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~ ITPEBO_JAqECK..!\ AITHUIUI "AEB CTY,ll;HO" EOO,ll;
-+...,. rp. Co,._IDi lO ::;_ y.1. "Tpa¢ l1rHan:1eB"N2 5, eT. 2, o¢uc 209
eTII All;~·: (02) 9 505 345; Te."l. ¢aKc: (0~. 9 505 346, E-mail: abv [email protected]
TRANSLATION AGENCY ABV STUDIO LTD Bulgaria, Sofia 1000, 5 Graf Ignatiev Str., Fl. 2, office 209 tel.:(+ 359 2) 9 505 345; tel./fax: (+ 359 2) 9 505 346, E-mail: [email protected]
Translation from Bulgarian
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY
NON-PROFIT ORGANISATION
Registered office: Sofia 1330, 73 Todor Aleksandrov Blvd, fl.6, office 6
Telephone: +359 2 9848190
E-mail: [email protected]
Web-site: www.bacibg.org
BULST AT .N2: 130950810
VAT .N2: BG130950810
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FINANCIAL STATEMENTS AS OF DECEMBER 31,2011
APPENDIX
1. INFORMATION ABOUT THE COMPANY
Bulgarian Association of Cement Industry (BACI) is a non-profit organisation registered in July 2002. The Association is an organization operating to achieve private benefit. The main objectives of the Association are to protect and promote the common interests of its members, to help achieve the widest possible use of cement in as many areas as possible, and to develop such technologies and methods of production that would contribute the most to environmental protection.
1.1. Members and management
Regular members of BACI are the following three Bulgarian companies - manufacturers of cement:
1. DEVNYACEMENT AD 2. ZLATNA PANEGACEMENT AD 3. HOLCIM BULGARIA AD
Members of the Association participate in the General Meeting with voting right and pay membership fees and additional cash contributions for financial provision of the Association's activity.
Majority shareholders in the companies that are members of BACI are the world's largest manufacturers of cement. DEVNY A CEMENT AD is part of the Italcementi Group, HOLCIM BULGARIA AD is part of the Swiss group Holcim Group, owner of ZLATNA P ANEGA CEMENT AD is the Greek company Titan Cement.
The Association can also accept associated members - legal entities that produce cement and clinker and share the goals of the Association, accept the Articles of Association, declare their willingness to work towards achieving the objectives of the Association and pay the set membership fees. Associated members participate without voting right in the General Meeting.
I 2011 the Management Board ofBACI consisted ofthe following members: 1. Todor Donchev Kostov; 2. Alexander N akov Chakmakov; 3. Nabil Paul Fransis.
The Association is represented by Todor Donchev Kostov- Chairperson of the Management Board.
2
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FINANCIAL STATEMENTS AS OF DECEMBER 31 , 2011
APPENDIX
Summary o(activities
In 2011 Bulgarian Association of Cement Industry aimed at protecting its members' interests. Representatives of the Association participated in the interdepartmental working group for developing and implementing the National Plan for allocation of greenhouse gas emission allowances pursuant to Directive 2003/87/EC for the period 2008-2012, and also in the activities of working groups and management bodies of CEMBUREAU. The Association also carries out commercial activity. On the basis of the framework service agreements concluded with its members, BACI has provided the latter, in their capacity of customers, regularly and/or upon request, with the services provided for therein.
2. ACCOUNTING POLICY OF THE COMPANY
2.1. Basis (or the preparation o(the financial statement
These annual financial statements are prepared in accordance with the requirements of the National financial reporting standards for small and medium-sized enterprises (NFRSSME) following the historical cost convention. The company presents comparative information in this financial statement for one previous year. The annual financial statement for 2011 has been prepared following the accounting principles of current accrual, going concern, prudence, comparability of income and expenses, priority of content over form, preserving if possible the accounting policies from the previous reporting period, independence between reporting periods and value relationship between initial and final balance. Current accounting is based on documentary validity of economic operations, transactions and processes.
