (3,205) - (3,205)
Other financial expenses, net 13 (89) - (89)
Profit before tax 10,149 (1,396) 8,753
Income tax expense 14 (1,011) 21 (990)
Profit for the period 9,138 (1,375) 7,763
Earnings per share (BGN) 15 0.51 (0.08) 0.43
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 23
3 Significant accounting policies (continued)
3.17 Correction of errors from prior periods (continued)
Reconciliation in the statement of comprehensive income
Note
Year ended
December 31,
2015
before restatement
restatement
Year ended
December 31, 2015
restated
Profit for the period 9,138 (1,375) 7,763
Other comprehensive income
Items that will not be reclassified
subsequently to profit or loss:
Revaluation of property, plant and
equipment 16
40,447 - 40,447
Tax effect on revaluation of property,
plant and equipment
(4,045) - (4,045)
Actuarial loss, incurred during the
period 25
(204) - (204)
Tax effect on actuarial loss, incurred
during the period
20 - 20
Decrease in revaluation reserve as a
result of impairment of investment
property
- (1,088) (1,088)
Tax effect on decrease in revaluation
reserve
- 109 109
36,218 (979) 35,239
Items that may be reclassified
subsequently to profit or loss:
Adjustment of the hedging reserve for
the loss/(gain) from forward contracts,
transferred to the initial carrying
amount of the hedged items 24
(832) - (832)
Tax effect on the adjustment of the
hedging reserve for the result from
forward contracts, transferred to the
initial carrying amount of the hedged
items
83 - 83
Unrealized profit/(loss) on forward
contracts, recognized in the hedging
reserve 24
(182) - (182)
Tax effect on the unrealized profit/(loss)
on forward contracts, recognized in the
hedging reserve 24
18 - 18
(913) - (913)
Total other comprehensive income for
the period, net of tax
35,305 (979) 34,326
TOTAL COMPREHENSIVE
INCOME FOR THE PERIOD
44,443 (2,354) 42,089
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 24
3 Significant accounting policies (continued)
3.17 Correction of errors from prior periods (continued)
Reconciliation in the statement of financial position
Note
December 31,
2015
before restatement
restatement
December 31,
2015
restated
ASSETS
Non-current assets
Property, plant and equipment 16 146,042 - 146,042
Intangible assets 17 199 - 199
Investment property 18 4,935 (1,297) 3,638
Receivables on loans granted 19 5,793 - 5,793
Investments in subsidiaries and associated
companies 19
6 -
6
Deferred tax assets 14 239 - 239
157,214 (1,297) 155,917
Current assets
Inventories 20 42,972 7,372 50,344
Trade and other receivables, net 21 52,436 (9,072) 43,364
Derivative financial instruments 24 - - -
Cash and cash equivalents 22 412 - 412
95,820 (1,700) 94,120
TOTAL ASSETS 253,034 (2,997) 250,037
EQUITY AND LIABILITIES
Capital and reserves
Share capital 23 17,953 - 17,953
Legal reserve 23 1,795 - 1,795
Revaluation reserve 23 92,048 (979) 91,069
Hedging reserve 23 (164) - (164)
Retirement benefits obligation reserve 23 (1,106) - (1,106)
Retained earnings 32,213 (1,997) 30,216
142,739 (2,976) 139,763
Non-current liabilities
Retirement benefits obligation 25 889 - 889
Long-term borrowings 26 16,842 - 16,842
Deferred income and government grants 27 1,777 - 1,777
Deferred tax liabilities 14 7,472 (21) 7,451
26,980 (21) 26,959
Current liabilities
Trade and other payables 28 12,670 - 12,670
Short-term borrowings 26 69,440 - 69,440
Deferred income and government grants 27 130 - 130
Derivative financial instruments 24 182 - 182
Income tax liability 29 320 - 320
Accruals 30 573 - 573
83,315 - 83,315
TOTAL EQUITY AND LIABILITIES 253,034 (2,997) 250,037
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 25
3 Significant accounting policies (continued)
3.17 Correction of errors from prior periods (continued)
Reconciliation in the statement of financial position (continued)
Note
January 1, 2015
before restatement
restatement
January 1,
2015
restated
ASSETS
Non-current assets
Property, plant and equipment 16 113,662 - 113,662
Intangible assets 17 340 - 340
Investment property 18 4,935 - 4,935
Receivables on loans granted 19 5,644 - 5,644
Investments in subsidiaries and associated
companies 19
6 -
6
Deferred tax assets 14 201 - 201
124,788 - 124,788
Current assets
Inventories 20 60,400 6,742 67,142
Trade and other receivables, net 21 53,127 (7,256) 45,871
Derivative financial instruments 24 879 - 879
Cash and cash equivalents 22 4,709 - 4,709
119,115 (514) 118,601
TOTAL ASSETS 243,903 (514) 243,389
EQUITY AND LIABILITIES
Capital and reserves
Share capital 23 17,953 - 17,953
Legal reserve 23 1,795 - 1,795
Revaluation reserve 23 55,830 - 55,830
Hedging reserve 23 749 - 749
Retirement benefits obligation reserve 23 (922) - (922)
Retained earnings 23,693 (514) 23,179
99,098 (514) 98,584
Non-current liabilities
Retirement benefits obligation 25 884 - 884
Long-term borrowings 26 20,412 - 20,412
Deferred income and government grants 27 1,882 - 1,882
Deferred tax liabilities 14 4,119 - 4,119
27,297 - 27,297
Current liabilities
Trade and other payables 28 21,294 - 21,294
Short-term borrowings 26 95,409 - 95,409
Deferred income and government grants 27 129 - 129
Derivative financial instruments 24 - - -
Income tax liability 29 41 - 41
Accruals 30 636 - 636
117,508 117,508
TOTAL EQUITY AND LIABILITIES 243,903 (514) 243,389
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 26
3 Significant accounting policies (continued)
3.17 Correction of errors from prior periods (continued)
Reconciliation in the statement of cash flows
December 31, 2015
before restatement
restatement
December 31,
2015
restated
Cash flows from operating activities
Profit before tax 10,149 (1,396) 8,753
Adjustments for:
Depreciation of property, plant and equipment (PPE) 11,776 - 11,776
Amortization of intangible assets 181 181
(Profit)/ loss on disposal of property, plant and
equipment
(106)
(106)
Impairment and carrying amount of obsolete PPE 1,047 1,047
Impairment of investment property - 209 209
Receivables and payables written-off, net of impairment
of receivables
277
277
Income from government grants and deferred income (128) (128)
Income from dealing with securities (409) (409)
Interest expense, net 3,205 3,205
Changes in accruals and retirement benefits obligation
(288)
(288)
Exchange rate loss (974) (974)
24,730 (1,187) 23,543 Increase in inventory 17,428 (630) 16,798
Increase in current receivables 256 1,817 2,073
Increase/ (decrease) in current liabilities (7,566) - (7,566)
Cash, generated from operating activities
34,848
-
34,848
Interest received 71 - 71
Interest paid (3,303) - (3,303)
Income tax paid (1,341) - (1,341)
Dividends paid (801) - (801)
Net cash from operating activities 29, 474 - 29, 474 Cash flows from investing activities
Purchase of property, plant and equipment and
intangible assets
(4,860)
-
(4,860)
Government grants 25 - 25
Proceeds from sales of property, plant and equipment 280 - 280
Net cash used in investing activities (4,555) - (4,555) Cash flows from financing activities
Proceeds from borrowings 697,945 (139,473) 558,472
Repayments of borrowings (724,191) 152,777 (571,414)
Payments of finance lease obligations (2,934) - (2,934) Net cash, generated from/ (used in) financing activities (29,180) 13,304 (15,876)
Net (decrease)/increase in cash (4,261) 13,304 9,043
Cash and cash equivalents, net of overdrafts at the
beginning of the period
4,673
(40,844)
(36,171)
Cash and cash equivalents, net of overdrafts at the end of
the period (see note 22)
412
(27,528)
(27,116)
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 27
3 Significant accounting policies (continued)
3.17 Correction of errors from prior periods (continued)
Reconciliation in the statement of changes in equity
Share
capital
Reserves
Retained
earnings
Total
Balance at January 1, 2015 before
restatement 17,953 57,452 23,693 99,098
Restatement - - (514) (514)
Balance at January 1, 2015 restated 17,953 57,452 23,179 98,584
Changes in equity for 2015
Dividends - - (802) (802)
Revaluation reserve of obsolete
property, plant and equipment - (184) 184 -
Restatement - - (109) (109)
Comprehensive income for the
period restated - 34,326 7,763 42,089
Balance at December 31, 2015
restated 17,953 91,594 30,216 139,763
4 Revenue
Revenue can be analyzed by markets as follows:
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Export 288,598 303,079
Domestic 21,202 22,055
Total revenue 309,800 325,134
Revenue can be analyzed by products as follows:
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Foils 147,122 137,958
Extrusion, pipes and other 100,214 112,726
Strip and sheets 62,464 74,450
Total revenue by products 309,800 325,134
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 28
5 Cost of sales
Cost of sales consists of the following:
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Materials, fuels, electricity and services 241,536 270,420
Personnel costs 15,290 14,485
Depreciation 11,983 11,228
Other 397 287
Changes in inventories of work in progress, finished goods,
net of capitalized expenses
(9,910)
253
Impairment of property, plant and equipment - 282
Total cost of sales 259,296 296,955
Cost of sales can be analyzed by products as follows:
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Foils 118,433 121,283
Extrusion, pipes and other 83,425 99,028
Strip and sheets 57,438 76,644
Total cost by products 259,296 296,955
6 Other income
Other income consists of the following:
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Sales of materials 5,839 5,070
Insurances indemnities 92 242
Sales of services 358 325
Payables written-off 199 38
Income from rents 168 53
Income from government grants (note 27) 1,372 128
Other 266 381
Total other income 8,294 6,237
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 29
7 Administrative expenses
Administrative expenses consist of the following:
Year ended
December 31,
2016
Year ended
December 31,
2015
Personnel expenses 6,465 4,930
Depreciation and amortization 704 701
Insurance expenses 655 902
Repairs and maintenance 316 457
Security 436 446
Transportation and business travel 396 359
Taxes 311 291
Donations 438 334
Ecology 549 164
Materials 145 130
Communication expenses 53 82
Receivables written-off 220 43
Consulting services 130 98
Fines and tax audits expenses 4 10
Rents 78 73
Entertainment expenses 299 -
Other 197 616
Total administrative expenses 11,396 9,636
Expenses on audit of the financial statements of the Company, presented as part of the administrative
expenses for 2016 and 2015 amount to BGN 40 thousand and BGN 38 thousand, respectively.
