Eurohold Bulgaria AD. Annual Report

Eurohold Bulgaria AD Annual Report 31 December 2011

CONTENTS 1. Management report for 2011...5 2. Independent Auditor s Report...45 Further information on: About Us Structure Corporate Management Information for investors Communications and Media you can find on: www.eurohold.bg 3. Financial Statements...47 4. Notes to the Financial Statements...52 2

KEY INDICATORS Indicators 2011 Change 2010 2009 2008 Income Statement 1. Profit / loss (before taxes) BGN 000 1.353-51% 2.746 2.053 24.475 2. Net profit / loss (after tax) BGN 000 13.914 407% 2.746 2.053 21.538 3. Revenue BGN 000 8.942-42% 15.367 17.247 42.313 Statement of financial position as of December, 31 4. Equity BGN 000 279.596 46% 192.006 189.260 185.461 5. Liabilities (long- and short-term) BGN 000 50.147-52% 104.207 127.168 160.666 6. Assets (long- and short-term) BGN 000 329.743 11. 296.213 316.428 346.127 Information on the shares Share Capital BGN 000 127.345 104% 62.498 62.498 62.498 Number of shares BGN 000 127.345 104% 62.498 62.498 62.498 Net profit / loss per share BGN 000 0109 149% 0044 0033 0345 Finanancial Ratios Coefficient of financial autonomy BGN 000 5.58 203% 1.84 1.49 1.15 Debt / Equity ratio BGN 000 0.18-67% 0.54 0.67 0.87 Gross return on revenue BGN 000 15.13% 15. 17.87% 11.90% 57.84% Net return on revenue BGN 000 155.60% 771% 17.87% 11.90% 50.90% Gross return on equity BGN 000 0.48% -66% 1.43% 1.08% 13.20% Net return on equity BGN 000 4.98% 248% 1.43% 1.08% 11.61% Gross return on liabilities BGN 000 2.70% 2. 2.64% 1.61% 15.23% Net return on liabilities BGN 000 27.75% 953% 2.64% 1.61% 13.41% Gross return on assets BGN 000 0.41% -56% 0.93% 0.65% 7.07% Net return on assets BGN 000 4.22% 355% 0.93% 0.65% 6.22% 3

9 BGN mln. 14 BGN mln. Total revenue for 2011 see p. 17 Net profit for 2011 г. see p. 18 280 BGN mln. 330 BGN mln. Net assets see p. 16 Total assets see p. 15 (52)% 0.15 BGN Decrease in liabilities in 2011 see p. 16 EPS for 2011 г. see p. 18 4

Management Report of EuroHold Bulgaria AD for 2011 The present report has been drafted in compliance with the provisions of article 100n of the Law on Public Offering of Securities, article 247 of the Commerce Act, article 33 of the Accountancy Act, and appendix 10 to article 32, paragraph 1, item 2 of Ordinance 2 of 17.09. 2003 on the prospectuses to be published when securities are offered to the public or admitted to trading on a regulated market, and on the disclosure of information by public companies and other issuers of securities. The management report of Eurohold Bulgaria AD presents commentary and analysis of the financial statements and of other material information about the financial position and results achieved as a result of the operations of the company. The report reflects the company s position and prospects for development, as well as the main risks faced by it. Eurohold Bulgaria AD also drafts a consolidated annual report on the activity which includes the financial results of the parentcompany, its subsidiaries and associated companies. In order to get a comprehensive picture of the Group s financial position as a whole, the users of this annual report should read it in conjunction with the consolidated annual report of Eurohold Group for 2011. In managing the company, the members of the Management Board apply the best international practices in corporate governance, seeking to be among the leaders in the implementation of transparent corporate practices in Bulgaria. The business model implemented by the company is built on fundamental principles such as ensuring the rights of and the equal treatment of all shareholders. I.COMPANY OVERVIEW History The trade name of the company is EUROHOLD BULGARIA AD. The trade name is defined in Art. 2, paragraph 1 of the Articles of Association of the Company. According to Art. 2, paragraph 3 of the Articles of Association, the trade name of the company may be spelled in English, as follows: EUROHOLD BULGARIA S.A. EuroHold Bulgaria AD is a holding company, registered in the Republic of Bulgaria, which operates in compliance with Bulgarian legislation. EuroHold Bulgaria AD is a public company as defined in the Public Offering of Securities Act. The initial registration of the Company is with the Commercial Registry at Sofia City Court, under file 14436/ 2006, under 111639, volume 1509, page 116. On 10.03.2008 EuroHold Bulgaria AD was reregistered with the Commercial Registry at the Registry Agency in compliance with the requirements of the Commercial Registry Act. The unique identification code (UIC) of the Company is 175187337. EuroHold Bulgaria AD has been set up for an indefinite term, which means that the Company is not limited by a specific term or other preclusive condition. EuroHold Bulgaria AD is a public limited company formed by the merger between EuroHold AD, registered under file 13770/ 1996 of Sofia City Court and Starcom Holding AD, registered under file 6333/ 1995 of Sofia City Court. By means of the merger, the newly established holding company EuroHold Bulgaria AD strengthened its position as one of the biggest Groups in Bulgaria with significant potential for development, considerable equity and financial resources. EuroHold Bulgaria AD was established with a capital in the amount of BGN 50,002,586, divided into 50,002,586 ordinary, registered, nonprivileged, dematerialized shares with one vote at the General Meeting of the Shareholders, with dividend rights and liquidation quota, with a nominal value of BGN 1 each one. Since the Company s establishment several capital increases by cash contributions have been performed and as of the date of this report the capital of the Company amounts to BGN 127,345,000, divided into 127,345,000 ordinary, registered, non-privileged, dematerialized voting shares, with dividemd rights and liquidation quota, with a nominal value of BGN 1 each one. The capital of the Company has not been increased by contributions in kind. The Company has not issued any shares that do not represent capital. All shares, excluding the shares owned by subsidiary companies, issued by EuroHold Bulgaria AD give their owners the right to vote at the General Meeting of the Shareholders. 5

When EuroHold Bulgaria AD was first established, it had many subsidiaries in its structure, which operated in the fields of insurance, leasing, real estate and manufacturing. Aiming at optimizing its costs and achieving higher synergies among all subsidiaries, EuroHold s management decided to split its subsidiaries functionally into separate legal entities within the Group. On 06.11.2007 EuroHold Bulgaria AD founded EuroIns Insurance Group EAD, aiming at the consolidation of its insurance activities. On 27.11.2007 a session of the General Meeting of the Shareholders of EuroHold Bulgaria AD was held and a decision was reached to do a contribution in-kind of the shares, held by EuroHold Bulgaria AD in its subsidiaries EuroIns AD, EuroIns Romania Asigurare Reasigurare SA and the health assurance company St. Nicolay Chudotvorets EAD (currently EuroIns Health Assurance EAD). The described in-kind contribution was performed after the Bulgarian Financial Supervision Commission and the Romanian Insurance Supervisory Commission granted their approvals. Subsequently, EuroIns Insurance Group EAD acquired Macosped Osiguruvanje AD, Skopje (currently EuroIns Osiguruvanje AD, Skopje), whereby the acquisition was approved by the Ministry of Finance of the Republic of Macedonia on 28.01.2008. At the end of 2008 began the formation of the automotive sub-holding of EuroHold Bulgaria AD EuroHold Automotive Group EAD. The company was founded in 2007 and its initial share capital was formed by a contribution in-kind of the shares from the capital of Cargoexpress EOOD (currently Bulvaria Varna EOOD) a dealer of Opel and Chevrolet for the city of Varna. Similar to the establishment of EuroIns Insurance Group EAD, the consolidation of the automotive activities of EuroHold Bulgaria AD was made by means of a contribution in kind of the company s shares in its subsidiaries Scandinavia Motors EAD official importer of SAAB for Bulgaria, Nissan Sofia AD the biggest dealer of Renault Nissan Bulgaria and EuroLease Rent-a-Car EOOD exclusive franchise partner of Budget Rent-a-car for Bulgaria. The General Meeting of the Shareholders of EuroHold Bulgaria AD approved the above described contribution in-kind at its session held on 26.05.2009, and on 02.06.2009 the automotive sub-holding was founded. In the meantime, in April 2009 EuroHold Automotive Group EAD, renamed to Avto Union Group EAD, acquired control over Avto Union AD s group, which owns Auto Italia EAD official importer of Fiat and Lancia for Bulgaria, Bulvaria Holding EAD Opel and Chevrolet dealer in Sofia, Gransport Auto EOOD official importer of Maserati for Bulgaria, Milano Motors EOOD official importer of Alfa Romeo and the scooters Piaggio, Vespa and Guillera, Star Motors EOOD official representative of Mazda for Bulgaria and Bulvaria Rent-a-Car EOOD franchise partner of Avis Europe for Bulgaria. At the end of 2010 EuroHold Automotive Group EAD (currently Avto Union Group EAD) transferred its participations in Scandinavia Motors EAD, Nissan Sofia AD and EuroLease Rent-a-Car EOOD to Avto Union AD. In 2010, Avto Union AD also acquired Espace Auto EOOD. In the end of 2010 Avto Union Group EAD sold its shares in Avto Union AD to Eurohold Bulgaria. By this transaction the reorganization of the automotive group has been completed. The ownership right over the shares has been transferred entirely in 2010. In 2011 the transaction was finalized and the total consideration was determined based on conditions included in additional agreement between the parties. In 2011, Bulvaria-Rent-a-Car EOOD was pooled into EuroLease Rent-a-Car EOOD, which became its universal assignee. This primary aim of this transformation has been to optimize the operating costs of the company and to achieve better market segmentation, which in turn will improve the levels of customer service and satisfaction. This is a prerequisite to strengthen the market presence of Avis and Budget in Bulgaria and to increase their market shares. In the end of 2011, Avto Union AD signed preliminary contract and agreement to transfer the effective control in Eurolease rent-a-car to the leasing subsidiary BG Autolease Holding B.V., whereby the management of the company was transferred to the new owner. On 30.01.2012 the final contract for the transfer of the shares was signed. At the end of 2008 EuroHold Bulgaria AD acquired 100 per cent of the share capital of the Dutch company BG AutoLease Holding B.V. (with former trade name Wivotech B.V.), which in turn had acquired another Dutch company BG AutoLease Group B.V. (with previous trade name Doesign B.V.). EuroHold Bulgaria AD decided to do an inkind contribution in the share capital of its subsidiary company BG AutoLease Holding B.V. of its controlling stakes in EuroLease Auto EAD, Bulgaria, EuroLease Auto IFN SA, Romania, EuroLease Auto EAD, Macedonia. BG AutoLease Holding B.V. in turn contributed in-kind the aforementioned shareholdings in the capital of BG AutoLease Group B.V. the leasing subsidiary in the structure of EuroHold Bulgaria AD. EuroHold Bulgaria AD deemed its manufacturing companies as non-strategic, therefore a decision for their sale,which took place in August 2008, was taken. 6

