CONTENTS:
GENERAL INFORMATION .................................................................................................................. 2 NCOME STATEMENT .......................................................................................................................... 3 STATEMENT OF COMPREHENSIVE INCOME ................................................................................. 4 STATEMENT OF FINANCIAL POSITION .......................................................................................... 5 CASH FLOW STATEMENT .................................................................................................................. 6 STATEMENT OF CHANGES IN EQUITY ........................................................................................... 7 NOTES TO THE FINANCIAL STATEMENTS .................................................................................... 8
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
Eshref Tevfik Alkang
Mehmet Dedeoglu
Registered Office
Shumen 9700
Second Industrial Zone
Legal consultants
Advocate Katya Obretenova
Advocate Valentin Vasilev
Bankers
UniCredit Bulbank AD, Sofia
Societe Generale Expressbank AD
BNP Paribas SA, branch Sofia
BNP Paribas (Swisse) SA,Geneva
MKB Unionbank AD
D Commerce Bank AD
Commercial Bank Allianz AD Sofia
T.C. Ziraat Bankasi Varna branch
Auditors
DFK AndA Consulting Ltd.
Address: № 19 Lyuben Karavelov Str., floor 2
Sofia 1142
Bulgaria
АLCOMET AD
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 3
NCOME STATEMENT
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
Notes
Year ended
December 31,
2012
Year ended
December 31,
2011
Revenue 4 251,697 267,508
Cost of sales 5 (228,928) (240,137)
Gross margin 22,769 27,371
Other income, net 6 8,884 6,166
Administrative expenses 7 (9,515) (8,498)
Distribution expenses 8 (8,554) (8,646)
Other expenses 9 (6,463) (4,108)
Exchange rate (loss)/gain, net 11 (419) 83
Interest expenses, net 12 (2,489) (3,626)
Other financial incomes /(expenses), net 13 116 (365)
Profit before taxation 4,329 8,377
Income tax expense 14 (441) (470)
Profit for the period 3,888 7,907
Earning per share (BGN) 15 0.22 0.44
Approved for issuance by the Managing Board of Alcomet AD on February 26, 2013
Huseyin Yorucu (signed)
Huseyin Umut Ince (signed) Semih Baturay (signed) Teodora Petrova (signed)
Executive Directors Financial Director Chief Accountant
Antoaneta Bazlyankova (signed) Dimitar Bazlyankov (signed)
Managing Director Registered Auditor
DFK AndA Consulting Ltd
February 26, 2013, Sofia
The accompanying notes are an integral part of these financial statements.
АLCOMET AD
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 4
STATEMENT OF COMPREHENSIVE INCOME
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
Notes
Year ended
December 31,
2012
Year ended
December 31,
2011
Profit for the period 3,888 7,907
Other comprehensive income
Decrease of revaluation reserve from impairment of
property, plant and equipment 16
(170)
(101)
Deferred tax effect on revaluation of property, plant
and equipment
17
10
Adjustment of the hedging reserve for the
loss/(gain) from forward contracts, transferred to
the initial carrying amount of the hedged items 24
738
(1,782)
Tax effect on the adjustment of the hedging reserve
for the loss/(gain) from forward contracts,
transferred to the initial carrying amount of the
hedged items 24
(74)
178
Unrealized profit/(loss) on forward contracts,
recognized in the hedging reserve 24
183
(738)
Tax effect on the unrealized profit/(loss) on
forward contracts, recognized in the hedging
reserve 24
(18)
74
Total other comprehensive income for the period, net
of tax
676
(2,359)
TOTAL COMPREHENSIVE INCOME
FOR THE PERIOD
4,564
5,548
Approved for issuance by the Managing Board of Alcomet AD on February 26, 2013
Huseyin Yorucu (signed)
Huseyin Umut Ince (signed) Semih Baturay (signed) Teodora Petrova (signed)
Executive Directors Financial Director Chief Accountant
Antoaneta Bazlyankova (signed) Dimitar Bazlyankov (signed)
Managing Director Registered Auditor
DFK AndA Consulting Ltd
February 26, 2013, Sofia
The accompanying notes are an integral part of these financial statements.
АLCOMET AD
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 5
STATEMENT OF FINANCIAL POSITION
as of December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
Notes
December 31,
2012
December 31,
2011
ASSETS
Non-current assets
Property, plant and equipment 16 118,613 108,296
Intangible assets 17 525 656
Investment property 18 4,935 4,935
Financial assets 19 5,351 5,098
Derivative financial instruments 24 183 35
Deferred tax assets 14 139 198
129,746 119,218
Current assets
Inventories 20 39,615 38,903
Trade and other receivables, net 21 43,847 42,169
Derivative financial instruments 24 - 22
Income tax receivables 461 -
Cash and cash equivalents 22 339 2,497
84,262 83,591
TOTAL ASSETS
214,008 202,809
EQUITY AND LIABILITIES
Capital and reserves
Share capital 23 17,953 17,953
Legal reserve 23 1,795 1,795
Revaluation reserve 56,145 57,191
Hedging reserve 24 165 (664)
Accumulated profit 19,876 16,281
95,934 92,556
Non-current liabilities
Retirement benefits obligation 25 176 140
Long-term borrowings 26 28,495 24,275
Derivative financial instruments 24 3 -
Deferred tax liabilities 14 5,057 5,418
33,731 29,833
Current liabilities
Trade and other payables 27 15,291 13,169
Short-term borrowings 26 68,247 65,766
Derivative financial instruments 24 2 738
Income tax liability 28 - 51
Accruals 29 803 696
84,343 80,420
TOTAL EQUITY AND LIABILITIES 214,008 202,809
Approved for issuance by the Managing Board of Alcomet AD on February 26, 2013
Huseyin Yorucu (signed)
Huseyin Umut Ince (signed) Semih Baturay (signed) Teodora Petrova (signed)
Executive Directors Financial Director Chief Accountant
Antoaneta Bazlyankova (signed) Dimitar Bazlyankov (signed)
Managing Director Registered Auditor
DFK AndA Consulting Ltd
February 26, 2013, Sofia
The accompanying notes are an integral part of these financial statements.
АLCOMET AD
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 6
CASH FLOW STATEMENT
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
Year ended
December 31,
2012
Year ended
December 31,
2011
Cash flows from operating activities
Profit before taxation 4,329 8,377
Adjustments for:
Depreciation of property, plant and equipment 9,380 9,350
Amortization of intangible assets 131 6
Net book value of disposed assets and impairment of assets - 161
Loss/(profit) on disposal of property, plant and equipment 1 (18)
Receivables and payables written-off, net (91) (1)
Income from dealing with securities (642) (209)
Interest expense, net 2,489 3,626
Changes in accruals and retirement benefits obligation 87 (173)
Exchange rate loss/(profit) 11 (350)
15,695 20,769 Increase in inventory (712) (11,375)
(Increase)/decrease in current accounts receivable (1,703) 4,321
Increase in current liabilities 1,944 4,110
Cash, generated from operating activities
15,224 17,825
Interest received 3 8
Interest paid (3,466) (3,831)
Income tax paid (1,330) (1,111)
Dividends paid (1,184) (1,108)
Net cash, generated from operating activities 9,247 11,783 Cash flows from investing activities
Purchase of property, plant and equipment and intangible assets (13,120) (6,677) Proceeds from sales of property, plant and equipment 2 15
Net cash used in investing activities (13,118) (6,662) Cash flows from financing activities
Proceeds from borrowings 419,121 264,865
Repayments of borrowings (417,315) (271,646)
Payments of finance lease obligations (83) (79) Net cash, generated from /( used in) financing activities 1,723 (6,860)
Net decrease in cash and cash equivalents (2,148) (1,739)
Cash and cash equivalents at the beginning of the period 2,486 4,225
Cash and cash equivalents at the end of the period (see note 22) 338 2,486
Approved for issuance by the Managing Board of Alcomet AD on February 26, 2013
Huseyin Yorucu (signed)
Huseyin Umut Ince (signed) Semih Baturay (signed) Teodora Petrova (signed)
Executive Directors Financial Director Chief Accountant
Antoaneta Bazlyankova (signed) Dimitar Bazlyankov (signed)
Managing Director Registered Auditor
DFK AndA Consulting Ltd
February 26, 2013, Sofia
The accompanying notes are an integral part of these financial statements.
АLCOMET AD
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 7
STATEMENT OF CHANGES IN EQUITY
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
Share
capital
Share
premium
Legal
reserve
Revaluation
reserve
Hedging
reserve
Accumulated
profit Total
Balance at December 31, 2010 17,953 1,500 86 58,038 1,604 8,937 88,118
Changes in equity for 2011
Allocation to legal reserve - (1,500) 1,709 - - (209) -
Dividends - - - - - (1,110) (1,110)
Revaluation reserve of
property, plant and
equipment disposed - - - (756) - 756 -
Comprehensive income for
the period - - - (91) (2,268) 7,907 5,548
Balance at December 31, 2011 17,953 - 1,795 57,191 (664) 16,281 92,556
Changes in equity for 2012
Dividends - - - - - (1,186) (1,186)
Revaluation reserve of
property, plant and
equipment disposed - - - (893) - 893 -
Comprehensive income for
the period - - - (153) 829 3,888 4,564
Balance at December 31, 2012 17,953 - 1,795 56,145 165 19,876 95,934
Approved for issuance by the Managing Board of Alcomet AD on February 26, 2013
Huseyin Yorucu (signed)
Huseyin Umut Ince (signed) Semih Baturay (signed) Teodora Petrova (signed)
Executive Directors Financial Director Chief Accountant
Antoaneta Bazlyankova (signed) Dimitar Bazlyankov (signed)
Managing Director Registered Auditor
DFK AndA Consulting Ltd
February 26, 2013, Sofia
The accompanying notes are an integral part of these financial statements.
АLCOMET AD
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 8
NOTES TO THE FINANCIAL STATEMENTS
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
1 General information
1.1 Organization
Alcomet AD (the Company) is a joint-stock company registered in Bulgaria in 1991. The Company
is entered in the Trade Register of the Registry Agency under Unified Identification Code
837066358. The address of the Company’s principal place of business and head office is Shumen,
Second Industrial Zone.
Alcomet AD is a public company, registered in the Public Companies Register, as per decision of
the Financial Supervision Commission dated July 1, 1998. The Company’s shares are traded on the
Bulgarian Stock Exchange, Sofia.
The Company was established under the name of Alumina EAD and the sole shareholder of the
Company was the Government of Bulgaria. On September 13, 1999 the Privatization Agency sold
1,116,361 shares of the Company to private investors, which presented 75 % of the share capital of
the Company.
As of December 31, 2012 and 2011 the structure of the share capital of the Company is as follows:
December 31,
2012
December 31,
2011
Alumetal AD 73.25% 73.25%
FAF Metal Sanayj Ve Ticaret AS, Турция 16.86% 16.86%
ZUPF Allianz Bulgaria 2.84% 2.45%
Other 7.06% 7.44%
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 146 thousand tons, rolling workshop - 91
thousand tons and extrusion workshop - 23 thousand tons.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 9
2 Basis for preparation of the financial statements
2.1 Financial reporting framework
The Company prepares and presents its financial statements in accordance with the International
Financial Reporting Standards (IFRS), issued by the International Accounting Standards Board
(IASB) and the Interpretations, issued by the International Financial Reporting Interpretations
Committee (IFRIC), adopted by the European Union Commission (the Commission).
During the current year the Company has adopted all new and revised standards and interpretations
issued by the International Accounting Standards Board (IASB), effective for 2012 and applicable for
the activities of the Company. All changes in IFRS, effective for 2012, are approved by the
Commission (see note 2.1.1).
These financial statements are prepared for general purpose and provide information for the financial
position, results and cash flows, generated by the Company for the year ended December 31, 2012.