8 Distribution expenses
Distribution expenses are, as follows:
Year ended
December 31,
2016
Year ended
December 31,
2015
Transportation 7,860 7,484
Sales commissions 1,376 1,145
Personnel expenses 880 749
Impairment of trade receivables and claims paid 105 438
Insurances 298 347
Advertisement expenses 315 96
Materials 69 50
Depreciation and amortization 20 15
Other 450 169
Total distribution expenses 11,373 10,493
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 30
9 Other expenses
Other expenses are, as follows:
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Cost of materials and services sold 1,787 1,897
Impairment of assets under construction - 765
Impairment of investment properties 268 209
Assets written-off 2,028 -
Loss on sales of property, plant and equipment 49 -
Total other expenses 4,132 2,871
10 Operating expenses by nature
The expenses classified by function can be further analyzed by nature, as follows:
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Materials 241,008 270,154
Personnel costs 22,394 19,920
Depreciation 12,726 11,957
Hired services 12,677 12,061
Other expenses 5,083 2,099
Impairment of property, plant and equipment and investment
properties
268 1,256
Changes in inventories of finished goods and work in progress (9,720) 687
Capitalized expenses (74) (76)
Total 284,362 318,058
Сost of sales 259,296 296,955
Administrative expenses 11,396 9,636
Distribution expenses 11,373 10,493
Impairment of assets under construction and investment
properties (Other expenses)
268 974
Assets written-off (Other expenses) 2,028 -
Total 284,362 318,058
11 Foreign exchange rate gain/ (loss), net
Foreign exchange rate gain/(loss) net comprises of the following:
Year ended
December 31,
2016
Year ended
December 31,
2015
Foreign exchange rate gain 82 2,029
Foreign exchange rate loss (42) (1,397)
Foreign exchange rate gain, net 40 632
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 31
12 Interest expenses, net
Interest expenses, net include the following:
Year ended
December 31,
2016
Year ended
December 31,
2015
Interest expenses on loans (1,803) (3,398)
Interest income 206 220
Financial costs on retirement benefits obligation (18) (27)
Total interest expenses, net (1,615) (3,205)
13 Other financial expenses, net
Year ended
December 31,
2016
Year ended
December 31,
2015
Bank charges (407) (451)
Gain/(loss) from derivative financial instruments - (47)
Gain arising from transactions with securities - 409
Total other financial expenses, net (407) (89)
Gains arising from transactions with securities are due to repayments of principal and interest related
to the ZUNK loan (see also note 26).
14 Income taxes
The deferred tax assets and liabilities accrued, are as follows:
December 31,
2016
December 31,
2015
restated
January 1,
2015
restated
Deferred tax assets:
Expenses regarding employee benefits 145 146 152
Receivables written-off - 54 30
Accrued and unpaid remunerations 21 21 19
Derivative financial instruments - 18 -
Total deferred tax assets 166 239 201
Deferred tax liabilities:
Property, plant and equipment 6,670 7,224 3,788
Investment property 200 227 248
Derivative financial instruments 64 - 83
Total deferred tax liabilities 6,934 7,451 4,119
Total deferred tax liabilities, net 6,768 7,212 3,918
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 32
14 Income taxes (continued)
A reconciliation of the effective tax rate is provided in the table below:
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Profit before taxation 29,914 8,753
Statutory tax rate 10% 10%
Income tax (2,991) (875) Tax effect of permanent differences 5 (11)
Other - (104)
Recorded tax expense (2,986) (990)
Effective tax rate 9.98% 11.3%
Income tax expense is as follows:
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Current tax expense on taxable profit (3,512) (1,620)
Deferred tax income relating to the origination and reversal of
temporary differences during the current period 526 630
Income tax expense (2,986) (990)
Deferred tax for 2016 and 2015, charged directly to equity is at the amount of BGN 83 thousand and
BGN 3,924 thousand, respectively (see also the statement of comprehensive income).
15 Earnings per share
Earnings per share are as follows:
Year ended
December 31,
2016
Year ended
December 31,
2015
restated
Average number of shares 17,952,959 17,952,959
Profit for the period (BGN’000) 26,928 7,763
Earnings per share (BGN) 1.50 0.43
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 33
16 Property, plant and equipment
Property, plant and equipment, owned by the Company, are as follows:
Land and
Buildings
Plant and
Equipment
Vehicles
and other
Assets under
construction
Total
Cost or Revalued amount
Balance at December 31, 2014 37,404 173,993 2,795 7,740 221,932
Acquisitions - 665 269 3,997 4,931
Disposals (172) (403) (44) - (619)
Revaluation to fair value - 40,447 - - 40,447
Transferred from fixed assets in
progress - 1,755 - (1,755) -
Balance at December 31, 2015 37,232 216,457 3,020 9,982 266,691
Acquisitions - 535 414 8,514 9,463
Disposals (85) (110) (61) (1,994) (2,250)
Transferred from fixed assets in
progress 2,252 1,179 - (3,431) -
Transferred from inventories - - - 8,107 8,107
Balance at December 31, 2016 39,399 218,061 3,373 21,178 282,011
Accumulated depreciation and
impairment
Balance at December 31, 2014 (16,166) (90,036) (1,750) (318) (108,270)
Depreciation for the period (1,122) (10,404) (250) - (11,776)
Impairment - (282) - (765) (1,047)
Disposed 25 378 41 - 444
Balance at December 31, 2015 (17,263) (100,344) (1,959) (1,083) (120,649)
Depreciation for the period (1,125) (11,182) (252) - (12,559)
Disposed 51 27 53 - 131
Balance at December 31, 2016 (18,337) (111,499) (2,158) (1,083) (133,077)
Carrying amount at
December 31, 2015 19,969 116,113 1,061 8,899 146,042
Carrying amount at
December 31, 2016 21,062 106,562 1,215 20,095 148,934
As of December 31, 2016 the Company has advances for purchasing of equipment at the amount of
BGN 7,970 thousand. The total amount of the investment is EUR 36 million, which includes the three
main workshops – the casting, rolling and extrusion shops. The planned investments are connected
with the increase of capacity, diversifying the product range, increase of production efficiency,
optimization and improvement of technical and technological parameters of the processes and
ensuring higher quality of rolled and extruded products. The first phase of the investments envisages:
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 34
16 Property, plant and equipment (continued)
1. Assembling of a new cold rolling mill for rolling strip
2. Assembling of the following ancillary equipment connected with the operation of the cold
rolling mill:
- Filter system for purification of oil aerosols from the emissions into the atmosphere from
the cold rolling mill
- Machine for coil slitting
- Two gas furnaces for annealing of coils with servicing operator
- Cooling chamber for coils after annealing
- Cooling tower for circulating water – 3 cooling towers
- Assembling of new carbon dioxide reservoir
- Assembling of a machine for grinding of working shafts
- Reorganization of the five electric furnaces for aluminum foil annealing for operation
with natural gas in the rolling shop
- Assembling of a new innovative press for production of special aluminum profiles
- Assembling of furnace for artificial aging of profiles in the extrusion shop
After completing the overall investment program the total volume of production of the Company is
expected to increase by a minimum of 35 % with retaining the same level of profitability.
As of December 31, 2015 a valuation of the Company’s buildings, plant and equipment was performed
by Simeon Kutsarov, licensed appraiser, to determine the fair value of buildings, plant and equipment.
The valuation was performed in accordance with the International Valuation Standards and in
compliance with the method of amortized recoverable amount. Due to the specific characteristics of
certain items of plant and equipment, which are produced specially for the Company in accordance
with technical specifications and due to the fact that there are no similar assets and no active market
for them the appraiser has used the historical cost of the assets which is believed to be the best
estimate of their recoverable amount. The valuation was influenced by the assumptions for the
recoverable amount, the physical condition, wearing out of plant and equipment and residual useful
life.
As at December 31, 2015 a valuation was performed by the same licensed appraiser of separate groups
of assets from property, plant and equipment, and of assets under construction.
As of December 31, 2015 and 2014 assets under construction include expenses amounting to
BGN 3,546 thousand and BGN 4,311 thousand, respectively related to construction of secondary
aluminum workshop. The construction project dated as of the beginning of 1990 was suspended before
being fully accomplished. As of December 31, 2015 and 2014 the Management of the Company
intends to fulfill the project by the financial support of investors. Machinery and equipment of the
secondary aluminum workshop are impaired to their liquidation amount. As of December 31, 2015
and 2014 the recoverable amount of the secondary aluminum workshop and its plant and equipment
was valued by a licensed appraiser.
As at December 31, 2015 impairment is accrued at the amount of BGN 765 thousand, and as at
December 31, 2014 the recoverable amount of these assets did not differ significantly from their fair
value. In 2016 the management of the Company has written off assets under construction related to the
secondary aluminum workshop at the amount of BGN 1,994 thousand because they were considered
obsolete. As of December 31, 2016 the management decided not to complete the project with investors
and reviewed the option for sale of the assets.
As of December 31, 2016 and 2015 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.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 35
16 Property, plant and equipment (continued)
For the purposes of IFRS 13 the Company classifies its property, plant and equipment into Level 3 –
unobservable inputs.