EuroHold Bulgaria AD owns the investment intermediary Euro-Finance AD, which is a member of the Group since 2006. In the real estate business the Group owns two companies EuroHold Imoti EOOD and Avto Union Properties EOOD. Scope of Business The official scope of activity of EuroHold Bulgaria is acquisition, management, evaluation and sale of shares of Bulgarian and foreign companies; acquisition, management and sale of bonds; acquisition, evaluation and sale of patents, concession of licenses for patent use to companies where the Company has shares; financing of companies where the Company has shares. The Company can participate in Bulgarian and foreign companies and organizations, regardless of their scope of business activity, as long as it complies with the conditions set by the Law and the Articles of Association of the Company. The company operates in compliance with Bulgarian legislation. The main acts, governing its activities are the Commerce Act, the Law on the Public Offering of Securities, the Financial Supervision Commission Act, the Law on Measures against Money Laundering, the Supplementary Supervision of Financial Conglomerates Act. The main ordinances in place are the Ordinance 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 the disclosure of information by the public companies and the other issuers of securities, Ordinance No. 39 of 21 November 2007 on the disclosure of a holding in a public company, Ordinance on the minimum contents of a proxy form for the general meeting of shareholders of a company, whose shares have been subject to a public offering etc. Headquarters and Address of the Management The headquarters and the address of the management of EuroHold Bulgaria AD is Republic of Bulgaria, Sofia, 1592, 43 Christopher Columbus blvd. The head office of the Company is located at the same address. This is also the official correspondence address of the Company. Business address: 43 Christopher Columbus Blvd. Telephone 02/ 9651 653; 02/ 9651 651 Fax 02/ 9651 652 E-mail Web site investors@eurohold.bg; office@eurohold.bg www.eurohold.bg Since the registration of EuroHold Bulgaria AD as a business entity, there has been no change in the Company s name. There have been no changes in the scope of activity of the Company. The Company is not limited by time or another termination condition. So far the Company has not transferred or pledged its entity, has not acquired and has not disposed of assets of significant value outside the Company s usual course of business. EuroHold AD is not aware of any filed claims for the opening of an insolvency proceeding against itself or any of its subsidiaries. Management Bodies EuroHold Bulgaria AD has a two-tier management system, as follows: a Management Board which consists of four natural persons and one legal entity, and a Supervisory Board of three natural persons. Management Board The Management Board of EuroHold Bulgaria AD consists of five members: Kiril Ivanov Boshov Chairman; Assen Minchev Minchev Executive Director (CEO); Zlatolina Ivanova Mukova Member; Assen Emanuilov Assenov Member; Expat Capital AD member, through its two representatives Nicola Simeonov Yankov and Lubomir Christov Stoev Supervisory Board The Supervisory Board consists of four members: Assen Milkov Christov Chairman; Dimitar Stoyanov Dimitrov Vicechairman; Ivan Georgiev Munkov Independent member; Nikolay Vassilev Vassilev Independent member. There are no family ties among the members of the Management Board and the Supervisory Board, including the natural persons, representing the legal entity member of the Management Board. The activity of the company is not dependent on the individual professional experience or qualifications of other employees. 7

The company is represented by the Executive Director of the Management Board, Assen Minchev Minchev, and the Chairman of the Management Board, Kiril Ivanov Boshov. Share capital As of the date of this report the share capital of the Company amounts to BGN 127 345 000, divided into 127 345 000 ordinary, registered, non-privileged, dematerialized voting shares, with dividend right and liquidation quota, with a nominal value of BGN 1 for each share All of the Company s shares are from the same class and are fully paid in. The entire capital of the Company has been paid in with cash. All the shares issued by the Company are in circulation. The Company s shares are registered for trade on the Premium Equities Segment of the Bulgarian Stock Exchange Sofia AD with stock index 4EH. After the successful completion of the dual listing procedure of the shares of EuroHold Bulgaria AD, the shares were registered for trading on the Warsaw Stock Exchange (WSE), Main List, with stock index EHG. The first day of trading on the WSE was 15. December 2011. The Company hasn t bought and, hence, does not possess its own shares. As of 31.12.2011 4,227,682 shares of the capital of EuroHold Bulgaria are owned by subsidiary companies. The shares have a nominal value of 1 BGN each. The Company has not issued shares which do not represent capital. All shares issued by EuroHold Bulgaria AD give their owners voting rights on the General Meeting of the Shareholders. The Bulgarian legislation does not govern the existence of any authorized but unissued capital, therefore there are no acquisition rights and/ or obligations over the Company regarding authorized but unissued capital. The share capital of the Company has not been increased by in-kind contributions. The Company has not undertaken any actions related to the issuance of warrants, convertible and exchangeable securities or rights. The competent body to make any decisions related to the Company s capital increase is the General Meeting of the Shareholders. As per Art. 13, paragraph 5 of the Articles of Association of EuroHold Bulgaria AD, the Management Board of the Company can take decisions to increase the capital of the Company to up to EUR 200,000,000 (two hundred million) for a period of 5 (five) years after a registration with the Commercial Registry of an amendment to the Company s Articles of Association, which was voted on the General Meeting of the Shareholders on 30.06.2011, and is in compliance with the provisions of Art. 194, paragraph 1 and 2, Art. 196, paragraph 1 and 2 of the Commerce Act, as well as with the provisions of the Public Offering of Securities Act. There are no parties that own equity options over EuroHold s capital or over the capital of any of the companies, members of EuroHold Group. EuroHold Bulgaria AD and its subsidiaries do not have any engagements to issue such options. Changes in the Share Capital EuroHold Bulgaria AD was established on 12.12.2006 with a capital in the amount of BGN 50,002,586, divided into 50,002,586 ordinary, registered, non-privileged, dematerialized shares, with one voting right on the General Meeting of the Shareholders, with dividend rights and liquidation quota, with a nominal value of BGN 1 each one. The Company s capital has been formed by a merger without liquidation between EuroHold AD and Starcom Holding AD. The amount of the capital is defined in the Reorganization Agreement, approved at the General Meeting of the Shareholders of the two merged companies. Between May and June 2007 EuroHold Bulgaria AD executed a successful capital increase subscription by issuing 12,500,646 new shares with a nominal value of BGN 1 per share and issue value of BGN 3.35 per share. During the course of the subscription 50,002,586 rights were issued and each one gave the right to purchase 0.25 new shares. The total amount of the subscribed and paid in shares reached 12,495,050 or 99.96% of the amount offered. After this capital increase was completed, the Company s capital amounted to BGN 62 497 636, divided into ordinary, registered, non-privileged, dematerialized voting shares, with dividend right and liquidation quota, with a nominal value of BGN 1 each one. Between March and May 2011, with a resolution of the Management Board of EuroHold Bulgaria AD, on grounds of the powers granted by Article 13, paragraph 5 of the Articles of Association of the Company, the capital of EuroHold Bulgaria AD was increased through the issuance of 46,146,076 new shares with a nominal value of BGN 1 and issue value of BGN 1 per share. The Company issued 62,497,626 rights whereas the ratio of rights/new shares was 1/1. 46,146,076 shares were subscribed or 73.84% of the amount offered 8

for subscription. As a result, the capital of the Company amounted to BGN 108,643,712, divided into 108,643,712 ordinary, registered, nonprivileged, dematerialized voting shares, with dividend right and liquidation quota, with a nominal value of BGN 1 each. On 27.07.2011 the Management Board of EuroHold Bulgaria AD took the decision for a subsequent capital increase of EuroHold Bulgaria AD. The Company issued 36,214,570 new rights at a ratio number of rights/new shares 3/1. 18,701,288 new shares were subscribed or 51.64% of the rights offered. The total capital of the Company was increased from 108,643,712 to 127,345,000 BGN. The new issue was registered in the Commercial Register on 30.11. 2011 and started trading on the Bulgarian Stock Exchange (BSE) on 04.01 2012. Expected is a registration for admission to trading of the new issue to the Warsaw Stock Exchange (WSE), where the Company s shares have been traded since 15.12.2012, following the dual listing. 34 211 301 6 899 739 21 436 026 Shareholder structure (number of shares) 64 797 934 Starcom Holding AD Expat Capital AD Other legal entities Other physical entities The majority shareholder of EuroHold Bulgaria AD is Starcom Holding AD. The majority shareholder does not own shares, bearing different voting rights. The seat and business address of Starcom Holding AD is Bulgaria, Etropole, 191, Ruski blvd. Shareholder structure(%) 5.4% Starcom Holding AD Regarding the Company there are no applicable actions which could lead to a change in the shareholders rights. 26.9% 50.9% Expat Capital AD Other legal entities There are no provisions in the Articles of Association and/or in the Internal Regulations of EuroHold Bulgaria AD, which could lead to delaying, deferring or preventing a change in the control of the Company There are no provisions governing the ownership threshold above which shareholder ownership should be disclosed in the Articles of Association and/or in the Internal Regulations of the Company. There are no provisions in the Articles of Associations of the Company, which define stricter rules, than the ones required by the law about changes in the capital. 16.8% Other physical entities As of the date of the present report, Starcom Holding AD controls 50.88 per cent of the issued shares, out of which 7.067 per cent are object of repo deals. Starcom Holding AD is the only entity that may exercise direct control over EuroHold Bulgaria AD. The Chairman of the Supervisory Board of EuroHold Bulgaria AD, Assen Christov, may exercise indirect control over the Company. Assen Christov is a majority shareholder and directly owns 51 per cent of the voting shares of Starcom Holding AD. Through this stake, Assen Christov controls directly the majority shareholder and indirectly EuroHold Bulgaria AD. Shareholder Structure As of the end of the fiscal year, there are two legal entities that own on a nominal basis more than 5 per cent of the shares with voting rights. There are no natural persons shareholders, who directly hold more than 5 per cent of the shares with voting rights. All issued shares are from the same class and give one voting right each. Expat Capital AD is the second main shareholder in EuroHold Bulgaria, in possession of a qualifying stake in the Company s capital. As of the date of this report Expat Capital AD controls the voting rights of approximately 17% of the issued and outstanding shares. The shares of Expat Capital AD do not bear different voting rights. Expat Capital AD is a joint stock company, duly incorporated and operating under the laws of the Republic of Bulgaria. The Company has its registered office in Sofia, 96A, G.S. Rakovski str. 9

The company's capital amounts to BGN 1,124,000, divided into 1,124,000 shares with a nominal value of BGN 1 each. The company is managed by a Board of Directors Nikola Simeonov Yankov, Nikolay Vassilev Vassilev and Lyubomir Hristov Stoev. Expat Capital AD is the sole owner of a licensed management company Expat Asset Management EAD, which manages three mutual funds and many individual portfolios. Expat Capital AD is the management company of Expat Beta REIT that invests in real estate in Bulgaria. Eurohold Bulgaria AD neither has arrangements with other parties, nor is aware of such arrangements the enforcement of which might result in a future change in the Company s control. The primary way for restricting possible abuse on behalf of the majority shareholder with the operations or the assets of the Company is through applying the provisions of article 114 of the Law on the Public Offering of Securities, which stipulate that the company may not, unless being explicitly empowered to do so by the General Meeting of the Shareholders, acquire, transfer, obtain or grant for use, or as a collateral in any form whatsoever, fixed assets, as well as obligations to be incurred to any stakeholders when the transactions/ obligations exceed 2 per cent of the company s assets. The Statutes of the Company do not provide any additional restrictions. The Company s capital has not been increased through in-kind contributions. The Company has not issued any shares that do not represent capital. All shares, issued by EuroHold Bulgaria AD, give their owners the right to vote at the General Meeting of Shareholders. II. OVERVIEW OF ACTIVITY Main Scope of Activity EuroHold Bulgaria AD is registered in the Republic of Bulgaria. Its main activities include: acquisition, management, evaluation and sale of participations in Bulgarian and foreign companies financing of companies, where the c\company participates; participation in Bulgarian and foreign companies. EuroHold Bulgaria AD s revenues are formed mainly by its financial activity, related to acquisition, disposal and management of participations and financing of related companies. As of 31.12.2011 EuroHold Bulgaria AD has direct participation in five subsidiary and two associated companies. 19.6% Breakdown of investments 2011 5.8% 0.5% 8.4% 65.8% Insurance Car sales Leasing Asset management and brokerage Real estate The companies from EuroHold Bulgaria AD s portfolio operate on the following markets: insurance and health assurance market, leasing market, financial, automotive, real estate. The overall business is focused across the line of Car sales Leasing Insurance. During the period covered by historical information the Group s companies offer the following services: Insurance services; Health assurance services; Financial and operational leasing; Financial intermediation; Sales of new cars; Sales of used cars; Car repair services; Sales of spare parts; Rent-a-car; Investment properties management 10

