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EUROHOLD BULGARIA AD (27/2018) Interim Management Report and Financial Statements for H1'2018

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Interim Management Report and Financial Statements for H1'2018

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    Eurohold Bulgaria AD

    INTERIM CONSOLIDATED
    MANAGEMENT REPORT AND
    FINANCIAL STATEMENTS

    1 January - 3 0 June 201 8


    Interim consolidated management report , 30 June 2018





















    For more information on the following :
    About us
    Structure
    Corporate governance
    Information for investors
    Communication and media
    please visit :
    www.eurohold.bg


    TABLE OF
    CONTENTS

    1. Interim consolidated management
    report as of June 30, 2018.

    Interim consolidated financial
    statements as of June 30, 2018.

    2. Notes to the interim consolidated
    financial statements.


    3. Declarations by the responsible
    persons




    Interim consolidated management report , 30 June 2018

    INTERIM CONSOLIDATED MANAGEMENT REPORT
    containing information on important events that occurr ed during
    the first half of 2018 according to Art. 100o, para graph 4, item 2 of
    POSA
    IMPORTANT EVENTS FOR THE EUROHOLD GROUP THAT OCCURRED IN THE
    PERIOD 1 JANUARY - 30 JUNE 2018
    During the reporting period, the following important events took place, affecting the
    results in the financial statement s of Eurohold Bulgaria AD as of 30.06.2018 :
    1. DIVIDEND PAYMENT
    At a regular meeting of the General Meeting of Shareholders of Eurohold Bulgaria
    AD, h eld on 29.06.2018, a decision was taken to allocate a net profit of BGN 1 800
    000 (one million eight hundred thousand leva) as a gross dividend among the
    shareholders. The gross dividend per share is BGN 0.009. Dividend payments will
    be made within 60 (six ty) days of the date of approval by the General Meeting of
    Shareholders of the decision to distribute the dividend.
    2. EUROHOLD ACQUIRES THE RESIDUAL MINORITY SHARE IN THE EUROINS
    INSURANCE GROUP
    In June 2018, Eurohold Bulgaria AD agreed with South Eastern Eu rope Fund L.P.
    (SEEF), managed by the Greek investment company Global Finance, for the
    acquisition of the residual minority share of 10.64% of its subsidiary insurance
    holding company Euroins Insurance Group (EIG).
    After the transaction is finalized, Euro hold will own 100% of the capital of Euroins
    Insurance Group AD and thus consolidate its ownership in all of its subsidiaries -
    EIG, Avto Union AD, EuroLease Group EAD and Euro - Finance AD, which operate in
    the respective sectors : insurance, car sales, lea sing and financial investment
    intermediation. Currently Eurohold holds 100% of the shares of Avto Union AD,
    Eurolease Group EAD and Euro - Finance AD.
    3. FINANCING
    At the end of May 2018 Eurohold Bulgaria signed a loan agreement with
    International Investment Bank. The loan amounts to EUR 10 million, with a
    repayment term of 18 March 2025 and an annual interest rate of 6% + Euribor.
    4. REPAYMENT OF A MEZZANINE LOAN
    On 31st of May, 2018, Eurohold Bulgaria fully repaid a mezzanine loan - interest
    and principal.
    The 15 - million - euro mezzanine credit agreement was signed in 2008 with
    Accession Mezzanine Capital II.
    The loan was used for the regional expansion of EIG.
    The repayment of the loan will result in a reduction in the interest costs of
    Eurohold.



    Interim consolidated management report , 30 June 2018
    IMPORTANT EVENTS FOR THE EUROHOLD GROUP THAT OCCURED AFTER THE
    BALANCE SHEET DATE OF 30.06.2018
    1. EUROINS INSURANCE GROUP RECEIVE D AUTHORIZATION FOR THE
    ACQUISITION OF AN INSURANCE COMPANY IN UKRAINE
    On 19.07.2018 the Ukrainian regulator - the National Commission for State
    Regulation of the Financial Services Markets of Ukraine (Національна комісія, що
    здійснює державне регулювання у сфері ринків фінансових послуг), issued a
    decision 1302 / 19.07.2018, according to which it authorized Euroins Insurance
    Group to acquir e a qualifying shareholding of 99.99998% of the capital of Private
    Company “ European Tourist Insurance ” , Ukraine. The acquisition of shares on the
    part of Euroins Insurance Group will take place in accordance with the provisions of
    the Purchase and Sale Ag reement for Shares from 13.04.2018 and the applicable
    provisions of the Ukrainian law.

    2. FITCH RATINGS CONFIRMED THE CREDIT RATING S OF EUROINS ROMANIA
    AND EUROHOLD BULGARIA

    On August 1, 2018 , the international rating agency Fitch Ratings for the first time
    awarded a rating "BB - " to Euroins Bulgaria, the B ulgarian insurance company of
    Eurohold. As well as , Fitch Ratings confirmed Euroins Romania's rating for financial
    s tability (Insurer Financial Strength Rating - IFSR) "BB - " . The outlook for the rating
    was assessed as stable.

    The long - term credit rating of Eurohold Bulgaria AD was also confirmed (Long - Term
    Issuer Default Rating – IDR) “B” . The outlook for the rating was assessed as stable .
    Fitch Ratings also confirmed the credit rating of Eurohold's medium - term Eurobond
    program (EMTN programme) in the amount of up to EUR 200 million and the EUR
    70 million medium - term Eurobonds issued under the programme as B'/'RR4'.

    Fitch's rating analysis reported the following key factors in the development of
    Eurohold:

    ➢ Improved leverage, capitalization and debt servicing capabilities;

    ➢ Eurohold’s consolidated Fitch - calculated financial leverage ratio improved to
    63% at the end of 2017 from 84% in 2016 due to equity increases and debt
    reduction in 2017;

    ➢ Eurohold’s fixed coverage ratio improved to 2.1 at the end of 2017 compared
    0.9 as of the end o f 2016 supported by improved profitability. Fitch expects
    that debt reduction in 4Q17, and more favourable rates on newly issued Euro
    medium - term notes (EMTN) could lead to further improvement in Eurohold's
    FCC ratio in 2018;

    ➢ Fitch considers Eurohold's bu siness profile as good. EIG holds strong market
    positions in its core Romanian and Bulgarian non - life insurance markets,
    especially in the MTPL segment;

    ➢ The S2 ratio of Eurohold's insurance activities grouped under the interim
    holding company Euroins Insu rance Group (EIG) improved to 177% at end -
    2017 (2016:123%) due to fresh equity injections, investment portfolio de -
    risking, and lower catastrophe risk retention.


    Interim consolidated management report , 30 June 2018

    EUROHOLD BULGARIA
    CONSOLIDATED FINANCIAL RESULTS
    Eurohold Bulgaria reported as at June 30, 2018 a net consolidated profit of BGN 4.1 million,
    gaining 3.9% compared to a profit of BGN 3.9 million for the first half of 2017. The
    distribution of the financial result is as follows: for the Group, profit of BGN 1.9 million; for
    non - controlling partic ipation profit of BGN 2.1 million . Accordingly, as of 30.06.2017: t he
    Group realized a profit of BGN 2 million, whereas the relative result to the non - controlling
    interest amounted to BGN 1.9 million profit .

    Consolidated gross profit of Eurohold Group as at 30.06.2018 increased by BGN 6.6 million,
    reaching BGN 59.6 million compared to BGN 53.1 million for the comparable period .
    At the same time, EBITDA amounted to BGN 19.4 million, up 11.7% as compared to
    30.06.2017, when EBITDA amounted to BGN 17.3 million .
    According to the interim consolidated financial statements for the first half of 2018, the
    consolidated operating income of Eurohold Group amounted to BGN 600.5 thousand,
    accounting for a decrease of 7% compared to the comparable period of 2017 .
    The Group's operating expenses decreased comparatively to revenues . T he reported
    decrease of expenses for the reporting period was 7.2% and they amounted to BGN
    540,852 thousand .
    The net financial and depreciation costs of the Eurohold Group companies amou nted to
    BGN 10.3 million and BGN 5 million respectively, while during the comparable period they
    amounted to BGN 9.1 million and BGN 4.1 million . 53 050 59 605
    17 324 19 356
    3 926
    4 079
    010 00020 00030 00040 00050 00060 00070 000
    30 June 2017 30 June 2018Eurohold Bulgaria comparative consolidated result as of the first half of 2018, in
    thousands of BGN.
    gross profit EBITDA net profit


    Interim consolidated management report , 30 June 2018
    Other expenses for the Group's activity increased by BGN 4.5 million and amounted to a
    total of BGN 40.2 million .

    CONSOLIDATED OPERATING RESULTS BY TYPE OF ACTIVITY BASED ON
    CONSOLIDATED DATA

    Insurance business
    Revenues from insurance activity at the end of the first half of 2018 amounted to BGN
    458.6 million. Compared to the same period in 2017, the reven ues from insurance activity
    decreased by 14.9% .
    The operating expenses for the period under review decreased by 16.8% to BGN 423.2
    million compared to BGN 508.7 million at the end of the comparable period .
    Despite the reported revenue decrease, the insurance sub - holding Euroins Insurance
    Group realized a 16.9% increase in consolidated operating profit, which amounted to BGN
    35.6 million compared to BGN 30.4 million as at 30.06.2017 .
    Automotive business
    Revenues from the automo tive business amounted t o BGN 127.2 million, with a significant
    increase for the reported period of BGN 35.4 million .
    Operating expenses for sold vehicles and spare parts increased by BGN 34.1 million and
    reached BGN 114.6 million .
    For the reporting period, the automotive sub - ho lding realized a consolidated operating
    profit of BGN 12.6 million compared to BGN 11.2 million for the comparable period of 2017 .
    Leasing business
    Reported consolidated operating income from leasing activity amounted to BGN 11.6
    million compared to BGN 12.6 million for the comparable period with a decrease of BGN
    1.1 million .
    The operating expenses related to the leasing activity amounted to BGN 1.8 million,
    remaining relatively unchanged compared to the previous reporting period .
    For the current period, the leasing activity realized a consolidated operating profit of BGN
    9.7 million, while as of 30.06.2017 the consolidated operating profit was BGN 10.6 million .
    Asset management and brokerage
    Asset management and brokerage business generated revenue of BG N 1.8 million,
    accounting for a growth of 24.4% compared to the comparable period .
    The expenses for financial - investment activity for the reporting period increased by 35.6%
    and amounted to BGN 1.3 million .
    The result of the operating activity of the asset management and brokerage business for
    the first half of 2018 is a profit of BGN 0.463 million, while the realized financial result as
    at 30.06.2017 amounted to BGN 0.459 million .


    Interim consolidated management report , 30 June 2018

    Activity of the parent company
    In the first half of 2018, Eurohold Bu lgaria generated revenues amounting to BGN 1.3
    million .
    The operating expenses of the parent company are insignificant in the amount of BGN 51
    thousand .
    The result of the operating activity is a profit of BGN 1.2 million .

    RESULTS BY TYPE OF ACTIVITY BASED ON UNCONSOLIDATED DATA
    The table below provides information on revenue ss earned by subsidiaries as of 30 June
    2018 compared to 30 June 2017. A comparison of the EBITDA generated by Eurohold
    subsidiaries was also made, as well as the financial result before the elimination by sector s .

    TOTAL REVENUES BY SECTOR S
    Sectors
    H1.2018 H1.2017 Change
    BGN ‘000 BGN ‘000 %
    Insurance business 459 396 540 003
    - 15%
    Automotive business 131 630 95 349
    38%
    Leasing business 12 261 13 113
    - 6%
    Asset management and brokerage 2 138 1 931
    11%
    Total for the subsidiaries 605 425 650 396
    - 7%
    Parent company 1 834 2 627
    - 30%
    Total before eliminations 607 259 653 023
    - 7%
    Intra - group elimination s (6 802) (7 063)
    - 4%
    Total revenues by sectors 600 457 45 960 - 7%

    PROFIT BEFORE INTEREST, AMORTISATION AND TAX ES
    Sectors
    H1.2018 H1.2017 Change
    BGN ‘000 BGN ‘000 %
    Insurance business 13 692 13 231
    3%
    Automotive business 3 091 3 079
    0%
    Leasing business 2 744 2 178
    26%
    Asset management and brokerage 73 201
    - 64%
    Total for the subsidiaries 19 600 18 689
    5%
    Parent company 840 854
    - 2%
    Total before eliminations 20 440 19 543
    5%
    Intra - group elimination s (1 084) (2 219)
    - 51%
    Total profit before interest, amortisation and
    taxes 19 356 17 324
    12%

    FINANCIAL RESULTS
    Sectors
    H1.2018 H1.2017 Change


    Interim consolidated management report , 30 June 2018
    BGN ‘000 BGN ‘000 %
    Insurance business 11 534 11 216
    3%
    Automotive business 395 434
    9%
    Leasing business 110 122
    - 10%
    Asset management and brokerage 36 171
    - 79%
    Total for the subsidiaries 12 075 11 943
    1%
    Parent company (7 787) (7 478)
    - 4%
    Total before eliminations 4 288 4 465
    - 4%
    Intra - group elimination s (209) (539)
    - 61%
    Total financial result 4 079 3 926
    4%

    Revenues from the activities of Eurohold Group companies decreased by 7% or by BGN
    45.8 million before accounting for intragroup calculations. The decrease in revenues is
    mainly due to the drop in subscribed premiums in Romania recorded during the reporting
    period .
    Profit before interest, depreciation and taxes increased by 5% or by BGN 0.9 million before
    reporting for intragroup eliminations .
    The realized financial results of the Group companies before intragroup elimination s
    amounted to BGN 4.3 million, decreasing by just BGN 177 thousand .

    FINANCIAL CONDITION
    Consolidated Assets

    During the first six months of 2018 Eurohold Group companies achieved an increase of
    consolidated assets by 2.4%, which at the end of the reporting period amounted to BGN
    1.358 billion compared to BGN 1.326 billion at 31.12.2017 .
    The most significant change in consolidated assets was recorded in cash and deposits,
    receivables, financial assets and reinsurers' share of technical reserves .
    At the end of the first half of the year, the Eurohold Group has free cash and deposits in
    banks amounting to BGN 62 million . At the end of 2017 they amounted to BGN 57.1 million .
    Receivables increased by BGN 27 million for the period to BGN 259.2 million. The most
    significant change was observed in non - current receivables, which increased by BGN 21.7
    million and amounted to BGN 107.6 million .
    The financial assets held by Eurohold Group companies as at 30.06.2018 reported a
    decrease of BGN 24.7 million compared to the end of 2017 .
    In the first half of 2018, the share of reinsurers in technical reserves grew by BGN 22.6
    million .



    Interim consolidated management report , 30 June 2018

    Consolidated equity and liabilities
    Total equity of Eurohold Bulgaria amounted to BGN 216.5 million, rising by BGN 2 million
    as compared to 31.12.2017. T he consolidated capital of the Eurohold Group amounted to
    BGN 174.5 million, while the capital belonging to the non - controlling interest for the period,
    amounted to BGN 42 million . For comparison with the end of 2017, the consolidated capital
    of the Eurohold Group amounted to BGN 170.8 million, and the capital belong ing to the
    non - controlling interest amounted to BGN 43.7 million .
    In support of equity, the Group holds subordinated debt instruments of BGN 28 million
    compared to BGN 26 million as at the end of 2017 .
    The total amount of equity and subordinated debt inst ruments amounted to BGN 244.6
    million, while at the end of 2017 they amounted to BGN 240.6 million .
    Non - current consolidated liabilities increased by 11.18% from BGN 280 million to BGN
    311.4 million during the reporting period. A major part of non - current liabilities represent
    liabilities to banks, other financial institutions and issued bond loans .
    Liabilities on loans and bond issues : Н 1. 2 01 8 31.12. 201 7 %
    BGN ‘000 BGN ‘000 Change
    - bank and non - bank loans 1 16 610 99 245 17 . 5 %
    - bond issues 163 267 150 757 8 . 3 %
    Total loans 2 79 877 250 002 11 . 9 %
    Current c onsolidated l iabilities decreased by the end of the reporting period by BGN 3.2
    million and amounted to BGN 802.5 million .
    A major part of the current liabilities represent assigned insurance reserves amounting to
    BGN 630 million . F or the current reporting period they increased by BGN 34.1 million
    compared to the end of 2017 .

    ACTIVITY OF THE SUBSIDIAR IES FOR THE PERIOD
    1 JANUARY - 30 JUNE 2018

    EUROINS INSURANCE GROUP
    In the first six months of 2018 Euroins Insurance Group (EIG, the Group) has realized
    consolidated gross written premiums of BGN 299.5 million compared to BGN 359.4 million
    for the same period of 2016. Reason for the decrease is the business written by Eur oins
    Romania. All other subsidiaries have registered growth. The Group has reported an
    unaudited consolidated profit of BGN 11.5 million compared to a profit of BGN 11.2 million
    in Q2 2017.
    In January 2018 was completed the process to increase EIG capital by BGN 195.6 million
    (EUR 100 million), a decision that has been voted back in 2015. The amount of this increase


    Interim consolidated management report , 30 June 2018
    has been fully paid in and registered with the Trade Registry as well. As of now the total
    share capital of Euroins Insurance Group amounts to BGN 483,445,791 .
    At the end of the quarter a Group corporate governance plan was initiated. Based on good
    practices, risk management and improved reporting it is in the context of a shared
    o perational and IT environment. The aim is to achieve management synergies and to
    improve the Group corporate governance so that it will lead to qualitative and quantitative
    progress – from the very main elements (products, sales, claims) through reporting,
    control and quality of the actuarial calculations and work.
    ➢ Euroins Bulgaria
    In the first six months of 2018 Euroins Bulgaria has reported total GWP of BGN 80.3 million
    c ompared to BGN 73.6 million written in 201 7. The reason for this growth of more than
    9% is the direct insurance business written through brokers both locally in Bulgaria and in
    Greece, Italy and Spain according to the EU directive for Freedom of services. MTPL line of
    business grows but so do also main non - motor lines such as Health (67%)
    and Accident and Travel (25%).
    Net claims incurred are up by 17 % . The reasons for this growth is the growth of the
    business. Net earned premiums have increased by more than 20% for the period.
    An increase in the administrative expenses has be en reported compared to the same period
    of 2017. Firstly, these are the expenses associated with the growth of the business. Next
    are the substantial final costs related to the IFRS and Solvency II audits that also have
    their impact. Because of the new reg ulatory requirement, the statements of the insurance
    companies must be now signed off by two audit firms. There are also the significant costs
    associated with the new regulatory requirements of Solvency II.
    Despite this Euroins Bulgaria has reported a prof it for group purposes of BGN 470 thousand
    compared to BGN 138 thousand in Q2 2017.
    In 2017 the majority shareholder of Euroins Bulgaria Euroins Insurance Group has
    reconfirmed its commitment to support its subsidiary by increasing its capital by BGN 16
    mil lion. As at 30 June 2018 the share capital, fully paid in and registered, amounts to BGN
    32,470,000.
    The improved financial condition of the company has been also confirmed by the updated
    Long - Term Claims Paying Ability Rating assigned by BCRA, Credit rati ng Agency, in January
    2018. The assigned rating is “BBB - ” with outlook updated to Stable confirming the
    improvement. On August 1, 2018 , the international rating agency Fitch Ratings for the first
    time awarded a rating "BB - " to Euroins Bulgaria .
    All the circumstances above would help the management of Euroins Bulgaria in focusing
    on the challenges waiting in 2018, which are the intr oduction by way of enactment of the
    bonus malus system on the local MTPL insurance market and the establishment of an
    insurance branch in Greece.
    The bonus malus system has been already part of the underwriting policy of Euroins
    Bulgaria since 2012. But so far, the company has applied it only on drivers that are either
    current or former clients. With the introduction of the system on the entire market Euroins
    Bulgaria will be in position to perfect it and apply its conservative underwriting approach
    to all its clients and thus improve its technical result.
    ➢ Euroins Romania
    In the first ясй months of 2018 Euroins Romania has written total GWP of BGN 200 . 1
    million compared to BGN 1 66 . 2 million in 2017. The decrease is a result of the stabilization
    of the Romani an MTPL market after two years of significant increase of the average


    Interim consolidated management report , 30 June 2018
    premium. Unlike the Motor business the major non - Motor lines of business such as Liability
    (4 2 %), Accident ( 19 %), Property (18%) and Cargo (3%).
    Net claims incurred grow as result of an increase in the number of reported claims. At the
    same time there is a decrease in the average paid claim.
    Acquisition costs have registered significant decrease of more than 17% with the reason
    being the decrease in the written business. Administrative ex pense has registered slight
    increase compared to the same period of 2017 but there currently are certain initiatives
    under way to optimize several processes related not only to the administrative
    management but also to processes that are yet to benefit act ivities such as claims handling
    and internal controls.
    As a result, this is another quarter for Euroins Romania where it can be witnessed the
    positive effect of the re - segmentation combined with the strengthening of the reserves in
    2015. Subsequently the p rofit for group purposes rises to BGN 11 million before tax.
    At the beginning of 2018 Euroins Romania has received the final regulatory approval for
    the acquisition of the insurance portfolio of ATE Insurance, a Romanian general insurer. It
    consists of non - Motor business only. The transaction is part of the long - term strategy of
    Euroins Romania to increase the share of the non - Motor business of the company.
    ➢ Euroins Macedonia
    In Q2 2018 gross premiums written by Euroins Macedonia have registered a growth of
    nearly 19% reaching BGN 10 million. Main business lines that grow are Liability by 57%,
    Property – 26%, Motor Hull – 12%, Cargo – 9 %, MTPL – 5%.
    Net claims incurred have increased by 8% with the net earned premiums having grown by
    16% in the same period.
    B ecause of the ongoing initiatives of the management of the company administrative costs
    have registered a decrease of 8%.
    The result of the above is a profit for group purposes of BGN 800 thousand compared to
    BGN 4 thousand in 2017.
    ➢ Euroins Life
    In the first six months of 2018 Euroins Life has written total GWP of BGN 931 thousand
    registering growth of 6% compared to Q2 2017.
    The management of the company is currently reviewing the products on offer. In addition
    the company also started offering on the market new life insurance solutions including
    online sales solutions. These initiatives, however, are still at the very beginning with the
    positive portfolio effect yet to be seen.