Had the Company’s property, plant and equipment been measured on a historical cost basis, their
carrying amount would have been:
Land and
Buildings
Plant and
Equipment
Vehicles
and other
Assets under
construction
Total
Carrying amount at
December 31, 2015 1,294 33,365 1,093 8,899 44,651
Carrying amount at
December 31, 2016 2,386 23,911 1,355 20,095 47,747
Property, plant and equipment at carrying amount of BGN 4,163 thousand are completely amortized as
of December 31, 2016 (December 31, 2015: BGN 3,191 thousand).
Property, plant and equipment have been pledged as security of the Company’s borrowings (see
also note 26).
17 Intangible assets
Intangible assets are as follows:
Allowances for
emissions of
greenhouse gases
Software
Total
Cost
Balance at December 31, 2014 5 830 835
Additions - 40 40
Balance at December 31, 2015 5 870 875
Additions - 27 27
Balance at December 31, 2016 5 897 902
Accumulated amortization
Balance at December 31, 2014 - (495) (495)
Amortization for the period - (181) (181)
Disposals - - -
Balance at December 31, 2015 - (676) (676)
Amortization for the period - (167) (167)
Disposals - - -
Balance at December 31, 2016 - (843) (843)
Carrying amount at
December 31, 2015
5 194 199
Carrying amount at
December 31, 2016
5 54 59
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 36
17 Intangible assets (continued)
Under the National Plan for allocation of allowances for trade with emissions of greenhouse gases for
the period from 2013 to 2020 the Company has available 116,152 tons EU allowances. In 2016 and
2015, according to Annual reports on the emissions, prepared by the Company and verified by an
authority, accredited by the Executive Agency Bulgarian Accreditation Service, respectively 23,578
and 22,688 tons greenhouse gases were emmitted. For the emmitted in 2016 and 2015 greenhouse
gases were used EU Allowances from the received ones for the period from 2014 to 2020.
Intangible assets at reporting amount of BGN 117 thousand are fully amortized as of December 31,
2016 (December 31, 2015: BGN 110 thousand).
18 Investment property
As at December 31, 2016 and 2015 investment property comprises of a hotel and a restaurant, situated
in the village of Kranevo, Varna district, at the amount of BGN 3,370 thousand and BGN 3,638
thousand.
As at December 31, 2016 and 2015 revaluations of investment property have been made by an
independent appraiser. The valuations conform to the International Valuation Standards, and were
arrived at by reference to market evidence of transaction prices for similar properties. In 2016 and
2015 after a valuation was performed by the appraiser the fair value of the investment property was
lower than their carrying amount and therefore they were impaired by the Company.
For the purposes of IFRS 13 the Company classifies its investment property into Level 3 –
unobservable inputs.
Had the Company’s investment property been measured on a historical cost basis, their carrying
amount would have been at the amount of BGN 3,847 thousand as at December 31, 2015 and 2015.
2016 2015
restated
Investment property at the beginning of the period 3,638 4,935
Impairment charged for the period (268) (1,297)
Investment property at the end of the period
3,370 3,638
19 Receivables on loans granted and investments in subsidiaries and associated companies
Receivables on loans granted and investments in subsidiaries and associated companies include: December 31,
2016
December 31,
2015
Long-term loan granted to a related party 5,943 5,793
Equity investments 6 6
Total 5,949 5,799
As of December 31, 2016 and 2015 the Company’s investments include BGN 5 thousand, representing
100 % of the capital of Euromet EOOD and other investments amounting to BGN 1 thousand.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 37
19 Receivables on loans granted and investments in subsidiaries and associated companies
(continued)
As of December 31, 2016 the long-term loan includes principal and interest at the amount of BGN
2,300 thousand (2015: BGN 2,300 thousand) and BGN 3,643 thousand (2015: 3,493 хил. лв.). In 2013
an additional agreement for extension of the term for payment of the total outstanding principal and
interest on the loan until December 31, 2017 was signed. In accordance with the additional agreement
dated December 6, 2016 the deadline for repayment of the loan was extended until December 31,
2020.
The annual interest on the loan is 6.5 %.
20 Inventories
Inventories consist of the following:
December 31,
2016
December 31,
2015
Restated
January 1, 2015
Restated
Materials 7,579 13,760 20,212
Work in progress 25,016 17,736 17,274
Finished goods 21,308 18,797 19,870
Dispatched materials 1,720 51 9,786
Total inventories 55,623 50,344 67,142
Breakdown of work in progress is presented below:
December 31,
2016
December 31,
2015
January 1, 2015
Work in progress in rolling workshop 13,118 9,218 9,847
Work in progress in casting workshop 3,615 3,206 3,730
Work in progress in extruding workshop 8,283 5,312 3,697
Total work in progress 25,016 17,736 17,274
Further breakdown of materials is presented below:
December 31,
2016
December 31,
2015
January 1, 2015
Raw materials 5,513 5,465 13,015
Moulds and samples - 5,676 5,235
Spare parts 1,462 2,040 1,365
Fuel and lubricants 196 231 272
Packaging materials 283 206 197
Scrap 5 20 20
Auxiliary materials 5 10 11
Other 115 112 97
Total materials 7,579 13,760 20,212
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 38
20 Inventories (continued)
Further breakdown of finished goods is presented below:
December 31,
2016
December 31,
2015
Restated
January 1, 2015
Restated
Rolled products 15,792 12,298 13,034
Extruded products 5,516 6,499 6,836
Total finished goods 21,308 18,797 19,870
As of December 31, 2016 and 2015 inventories up to the amount of EUR 24,300 thousand and
EUR 30,000 thousand have been pledged as a security of the Company’s borrowings (see also note
26).
21 Trade and other receivables, net
Trade and other receivables, net, are as follows:
December 31,
2016
December 31,
2015
Restated
January 1, 2015
Restated
Trade receivables, gross 34,006 35,452 36,098
Less impairment - (545) (273)
Trade receivables, net 34,006 34,907 35,825
VAT refundable 4,743 4,083 6,038
Advances to suppliers 3,087 2,253 1,859
Receivables from financing 1,242 - -
Receivables on tax audit report - - 214
Advances to personnel 136 135 167
Loan granted 13 12 2
Receivables from related parties 1,981 1,926 1,750
Other receivables 34 47 16
Total trade and other receivables, net 45,242 43,364 45,871
The movement of the impairment of trade receivables is presented below:
2016 2015
Balance at the beginning of the period 545 273
Accrued for the period - 272
Written-off for the period (545) -
Balance at the end of the period - 545
As per a tax audit report, dated November 5, 2012, VAT refundable at the amount of
BGN 236 thousand was denied and withholding tax liabilities and interest amounting to
BGN 10 thousand and BGN 53 thousand, respectively were set. In 2013 an additional tax audit was
conducted, resulting in decrease of the identified liabilities by BGN 40 thousand. In 2014 the
Company reports in the profit or loss receivables written-off under the tax audit report, related to a part
of the denied VAT refundable and other established tax liabilities at the total amount of
BGN 60 thousand. As at December 31, 2014 the receivables under the tax revision act include denied
VAT refundable, default interest and legal fees at the total amount of BGN 214 thousand. Under a
decision of the Supreme Administrative Court, dated June 11, 2015 the tax audit report was repealed
and as at December 31, 2015 the amounts are completely refunded to the Company.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 39
21 Trade and other receivables, net (continued)
On December 20, 2016 by order of the Minister of Energy of the Republic of Bulgaria the Company
received a grant to reduce the burden related to the allocation of costs, originating from buying
electricity produced from renewable sources. This grant was at the amount of BGN 1,242 thousand.
The financing was reported as revenue and at the end of the reporting period the Company has not
received the funds (note 6).
Trade and other receivables as of December 31, 2016 and 2015 have been pledged as a security of
Company’s borrowings (see also note 26).
22 Cash and cash equivalents
Cash and cash equivalents consist of the following:
December 31,
2016
December 31,
2015
Restated
January 1,
2015
Restated
Cash at banks 367 90 373
Cash on hand 34 14 31
Deposits 73 288 4,287
Cash equivalents 1 20 18
Total cash and cash equivalents in the
Statement of Financial Position
475 412 4,709
Restricted cash - - (36)
Bank overdrafts (note 26) (8,391) (27,527) (40,843)
Total cash and cash equivalents net of
overdrafts in the Cash Flow Statement (7,916) (27,116) (36,170)
As of January 1, 2015 restricted cash comprises of cash on bank accounts amounting to
BGN 36 thousand, pledged as a security in favor of a Bulgarian bank for a bank guarantee opened in
favour of the Company.
23 Capital and legal reserves
The Company’s share capital as at December 31, 2016 and 2015 and as of January 1, 2015 amounts to
BGN 17,952,959 distributed in 17,952,959 shares with par value of BGN 1 each.
The structure of the Company’s share capital according to the last available extract from the Central
Depository as of December 31, 2016 includes 55 juridical persons holding 99.06 of the share capital
and 2 454 individuals holding participation of 0.94 %. The table below describes the shareholders
owing over 3% of the Company’s share capital.
Shareholder Share %
Alumetal АD 73.25%
FAF METAL SANAYII VE TICARET AS 16.86%
Mandatory Universal Pension Fund Allianz Bulgaria 3.69%
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 40
23 Capital and legal reserves (continued)
In accordance with the Bulgarian Commerce Act requirements, the Company is obliged to set up a
legal reserves (reserve fund). The sources of financing the reserve fund are:
at least one tenth of the profit which is set aside until the fund’s assets reach one tenth or
more of the Company’s share capital or such other larger portion as the Company’s statute
may provide;
the proceeds obtained in excess of the nominal value of shares and debentures upon their
issuing;
the total of the additional payments made by the shareholders for preferences given them
with shares;
other sources provided for by the Company’s statute or by a general meeting resolution.
Disbursements from the reserve fund may be made only for covering losses. When the amount of the
reserve fund exceeds one-tenth of the Company’s share capital, the excess amount may be used for
increase of the share capital.