Capital Investments Description % ownership Number of shares Investments (BGN) Method of financing Investor EuroHold Bulgaria AD Investments in 2008 EuroLease Auto Skopije EAD Incorporation EuroIns Insurance Group Capital Increase EuroLease Auto EAD Capital Increase EuroLease auto IFN Romania Share purchase EuroLease auto IFN Romania Capital Increase EuroLease auto IFN Romania Share purchase Eurohotels AD Capital increase Geoenergoproekt AD Share purchase BG AutoLease Holding, the Netherlands Share purchase EuroLease Rent-a-car EOOD Capital Increase 100% 1 000 97 830 Own funds EuroHold Bulgaria AD 100% 76 981 791 76 981 791 Borrowings EuroHold Bulgaria AD 6 018 606 6 018 606 Own funds EuroHold Bulgaria AD 51% 55 080 1 956 000 Own funds EuroHold Bulgaria AD 66,92% 201 650 1 065 927 Own funds EuroHold Bulgaria AD 70.54% 13 870 72 011 Own funds EuroHold Bulgaria AD 91.21% 1 200 000 1 200 000 Own funds EuroHold Bulgaria AD 80% 6 150 150 000 Own funds EuroHold Bulgaria AD 100% 180 46 647 Own funds EuroHold Bulgaria AD 100% 6 300 630 000 Own funds EuroHold Bulgaria AD Autoplaza EAD 50% 49 000 49 000 Own funds EuroHold Bulgaria AD Total 88 267 812 Investments in subsidiaries in 2008 EuroIns Share purchase Macedonia 83,25% 2102 14 994 295 Own funds EIG AD EuroIns Capital increase Macedonia 8,10% 475 474 998 Distribution of dividends EIG AD EuroIns Capital increase Takovo, Share purchase EuroIns Capital increase EuroIns Share purchase EuroIns Capital increase EuroIns Share purchase Macedonia Serbia AD AD Romania Romania 47,48% 2786 3 683 933 Own funds EIG AD 10% 41 948 7 315 321 Own funds EIG AD 14,92% 1 753 542 7 014 168 Own funds EIG AD 1,84% 215 974 1 310 175 Own funds EIG AD 29,21% 10 603 144 5 922 173 Own funds EIG AD 0,70% 242 000 402 314 Own funds EIG AD EuroIns Health Insurance EAD Capital increase EuroIns Health Insurance EAD Share purchase 10,63% 250 000 1 000 000 Own funds EIG AD 44,68% 1 050 000 1 200 000 Own funds EIG AD EuroIns Share purchase Macedonia 83,25% 2 102 43 317 377 Own funds EIG AD Total 86 634 754 EuroHold Bulgaria AD investments in 2009 Euro-Finance Share purchase AD 99,99% 207 899 1 455 293 Own funds EuroHold Bulgaria AD 11

EuroLease Auto Skopije EAD Capital increase 100% 1 000 97 825 Own funds EuroHold Bulgaria AD Autoplaza EAD 100% 51 000 51 000 Own funds EuroHold Bulgaria AD BG Autolease Holding, the Netherlands, Capital increase Eurolease auto EAD Share purchase 100% 27 400 Own funds EuroHold Bulgaria AD 22,46% 3 481 293 8 067 798 Own funds EuroHold Bulgaria AD Total 9 699 316 Investments in subsidiaries in 2009 Avto Union Holding, BVI Share purchase 100% 17 300 000 15 646 640 Own funds Avto Union Group AD Kamalia Share purchase Inter Share purchase EuroIns Share purchase EuroIns Capital increase EuroIns Share purchase Limited Sigorta AD Romania Romania 100% 999 3 911 660 Own funds Avto Union Group AD 90,75% 90 750 500 1 052 007 Own funds EIG AD 2,61% 306 687 588 879 Own funds EIG AD 36,96% 2 2658 397 10 492 167 Own funds EIG AD 1,55% 949 000 1 632 922 Own funds EIG AD Star Motors EOOD Capital Increase 100% 20 000 1 000 000 Own funds Avto Union AD Total 34 324 275 EuroHold Bulgaria AD investments in 2010 Geoenergoproekt Share purchase AD 99,47% 70 000 700 000 Own funds EuroHold Bulgaria AD Total 700 000 Investments in subsidiaries in 2010 EuroIns Capital increase Romania 9 035 868 4 293 829 Own funds EIG AD Milano Motors EOOD Capital increase Gransport Auto EOOD Capital increase Auto Italia EAD Capital increase Avto Union AD Capital increase Eurolease Auto Skopije EAD, Capital increase 190 760 000 Own funds Avto Union AD 9 500 950 000 Own funds Avto Union AD 415 000 4 150 000 Own funds Avto Union AD 5 126 2 563 000 Own funds Kamalia Trading Ltd. 3 000 293 375 Own funds BG Autolease Group BV. Total 13 010 204 EuroHold Bulgaria AD investments in 2011 Avto Union AD Capital increase Avto Union AD Increase in the investment share BG Autolease Holding, the Netherlands, Capital increase Scandinavia Motors AD Capital increase 100% 12 850 000 Own funds EuroHold Bulgaria AD 100% 26 850 842 Own funds EuroHold Bulgaria AD 100% 3 344 469 Own funds EuroHold Bulgaria AD 0,38% 5 5 000 Own funds EuroHold Bulgaria AD 12

Total 43 050 311 Investments in subsidiaries in 2011 Scandinavia Motors EOOD Capital increase Scandinavia Motors EOOD Capital increase Nissan Sofia EAD Capital increase Eurotruck EOOD Incorporation Auto 1 OOD Share purchase 99,62% 871 871 000 Own funds Avto Union AD 99,62% 240 240 000 Own funds Avto Union AD 100% 150 000 750 000 Own funds Avto Union AD 100% 1 000 10 000 Own funds Avto Union AD 51% 5 100 510 000 Own funds Avto Union AD EuroIns Capital increase Romania 90.45% 3 468 000 Own funds EIG AD BG Autolease Group, the Netherlands, Capital increase EuroLease Auto Skopje Capital increase Eurolease Auto Romania, Capital increase Eurolease Auto EAD Capital increase Nissan Sofia EAD Share purchase Daru Car AD Share purchase Motobul EOOD Share purchase 100% 3 344 469 Own funds BG Autolease Holding the Netherlands 100% 97 792 Own funds BG Autolease Group the Netherlands 74.93% 312 933 Own funds BG Autolease Group the Netherlands 100% 3 032 808 Own funds BG Autolease Group the Netherlands 100 % 43 584 136 908 Own funds Avto Union AD 99.84% 12 686 9 779 150 Own funds Avto Union AD 100% 51% 10 439 575 Own funds Avto Union AD Total 32 992 635 Business Lines The current business structure of EuroHold Bulgaria AD includes three main sub-holdings: EuroIns Insurance Group AD, Avto Union AD and EuroLease Group, which specialize respectively in insurance, car sales and leasing, the investment intermediary Euro-Finance AD and a real estate company EuroHold Imoti EOOD. As of 31.12.2011 EuroHold Bulgaria AD controls the following companies: 13

EuroIns Insurance Group AD www.eig.bg EuroIns Insurance Group AD (EIG) is set up at the end of 2007 as a 100 per cent owned subsidiary of EuroHold Bulgaria AD, where the entire insurance and health assurance business of the holding structure is concentrated. As of the date of this report Eurohold Bulgaria AD owns 80.82 per cent of EIG s capital. EIG expands its activities through its subsidiary insurance companies in Bulgaria, Romania, Macedonia and Turkey. The insurance companies in the Group have more than 300 regional offices and more than 1 million clients in the region. The efforts and investments made during the last few years ensure the stabilization of the market positions of the companies in Bulgaria, Romania and Macedonia. As of the end of 2011, EIG owns the majority share in the companies in Bulgaria, Macedonia, Turkey and Romania and a minority share in a Serbian company. EIG s share in the capital of the companies is, respectively, 77.22 per cent in EuroIns AD, 91.39 per cent in EuroIns Insurance Skopje AD, 90.45 per cent in EuroIns Romania Asigurare Reasigurare S.A., 100 per cent in EuroIns Health Assurance EAD, 90.75 per cent in Inter Sigorta AS, Turkey. The main goal of EIG is achieving 10 per cent market share on the Balkans for the medium term in the general insurance sector. EIG s subsidiaries operate in the areas of general insurance and health assurance. The products offered include Motor Third Party Liability (MTPL), Auto Casco, Property Insurance, Cargo Insurance, General Third Party Liability Insurance, Crops and Livestock Insurance, Vessels Insurance, Aircraft Insurance, Financial Risks Insurance, Travel Assistance Insurance, Accident and Sickness Insurance. EuroLease Group www.euroleasegroup.com The leasing sub-holding BG AutoLease Holding B.V. and its subsidiary BG AutoLease Group B.V. are holding companies, consolidating Eurohold s investments in the leasing sector on the Balkans. The companies were established in the Netherlands and acquired by Eurohold in 2008; later the shares owned by EuroHold Bulgaria AD in the individual 14