    ➢ Euroins Ukraine
    On 12 August 2016 Euroins Insurance Group has compl eted the acquisition of PJSC HDI
    Strakhuvannya Insurance Company. On 30 September the General Assembly of the
    Shareholders voted the company’s name to be changed to PJSC Euroins Ukraine Insurance
    Company. The newly acquired company writes both motor and no n - motor business .
    In Q2 2018 gross written premiums amount to BGN 9 million, which is a growth of 77%.
    Nearly 40% of the written business has been non - Motor. Because of the administrative and
    acquisition costs related to the current ongoing restructuring o f the company Euroins
    Ukraine has reported a loss for Group purposes of BGN 861 thousand.


    Interim consolidated management report , 30 June 2018

    ➢ EIG Re
    The previous name of Insurance Company EIG Re EAD is HDI Insurance AD. Euroins
    Insurance Group has acquired the company at the end of 2015. For the six months of 201 8
    EIG Re has written gross premiums of BGN 11 million showing some slight growth. The
    profit for Group purposes amounts to BGN 140 thousand.
    ➢ Euroins Russia
    On 23 November 2017 Euroins Insurance Group has acquired 14.144% of the capital of
    Insurance Company Euroins Russia.
    On 13 February 2018 the increase of the capital of the company where Euroins Insurance
    Group AD participated with RUB 80 million has been completed. As a result, at the end of
    the quarter the participation of the Group in the capita l of Euroins Russia is 32.195%.
    In the first half of 2018 the company has reported gross written premiums of BGN 11
    million. As continuation of the sound performance from last year the company reports a
    profit of BGN 336 thousand in Q2 2018 .

    AVTO UNION
    The consolidated financial result of the Group for the period from 01.01.2018 until
    30.06.2018 is a profit of BGN 395 thousand (2017 - profit of BGN 434 thousand). The
    consolidated financial result for the parent company's owners for the same period was a
    loss of BGN 488 thousand, compared to 2017 when it was a profit of BGN 3 thousand.
    The number of cars sold for the second quarter of 2018 increased by 34.6% compared to
    the same period of 2017. Revenues from sales of cars, spare parts, oils and fuels incre ased
    by 39.3%, and the revenues from sales of services grew by 7.2% .



    Interim consolidated management report , 30 June 2018
    Sales of new cars from Avto Union in the second quarter of 2018 compared to those on the
    Bulgarian market as a whole , number of cars – Q 2 201 6 , Q 2 201 7 and Q 2 201 8 , source :
    ACM

    Operating expenses for the second quarter of 2018 show an increase of 16.7% over the
    same period in 2017, due to the higher realized revenues in 2018 compared to 2017. The
    highest growth was recorded in the personnel costs, which increased by 17.6% or BGN
    1,060 thousand, as well as the expenses for external services, which increased by 16.7%
    or BGN 716 thousand. The financial expenses decreased by 12.7%, or BGN 203 thousand,
    due to the optimization of the structure and the cost of the borrowed capital for t he Group.
    Revenues from financial operations also decreased by 86% or BGN 280 thousand in the
    period under review compared to the previous year 2017, due to a decrease in interest
    income under loan agreements.
    For the period ending on 30.06.2018 the sales of new cars and light commercial vehicles
    realized by Avto Union - the automobile holding in the group of Eurohold Bulgaria amounted
    to 3 210 units, compared to 2 358 units sold in the same period in 2017, which represents
    a growth of 36.1%. According to t he Union of Automobile Importers in Bulgaria, the market
    for new cars and light commercial vehicles registered a growth of 20.8% for the second
    quarter of 2018 compared to the same period of 2017. During the reporting period Opel
    dropped 15% for Varna and 8% for Sofia. Espas Auto OOD has registered sales growth for
    both of its brands compared to 2017 - 35% for Renault and 7.7% for Dacia. In the case of
    N A uto , there was a growth in sales of 119% for Nissan cars. Auto Italia EAD increased its
    sales of Fiat b y 146% and Alfa Romeo by 160%, while its sales of Maserati decreased by
    61%. Star Motors marks a 7% decline in sales of new Mazda cars compared to last year .


    Number of cars sold and market share of automotive companies in the Auto Union Group
    for the second quarter of 2018 .



    Interim consolidated management report , 30 June 2018
    During the reporting period the companies from the automobile holding have concluded
    flotation transactions for a total of 1 109 automobiles with a total value of BGN 28.6 million,
    while the ratio for the previous year was 823 auto mobiles with a total value of BGN 18.3
    million .
    Avto Union Group Sales %
    2018 2017 Change
    January – June
    3 210 2 385 34,6%
    (with accumulation)
    By quarter:
    first quarter (Jan - Mar) 1 313 1 023 28,3%
    second quarter (Apr - June) 1 897 1 362 39,3%

    At a constituent meeting held on January 8, 2018, a decision was taken for the
    establishment of a joint stock company "Sofia Auto Bulvaria" AD, the decision being
    entered in the Commercial Register on 07.02.2018. The founders of the company are
    Bulvaria Ho lding EAD (controlling 51% of the capital) and Sofia Auto Bulgaria EAD (with
    minority participation of 49% of the capital) - two of Opel's three largest dealers in the
    country. The j oint stock company , as a new legal entity, will start to carry out an
    inde pendent economic activity of importing and selling new Opel cars in the country , selling
    spare parts for them and provi ding service activities. Bulvaria Holding EAD and Sofia Auto
    Bulgaria EAD will exercise joint control by stopping self - activity in the import and sale of
    new Opel cars, original spare parts for them, including warranty service.
    On May 3, 2018 , Star Motors Ltd. signed a contract with UniCredit Bulbank AD, whereby
    the parties agreed to provide a bank revolving loan of EUR 350,000 for operational
    payments, the deadline for which to be utilized is 30.04.2019.
    On 17.05.2018, with a record of an extraordinary general meeting of the shareholders of
    Espas Au to OOD, a decision was made to distribute BGN 500,000 of undistributed profit
    from the Company's activities to its shareholders H Auto Sofia EAD (51%) and M G Ltd
    (49%).
    On May 28, 2018 , Star Motors Ltd. signed an annex to its Contract for a Bank Loan with
    UniCredit Bulbank AD, through which the parties agreed to reduce the credit limit granted
    to the Borrower in the form of bank guarantees and documentary credits by EUR 1 050
    000. Thus, the total bank guarantee limit at the end of the reporting period gran ted to the
    borrower Star Motors EOOD amounts to EUR 3 250 000.
    On 13.06.2018 , Motobul EAD successfully carried out, under the terms of a primary
    private offering, a first issue of ordinary, registered, dematerialized, interest - bearing,
    secured, non - convert ible, freely transferable corporate bonds with the following
    parameters:

    ISIN : BG2100006183
    Currency : BGN
    Price : 8 800 000 leva .
    Amount : 8 800
    Nominal value : 1 000 leva.
    Fixed interest rate: 3.85% annually
    Maturity : 13.06.2028
    Coupon payment: every 6 months


    Interim consolidated management report , 30 June 2018

    On 15.06.2018 Motobul EAD signed an annex to its Revolving Bank Loan Agreement with
    Raiffeisenbank Bulgaria EAD, which extended the term by one year and reduced the
    interest rate under the loan agreement. Under the new conditions, the interest rate is 3 -
    month EURIBOR + 3.3% .
    On 29.06.2018 an a nnex was signed to the credit agreement between H Auto Sofia EAD
    and Raiffeisenbank Bulgaria EAD, which reached an agreement for a gradual reduction of
    the limit used up to EUR 250 000 until 30.09.2018. Under t he new conditions set out in
    the Annex, the interest rate is reduced and amounts to a 3 - month EURIBOR + 3.3% .

    EUROLEASE GROUP
    For the reporting period Eurolease Group reports consolidated profit of BGN 110 thousand
    compared to BGN 122 thousand for the second quarter of 2017.
    The consolidated revenues of the company are formed by the different business lines of
    the subholding, namely: revenue from financial and op erating leases, rent - a - car services
    and sale of used cars, the distribution of which is shown in the following graphic .

    The observed changes are caused by the following factors:
    - During the reporting period the total revenues from the different lines of the
    business increased by 13.28 % to BGN 10,932 thousand compared to BGN 9,650
    thousand at the end of the second quarter of 2017. The relative shares of each of
    the lines of business are kept relatively constant, proving the consistency of the
    revenues in the leasing sub - holding;
    - Financial leasing - In absolute terms, revenues from this business line increase and
    as at 30 June 2018 amounted to BGN 2,559 thousand compared to BGN 2,432
    thousand for the comparable period
    - Operating lease - the increase in the s econd quarter of 2018 is due to the significant
    increase in the number of long - term rental cars. Revenues from operating leases in
    the two comparable periods increased by 26%, reaching BGN 3,652 thousand as
    compared to BGN 2,898 thousand at the end of June 2017.
    - Rent - a - car services - the amount of revenues decreases by 6.34 % to BGN 1,640
    thousand compared to BGN 1,751 thousand at the end of June 2017. Revenues
    from operating leases and short - term rentals are reported in other operating income 23%
    33%16% 28%Q2, 2018
    25%
    30%18% 27% Q2, 2017
    Financial
    Leases
    Operartng
    Leases
    Car Rentals
    Used vehicles
    Sale


    Interim consolidated management report , 30 June 2018
    and for the second quarter of 2018 they show an increase of 13.34 % to reach BGN
    5,292 thousand compared to BGN 4,649 thousand for the same period in 2017.
    - Sale of used cars - the share of revenues from the sale of used cars remains
    unchanged. In absolute terms, an increase of 19.93 % to BGN 3,081 thousand was
    reported, compared to BGN 2,569 thousand as of 30.06 .2017.
    An increase o f 15.09 % was also reported in operating expenses amounting to BGN 6,414
    thousand at the end of the second quarter of 2018 compared to BGN 5,573 thousand for
    the same period in 2017.
    Assets at the consolidated level amounted to BGN 120,104 thousand compared to BGN
    115,171 thousand as at 31 December 2017.
    Consolidated net investment in finance leases slight increase to BGN 56,954 thousand
    compared to BGN 56,581 thousand as at the end of 2017.
    The following graph shows the movement in the net investment in a f inancial lease of the
    sub - holding for the specified periods, together with the movement in the number of the
    leasing assets, part of the portfolio of the company .

    As at the end of the reporting period, consolidated fixed assets amounted to BGN 27,546
    tho usand compared to BGN 25,436 thousand at the end of December 2017.
    As of the end of June 2018 there were no significant changes in the relative share of the
    type of funding used:
    - Due to banks as of 30 June 2018 amounted to BGN 55 , 536 thousand compared to
    B GN 47,768 thousand for the comparable reporting period.
    - Due to other financial institutions increase by 4.06% to BGN 13 , 237 thousand
    compared to BGN 12,719 thousand as at 31 December 2017. The amount is payable
    by the subsidiary Eurolease Rent A Car to lea sing companies that finance its
    activities ;
    - At the end of the second quarter of 2018, amounts due under debt securities issued
    are BGN 27 803 thousand compared to BGN 28,985 thousand as at 31 December
    2017 . Q2, 2018 2017 2016
    Net Investment in finance lease
    (in '000 BGN) 56 954 56 580 50 363
    Total number of vehicles
    3 034 2 888 2 776 1 6001 8002 0002 2002 4002 6002 8003 0003 200
    35 00040 00045 00050 00055 00060 000


    Interim consolidated management report , 30 June 2018

    Stand - alone financial result of Eurolease Group is loss of BGN 164 thousand compared to
    loss of BGN 154 thousand at the end of relative reporting period of 2017. Total assets of
    the company are BGN 40,496 thousand.
    ➢ Eurolease Auto Bulgaria
    Financial result of Eurolease Auto Bulgaria for the second quarter of 2018 is profit of BGN
    367 thousand compared to profit of BGN 375 thousand for the second quarter of 2017.
    Net interest income increases by 14.86 per cent and as of the end of June 2018 amount to
    BGN 1,232 thousand vs BGN 1,073 thousand as of 3 0 June 2017.
    The administrative expenses of the Company at the end of reporting period amount to BGN
    1,040 thousand compared to BGN 941 thousand at the end of second quarter of 2017.
    As of the end of June total assets of the Company amount to BGN 88,914 th ousand
    compared to BGN 86,987 thousand at the end of December 2017.
    The net investment in financial leasing reported a decrease of 1.68 per cent and as at 30
    June 2018 amounted to BGN 56,474 thousand compared to BGN 57,439 thousand at the
    end of 2017.
    The following graph shows the movement in the net investment in a financial lease of the
    company for the specified period, together with the movement in the number of the leasing
    assets, part of the company's portfolio . 58
    %
    14
    %29
    %Q2, 2018
    54%
    14%32% 2017
    Due to Banks
    Due to on the financial
    institutions
    Debt securities issued


    Interim consolidated management report , 30 June 2018

    As at the end of June 2018, company’s equity amounted to BGN 22,749 compared to BGN
    22,382 thousand as at 31 December 2017.
    At the end of the reporting period the liabilities of the company amounted to BGN 66,165
    thousand and BGN 64,605 thousand as at 31 December 2017.
    Eurolease Auto finances its activities through borrowed funds in the form of bank loans
    from local and international financing institutions and issuance of d ebt instruments .
    The following table shows the distribution of the funding used by the company .

    During the reporting period no significant changes occurred in this type of obligation:
    - Bank loans - at the end of June 2018 amounted to BGN 44,152 thousand compared
    to BGN 38,431 thousand at the end of 2017.
    - Company’s liabilities under debt instruments issued decrease by 5.5 8 % to BGN
    19,240 thousand compared to BGN 20,376 thousand as at 31 December 2017.
    ➢ Eurolease Auto Romania
    At the end of the reporting period Eurolease Auto Romania reports loss of BGN 17 thousand
    compared to loss of BGN 41 thousand for the relative reporti ng period of 2017 . Q2, 2018 2017 2016
    Net Investment in finance lease (in
    '000 BGN) 56 474 57 439 48 964
    Total number of vehicles
    2 556 2 473 2 377 1 8001 9002 0002 1002 2002 3002 4002 5002 600
    30 00035 00040 00045 00050 00055 00060 000
    70
    %30
    %Q2, 2018
    65%35% 2017
    Due to Banks
    Debt securities
    issued


    Interim consolidated management report , 30 June 2018
    ➢ Eurolease Auto Macedonia
    The financial result of Eurolease Auto Macedonia as at the end of second quarter of 2018
    is profit of BGN 47 thousand vs loss of BGN 64 thousand for the same period of 2017.
    As of 3 0 .0 6 .201 8 interest income increase d by 6.15 per cent to BGN 276 thousand
    compared to BGN 260 thousand at the end of the second quarter of 2017.
    During the reporting period interest expenses decrease by 24.11 per cent to BGN 192
    thousand compared to BGN 253 thousand as of 30.06.2017 . The decrease is due to
    renegotiation in 2017 of the interest rates under the funding the company uses.
    During the period the net investment in financial leasing decreases a bit and at the end of
    June 2018 amounts to BGN 6,196 thousand in comparison to BG N 6,449 thousand at the
    end of 2017.
    The following graph ic shows the movement in the net investment in financial lease of the
    sub - holding for the specified periods , along with the movement in the number of leas ed
    assets part of the company's portfolio .

    As at 30 June 2018 Company’s total assets amounted to BGN 8,441 thousand compared
    to BGN 8,019 thousand as at 31 December 2017.
    At the end of reporting period bank loans amount to BGN 5,471 thousand compared to
    BGN 5,380 thousand as at 31 December 2017.
    ➢ Eurolease Rent a Car
    Eurolease Rent A Car is a provider of short - term and long - term rent of vehicles under AVIS
    and BUDGET brands.
    The financial result as of the company during the reporting period is loss of BGN 115
    thousand compared to loss of 113 thous and as of the end of second quarter of 2017.
    The following chart shows the breakdown of revenue by origin for the first quarters of 201 8
    and 201 7 : Q2, 2018 2017 2016
    Net Investment in finance
    lease (in '000 BGN) 6 196 6 448 5 819
    Total number of vehicles
    392 415 399 300320340360380400420440
    2 0002 5003 0003 5004 0004 5005 0005 5006 0006 5007 000


    Interim consolidated management report , 30 June 2018

    At the end of the second quarter of 2018, the interest expense of the company remained
    unchanged and amoun ts BGN 271 thousand compared to BGN 268 thousand as at June
    2017.
    The administrative expenses of the Company as at 30 June 2018 decrease by 2.66 per
    cent and amounted to BGN 3,471 thousand compared to BGN 3,566 thousand for the same
    period in 2017.
    The cha rt below shows the relationship between the Company's fixed assets, revenues and
    EBITDA. With the increase in the book value of fixed assets, there was a slight increase in
    EBITDA .

    Total assets of the company amount to BGN 21,023 thousand compared to BGN 19,459
    thousand as of December 2017.
    Total liabilities are BGN 20,013 thousand vs BGN 18,319 thousand for the comparable
    period.
    ➢ Autoplaza 0,0%10,0%20,0%30,0%40,0%50,0%60,0%70,0%80,0%90,0%100,0%
    Q2, 2018 Q2, 201755,4%
    50,9%36,9%
    42,5%7,6% 6,6%
    Other
    Rent-a-car services
    Operating lease
    8 0009 00010 00011 00012 00013 00014 00015 00016 00017 000
    Q2, 2018 Q2, 2017 05001 0001 5002 0002 5003 0003 5004 000
    Fixed Assets Revenue EBITDA


    Interim consolidated management report , 30 June 2018
    The main activity of Autoplaza EAD involves the sale of vehicles returned from lease,rent -
    a - car and "buy - back". The company operates in cooperation with Avto Union, Eurolease
    Bulgaria and Eurolease – Rent - A Car.
    Financial result of Autoplaza as of the end of second quarter of 2018 is profit of BGN 50
    thousand compared to profit of BGN 116 thousand for the comparable period.
    During the reporting period Autoplaza reports gross profit of BGN 257 thousand compared
    to BGN 271 thousand at the end of June 2017.
    The chart below shows the change in the total revenue, the cost of goods sold and the
    gross pro fit realized by the company .