In 2016 based according to a decision of the Company’s General meeting of the shareholders dividend
was distributed at the amount of BGN 1,828 thousand (2014: BGN 802 thousand). As of December
31, 2016 the liabilities for outstanding dividend amount to BGN 9 thousand (December 31, 2015:
BGN 6 thousand).
Concerning establishment and use of the revaluation reserve, hedging reserve and reserve on
retirement benefits obligation see notes 3.7, 3.13 and 3.5, respectively.
Movement of the Company’s reserves is, as follows:
Legal
reserve
Revaluation
reserve
Hedging
reserve
Reserve on
retirement
benefits
obligation Total
Balance at December 31, 2014 1,795 55,830 749 (922) 57,452
Changes in equity for 2015
Revaluation reserve of
property, plant and
equipment disposed - (184) - - (184)
Comprehensive income for
the period restated - 35,423 (913) (184) 34,326
Balance at December 31, 2015
restated 1,795 91,069 (164) (1,106) 91,594
Changes in equity for 2016
Revaluation reserve of
property, plant and
equipment disposed - (39) - - (39)
Comprehensive income for
the period - - 744 (9) 735
Balance at December 31, 2016 1,795 91,030 580 (1,115) 92,290
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 41
24 Derivative financial instruments
Derivative financial instruments consist of the following:
December 31,
2016
December 31,
2015
Cash flow hedge derivative financial assets/(liabilities) 644 (182)
Including
Non-current derivative financial assets/(liabilities) - - 4
Current derivative financial assets/(liabilities) 644 (182)
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, 2016 the Company has outstanding forward contracts for sale and purchase of
metal from January till June 2017. Under the terms of the forward contracts the Company will sell
5,550 tons of aluminum with contracted value of BGN 17,395 thousand. The Company does not
expect any deals that would not be finalized.
For the period from January 2017 till the date of the current financial statements the Company sold
forward contracts for 20,050 tons of aluminum and purchased forward contracts for 27,425 tons of
aluminum. The remaining contracts are expected to be realized until December 2017. The Company
does not expect any projected deals that would not be finalized.
As at December 31, 2016 and 2015 the Company has assessed the cash flow hedge as highly effective,
and, as a result the gains and losses on changes in fair value of hedging instruments have been reported
as other comprehensive incomes, as follows:
Year ended
December 31,
2016
Year ended
December 31,
2015
Gains/(losses) arising during the period 826 (1,014)
Adjustment for amounts transferred to the carrying amount of the
hedged items (182) 832
Unrealized gains/(losses) on hedging at the end of the period 644 (182)
Less: Tax effect (64) 18
Total unrealized gains/(losses) on hedging at the end of the period,
net of tax 580 (164)
In 2015 the Company has a foreign currency swap contracts with a Bulgarian bank to hedge the risks
associated with the changes in the foreign currency rates of a long-term debt, denominated in USD
(see also note 26). These contracts are classified as fair value hedge instruments and the Company has
assessed the hedge as highly effective.
The movement of the fair value hedge derivative financial liabilities is, as follows:
December 31,
2016
December 31,
2015
Balance at the beginning of the period - (47)
(Gain)/ loss from fair value hedges - 47 -
Balance at the end of the period -
Less short-term portion - -
Long-term portion at the end of the period - -
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 42
25 Retirement benefits obligation
The financial assumptions used for the calculation of the retirement benefits obligation are as follows: December 31,
2016
December 31,
2015
Discount rate 2.00% 3.00%
Expected rate of salary increase for the first year 2.00% 2.00%
Expected rate of salary increase for the second and third year 2.00% 2.00%
Expected rate of salary increase for the following years 1.00% 1.00%
As of December 31, 2016 and 2015, the demographic actuarial assumptions used are based on the
following:
а) mortality of the Bulgarian population during the period 2011 - 2013, according to data of the
National Statistical Institute;
b) statistical data of the National Health Information Center about peoples’ disability and early
retirement.
The employee turnover is, as follows:
Age
Year ended
December 31,
2016
Year ended
December 31,
2015
18 – 30 years 47% 35%
31 – 40 years 22% 25%
41 – 50 years 5% 15%
51 – 60 years 11% 5%
over 60 years 9% 1%
The amounts, recognized in the statement of comprehensive income regarding retirement benefits
obligation are, as follows:
Year ended
December 31,
2016
Year ended
December 31,
2015
Current service cost 59 54
Net interest 18 27
Expenses, recognized in profit or loss 77 81
Actuarial loss arising from changes in the financial assumptions 180 48
Actuarial (gain)/ loss arising from experience adjustments (170) 156
Actuarial loss, recognized in other comprehensive income 10 204
Total 87 285
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 43
25 Retirement benefits obligation (continued)
The movement of retirement benefits obligation is presented below:
December 31,
2016
December 31,
2015
Balance at the beginning of the period 889 884
Current service cost 59 54
Payments for the period (139) (280)
Interest costs 18 27
Actuarial loss arising from changes in the financial assumptions 180 48
Actuarial (gain)/loss arising from experience adjustments (170) 156
Balance at the end of the period 837 889
The retirement benefits obligation at December 31, 2016 and 2015 comprises of the following:
December 31,
2016
December 31,
2015
Benefits on attainment of retirement age 825 884
Benefits on early retirement 12 5
Total retirement benefits obligation 837 889
The movement of the reserve on retirement benefits obligation is, as follows:
December 31,
2016
December 31,
2015
Reserve at the beginning of the period, gross 1,228 1,024
Actuarial loss, recognized in Other comprehensive income 10 204
Reserve at the end of the period, gross 1,238 1,228
Defined benefit plan exposes the Company to the following actuarial risks:
Investment risk The present value of the defined benefit plan liability is calculated
using a discount rate of Bulgarian government securities, denominated
in BGN, with maturity up to 10 years, and the data for the following
periods is received by data interpolating.
Interest risk A decrease in the interest rate of the Bulgarian government securities
will increase the defined benefit plan liability.
Longevity risk The present value of the defined benefit liability is calculated by
reference to the best estimate of the mortality of plan participants.
Salary risk The present value of the defined benefit plan liability is calculated by
reference to the future salaries of plan participants. An increase in the
salary of the plan participants will increase the plan’s liability.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 44
25 Retirement benefits obligation (continued)
A sensitivity analysis based on reasonably possible changes in the respective assumptions, at the end
of the reporting period, assuming all other assumptions held constant is, as follows:
Minus 0.5%
Assumptions
and results used Plus 0.5 %
Discount rate 1.5% 2.0% 2.5%
Amount of the liability (BGN thousand) 873 837 803
Difference (BGN thousand) 36 - (34)
Difference (%) 4 % - (4 %)
Salary growth 0.5% 1% 1.5%
Amount of the liability (BGN thousand) 803 837 873
Difference (BGN thousand) (34) - 36
Difference (%) (4 %) - 4 %
Probability of early retirement 5% 5.5% 6%
Amount of the liability (BGN thousand) 876 837 801
Difference (BGN thousand) 39 - (36)
Difference (%) 5 % - (4 %)
Mortality assumption -1 year Mortality table +1 year
Amount of the liability (BGN thousand) 830 837 844
Difference (BGN thousand) (7) (7)
Difference (%) (0.8%) (0.8%)
The sensitive analysis presented above may not be representative of the actual change in the retirement
benefit obligation as it is unlikely that the change in assumptions would occur in isolation of one
another as some of the assumptions may be correlated. In presenting the above calculations the
projected unit credit method is used, the same as that applied in calculating the retirement benefit
obligation liability, recognized in the Statement of Financial Position.
26 Borrowings
Borrowings of the Company, including interest can be analyzed as follows:
December 31,
2016
December 31,
2015
Short-term bank loans 47,632 63,194
Current portion of long-term bank loans 2,869 3,155
Decrease of unamortized initial fees (35) -
2,834 3,155
Current portion of lease agreements 3,235 3,091
Current portion of long-term loans 6,069 6,246
Total short-term bank loans and leases 53,701 69,440
Long-term bank loans 11,052 5,692
Decrease of unamortized initial fees (209) -
10,843 5,692
Long-term trade loans and lease agreements 6,560 11,150
Total long-term loans and leases 17,403 16,842
Total loans and leases 71,104 86,282
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 45
26 Borrowings (continued)
Loans of the Company can be analyzed as follows:
December 31, 2016
Principal Interest Total
Bank loans
- Long-term bank loans 10,843 - 10,843
- Current portion of long-term bank loans 2,834 - 2,834
- Short-term bank loans 47,632 - 47,632
Total 61,309 - 61,309
Trade loans
- Long-term trade loans and lease agreements 5,735 825 6,560
- Current portion of long-term trade loans and lease
agreements 3,235 - 3,235
Total 8,970 825 9,795
Total loans 70,279 825 71,104
December 31, 2015
Principal Interest Total
Bank loans
- Long-term bank loans 5,692 - 5,692
- Current portion of long-term bank loans 3,155 - 3,155
- Short-term bank loans 63,194 - 63,194
Total 72,041 - 72,041
Trade loans
- Long-term trade loans and lease agreements 10,271 879 11,150
- Current portion of long-term trade loans and lease
agreements 3,091 - 3,091
Total 13,362 879 14,241
Total loans 85,403 879 86,282
The Company’s bank loans are as follows:
December 31, 2016 December 31, 2015
Bank loans Principal Interest Total Principal Interest Total
- Loan A 831 - 831 1,663 - 1,663
- Loan B1 3,912 - 3,912 3,912 - 3,912
- Loan B2 5,214 - 5,214 5,466 - 5,466
- Loan B3 5,223 - 5,223 - - -
- Loan B4 - - - - - -
- Loan G 21,523 - 21,523 23,959 - 23,959
- Loan D - - - 613 - 613
- Loan Е 2,882 - 2,882 3,172 - 3,172
- Loan P1 1,883 - 1,883 2,330 - 2,330
- Loan P2 - - - - - -
- Loan F 8,391 - 8,391 27,527 - 27,527
- Loan K 1,486 - 1,486 - - -
- Loan H 2,237 - 2,237 3,399 - 3,399
- Loan I 7,727 - 7,727 - - -
Total 61,309 - 61,309 72,041 - 72,041
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 46
26 Borrowings (continued)
Trade loans and leases are, as follows:
December 31, 2016 December 31, 2015
Principal Interest Total Principal Interest Total
Trade loans and leases
- Заем J - - - 1,300 165 1,465
- Заем Z 5,735 825 6,560 5,735 714 6,449
- Lease agreements 3,235 - 3,235 6,327 - 6,327
Total 8,970 825 9,795 13,362 879 14,241
Loan А
On January 24, 2013 an agreement was concluded for a long-term bank loan (Loan A) between the
Company and a Bulgarian bank at the total amount of EUR 2,400 thousand. The loan purpose is
financing and purchase of new production equipment. The repayment of the loan is, as follows: one
installment amounting to EUR 1,125 thousand, due till December 31, 2014, and the rest of the loan in
36 equal monthly installments payable, starting from January 30, 2015 till December 31, 2017. The
loan is secured with a registered pledge on equipment property to the Company at a carrying amount
of BGN 2,699 thousand as of December 31, 2016 (December 31, 2015L BGN 2,898 thousand). As of
December 31, 2016 and 2015 the outstanding liability in respect to the loan is EUR 425 thousand
(BGN 831 thousand) and EUR 850 thousand (BGN 1,663 thousand), respectively.