leasing companies in Bulgaria, Romania and Macedonia were contributed in-kind into the capital of the Eurolease Group. The companies are registered in the Netherlands in order to ensure easier access to financial resources from the international financial markets. The leasing subholding BG AutoLease Holding B.V. and its subsidiary BG AutoLease Group B.V. are united under the trade name Eurolease Group (ELG). The structure of ELG includes Eurolease Auto Bulgaria (100%), Eurolease Auto Romania (70.54%) and Eurolease Auto Macedonia (100%). The companies from the ELG group offer financial leasing of new and used vehicles, of new passenger cars and light commercial vehicles, trucks and buses. The complete name of the company is BG AutoLease Holding B.V. It was established in the Netherlands as part of the long term strategy of EuroHold to segregate its core business lines in separate stand-alone sub-holdings. EuroLease Group has a key role in the overall strategy of EuroHold Bulgaria AD it connects car dealers and insurers to pack a product with a common added value. Avto-Union AD www.avto-union.com Avto Union AD is a holding company which consolidates EuroHold Bulgaria s investments in the automobile sector. Avto Union is an automotive subsidiary which offers 11 car brands in Bulgaria. Avto Union manages the largest portfolio of car brands in Bulgaria. The strategy of maintaining a variety of brands is complemented by continuously improving the quality of supplementary products and the after sales service, as well as by offering new packaged products, combining leasing and insurance and tailored to the client s needs. The main business lines of Avto Union are: Sale of new cars, motorcycles and scooters; Sale of original spare parts and accessories; Rent-a-car (long and short-term); Car buy-backs; Through its subsidiaries, Avto Union is: An exclusive importer for Bulgaria of the following brands: Fiat, Lancia, Alfa Romeo, Mazda, SAAB, Maserati and the following brands of scooters: Piaggio, Vespa и Gilera; An authorized dealer of Opel, Nissan, Renault, Dacia and Chevrolet; For each model sold by Avto Union a test-drive of the vehicle is offered. Assistance is also provided for the registration of each new vehicle bought. Customers can benefit from the following supplementary services: Up to 5 years of Extended warranty extends the warranty by 1 or 2 years (upon customer s preferences); covers mileage of up to 150 000 km; Substitute vehicle in case of car accident or damage; Internal and external car wash, etc.; Warranty and post warranty service; Vehicle buyback. Euro-Finance AD www.eurofinance.bg Euro-Finance AD has been member Eurohold Bulgaria since 2006. Euro-Finance is one of the first licensed investment intermediaries in Bulgaria with an almost 18 years history. The company is the only investment intermediary in Bulgaria, member of the Deutsche Borse Group and through its network and longstanding relations with international broker-dealers offers a wide range of investment products FX deals, contracts for differences (CFDs), equity trading,, fixed income trading, derivatives trading, REPOs, domestic and international SWIFT payments. Euro-Finance is a leading nonbanking financial institution in Bulgaria which aims to provide quality investment products and services, tailored to the preferences of each customer. Euro-Finance provides investment and financial services to individuals, corporate and institutional clients. Real Estate The real estate business of Eurohold Group is represented by three companies Eurohold Imoti EOOD with its subsidiary Eurohold Imoti V.Tarnovo EOOD (100% stake), and Avto Union Properties EOOD, owned fully (100% stake) by Avto Union AD. EuroHold Imoti EOOD specializes in the management of investment real estate. The company owns the showroom and body shop used by Nissan Sofia AD, a subsidiary of EuroHold Bulgaria AD, for its sales and after-sales services. The company also owns a commercial plot of land, located on Europe blvd. and designated to be a new showroom and repair shop of Nissan Sofia AD, which offers the brands Nissan, Renault and Dacia. EuroHold Imoti EOOD administers EuroHold s Business Centre, where the headquarters of EuroHold 15

Bulgaria AD and its subsidiaries, including several automotive showrooms, are. Avto Union Properties EOOD owns real estate in Sofia, Gorni Lozen, Plovdiv, Bourgas etc., which are to be used to build showrooms and repair-shops for the automobile companies, owned by EuroHold Bulgaria s subsidiary - Avto Union AD. Investments in subsidiaries increased by 15.1 per cent in the period 2008-2012. Investments (BGN '000) 315 531 ІІІ. OPERATING RESULTS 284 755 Assets 346 127 Total assets (BGN '000) 274 142 274 713 2008 2009 2010 2011 329 743 316 428 296 213 2008 2009 2010 2011 Total investment increased in 2011, compared to 2010. Part of the change can be attributed to the capital increase in the automobile and leasing subsidiaries. A detailed description of the investments as at the end of 2011 can be found above. The total assets of the Company grew rapidly toward the end of 2011, compared to 2010. This is mainly due to the increased investments of EuroHold Bulgaria, already disclosed in this report. Share Capital and Liabilities At of 31.12.2011 the share capital of the Company represents 84 per cent of the assets. Breakdown of assets, % Fixed assets (0.01%) Share capital (BGN '000) 279 596 Investments (95.69%) 185 461 189 260 192 006 Trade receivables (2.45%) Short-term receivables (1.81%) Financial assets (0.01%) 2008 2009 2010 2011 Cash (0.03%) The investments in subsidiaries, associated and other companies occupies a major share of the total assets. The second biggest share in the assets of the Company is the receivables. They can be long- and short-term and are formed as a result of the policy of active management of the free resources within the Group. The fixed assets of EuroHold Bulgaria include office equipment worth BGN 38 thousand. Cash as at the end of the period amounts to BGN 93 thousand. Financial assets include securities held for sale and as at the end of 2011 amount to BGN 24 thousand. During the reporting period EuroHold Bulgaria issued two issues of new shares, whereby the total amount of subscribed shares is 64,847,364 with a nominal value of BGN 1, each. The Company formed an additional reserve premium from the second issue in the amount of BGN 9,351 thousand. The increase in the share capital in 2011, compared to 2010, can be attributed to the profit formed at the unconsolidated basis. Eurohold Bulgaria has not made a decision regarding the distribution of the profits accumulated in previous years. 16

Financial result (BGN '000) Bond issues (BGN '000) 87 350 89 403 92 149 106 063 19 558 13 039-2008 2009 2010 2011 2008 2009 2010 2011 - In 2011, the Company reports a profit of BGN 13,914 thousand. Liabilities (BGN '000) Current liabilities represent the obligations of EuroHold Bulgaria to its subsidiaries in their free cash flow management. 160 666 Short-term liabilities (BGN '000) 127 168 104 207 72 622 50 147 2008 2009 2010 2011 21 693 13 390 12 140 The liabilities to financial institutions have increased the most during the fiscal year, which is due to the Accession Mezzanine Capital II mezzanine loan financing agreement from 2008, which has a maturity of 7 years until the end of 2015. The funds raised were employed in the capital increase of EuroIns Insurance Group EAD with the aim of a regional expansion of EIG. 31 661 Liabilities to financial institutions (BGN '000) 50 492 40 978 34 871 2008 2009 2010 2011 In 2011, the liabilities of the Company decreased after current portions of the debt outstanding were paid. 2008 2009 2010 2011 In 2011, current liabilities to financial institutions include the principal payments on a credit overdraft with UniCredit Bulbank, amounting to BGN 3,989 thousand and payable in 2012. The loan has been drafted for the purposes of the leasing company Eurolease Auto AD and has a limit of BGN 10,000 million. In this connection, as at the end of the reporting period, EuroHold reports a current receivable from related parties (EuroLease Auto AD) in the amount of BGN 3,989 thousand. The shortterm debt figure also includes the current portion of the principal payments of BGN 1,956 thousand on the financing provided by Accession Mezzanine Capital II. Total liabilities to related parties (short-term and long-term) as of the end of 2011 are BGN 4,224 thousand (2010 BGN 41, 801 thousand). In 2011 the repo deals with EuroIns Insurance Group were ended. 17

Analysis of Revenues and Expenses The revenues of Eurohold Bulgaria AD come primarily from its main activity related to the acquisition, disposal and management of participations and the funding of subsidiaries. +407% growth in net profit Net Result (BGN '000) 13 914 Total Revenues (BGN '000) 42 313 2 746 2010 2011 17 247 15 367 8 942 2008 2009 2010 2011 For the fiscal year 2011 the revenues of the holding company amount to BGN 8,942 thousand. The total interest income on loans granted amounts to BGN 1,235 thousand. (2010 BGN 1,083 thousand). The share of interest income from loans granted to subsidiaries is BGN 1,144 thousand (2010 BGN 910 thousand). Eurohold Bulgaria AD forms a positive financial result as of 31.12.2011, amounting to BGN 13,914 thousand. Before tax profit is 1,353 thousand. In 2011 Eurohold Bulgaria wrote-off a deferred tax liability amounting to BGN 12,561 thousand, which is accounted for as a current profit. The profit per share for 2011 is BGN 0,11 (2010 - BGN 0.04). Profit per share (BGN) 0.15 Total Expenses (BGN '000) 0.04 17 838 15 194 12 621 2010 2011 7 589 2008 2009 2010 2011 The operating expenses of EuroHold Bulgaria AD amount to BGN 7,589 thousand. Interest expenses on loans received, including a bond issue, amount to BGN 5,302 thousand (2010 BGN 6,492 thousand). The decrease in interest expense is due to the repayment of loans from financial institutions as well as debt to related parties. The current portion of interest expense from interest to subsidiaries amounts to BGN 1,253 thousand. (2010 2,439 thousand). Cash flows On an unconsolidated basis EuroHold Bulgaria generates cash flows from the following activities: Income from operations with investments Income from dividends Income from interest from loans granted to subsidiaries Income from services performed During the accounting period two new share issues were executed, which were used for capital increases in the subsidiaries. For the period under review the cash flows from operating activities have negative values because receivables from suppliers and clients have been lower than total payments made to them. The main reasons for these negative cash flows are related to the nature of the business, the followed policy of an increase in the market shares of the holding s different subsidiaries, as well as the necessity to offer flexible payment schemes. 18

The fiscal 2011 cash flows were formed primarily by the financing and investment activities of the Company in accumulating free cash flow from the subsidiaries and employing this cash flow in financing the current activities and investments of other subsidiaries. Financial autonomy 5.58 Cash Flow BGN thousand. 2008 2009 2010 2011 Cash flow from operating activities -562-2 712-1 996-1 799 Cash flow from investing activities -81 428 15 485 26 402-19 775 Cash flow from financing activities 81 651-12 793-24 386 21 613 Changes in cash flow -339-20 20 39 Beginning cash flow 393 54 34 54 Ending cash flow 54 34 54 93 1.84 1.15 1.49 2008 2009 2010 2011 Financial Results The return on assets increased by 355% from 2010. +355% Return on assets 4.22% Capital Resources The ratios of debt to equity show how the Company is funded. As of 31.12.2010 the share of equity in Eurohold Bulgaria AD s assets reached 84%. In 2011, the long-term liabilities/ equity ratio decreased to 0.14%. This is due to the repayment of part of the Company s obligations to banks and the two capital increases of EuroHold Bulgaria. 0.93% 2010 2011 The return on equity increased compared to 2010. Non-current liabilities/share capital Return on equity 47.30% 11.61% 4.98% 13.59% 1.08% 1.43% 2010 2011 2008 2009 2010 2011 The debt ratio and financial autonomy ratio reflect the coverage of funds attracted by the share capital and vice versa. The financial autonomy ratio is more than one, which means that the Company efficiently manages to cover the funds attracted by its share capital. In 2011, the Company records an increase in the net return on revenues as a result of a larger realized income compared to 2010. 19