The accounting policy of the Association has been developed in accordance with the principles and requirements of the Accountancy Act and NFRSSME, and on issues for which accounting there are no explicit provisions in NFRSSME - with the requirements of International Financial Reporting Standards insofar as they are not inconsistent with the statutory EU legislation in the field of accounting.
Accounting policy was applied consistently to all years presented, unless explicitly stated otherwise. During the current year the company has not had to make changes in its accounting policy. The Association keeps its accounting records in Bulgarian lev (BGN), which is adopted as its reporting currency for presentation. All data in the financial statements for 2011 and comparative information for 2010 are presented in thousands of levs.
2.2. Transactions in foreign currency
Reporting currency Reporting currency, in which items are presented in the financial statements of the Association,
is the Bulgarian lev (BGN). From 01.07.1997 the lev is pegged in accordance wit!\th~~t~. B.NB to the German mark at the ratio of BGN 1: DEM 1 and with the introduction ~~:f!tlr1{~ficial currency of the European Union- the Euro at the ratio ofBGN 1.95583 : EUR ~. ~ \:_-;,
'.$. ';) > tA ::0.
c;.. ~ . ~~ ~
t.J',:.but ,p. ,\'t-. ~ 3 l i./f) li) \ \ ' .
B
Transactions and balances
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FINANCIAL STATEMENTS AS OF DECEMBER 31, 2011
APPENDIX
Transactions in foreign currency at initial accounting (with the exception of the currency purchased and sold) are presented in the reporting currency using the official rate of BNB on the date of the transaction.
The cash, receivables and payables, denominated in foreign currency are revalued on an annual basis using the official exchange rate ofBNB on the last business day of the year.
Exchange differences arising from settlement of receivables and payables in foreign currency, as well as from revaluation of foreign currency positions at the end of the period, are reported as current financial income/expenses in the income statement.
2.3. Tangible [IXed assets
As fixed assets are recognized assets with long-term use, which acquisition cost is more than 700 Euro. Lower acquisition costs of assets, which are inherently long-term, are reported as current expenses for the period of their incurring. Tangible assets are originally recorded at acquisition cost, comprising the purchase value and the direct costs of acquisition. Their subsequent evaluation is at acquisition cost less accumulated depreciation and any impairment losses.
Subsequent expenses are added to the asset's carrying value or recognized as a separate ass~t only when the Association is likely to have an economic benefit above that of the originally assessed standard efficiency of the existing asset. Expenses related to an increase in the future economic benefit are those expenses that result in extending the useful life of the asset or economically beneficial change in the asset's functional purpose.
When replacing an identifiable part of a tangible fixed asset, the replaced part is derecognized, while the cost of replacing the part is recognized as a newly acquired asset. Maintenance and repair costs associated with the use of the asset are reported as current expenses in the income statement for the period, in which they are incurred. Depreciation of tangible fixed assets is determined using the straight-line method. Land is not depreciated. Assets, which are temporarily withdrawn from operation, are not depreciated. Depreciation of fixed assets is accrued from the month following the month of their putting into operation. The Association has set a zero residual value of the assets in operation.
The useful life of operation of individual assets and the respective depreciation rates are defined as follows for the following groups of assets:
Assets Annual depreciation rate (B %)
• Computer equipment 50%
• Automobiles 25%
• Office equipment 15%
2.4 Trade receivables
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FINANCIAL STATEMENTS AS OF DECEMBER 31, 2011
APPENDIX
Trade receivables, which have no fixed maturity, are initially recognized at acquisition cost. In the balance sheet they are stated at acquisition cost less any impairment loss due to uncollectability.
An impairment loss is reported in case there is objective evidence that the Association will not be able
to collect all amounts due under the original terms and conditions of the respective receivable, such as: significant financial difficulties of the debtor, possibility of bankruptcy and liquidation, financial
restructuring or inability to repay the debt (more than 360 days). The carrying value of the asset is
reduced using a corrective account for impairment and the value of the loss is reported in the income statement under expenses for impairment. The Association has defined the following criteria for classification of receivables as receivables subject to impairment:
- outstanding receivables with a period of occurrence over one year, for which there is a high
degree of uncertainty regarding their collection;- declaring the debtor bankrupt and/or under liquidation;
- termination of enforcement proceedings without satisfying the claim.