    The total assets of the company amounted to BGN 2,289 thousand vs. BGN 2,523 thousand
    as of 31 December 2017.
    ➢ Sofia Motors
    The main activity of Sofia Motors is related to the rental of vehicles to individuals and small
    and medium enterprises.
    The financial result of Sofia Motors at the end of second quarter of 2018 is profit of BGN
    37 thousand compared to loss of BGN 3 thousand for the comparable period.
    The chart below shows the relationship between the company's fixed assets, revenue and
    EBITDA. It is observed that the revenue growth is slower compared to the growth in book
    value of fixed assets. This is due the larger volume of new deals generated in the second
    half of 2017 . 150170190210230250270290310330350
    05001 0001 5002 0002 5003 0003 500
    Q2, 2018 Q2, 2017 Total Revenue
    Cost of goods sold
    Gross profit


    Interim consolidated management report , 30 June 2018

    During the reporting period, the revenues from services increased by 77.63% compared
    to the second quarter of 2017. This trend is again due to the large number of transactions
    realized in the second half of 2017.
    Total assets of the company as of 30 June 2018 amounted to BGN 9,772 thousand
    compare d to BGN 8,593 thousand as at 31 December 2017.
    The total liabilities of the company amounted to BGN 9,596 thousand compared to BGN
    8,653 thousand for the comparable reporting period.
    ➢ Amigo Leasing
    By order of listing BNB - 32591 dated March 20, 2018, EuroLease Auto Retail EAD was
    registered as a financial institution in the registers of the BNB. From April 2018, the
    company was renamed to Amigo Leasing EAD.
    The Company's activities started at the end of the first quarter.
    Amigo Leasing reports a loss o f BGN 95 thousand - related to the expenses incurred in the
    preparation stage of business development.
    For the period since the beginning of the business operations, the company has built a
    portfolio of financial leasing amounting to BGN 675 thousand and h as provided loans
    amounting to BGN 76 thousand.
    In June 2018, the company entered into a credit agreement with Bulgarian American Credit
    Bank AD for an amount of EUR 1.5 million. The funds will be used to finance the activities
    of Company .

    EURO - FINANCE
    EURO - FINANCE is an investment intermediary, a member of the Frankfurt Stock Exchange,
    providing a direct access to Xetra® through the EFOCS trade platform. The Company also
    offers trade in currencies, indexes, shares and precious metals by way of contracts for
    difference through the EF MetaTrader 5 platform.
    According to the FSC data, the Company is the one having the highest amount of equity
    from among all the investment intermediaries. 02004006008001 0001 2001 4001 6001 800
    7 0007 2007 4007 6007 8008 0008 2008 4008 6008 8009 000
    Q2, 2018 Q2, 2017
    Fixed Assets EBITDA Revenue (in '000 BGN)


    Interim consolidated management report , 30 June 2018
    During the reporting period EURO - FINANCE AD continues carrying out the activities set
    forth in the development programme, which are directed at developing the online services
    for individual clients, increasing the funds under management and participation i n projects
    related to corporate consulting and restructuring.
    As at 30 June 2018, EURO - FINANCE AD is holding clients’ financial assets in the amount of
    BGN 627 961 thousand, BGN 12 642 thousand thereof being ones under management.
    The Company’s net operat ing revenue for the first six months of the year 2018 amounts
    to BGN 857 thousand and is generated from:
    · Interest revenue – BGN 412 thousand;
    · Other operating revenue – BGN 445 thousand;
    Those expenses for the period which are connected with the current servicing of the
    Company amount to BGN 819 thousand.
    The Company develops in accordance with the expectations and, in view of the economic
    situation, the expenses are preserved close to the estimates. Part of the revenues of EURO -
    FINANC E is generated from the services that the Company has been actively developing
    since the year 2012.
    The table below shows the structure of the investments of EURO - FINANCE AD as at 30
    June 2018, which complies with the risk management policy pursued by the Company .

    Name 30 June
    2018
    Equity
    share in % 31 Dec.
    2017
    Equity share
    in % amount in
    thousand
    BGN amount in
    thousand
    BGN
    Cash, current accounts and short -
    term deposits 4 139 18.71% 4 528 20.31%
    Equity securities (shares, rights,
    and the like) 5 599 25.31% 6 096 27.34%
    Debt securities (bonds and
    treasury bills issued by
    governments and financial
    institutions) 198 0.89% - -
    Debt securities of other issuers 2 393 10.82% 2 115 9.49%
    Net receivables under repo
    transactions 9 592 43.36% 9 678 43.40%
    Total: 21 921 99.08% 22 417 100.54%



    Part of the investments in equity securities shown in the table above is reported in the
    investment portfolio of the Company. The items in the investment portfolio are as follows:

    Issuer Number
    available Unit value
    in BGN Book value in
    BGN
    Central Depository AD 1 476.20 476.20
    EF Asset Management AD 79 840 2.51 200 701.79
    Varengold Bank AG 413 000 6.83 2 819 074.69
    Varengold Bank AG 206 500 5.63 1 163 171.22
    Total: 4 183 424.00

    During the latest reporting period EURO - FINANCE AD has constantly monitored the
    fulfilment of those requirements regarding capital adequacy and liquidity which ensue from
    Ordinance № 50 of the FSC on capital adequacy and liquidity of investment intermediar ies
    and Regulation (EU) No. 575/2013 of the European Parliament and of the Council. No
    departures have been established. At any point in time the Company’s own funds
    considerably exceeded the amount of capital requirements for covering all risks arising
    fr om the activity of EURO - FINANCE AD. As at 30 June 2018 the Company’s own funds
    exceed by 68% the equity requirements under Regulation 575/2013, the Company’s total
    capital adequacy ratio being 8%.
    The rules and procedures for the assessment and maintenanc e of the amount, types and
    distribution of the internal capital that are necessary for adequately covering those risks
    to which EURO - FINANCE AD is exposed constitute an element of the Rules on Risk
    Assessment and Management, the reliability and effectivene ss of these Rules being
    checked by the Board of Directors not later than 30th January each year.

    EUROHOLD BULGARIA
    ( Standalone base )
    FINANCIAL RESULT
    As of 30th of June,2018 Eurohold Bulgaria AD reported for the negative financial result on
    standalone base in amount of BGN 7.8 million versus a loss of BGN 7.5 million for the
    comparable period last year .
    REVENUES
    Eurohold Bulgaria AD as a holding company does not carry out regular commercial
    transactions, a nd in this respect, its main (operating) revenues are of a financial nature,
    as the most significant of them - revenues from financial operations occur in different
    reporting periods and do not have a permanent occurrence.
    The revenues of the company over the reporting period increased by 6.6% amounting to
    BGN 2.7 million, of which BGN 0.9 million interest revenues, other financial revenues in
    amount of BGN 1 million, BGN 0.6 million revenues from financial operations and BGN 0.2
    million represented revenu es from dividend.


    Interim consolidated management report , 30 June 2018
    For comparison, as of the end of June, 2017 the company’s revenues amounted to BGN
    2.5 million, of which and interest revenues in amount of BGN 1.7 million, revenues from
    financial operations in amount of BGN 0.5 million and revenues fro m dividend in amount
    of BGN 0.3 million .
    EXPENSES
    For the observed period the operating expenses increased by 4.9% as amounted to BGN
    10.5 million compared to BGN 10 million as of 30.06.2017. The expenses growth was due
    to the increased interest expenses during the current period, while all other operating
    expenses decreased .
    ASSETS
    As of 30th of June 2018 the company's assets increased by 3% and amounted to BGN
    574.7 million compared to BGN 557.9 million as of the end of 2017.
    The increase in assets is due to an increase in investments in subsidiaries by BGN 7.9
    million, as well as due to the increased current assets by BGN 8.8 million .
    In the past six months Eurohold Bulgaria AD has invested in its subsidiary Euroins
    Insurance Group AD, in two direction s:
    1. On 3 January 2018, the last installment of the subsidiary company Euroins Insurance
    Group AD amounting to BGN 1,963 million was made in accordance with the decision to
    increase the capital of the insurance sub - holding in 2015;
    2. Acquisitio n of a share of its subsidiary insurance holding company Euroins Insurance
    Group (EIG) in connection with an agreement for the purchase of the 10.64% residual
    minority share held by the South Eastern Europe Fund L.P. (SEEF), managed by the Greek
    investment company Global Finance.
    During the reporting period, the current assets increased significantly mainly due to the
    increase of receivables from related parties by BGN 6.5 million and increased other
    receivables by BGN 2.2 million .
    EQUITY AND LIABILITIES
    The total equity amounted to BGN 328.4 million, decreasing by the reported loss in the
    first six months of the current year. For comparison, as at 31.12.2017, the equity of
    Eurohold Bulgaria amounted to BGN 338 million.
    The company's liabilities increased by 12% from BGN 219.9 million as at 31.12.2017
    reached BGN 246.2 million.
    For the period the non - current liabilities increased by 16.3% or BGN 27.8 million. The
    growth of non - current assets is due to an increase in the amount of Eurobonds (EMTN
    Program) from BGN 141.5 million to BGN 153.5 million, as well as due to the increase in
    the amount of loans received from financial and non - financial institutions from BGN 21.1
    million as of 31.12.2017 to BGN 37 million in the current period.
    The current liabilities decreased by BGN 1.5 million to BGN 53.1 million as of the end of
    reporting period. The bulk of current liabilities is current borrowings from financial and
    non - financial institutions, as well as the current portion of debenture obligations. During
    the reporting period total current liabilities on loans decreased by 5.4% to BGN 50.3
    million, while as of 31.12.2017 they amounted to BGN 53.2 million .



    DESCRIBTION OF THE KEY RISK FACTORS
    1. Systematic risks
    Influence of the global economic and financial crisis
    The global financial crisis, which started in 2007, led in many countries (including the US,
    EU countries, Russia, and Japan) to a slowdown of economic growth and an increase in
    unemployment, limited ac cess to sources of financing and a significant devaluation of
    financial assets worldwide. The financial crisis also caused significant disturbances on the
    global financial market which led to reduced confidence on financial markets and, thus,
    difficulties of entities in the financial sector with maintaining liquidity and raising financing.
    Also, the crisis on the global financial market may affect the non banking financial services
    sector and the sale of the range of products and services by the Group, part icularly driven
    by the possible further decrease in unemployment and drop in disposable incomes.
    Deterioration in the regional financial system and markets coupled with corresponding low
    consumer consumption rates could seriously lower sales across all div isions of the Group
    and thus may also adversely affect the Group’s outlook, results and financial situation.
    Risks related to the general macroeconomic, political and social situation, and
    government policy
    The macroeconomic situation and the growth rate i n the Balkans (Bulgaria, Romania,
    Macedonia and Serbia) are of key importance to the development of the Group, as well as
    government policy, particularly the regulatory policy and the decisions taken by the
    respective National Banks affecting such external factors as money supply, interest rates
    and exchange rates, taxes, GDP, inflation rate, budget deficit and foreign debt, and
    unemployment rate and income structure.
    Changes in the demographic structure, mortality or morbidity rate are also important
    eleme nts affecting the Group’s development. The above external factors, as well as other
    unfavorable political, military or diplomatic developments leading to social instability may
    lead to a curb on higher - level consumer expenditures, including limitation of f unds
    allocated for insurance coverage, car buying and leasing.
    Political risk
    This is the risk arising from political processes in the country - the risk of political instability,
    changes in government principles, legislation and economic policy. Political risk is directly
    related to the likelihood of unfavorable changes in the direction of governmental long - term
    policies. As a result there is a danger of adverse changes in the business climate.
    Sovereign credit risk
    The credit risk relates to the possibility for worsening of the international credit ratings of
    Bulgaria, Romania, Macedonia and Serbia. The low credit ratings may lead to higher
    interest rates and more restrictive financing conditions for business enterprises, including
    for the Company .
    At the end of 2015, Standard&Poor's Credit Rating Agency affirmed Bulgaria's long - term
    and short - term foreign and local currency sovereign credit ratings "BB+/B", outlook stable.


    Interim Management Report , 30 June 201 8
    The ratings are supported by the low government debt and the moderate exter nal
    indebtedness. The agency indicates as constraining factors the relatively low income - per -
    capita levels and the weak institutional settings. Standard&Poor's estimates that the
    financial sector continues to face important challenges, but notes that effor ts are underway
    to mitigate risks, including an asset quality review in the banking system slated for 2016.
    Inflation risk
    Inflation risk is associated with the possibility inflation to adversely impact real returns.
    Inflation may affect the amount of expenses of the Issuer as a large part of the company's
    liabilities are interest bearing. Servicing them is related prevailing current interest rates,
    which reflect levels of inflation in the country. Therefore, low inflation rates in the countries
    of oper ation, is seen as a significant factor in the Company.
    Currency risk
    This risk is related to the possibility of devaluation of a local currency.
    In the case of Bulgaria this is the risk of a premature collapse of the Monetary Board and
    the drastic change i n corresponding fixed exchange rate of the national currency. The
    official government and central bank policy are expected to maintain the currency board
    country to the adoption of the euro area.
    In Romania, Serbia and Macedonia the exchange rates are dete rmined by free market
    forces and rare interventions by central banks are driven primarily by sharp market
    movements in FX rates, caused by one - time extrinsic factors.
    Any significant devaluation of currencies in the region (Bulgaria, Romania, Macedonia and
    Serbian) can have a significant adverse effect on businesses in the country, including that
    of the Company. Risks exist when revenues and expenditures of a firm are derived in
    different currencies.
    Interest rate risk
    Interest rate risk is related to the p ossibility of changes in the prevailing interest rates in
    a country. Its impact is most obvious on the Net Income of a firm, as in cases of increases
    in underlying interest rates, should the firm fund itself with leverage. Interest rate risks
    are part of g eneral macro - economic risks, as it is most likely driven by instability and
    perceived risk in the overall financial system. This risk is best handled through the balanced
    use of multiple sources of funding. A typical example of this risk is the ongoing glo bal
    economic crisis, caused by capital shortage and liquidity squeeze in large mortgage lenders
    and financial institutions in the U.S. and Europe. As a result of the crisis, the required
    interest rate premium were re - evaluated and consequently dramatically increased globally.
    The effect of the crisis on Balkans is very tangible and has hampered access to leverage.
    Increases in general interest rate levels, ceteris paribus, would impact the cost of leverage
    used by the company in its business development eff orts. In parallel, such changes could
    adversely impact the expenses of the Firm, as a large portion of the Firm’s financial
    liabilities are interest bearing and have a floating interest rate component.




    Interim Management Report , 30 June 201 8
    2. Unsystematic risks
    Risk relating to the business ope rations of the Company
    EuroHold Bulgaria AD is а holding company and any deterioration in the operating results,
    financial position and growth prospects of its subsidiaries may adversely affect financial
    position of the Company.
    The Company is involved in managing assets and other companies and thus cannot be
    specifically attributed to being exposed to one particular industry segment. Broadly, the
    Company is focused on the industry segment – (1) non - banking financial service (leasing,
    insurance, asset mana gement, brokerage and financial intermediation) and (2) new car
    sales and services. The main risk facing EuroHold is the possibility of decreasing revenue
    across business segments. This could possibly impact the dividends received.
    Correspondingly, this co uld have a negative effect on consolidated revenue growth and
    respectively return on equity.
    The largest business risk comes from the largest business segment of the Company –
    namely the general insurance operations, as the subsidiaries operating in Bulgar ia,
    Romania and Macedonia bring a very significant portion of the Firm’s overall revenues.
    The activities of all subsidiaries of the Company are adversely affected by continued
    increases in market prices of fuel and electricity that are subject to internat ional supply
    and demand and are determined by factors far beyond the Firm’s control.
    The largest business risk comes from the largest business segment of the Company –
    namely the general insurance operations, as the subsidiaries operating in Bulgaria,
    Rom ania and Macedonia bring a very significant portion of the Firm’s overall revenues.
    The major risks in the leasing business stem from the needs of the regional leasing
    subsidiaries to raise sufficient leverage at favorable interest rates, which in turn leaves
    them room to grow and provides proper interest margins that drive profitability. The
    leading leasing subsidiary is EuroLease Auto which is the Bulgarian operating company. As
    such it has issued several tranches of public bonds traded on the Bulgarian Stock Exchange
    (BSE) and thus has publicly disclosed a lot of information, including certain risk
    considerations.
    Eurohold’s Brokerage and Asset management arm is Euro - Finance AD. The risks associated
    with financial intermediation, brokerage and asset management relate to the overall
    general financial markets condition and the inherent vo latility, along with the investment
    awareness and activeness of the general audience.
    The car - sales segment which is present only in Bulgaria and is hosted under the umbrella
    of Avto Union AD is active in new car sales and also provides after - sales service s to
    customers. Along with that, it provides rent - a - car services under short and long - term
    operating lease contracts. The ability to sell certain brands is a result of having a valid
    license issued by the OEMs to market and sell a given brand on the local market. Should
    such licenses and agreement be revoked, the impact on sales and the financial position of
    the company could be materially negative. This is particularly important, given the ongoing
    global restructuring and repositioning of car brands and ma nufacturers. The business
    environment in the automotive industry could be dramatically impacted by purely internal


    Interim Management Report , 30 June 201 8
    drivers related to general purchasing power, access to lease - financing, general business
    sentiment, inventory levels, etc.
    Deterioration in t he performance of one or more subsidiaries could lead to a deterioration
    of the results on a consolidated basis. This in turn, is related to the price of the Company’s
    shares as equity markets reflect the business potential and total net assets of the Grou p
    as a whole.
    Strategic development risks
    Future earnings and market value of the company depend on the strategy chosen by the
    senior management team of the company and its subsidiaries. Choosing the wrong strategy
    could lead to significant losses.
    Eurohol d seeks to manage the risk of strategic errors by continuous monitoring of various
    stages in the implementation of its marketing strategy and financial performance. It is
    absolutely crucial to be able to respond quickly if a sudden change is needed at some stage
    in the strategic development plan. Untimely or inappropriate changes in strategy may also
    have a significant negative impact on the Company's operating results and financial
    position.
    Risks related to the management of the company
    The following risks are related to the management of the company:
     Poor investment management and liquidity management decisions by either top
    management or other senior employees;
     Inability to launch and execute new projects under development;
     Possible information syste m errors;
     Possible external control failures;
     Departure of key employees and inability to retain and hire qualified personnel;
     Possible jump in SG&A expense, leading to shrinkage in overall margins and
    profitability levels.

    Financial risk
    Financial risk i s the additional level of risk and uncertainty. This level of financial
    uncertainty adds an extra layer of risk business. When a part of the capital which a
    company uses to finance its development is borrowed, the company has taken on
    predictable and/or fi xed financial obligations for periodic payments.
    The larger the proportion of long - term indebtedness to equity, the greater will be the
    probability of default in the payment of future financial obligations. An increase in this
    proportion (leverage ratio) implies an increase in overall financial risk. Another group of
    indicators are related to the flow of revenues through which the payment of the company’s
    obligations is possible. Another indicators is the so called debt - service coverage ratio,
    which is an indication of the free cash flow before interest and taxes, which in turn can be
    used to repay and service the currently due interest components of debt. This ratio is a
    good indicator of a firm’s ability to service its financial liabilities.