Net return on revenues 155.60% significant devaluation of financial assets worldwide. The financial crisis also caused significant disturbances on the global financial market which led to reduced confidence in financial markets and fewer investments in financial instruments. As a result, companies in the financial sector started experiencing difficulties in maintaining liquidity and raising capital. 50.90% 11.90% 17.87% 2008 2009 2010 2011 The financial result for 2011 results in an increase in the liabilities profitability compared to 2010. Return on liabilities 27.75% A further deterioration of the business climate may lead to an even higher unemployment rate and reduced income in the Balkan countries (Bulgaria, Romania, Macedonia and Serbia), which in turn may lead to a decreased level of consumption. The low levels of consumption will adversely affect the sales of the Group s subsidiaries. Moreover, the further deterioration of the business climate and the lack of certainty regarding the trends on the global financial markets, particularly on the Balkan financial markets, may also hinder the development prospects of the company, its results and financial condition. 2.64% Risks related to the general macroeconomic, political and social climate, and government policies 2010 2011 The financial leverage ratio has decreased compared to 2010 as a result of the two capital increases of the Company in 2011. 0.54 Financial leverage The macroeconomic situation and the growth rate on the Balkans (Bulgaria, Romania, Macedonia and Serbia) are of key importance to the development of the Group. The government policy, particularly the regulatory policy and the decisions taken by the respective National Banks regarding 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, also affect the financial results of the Group. 0.18 2010 2011 IV. OVERVIEW OF THE MAIN RISKS FACING THE COMPANY 1. Systematic risks Influence of the Global Economic Crisis The global financial crisis, which started in 2007, led in many countries (including the US, EU countries, Russia, and Japan) to a slowdown in economic growth and an increase in unemployment, to a limited access to sources of financing and a Changes in the demographic structure, the mortality or morbidity rate are also important factors, affecting the Group s development. The above mentioned external factors, as well as other unfavorable political, military or diplomatic developments, leading to social instability, may shrink higher-level consumer expenditures and limit funds allocated to insurance coverage, car purchases and leasing. Ultimately, gross written premiums (GWP) in the insurance business may decrease and clients may discontinue their insurance policies, as well as postpone new car purchases and, correspondingly, new car leases. Any deterioration of the region s macroeconomic ratios may also adversely affect insurance products, car sales and lease contract origination. Therefore, there is a risk that, if the business environment broadly deteriorates, the Group s sales may turn out to be lower than originally planned. Also, any general amendments 20

to the government policy and regulatory systems in place may lead to an increase in the Group s operating expenses and capital requirements. If the above mentioned factors occur, fully or partially, they could have a significant adverse impact on the Group s outlook, results and financial situation. Political Risk This is the risk stemming from any political processes in the country - the risk of political instability, of changes in the governing principles, legislation and economic policy. The political risk is directly related to the likelihood of unfavorable changes in the direction of the government s longterm policies. Consequently, there exists the possibility of negative changes in the business climate. The long-term political environment on the Balkans (Bulgaria, Macedonia, Romania and Serbia) is stable and does not imply greater risks for the future economic policies of the countries. The EU integration of the countries from the region,combined with their consistent domestic and foreign policies, ensure the absence of shocks and significant changes in the policies currently in place for the near future. Sovereign Credit Risk The sovereign credit risk relates to the likelihood of a worsening in the international credit ratings of Bulgaria, Romania, Macedonia and Serbia. Low credit ratings could lead to higher interest rates and to more restrictive financing terms for business enterprises, including the Company. The credit agencies give positive assessments of the region during the ongoing crisis, thanks to the sound fiscal policies in place and the effective structural reforms. The best example of a disciplined fiscal policy is the increased credit rating of Bulgaria to Baa by Moody s at the end of July 2011 indeed, the highest credit rating on the Balkans. The policies which in the longrun shall preserve the current fiscal stability are: Controlling the size, dynamics and servicing of all financial commitments and debts, borne by and on behalf of the country and comprising both its domestic and external debt; Development and implementation of a uniform policy on public debt management, whose fundamental existence is aimed at ensuring a smooth budget funding and refinancing of maturing debt at minimum medium and long-term rates and at an optimal level of risk; Development and implementation of a funding policy, exercise of control over openmarket transactions with government securities, issuance of permits for investment intermediary activities, as well as implementation of policies aimed at the development of an efficient, transparent and liquid secondary market for government securities; Monitoring the proper servicing of all financial liabilities for which a guarantee has been issued for and on behalf of the state, as well as providing complete and accurate data on the consolidated public indebtedness, including government debt, municipal debt, and wellfare and pension liabilities; Identifying and monitoring possible risks that may arise during the implementation of the strategic goals set forth; Appropriate and timely actions to minimize or avoid the impact of identified risks and their potential negative effects. Inflation Risk The inflation risk is associated with the possibility that inflation may adversely impact real returns on investments. Inflation may affect the expenses of the Company, as a large part of the Company's liabilities are interest bearing. Their servicing depends on the prevailing current interest rates, which reflect the levels of inflation in the country. Therefore, maintaining low inflation rates in the countries of operation, is seen as a significant factor in the Company. Currency Risk This risk is related to the possibility of a devaluation of the local currency. In the case of Bulgaria this is the risk of a premature collapse of the Monetary Board as the national currency has a fixed exchange rate. The official policy of the government and the Central Bank is expected to maintain the currency board in the country until the country s adoption to the euro area. In Romania, Serbia and Macedonia the exchange rates are determined by free market forces and the rare interventions by the central banks are driven primarily by sharp market movements in the FX rates, caused by one-time extrinsic factors. Any significant devaluation of the national currencies in the region (Bulgaria, Romania, Macedonia and Serbia) could have a significant 21

adverse effect on the businesses in the country, including the Company. Risks exist when the revenues and expenses of a firm are denominated in different currencies. Interest Rate Risk The interest rate risk is related to the possibility of changes in the prevailing interest rates in a country. Its impact is most obvious when the net income of a company decreases, as a result of an increase in the underlying interest rates, should the company fund itself with leverage. Interest rate risk is a general macro-economic risk, as it is most likely driven by the instability and perceived risk in the overall financial system. This risk is best managed by a balanced use of multiple sources of funding. A typical example of this risk is the ongoing global economic crisis, caused by the liquidity issues of the large mortgage lenders and financial institutions in the U.S. and Europe. As a result of the crisis, the required interest rate premia were re-evaluated and, eventually, increased globally. The effect of the crisis on the Balkans is very tangible and has hampered the free access to leverage. Increases in the general interest rate levels, ceteris paribus, would impact the cost of leverage used by the Company in executing different business projects. At the same time, such changes could adversely impact the expenses of the Company, as a large portion of its financial liabilities are interest bearing and have a floating interest rate component. The activities of the Company s subsidiaries are adversely affected by the continued increase in the market prices of fuel and electricity that are subject to international supply and demand and are determined by factors beyond the Company s control. The biggest business risk is concentrated in the largest business segment of the Company the insurance business. The subsidiaries operating in Bulgaria, Romania and Macedonia bring a very significant portion of EuroIns Group s overall revenues and, ultimately, in the financial results of the insurance segment. The major risk in the leasing business stems from the needs of the regional leasing subsidiaries to raise sufficient leverage at favorable interest rates, so that they can grow their leasing portfolios The leading leasing subsidiary is EuroLease Auto which is the Bulgarian based company. As such it has issued several tranches of public bonds traded on the Bulgarian Stock Exchange (BSE). Interested investors can find more detailed information about the risks in the sector from the company s prospectus. Euro-Finance AD consolidates the Company s activities in the financial sector. The risks associated with financial intermediation, brokerage and asset management relate to the high volatility of the debt and equity markets, as well as the changes in the nation s investment awareness and preferences. Unsystematic Risks Risks, Pertaining to the Business Operations and the Structure of the Company EuroHold Bulgaria AD is а holding company, hence any deterioration in the operating results, financial position and growth prospects of its subsidiaries may adversely affect the financial condition of the Company. As far as the Company s business is concerned, since it manages the assets of other companies, the Company cannot be specifically classified to one particular industry segment. Broadly, the Company s activities are focused in two industry segments (1) non-banking financial services (leasing, insurance, asset management, brokerage and financial intermediation) and (2) new car sales and services. The main risk facing EuroHold Bulgaria AD is the possibility of decreasing revenues across business segments. This could possibly impact the dividends received. Correspondingly, this could have a negative effect on the Company s revenue growth and, respectively, the return on equity. The automotive subsidiary Avto Union AD which operates only in Bulgaria is active in the new car sales, rent-a-car services and also provides aftersales services to customers. The lisence to sell certain brands on the local market is granted by the respective OEMs. Should such licenses and agreements be revoked, sales could decrease drastically. This is particularly important, given the ongoing global restructuring and repositioning of car brands and manufacturers. The business environment in the automotive industry could be dramatically impacted by purely internal forces, related to the nation s general purchasing power, access to lease-financing, general business sentiment, inventory levels, etc. Deterioration in the 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 Group as a whole. 22

Strategic Development risks The future earnings and market value of the Company depend on the strategy, chosen by the senior management of the Company and its subsidiaries. Choosing the wrong strategy could lead to significant losses. EuroHold seeks to manage the risk of strategic errors by continuously monitoring 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 in the strategic development plan is needed. 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 decisions regarding investments and liquidity management by either top management or other senior employees; Inability to launch and execute new projects under development, or lack of a competent management team for those projects Possible information system errors; Possible failures in the internal control system; Departure of key employees and inability to retain and hire qualified personnel; Possible sharp increase in SG&A expenses, leading to a decrease in the Company s profitability levels. Financial Risk The financial risk is the additional level of risk and uncertainty that an investor is willing to accept, when the Company is taking on financial indebtedness, i.e. leverage. This level of financial uncertainty adds an extra layer to the business risk. When part of the capital, which a company uses to finance its activities, has been borrowed, the company has taken on predictable and/or fixed financial obligations for periodic payments. The larger the proportion of long-term debt to equity, the greater will be the probability of default on the payments of future financial obligations. An increase in this proportion (leverage ratio) implies an increase in overall financial risk. Another group of indicators is related to the flow of revenues which enable the payment of the company s obligations. Another indicator 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 current interest components of debt due. This ratio is a good indicator of a firm s ability to service its financial liabilities. An acceptable or 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 on higher levels of financial risk and vice versa. Currency Risk EuroHold operates in several Balkan countries (Bulgaria, Romania, Macedonia and Serbia), whereby the national currency of each of the countries, except that of Bulgaria, is a freely convertible currency, whose value relative to other currencies is determined by free markets forces. In Bulgaria, since 1996 the local currency has been pegged to the Euro. Abrupt changes in the macroframework of any of the countries, where the Company actively operates, may have a negative effect on its consolidated results. Ultimately, however, EuroHold reports its consolidated financial results in Bulgaria in Bulgarian lev (BGN), which in turn is pegged to the Euro, which also changes its value against other global currencies, but is significantly less exposed to any dramatic price fluctuations. Liquidity Risk The liquidity risk is linked to the ability of the Company to service its maturing financial liabilities fully and on time. Low financial indebtedness and stable capitalization alone do not guarantee uninterrupted debt servicing capacity. Liquidity risks can also arise from a substantial delay in customer payment of amounts due. EuroHold aims to manage this risk through an optimal cash flow management flows on a consolidated basis. The Group seeks adequate liquidity levels in order to meet liabilities due, both under normal and unexpected market conditions, in a way that minimizes any bearing of extra costs or losses, and that takes away the reputation risk from the non-payment of obligations due. All subsidiaries exercise proper financial planning and forecasting, taking into account amounts due within the next 90 days, including the servicing of financial liabilities. This detailed planning minimizes or even completely eliminates the effects of unexpected events. The Company s senior management endorses the use of financial leverage by its subsidiaries to the extent that it is used for new business development 23