2.1.1 Standards and Interpretations effective in the current period
The following amendments to the existing standards and interpretations are adopted by the EU
Comission and are effective for 2012:
Standard or interpretation, date of
revision and effective date
Name of the standard or
interpretation
Effect on the Company’s
activity
Deferred tax: Recovery of
underlying assets (Amendments to
IAS 12), issued in December 2010,
effective for annual periods on or
after January 1, 2012
Limited scope amendments No effect on the
Company’s financial
statements
Amendments to IFRS 1, issued in
December 2010, effective for annual
periods beginning on or after
July 1, 2011
First time adoption of IFRS –
Replacement of 'fixed dates' for
certain exceptions with 'the date
of transition to IFRSs';
additional exemption for
entities ceasing to suffer from
severe hyperinflation
No effect on the
Company’s financial
statements
Amendments to IFRS 7 Financial
instruments, , issued in October
2010, effective for annual periods on
or after July 1, 2011
Amendments enhancing
disclosures about offsetting of
financial assets
No effect on the
Company’s financial
statements
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 10
2 Basis for preparation of the financial statements (continued)
2.1 Financial reporting framework (continued)
2.1.2 Standards and Interpretations, effective for future reporting periods
Standard or interpretation, date of
revision and effective date
Name of the standard or
interpretation
Status of adoption by the
EU Commission
IFRS 9, original issue November
2009, effective for annual periods
beginning on or after
January 1, 2015
Financial Instruments –
Classification and Measurement
- the standard will supersede
completely IAS 39
The endorsement is
postponed and no clear
view when it will be
adopted
IFRS 10, issued in May 2011,
effective for annual periods
beginning on or after
January 1, 2013
Consolidated Financial
Statements
Adopted by the EU
Commission
IFRS 11, issued in May 2011,
effective for annual periods
beginning on or after
January 1, 2013
Joint Arrangements Adopted by the EU
Commission
IFRS 12, issued in May 2011,
effective for annual periods
beginning on or after
January 1, 2013
Disclosure of Interests in Other
Entities
Adopted by the EU
Commission
IFRS 13, issued in May 2011,
effective for annual periods
beginning on or after
January 1, 2013
Fair Value Measurement Adopted by the EU
Commission
IAS 27, issued in May 2011,
effective for annual periods
beginning on or after
January 1, 2013
Separate Financial Statements Adopted by the EU
Commission
IAS 28, issued in May 2011,
effective for annual periods
beginning on or after
January 1, 2013
Investments in Associates and
Joint Ventures
Adopted by the EU
Commission
Amendments to IAS 1, issued in
June 2011, effective for annual
periods beginning on or after
July 1, 2012
Presentation of Financial
Statements – Amendments to
revise the way other
comprehensive income is
presented
Adopted by the EU
Commission
Amendments to IAS 19, issued in
June 2011, effective for annual
periods beginning on or after
January 1, 2013
Employee Benefits –
amendments, resulting from the
Post-Employment Benefits and
Termination Benefits projects
Adopted by the EU
Commission
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 11
2 Basis for preparation of the financial statements (continued)
2.1 Financial reporting framework (continued)
2.1.2 Standards and Interpretations, effective for future reporting periods (continued)
Standard or interpretation, date of
revision and effective date
Name of the standard or
interpretation
Status of adoption by the
EU Commission
Amendments to IFRS 7, issued in
December 2011, effective for annual
periods on or after January1, 2013
and interim periods within these
periods
Financial Instruments:
Disclosures — Amendments
enhancing disclosures about
offsetting of financial assets and
financial liabilities
Adopted by the EU
Commission
Amendments to IAS 32, issued in
December 2011, effective for annual
periods beginning on or after
January 1, 2014
Financial Instruments:
Presentation — Amendments to
application guidance on the
offsetting of financial assets and
financial liabilities
Adopted by the EU
Commission
IFRIC 20, issued in October 2011,
effective for annual periods
beginning on or after
January 1, 2013
Stripping costs in the
Production Phase of a Surface
Mine
Adopted by the EU
Commission
Amendments to IFRS 1, issued on
March 13, 2012, effective for annual
periods beginning on or after
January 1, 2013
Amendments relating to
government loans
Proposed for adoption by
the Commission,
expected adoption in Q1
2013
Improvements to IFRS (2009 –
2011), issued in May 2012, effective
for annual periods beginning on or
after January 1, 2013
Improvements to IFRS Proposed for adoption by
the Commission,
expected adoption in Q1
2013
Transition guidance (Amendments to
IFRS 10, IFRS 11 and IFRS 12),
issued in June 2012, effective for
annual periods beginning on or after
January 1, 2013
Transition guidance Proposed for adoption by
the Commission,
expected adoption in Q1
2013
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 12
2 Basis for preparation of the financial statements (continued)
2.1 Financial reporting framework (continued)
2.1.2 Standards and Interpretations, effective for future reporting periods (continued)
Standard or interpretation, date of
revision and effective date
Name of the standard or
interpretation
Status of adoption by the
EU Commission
Amendments for Investment entities
(Amendments to IFRS 10, IFRS 12
and IAS 27), issued in October,
2012, effective for annual periods
beginning on or after
January 1, 2014
Transition guidance Proposed for adoption by
the Commission, expected
adoption in Q3 2013
The more significant changes in the above-mentioned standards refer mainly to IFRS 10 Consolidated
Financial Statements, IFRS 11 Joint Arrangements, IFRS 12 Disclosure of Interest in Other Entities,
IAS 27 Separate Financial Statements, IAS 28 Investments in Associates and Joint Ventures. These
amendments do not affect the Company, as it does not prepare consolidated financial statements (see
note 19) and has not planned undertaking of engagements for joint ventures.
IFRS 13 Fair Value Measurement: IFRS 13 defines fair value, sets out in a single IFRS a framework
for measuring fair value and requires disclosures about fair value measurements. This standard is
applicable to annual reporting periods beginning on or after January 1, 2013. Entities may apply
IFRS 13 to an earlier accounting period, but if doing so they must disclose the fact. Application is
required prospectively as of the beginning of the annual reporting period in which the IFRS is initially
applied by the respective entity. Comparative information need not be disclosed for periods before
initial application.
The Company anticipates that the adoption of these standards, amendments to the existing standards
and interpretations would have no material impact on its financial statements in the period of initial
application, except for IFRS 9, the impact of which has not yet been evaluated.
During 2012 the Company has not elected early adoption of standards, revisions and interpretations,
effective for future annual periods.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 13
2. Basis for preparation of the financial statements (continued)
2.2 Accounting convention
The accompanying separate financial statements have been prepared on the historical cost basis
modified with subsequent revaluation to fair value of some property, plant and equipment, investment
property and derivative financial instruments as further described in notes 3.7, 3.9 and 3.12 below.
2.3 Functional and presentation currency
Functional currency is the currency of the primary economic environment, in which an entity operates
and in which it generates and expends cash. The entity carries out its transactions mainly in Bulgarian
Lev, and for this reason the functional and presentation currency is the Bulgarian Lev, which since
January 1, 1999 has been pegged to the EURO at a fixed exchange rate of EUR 1: BGN 1.95583.
These financial statements are presented in thousands of BGN.
3 Definition and valuation of the financial statements items
3.1 Revenue and expense recognition
Revenue is measured at the fair value of the consideration received or receivable and represents
amounts receivable for goods and services provided in the normal course of business, net of discounts,
Value Added Tax (VAT) and other sales related taxes.
Revenue is recognized when the entity has transferred all risks and rewards related to the ownership
of the production and goods to the buyer and the costs incurred in respect of the transaction can be
measured reliably.
Expenses are recognized in the income statement when a decrease of the future economic benefits
arise, regarding decrease of an asset or increase of a liability, which can be reliably measured.
Expenses are recognized on the basis of a direct association between the costs incurred and the revenue.
When economic benefits are expected to incur during more than one financial period and the
corresponding revenue cannot be measured precisely but only indirectly, the expenses shall be
recognized based on procedures for rational and systematic allocation.
3.2 Interest income
Interest income is accrued on a time basis, based on the outstanding principal and the applicable
effective interest rate, which is the rate that exactly discounts estimated future cash receipts through
the expected life of the financial asset to the net carrying amount of the asset.
3.3 Borrowing costs
Borrowing costs are recognized in the period in which they are incurred and are determined on the
basis of the outstanding principal and the applicable effective interest rate, which is the rate that
exactly discounts estimated future cash payments through the expected life of the financial liability to
the net carrying amount of the liability.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 14
3 Definition and valuation of the financial statements items (continued)
3.3 Borrowing costs (continued)
Borrowing costs that are directly attributable to the acquisition, construction or production of an asset,
that takes a substantial period of time to get ready for its intended use or sale, are capitalized as part of
the cost of the asset in accordance with the requirements of IAS 23 Borrowing costs. The borrowing
costs that are directly attributable to the acquisition or production of a qualifying asset are those
borrowing costs that would have been avoided, if the expenditure on the qualifying asset had not been
made.
The amount of borrowing costs eligible for capitalization is determined as the actual borrowing costs
incurred on the borrowings during the period less any investment income on the temporary investment
of those borrowings. To the extent that funds are borrowed generally and used for the purpose of
obtaining a qualifying asset, the amount of borrowing costs eligible for capitalization is determined by
applying a capitalization rate to the expenditures on that asset. The capitalization rate is the weighted
average of the borrowing costs applicable to the borrowings that are outstanding during the period.
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 for the period in which they arise.
3.5 Employee benefits
Labor and social relationships between the employees and the Company are arranged under the
provisions of the Labour Code (LC) and the social security legislation requirements enforceable in the
Republic of Bulgaria.
Short-term employee benefits
Short-term employee benefits including remunerations, bonuses and social payments and benefits
(payable within 12 months after the period in which employees have rendered their service or satisfied
the necessary conditions) are recognized as an expense in the income statement for the period in
which the service is rendered or the vesting conditions are met, and as a current liability (after
reduction of any amounts paid and deductions) to its undiscounted amount. The Company's
contributions for social security and health insurance are recognized at their undiscounted amount as
current expense and liability together with and for the period, when the respective employee benefits
are accrued.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 15
3 Definition and valuation of the financial statements items (continued)
3.5 Employee benefits (continued)
Unused paid annual leaves accruals
As of the reporting period end, the Company recognizes as liability the non-discounted amount of the
estimated expenses on paid leaves, expected to be paid to employees during the following reporting
periods as compensation to their labor in the previous reporting period, as well as the respective to
these accruals expenses on social security contributions.
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.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 16
3 Definition and valuation of the financial statements items (continued)
3.5 Employee benefits (continued)
Defined benefits plan (continued)
In accordance with requirements of IAS 19 Employee benefits, the Company recognizes a retirement
benefits liability, which is determined estimated by a licensed actuary using the Projected Unit Credit
Method. The retirement benefits liability is equal to the net present value of the defined retirement
benefits liability as of the date of the statement of financial position less any adjustments for
unrecognized actuarial gains/losses and expenses for past service cost. The present value of the
defined liability is estimated based on the expected future cash outflows, using the interest rate of the
government bonds, which have a similar maturity. The cumulative unrecognized actuarial gains and
losses at the end of the previous reporting period in excess of 10 % of the present value of the defined
benefits obligation are recognized on the basis of the expected average remaining working lives of the
employees participating in that plan (corridor approach).
The retirement benefits obligation is recognized and reported in the income statement during the
period of the respective employee service. Past service cost is recognized immediately to the extent
that the benefits are already vested. The amount of the retirement benefits obligation reported in the
statement of financial position represents the present value of the defined benefit liability of the
Company.
3.6 Taxation
According to the Bulgarian tax legislation, the Company is subject to corporate income tax. The rate
for corporate income tax for 2012 and 2011 is 10 % on the taxable profit.
Income tax expense represents the sum of the tax currently payable and deferred tax.
The tax currently payable is based on the taxable profit for the year. Taxable profit differs from profit
before taxes as reported in the income statement because it excludes items of income or expenses that
are taxable or deductible in other years and it further excludes items that are never taxable or
deductible. The Company’s liability for current tax is calculated using tax rates that have been enacted
by the end of the reporting period.
Deferred tax is the tax expected to be payable or recoverable on differences between the carrying
amounts of assets and liabilities in the financial statements and the corresponding tax bases used in
the computation of taxable profit, and is accounted for using the balance sheet liability method.