2.5. Cash
Cash includes cash balances (cash on hand and cash in bank current accounts).
For the preparation of the cash flow statement:
• cash receipts from customers and cash payments to suppliers are reported gross, including VAT
(20%);
• interest received on current accounts are presented under operating activity;
2.6. Income
Income in the Association is recognized on an accrual basis and to the extent, in which economic benefits are obtained by the Association and in so far as incomes can be reliably measured.
Income from membership fees is recognized on an accrual basis.
In providing services, income is recognized, taking into account the stage of completion of the transaction as at the balance sheet date, if this stage can be reliably measured, as well as the expenses incurred in the transaction and the cost of closing it.
Income of the Association is classified as commercial or non-commercial activity.
2. 7. Expenses
Expenses in the Association are recognized at the time of their occurrence and on the basis of the accrual and comparability concepts.
. Deferred expenses are recognized as a current expense for the period, in whi~hg.~<)n, c s, to which they relate, are performed. ~ (.,o~Ht~. ;; ,.
Financial costs are included in the income statement as incurred andl consist of: ( - -~t expenses under lease contracts, bank charges, exchange differences on foreign ctky transa i · .
~~ .., •.:!',::, B:;! G r.\t-. I . ( -. ~ .··l.l JO \..'
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FINANCIAL STATEMENTS AS OF DECEMBER 31,2011
APPENDIX
Costs are allocated to commercial and non-commercial activity. Distributable costs are allocated based on the ratio between income from commercial and non-commercial activity.
2. 8. Trade payables
Trade and other current payables are reported at original invoice amount (cost of acquisition), which is assumed to be the fair value of the transaction, which will be paid in the future against the received goods and services.
2.9. Deferred income taxes
Deferred income taxes are determined using the passive balance sheet method on all temporary differences at the date of the financial statements, which exist between the carrying amounts and tax bases of individual assets and liabilities. Deferred tax assets are recognized for all taxable temporary differences. Deferred tax assets are recognized only for deductible temporary tax differences, insofar as their recovery is probable if taxable income is available in subsequent years. Deferred tax assets and liabilities are measured at the tax rates expected to apply for the period during which the assets will be realized and liabilities will be settled.
2.1 0. Income of employees
Labor and social insurance relations with personnel are based on the provisions of the Labor Code and the current social security legislation. The amounts of social insurance contributions are determined according to the effective legislation. Short-term staff remunerations in the form of wages are recognized as an expense in the income statement for the period, in which the work for it was performed or the requirements for their obtaining were met, and as a current liability (after subtracting any amounts already paid and due deductions) to the amount of their undiscounted value. Due social security and health insurance contributions are recognized as a current expense and liability at their undiscounted value in the period of accrual of the respective income they are associated with. A payable is accrued for unused paid (compensable) leaves as at the date of the financial statements, which is measured at the amount expected to be paid as a result of the unexercised entitlement to accumulated leave. The estimation includes expenses for the salaries themselves and expenses for social insurance contributions, which the employer owes on these amounts. Financial relations with employees and workers in the company are based on the provisions of the Labor Code and the current social security legislation.
Pursuant to the Labor Code the employer is obliged to pay the staff a compensation upon reaching retirement age, which depending on length of service in the enterprise may vary between 2 and 6 gross salaries as at the date of termination of employment.