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 the needs of the specific business segment and the economic effect of such leverage. The general policy of the management is to raise capital in the form of debt and equity financing on a centralized basis, and then distribute it to the respective subsidiaries, either in the form of equity or debt. Risk related to the possible transactions between companies within the Group under terms different from the market terms, as well as related to the dependence on the Group activity The relations with related parties arise from contracts for temporary financial aid to the subsidiary companies and stem from transactions, related to the normal business activity of the subsidiary companies. The risk with possible transactions among the companies within the Group under terms that are different from the market terms may lead to low profitability from the provided inter-group financing. Another risk from inter-group transactions is failing to realize enough revenues and therefore adequate profit for the respective company. On a consolidated level, this can affect negatively the profitability of the entire Group. There are constant transactions between the parent Company and its subsidiaries, as well as among the subsidiaries themselves, which arise in the normal course of activity of the companies. All transactions with related parties are conducted under terms that are no different from the normal market prices and are in compliance with IAS 24. Eurohold Bulgaria AD operates through its subsidiary companies which means that its financial results are directly dependant on the financial results, the developments and the perspectives of the subsidiaries. One of the main objectives of Eurohold Bulgaria AD is to realize significant synergies between its subsidiary companies as a result of the integration of the three business lines insurance, leasing and car sales. Bad results of one or several subsidiary companies could lead to a deterioration of the consolidated financial results. This, in turn, affects the Company s share price which can change as a result of the expectations of the investors about the perspectives of the company. Risk Management The elements of risk management consist of specific procedures for the prevention and solution of any problems in the operations of EuroHold Bulgaria AD in a timely manner. These include current analysis in the following directions: market share, pricing policy and marketing research on the development of the market and market share; active management of investments in different industry sectors; a comprehensive policy regarding the management of the Company s assets and liabilities, which aims to optimize the structure, quality and return on assets; optimization of the structure of raised funds aiming to ensure liquidity and a decrease in the financial expenses of the Group; effective management of cash flows; optimization of administrative expenses, as well as those for management and external services; human resource management. In the case of any unexpected events, an incorrect forecast of current market trends, as well as of many other micro- and macroeconomic factors, could impact the judgment of management. The only way to overcome this risk is to work with experienced professionals, as well as to maintain and update a comprehensive database on recent developments and trends in all markets of operation. The Group has implemented an integrated a risk management system based on the Enterprise Risk Management model. The risk management process covers all the Group s business segments and is aimed at identifying, analyzing and limiting risks in all areas of the Group s operations. In particular, the Group minimizes insurance risk by properly selecting and actively monitoring the insurance portfolio, matching the duration of assets and liabilities, as well as minimizing FX exposure. An effective risk management system allows the Group to maintain stability and a strong financial position, despite the ongoing crisis on the global financial markets. The risk management procedures aim to: идентифицира потенциални събития, които могат да повлияят на функционирането на Групата и постигането на определени оперативни цели; контролира значимостта на риска до степен, която е счетена за допустима в Групата; постигне финансовите цели на Групата при възможно по-малка степен на риск. 24

identify events that could impact the Group s operations and the achievement of certain goals; 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 achieved and, in the cases when possible, this is done within a lower than expected risk level. V. INFORMATION ABOUT THE MANAGEMENT BODIES The Supervisory Board and the Management Board of EuroHold Bulgaria AD each serve five year terms, while the members of the first Supervisory Board are elected for a three year term. If the contracts of the members of the Management Board and the Supervisory Board are not expressly terminated before their term is over, the latter shall be automatically renewed for a new five-year term. The members of the Management Board and the Supervisory Board have been appointed under management or supervisory contracts. Current contracts of the members of the Management Board and the Supervisory Board are in effect until the termination of the duties of the respective member. As of the date of this report, the Company has an Audit Committee in place. The Audit Committee of EuroHold Bulgaria AD was elected by the General Meeting of the Shareholders of the Company on 26. 05. 2009. The members, Dimitar Stoyanov Dimitrov, Ivan Georgiev Munkov and Milena Vassilieva Avramova, serve a term of 3 years. VІ. CURRENT TRENDS AND POSSIBLE FUTURE DEVELOPMENTS OF THE COMPANY TRENDS IN THE ACTIVITY OF THE COMPANY After the realization of its strategy for the sale of non-strategic assets in 2011, EuroHold Bulgaria AD has entirely focused on its main business lines. In the last two years, EuroHold Bulgaria has concentrated its main activities around the following five business lines: Sales of cars Leasing Insurance Financial intermediary Real estate There are no compensations or benefits that management members of EuroHold Bulgaria AD would receive should their contracts be terminated earlier. Supervisory Board Date of contract for management /supervision Valid until Assen Christov 27.11.2006 Until termination Dimitar Dimitrov 27.11.2006 Until termination Ivan Munkov 27.11.2006 Until termination Nikolay Vassilev* 01.07.2011 Until termination Management Board Kiril Boshov 27.11.2006 Until termination Assen Minchev 27.11.2006 Until termination Zlatolina Mukova* 01.07.2011 Until termination Assen Assenov 31.08.2009 Until termination Expat Capital AD* 01.07.2011 Until termination *At the regular session of the General Meeting of the Company, held on 30.06. 2011, the following changes in the composition of the Management Board and the Supervisory Board were adopted: Iva Garvanska and Borislav Feschiev were replaced as members of the Management Board by Zlatolina Mukova and Expat Capital AD, through its representatives Nikolay Yankov and Lubomir Stoev. Nikolay Vassilev was elected member of the Supervisory Board. Insurance According to preliminary data about the insurance market, the total premium income for 2011, divided by countries is as follows: Bulgaria 696.7 million euro, Romania 1,855.7 million euro and Macedonia 102.5 million euro. The premium income of the health assurance market in Bulgaria is 20.6 million euro. A decrease in the general insurance market can be observed in 2011 compared to 2010 1.1 per cent in Bulgaria, 5.3 per cent in Romania and 4.3 per cent in the health assurance in Bulgaria. There is a slight increase of 2.9 per cent in the general insurance market in Macedonia. The market share of the subsidiaries of EuroIns Insurance Group increases from 5.0 per cent to 5.6 per cent in Euroins Bulgaria, from 5.9 per cent to 8.1 per cent in Euroins Health Assurance, from 7.1 per cent to 7.2 per cent in Euroins Macedonia, and a slight decrease from 4.5 per cent to 3.8 per cent in Euroins Romania. In 2012 it is expected that the general and health insurance markets of the three countries will expand by 10 per cent on average, as a combined result of an increased MTPL insurance fees and an increase in the volume of sales of other types of insurance, which in turn has resulted from an 25

improvement in the economic activity in the region. According to the predictions for EuroIns Insurance Group for 2012, its subsidiaries will retain their market shares in the general insurance business and will increase their share in the health insurance market. Car Sales As of the end of 2010 and the first half of 2011 the new car market grew moderately, which is a sign of a gradual revival. As of the date of this report, there is a modest decrease in the market for new cars in the country. In 2011, the tendency for a growth of the market will be sustained as a whole except for the first half of 2012 when a slight drop of about 5 per cent is expected as a result of the expected regulatory changes in the VAT Law on the right for a deduction for vehicles and on the limit of the export of vehicles (reexport). For the second half of 2012 the expectations are for a stable growth of about 8-10 per cent over the next 3 years. old and more than 20 per cent are above 20 years old. Thus, there is huge room for a renewal of the car park. Leasing Due to the global financial crisis most of the leasing companies in Bulgaria witnessed a drop in their volume of business and in their leasing receivables. This was a result of the limited lending by the banks. The leasing business is financed mainly by bank loans and bonds. The stagnation in the credit markets in 2009 and 2010 made it harder to raise new funding for companies that are not connected to a bank. However, the leasing sub-holding succeeded in this difficult environment not only to maintain, but to significantly increase its market share after signing a loan agreement with EBRD and several local banks across all three markets of operation. Based on data provided by BNB, in 2010 EuroLease Auto was among the three largest leasing companies for cars and had 10% market share in the newly generated leasing business. Avto Union expects that its market share will increase as a result of: Excellent opportunities for the development of the existing client base of individual and corporate clients; Increase in the number of corporate clients; The expected regulatory changes limiting re-exports. They will automatically affect the market share of the Group, since dealers of Avto Union work on the Bulgarian market (the cars sold by the Group are registered in Bulgaria). The expectations for the future developments of the car market in Bulgaria have been based on the projections for a recovery of the local economy with the first signs for the improvement already present. This will be followed by a recovery across all business sectors in the next years, which will inevitably lead to more fleet deals and a recovery of the sales to corporate clients. In addition, the recovery in the economic conditions and the improvement of the business environment in Bulgaria will lead to a higher employment rate and higher disposable income. Moreover, financing will become readily available, which will further stimulate sales. Another important factor that will contribute to the growth of the new car market in Bulgaria is the currently very old and inefficient national car park. More than 85 per cent of the cars are over 10 years The financing that EuroLease Auto managed to secure in 2010 continued in 2011 as well. Due to the developed dealership network and the active receivables management, the company maintained low delinquency rates and limited repossessions of cars compared to the rest of the market players. 2011 brought a moderate revival of the local credit markets. Most of the leasing companies connected to banks started to operate actively by offering more attractive terms. Some of the banks resumed their lending to external independent leasing companies. There are signs of a revival of the leasing market, resulting in stable monthly volumes of new deals especially in Bulgaria, a decrease in the share of bad leasing contracts and an accelerated sale of repossessed assets. Most of the leasing companies owned by banks and operating on the three markets started conducting active marketing campaigns, which included significant reductions in interest rates and down-payments. Due to the relatively more expensive cost of funding for ELG compared to the bank-owned leasing companies, ELG and its subsidiaries could not participate actively in the price war; however they have been actively focusing their efforts on improving the quality of the services provided to clients. The positioning of the leasing sub-holding of EuroHold as a company with sufficient capital and high market share is extremely important at the beginning of the upcoming economic revival. The improved leasing financing will affect positively car sales as well as the insurance business. 26