Deferred tax liabilities are generally recognized for all taxable temporary differences and deferred tax
assets are recognized to the extent that it is probable that taxable profits will be available, against
which deductible temporary differences can be utilized.
The carrying amount of deferred tax assets is reviewed at each year end and reduced to the extent that
it is no longer probable that sufficient taxable profit will be available to allow all or part of the asset to
be recovered.
Furthermore at the end of each reporting period deferred tax assets not-recognized in previous
reporting periods are reviewed. Such assets are recognized to the extent that it is probable to generate
sufficient taxable profit in future, against which the deferred tax assets to be recovered.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 17
3 Definition and valuation of the financial statements items (continued)
3.6 Taxation (continued)
Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is
settled or the asset realized. Deferred tax is recognized charged or credited in the income statement,
except when it relates to items charged or credited directly to equity, in which case the deferred tax is
also dealt with in equity.
Deferred tax assets and liabilities are offset when they relate to income taxes levied by the same
taxation authority and the Company intends to settle its current tax assets and liabilities on a net basis.
3.7 Property, plant and equipment
Property, plant and equipment are initially carried at cost, including purchase cost and any related
costs, less any subsequently accumulated depreciation and any impairment losses.
After the initial recognition, the land and buildings and plant and equipment are measured at revalued
amount, which is their fair value as of the date of revaluation, less accumulated depreciation and any
impairment losses.
Increases in the carrying amount of assets as a result of the revaluation are credited directly to equity
as a revaluation surplus. Decreases in carrying amounts of assets as a result of the revaluation are
recognized as expenses. However, a revaluation decrease is debited directly to revaluation reserve to
the extent that the decrease does not exceed the amount held in the revaluation surplus in respect of
those assets. The accumulated depreciation of revalued assets at the date of the revaluation is restated
proportionally with the change in the gross carrying amount of the assets, so that the carrying amount
of the assets after the revaluation equals the revalued amount.
On subsequent disposal of a revalued property, plant and equipment the attributable revaluation
surplus remaining in the revaluation reserve is transferred to retained earnings, net of deferred taxes.
A valuation of property, plant and equipment and assets under construction as at December 31, 2008
was performed by a licensed appraiser. A valuation of separate groups of assets from property, plant
and equipment as at December 31, 2009 and 2012 was performed by the same appraiser, as well as a
valuation of the assets under construction as at December 31, 2009, 2010, 2011 and 2012.
At the end of each reporting period, the management of the Company reviews the carrying amounts of
property, plant and equipment, which have not been valuated from a licenced appraiser and
determines whether there is any indication for impairment of these assets.
Land and buildings, which are held to earn rentals are presented as investment property (see also notes
3.9 and 18).
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 18
3 Definition and valuation of the financial statements items (continued)
3.7 Property, plant and equipment (continued)
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:
2012 2011
Buildings 25 - 30 25 - 30
Plant and equipment 5 - 17 5 - 17
Vehicles 10 10
Office equipment 6-7 6-7
Other non-current tangible assets 5 5
Depreciation is not provided for land, fully depreciated assets and assets in process of acquisition or
construction.
The gain or loss arising on the disposal or retirement of an asset is determined as the difference
between the sales proceeds and the carrying amount of the asset and is recognized in the income
statement.
3.8 Intangible assets
Intangible assets are carried at cost less accumulated amortization and any subsequent impairment
losses.
Amortization of intangible assets is charged over their estimated useful lives, under the straight-line
method, which period is from 2 to 7 years.
European Union Emissions Trading Scheme and 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 of each reporting period end, for the amount of greenhouse gases emitted during the period over
the available distributed and purchased allowances, the Company recognizes a liability in the
statement of financial position. The liability is valued at cost of the allowances purchased, used to
cover the excess and on market prices as at the date of the statement of financial position for the
excess over the available allowances, as the liability amount and the changes therein are recognized in
the statement of comprehensive income (in the financial result for the year).
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 19
3 Definition and valuation of the financial statements items (continued)
3.9 Investment property
Investment property is property held to earn rentals and is carried at fair value. As a part of property,
plant and equipment of the Company, investment properties are revaluated to their fair value by
licensed appraisers to the date of their classification as investment property. If an asset’s carrying
amount is increased as a result of such revaluation, the increase is credited directly to equity as
revaluation surplus.
The revaluation decrease is recognized in the income statement or is debited directly to equity as
revaluation surplus to the extent of any credit balance existing in the revaluation surplus in respect of
that asset. After transfer of assets to investment property, subsequent gains or losses from changes in
fair value are recognized in the net profit for the period when they arise (see note 18).
Rental income from operating leases is recognised on a straight-line basis over the term of the relevant
lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the
carrying amount of the leased asset and recognised on a straight-line basis over the lease term.
3.10 Inventories
Inventories are valued at the lower of cost and net realizable value. Cost comprises of all costs of
purchase, transportation, customs duties and other related costs.
Net realizable value represents the estimated selling price less all estimated costs of completion and
costs to sell.
The costs of conversion of inventories include costs directly attributable to the units of production.
They also include a systematic allocation of fixed and variable production overheads that are incurred
in converting materials into finished goods. The costs of conversion of each product, which are not
separately identifiable, are allocated between the products on a rational and consistent basis.
Assignment of the cost is determined on a weighted average basis.
3.11 Impairment of property, plant and equipment, intangible assets and investment property
At the reporting period end, the Company reviews the carrying amounts of its property, plant and
equipment, intangible assets and investment property to determine whether there is any indication of
impairment. If any such indication exists, the recoverable amount of the asset is estimated in order to
determine the extent of the impairment loss. Where the recoverable amount of an asset cannot be
reliably measured, the Company estimates the recoverable amount of the cash-generating unit, to
which the asset belongs.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 20
3 Definition and valuation of the financial statements items (continued)
3.11 Impairment of property, plant and equipment, intangible assets and investment property
(continued)
Recoverable amount is the higher of fair value less costs to sell and value in use. In assessing value in
use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate
that reflects current market assessments of the time value of money and the risks specific to the asset
for which the estimates of future cash flows have not been adjusted.
If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying
amount, the carrying amount of the asset (cash-generating unit) is reduced to its recoverable amount.
The impairment loss is recognized as expense immediately, unless the relevant asset is carried at a
revalued amount, in which case the impairment loss is treated as a revaluation decrease.
When an impairment loss is subsequently reversed, the carrying amount of the asset (cash-generating
unit) is increased to the revised estimate of its recoverable amount, so that the increased carrying
amount does not exceed the carrying amount that would have been determined, had no impairment
loss been recognized for the asset (cash-generating unit) in prior years. A reversal of an impairment
loss is recognized as income immediately, unless the relevant asset is carried at a revalued amount, in
which case the reversal of the impairment loss is treated as a revaluation increase.
3.12 Financial instruments
Financial assets and financial liabilities are recognized in the Company’s statement of financial
position only when the Company becomes a party to the contractual provisions of the instrument.
Financial assets are derecognized from the statement of financial position when the contractual rights
to receive the cash flows from the financial asset expire, or the assets are transferred and the transfer
qualifies for derecognition in accordance with the derecognition requirements of IAS 39 Financial
Instruments: Recognition and Measurement. Financial liabilities are removed from the statement of
financial position only when they are extinguished – i.e. when the obligation specified in the contract
is discharged or cancelled, or expired.
On initial recognition financial assets/(liabilities) are measured at fair value plus, in the case of
financial assets/(liabilities) not reported at fair value through profit or loss, transaction costs, which
are directly attributable to the acquisition or issue of the financial assets/(liabilities).
For the purposes of subsequent measurement, in the current and prior reporting periods the Company
classifies the financial assets and financial liabilities into the following categories: financial assets
available for sale; trade and other receivables; and other financial liabilities (other than those, reported
at fair value through profit or loss). The classification under each category depends on the purpose
and term of the respective contract.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 21
3 Definition and valuation of the financial statements items (continued)
3.12 Financial instruments (continued)
Impairment of financial assets
As of the financial statements date the Company assesses whether there is any objective evidence for
impairment of all financial assets, except for financial assets reported at fair value through profit or
loss. A financial asset is impaired if, and only if, there is objective evidence of impairment as a result
of one or more events that have occurred after the initial recognition of the asset, resulting in a
decrease of the estimated future cash flows. It may not be possible to identify a single, discrete event,
rather than a combined effect of several events that may have caused the impairment.
The Company recognizes impairment of trade and other receivables, whether there is objective
evidence, that the Company would not be able to collect all amounts due at their maturity date. The
Company considers as indications for potential impairment significant financial problems of the
debtor, the probability that the debtor will be subject to a bankruptcy procedure or non-fulfillment of
the contract terms, as well as payment delay. If any of these indications for impairment occurs, the
impairment loss is calculated as a difference between the carrying amount and the present value of the
expected future cash flows, discounted by the original effective interest rate for similar assets. The
impairment is recorded by using a separate impairment account, which is shown as a reduction to
receivables in the statement of financial position and the impairment expenses are stated as
Administrative expenses or Distribution expenses in the income statement depending on the type of
the impaired receivable. If a receivable is non-collectable and there is a recognized impairment loss
for it, the receivable is written off by decrease of the respective allowance account. The recovery of
the loss from impairment of trade receivables is reported in profit or loss and is stated as a decrease of
the item, in which the impairment has been previously recorded.
The Company’s financial instruments include cash on hand and cash at bank accounts, equity
investments, loans granted, receivables, payables, borrowings and derivatives.
Derivative financial instruments
The Company uses forward contracts to hedge risks, associated with changes in market prices of the
aluminum on the London Metal Exchange. Such contracts are classified as cash flow hedges as they
hedge the Company’s exposure to variability in cash flows that is attributable to the particular price
risk associated with forecasted sale and purchase transactions. Derivatives are initially recognised at
fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair
value at each reporting period end. The fair value of such forward contracts is determined by
reference to the current prices of similar contracts.
The portion of the gain or loss on the forward contracts that are determined to be effective hedge is
recognized directly in equity. The gain or losses that are recognized in equity are transferred to the
income statement in the same period, in which the hedged transaction affects the net profit or loss.
Hedge accounting is discontinued when the forward contract expires, is sold, terminated or exercised.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 22
3 Definition and valuation of the financial statements items (continued)
3.12 Financial instruments (continued)
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.
The effective interest rate method is a method of calculating the amortized cost of a financial asset or
liability (or group of financial assets/liabilities) and of allocating the interest income or interest
expense over the relevant period. The effective interest rate is the rate that exactly discounts the
estimated future cash payments or receipts through the expected life of the financial instrument or,
when appropriate, a shorter period to the net carrying amount of the financial asset or liability.
The Management believes that the carrying amount of such financial instruments approximates their
fair value. Fair value for this purpose is defined as the amount for which an asset can be exchanged, or
a liability settled, between knowledgeable and willing parties in an arm’s length transaction.
3.12.1 Cash and cash equivalents
For the purposes of cash flow presentation, cash and cash equivalents represent unrestricted cash on
hand and at banks. For the purposes of the cash flow statement presentation cash receipts from
customers and cash payments to suppliers are presented as gross amounts, including value added tax
(VAT). VAT on purchase of property, plant and equipment and intangible assets is presented as
payments to suppliers in the cash flows from operating activities.
3.12.2 Equity investments and loans granted
The equity investments are non-tradable and are stated at cost less any impairment loss.
Long-term loans granted are initially carried at fair value and subsequently measured at amortized
cost using effective interest rate, which, due to the substance of the loan agreement, coincides with the
interest rate negotiated.
3.12.3 Trade and other receivables
Trade and other receivables are non-derivative financial assets with fixed or determinable payments
that are not quoted in an active market. They are originated when the Company provides cash, goods
for sale or services having no intention to trade them. Receivables are stated at amortized cost,
calculated under the effective interest rate method. For current receivables, which will be settled
within normal credit terms, the amortized cost approximates their nominal value.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 23
3.12 Financial instruments (continued)
3.12.4 Trade and other payables
Trade and other payables incurred as a result of purchases of goods or services, which are not
classified as financial liabilities measured at fair value through profit or loss, are stated in the
statement of financial position at amortized cost, calculated under the effective interest rate method.