    Interim Management Report , 30 June 201 8
    Acceptable o r “normal” level of financial risk is generally highly dependent on the business
    risk. In a low business risk environment, investors should generally be willing to take higher
    levels of financial risk.
    Currency risk
    EuroHold operates in several Balkan cou ntries (Bulgaria, Romania, Macedonia and Serbia),
    as the national currency of each of the countries, except Bulgaria, is a freely convertible
    currency, whose value relative to other currencies is determined by free markets forces.
    In Bulgaria, since 1996 t he local currency has been pegged to the EURO. Abrupt change in
    macro - framework of any of the countries, where the Company actively pursues business
    opportunities, may have a negative effect on its consolidated results. Ultimately, however,
    EuroHold report s consolidated Financial Results in Bulgaria in Bulgarian leva (BGN), which
    in turn is pegged to the Euro, which also changes its value against other global currencies,
    but is significantly less exposed to dramatic price fluctuations.
    Liquidity Risk
    Liquid ity risk is linked to the ability of the Company to service its maturing financial
    liabilities fully and on time. Low financial indebtedness and capitalization alone do not
    guarantee uninterrupted debt servicing capacity. Liquidity risks can also arise fro m a
    substantial delay in customer payment of amounts due.
    EuroHold aims to manage this risk through an optimal allocation of internal resources on
    a consolidated basis. The Group seeks adequate liquidity levels in order to meet liabilities
    coming due, both under normal and unexpected market conditions, in a way that minimizes
    bearing of extra costs or losses, and that takes away reputation risk from non - payment of
    obligations due.
    All subsidiaries exercise proper financial planning and forecasting, taking into account
    amounts due within the next 90 days, including servicing of financial liabilities. This format
    of detailed planning minimizes or even completely eliminates the effects of unexpected
    events happening.
    Company’s senior management endorses use of financial leverage by the subsidiaries to
    the extent it is used for new business development or as working capital facilities. The level
    of such borrowed money is strictly controlled and is kept within pre - approved limits, after
    careful consideration of t he needs of the specific business segment and the economic effect
    of such leverage. The general policy of EuroHold is to raise capital in the form of debt and
    equity financing on a centralized basis and then distribute it to the respective subsidiaries
    eit her in form of equity or debt.
    Risk related to the possible transactions between companies in the group with
    terms different from the market terms as well as related to the dependence on the
    group activity
    The relations with the related parties arise from contract for temporary financial aid to the
    subsidiary companies and regarding transactions related to the normal business activity of
    the subsidiary companies.
    The risk from the possible transactions between the companies in the Group under terms
    that ar e different from the market terms is a risk from achieving low profitability from the
    provided inter - group financing. Another risk which can be taken in inter - group transactions


    Interim Management Report , 30 June 201 8
    is failing to realize enough revenues and therefore good profit for the releva nt company.
    On a consolidated level this can reflect negatively on the profitability of the whole group.
    Transactions between the parent company and the subsidiary companies are constantly
    done inside the Holding which arise from their normal activity. Al l transactions with related
    parties are conducted under terms that are no different from the normal market prices,
    complying with IAS 24.
    Eurohold Bulgaria AD operates through its subsidiary companies which means that its
    financial results are directly de pendant on the financial results, the developments and the
    perspectives of the subsidiary companies. One of the main objectives of Eurohold Bulgaria
    AD is to realize significant synergies between its subsidiary companies due to the
    integration of the three business lines – insurance, leasing and car sales. Bad results of
    one or several subsidiary companies could lead to worsening of the consolidated financial
    results. This is related to the Issuer’s share price which can change as a result of the
    expectatio ns of the investors about the perspectives of the company.
    RISK MANAGEMENT

    The elements through which the Group manages risks, are directly related to specific
    procedures for prevention and solving any problems in the operations of EuroHold in due
    time. These include current analysis in the following directions:
     Market share, pricing policy and marketing researches for the development of the
    market and the market share;
     Active management of investments in different sectors;
     Comprehensive policy in asset and liabilities management aiming to optimize the
    structure, quality and return on assets;
     Optimization of the structure of raised funds aiming to ensure liquidity and decrease
    of financial expenses for the group;
     Effective management of cash flows;
     Admini strative expenses optimization, management of hired services;
     Human resources management.
    Upon occurrence of unexpected events, the incorrect evaluation of current market
    tendencies, as well as many other micro - and macroeconomic factors could impact the
    j udgment of management. The single way to overcome this risk is work with experienced
    professionals, maintain and update of fully comprehensive database on development and
    trends in all markets of operation.
    The Group has implemented an integrated risk mana gement system based on the
    Enterprise Risk Management model. The risk management process covers all the Group’s
    organizational levels and is aimed at identifying, analyzing and limiting risks in all areas of
    the Group’s operations. In particular, the Group minimizes insurance risk through proper
    selection and active monitoring of the insurance portfolio, matching the duration of asset
    and liabilities as well as minimizing F/X exposure. An effective risk management system
    allows the Group to maintain stabil ity and a strong financial position despite the ongoing
    crisis on the global financial markets.
    Risk management in the Group aims to:


    Interim Management Report , 30 June 201 8
     identify potential events that could impact the Group’s operations in terms of
    achieving business objectives and achieveme nt related risks;
     manage risk so that the risk level complies with the risk appetite specified and
    accepted by the Group;
     ensure that the Group’s objectives are attained with a lower than expected risk
    level.

    INFORMATION FOR TRANSACTIONS BETWEEN RELATED PARTIES
    IN THE FIRST SIX MONTHS OF 2018
    There were no significant transactions between related parties during the reporting
    period.


    Date: 8 August 2018

    Asen Minchev ,
    Executive Member of the
    Management Board
    Management Board


    Interim Consolidated Financial Statement s for H 1. 201 8


    These Interim consolidated F inanc ial S tatements have been approved from the Board of Directors of Eurohold Bulgaria .
    The notes are an integral part of the interim consolidated f inancial s tatement s for H 1.2018 . 1 5 Eurohold Bulgaria AD
    Interim Consolidated S tatement of profit or loss
    For the period ended June 30 , 2018

    In thousand BGN Notes

    30.6. 201 8 30.6. 201 7



    Revenue from operating activities


    Revenue from Insurance business
    3
    458 635 539 127
    Revenue from car sales and after sales
    5 127 243 91 801
    Revenue from Leasing business
    6
    11 560 12 612
    Revenue from asset management and brokerage
    8
    1 761 1 416
    Revenue from the activities of the parent company
    1 0
    1 258 1 004


    600 457 645 960



    Expenses of operating activities


    Expenses of I nsurance business
    4
    (423 076) (508 700)
    Cost of cars and spare parts sold

    (114 610) (80 553)
    E xpenses of Leasing business
    7
    (1 817) (1 968)
    E xpenses of asset management and brokerage
    9
    (1 298) (957)
    E xpenses of the activities of the parent company
    1 1
    (51) (732)


    (540 852) (592 910)
    Gross Profit

    59 605 53 050



    Other income/ ( expenses ), net
    1 2
    (2 644) (4 461)



    Other operating expenses
    1 3
    (37 605) (31 265)
    EBITDA

    19 356
    17 324



    Financial expenses
    1 4
    (11 259) (9 444)
    Financial income
    1 5
    41 316
    Foreign exchange gains/losses , net
    18
    944 7
    EBTDA

    9 08 2
    8 203



    Depreciation and amortization
    1 6
    (5 001) (4 118)
    EBT

    4 081
    4 085



    Tax expenses
    1 7
    (2) (159)
    Net income for the period

    4 079 3 926

    Attributable to:


    Equity holders of the parent

    1 938 2 011
    Non - controlling interests

    2 141 1 915


    Prepared by : Signed on behalf of BoD : Procurator:



    / I. Hristov / /А . Minchev / /H.Stoev/
    31.7. 2018



    Interim Consolidated Financial Statement s for H 1. 201 8


    These Interim consolidated F inanc ial S tatements have been approved from the Board of Directors of Eurohold Bulgaria .
    The notes are an integral part of the interim consolidated f inancial s tatement s for H 1.2018 . 1 5
    Eurohold Bulgaria AD
    Interim Consolidated Statement of Other Comprehensive I ncome
    For the period ended June 30 , 2018

    In thousand BGN
    Notes
    30.6. 201 8 30.6. 201 7
    Profit for the period
    4 4
    4 079 3 926
    Other comprehensive income





    Other comprehensive income to be reclassified to profit or loss in
    subsequent periods :





    Net (loss)/gain on financial assets available - for - sale

    184 46



    Exchange differences on translating foreign operations

    1 234 (392)



    Other comprehensive income for the period , net of tax

    1 418 (346)
    Total compr ehensive income for the period , net of tax

    5 497 3 580



    Attributable to:


    Equity holders of the parent

    3 235 1 715
    Non - controlling interests

    2 262 1 865


    5 497 3 580




    Prepared by : Signed on behalf of BoD : Procurator:





    / I. Hristov / /А . Minchev / /H.Stoev/
    31.7. 2018



    Interim Consolidated Financial Statement s for H 1. 201 8


    These Interim consolidated F inanc ial S tatements have been approved from the Board of Directors of Eurohold Bulgaria .
    The notes are an integral part of the interim consolidated f inancial s tatement s for H 1.2018 . 1 5 Eurohold Bulgaria AD
    Interim Consolidated Statement of Financial Position
    As at June 30 , 2018

    In thousand BGN
    Notes
    30.6. 2018 31.12.201 7
    ASSETS


    Cash and cash equivalents
    19
    47 581
    45 945
    Deposits at banks
    2 0
    14 445
    11 171
    *71


    Reinsurers’ share in technical reserves
    21.1
    383 818
    361 247
    Insurance receivables
    2 1 .2
    85 202
    87 941
    Trade receivables
    2 2
    31 489
    27 474
    Other receivables
    2 3
    34 844
    30 822
    *71


    Machi nery , plant and equipment
    2 4 , 2 4 .2 - 5
    51 516 44 630
    Intangible assets
    2 6
    2 276 2 198
    Inventory
    27
    51 461 59 125
    Financial assets
    28
    302 365 327 053
    Deferred tax assets
    29
    13 171 13 184
    *71


    Land and buildings
    2 4 , 2 4 .1
    1 9 618 20 090
    Investment property
    2 5
    13 259 12 698
    Investments in associates and other investments
    3 0
    7 646 4 724
    Other financial investments
    3 1
    2 395 2 391
    Non - current receivables
    3 2
    107 616 85 908
    *71



    Goodwill
    3 3
    189 813 189 813


    TOTAL ASSETS

    1 358 515 1 326 414




    Interim Consolidated Financial Statement s for H 1. 201 8


    These Interim consolidated F inanc ial S tatements have been approved from the Board of Directors of Eurohold Bulgaria .
    The notes are an integral part of the interim consolidated f inancial s tatement s for H 1.2018 . 1 5 Eurohold Bulgaria AD
    Interim Consolidated Statement of Financial Position (continued)
    As at June 30 , 2018

    In thousand BGN
    Notes
    30.6. 2018 31.12.201 7
    EQUITY AND LIABILITIES


    Equity


    Issued capital
    43 .1
    197 526 197 526
    Treasury shares
    43 .1
    (6 077) (77)
    Share Premium
    43.2
    49 568 49 568
    General reserves

    7 641 7 641
    Revaluation and other reserves

    (48 568) (57 203)
    Retained earnings /(losses)

    (27 54 8) (44 825)
    Profit for the year
    44
    1 938 18 174
    Equity attributable to equity holders of the parent

    174 480 170 804


    Non - controlling interests
    4 5
    42 027 43 702
    Total equity

    216 507 214 506


    Subordinated debts
    34
    28 058 26 058


    LIABILITIES


    B ank and non - bank loans
    3 5
    116 610 99 245
    Obligations on bond issues
    3 6
    163 267 150 757
    Non - current liabilities
    3 7
    31 534 30 087
    Current liabilities
    38
    22 245 25 587
    Trade and other payables
    39
    85 776 102 192
    Payables to reinsur ers and from direct insurance
    4 0
    64 305 81 863
    Deferred tax liabilities
    4 1
    251 284


    483 988 490 015


    Insurance reserves
    4 2
    629 962 595 835


    629 962 595 835


    Total liabi lities and subordinated debts

    1 142 008 1 111 908



    TOTAL EQUITY AND LIABILITIES

    1 358 515 1 326 414


    Prepared by : Signed on behalf of BoD : Procurator:


    / I. Hristov / /А . Minchev / /H.Stoev/
    31.7. 2018



    Interim Consolidated Financial Statement s for H 1. 201 8


    These Interim consolidated F inanc ial S tatements have been approved from the Board of Directors of Eurohold Bulgaria .
    The notes are an integral part of the interim consolidated f inancial s tatement s for H 1.2018 . 1 5 Eurohol d Bulgaria AD
    Interim Consolidated Statement of Cash Flows
    For the period ended June 30 , 2018

    In thousand BGN
    Notes
    30.6. 201 8 30.6. 201 7
    Cash flow s from operating activities

    Profit for the period before tax:


    4 081
    4 085
    Adjustments for:




    Depreciation
    16
    5 001
    4 118
    Foreign exchange gain/loss

    (21)
    90
    Impairment of assets

    45
    52
    Interest expense

    12 590
    10 987
    Interest revenue

    (5 762)
    (6 227)
    Dividend revenue

    (113)
    (159)
    Other non - cash adjustments

    (4 980)
    (4 511)
    Operating profit before change in working capital

    10 841
    8 435
    Change in trade and other receivables

    17 273
    (69 145)
    Change in inventory

    7 677
    3 162
    Change in trade and other payables and other adjustments

    (5 065)
    82 817


    Cash generated from operating activities

    30 726
    25 269
    Interest ( paid ) /received

    149
    1 149
    Income tax paid

    (468)
    (585)



    Net cash flows from operating activities

    30 407
    25 833



    Investing activities


    Purchase of property, plant and equipment

    (4 228)
    (2 204)
    Proceeds from the disposal of property, plant and equipment

    1 249
    3 882
    Loans granted

    (23 064)
    (2 322)
    Repayment of loans, including financial leases

    18 549
    9 144
    Interest received on loans granted

    781
    296
    Purchase of investments

    (110 313)
    (295 308)
    Sale of investments

    76 835
    288 925
    Dividends received

    49
    188
    Effect of exchange rate changes

    121
    1 099
    Other proceeds/ ( payments ) from investing activities , net

    (1 819)
    (483)



    Net cash flow s from investing activities

    (41 840)
    3 217



    Interim Consolidated Financial Statement s for H 1. 201 8


    These Interim consolidated F inanc ial S tatements have been approved from the Board of Directors of Eurohold Bulgaria .
    The notes are an integral part of the interim consolidated f inancial s tatement s for H 1.2018 . 1 5 Eurohold Bulgaria AD
    Interim Consolidated Statement of Cash Flows (continued)
    For the period ended June 30 , 2018

    In thousand BGN
    Notes
    30.6. 201 8 30.6. 201 7
    F inancing activities


    Proceeds f rom issuance of shares

    -
    34 000
    Proceeds from loans

    133 957
    216 438
    Repayment of loans

    (106 136)
    (227 786)
    Repayment of financial leases

    (8 916)
    (5 274)
    Payment of interest, charges , commissions on investment loans

    (6 716)
    (3 471)
    Dividends paid

    (244)
    -
    Other proceeds/ ( payments ) from financing activities , net

    1 124
    (352)



    Net cash flow s from financing activities

    13 069
    13 555



    Net increase (decrease) in cash and cash equivalents

    1 636
    42 605
    C ash and cash equivalents at the beginning of the year
    19
    45 945
    100 948
    C ash and cash equivalents at the end of the year
    19
    47 581
    143 553







    Prepared by : Signed on behalf of BoD : Procurator:





    / I. Hristov / /А . Minchev / /H.Stoev/
    31.7. 2018




    Interim Consolidated Financial Statement s for H 1. 201 8


    These Interim consolidated F inanc ial S tatements have been approved from the Board of Directors of Eurohold Bulgaria .
    The notes are an integral part of the interim consolidated f inancial s tatement s for H 1.2018 . 1 5 Eurohold Bulgaria AD
    Interim Consolidated Statement of Changes in Equity
    For the period ended June 30 , 2018

    In thousand BGN
    Share
    capital Share
    premium
    Retained
    earnings /
    (losses) Equity
    attributable
    to equity
    holders of
    the parent Non -
    controlling
    interest s Total
    equity General
    reserves Revaluation
    and other
    reserves

    Balance as at 1 January 201 7 124 399 39 736 7 641 (56 477) (36 185) 79 114 36 145 115 259
    Issue of share capital 7 0 181 10 854 - - - 81 035 - 81 035
    Dividends - - - - (1 613) (1 613) (4 9 0) (2 103)
    Treasury shares 2 869 (1 022) - - - 1 847 - 1 847
    Change in non - controlling interest s
    without change in cont rol - - - 481 (7 027) (6 546) 1 684 ( 4 862 )
    Profit for the year - - - - 18 174 18 174 6 241 24 415
    Other comprehensive income :
    Exchange differences on translating
    foreign operations - - - (734) - (734) 135 (599)
    Change in the fair value of financial
    assets available - for - sal e - - - (473) - (473) (13) (486)
    Total other comprehensive income - - - (1 207) - (1 207) 122 (1 085)
    Total comprehensive income - - - (1 207) 18 174 16 967 6 363 23 330
    Balance as of 31 December 201 7 197 44 9 49 568 7 641 (57 203) (26 651) 170 804 43 702 214 506

    Balance as at 1 January 201 8 197 449 49 568 7 641 (57 203) (26 651) 170 804 43 702 214 506
    Treasury shares (6 000) - - - - (6 000) - (6 000)
    Dividends - - - - (1 800) (1 800 ) (244) (2 044)
    Change in non - controlling interest s
    without change in control - - - 7 338 903 8 241 (3 693) 4 548
    Profit for the period - - - - 1 938 1 938 2 141 4 079
    Other comprehensive income :
    Exchange differences on translating
    foreign op erations - - - 1 100 - 1 100 134 1 234
    Change in the fair value of financial i
    assets available - for - sale - - - 197 - 197 (13) 184
    Total other comprehensive income - - - 1 297 - 1 297 121 1 418
    Total comprehensive income - - - 1 297 1 938 3 235 2 262 5 497
    Balance as of 30 June 2018 19 1 449 49 568 7 641 (48 568) (25 610) 174 480 42 027 216 507


    Prepared by : Signed on behalf of BoD : Procurator:




    / I. Hristov / /А . Minchev / /H.Stoev/
    31.7. 2018



    Interim Consolidated Financial Statement s for H 1. 201 8


    These Interim consolidated F inanc ial S tatements have been approved from the Board of Directors of Eurohold Bulgaria .
    The notes are an integral part of the interim consolidated f inancial s tatement s for H 1.2018 . 1 5 Consolidated statement of profit or loss by Business Segments
    For the period ended June 30 , 2018

    In thousand BGN
    30.6. 2018 30.6. 2018 30.6. 2018 30.6. 2018 30.6. 2018 30.6. 2018 30.6. 2018

    Notes Consolidated Insuran ce
    business Automo tive Leasing
    business Asset
    manage -
    ment and
    brokerage Parent
    company Elimination


    Revenues from operating activities

    Revenue from Insurance business
    3 458 635 459 396 - - - - (761)
    Revenue from car sales and after sales
    5 127 243 - 131 630 - - - (4 387)
    Revenue from Leasing business
    6 11 560 - - 12 261 - - (701)
    Revenue from asset management and
    brokerage
    8 1 761 - - - 2 138 - (377)
    Revenue from the activities of the parent
    company
    10 1 258 - - - - 1 834 (576)

    600 457 459 396 131 630 12 261 2 138 1 834 (6 802)
    Expenses of operating activities

    Expenses of I nsurance business
    4 (423 076) (426 828) - - - - 3 752
    Cost of cars and spare parts sold
    (114 610 ) - (114 628) - - - 18
    E xpenses of Leasing business
    7 (1 817) - - (1 998) - - 181
    E xpense s of asset management and
    brokerage
    9 (1 298) - - - (1 299) - 1
    E xpenses of the activities of the parent
    company
    11 (51) - - - - (51) -

    (540 852) (426 828) (114 628) (1 998) (1 299) (51) 3 952
    Gross Profit
    59 605 32 568 17 002 10 263 839 1 783 (2 850)
    Other income/ ( expenses ), net
    12 (2 644) - - (3 446) 19 - 783

    Other operating expenses
    13 (37 605) (18 876) (13 911) (4 073) (785) (943) 983
    EBITDA
    19 356 13 692 3 091 2 744 73 840 (1 084)
    Financial expenses
    14 (11 259) (1 179) (1 401) - - (9 560) 8 81
    Financial income
    15 41 - 47 - - - (6)
    Foreign exchange gains/losses , net
    18 944 - - - - 944 -
    EBTDA
    9 082 12 513 1 737 2 744 73 (7 776) (209)
    Depreciation and amortization
    16 (5 001) (979) (1 342) (2 634) (35) (11) -
    EBT
    4 081 11 534 395 110 38 (7 787) (209)
    Taxes
    17 (2) - - - (2) - -
    Net income for the period
    4 079 11 534 395 110 36 (7 787) (209)

    Consolidated statement of profit or loss by Business Segments
    For the period e nded June 30 , 201 7

    In thousand BGN
    30.6. 2017 30.6. 2017 30 .6. 2017 30.6. 2017 30.6. 2017 30.6. 2017 30.6. 2017

    Notes Consolidated Insurance
    business Automo tive Leasing
    business Asset
    manage -
    ment and
    brokerage Parent
    company Elimination


    Revenues from operating activities

    Revenue from Insurance bus iness
    3 539 127 540 003 - - - - (876)
    Revenue from car sales and after sales
    5 91 801 - 95 349 - - - (3 548)
    Revenue from Leasing business
    6 12 612 - - 1 3 113 - - (501)
    Revenue from asset management and
    brokerage
    8 1 416 - - - 1 931 - (515)
    Revenue from the activities of the parent
    company
    10 1 004 - - - - 2 627 (1 623)

    645 960 540 003 95 349 13 113 1 931 2 627 (7 063)
    Expenses of operating activities

    Expenses of I nsurance business
    4 (508 700) (511 794) - - - - 3 094
    Cost of cars and spare parts sold
    (80 553) - (80 562) - - - 9
    E xpenses of Leasing business
    7 (1 968) - - (2 082) - - 114
    E xpenses of asset management and
    brokerage
    9 (957)
    - - - (958) - 1
    E xpenses of the activities of the parent
    company
    11 (732) - - - - (813) 81

    (592 910) (511 794) (80 562) (2 082) (958) (813) 3 299
    Gross Profit
    53 050 28 209 14 787 11 031 973 1 814 (3 764)
    Other income/ ( expenses ), net
    12 (4 461) - - (5 154) - - 693

    Other operating expenses
    13 (31 265) (14 978) (11 708) (3 699) (772) (960) 852
    EBITDA
    17 324 13 231 3 079 2 178 201 854 (2 219)
    Financial expenses
    14 (9 444) (1 196) (1 604) - - (8 335) 1 691
    Financial income
    15 316 - 327 - - - (11)
    Foreign exchange gains/losses , net
    18 7 - - - - 7 -
    EBTDA
    8 203 12 035 1 802 2 178 201 (7 474) (539)
    Depreciation and amortiza tion
    16 (4 118) (672) (1 358) (2 056) (28) (4) -
    EBT
    4 085 11 363 444 122 173 (7 478) (539)
    Taxes
    17 (159) (147) (10) - (2) - -
    Net income for the period
    3 926 11 216 434 122 171 (7 478) (539)



    Interim Consolidated Financial Statement for H1. 201 8


    22 Notes to the Interim Consolidated
    Financial Statements for H 1.2018


    Found in 1996, Eurohold Bulgaria AD operates in Bulgaria, Romania and
    Macedonia. The company is an owner of a great number of subsidiaries in the
    insurance, financial service and car sa le sectors.