As at the date of these annual financial statements, the Company's man~:qt~
that the amount of this liability is not material for making a long-term provi~r(~~{~~
certified actuaries. I
6
2.11. Lease contracts
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FINANCIAL STATEMENTS AS OF DECEMBER 31,2011
APPENDIX
Lease contracts, under which a significant part of the risks and benefits resulting from the ownership of assets is transferred to the lessee, are classified as finance leases. Tangible fixed assets
acquired under the terms of finance leases are initially recognized in the balance sheet of the lessee at the lower of the value of minimum lease payments and the fair value of the leased asset. A payable to the lessor is reported to the total amount of the lease payments over the term of the lease. Interest for
the entire duration of the lease are initially recognized in the balance sheet as a deferred financial expense amounting to the difference between the initial evaluation of the lease asset and the obligation under the lease. Assets acquired under the terms of finance lease are depreciated based on useful life of operation of the asset.
Lease payments comprise in a certain ratio of the financial expense (interest) and the respective
part of the lease obligation (principal). Interest costs related to the lease asset are recognized in the income statement over the term of the lease contract by applying the effective interest rate method.
2.12. Material accounting estimates and assessments - assumptions with high degree of uncertainty Estimates of decisive importance in applying the Company's accounting policies
The estimates and assessments are based on gained experience and other factors, including
ex ecra · ons for future e\ ents under the existing circumstances. The reliability of estimates and assessments is regular! reviewed.
The Association makes estimates and assessments for the purposes of accounting and disclosure related to future period, which could differ from actual results.
Impairment of receivables
Estimates of losses from uncollectable and doubtful receivables are made at the end of each financial year. Receivables with difficulties in their collection for a period over one year are subject to
current analysis to determine the portion of them, which is actually collectable and the remainder up to the face value of the claim is consistently recognized in the income statement as impairment loss.
All doubtful receivables that have not been collected for more than two years are treated as uncollectable and are impaired fully to the extent management considers that there is high uncertainty about their collection in the future.
3. Income from non-commercial activity
in thousand BGN
Membership fees
31.12.2011 31.12.2010
36
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FINANCIAL STATEMENTS AS OF DECEMBER 31,2011
APPENDIX
4. Income from commercial activity
in thousand BGN
Services
5. Distributable costs
31.12.2011 31.12.2010
263 314
The ratio of distributable costs in percentage is determined based on the ratio between total income in relation to income from commercial activity and in relation to income from non-commercial activity. Services provided by the European Cement Association (CEMBUREAU), of which BACI is a member, are reported as expenses for commercial activity, all other expenses are reported as distributable costs. The ratio between commercial and non-commercial activity is as follows:
For commercial activity For non-commercial activity
2011 87,96% 12,04%
2010 89,70% 10,30%
enices receiYed from CEMBUREAU in thousand BGN are as follows:
in thousand BG
6. Expenses for commercial activity
2011 143
2010 176
Cost allocation for commercial activity by economic elements is the following:
in thousand BGN materials external services
incl. - CEMBUREAU - office rentals
- legal services - consultancy services - audit - others - for accountancy services
- for remunerations and social insurance contributions - depreciation - others (business trips) Total expenses
2011 2010
3 4 198 240 143 176 21 26
4 23 0 2 5 6 1 7
24 "\.:~y W, r (", , - ~
61 ~ ~~~,·;\, r:()5J;' ~ . .... ;'
10 ~ c.:" 18 ':' .-.. . .f: - -
4 ; 2 276 ~tf?~ 350 ~ t '1. \ "'~ '1, 81JU':l \_;
~,run· - l
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FINANCIAL STATEMENTS AS OF DECEMBER 31,2011
APPENDIX
7. Expenses for non-commercial activity
Cost allocation for non-commercial activity by economic elements is the following: 2011 2010
in thousand BGN materials 0 0 external services 7 10 for remunerations and social insurance contributions 8 8
- depreciation 2 2
- others (business trips) 1 0 Total expenses 18 20
In the mcome statement for non-commercial activity they are reported as administrative expenses.
8. Financial costs
in thousand BGN
Financial expenses
9. Operating result
2011 2010
1 1
The result from commercial activity for 2011 is loss to the amount of 14 thousand BGN.
The result from non-commercial activity for 2011 is gain to the amount of 14 thousand BGN.
10. Tangible fixed assets
Tangible fixed assets are presented in a separate Appendix.