For current payables, which will be settled whithin normal credit terms, the amortized cost
approximates their nominal value.
3.12.5 Borrowings and leasing
All borrowings are initially recognized at cost, being the fair value of the consideration received net of
issue costs associated with the borrowing. After initial recognition, interest bearing loans and
borrowings are subsequently measured at amortized cost using the effective interest rate method.
Amortized cost is calculated by taking into account any issue costs, and any discount or premium on
settlement. Gains and losses are recognized in the net profit or loss when the liabilities are
derecognized or impaired, as well as through the amortization process.
Leases are classified as finance leases whenever the terms of the lease transfer substantially all the
risks and rewards of ownership to the lessee. All other leases are classified as operating leases.
Assets held under finance leases are recognised as assets of the Company at the lower of the present
value of the minimum lease payments and their fair value at the date of acquisition. The
corresponding liability to the lessor is included in the statement of financial position as a finance lease
obligation. Finance costs, which represent the difference between the total leasing commitments and
the fair value of the assets acquired, are charged to the income statement over the term of the relevant
lease so as to produce a constant periodic rate of charge on the remaining balance of the obligations
for each accounting period.
3.12.6 Interest rate risk
Interest rate risk is the risk that the value of the Company’s borrowings will fluctuate due to changes
in market interest rates. Part of the Company’s borrowings are contracted at a floating interest rate and
thus expose the Company to eventual interest rate risk (see note 26).
3.12.7 Credit risk
Financial assets, which potentially expose the Company to credit risk, consist mainly of trade
receivables and advance payments. The Company is primarily exposed to credit risk in the event
where its customers fail to perform their obligations. The Company’s policy is to enter into sales
transactions with customers having favorable credit reputation. In addition, the trade receivables are
secured against future risks by credit limits, which are defined by the insurance company based on
preliminary client research. The Company would receive 90 % of the respective trade receivable as a
compensation, if the clients fail to pay their obligations.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 24
3.12 Financial instruments (continued)
3.12.8 Foreign currency risk
The Company enters into international transactions related mainly to the purchases of raw materials,
sales of finished goods and loans (see note 2.3). Metal hedge operations are completed at cross
currency rates to eliminate the currency risk between the selling price currency and purchase currency
of metals for each order. Therefore, metal hedge operations cover both risk associated with changes in
market prices of the metals on the London Metal Exchange and foreign currency risk.
3.12.9 Liquidity risk
The liquidity risk arises from the time difference in the contracted maturities of the monetary
liabilities and the possibility that the liabilities are not settled on maturity. The Company manages this
risk by using appropriate methods of planning, including providing overdrafts, daily liquidity reports,
short-term and mid-term cash flows forecasts.
3.13 Accruals
Accruals are recognized when the Company has a present obligation as a result of a past event, and it
is probable that the Company will be required to settle that obligation. Accruals are measured at the
management’s best estimate of the expenditure required to settle the obligation at the end of the
reporting period, and are discounted to present value where the effect is material.
3.14 Critical accounting judgements and key sources of estimation uncertainty
The application of IFRS requires management to apply certain accounting assumptions and
accounting estimates in the preparation of the financial statements, which affect the reported assets,
liabilities and disclosures of contingent assets and liabilities as at the end of the reporting period and
the amounts of revenue and expenses reported during the period. All of them are based on the best
estimate of management as of the date of the preparation of the financial statements. The actual
results may differ from those presented in these financial statements.
The key assumptions concerning the future and other key sources of estimation uncertainty at the end
of the reporting period, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are: the useful lives and fair value of
property, plant and equipment (note 3.7), impairment of assets (note 3.11), fair value of investment
property (note 3.9), fair value of derivatives (note 3.12) and the retirement benefits obligation
(note 3.5).
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 25
4 Revenue
Revenue can be analyzed by markets as follows:
Year ended
December 31,
2012
Year ended
December 31,
2011
Export 228,836 246,126
Domestic 22,861 21,382
Total revenue 251,697 267,508
Revenue can be analyzed by products as follows:
Year ended
December 31,
2012
Year ended
December 31,
2011
Foils 97,311 98,761
Strip and sheets 71,252 85,437
Extrusion, pipes and other 83,134 83,310
Total revenue by products 251,697 267,508
5 Cost of sales
Cost of sales consists of the following:
Year ended
December 31,
2012
Year ended
December 31,
2011
Materials, fuels and electricity 210,221 222,866
Personnel costs 10,112 8,663
Depreciation 8,381 8,397
Other 214 211
Total cost of sales 228,928 240,137
Cost of sales can be analyzed by products as follows:
Year ended
December 31,
2012
Year ended
December 31,
2011
Foils 80,493 81,336
Strip and sheets 70,658 81,460
Extrusion, pipes and other 77,777 77,341
Total cost of sales by products 228,928 240,137
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 26
6 Other income, net
Other income, net consists of the following:
Year ended
December 31,
2012
Year ended
December 31,
2011
Sales of materials 8,092 4,964
Sales of services 263 289
Payables written-off 119 219
Insurances indemnities 107 196
Income from rents 63 119
Sales of goods 16 1
Profit on sales of property, plant and equipment - 18
Profit on sales of allowances for emissions of greenhouse gases - 130
Other 224 230
Total other income, net 8,884 6,166
In 2011 the Company sold 6,610 tonns EU Allowances for emissions of greenhouse gases from the
quotas received under the National plan (see also note 17).
7 Administrative expenses
Administrative expenses consist of the following:
Year ended
December 31,
2012
Year ended
December 31,
2011
Personnel expenses 4,941 4,124
Depreciation and amortization 684 613
Repairs and maintenance 462 516
Insurance expenses 466 510
Transportation and business travel 437 413
Security 436 400
Ecology 369 136
Taxes 327 331
Donations 261 239
Communication expenses 154 113
Consulting services 147 202
Materials 104 152
Rents 44 58
Receivables written-off 28 55
Fines and tax audits expenses 21 -
Carrying amount of property, plant and equipment written-off - 27
Other 634 609
Total administrative expenses 9,515 8,498
Expenses on audit of the financial statements of the Company, presented as part of the administrative
expenses for 2012 and 2011 amount to BGN 45 thousand and BGN 50 thousand, respectively.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 27
8 Distribution expenses
Distribution expenses are, as follows:
Year ended
December 31,
2012
Year ended
December 31,
2011
Transportation 6,484 6,160
Sales commissions 610 801
Personnel expenses 499 594
Insurances 369 471
Advertisement expenses 337 163
Impairment of trade receivables and claims paid 69 278
Materials 68 75
Depreciation and amortization 11 20
Other 107 84
Total distribution expenses 8,554 8,646
9 Other expenses
Other expenses are, as follows:
Year ended
December 31,
2012
Year ended
December 31,
2011
Cost of materials and services sold 6,420 3,843
Loss on sales of property, plant and equipment 1 -
Impairment of property, plant and equipment - 134
Cost of used EUA and CER allowances for emissions of
greenhouse gases
28
130
Cost of goods sold 14 1
Total other expenses 6,463 4,108
10 Operating expenses by nature
The expenses classified by function can be further analyzed by nature, as follows:
Year ended
December 31,
2012
Year ended
December 31,
2011
Materials 214,993 226,946
Personnel costs 15,791 13,509
Depreciation 9,511 9,356
Hired services 10,747 10,229
Other expenses 2,031 1,950
Changes in inventories of finished goods and work in progress (5,348) (4,709)
Capitalized expenses (728) -
Total 246,997 257,281
Сost of sales 228,928 240,137
Administrative expenses 9,515 8,498
Distribution expenses 8,554 8,646
Total 246,997 257,281
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 28
11 Exchange rate (loss)/gain, net
Exchange rate (loss)/gain net comprises the following:
Year ended
December 31,
2012
Year ended
December 31,
2011
Exchange rate gain 343 778
Exchange rate loss (762) (695)
Total exchange rate gain/(loss), net (419) 83
12 Interest expenses, net
Interest expenses, net include the following:
Year ended
December 31,
2012
Year ended
December 31,
2011
Interest expense on loans (2,689) (3,835)
Interest income 256 261
Financial costs on retirement benefits obligation (56) (52)
Total interest expenses, net (2,489) (3,626)
13 Other financial gains/(losses), net
Year ended
December 31,
2012
Year ended
December 31,
2011
(Loss)/gain from derivative financial instruments (62) 103
Bank charges (464) (677)
Gain arising from transactions with securities 642 209
Total other financial gains/(losses), net 116 (365)
Gain arising from transactions with securities are due to repayments of principal and interest related
to the ZUNK loan (see note 26).
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 29
14 Income taxes
The deferred tax assets and liabilities accrued, are as follows:
Year ended
December 31,
2012
Year ended
December 31,
2011
Deferred tax assets:
Accrual for unutilized paid leaves and provision for retirement
benefits obligation
98
83
Receivables written-off 41 41
Derivative financial instruments - 74
Total deferred tax assets 139 198
Deferred tax liabilities:
Derivative financial instruments 18 -
Investment property 248 248
Property, plant and equipment 4,791 5,170
Total deferred tax liabilities 5,057 5,418
Total deferred tax liabilities, net 4,918 5,220
A reconciliation of the effective tax rate is provided in the table below:
Year ended
December 31,
2012
Year ended
December 31,
2011
Profit before taxation 4,329 8,377
Statutory tax rate 10% 10%
Income tax (433) (838) Tax effect of permanent differences (8) (5)
Tax effect from deferred tax assets recognized in the current
period, not recognized during prior periods
-
373
Recorded tax expense (441) (470)
Effective tax rate 10.19% 5.61%
Income tax expense is as follows:
Year ended
December 31,
2012
Year ended
December 31,
2011
Current tax expense on taxable profit (818) (1,162)
Deferred tax income relating to the origination and reversal of
temporary differences during the current period 377 692
Income tax expense (441) (470)
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 30
14 Income taxes (continued)
The deferred tax for 2012 and 2011, charged directly to equity is at the amount of BGN 75 thousand
and BGN 262 thousand, respectively (see the Statement of Comprehensive Income). In 2011 the
Company recognized deferred tax assets not recognized in prior periods, relating to impairment of
property, plant and equipment at the amount of BGN 373 thousand.
15 Earnings per share
Earnings per share are as follows:
Year ended
December 31,
2012
Year ended
December 31,
2011
Average number of shares 17,952,959 17,952,959
Profit for the period (BGN’000) 3,888 7,907
Earnings per share (BGN) 0.22 0.44
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, 2010 37,007 131,664 2,070 9,356 180,097
Acquisitions - 338 185 8,072 8,595
Disposals - (391) (90) (27) (508)
Transfers 404 804 - (1,208) -
Balance at December 31, 2011 37,411 132,415 2,165 16,193 188,184
Acquisitions - 329 188 19,353 19,870
Disposals (7) (1,691) (84) (2) (1,784)
Transfers - 6,863 - (6,863) -
Balance at December 31, 2012 37,404 137,916 2,269 28,681 206,270
Accumulated depreciation and
impairment
Balance at December 31, 2010 (11,685) (57,813) (1,100) (184) (70,782)
Depreciation for the period (1,112) (7,975) (263) (9,350)
Disposals 389 90 - 479
Impairment - (101) - (134) (235)
Balance at December 31, 2011 (12,797) (65,500) (1,273) (318) (79,888)
Depreciation for the period (1,125) (8,029) (226) - (9,380)
Disposals 7 1,690 84 - 1,781
Impairment (4) (166) - - (170)
Balance at December 31, 2012 (13,919) (72,005) (1,415) (318) (87,657)
Carrying amount at
December 31, 2011 24,614 66,915 892 15,875 108,296
Carrying amount at
December 31, 2012 23,485 65,911 854 28,363 118,613
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 31
16 Property, plant and equipment (continued)
As of December 31, 2008 an independent valuation of the Company’s buildings and plant and
equipment was performed by Mr. Simeon Kutsarov, licensed appraiser, to determine the fair value of
buildings, plant and equipment. The valuation, which conforms to the International Valuation
Standards, was determined by reference to market values. Due to the specific characteristics of certain
items of plant and equipment and the absence of an active market for them, reference has also been
made to their purpose and the Company’s overall condition as such assets constitute, and could be
realized as, an integral part of the Company as a whole. A valuation of separate groups of assets from
property, plant and equipment as at December 31, 2009 and 2012 was performed by the same licensed
appraiser, as well as a valuation of the assets under construction as at December 31, 2009, 2010, 2011
and 2012.