Loan B
On June 12, 2008 the Company concluded a facility agreement with a Bulgarian bank. Subject of the
agreement is a revolving facility for working capital of up to EUR 9,000 thousand and the term of the
agreement is up to May 31, 2009. In 2015 the limit was increased up to EUR 12,000 thousand. The
loan was renegotiated as a multi-purpose revolving facility for working capital, usable under revolving
conditions, as follows:
- sublimit B1 up to EUR 2,000 thousand - credit line for financing of VAT related payments;
- sublimit B2 and B3 up to EUR 7,500 thousand - credit line for financing of trade receivables and
issuance of bank guarantees and letters of credit. The limit amounting to EUR 7,500 thousand is
distributed as follows:
a) sublimit B2 up to EUR 5,000 thousand - credit line for financing of trade receivables under
deferred payment contracts for sale of goods, insured by Atradius or another insurer approved by the
Bank;
b) sublimit B3 up to EUR 3,000 thousand – credit line for trade financing, serving contingent
liabilities of the Company, including issuance of bank guarantees and letters of credit;
The total amount of the utilized portion of Sublimits B2 and B3 at each moment may not exceed EUR
7,500 thousand;
- sublimit B4 up to EUR 2,500 thousand – credit line for working capital and for issuance of bank
guarantees/letters of credit.
In subsequent annexes dated November 2016, the loan maturity is renegotiated to September 30, 2017
(December 31, 2015: maximum limit of BGN 12,000 thousand, maturity January 31, 2016).
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 47
26 Borrowings (continued)
Collaterals for the loan sublimits are as follows:
- sublimit B1 is secured with a registered pledge on plant and equipment, owned by the Company,
with carrying amount of BGN 9,240 thousand as of December 31, 2016 (December 31, 2015: BGN
10,161 thousand);
- sublimit B2 is secured with a registered pledge on a group of current and future receivables resulting
from trade transactions with certain counterparties at the amount of BGN 5,000 thousand as of
December 31, 2016 (December 31, 2015: BGN 5,000 thousand);
- sublimit B3 is secured with a registered pledge on a current and future group of inventory at the
amount of 125% of the utilized sum. As of December 31, 2016, the inventory pledged amount to BGN
5,476 thousand (December 31, 2015: BGN 5,476 thousand);
- a guarantee, signed by the ultimate owner for the whole limit of the loan.
As of December 31, 2016 and December 31, 2015 the loan liabilities are as follows:
limit
limit in
EUR ‘000 balance as of
31.12.2016 in
EUR ‘000
balance as of
31.12.2016 in
BGN ‘000
balance as of
31.12.2015 in EUR
‘000
balance as of
31.12.2015 in
BGN ‘000
B1
2,000
2,000
3,912
2,000
3,912
B2
7,500
2,666
5,214
2,795
5,466
B3
2,671
5,223
B4 2,500 - - - -
total: 12,000
7,337
14,349
4,795
9,378
Loan G
On March 16, 2010 the Company concluded an agreement with a Bulgarian bank for loan
commitments under a revolving credit line (Loan G) for the amount of EUR 10,000 thousand. The
loan is a multipurpose credit line, as follows:
- revolving loan for working capital,
- limit for issuance of bank guarantees and issuance of documentary letters of credit,
- limit for issuance of credit cards under the terms and conditions of a separate contract.
The loan limit had been increased several times until April 3, 2014 when an annex was signed, which
defined the maximum amount of the credit line at EUR 20,000 thousand, allocated as follows:
- EUR 15,000 thousand – a revolving loan for working capital, a limit for issuance of bank guarantees
and letters of credit and a limit for issuance of credit cards;
- EUR 5,000 thousand – a limit provided to the Company by the bank of up to 90% of the amount of
sales invoices with VAT included, in accordance with a list of clients, previously approved by the
bank, whose receivables are pledged in its favor.
In accordance with annexes from 2016 to the loan agreement, the loan repayment term is extended to
June 30, 2017.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 48
26 Borrowings (continued)
The collateral of the loan is as follows:
- first in a row is a pledge on machinery and equipment with a carrying amount of BGN 24,053
thousand as of December 31, 2016 (December 31, 2015: BGN 26, 901 thousand);
- second in a row is a mortgage on lands and buildings with a carrying amount of BGN 16,687
thousand as of December 31, 2016 (December 31, 2015: BGN 17,233 thousand);
- a pledge on receivables under the Law on financial collateral arrangements – on all receivables,
current and future;
- a pledge under the Law on registered pledges of all receivables, current and future ones, of the
borrower on all accounts in national or foreign currency that the Company holds at the bank, at the
total amount of EUR 3,850 thousand at any moment of the agreement term. As of December 31, 2016
the carrying amount of the receivables from customers that are pledged in favor of the bank amounts
to BGN 10,169 thousand.
As of December 31, 2016 and 2015, the utilized funds amount to EUR 11,004 thousand (BGN 21,522
thousand) and EUR 12,250 thousand (BGN 23,959 thousand), respectively.
Loan D
On April 23, 2014 the Company entered into an agreement for a long-term loan (Loan D) with a
Bulgarian bank at the amount of EUR 883 thousand, to refinance an existing investment credit facility.
The repayment is in 31 equal monthly installments, first of which falling due on May 30, 2014 and the
last one - on November 30, 2016. Collateral of the loan is a pledge on machinery and equipment,
owned by the Company, with carrying amount at December 31, 2015 of BGN 2,551 thousand. The
loan is fully repaid as of December 31, 2016. As of December 31, 2015 the outstanding liability in
respect to the loan is EUR 313 thousand.
Loan E
On April 23, 2014 the Company entered into an agreement for a long-term loan (Loan E) with a
Bulgarian bank at the total amount of EUR 1,700 thousand, to finance investments. The repayment is
in 60 equal monthly installments, first of which falling due on May 31, 2016 and the last one - on
April 30, 2021. Collateral of the loan is a pledge on machinery and equipment, owned by the
Company, with carrying amount at December 31, 2016 of BGN 2,477 thousand (December 31, 2015:
BGN 2,731 thousand). As of December 31, 2016 and 2015 the outstanding liability in respect to the
loan is EUR 1,473 thousand (BGN 2,882 thousand) and EUR 1,622 thousand (BGN 3,172 thousand),
respectively.
Loan K and F
On October 31, 2007 the Company entered into a tripartite contract with a foreign commercial bank
and its branch in Bulgaria for an overdraft facility or a credit line for issuance of letters of credit (Loan
F) and a facility for working capital (Loan K). As of December 31, 2016 the total credit limit of Loan
F and Loan K amounts to EUR 24,300 thousand where EUR 4,000 thousand are for the Bulgarian
branch of the Bank. As of December 31, 2015 the total credit limit of Loan F and Loan K amounts to
EUR 30,000 thousand where EUR 4,000 thousand are for the Bulgarian branch of the Bank. As of
December 31, 2016 and 2015 the outstanding liability on Loan F is at the amount of EUR 4,290
thousand (BGN 8,391 thousand) and EUR 14,074 thousand (BGN 27,527 thousand), respectively. As
of December 31, 2015 there are no utilized amounts under Loan K. As of December 31, 2016, the
utilized amount under Loan K is EUR 760 thousand (BGN 1,486 thousand).
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 49
26 Borrowings (continued)
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 24,300 thousand as of December 31, 2016 (December 31, 2015: 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 24,300 thousand as of December 31, 2016 (December 31, 2015: EUR 30,000
thousand), pledge on machinery and equipment with carrying amount as at December 31, 2016 of
BGN 10,315 thousand (December 31, 2015: BGN 19,912 thousand), pledge on receivables of the
Company on contracts with clients at the amount of EUR 15,000 thousand as at December 31, 2015
and December 31, 2015 and a promissory note at the amount of EUR 24,300 thousand (December 31,
2015: EUR 30,000 thousand) with guarantors ultimate owners.
As of December 31, 2016 the carrying amount of the receivables pledged under loans K and F
amounts to BGN 12,773 thousand.
Loan 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. In 2013 an annex
№1 to the contract was signed to increase the credit limit up to EUR 2,000 thousand. The Bank gives
the possibility to the Company to utilize the limit of the loan as overdraft or a facility line, including
for issuance of bank guarantees for purchase of goods. The Company can utilize new amounts in the
form of overdraft, reducing its total exposition due to the Bank until reaching the approved limit.
The loan is utilized according to two sublimits – P1 and P2.
Sublimit P1 is at the amount of EUR 1,225 thousand. The sublimit is to be repaid in 48 monthly
installments, first of which falling due on October 31, 2011, and the last one – on October 14, 2015.