    1. DETAILS ABOUT THE ECONOMIC
    GROUP

    Eurohold Bulgaria AD (parent company) is a
    public joint stock company established by virtue
    of article 122 of the Public Offering of Securities
    Act and article 261 of the Commerce Act.

    The parent company is registered in Sofia City
    Court under corporate file 14436/2006 and is
    established by merger of Eurohold AD registered
    under corporate file № 13770/1996 as per the
    inventory of Sofia City Court and Starcom
    Holding AD registered under corporate file №
    633 3/1995 as per the inventory of Sofia City
    Court.

    The seat and registered address of Eurohold
    Bulgaria AD are as follows: city of Sofia, 43
    Christopher Columbus Blvd.

    The parent company has the following managing
    bodies: General Meeting of Shareholders,
    Supervisory Board /two - tier system/ and
    Management Board, with the following members
    as at 30.6. 201 8 :

    Supervisory Board:
    Assen Milkov Christov – Chairman;
    Dimitar Stoyanov Dimitrov – Deputy Chairman;
    Radi Georgiev Georgiev – Member;
    Kustaa Lauri Ayma – In dependent member;
    Lyubomir Stoev – Indendent member.

    Management board:
    Kiril Ivanov Boshov - Chairman, Executive
    Member;
    Assen Mintchev Mintchev – Executive Member;
    Velislav Milkov Hristov – Member;
    Assen Emanouilov Assenov – Member;
    Dimitar Kirilov Dimit rov – Member;
    Razvan Stefan Lefter – Member. As at 30.6. 201 8 , the Company is represented and
    managed by Kiril Ivanov Boshov and Assen
    Mintchev Mintchev – Executive Members of the
    Management Board, and Hristo Stoev –
    Procurator, jointly by the one of the e xecutive
    members and the Procurator of the Company.

    1.1 Scope of activities

    The scope of activities of the parent company is
    as follows: acquisition, management, assessment
    and sales of participations in Bulgarian and
    foreign companies, acquisition, man agement and
    sales of bonds, acquisition, assessment and sales
    of patents, granting patent use licenses to
    companies in which the parent company
    participates, funding companies, in which the
    parent company participates .

    1.2 Structure of the economic group

    The investment portfolio of Eurohold Bulgaria AD
    comprises three economic sectors: insurance,
    finance and automobile. The insurance sector has
    the biggest share in the holding’s portfolio, and
    the automobile sector is the newest line.

    Companies involve d in the consolidation and
    percentage of participation in equity

    Insurance Sector
    Company % of
    participation in
    the share capital
    30.6. 201 8 % of
    participation in
    the share capital
    201 7
    Euroins Insurance Group AD *
    90 . 74 % 89.36%
    Indirect participation thr ough EIG AD :
    Insurance Company Euroins AD 98.2 2 % 98.21%
    Euroins Romania Insurance AD 98.50 % 98.50 %
    Euroins Insurance AD Macedonia 93 . 36 % 93 . 36 %
    Euroins Life Insurance EAD 100 .00% 100 .00%
    Insurance Company EIG Re AD 100 .00% 100 .00%
    Euroins Ukraine AD 98.32% 98.32%
    * direct participation


    Interim Consolidated Financial Statement for H1. 201 8


    23
    Finance Sector
    Company % of
    participation in
    the share capital
    30.6. 201 8 % of
    participation in
    the share capital
    201 7
    Euro Finance AD *
    99.99% 99.99%

    Eurolease Group EAD * 100.00% 100.00%
    Indirect participatio n through
    Eurolease Group EAD :
    Eurolease Auto EAD 100.00% 100.00%
    Eurolease Auto Romania AD 77.98% 77.98%
    Eurolease Auto Romania AD through
    Euroins Romania Insurance AD 22.02 % 22.02 %
    Eurolease Auto DOOEL, Macedonia 100.00% 100.00%
    Eurolease Rent A Car EOOD 100.00% 100.00%
    Eurolease Auto Retail EAD 100.00% 100.00%
    Autoplaza EAD 100.00% 100.00%
    Sofia Motors EOOD 100.00% 100.00%
    * direct participation
    In 2017 the company Eurolease Auto Retail EAD
    was established.

    Automobile Sector
    Company % of
    pa rticipation in
    the share capital
    30.6. 201 8 % of
    participation in
    the share capital
    201 7
    Auto Union AD * 99.99% 99.99%
    Indirect participation through AU
    AD:
    Bulvaria Varna EOOD 100.00% 100.00%
    N Auto Sofia AD 100.00% 100.00%
    Espas Auto through N Aut o Sofia
    EAD
    51.00%
    51.00%
    EA Properties EOOD
    51.00% 51.00%
    Daru Car AD
    99.84% 99.84%
    Auto Italia EAD
    100.00% 100.00%
    Bulvaria Holding EAD
    100.00% 100.00%
    Sofia Auto Bulvaria OOD
    51 .00% -
    Star Motors EOOD
    100.00% 100.00%
    Star Motors DOOEL , Macedonia
    through Star Motors EOOD
    100.00% 100.00%
    Star Моторс SH.P.K. through Star
    Motors EOOD
    100.00%
    100.00%
    Auto Union Service EOOD
    100.00% 100.00%
    Motobul EAD
    100.00% 100.00%
    Bopar Pro S.R.L., Romania through
    Moto bul EOOD
    99.00% 99.00%
    * direct participation 2. SUMMARY OF THE GROUP’S
    ACCOUNTING POLICY

    2.1 Basis for Preparation of the Financial
    Statement

    The interim consolidated financial statements of
    Eurohold Bulgaria AD are prepared in compliance
    with all Int ernational Financial Reporting
    Standards ( IFRS ), International Accounting
    Standards ( IAS ), interpretations of the Standing
    Interpretation Committee ( SIC ), interpretations of
    the IFRS interpretation committee (IFRIC), which
    are effectively in force and are adopted by the
    Commission of the European Union .

    The Group has considered all standards and
    interpretations applicable to its activity as at the
    date of preparation of the present financial
    statement .

    The interim consolidated financial statement is
    draft ed in compliance with the historic cost
    principle , excluding those financial instruments
    and financial liabilities, which are measured at fair
    value . The report are drafted in accordance with
    the principle of going concern, which assumes
    that the company w ill continue to operate in the
    near future.

    2.2 Comparative Data

    The group keeps on presenting the information in
    the financial statements during the periods.
    Whenever needed, comparative data are
    reclassified in order to achieve comparability
    between t he changes in the presentation for the
    current year.

    2.3 Consolidation

    Consolidated financial statements comprise
    consolidated statement of financial position,
    consolidated statement of profit or loss,
    consolidated statement of other comprehensive
    inco me, consolidated statement of cash flows and
    consolidated statement of changes in equity as at
    30.6. 201 8 .


    Interim Consolidated Financial Statement for H1. 201 8


    24 These statements comprise the holding – parent
    company and all subsidiaries. A subsidiary is
    consolidated by the parent company through the
    direct or indirect holding of more than 50% of the
    voting shares in the capital or through the ability
    to manage its financial and operational policy for
    the purposes of obtaining economic benefits from
    its operations.

    The method of full consolidation is applied.
    Statements are aggregated line by line, and items
    such as assets and liabilities, properties, income
    and expenses are summed up. All internal
    transactions and balances between the group
    companies are eliminated. Opposing elements:
    equity, financial, trade, calculation of goodwill as
    at the date of acquisition, are eliminated.

    Non - controlled participation in the net assets of
    subsidiaries is defined in accordance with the
    shareholding structure of such subsidiaries as at
    the date of the consolidated stateme nt of financial
    position.

    With regard to business combinations
    comprising group entities or business subject to
    joint control, the Group has chosen to apply the
    purchase method in accordance with IFRS 3 –
    Business Combinations. The Group has chosen
    the ac counting policy with regard to these
    transactions, as for the time being they do not
    fall within the scope of application of IFRS 3 and
    the existing IFRSs do not provide any guidance
    to this effect. In accordance with IAS 8, when
    there is no standard or in terpretation that are
    particularly application to an operation, another
    vent or condition, the management uses its own
    judgments to develop and apply the accounting
    policy.

    Principles of Consolidation
    Business combinations are accounted by using the
    purc hase method. This method requires the
    investor to recognize the acquired identifiable
    assets, undertaken liabilities and the participation,
    which is not a control in the investee, separately
    from the goodwill as at the date of acquisition.
    Expenses that ar e directly related to the acquisition
    are stated in the statement of profit or loss for the
    period.

    Acquired identifiable assets and undertaken
    liabilities and contingent liabilities in a business
    combination are measured at fair value at the date of acqu isition, irrespective of the level of non -
    controlled participation. The Group is able to
    measure participations, which are not control in the
    investee either at fair value, or as a proportionate
    share in the identifiable net assets of the investee.

    The ex cess of the acquisition price over the share
    of the investor in the net fair value of identifiable
    assets, liabilities and contingent liabilities of the
    investee is stated as goodwill. In case the
    acquisition price is less than the investor’s share
    in the fair value of the net assets of the company,
    the difference is recognised directly in the
    consolidated statement of profit or loss.

    Separately recognised goodwill with regard to the
    acquisition of subsidiaries is always tested for
    impairment at least once a year. Goodwill
    impairment losses are not subsequently
    reimbursed. Profits or losses from sale (disposal)
    of a subsidiary by the Group also comprise the
    book value of the goodwill deducted for the sold
    (disposed) company.

    R ecognised goodwill is affiliat ed to a specific cash
    inflow generating unit yet at the realization of a
    business combination, and such unit is applied for
    the impairment tests. When defining the cash flow
    generating units, the Group takes into account
    the units that have been expected t o generate
    future economic benefits upon the acquisition
    through the business combination, and with
    regard to which the goodwill has occurred.

    Non - controlling participation transactions
    The Group treats the operations with non -
    controlling participation as transactions with
    entities holding Group’s equity instruments. The
    effects from sale of shares of the parent
    company, without losing control, to the holders of
    non - controlling participations are not treated as
    elements of the current profit or loss of the
    Group, but as movement within the components
    of its equity. And vice versa, upon purchases by
    the parent company, without acquiring control, of
    additional shares in the participation of holders of
    non - controlling participations, every difference
    between t he amount paid and the respective
    acquired share from the book value of the
    subsidiary’s net assets is recognised directly in
    the consolidated statement of equity, usually as
    “retained earnings/ (non - covered loss)”.


    Interim Consolidated Financial Statement for H1. 201 8


    25


    When the Group does not have control and
    significant influence any more, every minority
    investment remaining as a share in the capital of
    the respective company is revaluated at fair
    value, and the difference up to the book value is
    recognised in the current profit or loss, whereas
    all amount s recognised before in other elements
    of the comprehensive income, are stated as like
    as for operation of direct disposal of all associated
    to the initial investment (in the subsidiary or
    associate), respectively.

    2.4 Functional and Reporting Currency

    T he Bulgarian Lev (BGN) is the functional and
    reporting currency of the group. Data presented
    in the consolidated statements and the annexes
    thereto are in thousand BGN (000’BGN). Since 1
    January 1999, the Bulgarian Lev is pegged to
    the EURO at the exchange rate: BGN 1, 95583
    for EUR 1. Cash, receivables and payables
    denominated in foreign currency are reported in
    the BGN equivalent on the basis of the exchange
    rate as at the date of the operation and are
    revaluated on annual basis using the official
    exchang e rate of the Bulgarian National Bank on
    the last working day of the year.

    2.5 Accounting Assumptions and Accounting
    Estimates

    Upon preparing the financial statement in
    compliance with IAS, the management of the
    Group is required to apply accounting esti mates
    and assumptions, which affect the reported assets
    and liabilities, and the disclosure of the contingent
    assets and liabilities as at the date of the balance
    sheet. Despite the estimates are based on the
    management’s knowledge of current
    developments, the actual results may vary from
    the estimates used .

    Deferred tax assets

    Tax loss
    The assessment of probability for future taxable
    income for the utilisation of deferred tax assets is
    based on the last approved budget forecast
    adjusted with regard to m aterial untaxable
    income and expenses and specific restrictions for
    carrying forward unused tax losses or credits.


    If a reliable estimate for taxable income suggests
    the probable use of deferred tax asset, in
    particular in case the asset may be used wi thout
    time limit, then the deferred tax asset is
    recognised in full. The recognition of deferred tax
    assets that are subject to specific legal or
    economic restrictions or uncertainty should be
    judged by the management on case by case basis
    on the grounds o f specific facts and
    circumstances.

    Inventories – Impairment
    As at the end of the reporting period, the
    management reviews the available inventories –
    supplies, goods, in order to identify if there are
    inventories whose net realizable value is less than
    their book value. No indications for impairment of
    inventories have been found during the review as
    at 30.6. 201 8 .

    Impairment of property, plant, machinery
    and equipment
    In accordance with the requirements of IAS 36, as
    at the end of the reporting period the
    management judges if there are indications that
    the value of an asset within the property, plant
    and equipment is impaired. In case such
    indications exist, the replacement cost of this
    asset is measured and the impairment loss is
    calculated. As at 30. 6. 201 8 , no impairment of
    property, plant, machinery and equipment has
    been stated.

    Actuarial valuations
    When defining the current value of long - term
    employee benefits upon retirement, calculations
    of certified actuaries are used based on
    assumptions for mortality, staff turnover rate,
    future level of salaries and discount factor, which
    assumptions are estimated by the management
    as reasonable and appropriate for the Group.

    Impairment of goodwill
    The Group makes a test for impairment of
    goodwill at least once a year. The refundable
    amounts from cash generating units are defined
    on the basis of their value in use or their fair
    value, without calculation of the sale cost.


    Interim Consolidated Financial Statement for H1. 201 8


    26


    Impairment of borrowings and receivables
    The Group uses an adjustment account to re port
    the impairment of difficultly collectible and
    uncollectible receivables from counterparties. The
    management judges the adequacy of this
    impairment on the basis of age analysis of
    receivables, previous experience about the level
    of derecognition of unc ollectible receivables, and
    analysis of the counterparty’s solvency,
    amendments of contractual payment terms and
    conditions, etc. If the financial position and
    performance of the counterparties become worse
    than the expected, the value of receivables that
    should be derecognised during the next reporting
    periods may be higher than the one expected as
    at the reporting date.

    Fair value of financial instruments
    The management uses techniques to measure the
    fair value of financial instruments if here are no
    quoted prices at active market. Detailed
    information about the assumptions used are
    presented in the explanatory notes to the financial
    assets and liabilities. When applying assessment
    techniques, the management uses, to the
    maximum extent, market data and assumptions,
    that market stakeholders would adopt upon
    assessing a financial instrument. In case there are
    no applicable market data, the management uses
    its best estimate of assumptions that the market
    stakeholders would make. These assessments
    may diffe r from the actual prices that would be
    defined in an arm’s length transaction between
    informed and willing parties at the end of the
    reporting period.

    2.6 Income

    Group’s income is recognized on the accrual
    basis and to the extent economic benefits are
    o btained by the Group and as far as the income
    may be reliably measured.

    Upon sales of goods income is recognized when
    all material risks and benefits from the title of
    goods are transferred to the buyer.

    Upon provision of services, income is recognized
    c onsidering the stage of completion of the
    transaction as at the date of the balance sheet,
    if such stage may be reliably measured, as well
    as the costs incurred for the transaction.


    Dividend income is recognized upon certifying
    the right to obtain them.

    In the consolidated statement of profit or loss,
    dividends declared for the financial year by the
    subsidiaries are recognised as intra - account and
    are thus eliminated and are not taken in
    consideration upon calculation of the financial
    performance.

    Euro hold Group generates financial income from
    the following activities:
    • Operations with investments;
    • Dividends;
    • Interests from granted loans.

    2.7 Expenses

    Group’s expenses are recognized at the time of
    occurrence thereof and on the accrual and
    comparability basis.

    Administrative expenses are recognized as
    expenses incurred during the year and are
    relevant to the management and administration
    of the Group companies, ng expenses that relate
    to the administrative staff, officers, office
    expenses, and other out sourcing.

    Financial expenses include: expenses incurred in
    relation to investment operations, losses from
    financial instruments operations and currency
    operations, expenses on interest under granted
    bank loans and obligatory issues, as well as fees
    and co mmissions.

    Prepa id expenses (deferred expenses) are carried
    forward for recognition as current expenses for
    the period in which the contracts they pertain to
    are performed.

    Other operating income and expenses include
    items of secondary character in rela tion to the
    main activity of the Group.

    2.8 Interest

    Interest income and expenses are recognised in
    the consolidated statement of profit or loss using
    the effective interest rate method. The effective
    interest rate is the rate for discounting the
    expect ed cash payments and proceeds during the


    Interim Consolidated Financial Statement for H1. 201 8


    27

    term of the financial asset or liability up to the net
    book value of the respective asset or liability. The
    effective interest rate is calculated upon the initial
    recognition of the financial asset or liability a nd is
    not adjusted subsequently.

    The calculation of the effective interest rate
    includes all received or paid commissions,
    transaction costs, as well as discounts or
    premiums, which are an integral part of the
    effective interest rate.

    Transaction costs a re the inherent costs directly
    attributable to the financial asset or liability
    acquisition, issue or derecognition.

    Interest income and expenses stated in the
    consolidated statement of profit or loss include:
    interest recognized on the basis of effective
    interest rate under financial assets and liabilities
    carried at amortized value .

    Unearned financial income (interest) is the
    difference between the gross and net investment
    in the lease, whereas the gross investment in a
    lease is the amount of minimum le ase payments
    and the non - guaranteed residual value charged
    by the lessor. Interest income under lease
    operations (financial income) is distributed for the
    term o f validity of the lease and is recognised on
    the basis of constant periodic rate of return of t he
    lessor’s net investment.

    2.9 Fees and commissions

    Fee and commission income and expenses which
    are an integral part of the effective interest rate
    for a financial asset or liability, are included in the
    calculation of the effective interest rate.

    Oth er fee and commission income, including
    logistic services fees, insurance and other
    intermediation fees, is recognized upon providing
    the respective services.

    The other fee and commission costs relevant
    mainly to banking services are recognized upon
    recei pt of the respective services.

    2.10 Reporting by segments

    An operating segment is a component of the
    Group, which deals with activities that can

    generate income and incur expenses related to
    transactions with any of the other Group’s
    components.

    Fo r management purposes, the Group is
    organised in business units on the basis of the
    products and services they offer and provide, and
    includes the following segments subject to
    reporting:

    Insurance:
    • Insurance services

    Financial services:
    • Lease services
    • Investment intermediation

    Automobiles:
    • Sale of new cars
    • Car repair services
    • Rent - a - car

    2.10.1 Insurance activities

    Recognition and measurement of insurance
    contracts

    Non - life insurance premiums
    Non - life insurance premiums are accounted on
    annual basis . Gross written premiums under non -
    life insurance are premiums under contracts for
    direct insurance or co - insurance, which are
    entered into during the year, although the
    premiums may be fully or partially relate to a
    later accounting period. Premiums are d isclosed
    gross of commissions payable to brokers.

    The earned part of written insurance premiums,
    including for unexpired insurance contracts, is
    recognised as income. Written insurance
    premiums are recognised as at the date of
    entering into the insurance contract.

    Premiums paid to reinsurers are recognised as an
    expense in accordance with the received
    reinsurance services.