As of December 31, 2012 assets under construction include expenses amounting to
BGN 4,218 thousand related to construction of secondary aluminum workshop. The construction
project dated as of the beginning of 1990 was suspended before being fully accomplished.
Management of the Company intends to fulfill the project by the financial support of investors.
Machinery and equipment of the secondary aluminum workshop are impaired to their liquidation
amount. As of December 31, 2012 and 2011 the recoverable amount of the secondary aluminum
workshop and machinery and equipment were determined by independent appraiser, and as of
December 31, 2012 an impairment loss was assessed to BGN 134 thousand (see note 9).
As of December 31, 2012 and 2011 the management of the Company has analyzed the carrying
amount of its property, plant and equipment, that have not been evaluated as described above, and
assessed that it does not differ significantly from their fair value, except for a group of machines for
which impairment is charged at the amount of BGN 170 thousand and BGN 101 thousand,
respectively. The amounts are recognized directly in equity as a decrease of the revaluation reserve, as
the impairment does not exceed the revaluation reserve for the respective assets.
For 2012 and 2011 the acquisition cost of property, plant and equipment includes capitalized
borrowing costs to the amount of BGN 933 thousand and BGN 107 thousand, respectively
(see note 3.3).
Property, plant and equipment at gross book value amounting to BGN 1,448 thousand are fully
depreciated as of December 31, 2012 (2011: BGN 1,374 thousand).
Property, plant and equipment have been pledged as security of the Company’s borrowings
(see note 26).
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 32
17 Intangible assets
Intangible assets are as follows::
Allowances for
emissions of
greenhouse gases
Software
Total
Cost
Balance at December 31, 2010 - 185 185
Acquisitions 130 656 786
Disposals (130) - (130)
Balance at December 31, 2011 - 841 841
Disposals - (9) (9)
Balance at December 31, 2012 - 832 832
Accumulated amortization
Balance at December 31, 2010 - (179) (179)
Amortization for the period - (6) (6)
Balance at December 31, 2011 - (185) (185)
Amortization for the period - (131) (131)
Disposals - 9 9
Balance at December 31, 2012 - (307) (307)
Net book value at
December 31, 2011
- 656 656
Net book value at
December 31, 2012
- 525 525
As of December 31, 2012, under the National Plan for allocation of allowances for trade with
emissions of greenhouse gases the Company received 73,405 tons EU Allowances for the period from
2008 to 2012. In 2011 the Company sold allowances for 6,610 tons from the received EUA quotas
(see note 6) and bought CER allowances for emissions of greenhouse gases for 9,180 tons at the
amount of BGN 130 thousand (see note 9). For the period from 2008 to 2012, according to the Annual
reports on the emissions, prepared by the Company and verified by an authority, accredited by the
Executive Agency Bulgarian Accreditation Service, 78,414 tons greenhouse gases were emmitted. For
the difference between the available 14,363 tons allowances for emissions of greenhouse gases as of
December 31, 2012 and the emitted 16,722 tons, a liability is accrued in the statement of financial
position, valuated based on the market prices at BGN 28 thousand, and in the income statement
expenses are recognized at the same amount (see notes 9 and 33).
Intangible assets with gross book value and respectively accumulated depreciation at the amount of
BGN 176 thousand are fully depreciated as of December 31, 2012 (2011: BGN 185 thousand).
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 33
18 Investment property
As at December 31, 2012 and 2011 investment property comprise of a hotel and a restaurant, situated
in the village of Kranevo, Varna district, at the amount of BGN 4,935 thousand.
As at December 31, 2012 and 2011 a revaluation of investment property has been made by MEng.
Simeon Kutsarov, independent appraiser. The valuation conforms to the International Valuation
Standards, and was arrived at by reference to market evidence of transaction prices for similar
properties. The revaluation of the Company’s investment property confirms that their fair value does
not differ significantly from their carrying amount as at December 31, 2012 and 2011.
The Company recognized income from rental of investment property for 2012 at the amount of
BGN 6 thousand (2011: BGN 63 thousand). Rental income from investment property is presented in
other income, net. During the years ended December 31, 2012 and 2011 there have been no operating
costs incurred with respect of investment property.
19 Financial assets
Financial assets consist of the following: December 31,
2012
December 31,
2011
Long-term loan granted to a related party 5,345 5,092
Equity investments 6 6
Total financial assets
5,351 5,098
As at December 31, 2012 and 2011 the Company’s investments include BGN 5 thousand, representing
100 % of the capital of Euromet EOOD and other investments amounting to BGN 1 thousand.
As Alcomet AD holds 100 % of the shares in a subsidiary, in accordance with the requirements of IAS
27 Consolidated and Separate Financial Statements, the Company has to prepare consolidated
financial statements. The consolidation adjustments related to the subsidiary Euromet AD would
include only elimination of the share capital of the Subsidiary against the investment recorded in the
Parent. This adjustment should not lead to any material changes in the financial position of the
Company and financial results and cash flows of the Company would not be changed, and thus,
consolidated financial statements have not been prepared.
The long-term receivables as of December 31, 2012 include a principal and interest to the amount of
BGN 2,300 thousand (2011: BGN 2,300 thousand) and BGN 3,045 thousand (2011:
BGN 2,792 thousand), respectively, related to a loan granted to a related party. In 2011 an annex was
signed to prolonge the repayment of the full amount of the principal and interest due till
December 31, 2015.
Interest is charged at 11 % per annum and is payable on the repayment date of the loan.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 34
20 Inventories
Inventories consist of the following:
December 31,
2012
December 31,
2011
Work in progress 21,302 15,834
Materials 10,526 12,941
Finished goods 6,903 7,023
Dispatched materials 853 3,060
Goods 31 45
Total inventories 39,615 38,903
Breakdown of work in progress is presented below:
December 31,
2012
December 31,
2011
Work in progress in rolling workshop 9,549 7,623
Work in progress in casting workshop 7,339 4,805
Work in progress in extruding workshop 4,346 3,403
Work in progress in repair workshop 68 3
Total work in progress 21,302 15,834
Further breakdown of materials is presented below:
December 31,
2012
December 31,
2011
Moulds and samples 4,546 3,819
Raw materials 4,100 4,318
Spare parts 1,196 3,049
Fuel and lubricants 357 306
Packaging materials 143 50
Auxiliary materials 14 937
Other 170 462
Total materials 10,526 12,941
Further breakdown of finished goods is presented below:
December 31,
2012
December 31,
2011
Extruded products 4,392 2,605
Rolled products 2,511 4,417
Other - 1
Total finished goods 6,903 7,023
As at December 31, 2012 and 2011 inventories up to the amount of EUR 30,000 thousand (work in
progress, finished goods and goods for resale), have been pledged as security of the Company’s
borrowings (see note 26).
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 35
21 Trade and other receivables, net
Trade and other receivables, net, are as follows:
December 31,
2012
December 31,
2011
Trade receivables, gross 33,958 35,225
Less impairment (163) (163)
Trade receivables, net 33,795 35,062
VAT refundable 7,083 5,694
Advances to suppliers and prepayments 2,347 1,062
Receivables on tax audit report 299 -
Advances to personnel 292 312
Loan granted 19 -
Receivables from related parties 5 5
Customs receivables - 28
Other debtors 7 6
Total trade and other receivables, net 43,847 42,169
As per tax audit report, dated November 5, 2012, VAT refundable was denied at the amount of
BGN 236 thousand and withholding tax liabilities and interest are set amounting to BGN 10 thousand
and BGN 53 thousand, respectively. The Company is appealing the tax audit report
As at December 31, 2012 and 2011 trade and other receivables have been pledged as security of
Company’s borrowings (see note 26).
22 Cash and cash equivalents
Cash and cash equivalents consist of the following:
December 31,
2012
December 31,
2011
Cash at banks 248 2,452
Cash on hand 24 17
Deposits 1 11
Cash equivalents 66 17
Total cash and cash equivalents in the Statement of financial
position
339 2,497
Less deposits (1) (11)
Total cash and cash equivalents in the Cash Flow Statement 338 2,486
Deposits as at December 31, 2012 and 2011 include mainly amounts deposited in favor of customs
relating to VAT and customs duties.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 36
23 Capital and legal reserves
The Company’s share capital as at December 31, 2012 and 2011 is BGN 17,952,959 represented by
17,952,959 shares of BGN 1 each.
In accordance with the Bulgarian Commerce Act requirements, the Company is obliged to set up a
legal reserves (reserve fund). The sources of financing the reserve fund are:
at least one tenth of the profit which is set aside until the fund’s assets reach one tenth or more
of the Company’s share capital or such other larger portion as the Company’s statute may
provide;
the proceeds obtained in excess of the nominal value of shares and debentures upon their
issuing;
the total of the additional payments made by the shareholders for preferences given them with
shares;
other sources provided for by the Company’s statute or by a general meeting resolution.
Disbursements from the reserve fund may be made only for covering losses. When the amount of the
reserve fund exceed one-tenth of the Company’s share capital, the excess amount may be used for
increase of the share capital.
In 2011 based on a decision of the Company’s General meeting of the shareholders a reserve fund at
the amount of BGN 209 thousand was set up, and dividend was distributed at the amount of
BGN 1,110 thousand from the realized in 2010 profit at the total amount of BGN 7,612 thousand. The
outstanding of BGN 6,293 thousand is not distributed. Based on a decision of the Company’s General
meeting of the shareholders the premiums from the emission of shares at the total amount of
BGN 1,500 thousand are transferred to the legal reserve.
In 2012 based on a decision of the Company’s General meeting of the shareholders dividend was
distributed at the amount of BGN 1,186 thousand from the realized in 2011 profit at the total amount
of BGN 7,907 thousand. The outstanding of BGN 6,721 thousand is not distributed.
24 Derivative financial instruments
Derivative financial instruments consist of the following:
December 31,
2012
December 31,
2011
Cash flow hedge derivative financial assets/(liabilities) 183 (738)
Fair value hedge derivative financial (liabilities)/assets (5) 57
Including:
Non-current derivative financial (liabilities)/assets (3) 35
Current derivative financial (liabilities)/ assets (2) 22
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.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 37
24 Derivative financial instruments (continued)
As at December 31, 2012 the Company has outstanding forward contracts for sale of metal from
January till December 2013. Under the terms of the forward contracts the Company will sell 7,925
tons of aluminum with contracted value of BGN 21,239 thousand. The Company does not expect any
deals that would not be finalized.
From January 2013 till the date of the current financial statements the Company sold forward
contracts for 4,325 tons of aluminum. The remaining 3,600 tons are expected to be realized until
December 2013. The Company does not expect any deals that would not be finalized.
As at December 31, 2012 and 2011 the Company has assessed the 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,
2012
Year ended
December 31,
2011
Gains/(losses) arising during the period 921 (2,520)
Adjustment for amounts transferred to the initial carrying amount of
the hedged items (738) 1,782
Unrealized gains /(losses) on hedging at the end of the period 183 (738)
Less: Tax effect (18) 74
Total unrealized gains/(losses) on hedging at the end of the period,
net of tax 165 (664)
The Company has a foreign currency swap contract with a Bulgarian bank to hedge the risks
associated with the changes in the foreign currency rates of a long-term debt, denominated in USD
(see note 26). These contracts are classified as fair value hedge instruments and the Company has
assessed the hedge as highly effective.