As at December 31, 2015 the liabilities under the loan sublimit are completely repaid.
Sublimit P2 is utilized as credit line limited to the amount of EUR 875 thousand. The term of payment
of the sublimit is to November 3, 2016. As at December 2015 the liabilities under the loan sublimit are
repaid.
As of December 2016 and 2015, the liabilities under the loan limit, utilized in the form of a credit line
or overdraft in accordance with annex 1 of 2013, are at the amount of EUR 963 thousand (BGN 1,833
thousand) and EUR 1,1,91 thousand (BGN 2,330 thousand), respectively.
In accordance with annex 6 from October 2016, the Company can utilize the approved limit at the
amount of EUR 2,000 thousand as overdraft or credit line until November 3, 2017.
Collateral of the credit is a mortgage on investment properties of the Company in the village of
Kranevo (see also note 18), and a promissory note at the amount of EUR 1,925 thousand
(BGN 3,765 thousand), issued by the Company and avalled by related parties – ultimate owner, as
well as a with a guarantee of these related parties.
Sublimit P1 can be utilized as overdraft for the repaid portion of the limit at the amount of EUR 1,125
thousand. The repayment term is November 3, 2016. With annex No. 2 from 2014, the parties decided
that the loan interest (for the portion of the utilized limit to the amount of BGN 1,125 thousand) is to
be negotiated for each demand for fund utilization. As of December 31, 2016 the loan interest amounts
to 2%.
In 2016 the loan term is extended with an annex to November 3, 2017.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 50
26 Borrowings (continued)
Loan H
On August 25, 2011 the Company entered into an agreement with a Bulgarian commercial bank for a
long-term bank loan (Loan H) at the total amount of EUR 3,250 thousand with the purpose of
financing the delivery of production machines and modernization of the casting and rolling
production. The loan has to be utilized in installments till 12 months from the date of the agreement.
The loan is to be repaid in 60 monthly installments, first of which falling due on September 30, 2013
and the last one – on August 31, 2018. Collateral of the loan is a first ranking pledge on the machinery
purchased, with carrying amount as at December 31, 2016 of BGN 5,311 thousand (December 31,
2015: BGN 5,911 thousand). As at December 31, 2016 and 2015 the outstanding liability on the loan
amounts to EUR 1,144 thousand (BGN 2,237 thousand) and EUR 1,738 thousand (BGN 3,399
thousand), respectively.
Loan J and Z
On May 12, 2003 the Company concluded a long-term loan agreement with a related party at the total
amount of USD 10,000 thousand (Loan J). The purpose of the funds is to provide financing for
investment activities of the Company. The loan term is negotiated to be 5 years with effect from
January 1, 2005 and the interest rate is one-year libor of +2%. On August 5, 2005 a part of the Loan J
at the amount of USD 7,650 thousand was transferred to another related party. The remaining part of
the Loan J at the amount of USD 1,125 thousand was converted to EUR at an exchange rate fixed
under an annex dated August 6, 2005, namely EUR 947 thousand. According to an annex from 2014
the payment date for the principal and interest due is December 31, 2018. In accordance with an annex
from 2014 the interest rate is changed to one-year euribor +3%. As at December 31, 2016, the loan is
fully repaid in advance. As at December 31, 2015 the outstanding liability of the loan amounts to BGN
1,465 thousand (principal BGN 1,300 thousand and interest BGN 165 thousand).
In 2002 the Company received from a related party USD 3,178 thousand and EUR 215 thousand as a
fulfillment of an agreement for financial support of the business operations and the investment
activities of the Company (Loan Z). The loan term is negotiated to 3 years with effect from the first
fund utilization under the loan and the interest rate is one-year libor of +2%. According to an annex
from December 2, 2005 the parties have agreed and converted the liability from USD to EUR 2,932
thousand. According to annex from 2013 the payment date for principal and interest due is December
31, 2018. The interest rate is changed to one-year euribor +3%. As at December 31, 2016 and 2015 the
outstanding liabilities of the loan are at the amount of BGN 6,560 thousand (principal BGN 5,735
thousand and interest BGN 825 thousand) and BGN 6,449 thousand (principal BGN 5,735 thousand
and interest BGN 714 thousand), respectively.
Loan I
On November 15, 2016, the Company concluded an agreement with a Bulgarian bank for an
investment loan for financing the purchase of machinery and equipment in accordance with the
Company’s investment program for 2016-2017 with an included option for a letters of credit for
equipment supply. The loan’s limit is EUR 23,000 thousand (BGN 44,984 thousand) and it will be
utilized in tranches for a period of 24 months effective from the date of the agreement. The repayment
term is 84 months, where 24 months represent a grace period on the principal and the repayment is to
be made in equal monthly installments. As of December 31, 2016 the sum utilized amounts to EUR
4,075 thousand (BGN 7,670 thousand) gross of commissions paid.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 51
26 Borrowings (continued)
Collaterals on the loan are as follows:
- first in a row, a registered pledge on production equipment, purchased with the utilized loan
amounts, as well as a pledge on another equipment accepted by the bank. The equipment will be
pledged in favor of the bank after it is purchased with loan funds. As of December 31, 2016, the
equipment is not purchased yet;
- second in a row, a registered pledge on production equipment with a carrying amount of BGN
10,600 thousand as of December 31, 2016.
Lease agreements
The Company has signed finance lease agreements for purchase of vehicles and production machinery
and as of December 31, 2016 the amount of the liability under the finance lease is BGN 0 thousand
(2015: BGN 62 thousand) and BGN 3,235 thousand (2015: BGN 6,327 thousand), respectively.
The liabilities under the contracts for purchase of vehicles are fully repaid in 2016. The liabilities
under the contract for purchase of production machinery are repaid in monthly installments, the last
one being due in December 2017.
The carrying amount of the purchased assets under the conditions of a finance leas as of December 31,
2016 is as follows:
- vehicles: BGN 55 thousand (December 31, 2015: BGN 62thousand);
- production machinery: BGN 19,319 thousand (December 31, 2015: BGN 20,878 thousand)
The liabilities on the finance lease agreements are secured with the leased equipment and a bank
guarantee at the amount of EUR 4,000 thousand, issued in 2010 with expiry date March 31, 2018. The
issued bank guarantee is secured with a second ranking pledge on maschinery and equipment with
carrying amount as at December 31, 2016 of BGN 8,281 thousand (December 31, 2015: BGN 9,069
thousand).
Finance lease liabilities as of December 31, 2016 and 2015 are as follows:
Total value of
Minimum lease payments
Present value of
Minimum lease payments
December
31, 2016
December
31, 2015 December 31,
2016
December
31, 2015
No later than 1 year 3,306 3,288 3,235 3,091
Later than 1 year and not later than 5
years - 3,306 - 3,236
Total 3,306 6,594 3,235 6,327
Less: Deferred financial expenses (71) (267) - -
Present value of minimum lease
liabilities 3,235 6,327 3,235 6,327
Current portion of finance lease
liabilities 3,235 3,091
Long-term portion of finance lease
liabilities - 3,236
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 52
26 Borrowings (continued)
ZUNK loan
The Company received a bank loan for funding of the construction of the secondary aluminum
workshop in late 1980. In 1994, in accordance with the Law for Settlement of Unserviced Loans, the
loan was transformed into a loan to the State (ZUNK loan). On December 14, 2000 under an annex to
the agreement between the Company and the Ministry of Finance of Bulgaria dated January 15, 1997,
the ZUNK loan, comprising of principal at the amount of USD 5,305,823 and interest at the amount of
USD 3,190,472 was rescheduled for repayment until October 30, 2015. Interest is charged on the
outstanding principal at 7 % per annum. As at December 31, 2015 the loan is completely repaid.
27 Government grants and deferred income
Government grants
December 31,
2016
December 31,
2015
Government grants at the beginning of the year 1,907 2,010
Received for the year 25
Recognized in the Statement of Comprehensive Income (130) (128)
Government grants at the end of the year 1,777 1,907
Including:
Short-term government grants 130 130
Long-term government grants 1,647 1,777
In 2014 the Company received BGN 2,057 thousand related to the performance of project
“Investments to expand the activity of “Alcomet” AD and protection of the environment” under
government grant contract № BG161PO003-2.3.01-0032-С001 dated July 12, 2012 under Operational
Programme “Development of the Competiveness of the Bulgarian Economy” 2007-2013.
In 2014 the Company concluded a government grant contract № 33 dated July 23, 2014 with the Fund
“Working Conditions” for the performance of project “Improving the working environment and
working conditions in “Alcomet” AD” and in 2015 the Company received financing at the amount of
BGN 25 thousand.
Deferred income
December 31,
2016
December 31,
2015
Deferred income at the beginning of the year - -
Accrued 978 -
Recognized in the Statement of Comprehensive Income (110) -
Deferred income at the end of the year 868 -
Including:
Short-term deferred income 326 -
Long-term deferred income 542 -
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 53
27 Government grants and deferred income (continued)
According to a lease agreement for land, a building and equipment, dated August 30, 2016, the
Company received an advance payment at the amount of BGN 978 thousand for the total amount of
the lease of the agreement term that is 3 years.