They have book value as of 31.12.2011 as of31.12.2010
14 thousand BGN 26 thousand BGN
The book value of fully depreciated tangible fixed assets that are being used in the company's activity as at 31.12.2011 is 88 thousand BGN.
9
11. Trade and other receivables in thousand BGN
Receivables from customers
Receivables from shortages (theft)
Other
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FINANCIAL STATEMENTS AS OF DECEMBER 31,2011
APPENDIX
2011 2010
2
Incl. (calculations on guarantee rental)
4
3 3 2
3
2
Prepaid deferred expenses
Insurance policies automobile
12. Cash in thousand BGN
Cash
Cash in bank current
accounts
Total:
1
2011
3
40
43
1
2010
2
37
39
Monetary funds as at December 31 are available in hand and in company's accounts with
Corporate Commercial Bank AD.
13. Provisions in thousand BGN
Accruals for leaves
2011
3
2010
5
Payables under unused leave have been accrued to Vladimir Stariradev - Secretary General, 8
days for 2009, and to Yoto Vasilev- Administrator, 13 days for 2009. Payables under social security
contributions on these amounts have also been accrued. A deferred tax asset amounting to 263 .78
BGN has been accrued on the amounts of unused leave and social security contributions
14. Current payables in thousand BGN
Payables to financial institutions
2011
6
2010
11
This payable is towards Raiffeisen Leasing Bulgaria Ltd. under finance lease for e,t1t~obile.
The lease contract is for 60 months, interest is variable, based on 3M EURIB0-\.~~-~4!1P} t:9n 30.09.2012. I ";t (I' -co
. Cl
.:.::
BL"LGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FlliANCIAL STATEMENTS AS OF DECEMBER 31,2011
APPENDIX
15. Financial risk management
In the ordinary course of business activity the Association can be exposed to various financial risks, most importantly foreign currency risk, credit risk and liquidity risk.
Foreign currency risk The Association is not exposed to significant foreign currency risk since all of its operations
and transactions are made in Bulgarian levs and/or euros.
Credit risk In carrying out its activities the Association is exposed to credit risk, which is associated with
the risk that any of its contractors will not be able to meet fully and in due time their obligations to the
Association. Collectibility and concentration of receivables is controlled on an ongoing basis.
Liquidity risk Liquidity risk is the adverse situation when the Association is not able to meet unconditionally
all its obligations according to their maturity. The Association has the liquid funds to meet its current obligations.
16. Contingent liabilities and commitments
As at the date of the annual financial statements, Bulgarian Association of Cement Industry is defendant under a lawsuit, in which the claimant is Rumiyana Georgieva Kondova.
The lawsuit was filed against BACI in its capacity of a condominium owner in the building, in which the office of the Association is located. The claimant has fallen in front of the building and has broken her arm because of uncleaned snow. The claim is worth 50 000 BGN. The lawsuit, which was scheduled for February 2012, has been postponed and rescheduled for June 2012.
17. Transactions with related parties
Related parties of Bulgarian Association of Cement Industry are:
DEVNY A CEMENT AD ZLATNA P ANEGA CEMENT AD HOLCIM BULGARIA AD
18. Auditors' remuneration
in thousand BGN
Independent financial audit
2011
6
BULGARIAN ASSOCIATION OF THE CEMENT INDUSTRY FINANCIAL STATEMENTS AS OF DECEMBER 31, 2011
APPENDIX
19. Events after the balance sheet date
The annual financial statements of the Company are prepared as at 31.12.2011. These financial statements are prepared on 10.02. 2012. The body that has approved the annual financial statements for publishing is the Management
Board. The date of audit certification is 01.03.2012.
Prepared by: Chairman of the MB: Kameliya Kovacheva Todor Kostov
I, the unde ned Minko Georgiev Petkov, hereby certifY the correctness of this translation of the attached original do u e erformed by me from Bulgarian into English. The translation consists of 12 pages. Translator: . ..., If I Minko Georgiev Petkov I