The movement of the fair value hedge derivative financial liabilities is, as follows:
December 31,
2012
December 31,
2011
Balance at the beginning of the period (57) 46
(Gain)/loss from fair value hedges 62 (103)
Balance at the end of the period 5 (57)
Less short-term portion (2) 22
Long-term portion at the end of the period 3 (35)
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 38
25 Retirement benefits obligation
The financial assumptions used for the calculation of the retirement benefits obligation are as follows:
December 31,
2012
December 31,
2011
Discount rate 6% 6%
Expected rate of salary increase for 2012 - 7%
Expected rate of salary increase for 2013 2% 2%
Expected rate of salary increase for 2014 2% 2%
Expected rate of salary increase for 2015 2% 2%
Expected rate of salary increase per year, after 2015 2% 2%
As of December 2012, the demographic actuarial assumptions used are based on the following:
a) mortality of the Bulgarian population during the period 2008 - 2010, 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,
2012
Year ended
December 31,
2011
18 – 30 years 13% 13%
31 – 40 years 5% 5%
41 – 50 years 3% 3%
51 – 60 years 1% 1%
over 60 years - -
An analysis of the movement of retirement benefits obligation is presented below:
December 31,
2012
December 31,
2011
Balance at the beginning of the period 140 164
Current service cost 56 59
Payments for the period (111) (163)
Interest costs 56 52
Actuarial loss recognized for the period 35
28
Balance at the end of the period 176 140
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 39
25 Retirement benefits obligation (continued)
The retirement benefits obligation at December 31, 2012 and 2011 comprises of the following:
December 31,
2012
December 31,
2011
Benefits on attainment of retirement age 162 131
Benefits on early retirement 14 9
Total retirement benefits obligation 176 140
The amount included in the statement of financial position arising from the Company’s retirement
benefits obligation is, as follows:
December 31,
2012
December 31,
2011
Present value of retirement benefits obligation 1,095 932
Unrecognized actuarial loss (919) (792)
Total retirement benefits obligation 176 140
26 Borrowings
Borrowings of the Company, including interest can be analyzed as follows:
December 31,
2012
December 31,
2011
Short-term bank loans 62,849 61,613
Current portion of long-term bank loans 1,695 2,684
Current portion of lease agreements 2,689 83
Current portion of long-term debt to the State (ZUNK) 1,014 1,386
Total current portion of long-term loans 5,398 4,153
Total short-term bank loans and leases 68,247 65,766
Long-term bank loans 8,796 12,984
Long-term trade loans and lease agreements 19,120 9,076
Long-term debt to the State (ZUNK) 579 2,215
Total long-term loans and leases 28,495 24,275
Total loans and leases 96,742 90,041
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 40
26 Borrowings (continued)
Loans of the Company can be analyzed as follows:
December 31, 2012
Principal Interest Total
Bank loans
- Long-term bank loans 8,796 - 8,796
- Current portion of long-term bank loans 1,695 - 1,695
- Short-term bank loans 62,849 - 62,849
Total 73,340 - 73,340
Trade loans
- Long-term trade loans and lease agreements 17,600 1,520 19,120
- Current portion of long-term trade loans and lease
agreements 2,689 - 2,689
Total 20,289 1,520 21,809
Debt to the State (ZUNK)
- Long-term debt - 579 579
- Current portion of long-term debt 1,003 11 1,014
Total 1,003 590 1,593
Total loans 94,632 2,110 96,742
December 31, 2011
Principal Interest Total
Bank loans
- Long-term bank loans 12,984 - 12,984
- Current portion of long-term bank loans 2,684 - 2,684
- Short-term bank loans 61,613 - 61,613
Total 77,281 - 77,281
Trade loans and lease agreements
- Long-term trade loans and lease agreements 7,154 1,922 9,076
- Current portion of lease agreements 83 - 83
Total 7,237 1,922 9,159
Debt to the State (ZUNK)
- Long-term debt 1,022 1,193 2,215
- Current portion of long-term debt 1,360 26 1,386
Total 2,382 1,219 3,601
Total loans 86,900 3,141 90,041
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 41
26 Borrowings (continued)
December 31, 2012 December 31, 2011
Principal Interest Total Principal Interest Total
Bank loans
- Loan А - - - 52 - 52
- Loan B1 3,912 - 3,912 3,912 - 3,912
- Loan B2 1,021 - 1,021 - - -
- Loan B3 5,298 - 5,298 5,402 - 5,402
- Loan C - - - 762 - 762
- Loan D 24,714 - 24,714 25,256 - 25,256
- Loan Е - - - 420 - 420
- Loan К 1,072 - 1,072 2,783 - 2,783
- Loan К1 - - - 704 - 704
- Loan N 398 - 398 879 - 879
- Loan P1 1,681 - 1,681 2,293 - 2,293
- Loan P2 849 - 849 978 - 978
- Loan R - - - 6,670 - 6,670
- Loan U - - - 2,327 - 2,327
- Loan F 26,832 - 26,832 21,933 - 21,933
- Loan H 6,356 - 6,356 2,910 - 2,910
- Loan T 1,207 - 1,207 - - -
Total 73,340 73,340 77,281 - 77,281
Trade loans and leases
- Loan G 1,300 83 1,383 1,300 1,300
- Loan J 5,735 1,437 7,172 5,735 1,922 7,657
- Lease agreements 13,254 - 13,254 202 - 202
Total 20,289 1,520 21,809 7,237 1,922 9,159
Debt to the State (ZUNK) 1,003 590 1,593 2,382 1,219 3,601
Total loans 94,632 2,110 96,742 86,900 3,141 90,041
Loan А
On September 14, 2009 the Company concluded an agreement for a long-term bank loan (Loan A)
with a Bulgarian commercial bank to the total amount of EUR 105 thousand, equal to
BGN 205 thousand. The repayment is in 36 equal monthly installments payable for a three-year
period, starting from September 30, 2009. As of December 31, 2011 the outstanding liability in
respect to the loan is EUR 27 thousand (BGN 52 thousand). In 2012 the loan is completely repaid.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 42
26 Borrowings (continued)
Loan B
On June 12, 2008 the Company concluded a facility agreement with a Bulgarian bank. Subject of the
agreement is a revolving facility for working capital of up to EUR 9,000 thousand and the term of the
agreement is up to May 31, 2009. The loan was contracted as a multi-purpose revolving facility for
working capital as follows: Sublimit B1 up to EUR 2,000 thousand for financing of VAT related
payments, Sublimit B2 up to EUR 2,500 thousand for financing of bank guarantees and letters of
credit and Sublimit B3 up to EUR 4,500 thousand financing for working capital and issuance of bank
guarantees/letters of credit. According to annexes to the agreement from 2012 the total amount of the
utilized facilities under the terms of the contracted sublimits could not exceed EUR 9,000 thousand
and the term was prolonged up to December 31, 2013. The loan is secured by pledge on machinery
and equipment, owned by the Company, with carrying amount at December 31, 2012 of
BGN 4,452 thousand in respect of Sublimit B1, pledge on current and future receivables to 125 % of
the utilized amount of Sublimit B2 and pledge on current and future inventories to 125 % of the
utilized amount of Sublimit B3. As of December 31, 2012 and 2011 the total outstanding liability in
respect to the loan is EUR 5,231 thousand (BGN 10,231 thousand) and EUR 4,762 thousand
(BGN 9,314 thousand), respectively.
Loan C
On May 18, 2009 the Company concluded an agreement (Loan C) with a Bulgarian bank to the total
amount of EUR 850 thousand. The loan purpose is financing and purchase of production machinery.
The repayment is in 48 equal monthly installments of EUR 17,7 thousand payable for a four-year
period, starting from November 25, 2009. As of December 31, 2011 the outstanding liability in
respect to the loan is EUR 390 thousand (BGN 762 thousand). In 2012 the loan is completely repaid.
Loan D
On December 12, 2002 the Company entered into an agreement for a short-term loan (Loan D) with a
Bulgarian bank at the amount of EUR 2,800 thousand, from which EUR 2,500 thousand are for
working capital purposes and issuance of bank guarantees and/or letters of credit, and the remaining
EUR 300 thousand represent a revolving credit facility to be used for hedging of market price risk
upon spot and forward transactions related to the purchase and sale of foreign currencies. In 2011 and
2010 according to annexes signed, the limit of the credit line was increased to EUR 15,000 thousand
and EUR 10,000 thousand, respectively, and the maturity date of the loan has been prolonged up to
March 31, 2012 and March 31, 2011, respectively. As at December 31, 2012 and 2011 the utilized
portion of the loan amounts to EUR 12,636 thousand (BGN 24,714 thousand) and
EUR 12,913 thousand (BGN 25,256 thousand), respectively. Collateral of the loan is a first ranking
pledge on machinery and equipment and second ranking mortgage on land and buildings with carrying
amount at December 31, 2012 of BGN 16,555 thousand and BGN 20,518 thousand, respectively.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 43
26 Borrowings (continued)
Loan L
On November 23, 2010 the Company entered into a long-term agreement for a revolving credit facility
with a Bulgarian bank to be used for issuance of a bank guarantee upon lease contract payments,
further described as Loan R. The limit of the credit facility is up to EUR 4,000 thousand. As at
December 31, 2010 a bank guarantee is issued at the amount of EUR 4,000 thousand and term of
validity to March 31, 2018. Collateral of the loan is a third ranking mortgage on properties of the
Company and second ranking pledge on machinery and equipment with carrying amounts at
December 31, 2012 of BGN 20,518 thousand and BGN 11,192 respectively.
Loan Е
On June 25, 2007 the Company entered into an agreement (Loan E) with a Bulgarian commercial
bank for a long-term borrowing at the amount of EUR 1,500 thousand, with the purpose of financing
and purchase of production equipment. The repayment is in 42 equal installments, the first payment is
due on January 25, 2009 and the last on June 25, 2012. As of December 31, 2011 the outstanding
amount of the facility is EUR 215 thousand (BGN 420 thousand). In 2012 the loan is completely
repaid.
Loans К and К1
On October 31, 2007 the Company entered into a tripartite contract with a foreign commercial bank
and its branch in Bulgaria for a revolving credit line (see Loan F) and facility for working capital
(Loan K). The credit limit is at the amount of EUR 3,000 thousand and the maturity term is to July 31,
2011. According to an annex to the agreement from 2011 the credit limit of the loan was increased to
EUR 4,000 thousands and the maturity of the loan was prolonged to July 31, 2012 and in 2012 the
maturity is prolonged to November 30, 2013. As of December 31, 2012 and 2011 the outstanding
amount of the facility is EUR 548 thousand (BGN 1,072 thousand) and EUR 1,423 thousand
(BGN 2,783 thousand), respectively.
On October 31, 2008 an anex to the agreement was signed and a credit sublimit K1 at the amount of
EUR 1,500 thousand for the purchase of machinery and equipment was agreed. The sublimit is to be
repaid at monthly installments amounting to EUR 30 thousand, first of which is due on October 28,
2008 and the final installment is due on March 31, 2011. In 2011 another annex was signed and the
maturity was prolonged till July 31, 2012. As of December 31, 2011 the outstanding amount of the
credit sublimit is EUR 360 thousand (BGN 704 thousand). In 2012 the loan is completely repaid.
Collateral of all credit facilities, received by the Company upon the tripartite contract, comprises of
pledge on goods in turnover (work in progress, production and finished goods) at the amount up to
EUR 30,000 thousand, pledge on current and future receivables of the Company at bank accounts in
the bank branch in Bulgaria at the amount up to EUR 30,000 thousand, pledge on machinery and
equipment with carrying amount at December 31, 2012 of BGN 7,595 thousand, pledge on receivables
of the Company on contracts with clients at the amount of EUR 15,000 thousand and a promissory
note at the amount of EUR 30,000 thousand.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 44
26 Borrowings (continued)
Loan N
On August 3, 2006 the Company entered into a bank loan agreement to the amount of
EUR 1,700 thousand with the purpose of partial financing of due interest and earlier repayment of due
principal under ZUNK loan. The loan is to be repaid in 83 monthly installments, first of which falling
due on September 30, 2006 and the last one on July 30, 2013. The collateral of the loan comprises of
pledge on machinery and equipment, owned by the Company with carrying amount at December 31,
2012 of BGN 2,275 thousand, and as well as a guaranty contract with a related party for the amount of
EUR 1,700 thousand. As at December 31, 2012 and 2011 the outstanding amount of the loan is
EUR 203 thousand (BGN 398 thousand) and, EUR 449 thousand (BGN 879 thousand), respectively.