28 Trade and other payables
Trade and other payables consist of the following:
December 31,
2016
December 31,
2015
Restated
January 1,
2015
Restated
Suppliers 8,230 9,066 17,591
Payables to employees 1,043 1,002 949
Advances from customers 577 471 781
Social security payables 460 421 415
Payables to state budget 301 302 310
Trade payables to related parties (note 32) 347 504 739
Dividend payable 9 6 5
Accruals for payables to suppliers 1,500 898 504
Total trade and other payables 12,467 12,670 21,294
29 Income tax liabilities
December 31,
2016
December 31,
2015
Restated
Income tax liabilities/( receivables) at the beginning of the period 320 41
Income tax accrued 3,512 1,620
Income tax paid (3,570) (1,341)
Income tax liabilities at the end of the period 262 320
30 Accruals
Accruals are as follows:
December 31,
2016
December 31,
2015
Unutilized paid annual leaves’ charges 523 488
Social and health security 92 85
Total accruals 615 573
Further analysis of movements of unutilized paid leaves’ charges is presented below:
December 31,
2016
December 31,
2015
Balance at the beginning of the period 573 636
Accrued 615 573
Utilized (573) (636)
Balance at the end of the period 615 573
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 54
31 Financial instruments and risk management
The carrying amounts of financial assets and liabilities as at December 31, 2016 and 2015 by
categories as defined in accordance with IAS 39 Financial instruments: Recognition and Measurement
are presented in the tables below:
Financial assets:
December 31,
2016
December 31,
2015
Restated
January 1,
2015
Restated
Cash (note 22) 475 412 4,709
Interest bearing loans receivables (note 19) 5,943 5,793 5,644
Trade and other receivables, net (note 21) 35,987 36,833 37,575
Government grant receivable (note 21) 1,242 - -
Derivative financial instruments for hedging (note 24) 644 - 879
Total 44,291 43,038 48,807
Financial liabilities:
December 31,
2016
December 31,
2015
Restated
January 1,
2015
Restated
Trade and other payables (note 28) 10,086 10,474 18,826
Interest bearing loans liabilities (note 26) 67,869 79,955 106,560
Finance lease liabilities (note 26) 3,235 6,327 9,261
Derivative financial instruments for hedging (note 24) - 182 -
Total 81,190 96,937 134,647
The financial instruments used expose the Company to market, credit and liquidity risk. Information in
regard to purposes, policies and processes concerning the management of those risks, as well as the
capital management is provided below.
Market risk
Market risk is the risk that the fair value or the future cash flows of financial instruments may vary due
to the changes in market prices. The associated market risk is foreign currency risk, interest risk or
price risk.
Foreign currency risk
The Company enters into international transactions, denominated in foreign currencies. Therefore, the
Company is exposed to market risk related to possible foreign currency fluctuations. Such risk is
mainly connected to the USD/BGN exchange rate fluctuations, because the Company’s transactions
related to purchases of raw materials and sales of finished goods are denominated in USD. The
Company does not have any loans received or granted, denominated in USD. 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
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 55
31 Financial instruments and risk management (continued)
Foreign currency risk (continued)
Financial assets and liabilities, denominated in USD, are presented in the table below:
December 31, 2016 December 31, 2015
Original
currency
(in thousands)
BGN’000
Original
currency
(in thousands)
BGN’000
Trade and other receivables 844 1,567 841 1,506
Total financial assets 844 1,567 841 1,506
Trade and other payables (174) (322) (476) (852)
Total financial liabilities (174) (322) (476) (852)
Total financial assets/(liabilities), net 670 1,245 365 654
The sensitivity analysis of foreign currency risk is calculated at a change of 5% of the USD/BGN
exchange rate. Management believes that this change is reasonably possible, based on statistical data
for the dynamics in variations for the previous year. If as at December 31, 2016 and 2015 the
USD/BGN exchange rate had increased by 5%, and, with all other variables held constant, the profit
after tax would have increased by BGN 67 thousand for 2016, and by BGN 33 thousand for 2015,
mainly as a result of exchange rate differences arising from revaluation of trade receivables for 2016
and trade liabilities, denominated in USD for 2015. The difference in the sensitivity of the profit after
taxation for 2016 to changes in the exchange rate of the USD compared to 2015 is insignificant.
Most of the sales of the Company are concentrated in countries from the European Union, including
Bulgaria, as 97 % of the sales are realized in this region. Transactions with customers from those
countries are negotiated in EUR, that basically eliminates foreign currency risk. In addition, owing to
the increasing importance of the EUR as a global currency, the Company has the opportunity to realize
some of its sales in EUR outside the European Union as well, that further mitigates the foreign
currency risk.
Interest rate risk
The Company is exposed to interest rate risk, because the main part of the loans received are
contracted under the terms of floating interest rate, negotiated as a base interest rate (LIBOR,
EURIBOR) with a certain mark-up, which varies between 3% and 4%. In 2016 and 2015 the loans
with a floating interest rate are denominated in BGN and EUR.
The Company continuously monitors and analyses its main interest exposures and develops certain
scenarios in regard to their optimization, including re-financing, renewal of existing loans, alternative
financing (contracts for sale and lease-back of assets), as well as develops estimates of the impact of
the interest rate fluctuations in a certain range over the financial result.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 56
31 Financial instruments and risk management (continued)
Interest rate risk (continued)
As of the date of these financial statements the structure of the interest-bearing financial instruments is
as follows:
December 31,
2016
December 31,
2015
Instruments with a fixed interest rate
Financial assets 5,943 5,793
Financial liabilities 7,727 8,657
Instruments with a floating interest rate 63,378 77,625
Financial liabilities 63,377 77,625
If the interest rate increases or decreases by 2 %, the interest amount for the past
one-year-period could affect the income statement, as follows:
Accrued
interest
Interest amount at a possible
fluctuation of the interest
rate by
plus 2% minus 2%
Trade loans (fixed interest rate) 150 150 150
Total income from interest 150 150 150
Bank loans 1,408 2,571 244
Trade loans 199 327 54
Lease agreements 196 196 196
Total interest expenses 1,803 3,094 494
Total interest expenses, net 1,653 2,944 344
Price risk
Price risk is related to possible changes in the market prices of equity instruments held for sale and of
the Company’s finished goods.
Changes in selling prices of finished goods depend vastly on movements in the price of aluminum on
the international stock exchange. The Company uses forward contracts to hedge the risks associated
with changes in market prices of aluminum on the London Metal Exchange. These contracts are
classified as cash flow hedges as they hedge the Company’s exposure to variability in cash flows that
is attributable to the particular price risk associated with forecasted sale and purchase transactions (see
note 24).
Credit risk
Credit risk is the risk that a party to a financial instrument is unable to pay its liabilities and thus cause
financial loss to the other party. Financial assets, which potentially expose the Company to credit risk,
are mainly trade receivables and interest-bearing loans granted. Primarily, the Company is exposed to
credit risk in the event where its customers fail to perform their obligations. In order to mitigate the
credit risk the Company has concluded contracts with an international and a Bulgarian insurance
companies in regard of trade receivables insurance. Additionally, the Company directs its policy to
enter into sales transactions with customers having favorable credit reputation, and, to use adequate
collaterals in order to mitigate the risk of possible financial losses. The estimations for favorable credit
reputation of the customers are based on the financial position, previous experience and other factors.
Credit limits are determined, which are strictly monitored.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 57
31 Financial instruments and risk management (continued)
Credit risk (continued)
As at December 2016 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 to which it has
the most significant exposure as of December 31, 2016 and 2015 are presented in the tables below:
December 31, 2016
Carrying amount Credit limit
CEDO SP.Z O.O. 4,513 6,454
CUKI COFRESCO SPA 1,966 2,602
THYSSENKRUPP METALSERV GMBH 2,310 3,912
Aliberico Food Packaging S.L. 1,645 2,151
Sphere France S.A.S. 1,791 4,401
Total: 12,226 19,520
December 31, 2015
Carrying amount Credit limit
CEDO SP.Z O.O. 3,932 5,183
SPHERE FRANCE S.A.S. 2,110 4,401
WRAP FILM SYSTEMS LTD. 1,553 2,347
THYSSENKRUPP METALSERV GMBH 1,286 3,912
ETF Aluminium GmbH 5 1,956
Total: 8,886 17,799
During 2016 the Company realizes 21 % of the revenue through sales to the five biggest customers
(2015: 21 %). As at December 31, 2016 and 2015 trade receivables from these customers amount to
BGN 11,789 thousand and BGN 11,222 thousand, respectively, that represent 25% and 24 % of the
gross amount of trade receivables.
As of December 31, 2015, maturities of receivables from customers, based on the latest possible date,
on which the Company may receive them are presented in the table below:
December 31,
2015
up to 30 days 28,002
30-90 days 17,854
up to 120 days 45
Total amounts receivable 45,901
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 58
31 Financial instruments and risk management (continued)
Credit risk (continued)
As of December 31, 2016 and 2015, the aging structure of the Company’s trade receivables is as
follows:
December 31,
2016
December 31,
2015 before
impairment
Individually
impaired
December 31,
2015 net of
impairment
Neither overdue, nor impaired 27,997 26,112 26,112
up to 30 days 5,009 6,991 6,991
30-60 days 108 488 488
60-90 days 94 242 242
90-180 days 510 419 419
over 180 days 2,264 3,121 (545) 2,576
Total trade receivables 35,982 37,374 (545) 36,830
As of December 31, 2016 trade receivables at the amount of BGN 32,827 thousand are insured
(December 31, 2015: BGN 31,290 thousand).
The credit risk associated with cash at bank accounts and derivatives is minimal, owing to the fact that
the Company operates only with banks having high credit reputation.
The carrying amount of financial assets, net of impairment reflects the maximum credit risk, to which
the Company is exposed.
The Company’s non-derivative financial assets are represented by fixed interest rate long-term loans,
whose effective interest rate is 6,5% per annum (see also note 19).
Liquidity risk
Liquidity risk is the risk that the Company is not able to settle its financial liabilities on maturity. The
Company manages this risk by securing enough liquid funds, which should be used to settle the
financial liabilities when they become executable, including in extraordinary or unexpected
circumstances. The aim of the management is to maintain a stable balance between constant
availability and flexibility of the financial resources through use of different forms of financing.
Management of the liquidity risk is the responsibility of the Managing and Supervisory Boards. and
includes maintaining of sufficient monetary funds, successfully negotiating of adequate credit lines,
preparing, analyzing and updating of cash flows forecasts.