Asset management and brokerage Over the last few years capital markets have been directly influenced by the financial crisis of 2008 which brought a large drop in securities valuations and led to a decrease in the risk appetite of many investors. The beginning of 2011 brought a gradual stabilization in the market situation coupled with a gradual increase in trading volumes. Still, the market volatility remains significant. Euro-Finance AD expects a gradual increase in trading volumes as a result of the development of its inhouse proprietary Internet platform EFOCS and the inclusion of all securities registered for trading on the Frankfurt Stock Exchange, as well as the newly implemented platform for online trading Meta Trader 5. The technical reserves of the companies in the insurance sub-holding, which are managed by Euro-Finance, are expected to increase as well. Euro-Finance envisions its development toward the standards typical for investment banks, known across developed markets, by serving both individual and institutional clients. The infrastructure of the company its membership on the BSE, CD and FSE, participation in SWIFT and ESROT as well as the extremely wide network of correspondent banks and clearing institutions - enables it to offer modern investment services. Real estate The global financial crisis of 2008 impacted significantly the real estate market all over the world which resulted in a drop in the overall demand and a decrease in rental prices. In 2011 the real estate market in Europe started to gradually revive from the crisis, with housing recovery leading the way, partially followed by offices and industrial properties. This trend is valid for Bulgaria as well. There is a slight increase in the demand and supply of offices in the larger Bulgarian cities, resulting in a further decline in rental levels. The supply of new office space in Sofia continues to rise which means that the utilization of modern office space will take a few years. Main Goals The main activity of Eurohold Bulgaria AD is dictated by its main goals, and namely: To satisfy the needs of its customers by means of offering innovative and competitive products and services; To increase the amount of sales in combination with high profitability; To ensure the required conditions for a continuous improvement in the synergies between its subsidiaries; To expand the markets of operation and to increase the market shares of each of its subsidiaries; To recruit highly qualified management and employees; To provide better opportunities for professional development and growth for each employee within the Group. Mid-Term Goals and Strategies The mid-term goals set by Eurohold Bulgaria AD management are focused on the three subholdings insurance, leasing and automotive, as well as on the management of the Group s cash through the investment intermediary Euro-Finance AD. After the formation of the three subholdings, the efforts have been directed towards the strengthening of the companies market positions and development of the existing business. The main strategic goals are: Stable increase in market shares across all sectors and markets the Group operates in; Continued expansion strategy in the region; Achievement of a loyal and diversified client base. For the purposes of implementation of the strategic goals, the Company has developed up-to-date goals and development policies. Those are focused primarily on the improvement of the Group s integration, profitability and financial position: EuroHold Imoti has been only moderately affected by the negative trends in the real estate sector. Tenants of the Company are the subsidiaries of EuroHold Group that currently fill the capacity of the rented office areas and showrooms. Real consolidation of the companies at subholding structure level under a common management. Establishment of common positions on subholding level relevant to the establishment of agreements for better delivery conditions, advertising and participation in public procurements, which significantly affects the reduction of costs pertaining to these activities; 27

Realization of synergies from the centralization and optimization of operations, marketing and all other business processes in the structure of the Group; Cost optimization in maintaining stock; Fixed costs optimization; Optimization of inventory level, etc.; Consolidation of all sources of funding for the purposes of minimizing the administration costs; Opening of new locations showrooms and car repairs stations; Optimization of the staff and equipment in the car repairs activity; Introduction of better guarantee conditions for sold cars; Ensuring funding for the leasing subholding; Introduction of a system for additional incentives for the insurance agents of the insurance Company Euroins AD who should forward customers to the automobile dealers and leasing companies; Change in the insurance portfolio directed towards a reduction in the automobile insurance share and a decrease in acquisition costs; Achievement of a stable market share by the insurance companies across all markets; Continued conservative policy by the insurance companies in relation to the maintained investment portfolio; Development and realization of new competitive products under the main business lines insurance, cars and leasing. VІІ. RESEARCH AND DEVELOPMENT As a holding structure, Eurohold Bulgaria AD does not carry out independent research and development operations. VІІІ. ENVIRONMENT PROTECTION As a holding company, Eurohold Bulgaria AD does not carry out independent sales and manufacturing activities. In this respect, the efforts are directed to the subsidiaries impact on the environment in performing their day-to-day operations. IX. INFORMATION REQUIRED BY THE COMMERCE ACT 1. Number of and nominal value of the acquired and transferred during the year own shares, the share capital they represent, and the price of the acquisition or transfer In 2011 the Company has not bought or transferred any of its own shares, therefore at the end of the period the Company is not in possession of its own shares. 2. Number of and nominal value of the shares owned and the share capital they represent The Company is not in possession of its own shares. 3. Information about the remuneration that each of the members of the Management Board and the Supervisory Board has received from EuroHold Bulgaria AD and its subsidiaries during the reporting year In 2011 the members of the Management and Supervisory Board have received the following remunerations by EuroHold Bulgaria AD and its subsidiaries, as follows: From EuroHold Bulgaria AD From subsidiary companies TOTAL Supervisory Board 38,640 185,314 223,954 Assen Christov 14,640 141,000 155,640 Dimitar Dimitrov 7,200 43,975 51,175 Ivan Munkov 10,800-10,800 Nikolay Vassilev * 6,000-6,000 Management Board 84,000 239,065 323,065 Kiril Boshov 24,000 76,200 100,200 Assen Minchev 24,000 33,600 57,600 Expat Capital AD * - - - Zlatolina Mukova * 1,440 64,933 66,373 Iva Garvanska * 24,000 38,160 62,160 Borislav Feschiev * 24,000 56,740 80,740 Assen Assenov 12,000 98,650 110,650 *At the regular session of the General Meeting of the Company, held on 30.06. 2011, the following changes in the composition of the Management Board and the Supervisory Board were adopted: Iva Garvanska and Borislav Feschiev were replaced as members of the Management Board by Zlatolina Mukova and Expat Capital AD, through its representatives Nikolay Yankov and Lubomir Stoev. Nikolay Vassilev was elected member of the Supervisory Board. The above listed renumeration figures pertain to the period when the members have been on the respective positions. During the reported period the members of the Supervisory and Management Boards have not received any remunerations and/ or compensations in kind. EuroHold Bulgaria AD and its subsidiaries do not make provisions for pension payments, retirement compensations or other similar compensations to the members of the Management Board and the Supervisory Board. The members of the Boards have been appointed under contracts for 28

management/control. Current contracts of the members of the Management and Supervisory Boards are effective until the termination of the duties of the respective member. 4. Company shares owned by members of the Management Board and the Supervisory Board As of 31.12.2011 the members of the Management Board and the Supervisory Board own shares from the registered capital of EuroHold Bulgaria, as follows: Name Supervisory Board Number of shares Assen Christov - Dimitar Dimitrov 200 Ivan Munkov 25,000 Nikolay Vassilev - Management Board Кiril Boshov - Аssen Minchev - Еxpat Capital AD 21,436,026 Аssen Assenov 140,250 Zlatolina Mukova - 21,601,476 There have been no stock options on shares of the Company, issued to the benefit of either a member of the management team, an employee or to third parties. 5. Rights of the members of the Boards to acquire shares and bonds of the Company As at the date of the present document, there are no agreements or other arrangements with the employees of EuroHold Bulgaria AD, regarding their participation in the Company s capital. as Company s bonds, traded on a regulated market of securities, as long as they fully comply with the Law on Measures Against Market Abuse with Financial Instruments and the Law on Public Offering of Securities. No options for the acquisition of shares in the Company have been issued in favor of the members of the Management and Supervisory Boards, employees or third parties. 6. Information about the participation of the members of the Boards in companies as general partners, the ownership of more than 25 per cent of another company s capital, as well as their participation in other companies or cooperatives as procurators, managers or board members. EuroHold Bulgaria AD has a two-tier management system, as follows: a Supervisory Board which consists of four natural persons, and a Management Board of four natural persons and one legal entity. The members of the Supervisory Board are: Assen Milkov Christov, Dimitar Stoyanov Dimitrov, Ivan Georgiev Munkov and Nikolay Vassilev Vassilev. The members of the Management Board consist of four natural persons and one legal entity, as follows: Kiril Ivanov Boshov, Assen Minchev Minchev, Zlatolina Ivanova Mukova, Assen Emanuilov Assenov, Expat Capital AD, through its representatives Nikola Simeonov Yankov and Lubomiv Christov Stoev. There are no family ties among the members of the Management Board and the Supervisory Board. The activity of the company is not dependent on the individual professional experience or qualifications of other employees. The members of the MB and the SB of the company may freely acquire shares from the capital, as well SUPERVISORY BOARD Name Position Business address Assen Milkov Christov Chairman of the Supervisory Board 43 Christopher Columbus Blvd., Sofia Details of performed activity besides the company, which is substantial to the company Avto Union AD Chairman of the Board of directors; Autoplaza EAD Member of the Board of directors; Euroins Insurance S.A. Macedonia Chairman of the Board of directors; Euroins Romania Asigurare Reasigurare S.A. Member of the Board of directors; Euro-Finance AD Chairman of the Board of directors; Scandinavia Motors AD Chairman of the Board of directors; 29

Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years Smartnet EAD Chairman of the Board of directors; Starcom Holding AD Executive member of the Board of directors. Present: Alfa Euroactive EOOD Sole shareholder and Manager; Balkan International Basketball League OOD Manager and shareholder with 50 % participation; Basketball Club Cherno More EAD Chairman of the Board of directors; Bulstar Investment AD Chairman of the Board of directors; Corporate Advisors EOOD Sole shareholder and Manager; Starcom Hold AD Executive member of the Board of directors; Formoplast 98 AD Chairman of the Board of directors. Terminated: Avto Union Group AD Chairman of the Board of directors up to 12. 10. 2011, whereas the person is not Chairman of the Board of directors as of 31. 12. 2011; Geoenergyproject AD Chairman of the Board of directors up to 30.09.2010, whereas the person is not Chairman of the Board of directors as of 31. 12. 2011; Euro Power AD (currently Power Logistics EAD) Chairman of the Board of directors up to 16.02.2011, whereas the person is not Chairman of the Board of directors as of 31. 12. 2011; Eurotest Control EAD Chairman of the Board of directors up to 21. 12. 2010, whereas the person is not Chairman of the Board of directors as of 31. 12. 2011; Etropal AD Chairman of the Board of directors up to 14.09.2010, whereas the person is not Chairman of the Board of directors as of 31. 12. 2011; Plasthim T AD member of the Board of directors up to 23.07.2010, whereas the person is not member of the Board of directors as of 31. 12. 2011; Profonika EOOD Sole shareholder and Manager up to 17.05.2010, whereas the person is not Sole shareholder and Manager as of 31. 12. 2011; Formoplast AD Executive member of the Board of directors up to 12. 02. 2011, whereas the person is not Executive member of the Board of directors as of 31. 12. 2011. Details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years Vitosha Investment Company EOOD (in liquidation procedure following Sofia City Court resolution, Commercial Section, Companies Department, civil case 52/ 2009 based on claim on grounds of Art. 29 of the Trade Register Act) registered as sole shareholder. As of 31. 12. 2011 there are no additional details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years. Relevant experience professional Assen Christov has Master degree in Physics from Sofia University St. Climent of Ochrida, perform specialization in Nuclear Researches Institute in Dubno, Russia. Has specialized management at Open University London. He is fluent in English and Russian language. Assen Christov has occupied the above mentioned position during different periods during last 5 years. He was Chairman of the Board of directors of Eurobank AD as of 1997 to 2000 and he performed different representative functions, he was chairman of the Supervisory board of IC Euroins AD from 2000 to 2007, Chairman of the Board of directors of Scandinavia Motors authorized dealer of SAAB for Bulgaria as of 2005 г. and today, as well as chairman of the Board of directors of investment intermediary Euro-finance AD. Details for any official public incriminations and/ or administrative sanctions During previous 5 years the person has not been subject of any official public incrimination and/ or administrative sanctions with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. Name Position Business address Dimitar Stoyanov Dimitrov Vice chairman of the Supervisory Board 43 Christopher Columbus Blvd., Sofia Details of performed activity besides the company, which is IC EUROINS AD - procurator 30