Loan U
On December 22, 2006 the Company entered into an agreement for a revolving credit (overdraft)
limited to the amount of EUR 2,000 thousand for working capital purposes and payments of VAT. As
at December 31, 2011 the outstanding amount of the loan is EUR 1,190 thousand
(BGN 2,327 thousand). In 2012 the loan is completely repaid.
Loan F
On October 31, 2007 the Company entered into an agreement with a foreign commerce bank and its
branch in Bulgaria for a revolving credit line (Loan F) and facility for working capital (see Loan K).
The credit is limited to the amount of EUR 25,000 thousand, which according to an annex from 2011
is increased to EUR 30,000 thousand. In 2012 an annex is signed and the maturity is prolonged till
July 31, 2013. As at December 2012 and 2011 the outstanding amount of the loan is
EUR 13,719 thousand (BGN 26,832 thousand) and EUR 11,214 thousand (BGN 21,933 thousand),
respectively.
Loans P1 and P2
On November 23, 2010 the Company entered into an agreement with a foreign bank with the purpose
of financing the Company’s main activity for the amount of EUR 1,750 thousand. The loan is utilized
according to two sublimits – P1 and P2.
Sublimit P1 is at the amount of EUR 1,250 thousand. The sublimit is to be repaid in 48 monthly
installments, first of which falling due on October 31, 2011, and the last one – on September 30, 2015.
As at December 31, 2012 and 2011 the outstanding amount of the loan sublimit is
EUR 859 thousand (BGN 1,681 thousand) and EUR 1,172 thousand (BGN 2,293 thousand),
respectively.
Sublimit P2 is utilized as credit line limited to the amount of EUR 500 thousand. The term of payment
of the sublimit is to September 30, 2015. As at December 2012 and 2011 the outstanding amount of
the loan sublimit is EUR 434 thousand (BGN 849 thousand) and EUR 500 thousand
(BGN 978 thousand), respectively.
Collateral of the credit is a mortgage on investment properties of the Company (in the village of
Kranevo (see note 18) and a promissory note at the amount of EUR 1,925 thousand
(BGN 3,765 thousand), issued by the Company and guaranteed by related parties.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 45
26 Borrowings (continued)
Loan R
On October 7, 2010 the Company enters into contract agreement with foreign Supplier for the
producing and delivery of production equipment at the total amount of EUR 7,462 thousand. On
November 23, 2010 a tripartite agreement was signed between the Company (the Lessee), the Supplier
and a Bulgarian lease company (the Lessor), and in accordance with the agreement the Lessor agrees
to acquire the production equipment from the Supplier and to grant it to the Lessee upon conditions of
a finance lease at the total amount of EUR 8,708 thousand. In accordance with the signed agreement
the Lessor should pre-finance the production of the equipment at three installments, the first of which
is at the amount of EUR 1,119 thousand (BGN 2,189 thousand) and is paid to the Supplier in
December 2010. In 2012 and 2011 the amount of EUR 5,597 thousand (BGN 10,946 thousand) is paid
to the Supplier. After putting of the equipment into operation the Company will repay the lease
obligation in 60 monthly lease installments, first of which falling due on January 10, 2013.
As at December 31, 2012 and 2011 the Company presented as Assets under construction and as a loan
received (Loan R) the paid amounts for the pre-financing at the amount of EUR 6,716 thousand
(BGN 13,135 thousand) and EUR 3,410 thousand (BGN 6,670 thousand), respectively. The accrued
interests due for the period from 2010 to 2012, amounting to EUR 358 thousand (BGN 700 thousand),
are capitalized to the cost of the assets. Collateral of the loan is a bank guarantee for the term of the
contract at the amount of EUR 4,000 thousand (see Loan L).
Loan H
On August 25, 2011 the Company entered into an agreement with a Bulgarian commercial bank for a
long-term bank loan (Loan H) to the amount of EUR 3,250 thousand with the purpose of financing the
delivery of production machines and modernization of the casting and rolling production. The loan
has to be utilized in installments till 12 months from the date of the agreement. The loan is to be
repaid in 60 monthly installments, first of which falling due on September 30, 2013 and the last one –
on August 31, 2018. Collateral of the loan is a first ranking pledge on the machinery purchased, with
carrying amount as at December 31, 2012 of BGN 6,319 thousand. As at December 31, 2012 and
2011 the utilized portion of the loan is amounting to EUR 3,250 thousand (BGN 6,356 thousand) and
EUR 1,488 thousand (BGN 2,910 thousand), respectively.
Loan T
On December 14, 2012 the Company entered into an agreement with a Bulgarian commercial bank for
a long-term bank loan (Loan T) to the amount of EUR 617 thousand with the purpose to refinance
reconstruction expenses and purchase of production equipment. The loan is to be repaid in 32 monthly
installments, first of which falling due on June 6, 2013 and the last one – on January 6, 2016.
Collateral of the loan is a pledge on the equipment and machinery purchased, with carrying amount as
at December 31, 2012 of BGN 7,007 thousand (see Loan V) and a promissory note for EUR 617
thousand. As at December 31, 2012 the utilized portion of the loan is amounting to EUR 617 thousand
(BGN 1,207 thousand).
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 46
26 Borrowings (continued)
Loan V
On December 14, 2012 the Company entered into an agreement for a credit line to the amount of
EUR 1,000 thousand for working capital. The loan is to be repaid till July 31, 2013. Collateral of the
loan is a pledge on equipment and machinery owned by the Compaany with carrying amount as at
December 31, 2012 of BGN 7,007 thousand (see Loan T). As at December 31, 2012 there are no
utilized portions of the loan.
Loans G and J
On May 12, 2003 the Company concluded a long-term loan agreement with a related party to the total
amount of USD 10,000 thousand (Loan G). The purpose of the funds is to provide financing for
investment activities of the Company. On August 5, 2005 a part of the Loan G at the amount of
USD 7,650 thousand was transferred to another related party. The remaining part of the Loan G at the
amount of USD 1,125 thousand was converted to EUR at an exchange rate fixed under an annex dated
August 6, 2005. According to an annex from 2011 the payment date for the principal and interest due
is December 31, 2015. As at December 31, 2012 and 2011 the outstanding liability of the loan
amounts to EUR 707 thousand (principal BGN 1,300 thousand and interest BGN 83 thousand) and
EUR 665 thousand (BGN 1,300 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 J). According to an annex from August 5, 2005 the parties have
agreed and converted the liability from USD to EUR 2,932 thousand. According to annex from 2011
the payment date for principal and interest due is December 31, 2015. As at December 31, 2012 and
2011 the outstanding liabilities of the loan are to the amount of BGN 7,172 thousand (principal
BGN 5,735 thousand and interest BGN 1,437 thousand) and BGN 7,657 thousand (principal BGN
5,735 thousand and interest BGN 1,922 thousand), respectively.
Lease agreements
The Company has signed finance lease agreements for purchase of vehicles and production machinery
with carrying amount as of December 31, 2012 amounting to BGN 177 thousand (2011:
BGN 219 thousand) and BGN 148 thousand (2011: BGN 154 thousand), respectively. The lease
liabilities are repaid on monthly installments, the last of which is due in December 2014. Collateral of
the Company’s liabilities on the finance lease agreements are the leased assets.
Additionally the Company has leased production equipment under a finance lease (see loan R above),
at carrying amount of BGN 13,835 thousand included in assets under construction. The lease
installments are repaid in monthly installments, the last of which due in December, 2017. The
liabilities on the finance lease agreement are secured with the leased equipment and a bank guarantee
for the term of the lease agreement at the amount of EUR 4,000 thousand (see Loan L).
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 47
26 Borrowings (continued)
Finance lease liabilities as of December 31, 2012 and 2011 are as follows:
Total value of
Minimum lease payments
Present value of
Minimum lease payments
December 31,
2012 December 31,
2011 December 31,
2012 December 31,
2011
No later than 1 year 3,397 91 2,689 83
Later than 1 year and not later than 5
years 11,908 125 10,565 119
Total 15,305 216 13,254 202
Less: Deferred financial expenses (2,051) (14) - -
Present value of minimum lease
liabilities 13,254 202 13,254 202
Current portion of finance lease
liabilities 2,689 83
Long-term portion of finance lease
liabilities 10,565 119
ZUNK loan
The Company received a bank loan for funding of the construction of the secondary aluminum
workshop in late 1980. In 1994, in accordance with the Law for Settlement of Unserviced Loans, the
loan was transformed into a loan to the State (ZUNK loan). On December 14, 2000 under an annex to
the agreement between the Company and the Ministry of Finance of Bulgaria dated January 15, 1997,
the ZUNK loan, comprising of principal to the amount of USD 5,305,823 and interest to the amount
of USD 3,190,472 was rescheduled for repayment until October 30, 2015. Interest is charged on the
outstanding principal at 7 % per annum. In order to secure the ZUNK debt, property of the Company
with a carrying amount as at December 31, 2012 of BGN 5,756 thousand, has been mortgaged. As at
December 31, 2012, and 2011 the total amount of principal and interest is USD 1,077 thousand
(BGN 1,593 thousand) and USD 2,382 thousand (BGN 3,601 thousand), respectively.
The Company has foreign currency swap contracts with a Bulgarian bank to hedge the risks associated
with the changes in the foreign currency rates (see note 24).
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 48
27 Trade and other payables
Trade and other payables consist of the following:
December 31,
2012
December 31,
2011
Trade creditors 13,429 11,590
Payables to employees 892 729
Advances from customers 300 87
Social security payables 197 271
Payables to state budget 149 153
Trade payables to related parties (see note 31) 11 18
Other 313 321
Total trade and other payables 15,291 13,169
28 Income tax (receivables)/liabilities
December 31,
2012
December 31,
2011
Income tax liabilities
at the beginning of the period
51
719
Income tax accrued 818 1,162
Income tax set-off - (719)
Income tax paid (1,330) (1,111)
Income tax (receivables)/liabilities
at the end of the period (461) 51
29 Accruals
Accruals are as follows:
December 31,
2012
December 31,
2011
Unutilized paid annual leaves’ charges 662 573
Social and health security 141 123
Total accruals 803 696
Further analysis of movements of unutilized paid leaves’ charges is presented below:
December 31,
2012
December 31,
2011
Balance at the beginning of the period 696 793
Accrued 265 18
Utilized (158) (115)
Balance at the end of the period 803 696
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 49
30 Financial instruments and risk management
The carrying amounts of financial assets and liabilities as at December 31, 2012 and 2011 by
categories as defined in accordance with IAS 39 Financial instruments: Recognition and Measurement
are presented in the tables below:
Financial assets: December 31,
2012
December 31,
2011
At amortized cost:
Interest bearing loans receivables (note 19) 5,345 5,092
Trade and other receivables, net (note 21) 36,166 36,129
At fair value:
Derivative financial instruments for hedging (note 24) 183 57
Total 41,694 41,278
Financial liabilities: December 31,
2012
December 31,
2011
At amortized cost:
Trade and other payables (note 27) 14,013 11,978
Interest bearing loans liabilities (note 26) 83,488 89,839
Finance lease liabilities (note 26) 13,254 202
110,755 102,019
At fair value:
Derivative financial instruments for hedging (note 24) 5 738
Total 110,760 102,757
The financial instruments used expose the Company to market, credit and liquidity risk. Information
in regard to purposes, policies and processes concerning the management of those risks, as well as the
capital management is provided below.
Market risk
Market risk is the risk that the fair value or the future cash flows of financial instruments may vary
due to the changes in market prices. The associated market risk is foreign currency risk, interest risk
or price risk.