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, 2016 Up to 1
month
Between 1
and 3 months
Between 3
months and
one year
Between
1 and 5
years
Over 5
years
Total
Financial liabilities
Long-term bank loans 282 342 1,523 34,762 16,792 53,701
Short-term bank loans 149 285 48,563 - - 48,996
Trade loans - - - 6,895 - 6,895
Finance lease liabilities 274 549 2,484 - - 3,306
Payables to suppliers 8,230 - - - - 8,230
Trade payables to related parties 347 - - - - 347
Dividends 9 - - - - 9
Other liabilities 1,500 - - - - 1,500
Total 10,792 1,176 52,570 41,657 16,792 122,985
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 59
31 Financial instruments and risk management (continued)
Liquidity risk (continued)
December 31, 2016 Up to 1
month
Between 1
and 3 months
Between 3
months and
one year
Between
1 and 5
years
Over 5
years
Total
Financial assets
Long-term bank loans - - - 6,541 - 6,541
Cash and cash equivalents 475 - - - - 475
Trade receivables - 34,006 - - - 34,006
Receivables from financing - 1,242 - - - 1,242
Receivables from related parties - - 1,981 - - 1,981
Total 475 35,248 1,981 6,541 - 44,244
December 31, 2015 Up to 1
month
Between 1
and 3 months
Between 3
months and
one year
Between
1 and 5
years
Over 5
years
Total
Financial liabilities
Long-term bank loans 251 507 2,604 5,834 69 9,265
Short-term bank loans 9,396 - 54,376 - - 63,772
Trade loans - - - 8,542 - 8,542
Finance lease liabilities 271 546 2,471 3,306 - 6,594
Payables to suppliers and related
parties 6,838 2,649 77 - - 9,564
Trade payables to related parties 6 - - - - 6
Dividends 904 - - - - 904
Other liabilities
17,666 3,702 59,528 17,682 69 98.647
December 31, 2015 Up to 1
month
Between 1
and 3 months
Between 3
months and
one year
Between
1 and 5
years
Over 5
years
Total
Financial assets
Trade loans - - 5,943 - - 5,943
Cash and cash equivalents 412 - - - - 412
Trade receivables - 34,908 - - - 34,908
Receivables from related parties - - 1,926 - - 1,926
Total 412 34,908 7,869 - - 43,188
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 60
31 Financial instruments and risk management (continued)
Fair value measurements
Some of the Company’s financial assets and financial liabilities are measured at fair value at the end of
each reporting period. The following table gives information about how the fair values of these
financial assets and liabilities are determined (valuation techniques and inputs used).
Financial assets/
(liabilities)
Fair values at Level Valuation techniques and
inputs
December 31,
2016
December
31, 2015
Derivatives for cash flow
hedging
644 (182) Ниво 1 Quoted prices on primary
market
Information about the financial liabilities, measured at fair value as at December 31, 2016 is presented,
as follows:
Описание
Оценки по справедлива стойност в края на отчетния период
при използвани:
December 31,
2016
Level 1 December
31, 2015
Level 1
Recurring fair value measurements
Derivatives for cash flow hedging 644 644 (182) (182)
Total recurring fair value measurements 644 644 (182) (182)
The tables below present the fair value of financial assets and financial liabilities, that are not
measured at fair value, but its presentation is required by IFRS’s. The management of the Company
considers that the fair value of financial assets and liabilities that are not included in the table, is
approximately equal to their carrying amount.
December 31, 2016
Carrying
amount
Fair
value
Financial assets
Receivables on interest bearing loans (note 19) 5,943 5,943
Financial liabilities
Interest bearing loans liabilities (note 26) 67,869 67,869
Finance lease liabilities (note 26) 3,235 3,235
December 31, 2015
Carrying
amount
Fair
value
Financial assets
Receivables on interest bearing loans (note 19) 5,793 5,570
Financial liabilities
Interest bearing loans liabilities (note 26) 79,955 74,591
Finance lease liabilities (note 26) 6,327 6,029
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 61
31 Financial instruments and risk management (continued)
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 2016 and 2015 is, as follows:
December 31,
2016
December 31,
2015
Restated
Debt (see note 26) 71,104 86,282
Cash (see note 22) (475) (412)
Net debt 70,629 85,870
Total Equity 165,598 139,763
Amounts accumulated in equity relating to cash-flow hedges (see
note 24)
(579)
164
Adjusted Capital 165,019 139,927
Debt-to-adjusted capital ratio 0.43 0.61
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, 2016 and
2015 the Company adheres to these requirements, as its net assets amount to BGN 165,598 thousand
and BGN 139,763 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, 2016 and 2015 the Company’s current liabilities exceed the current assets by
BGN 34,483 thousand and BGN 10,805 thousand, respectively. Management of the Company believes
that in the future it could sustain its normal activities through self-financing and increase of the
operating efficiency.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 62
32 Related parties
Related parties of the Company are:
1. Аlumetal АD – Sofia – Parent company and ultimate 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. Ferroal Limited – Nassau, Bahamas – controlling shareholder in the Parent company;
4. Fin Metal Aluminyum San. Ve Tic. A.S., Turkey – entity under common control.
The main transactions with related parties during 2016 and 2015 are as follows:
December 31,
2016
December 31,
2015
Parent company
Accrued interest on loans received 178 181
Interest paid on loans received (67) (113)
Loans received 1,335 -
Loan principal paid (1,335) -
Controlling shareholder in the Parent company
Accrued interest on loans received 21 28
Interest paid (186) -
Loan principal paid (1,300) -
Entities with significant influence over the Company
Services received 17 21
Subsidiaries
Interest on loans granted 150 150
Entities under common control
Fin Metal Aluminyum San. Ve Tic. A.S.
Purchase of materials 1,521 1,472
Purchase of fixed assets 4 252
Purchase of services 113 65
Sale of finished goods 31 74
Positive foreign exchange differences 58 161
The outstanding accounts receivable from related parties include:
December 31,
2016
December 31,
2015
Restated
January 1,
2015
Restated
Subsidiaries
Euromet EOOD – trade receivable (note 21) 5 5 5
Euromet EOOD – loans granted (note 19) 5,943 5,793 5,644
Enitity under common control
Fin Metal Aluminyum San. Ve Tic. A.S. – trade
receivable
1,976 1,921 1,745
Total receivables from related parties 7,924 7,719 7,394
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 63
32 Related parties (continued)
The outstanding amounts payable to related parties are as follows:
December
31, 2016
December 31,
2015
Restated
January, 1
2015
Restated
Controlling shareholder of the Parent company
Ferroal Limited – trade loan received (note 26) - 1,465 1,440
Parent company
Alumetal AD – trade loans received (note 26) 6,560 6,449 6,378
Entities with significant influence over the
Company
FAF Metal (note 28) - 6 13
Entity under common control
Fin Metal Aluminyum San. Ve Tic. A.S. – trade
payable
347 498 726
Total payables to related parties 6,907 8,418 8,557
The remuneration of key management includes only short-term benefits, which as at December 31,
2016 and 2015 are at the amount of BGN 3,486 thousand and BGN 2,107 thousand, respectively. The
outstanding payables to key management as at December 31, 2016 and 2015 amount to
BGN 226 thousand and BGN 208 thousand, respectively.
In 2016 and 2015, the Company did not distribute dividends (see note 23).
33 Contingent assets, liabilities and capital commitments
On September 28, 2016, the Company signed a contract for the purchase of equipment at the amount
of EUR 16,300 thousand. As of December 31, 2016, 25% of the contracted amount is paid in advance
to the supplier. The equipment supply will begin in 2017.
In April 2011, the Company signed a bank loan agreement under the condition of making loan
commitments in the form of financial transactions with a limit of EUR 250 thousand as of December
31, 2016 (December 31, 2015: EUR 1,750 thousand). As of December 2016 and 2015 there are no
amounts utilized under the contract. In accordance with annex 7 dated June 9, 2016, the agreement
term is extended to June 30 2018. In compliance with the Law on financial collateral arrangements,
the Company has provided a collateral to the Bank in the form of a pledge on all its current and future
receivables on all of the Company’s accounts in the Bank.
As of December 31, 2016 and 2015, the Company has issued a bank guarantee to Deutsche Leasing
Bulgaria EAD for the amount of EUR 4,000 thousand. The bank guarantee issued on February 11,
2015 came into force on March 1, 2015 and is valid until March 31, 2018. According to a condition in
the Bank guarantee agreement, its amount is to be proportionally reduced with every payment that the
Bank makes to Deutsche Leasing Bulgaria EAD. As of December 31, 2016, the commitment amount
under the bank guarantee is EUR 1,654 thousand (December 31, 2015: EUR 3,223 thousand).
As of December 31, 2016 the Company has no letters of credit.
As of December 31, 2016 the Company has received bank guarantees from counterparties at the total
amount of BGN 1,000 thousand and EUR 4,275 thousand, where the amount of EUR 4.252 thousand
is for the purchase of production equipment. The guarantees’ maturities are in the period 2017-2018.
ALCOMET AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2016 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original Bulgarian text, in case of divergence the Bulgarian text shall prevail 64
34 Events after the date of the separate financial statements
On March 21, 2017, the Company received in a bank account the aid for reduction of the burden for
allocation of costs resulting from purchasing electric power, produced by renewable sources. The aid
is recognized as income in 2016.
In January 2017 annex 1 to a contract for a pledge on receivables to a loan agreement without
commitment dated July 31, 2007 with Bank F and Bank K was signed. The total amount of the secured
receivables is to no less than EUR 15,000 thousand.
In January 2017, annex 4 to a contract for a pledge on inventory to a loan agreement without
commitment dated July 31, 2007 with Bank F and Bank K was signed. The total amount of the secured
goods is EUR 24,300 thousand.
In February 2017, the Company concluded an underlying contract for foreign exchange transactions
(currency forward, currency swap and currency interest rate swap) with a Bulgarian bank.
On March 16, 2017, the Company signed an annex to a loan agreement with its subsidiary Euromet
EOOD, stating that the loan principal amounting to BGN 2,300 thousand is payable on September 31,
2017 whereas the accrued interest remains payable until December 31, 2020.