    Health insurance premiums
    Written health insurance premiums are recognised
    as income on the basis of the annual premium
    due by the in sured individuals for the premium
    period beginning during the financial year, or the
    lump - sum premium payable for the whole period


    Interim Consolidated Financial Statement for H1. 201 8


    28


    of cover for one year health insurance contracts
    entered into during the financial year.

    Gross written premiums from heal th insurance are
    not recognised when the future cash inflows
    related thereto are uncertain. Written health
    insurance premiums are stated gross of
    commissions payable to agents.

    Life insurance premiums
    Written premiums from life insurance are
    recognised as income on the basis of the annual
    premium due by the insured persons for the
    premium period beginning during the financial
    year, or the lump - sum premium payable for the
    whole period of cover for policies entered into
    durin g the financial year .

    Gross writ ten premiums from are not recognised
    when the future cash inflows related thereto are
    uncertain. Written premiums are stated gross of
    commissions payable to agents .

    Unearned premium reserve
    Unearned premium reserve comprises that part of
    written gross ins urance/ health insurance
    premiums that is calculated to be earned during
    the next or subsequent financial periods.
    Unearned premium reserve comprises the
    insurance premiums charged and recognised as
    income during the reporting period, less ceded
    premiums t o reinsurers, which should be
    recognised during the next financial year or
    during subsequent financial periods. The reserve
    is calculated individually for each insurance/
    health insurance contract by using a proportionate
    method on daily basis. The unearne d premium
    reserve is calculated net of commissions to
    brokers, advertising and other acquisition costs.

    Unexpired risk reserve
    This reserve is established to cover risks for the
    time between the end of the reporting period and
    the date on which the respec tive insurance/
    health insurance contract expires, in order to
    cover payments and expenses that are expected
    to exceed the established unearned premium
    reserve .

    Compensations incurred under non - life
    insurance and health insurance and reserves
    for pending claims
    Compensations incurred with regard to non - life
    insurance and health insurance comprise


    compensations and their administration costs
    payable during the financial year, together with
    the change in the pending claims reserve.

    The management believ es that the gross pending
    claims reserve and the respective share of the
    reinsurer’s reserve are presented fairly based on
    the information available as at the date of the
    consolidated financial statements. The final
    liability will be changed as a result of subsequent
    information and events and may require material
    adjustment of the amount accrued initially.
    Adjustments in the pending claims reserve found
    during previous years are stated in the financial
    statements for the period in which such
    adjustments ha ve been made, and are disclosed
    independently, if they are material. The methods
    used and the assessments made for the accrual of
    the reserve are subject to regular review.

    Reinsurance
    In its principal activity, Group’s insurance
    companies cede risk to re insurers with view of
    decreasing their potential net losses through risk
    differentiation.
    Reinsurance activity does not release the direct
    obligations of the respective company to the
    insured persons.

    Reinsurance assets comprise the balance payable
    by r einsurance companies for ceded insurance
    liabilities. The amounts to be reimbursed by
    reinsurers are calculated in a way similar to the
    way for calculation of the reserves for pending
    claims or for settled claims related to reinsurance
    policies.

    Premiums and claims related to these reinsurance
    contracts are considered income and expenses in
    the same way as they would be considered if
    reinsurance was a direct activity, while taking into
    account the classification of reinsurance business’
    products.

    Ceded (o r accepted) premiums and reimbursed
    compensations (or paid claims) are stated in the
    consolidated statement of profit or loss and the
    consolidated statement of financial position as
    gross amounts.

    Contracts which cede material insurance risk are
    accounted as insurance contracts. The amounts
    refundable under these contracts are recognised
    during the year of occurrence of the respective
    claim.


    Interim Consolidated Financial Statement for H1. 201 8


    29


    Premiums for long - term reinsurance contracts are
    accounted in parallel with the term of validity of
    the related i nsurance policies by using
    assumptions similar to those for the accounting of
    the respective policies.

    The replacement cost of receivables under
    reinsurance contracts is subject to impairment
    review at each date of the consolidated statement
    of financial position. Such assets are impaired if
    there is objective evidence as a result of event
    that has occurred after their initial recognition.

    Deferred acquisition expenses
    Deferred acquisition expenses are the amount of
    acquisition expenses deducted upon calc ulating
    the unearned premium reserve. They are defined
    as that part of the acquisition costs under the
    contracts valid as at the end of the period, which
    are estimated as a percentage in the insurance
    technical schedule and relevant to the time
    between the end of the reporting period and the
    date of expiration of the term of validity of the
    insurance/ health insurance contract. Current
    acquisition expenses are recognised in full as an
    expense during the reporting period.

    Acquisition expenses
    Commission exp enses comprise charged broker’s
    commissions, expenses for share in the result,
    which are accrued in favour of the insured/ health
    insured persons in case of low claims ratio.
    Indirect acquisition costs comprise expenses for
    advertising and expenses incurre d for entering
    into/ renewal of insurance/ health insurance
    contracts.

    2.10.2 Lease activities

    The lease activity of the Group is related to the
    lease of motor vehicles and other industrial
    equipment, real estates, etc. under financial and
    operating leas e agreements.

    Finance lease is an agreement by virtue of which
    the lessor gives the lessee the right to use an
    asset for an agreed time period for consideration.
    The lease is reported as finance lease when the
    lessor transfers with the agreement all subs tantial
    risks and benefits related to the ownership of the
    asset to the lessee.


    Typical indicators reviewed by the Group to
    identify whether all substantial risks and benefits
    are transferred are as follows: present value of
    minimum lease payments in c omparison to the
    beginning of the lease; term of validity of the
    lease in comparison to the economic life of the
    leased asset; whether the lessee will acquire the
    title of the leased asset at the end of the finance
    lease term of validity. All other leases that do not
    transfer substantially all risks and benefits of the
    ownership of the asset are classified as operating
    lease.

    Minimum lease payments
    Minimum lease payments are those payments
    that the lessee will make or may be obliged to
    make during the term of validity of the lease.
    From Group perspective, minimum lease
    payments also comprise the residual value of the
    asset guaranteed by a third party not related to
    the Group, provided such party is financially
    capable to perform its engagements under the
    gu arantee or the repurchase agreement. In the
    m inimum lease payments, the Group also
    comprises the price of exercising possible option
    that the lessee has to purchase the asset,
    whereas it is to a great exte n t certain at the
    beginning of the lease that the o ption will be
    exercised.

    Minimum lease payments do not include amounts
    related to conditional leases, as well as service
    and tax expenses, which are paid by the Group
    and are subsequently re - invoiced to the lessee.

    Beginning of the lease and beginning of the
    term of validity of the lease
    There is a difference between the beginning of the
    lease and the beginning of the term of validity of
    the lease. The beginning of the lease is the earlier
    than the two dat e s – of the lease agreement or
    the parties’ bindi ng with the main conditions of
    the lease. As at this date: the lease is classified as
    finance or operating lease; and in case of finance
    lease, the amounts that should be recognised at
    the beginning of the term of validity of the lease
    are defined. The beg inning of the term of validity
    of the lease is the date on which the lessee may
    exercise its right to use the leased asset. This is
    also the date on which the Group initially
    recognizes the receivable under the lease.


    Interim Consolidated Financial Statement for H1. 201 8


    30


    Initial and subsequent measurement
    Initially the Group recognizes receivable under
    lease that is equal to its net investment, which
    comprises the present value of minimum lease
    payments and every non - guaranteed residual
    value for the Group. The present value is
    calculated by discounting th e minimum lease
    payments due with an interest rate inherent to
    the lease. Initial direct expenses are included in
    the calculation of the receivable under finance
    lease. During the term of validity of the lease, the
    Group accrues financial income (interest income
    from finance lease) over the net investment.

    Receivables under finance lease
    Received lease payments are considered a
    decrease of the net investment (repayment of
    principal) and recognition of financial income in a
    way that ensures permanent rate o f return of the
    net investment. Subsequently, the net investment
    in financial leases is stated net, after offsetting
    individual and portfolio provisions for
    in collectibility.

    2.10.3 Financial intermediation - related
    activity

    The financial intermediation a ctivity is related to
    transactions with financial instruments. They are
    classified as held for trading.

    Financial instruments are measured upon
    acquisition at cost, which comprises their fair
    value plus all transaction - related expenses.

    Financial instrum ents are subsequently measured
    at fair value, which is the sales, stock exchange or
    market price.

    The Group states its financial assets in the
    following way:
    • Securities of Bulgarian issuers traded on BSE
    – Sofia AD – the mean weighted price of the
    transac tions they have made on regulated
    market for the closest day of the last 30 - days’
    period in which such securities have been
    traded in an amount not less than the amount
    of securities held by the subsidiary Euro -
    Finance AD. If there is not transaction made,
    the market price of the securities is defined on
    the basis of the “ask” rate announced on the
    regulated market for the respective session of
    the closest day of the last 30 - days period;


    • Shares in foreign currency of foreign issuers –
    at market prices o f the foreign stock
    exchanges: FRANKFURT, XETRA, NASDAQ;
    • Government securities issued by the Bulgarian
    government – the market price is the price
    quoted by the Bulgarian National Bank or the
    primary dealers of government securities
    within the meaning of Or dinance № 5/ 1998;
    • Securities issued by Bulgarian non -
    governmental issuers – market price of
    REUTERS;
    • Securities issued and guaranteed by foreign
    countries and securities issued by foreign non -
    governmental issuers – market price of
    REUTERS.

    Derivatives
    D erivatives are off - balance financial instruments
    whose value is measured on the basis of interest
    rates, foreign exchange rates, or other market
    prices. Derivatives are effective means to manage
    the market risk and to limit the exposure to
    specific counter party.

    Most frequently used derivatives are:
    • Currency swap;
    • Interest swap;
    • Floors and caps;
    • Forward currency and interest contracts;
    • Futures;
    • Options.

    The conditions and time periods under the
    contracts are defined by means of standard
    documents.

    With regard to derivatives, the same procedures
    for control of market and credit risk are applied,
    as for the other financial instruments. They are
    aggregated with the other exposures for the
    purposes of monitoring the general exposure to a
    specific counterpart y and are managed within the
    frames of the limits approved for the respective
    counterparty.

    Derivatives are held both for trading and as
    hedging instruments used for the management of
    the interest and currency risk. Derivatives held for
    trading are measur ed at fair value and profits and
    losses are stated in the consolidated statement of
    profit or loss as a result of trade operations.


    Interim Consolidated Financial Statement for H1. 201 8


    31


    Derivatives used as hedging instruments are
    recognised in accordance with the accounting
    treatment of the hedged item.
    Cr iteria for recognition of a derivative as a
    hedging instrument is the existence of
    documented evidence for the intention to hedge a
    specific instrument and such hedging instrument
    should ensure reliable basis for elimination of the
    risk.

    When a hedged exp osure is closed, the hedging
    instrument is recognised as held for trading at fair
    value. The profit and loss are recognised in the
    consolidated statement of profit or loss,
    analogically to the hedged instrument.

    Hedging transactions that are terminated be fore
    the hedged exposure are measured at fair value
    and the profit or loss are stated for the period of
    existence of the hedged exposure .

    2.11 Taxes

    Income tax

    The current tax includes the tax amount, which
    should be paid over the expected taxable profi t
    for the period on the basis of the effective tax
    rate or the tax rate applicable on the day of
    preparation of the consolidated statement of
    financial position and all adjustments of due tax
    for previous years.

    Current income taxes of the Bulgarian Group
    companies are defined in compliance with the
    requirements of the Bulgarian tax legislation – the
    Corporate Income Tax Act . The nominal tax rate
    in Bulgaria for 201 8 is 10 % (201 7 : 10%).

    The foreign subsidiaries are subject to taxation in
    accordance with the requirements of the
    respective tax legislations of the countries, with
    the following tax rates :

    Country Tax rate
    201 8 201 7
    Romania 16% 16%
    Macedonia 10% 10%
    Ukraine 18% 18%

    Deferred tax
    Deferred tax is calculated using the balance sheet
    met hod for all temporary differences between the


    book value as per the financial statements and
    the amounts used for taxation purposes.

    The deferred tax is calculated on the basis of the
    tax rate that is expected to be effective upon the
    realization of th e asset or the settlement of the
    liability. The effect from changes in the tax rates
    on the deferred tax is reported in the consolidated
    statement of profit or loss, except in cases when
    it concerns amounts, which are earlier accrued or
    reported directly i n equity.

    Deferred tax asset is recognised only to the
    amount to which it is expected to gain future
    profits against which unused tax losses or tax
    credit can be used. Deferred tax assets are
    decreased in accordance with the decrease of the
    probability fo r realisation of tax benefits.

    As at 30.6. 201 8 , the deferred income taxes of the
    Group companies are measured at a tax rate valid
    for 2018, which is in the amount of 10% for the
    Bulgarian companies, and for the foreign
    companies it is as follows:

    Country Tax rate for 2018
    Romania 16%
    Macedonia 10%
    Ukraine 18%

    2.12. Non - current assets

    2.12.1 Property, plant, machinery and
    equipment

    Fixed tangible assets are measured at acquisition
    cost, less the amount of accrued amortization and
    possible impair ment losses.

    The Group has fixed the value of capitalization
    threshold to BGN 700, under which acquired
    assets, regardless if they have the characteristics
    of fixed assets, are reported as current expenses
    at the time of acquisition thereof.

    Initial acqu isition
    Fixed tangible assets are initially measured:

    At acquisition cost , which includes: purchase price
    (including duties and non - refundable taxes), all
    direct costs for bringing the asset into working
    condition according to its purpose – for assets
    ac quired from external sources;


    Interim Consolidated Financial Statement for H1. 201 8


    32


    At fair value : for assets obtained as a result of a
    charitable transaction;

    At evaluation : approved by the court and all direct
    costs for bringing the asset into working condition
    according to its purpose – for assets acq uired as a
    contribution of physical assets.

    Borrowing costs directly related to acquisition,
    construction or production of eligible assets are
    included in the acquisition cost (cost) of this
    asset. All other borrowing costs are reported on
    current basis i n the profit or loss for the period.

    Subsequent measurement
    The Group has chosen the cost model under IAS
    16 – historic price of acquisition, less accrued
    amortisation and accumulated impairment losses,
    as an approach for subsequent book value of
    propert y, plant and equipment.

    Subsequent expenses
    Subsequent expenses for repairs and
    maintenance are stated in the consolidated
    statement of profit or loss at the time of
    incurrence thereof, unless there is clear evidence
    that their incurrence will result in i ncreased
    economic benefits from the use of the asset. In
    this case, these expenses are capitalized in the
    carrying amount of the asset.

    Sales profits and losses
    Upon sales of fixed assets, the difference between
    the book value and the sales price of the a sset is
    reported as profit or loss in the consolidated
    statement of profit or loss.

    Fixed tangible assets are derecognized from the
    balance sheet upon sale or when the asset is
    finally decommissioned and no further economic
    benefits are expected after der ecognition thereof.

    Amortisation methods
    The Group applies the straight - line method of
    amortization. Amortization of assets begins from
    the month following the month of acquisition
    thereof. Land and assets in process of construction
    are not depreciated. The useful life by groups of


    assets depends on: the usual wear and tear,
    equipment specificity, future intentions for use and
    the probable moral aging.

    The estimated useful lives by groups of assets are
    as follows:

    Group of assets Useful life
    in yea rs
    Buildings 25 - 46
    Plant and equipment 3 - 10
    Vehicles 4 - 6
    Fixtures and fittings 3 - 19
    Computers 2 - 5

    Impairment
    The book values of fixed tangible assets are
    subject to review for impairment, when events or
    changes in circumstances have occurred, whi ch
    evidence that the book value might permanently
    differ from their recoverable amount. If there are
    indicators that the estimated recoverable value is
    less than their net book value, the latter is
    adjusted up to the recoverable value of assets.

    Impairmen t losses are recognised as an expense in
    the consolidated statement of profit or loss during
    the year of occurrence thereof.

    2.12.2 Fixed intangible assets

    Intangible assets are stated in the consolidated
    financial statements at cost, less accrued
    amorti sation and possible impairment losses.

    The Group applies the straight - linear method for
    amortisation of intangible assets with fixed useful
    life of 5 - 7 years.

    The book value of intangible assets is subject to
    review for impairment when there are events o r
    changes in circumstances that identify that the
    book value could exceed their recoverable value.

    2.12.3 Investment property

    Investment property is a property that is held for
    the purposes generating income from rent or
    capital profit or both, but not f or sale in the
    ordinary course of business of the Group, or for
    use of services or administrative needs.


    Interim Consolidated Financial Statement for H1. 201 8


    33


    Investment properties are measured on the basis
    of present fair value, whereas each change is
    stated as profit or loss .

    2.13 Pension and other emp loyee benefits
    under the labour and social legislation

    Employment and social insurance relationships
    with workers and employees in the Group are
    governed by the provisions of the Labour Code
    and the provisions of the applicable social
    insurance legislatio n for the companies operating
    in Bulgaria, of the Romanian Code – for the
    companies in Romania, of the labour legislation
    for the companies in Ukraine, of the labour
    legislation for the companies in Macedonia .

    Short - term employee benefits
    Short - term empl oyee benefits are measured at
    non - discounted basis and are stated as an
    expense whent the related services are provided.
    A liability is recongised for the amount that is
    expected to be paid under a short - term bonus in
    cash or profit sharing plans, provided the Group
    has legal or constructive obligation to pay this
    amount as a result of previous services provided
    by an employee, and this obligation may be
    reliably measured .

    The Group recognises as an obligation the non -
    discounted amount of measured expenses for paid
    annual leave expected to be paid to the
    employees in return of their service for the
    previous reporting period .

    Defined contribution plans
    Defined contribution plan is a plan for post -
    employment benefits in accordance with which
    the Group pays c ontributions to another person
    and does not have any legal or constructive
    obligations to make further payments. The
    Bulgarian government is responsible for providing
    pensions under the defined contribution plans.
    The group ’s engagement costs for transferr ing
    contributions under defined contribution plans are
    recognised currently in profit and loss .

    Retirement benefits
    Retirement benefits are recognised as an expense
    when the Group has clear engagements, without
    actual opportunity to withdraw, with an off icial
    detailed plan either for termination of
    employment relations before the normal


    retirement date, or for payment of compensation
    upon termination as a result of proposal for
    voluntary retirement .

    Benefits upon voluntary retirement are recognised
    a s an expense if the Group has made an official
    proposal for voluntary termination and the offer
    would be probably accepted, and the number of
    employees who has accepted the offer may be
    reliably measured. If compensations are payable
    for more than 12 month s after the end of the
    reporting period, they are discounted up to their
    present value .

    2.14 Financial assets

    2.14.1 Investments in non - current financial
    assets

    Entities in which the Group holds between 20%
    and 50% of the voting right and have significa nt
    influence but is not able to exercise control
    functions, are considered associates .

    Investments in associated companies are reported
    by using the equity method . By using the equity
    method, the investment in the associated
    company is carried in the stat ement of financial
    position at acquisition cost, plus the changes in
    the share in the net assets of the associated
    entity after the acquisition . The goodwill related
    to the associated entity is included in the net book
    value of the investment and is not a mortized . The
    consolidated statement of profit or loss presents
    the results from the associate’s business. The
    profit share is shown on the face side of the
    statement .

    2.14.2 Investments in Financial Instruments

    Financial assets within the scope of IAS 3 9 are
    classified as financial assets stated at fair value in
    the profit or loss, as loans and receivables, held -
    to - maturity investments, available - for - sale
    financial assets or derivatives defined as hedging
    instruments in effective hedge, where
    appropriate . The Group classifies its financial
    instruments at their initial recognition .

    Financial assets of the Group include cash and
    short - term deposits, trade and other receivables ,
    financial instruments and financial instrument
    derivatives quoted and unquoted on the stock
    exchange .



    Interim Consolidated Financial Statement for H1. 201 8


    34


    Cash
    Cash comprise cash on hand, current accounts
    and short - term deposits in banks with original
    maturity of up to 3 moths .

    Term deposits in banks
    Bank deposits are receivables from banks from
    invested free monetary resources i n the form of
    term deposits with original maturity exceeding 3
    months. Deposits are measured and stated in the
    consolidated statement of financial position at
    amortised cost .

    Financial Assets at Fair Value in Profit or
    Loss
    Financial assets at fair value in profit or loss
    include financial assets held for trading and those
    designated at fair value at inception .

    Financial assets , which are usually acquired for
    the purposes of selling in the near term, are
    classified as held for trading .