Foreign currency risk
The Company enters into international transactions, denominated in foreign currencies. Therefore, the
Company is exposed to market risk related to possible foreign currency fluctuations. Such risk is
mainly connected to the USD/BGN exchange rate fluctuations, because the Company’s transactions
related to purchases of raw materials and sales of finished goods are denominated in USD. The
Company does not have any loans received or granted, denominated in USD, except the ZUNK loan,
which is hedged (see note 26). Transactions in EUR do not expose the Company to foreign currency
risk as since January 1, 1999 the Bulgarian lev has been pegged to the Euro at a fixed exchange rate.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 50
30 Financial instruments and risk management (continued)
Financial assets and liabilities, denominated in USD, are presented in the table below:
December 31, 2012 December 31, 2011
Original
currency
(in thousands)
BGN’000
Original
currency
(in thousands)
BGN’000
Trade and other receivables 1,486 2,205 1,487 2,248
Total financial assets 1,486 2,205 1,487 2,248
ZUNK (1,077) (1,593) (2,382) (3,601)
Trade and other payables - - (90) (136)
Total financial liabilities (1,077) (1,593) (2,472) (3,737)
Total financial assets/(liabilities), net 409 612 (985) (1,489)
The sensitivity analysis of foreign currency risk is calculated at a change of 3 % 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, 2012 the USD/BGN
exchange rate had decreased by 3 %, and, with all other variables held constant, the profit after tax
would have decreased by BGN 66 thousand (2011: BGN 63 thousand), mainly as a result of exchange
rate differences arising from revaluation of trade receivables and liabilities, denominated in USD. The
difference in the sensitivity of the profit after taxation to changes in the exchange rate of the USD for
2012 is insignificant, compared to 2011. In the above analysis the liabilities under the ZUNK loan are
excluded, as they are hedged and the exchange rate fluctuations have no effect on the respective
period financial result.
Most of the sales of the Company are concentrated in countries from the European Union, including
Bulgaria, as 90 % of the sales are realized in this region. Transactions with customers from those
countries are negotiated in EUR, that basically eliminates foreign currency risk. In addition, owing to
the increasing importance of the EUR as a global currency, the Company has the opportunity to
realize some of its sales in EUR outside the European Union as well, that further mitigates the foreign
currency risk.
Interest rate risk
The Company is exposed to interest rate risk, because the main part of the loans received are
contracted under the terms of floating interest rate, negotiated as a base interest rate (base rate,
SOFIBOR, LIBOR, EURIBOR) with a certain mark-up, which varies between 3% and 4%. In 2012
and 2011 the loans with a floating interest rate are denominated in BGN and EUR.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 51
30 Financial instruments and risk management (continued)
Interest rate risk (continued)
The Company continuously monitors and analyses its main interest exposures and develops certain
scenarios in regard to their optimization, including re-financing, renewal of existing loans, alternative
financing (contracts for sale and lease-back of assets), as well as develops estimates of the impact of
the interest rate fluctuations in a certain range over the financial result.
As of the date of these financial statements the structure of the interest-bearing financial instruments
is as follows:
December 31,
2012
December 31,
2011
Instruments with a fixed interest rate
Financial assets 5,345 5,092
Financial liabilities 15,935 10,271
Instruments with a floating interest rate
Financial liabilities 80,807 79,770
If the interest rate increases or decreases by 2 %, the interest amount for a
one-year-period could affect the income statement as follows:
Accrued
interest
Interest amount at a possible
fluctuation of the interest
rate with
plus 2% minus 2%
Trade loans (fixed interest rate) 253 253 253
Total income from interest 253 253 253
Bank loans 2,289 3,643 1,047
Trade loans 271 445 97
Lease agreements 8 11 5
Debt to the State (ZUNK)
(fixed interest rate) 121 121 121
Total interest expenses 2,689 4,220 1,270
Total interest expenses, net 2,436 3,967 1,017
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 52
30 Financial instruments and risk management (continued)
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. Such contracts are
classified as cash flow hedges as they hedge the Company’s exposure to variability in cash flows that
is attributable to the particular price risk associated with forecasted sale and purchase transactions
(see note 24).
Credit risk
Credit risk is the risk that a party to a financial instrument is unable to pay its liabilities and thus cause
financial loss to the other party. Financial assets, which potentially expose the Company to credit risk,
are mainly trade receivables and interest-bearing loans granted. Primarily, the Company is exposed to
credit risk in the event where its customers fail to perform their obligations. In order to mitigate the
credit risk the Company has concluded contracts with an international and Bulgarian insurance
companies in regard of trade receivables insurance. Additionally, the Company directs its policy to
enter into sales transactions with customers having favorable credit reputation, and, to use adequate
collaterals in order to mitigate the risk of possible financial losses. The estimations for favorable
credit reputation of the customers are based on the financial position, previous experience and other
factors. Credit limits are determined, which are strictly monitored. In 2012 the Company generates
approximately 96 % of its revenue through sales to customers with over 2-year business relationships
with the Company.
As at December 2012 the Company does not have any substantial credit exposure to any counterparty
or a group of counterparties with similar characteristics. Counterparties are defined as counterparties
with similar characteristics if they are related parties.
The credit limits and the carrying amounts from the top five customers of the Company as of
December 31, 2012 and 2011 are presented in the tables below:
December 31, 2012
Carrying
amount
Credit
limit
ETF Aluminium GmbH 239 2,836
ALPHA METALL GMBH 783 2,151
CEDO SP.Z O.O. 2,383 4,694
THYSSENKRUPP METALSERV GMBH 766 1,956
FORA FOLIENFABRIK GMBH 1,364 1,565
Total: 5,535 13,202
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 53
30 Financial instruments and risk management (continued)
Credit risk (continued)
December 31, 2011
Carrying
amount
Credit
limit
ETF TRADE GMBH 1,493 2,640
CEDO SP. Z.O.O. 2,686 3,618
ALPHA METALL GMBH 1,229 1,760
CUKI COFRESCO SPA 1,348 2,934
ALUMECO S/A 445 978
Общо: 7,201 11,930
During 2012 the Company realizes 24 % of the revenue through sales to the five biggest customers
(during 2011: 20 %). As at December 31, 2012 and 2011 trade receivables from these customers
amount to BGN 5,535 thousand and BGN 7,201 thousand, respectively, that represent 16 % and 21 %
of the total amount of trade receivables.
Maturities of receivables, based on the latest possible date, on which the Company may receive them
are presented in the table below:
December 31,
2012
December 31,
2011
up to 30 days 23,558 24,847
30-90 days 10,031 10,215
up to 120 days 206 -
Total amounts receivable 33,795 35,062
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 11 % per annum (see note 19).
Liquidity risk
Liquidity risk is the risk that the Company is not able to settle its financial liabilities on maturity. The
Company manages this risk by securing enough liquid funds, which should be used to settle the
financial liabilities when they become executable, including in extraordinary or unexpected
circumstances. The aim of the management is to maintain a stable balance between constant
availability and flexibility of the financial resources through use of different forms of financing.
Management of the liquidity risk is the responsibility of the Managing and Supervisory Boards. and
include maintaining of sufficient monetary funds, successfully negotiating of adequate credit lines,
preparing, analyzing and updating of cash flows forecasts.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 54
30 Financial instruments and risk management (continued)
Liquidity risk (continued)
The maturities of non-derivative financial liabilities on the basis of the earliest date, on which the
Company may be obliged to pay them, are presented in the table below. The table presents the
undiscounted cash flows, including principal and interest:
December 31, 2012 Up to 1
month
Between 1
and 3 months
Between 3
months and
one year
Between
1 and 5
years
Over 5
years
Total
Long-term bank loans 91 183 1,461 8,649 1,020 11,404
Debt to the State (ZUNK) - - 1,036 579 - 1,615
Short-term bank loans - 24,863 39,170 - - 64,033
Trade loans - - - 7,582 - 7,582
Finance lease liabilities 279 464 1,880 12,682 15,305
Trade payables 11,087 2,204 138 - - 13,429
Advances received from clients 300 - - - - 300
Trade payables to related parties 11 - - - - 11
Other liabilities 273 - - - - 273
Total 12,041 27,714 43,685 29,492 1,020 113,952
December 31, 2011 Up to 1
month
Between 1
and 3 months
Between 3
months and
one year
Between
1 and 5
years
Over 5
years
Total
Long-term bank loans 313 611 2,262 13,666 2,557 19,409
Debt to the State (ZUNK) 13 36 1,471 2,239 - 3,759
Short-term bank loans 5,892 36,818 20,018 - - 62,728
Trade loans - - - 9,865 - 9,865
Finance lease liabilities 8 16 67 125 - 216
Trade payables 9,217 2,252 121 - - 11,590
Advances received from clients 87 - - - - 87
Trade payables to related parties 18 - - - - 18
Other liabilities 283 - - - - 283
Total 15,831 39,733 23,939 25,895 2,557 107,955
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 55
30 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 2012 and 2011 is as follows:
December 31,
2012
December 31,
2011
Debt (see note 26) 96,742 90,041
Cash and cash equivalents (see note 22) (339) (2,497)
Net debt 96,403 87,544
Total Equity 95,934 92,556
Amounts accumulated in equity relating to cash-flow hedges (see
note 24)
(165)
664
Adjusted Capital 95,769 93,220
Debt-to-adjusted capital ratio 1.01 0.94
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, 2012 and
2011 the Company adheres to these requirements, as its net assets amount to BGN 95,934 thousand
and BGN 92,556 thousand, respectively, and the registered share capital amounts to
BGN 17,953 thousand.
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 56
30 Financial instruments and risk management (continued)
The Company manages its capital in a proper manner in order to ensure its activity as a going concern.
As at December 31, 2012 the Company’s current liabilities exceed the current assets by
BGN 81 thousand. Management of the Company believes that in the future it could sustain its normal
activities through self-financing and increase of the operating efficiency.
31 Related parties
Related parties of the Company are:
1. Аlumetal АD – Sofia – Parent company;
2. FAF Metal Sanayj Ve Ticaret AS – Istanbul, Turkey – entity with significant influence over the
Company through direct and indirect participation in the Company’s share capital;
3. Euromet ЕООD – Shumen – Subsidiary;
4. Ferroal Limited – Nassau, Bahamas – controlling shareholder of the Parent company.
The main transactions with related parties during 2012 and 2011 are as follows:
December 31,
2012
December 31,
2011
Parent company
Repayments of loans received - 522
Accrued interest on loans received 271 239
Interest paid on loans received 664 160
Entity with significant influence over the Company
Services granted - 14
Subsidiaries
Interest on loans granted to Euromet EOOD 253 253
There are no unusual terms associated with these transactions or variances from the average market
prices contracted with third parties under the same conditions.
The outstanding accounts receivable from related parties include:
December 31,
2012
December 31,
2011
Subsidiaries
Euromet EOOD – trade receivable 5 5
Euromet EOOD – loans granted 5,345 5,092
Total receivables from related parties 5,350 5,097
АLCOMET AD
NOTES TO THE FINANCIAL STATEMENTS (CONTINUED)
for the year ended December 31, 2012 All amounts in thousand of BGN, unless otherwise stated
This document is a translation of the original in Bulgarian, in case of divergence the Bulgarian original is prevailing 57
31 Related parties (continued)
The outstanding amounts payable to related parties are as follows:
December 31,
2012
December 31,
2011
Controlling shareholder of the Parent company
Ferroal Limited – trade loan received 1,383 1,300
Parent company
Alumetal AD – trade loans received 7,172 7,657
Entities with significant influence over the Company
FAF Metal (see note 27) 11 18
Total payables to related parties 8,566 8,975
The remuneration of directors and other members of key management includes only short-term
benefits, which as at December 31, 2012 and 2011 are at the amount of BGN 2,770 thousand and
BGN 1,944 thousand, respectively. The outstanding payables to key management as at
December 31, 2012 and 2011 amount to BGN 95 thousand and BGN 62 thousand, respectively.
32 Contingent liabilities
At December 31, 2012 the Company has four outstanding bank guarantees at the amount of
BGN 286 thousand and EUR 4,000 thousand, issued on behalf of the Company by Bulgarian banks.
The validity term of three of the guarantees at the total amount of BGN 286 thousand expires in 2013.
The fourth guarantee at the amount of EUR 4,000 thousand is issued as a collateral to a lease liability
of the Company and is effective for the period of the lease agreement (see note 26).
33 Events after the date of the financial statements
In the beginning of 2013 the Company purchased EUA quotas for emissions of greenhouse gases for
2,700 tons at the amount of BGN 32 thousand (see note 17).
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