    Investments Held - t o - Maturity
    Investments held - to - maturity are financial assets ,
    which are non - derivative and have fixed or
    determinable payments and fixed maturity , that
    the Group has the positive intention and ability to
    hold to maturity .

    Initially , these investments are recognized at
    acquisition cost , which includes the amount of
    consideration paid for acquisition of the
    investment . All transaction costs directly related
    to the acquisition are also included in the
    acquisition cost . After the initial measurement ,
    held - to - maturity investments are carried at
    amortized cost by using the method of the
    effective interest rate . Gains and losses from
    held - to - maturity investments are recognized in
    the statement of profit or lost and other
    comprehensive income when the investment i s
    derecognized or impaired .


    Loans and Other Receivables
    Loans and receivables are non - derivative financial
    assets with fixed or determinable payments that
    are not quoted in an active market .

    Such financial assets are initially recognized at
    acquisitio n cost , which is the fair value paid for
    acquisition of financial assets . All directly
    attributable acquisition transaction costs are also
    included in the acquisition cost . Subsequent to
    initial recognition , loans and receivables are
    measured at amortized cost using the effective
    interest rate method . Gains and losses from loans
    and receivables are recognized in the consolidated
    statement of profit or loss, when derecognized
    and impaired, as well as through the process of
    amortisation .

    Financial Assets Av ailable for Sale
    Financial assets available for sale are non -
    derivative financial assets that are so classified
    and are not classified in any of the three
    categories listed above .

    Initially, these investments are presented at fair
    value. Subsequent to in itial recognition, financial
    assets available for sale are measured at fair
    value . Unrealized gains and losses from fair value
    are carried in separate item of the other
    comprehensive income until the financial assets
    are not derecognized or are not defined as
    impaired . Upon derecognition or impairment ,
    cumulative gains and losses previously recognized
    in equity , are recognized in the consolidated
    statement of profit or loss .

    Derivative financial instruments
    Derivative financial instruments are classified a s
    held - for - trading , unless they are effective hedging
    instruments . All derivatives are carried as assets ,
    when their fair values are positive and as
    liabilities when the fair values are negative .


    Interim Consolidated Financial Statement for H1. 201 8


    35


    2.15 Inventories

    Supplies and goods are measured at deli very
    value. Their value is equal to the sum of all
    purchase costs as well as any other costs incurred
    in relation to the delivery thereof at their current
    location and condition .

    Supplies and goods are derecognised at their
    consumption at specifically de fined or mean
    weighted value, depending on the segments .

    The net realisable value of inventories is stated at
    sales price, less the completion costs and the
    expenses incurred for the realisation of the sale
    and is defined with view of the marketing, moral
    aging and development of expected sales prices .

    When the carrying amount of inventories is higher
    than their net realisable value, it is reduced to the
    amount of the net realisable value. The decrease
    is stated as other current expenses .

    2.16 Short - term receivables

    Receivables are measured at amortized cost ,
    which usually corresponds to the nominal value .
    Impairment is estimated for the purposes of
    meeting the expected loss on the basis of
    separate measurement of individual
    arrangements .

    2.17 Liability provisions

    Liability provisions include expected costs related
    to obligations under guarantees , restructuring ,
    etc ., as well as deferred tax assets .

    2.18 Equity

    Equity is presented at its nominal value pursuant
    to the court decisions for its registrat ion .

    Equity that is not held by the economic group
    /non - controlled participation/ is part of the net
    assets, including of the net result of the
    subsidiaries for the year, which may be attributed
    to participations that are not directly or indirectly
    held b y the parent company .


    2.19 Earning per share

    The basic earnings per share are calculated by
    dividing the net profit or loss for the period that is
    subject to distribution among shareholders –
    holders of ordinary shares, by the mean weighted
    number of ordinary shares held during the period .

    The mean weighted number of shares is the
    number of ordinary shares held at the beginning
    of the period adjusted with the number of
    redeemed ordinary shares and the number of
    newly issued shares multiplied by the av erage
    time factor. Such factor expresses the number of
    days in which the respective shares have been
    held towards the total number of days during the
    period .

    Upon capitalisation, bonus issue or fractioning,
    the number of outstanding ordinary shares until
    the date of such event is adjusted to reflect the
    proportionate change in the number of
    outstanding ordinary shares as if the event has
    occurred at the beginning of the earliest period
    presented. Earnings per shares with decreased
    value are not calculated as no potential shares
    with decreased value are issued .

    2.20 Liabilities

    Financial liabilities are recognized during the loan
    period with the amount of gained proceeds ,
    principal , less the transaction expenses . During
    subsequent periods financial liabi lities are
    measured at amortized cost , equal to the
    capitalized value , when applying the effective
    interest rate method . In the consolidated
    statement of profit or loss , loan expenses are
    recognized during the loan term period .

    Current liabilities , such as payables to suppliers ,
    group and associate s and other payables , are
    measured at amortized cost , which is usually
    equal to the nominal value .

    Deferred income recognised as liabilities comprise
    received payments in terms of income for
    subsequent years .


    Interim Consolidated Financial Statement for H1. 201 8


    36


    2.21 Financial Risk Management

    Factors Determining Financial Risk

    While operating, the Group companies are exposed
    to diverse financial risks : market risk ( including
    currency risk , risk from change of financial
    instrument fair value under the impact o f market
    interest rates and price risk ), credit risk, liquidity
    risk and risk from change of future cash flows due
    to a change in market interest rates .

    The overall risk management program emphasizes
    the unpredictability of financial markets and is
    aimed at mitigating the possible adverse effects on
    the Group ’s financial result .

    Currency risk
    The Group is exposed to currency risk through
    payments in foreign currency and through its
    assets and liabilities, which are denominated in
    foreign currency . As a r esult of exposures in
    foreign currency, profits and losses are generated
    which are stated in the consolidated statement of
    profit or loss. These exposures are the monetary
    assets of the Group which are not denominated in
    the currency used in the financial statements of
    the local companies .

    In case the local currency is exposed to a
    significant currency risk, its management is
    achieved through investments in assets
    denominated in euro .

    Interest risk
    The Group is exposed to interest risk in relation to
    the used trade loans, as some of the received
    borrowings have floating interest rate agreed as a
    base interest (EURIBOR/LIBOR) increased with a
    specific margin. Borrowings with floating interest
    rates are denominated in euro. The amount of
    interest rates is de scribed in the respective notes .

    Credit risk
    The credit risk if the Group is mainly related to
    the trade and financial receivables .

    The amounts stated in the consolidated statement
    of financial position are on net basis, excluding
    the provisions for doub tful receivables determined
    as such by the management on the basis of
    previous experience and current economic
    conditions .


    Liquidity risk
    Liquidity risk is the risk that the Group may
    encounter difficulties in servicing its financial
    obligations when th ey become payable . Policy in
    this field is aimed at ensuring that there will be
    enough cash available to service its maturing
    obligations, including in exceptional and
    unforeseen conditions . The management’s
    objective is to maintain continuous balance
    bet ween continuity and flexibility of financial
    resources by using adequate forms of funding .

    The management is responsible for managing the
    liquidity risk and involves maintaining enough
    cash available, arranging adequate credit lines,
    preparation of analy sis and update of cash flows
    estimates .

    2.22 Measuring Fair Values

    Fair value is the price that would be received to
    sell an asset or paid to transfer a liability in an
    orderly transaction between market participants
    at the measurement date .

    The fair v alue measurement is based on the
    presumption that the transaction to sell the asset
    or transfer the liability takes place either :
    • on the principal market for the asset or
    liability ; or
    • i n the absence of a principal market, in the
    most advantageous market for the asset or
    liability .

    The principal or the most advantageous market
    must be accessible to the Group .

    A fair value measurement of a non - financial asset
    takes into account a market participant's ability to
    generate economic benefits by using the asse t in
    its highest and best use or by selling it to another
    market participant that would use the asset in its
    highest and best use . The Group uses valuation
    techniques that are appropriate in the
    circumstances and for which sufficient data are
    available to measure fair value, maximising the
    use of relevant observable inputs and minimising
    the use of unobservable inputs .

    All assets and liabilities for which fair value is
    measured or disclosed in the consolidated
    financial statements , are categorized within the


    Interim Consolidated Financial Statement for H1. 201 8


    37


    fair value hierarchy, described as follows based on
    the lowest level input that is significant to the fair
    value measurement as a whole :

    • Level 1 — Quoted (unadjusted) market prices
    in active markets for identical assets or
    liabilities the entity m ay have access to as at
    the date of measurement ;
    • Ниво 2 – Valuation techniques for which the
    lowest level input that is significant to the fair
    value measurement is directly or indirectly
    observable ;
    • Level 3 — Valuation techniques for which the
    lowest level input that is significant to the fair
    value mea surement is unobservable .

    External valuers are involved for valuation of the
    fair value of significant assets, such as goodwill
    and investment property .

    2.23 Cash flows

    Consolidated statement of cash flows shows the
    cash flows of the Group for the year in relation to
    the operating, invenstment and financial activity


    during the year , the change in cash and cash
    equivalents for the year , cash and cash
    equivalents at the beginning and at the end of the
    year .

    The operating cash flows are calculated as r esult
    for the year adjusted with the non - cash operating
    positions , changes in net turnover capital and
    corporate tax .

    Investment activity cash flows include payments
    in relation to purchase and sale of fixed assets
    and cash flows related to the purchase a nd sale of
    entities and operations . Purchase and sale of
    other securities which are not cash and cash
    equivalents are also included in the investment
    activity .

    Financial activity cash flows include changes in
    the amount or composition of share capital and
    the related costs , the borrowings and the
    repayment of interest - bearing loans , purchase ,
    and sale of own shares and payment of dividends .





    3. Revenue from insurance business 30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Gross premiums written from ins urance 299 137 359 134
    Received recoveries from reinsurers 74 229 69 290
    Positive change in the gross provision for unearned premiums and
    unexpired risk reserve 6 754 66
    Positive change in reinsurers’ share in unearned premium reserve 5 218 40 780
    Change in the r einsurers’ share in other reserves 17 433 6 117
    Positive change in other technical reserves - 7 724
    Recourse income 4 747 3 111
    Fees and commissions income 19 966 30 645
    Investment income 14 239 18 594
    Other revenue 16 912 3 666
    458 635 539 127


    Interim Consolidated Financial Statement for H1. 201 8


    38
    4. Expenses of insurance business
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Current year paid claims, claims handling and prevention expenses (192 211) (172 753)
    C hange in the gross provision for unearned pr emiums and unexpired
    risk reserve (11 128) (60 559)
    Share of reinsurers in the change of the unearned premium reserve - (6)
    Change in other reserves (29 778) (9 195)
    Change in the reinsurers’ share in the other reserves - (5 089)
    Premiums ceded to reinsurers (98 811) (154 585)
    Acquisition expenses (70 636) (74 549)
    Investment expenses (8 335) (8 638)
    Other expenses (12 177) (23 326)
    (423 076) (508 700)

    5. Revenues from car sales and after sales
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Revenue from sale of cars and spare parts 123 405 87 924
    Revenue from after sales and rent - a - car services 3 838 3 877
    127 243 91 801

    6. Revenue from Leasing business
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Revenue from services 9 285 10 345
    Interest income 2 234 2 250
    Foreign exchange gains 2 5
    Other financial revenue 36 12
    11 560 12 612

    7 . Expenses of Leasing business
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Inte rest expenses (1 687) (1 830)
    Foreign exchange losses (12) (12)
    Other expenses (111) (126)
    (1 817) (1 968)


    Interim Consolidated Financial Statement for H1. 201 8


    39
    8. Revenue from asset management and broke rage
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Interest income 356 191
    Dividend income 91 -
    Positive result from sales of financial instruments 686 934
    Gains from sale of financial instruments 279 27
    Other revenue 349 264
    1 761 1 416

    9. E xpenses of asset management and brokerage
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Interest expenses (13) (17)
    Negative result from sales of financial instruments (1 232) (891)
    Other expenses (53) (49)
    (1 298) (957)

    1 0 . Revenue from the activities of the parent company
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Gains from sale of financial instruments 570 507
    Interest revenue 688 497
    1 258 1 004


    1 1 . Expenses of the activities of the parent company
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Negative result from sales of financial instruments (51) (732)
    (51) (732)

    1 2 . Other revenue / (expenses), net
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Other income/ ( expenses ), net (2 644) (4 461)
    (2 644) (4 461)


    Interim Consolidated Financial Statement for H1. 201 8


    40
    1 2 .1. Other expenses
    30.6. 20 1 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Leasing business (2 663) (4 461)
    (2 663) (4 461)

    1 2 . 2 . Other revenue
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Asset management and brokerage 19 -
    19 -

    1 3 . Other op erating expenses
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Expenses on materials (1 412) (1 349)
    Expenses on hired services (14 180) (12 268)
    Employee benefits expense (16 916) (14 508)
    Oth er expenses (5 097) (3 140)
    (37 605) (31 265)

    1 3 .1 Expenses on materials by segments
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Insurance business (309) (295)
    Automotive business (974) (878)
    Leasing business (111) (149)
    Asset management and brokerage (15) (22)
    Parent company (3) (5)
    (1 412) (1 349)

    1 3 .2 Exp enses on hired services by segments
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Insurance business (6 751) (5 493)
    Automotive business (4 680) (4 045)
    Leasing business (1 780) (1 776)
    Asset management and brokerage (313) (246)
    Parent company (656) (708)
    (14 180) (12 268)



    Interim Consolidated Financial Statement for H1. 201 8


    41
    1 3 .3 Employee benefits expense by segments
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘ 000
    Insurance business (8 065) (6 895)
    Automotive business (7 076) (6 016)
    Leasing business (1 221) (1 059)
    Asset management and brokerage (338) (361)
    Parent company (216) (177)
    (16 916) (14 508)

    1 3 .4 Other expenses by segments
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Insurance business (3 751) (2 295)
    Automotive business (867) (536)
    Leasing business (319) (108)
    Asset management and brokerage (93) (138)
    Parent company (67) (63)
    (5 097) (3 140)

    1 4 . Financial expenses
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Interest expenses (10 890) (9 140)
    Other financial expenses (369) (304)
    (11 259) (9 444)

    1 4 .1 Financial expenses by segm ents
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Insurance business (1 073) (413)
    Automotive business (708) (797)
    Parent company (9 109) (7 930)
    (10 890) (9 1 40)


    1 4 .2 Other financial expenses by segments
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Automotive business (347) (276)
    Parent company (22) (28)
    (369) (304)


    Interim Consolidated Financial Statement for H1. 201 8


    42
    1 5 . Financial income
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Interest revenue 41 316
    41 316

    1 5 .1 Financial income by segments
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Automotive business 41 316
    41 316

    1 6 . Depreciation by segments
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Insurance business (979) (672)
    Automotive bu siness (1 342) (1 358)
    Leasing business (2 634) (2 056)
    Asset management and brokerage (35) (28)
    Parent company (11) (4)
    (5 001) (4 118)

    1 7 . Tax
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Income tax expense (2) (159)
    (2) (159)

    1 7 . 1 Tax by segments
    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Insurance business - (147)
    Automotive business - (10)
    Asset management and brokerage (2) (2)
    (2) (159)


    Interim Consolidated Financial Statement for H1. 201 8


    43
    18 . Foreign exchange gains/losses , net

    30.6. 201 8 30.6. 2017
    BGN ‘000 BGN ‘000
    Automotive busi ness 944 7
    Parent company - -
    944 7

    19 . Cash and cash equivalents
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Cash on hand 1 824 1 637
    Cash at bank 45 348 43 511
    Restricted cash 70 490
    Cash equivalents 339 307
    47 581 45 945

    2 0 . Deposits at banks with maturity 3 to 12 months, by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 14 445 11 171
    14 445 11 171

    2 1 . 1 R einsurers’ share in technical reserves
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Unearned premium reserve 122 868
    117 578
    Unexpired risk reserve -
    -
    Claims reserves , incl. : 260 950
    240 509
    Reserves for incurred , but not reported claims 108 891
    102 594
    Reserves for reported , but not settled claims 152 059
    137 915
    Other technical reserves -
    3 160
    383 818 361 247

    2 1 . 2 Receivables from insurance business
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Receivables from direct insurance 69 092 69 720
    Receivables from reinsurers or cedants 9 179
    7 545
    Recourse receivables 6 931 10 676
    85 202 87 941


    Interim Consolidated Financial Statement for H1. 201 8


    44
    2 2 . Trade receivables
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Trade receivables 26 192 26 576
    Advances paid 4 716 614
    Other 581 284
    31 489 27 474

    2 2 .1. Trade receivables b y segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 2 095 1 905
    Automotive business 14 705 13 500
    Leasing services 9 195 11 164
    Asset management and brokerage 33 2
    Parent company 164 5
    26 192 26 576


    2 3 . Ot her receivables
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 13 968 16 547
    Automotive business 4 460 3 688
    Leasing services 985 758
    Parent company 6 639 1 637
    Prepaid expenses 6 066 2 868
    Receivables under court procedu res 1 626 3 311
    Tax receivables 1 100 2 013
    34 844 30 822



    2 3 .1. Tax receivables by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 148 137
    Automotive business 173 223
    Leasing services 712 1 643
    Parent comp any 67 10
    1 100 2 013



    Interim Consolidated Financial Statement for H1. 201 8


    45
    2 4 . Property, plant and equipment

    Land plots Buildings Machinery
    and
    equipment Vehicles Furniture
    and
    fittings Assets under
    construction Other Total

    BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000
    Cost
    At 1 January 201 7 5 486 13 470 7 926 43 744 5 805 4 717 1 713 82 861
    Additions 37 4 297 1 255 28 056 1 441 490 2 188 37 764
    Disposals (33) (95) (123) (15 922) (63) (4 178) (2 147) (22 561)
    At 3 1 December 2 017 5 490 17 672 9 058 55 878 7 183 1 029 1 754 98 064
    At 1 January 201 8 5 490 17 672 9 058 55 878 7 183 1 029 1 754 98 064
    Additions - 42 393 16 287 242 1 211 29 18 204
    Disposals (207) (160) (23 ) (7 317) (69) (1 198) - (8 974)
    At 30 June 2018 5 283 17 554 9 428 64 848 7 356 1 042 1 783 107 294
    Depreciation
    At 1 January 201 7 - 2 749 6 401 17 768 4 147 5 1 069 32 139
    Depreciation for the p eriod - 335 672 6 134 365 - 100 7 606
    Disposals - (12) (77) (6 265) (45) - (2) (6 401)
    At 3 1 December 2017 - 3 072 6 996 17 637 4 467 5 1 167 33 344
    At 1 January 201 8 - 3 072 6 996 17 637 4 467 5 1 167 33 344
    Depreciatio n for the period - 209 376 3 864 249 - 50 4 748
    Disposals - (62) (27) (1 762) (81) - - (1 932)
    At 30 June 2018 - 3 219 7 345 19 739 4 635 5 1 217 36 160
    Net book v alue :
    At 1 January 201 7 5 486 10 721 1 525 25 976 1 658 4 712 644 50 722
    At 1 January 201 8 5 490 14 600 2 062 38 241 2 716 1 024 587 64 720
    At 30 June 2018 5 283 14 335 2 083 45 109 2 721 1 037 566 71 134


    2 4 .1. Land and buildings by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 9 597 9 918
    Automotive business 10 021 10 172
    19 618 20 090


    Interim Consolidated Financial Statement for H1. 201 8


    46
    2 4 .2. Machinery and equipment by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 525 385
    Automotive business 1 512 1 632
    Leasing business 46 45
    2 083 2 062

    2 4 .3. Vehicles by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 5 944 2 199
    Automotive busi ness 11 658 10 692
    Leasing services 27 366 25 281
    Asset management and brokerage 47 55
    Parent company 94 14
    45 109 38 241

    2 4 .4. Furniture and fittings and other assets by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance b usiness 215 214
    Automotive business 2 988 3 033
    Leasing services 66 38
    Asset management and brokerage 14 16
    Parent company 4 2
    3 287 3 303

    2 4 .5. Assets under construction by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insur ance business 332 224
    Automotive business 705 800
    1 037 1 024

    2 5 . Investment property
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Net book value at 1 January 12 698 13 215
    Additions - 68
    Revaluation 561 (130)
    Other changes - (455 )
    Net book value as at the period end 13 259 12 698



    Interim Consolidated Financial Statement for H1. 201 8


    47 2 6 . Intangible assets
    Software Licenses Other Total

    BGN ‘000 BGN ‘000 BGN ‘000 BGN ‘000
    Cost
    At 1 January 201 7 6 095 155 1 483 7 733
    Additions 1 037 - 150 1 187
    Disp osals (388) (40) (21) (449)
    At 3 1 December 201 7 6 744 115 1 612 8 471
    At 1 January 201 8 6 744 115 1 612 8 471
    Additions 390 - 49 439
    Disposals (72) (1) (35) (108)
    At 30 June 2018 7 062 114 1 626 8 8 02

    Depreciation
    At 1 January 201 7 5 076 154 764 5 994
    Depreciation for the year 412 - 92 504
    Disposals (184) (40) (1) (225)
    At 3 1 December 201 7 5 304 114 855 6 273
    At 1 January 201 8 5 304 114 855 6 273
    Depreciati on for the period 198 - 55 253
    Disposals - - - -
    At 30 June 31 5 502 114 910 6 526

    Net book value :
    At 1 January 201 7 1 019 1 719 1 739
    At 1 January 201 8 1 440 1 757 2 198
    At 30 June 2 018 1 560 - 716 2 276

    27 . Inventories by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 228 248
    Automotive business 49 087 53 249
    Leasing business 2 146 5 628
    51 461 59 125


    Interim Consolidated Financial Statement for H1. 201 8


    48
    28 . Financial ass ets
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Financial assets held for trading 275 057 305 715
    Available for sale financial assets 15 493 15 638
    Other financial assets 11 815 5 700
    302 365 327 053

    28 .1. Financial assets held for tradin g by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business , incl.: 263 584 294 500
    Government bonds 121 627 133 742
    Asset management and brokerage 11 473 11 215
    275 057 305 715

    28 .2. Available for sale financial assets b y segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business , incl.: 15 493 15 638
    Government bonds 4 436 4 680
    15 493 15 638

    28 .3. Other financial assets by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 11 815 5 700
    11 815 5 700

    29 . Deferred tax asset
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 12 607 12 618
    Automotive business 467 469
    Leasing business 97 97
    13 171 13 184

    3 0 . Investments in subsidiarie s and associates
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Investments of the parent company 3 463 -
    Investments of the subsidiaries 4 183 4 724
    7 646 4 724


    Interim Consolidated Financial Statement for H1. 201 8


    49
    3 1 . Other financial investments by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 2 386 2 382
    Parent company 9 9
    2 395 2 391

    3 2 . Non - current receivables
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Finance lease receivables 47 692 45 414
    Parent company 9 779 9 779
    Subsidiaries 50 145 30 715
    107 616 85 908

    3 3 . Goodwill
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Euroins Insurance Group AD 164 478 164 478
    Motobul EAD 12 538 12 538
    Bulvaria Varna EOOD 5 591 5 591
    Daru Car OOD 1 461 1 461
    Eurolease Group EAD 1 312 1 312
    Eurolease Rent - a - Car EOOD 1 803 1 803
    Sofia Motors EOOD 10 10
    Euro - Finance AD 2 620 2 620
    189 813 189 813

    3 4 . Subordinated debts by segments

    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business - issued 19 558 19 558
    Insurance business - other 8 500 6 500
    28 058 26 058

    3 5 . Bank and non - bank loans by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 17 -
    Automotive business 16 896 17 382
    Leasing business 55 536 47 768
    Par ent company 44 161 34 095
    116 610 99 245


    Interim Consolidated Financial Statement for H1. 201 8


    50

    35.1. Bank and non - bank loans by segments – long term

    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Automotive business , incl.: 4 455 4 918
    Bank loans 4 455 4 918
    Leasing business, incl.: 54 35 8 46 404
    Bank loans 54 358 46 404
    Parent company, incl.: 37 015 21 123
    Bank loans 37 015 21 123
    95 828 72 445

    35.1. Bank and non - bank loans by segments – short term

    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance busines s , incl.: 17 -
    Bank loans 17 -
    Automotive business , incl.: 12 441 12 464
    Bank loans 11 929 12 222
    Loans from non - bank financial institutions 512 242
    Leasing business, incl.: 1 178 1 364
    Bank loans 1 178 1 364
    Parent compa ny, incl.: 7 146 12 972
    Bank loans 7 146 5 940
    Loans from non - bank financial institutions - 7 032
    20 782 26 800

    3 6 . Bond obligations by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    A utomotive business 13 681 4 769
    Leasi ng business 20 372 20 863
    Parent company 129 214 125 125
    163 267 150 757



    Interim Consolidated Financial Statement for H1. 201 8


    51
    3 6 . 1 Bond obligations – long term , by segments

    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    A utomotive business 13 516 4 769
    Leasing business 20 372 20 863
    Parent company 124 081 124 178
    157 969 149 810

    3 6 . 2 Bond obligations – short term, by segments

    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    A utomotive business 165 -
    Parent company 5 133 947
    5 298 947

    3 7 . Non - current liabilities
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Other non - current liabilities 6 398 10 198
    Finance l eas e liabilities 25 136 19 885
    Deferred revenue - 4
    31 534 30 087

    3 7 .1. Other non - current liabilities by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘ 000
    Insurance business 18 11
    A utomotive business 5 593 9 336
    Leasing business 783 811
    Parent company 4 40
    6 398 10 198

    3 7 .2. Finance lease liabilities – non - current, by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    A utomotive business 12 582 7 166
    Leasing business 12 554 12 719
    25 136 19 885


    Interim Consolidated Financial Statement for H1. 201 8


    52
    38 . Current liabilities
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Payables to employees 3 708 3 304
    Social - security liabilities 1 830 1 619
    Tax liabilities 4 545 5 707
    Other current liabilities 10 700 9 792
    Finance l eas e liabilities 463 4 449
    Deferred revenue 446 270
    Provisions 553 446
    22 245 25 587

    38 .1. Payables to employees by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance b usiness 2 417 2 357
    A utomotive business 1 017 721
    Leasing business 233 187
    Parent company 41 39
    3 708 3 304

    38 .2. Social - security liabilities bys segments

    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance busi ness 1 308 1 325
    A utomotive business 375 209
    Leasing business 129 75
    Parent company 18 10
    1 830 1 619


    38 .3. Tax liabilities by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business
    A utomotive business
    Le asing business
    Asset management and brokerage
    Parent company



    Interim Consolidated Financial Statement for H1. 201 8


    53


    38 .4. Other current liabilities by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 7 717 6 322
    A utomotive business 895 2 084
    Leasing busi ness 871 795
    Asset management and brokerage 141 293
    Parent company 1 076 298
    10 700 9 792

    3 8 . 5 . Finance l eas e liabilities – current, by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    A utomotive business 463 4 449
    463 4 449

    38 . 6 . Deferred revenue – current, by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 128 -
    A utomotive business 318 270
    446 270

    39 . Trade and other payables by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insura nce business 3 390 7 380
    A utomotive business 54 582 51 080
    Leasing business 3 037 3 852
    Asset management and brokerage 3 6
    Parent company 24 764 39 874
    85 776 102 192

    4 0 . Payables to reinsurers , I nsurance business
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Payables to reinsurers 60 346 77 807
    Payables from direct insurance 3 959 4 056
    64 305 81 863



    Interim Consolidated Financial Statement for H1. 201 8


    54
    4 1 . Deferred tax liabilities
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance business 69 104
    A utomotive b usiness 122 120
    Leasing business 60 60
    251 284

    4 2 . Insurance reserves
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Unearned premium reserve, gross amount 199 243 187 985
    Reinsurers’ share in unearned premium reserve (122 868) ( 117 578 )
    Unexpired risks reserve, gross amount 539 7 288
    Reinsurers’ share in unexpired risks reserve - -
    Reserve for incurred but not reported claims, gross amount 174 992 165 038
    Reinsurers’ share in reserve for incurred but not reported claims (108 891) ( 102 594 )
    Reserve for reported but not settled claims, gross amount 250 210 231 443
    Reinsurers’ share in reserve for reported but unsettled claims (152 059) ( 137 915 )
    Other technical reserve 4 978 4 081
    629 962 595 835

    4 3 . S hare capital and s hare p remium

    4 3 .1 Issued capital
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Issued shares 197 526 197 526
    Treasury shares (Shares held from subsidiaries) (6 077) (77)
    Share capital 191 449 197 449
    Number of shares 197 525 600 197 525 600

    As at 30.6. 201 8 - 6 0 77 067 shares of Eurohold Bulgaria AD are held by the Eurohold Group companies (as
    at 31.12.201 7 – 77 387 share s ) .

    The share capital is distributed as follows :

    Share holders % Number of
    shares Par valu e
    Starcom Holding AD 54.55% 107 740 952 107 740 952
    KJK Fund II Sicav - Sif Balkan Discovery 12.46% 24 616 873 24 616 873
    Other companies 30.52% 60 291 557 60 291 557
    Other individuals 2.47% 4 876 218 4 876 218

    1 00 . 00% 197 525 600 197 525 600


    Interim Consolidated Financial Statement for H1. 201 8


    55
    43.2 Share premium 30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Share premium 49 568 49 568
    49 568 49 568

    4 4 . Net income for the year
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Current result attributable to the shareholders 1 938 18 174
    Current result attributable to the non - controlling interest 2 141 6 241
    Net income for the year 4 079 24 415


    4 4 .1. Net income for the year by segments
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Insurance busine ss 11 534 41 681
    Automotive business 395 258
    Leasing business 110 112
    Asset management and brokerage 36 209
    Parent company (7 787) (17 306)
    Income attributable to the non - controlling interest (2 141) (6 241)
    Intercompany eliminatio ns of dividends and other (209) (539)
    1 938 18 174

    4 5 . Non - controlling interests
    30.6. 201 8 3 1 . 12 . 2017
    BGN ‘000 BGN ‘000
    Non - controlling interest attributable to current result 2 141 6 241
    Non - controlling interest attributable to equit y 39 886 37 461
    42 027 43 702

    4 6 . Events after the end of the reporting period

    At the end of 2017, the companies in the Eurohold Group carried out an assessment of the effects of the
    three aspects of IFRS9, based on information available on 31.12.2017. On the basis of this assessment and
    in order to minimize the effect of the entry into force of the new standard, receivables totaling BGN 4,888
    thousand were sold at the beginning of 2018.

    An agreement with an external consultant has been signed to investigate and confirm the effects of the
    valuations at 31.12.2017 and there is no indication of significant impact on the consolidated statement of
    financial position and equity as of the date of this report .

    The Management Board of Eurohold Bulgaria AD is not aware of any other important or material events that
    have occurred after the end of the reporting period .






    INSIDE INFORMATION

    pursuant to Article 7 of Market Abuse Regulation (EU) No
    596/201 4 of the European Parliament and of the Council of 16
    April in respect of circumstances occurring during the reporting
    period


    EUROHOLD BULGARIA AD has disclosed the foll owing information:


    4 July , 201 8
    Notification concerning Regulation (EU) No 596/2014 of the European Parlia ment and of
    the Council of 16 April 2014;

    2 July , 201 8
    Announcement for di vidend payment ;

    2 July , 201 8
    Minutes from the regular session of GMS of Eurohold Bulgaria AD, held on 29 th
    of June,
    2018 ;

    22 June , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parliament and of
    the Council of 16 April 2014;

    11 June , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parliament and of
    the Council of 16 April 2014;

    8 June , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parliament and of
    the Council of 16 April 2014;

    5 June , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parliament and of
    the Council of 16 April 2014;

    31 May , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parliament and of
    the Council of 16 April 2014;

    30 May , 201 8
    Interim Consolidated Financial Report for Q 1 ’ 201 8 :
    1. Interim Consolidated Financial Statements as of 3 1 st
    of March , 201 8 , IFRS ;
    2. N otes to the Interim Consolidated Financial Statements for Q 1 ’ 201 8 ;
    3. Interim Consolidated Management Report ;
    4. Interim Consolidated Financial Statements – FSC forms ;
    5. Internal Information ;
    6. Additional Information ;
    7. Information according to Annex 9;
    8. Declarations ;





    29 May , 201 8
    Invitation for the regular session of GMS of Eurohold Bulgaria AD on 29 th
    of June, 2018 ;

    30 April , 201 8
    Interim Financial Report for Q 1 ’ 201 8 :
    1. Interim Financial Statements as of 3 1 st
    of March , 201 8 , IFRS ;
    2. N otes to the Interim Financial Statements for Q 1 ’ 201 8 ;
    3. Interim Management Report ;
    4. Interim Financial Statements – FSC forms ;
    5. Internal Information ;
    6. Additional Information ;
    7. Information according to Annex 9;
    8. Declarations ;

    19 April , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parlia ment and of
    the Council of 16 April 2014;

    18 April , 201 8
    Annual Consolidated Financial Report for the year ended on 31 December 201 7 :
    1. Annual Consolidated Financial Report as of 31 December 201 7 , IFRS ;
    2. Notes to the Annual Consolidated Financial Statements ;
    3. Independent Auditor’s Repor t ;
    4. Consolidated Management Report for 201 7 ;
    5. Corporate Governance Declaration ;
    6. Annual Consolidated Financial Report – FSC forms ;
    7. Independent Auditor’s Declaration ;
    8. Declarations;

    1 7 April , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parlia ment and of
    the Council of 16 April 2014;

    4 April , 201 8
    Annual Financial Report for the year ended on 31 December 201 7 :
    1. Annual Financial Report as of 31 December 201 7 , IFRS ;
    2. Notes to the Annual Financial Statements ;
    3. Independent Auditor’s Repor t ;
    4. Management Report for 201 7 ;
    5. Corporate Governance Declaration ;
    6. Annual Financial Report – FSC forms ;
    7. Independent Auditor’s Declaration ;
    8. Declarations;

    7 March , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parlia ment and of
    the Council of 16 April 2014;

    7 March , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parliament and of
    the Council of 16 April 2014;

    2 7 February , 201 8
    The shares from the last capital increase of Eurohold Bulga ria AD have been admitted to
    trading on the Warsaw Stock Exchange ( News Release ) ;





    2 February , 201 8
    2017 cons results for Eurohold: Profit doubled and upsurge in the profitability of the main
    business lines ( News Release ) ;

    1 Febr uary , 201 8
    Interim Conso lidated Financial Report for Q4’ 201 7 :
    1. Interim Consolidated Financial Statements as of 3 0 December 201 7 , IFRS ;
    2. Notes to the Interim Consolidated Financial Statements for Q4’ 201 7 ;
    3. Interim Consolidated Management Report ;
    4. Interim Consolidated Financ ial Statements – FSC forms ;
    5. In ternal Information ;
    6. Additional Information ;
    7. Information according to Annex 9;
    8. Declarations ;

    1 February , 201 8
    Interim Financial Report for Q4’ 201 7 :
    1. Interim Financial Statements as of 3 0 December 201 7 , IFRS ;
    2. N otes to the Interim Financial Statements for Q4’ 201 7 ;
    3. Interim Management Report ;
    4. Interim Financial Statements – FSC forms ;
    5. Internal Information ;
    6. Additional Information ;
    7. Information according to Annex 9;
    8. Declarations ;

    9 January , 2018
    No tification pursuant to Article 148b of POSA;

    4 January , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parliament and of
    the Council of 16 April 2014;

    2 January , 2018
    Notification concerning Regulation (EU) No 596/2014 of the European Parliament and of
    the Council of 16 April 2014;





    30.0 7 .2018

    Asen Minchev ,

    Executive Member of the Man agement Board
    of Eurohold Bulgaria AD



    1

    ADDITIONAL INFORMATION
    TO THE INTERIM FINANCIAL REPORT OF EUROHOLD
    BULGARIA FOR Q 2 ’ 201 8

    in accordance with art . 33 , par. 1of Ordinance No . 2 of September 17,
    2003 on the prospectuses to be published when securities are
    offered to the public or admitted to trading on a regulated market
    and on disclosure of information by the public companies and the
    other issuers of securities


    1. Information about the changes in the accounting policy during the reported
    period , the reasons for carrying them out and how th ey affect the financial
    results and equity of the issuer

    No changes have been made in the accounting policy of the company during the reported
    period .

    2. Information about changes in the economic group of the issuer, if it belongs
    to such a group

    No chang es have been made in the economic group of the issuer.

    3. Information about results of organizational changes in the issuer’s
    structure, such as conversion, sale of companies from the same economic
    group, in - kind contributes from the company, property rental , long - term
    investments, withdrawal from business

    No organizational changes in the issuer’s structure during the reported period .

    4. Opinion of the Governing Body of the feasibility of published estimates of the
    results of the current financial year, taking into account the results of the
    current three months, as well as information on the factors and
    circumstances, which will affect the achievement of the forecasted results at
    least in the next three months

    No estimates of financial results of the company ha ve been published for 2018 .

    5. Data on the persons, holding directly and indirectly at least 5 per cent of the
    votes in the General Meeting as of the end of the reported period, and
    changes in the votes, held by the persons in the end of the previous t hree
    months period

    Shareholder Number of
    shares % participation
    1. Starcom Holding AD
    107 740 952 54, 55 %
    3. KJK Fund II Sicav - Sif Balkan Discovery
    24 616 873 12.46 %


    6. Data of the shares, held by the management and supervisory bodies of the
    issuer at the end of the respective three months and changes, which took



    2
    place since the end of the previous three months period for each person
    individually.

    Shareholder Number of
    shares % participation
    1. Dimitar Stoyanov Dimitrov 200 -
    2. Ass en Emanuilov Assenov 78,000 0.0 4 %

    7. Information about pending judicial, administrative or arbitration
    proceedings concerning claims or liabilities of at least 10 per cent of the
    equity of the issuer ; if the total amount of the debts or the obligations o f the
    issuer in all proceedings exceeds 10 per cent of its own capital , information
    about each case separately is provided.

    For the reported period the Company has no pending legal, administrative or arbitration
    proceedings.


    8. Information about gra nted by the issuer or its subsidiary company loans,
    guarantees or commitments totally to one person or its subsidiary, including
    to related to it persons, showing the type of relation between the issuer and
    the person, the amount of unpaid principal, the i nterest rate, the final
    maturity, the size of the commitment, the term and conditions.


    Non - current liabilities to r elated parties
    30.6. 2018 31.12.2017
    Loans principal BGN’000 BGN’000
    Eurolease Auto EAD 2 591 2 576
    2 591 2 576

    30.6. 2018 31.12.2017
    Financial lease liabilities BGN’000 BGN’000
    Eurolease Auto EAD 48 -
    48 -




    Current liabilities to r elated parties
    Interest payables
    30.6. 2018 31.12.2017
    BGN’000 BGN’000
    Eurolease Auto EAD 17 157
    Eurolease Group EAD 8 8
    25 165


    Current borrowings

    30.6. 2018 31.12.2017
    BGN’000 BGN’000
    Starcom Holding AD - 18
    Eurolease Group EAD 16 16



    3
    16 34

    Other payables
    30.6. 2018 31.12.2017
    BGN’000 BGN’000
    Eurolease Auto EAD 63 17
    Sofia Motors EOOD - 9
    Bulvaria Holding E AD - 7
    63 33













    Date:
    30 . 0 7 .201 8 г. Asen Minchev,
    Executive Director of Eurohold Bulgaria AD



    1


    INFORMATION ACCORDING TO ANNEX 9

    according to the requirements of Article 33, paragraph 1, item 3 of
    ORDINANCE № 2 of 17.09.2003 on prospectuses for public offering
    and admission to trading on a regulated securities market and for
    the disclosure of info rmation




    1. There has no c hange of persons exercising a control over the Company

    2. Opening of insolvency proceedings for the company or its subsidiary and
    all essential stages of the proceedings

    No insolvency proceedings have been opened for the company o r its subsidiary


    3. Conclusion or execution of significant transactions

    There are no significant transactions during the observed period.

    4. No decision on the conclusion or termination of the joint venture
    agreement

    5. Change in company auditors and reasons f or change

    There has no change in company auditors.

    6. No court o r arbitration case relating to the debts or claims of the
    company or its subsidiary has been initiated or terminated at a purchase
    price of at least 10% of the capital of the company

    7. There is no purchase, sale or pledge of shareholdings in commercial
    comp anies by the issuer or its subsidiary

    8. There are no other circumstances that the Company believes could be
    relevant to investors in taking a decision to acquire, sell or continue to
    hold publicly - traded securities




    Date : 30 . 0 7 .201 8 г.

    Asen Minchev,
    Executive Director of Eurohold Bulgaria AD





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WSZYSTKIE KOMUNIKATY SPÓŁKI
Informacje o spółce
Nazwa:Eurohold Bulgaria AD
ISIN:BG1100114062
NIP:175187337
EKD:
Adres: 43 Christopher Columbus Blvd. 1592 Sofia
Telefon:+359 2 9651653
www:www.EuroHold.bg
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