substantial to the company Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years Present: Eurologistic Technologies EOOD Manager; Zeleni EOOD Sole shareholder and Manager; Cable Network AD Executive director; Creative Software Solutions EOOD Sole shareholder and Manager; Pofinika EOOD Manager; Smartnet EAD Executive member of the Board of directors; Stardom Hold AD Member of the Board of directors. Terminated: Euro Power AD (currently Power Logistics EAD) Executive director up to 16.02.2011, whereas the person is not Executive director as of 31. 12. 2011; Eurohotels AD Member of the Board of directors up to 14. 09. 2010, whereas the person is not member of the Board of directors as of 31. 12. 2011; Iztok Plaza EAD Executive director up to 27. 12. 2010, whereas the person is not Executive director as of 31. 12. 2011; Starcom Holding AD (universal assignee of Eurohold Bulgaria AD) member of the Board of directors up to 12. 12. 2006, whereas the person is not member of the Board of directors as of 31. 12. 2011; Starcom Holding AD (with previous trade name Bulgarian Holding Corporation AD) Executive director up to 01.08.2007, whereas the person is not Executive director as of 31. 12. 2011. Details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years Far Consult OOD (in liquidation procedure) Manager, the term of the liquidation procedure is 30. 03. 2010. The way the term has been set is one year as of the day of registration of termination of the company as per Resolution dated 29.12.2008 г. enacted on civil case 03/2008 of Sofia City Court. There are no unsatisfied creditors. As of 31. 12. 2011 there are no additional details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years. Relevant experience professional Dimitar Dimitrov has Master Degree in Electronics and Automatics from Technical University Sofia. From 1998 to 2006 he was executive director of the holding company Starcom Holding AD. As of 2005 is procurator of IC Euroins AD and for the period 1998 2005 he was director Informatics servicing, statistics and analysis in the same company. Details for any official public incriminations and/ or administrative sanctions During previous 5 years the person has not been subject of any official public incrimination and/ or administrative sanctions with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. Name Position Business address Nikolay Vassilev Vassilev Independent member of the Supervisory Board 96A Georgi S. Rakovski Str., Sofia Details of performed activity besides the company, which is substantial to the company Expat Capital AD Executive member of the Board of directors. Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years Present: Expat Asset Management EAD Executive member of the Board of directors; Expat Alfa AD Executive member of the Board of directors; Expat Group EOOD Sole shareholder and Manager. Terminated: As of 31. 12. 2011 there are no details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years. Details of any insolvency, bankruptcy, receivership or liquidation related to the As of 31. 12. 2011 there are no details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the 31

person as member of management or supervisory bodies for the previous five years previous five years. Relevant experience professional Nikolay Vassilev was member of two governments of Republic of Bulgaria and occupies consecutively the positions vice- prime minister and minister of economy (2001-2003), viceprime minister and minister of transportation and communications (2003-2005) and minister of public administration and administrative reform (2005-2009). Before this Nikolay Vassilev was senior vice-president at Lazard Capital Markets London (2000-2001 г.), as well as associated director of UBS (UBS Warburg Dillon Read) at company s offices in Tokyo, New York and London (1996-2000 г.), where he works in the field of stock and emerging markets. Mr. Vassilev was tax consultant in Coopers & Lybrand Budapest, Hungry (1993-1994 г.). Nikolay Vassilev has Master degree of international economy and finances from the Brandeis University (USA) and Keio University (Tokyo, Japan) in 1997, as well as Bachelor degree from the New York University (USA) and Budapest University of Economic Science and Public Administration (Hungry). From 1999 he has CFA degree (certified financial analyst) and currently is member of the Management Board of Bulgarian CFA association. He is fluent in English, Hungarian and Russian and speaks French, German and Japanese languages. Details for any official public incriminations and/ or administrative sanctions During previous 5 years the person has not been subject of any official public incrimination and/ or administrative sanctions with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. Name Position Business address Details of performed activity besides the company, which is substantial to the company Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years Details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years Ivan Georgiev Munkov Independent member of the Supervisory Board 43 Christopher Columbus Blvd, Sofia As of 31. 12. 2011 there are no details of performed activity besides the company, which is substantial to the company. Present: Bulglas OOD - Manager; Terminated: As of 31. 12. 2011 there are no details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years. As of 31. 12. 2011 there are no details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years. Relevant experience professional Ivan Munkov has Master degree in Law from Sofia University St. Climent of Ochrida. Ivan Munkov was legal advisor of bank Biochim AD (currently HVB Bank Biochim AD), as well as in Encouragement Bank AD (currently Bulgarian Development Bank AD). He was senior legal advisor, head of department Legal service of credit deals in Eurobank AD, head of legal department and department Business liabilities in IC Euroins AD. Details for any official public incriminations and/ or administrative sanctions During previous 5 years the person has not been subject of any official public incrimination and/ or administrative sanctions with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. MANAGEMENT BOARD Name Position Kiril Ivanov Boshov Chairman of the Management Board and legal representative 32

Business address 43 Christopher Columbus Blvd., Sofia Details of performed activity besides the company, which is substantial to the company Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years Avto Union AD Vice- chairman of the Board of directors; Autoplaza EAD Vice- chairman of the Board of directors; Euroins Insurance Group AD Chairman of the Board of directors; Euroins Health Assurance EAD Chairman of the Board of directors; Euroins Romania Asigurare Reasigurare S.A. Chairman of the Board of directors; Euroins Insurance SA, Macedonia member of the Board of directors; Eurolease Auto IFN S.A. Romania member of the Board of directors; Euromobile Leasing AD Vice- chairman of the Board of directors; Euro-Finance AD Vice- chairman of the Board of directors; Scandinavia Motors AD Vice- chairman of the Board of directors; Starcom Holding AD Chairman of the Board of directors. Present: Alcommerce EOOD Sole shareholder and Manager; Euroauto OOD Manager; Capital 3000 AD Chairman of the Board of directors; Starcom Hold AD Chairman of the Board of directors. Terminated: Geoenergyproject AD Vice- chairman of the Board of directors up to 30.09.2010, whereas as of 31. 12. 2011 the person is not Vice chairman of the Board of dorectors; Eurolease Asset EAD Vice- chairman of the Board of directors up to 19.10.2010, whereas as of 31. 12. 2011 the person is not Vice chairman of the Board of directors; Eurolease Auto EAD member of the Board of directors up to 04. 07. 2011, whereas as of 31. 12. 2011 the person is not member of the Board of directors; Eurolease Auto EAD, Skopje member of the Board of directors up to 12.08.2010 whereas as of 31. 12. 2011 the person is not member of the Board of directors; Euroforum OOD Manager up to 20.04.2007, whereas as of 31. 12. 2011 the person is not a Manager; Eurohotels AD Chairman of the Board of directors; up to 14. 09. 2010, whereas as of 31. 12. 2011 the person is not a Chairman of the Board of directors; IC Euroins AD General executive director up to 10.08. 2008, whereas as of 31. 12. 2011 the person is not General executive director; Details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years Iztok Plaza EAD Chairman of the Board of directors up to 27.12.2010 whereas as of 31. 12. 2011 the person is not a Chairman of the board pf directors; Coral Music EOOD Manager up to 20.10.2008, whereas as of 31. 12. 2011 the person is not a manager; Nissan Sofia OOD Manager up to 11.06.2009, whereas as of 31. 12. 2011 the person is not a manager; Nissan Sofia AD Chairman of the Board of directors up to 17. 10. 2011, whereas as of 31. 12. 2011 the person is not a Chairman of the Board of directors; Smartnet EAD Vice- chairman of the Board of directors up to 30.11.2010, whereas as of 31. 12. 2011 the person is not a Vice- chairman of the Board of directors. Coral Consult EOOD was in liquidation procedure, but currently continues its business activity on grounds of Art. 274 of the CA under the trade name of Coral Music EOOD. As of 31. 12. 2011 there are no additional details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years. Relevant experience professional Kiril Boshov has a Master degree in Accountancy and Control from the University of National and World Economy. He is fluent in English and Russian language. From 1995 to 1997 Kiril Boshov was chief accountant of Mobicom first mobile operator in Bulgaria, joint venture between Bulgarian Telecommunication Company and Cable and 33

Wireless, United Kingdom. In his capacity of Vice chairman and procurator he took an active participation in restructuring the assets of Eurobank AD, he represented the company before third parties and directly managed its active operations crediting and capital markets. Kiril Boshov was Chairman of the Management Board of IC Euroins AD as of 2000 until 2008, whereas in 2006 the Investors Association in Bulgaria rewarded IC Euroins AD with the price Company with best corporate management. In his capacity of Chairman of the board of director of Eurolease Auto AD he manages the process of securing financing of Eurolease Auto AD, as well as overall management of the process of execution of the International capital markets financing agreement between Eurolease Auto AD and Deutsche Bank AG branch London for the amount of 200 MM euro. Details for any official public incriminations and/ or administrative sanctions During previous 5 years the person has not been subject of any official public incrimination and/ or administrative sanctions with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. Name Position Business address Assen Minchev Minchev Executive member of the Management Board 43 Christopher Columbus Blvd., Sofia Details of performed activity besides the company, which is substantial to the company Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years Scandinavia motors AD Executive member of the Board of directors. Present: Bulstar Investment AD Vice chairman of the Board of directors; Capital 3000 AD Executive member of the Board of directors; Cable Network AD Chairman of the Board of directors. Terminated: Eurohold AD Executive director up to 12.12.2006, whereas as of 31. 12. 2011 the person is not an Executive director; Eurohotels AD Executive director up to 14.09.2010, whereas as of 31. 12. 2011 the person is not an Executive director; IC Euroins AD Representative, on grounds of Art. 234, paragraph 3 of CA, of board member legal entity up to 29.06.2005, whereas as of 31. 12. 2011 the person is not a representative, on grounds of Art. 234, paragraph 3 of CA, of board member legal entity; IC Euroins AD Member of the Management Board up to 16. 07. 2007, whereas as of 31. 12. 2011 the person is not a member of the Management Board; Iztok Plaza EAD Member of the Management Board up to 27. 12. 2010, whereas as of 31. 12. 2011 the person is not a member of the Management Board; Forum Plus EOOD Manager up to 07.01.2009, whereas as of 31. 12. 2011 the person is not a manager; Nissan Sofia Consult AD Executive director up to 02.09.2008, whereas as of 31. 12. 2011 the person is not an executive director. Details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years As of 31. 12. 2011 there are no details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years. Relevant experience professional Assen Minchev has a Master Degree in Accountancy and Control from the University of National and World Economy. Assen Minchev was Executive director of the holding company Eurohold AD for the period 1998 2006 until its merger with Starcom Holding AD. From 1996 until 2000 he is member of the Management Board of IC Euroins AD, he was representative of the vice chairman of the Board of directors of Euroins Health Assurance AD. Assen Minchev was a chairman of the Board of directors of Nissan Sofia Consult AD, authorized dealer of Renault and Nissan, and currently he is member of the Board of directors of Scandinavia motors EAD, authorized dealer of SAAB for Bulgaria. Details for any official public incriminations and/ or During previous 5 years the person has not been subject of any official public incrimination with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity 34

administrative sanctions of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. During previous 5 years the persons was subject to one administrative sanction under Act Р-10-43/06.04.2009 for committed breach under Art. 114, paragraph1 in connection to Art. 114, paragraph 1, item 1, letter b, in connection to Art. 114, paragraph 5 of POSA. Name Position Business address Zlatolina Ivanova Mukova Member of the Management Board 43 Christopher Columbus Blvd., Sofia Details of performed activity besides the company, which is substantial to the company Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years Euroins Insurance Group AD Executive director; IC Euroins AD Chairwoman of the management Board. Present: Niesa AD Member of the Board of directors; Association riding club - Concour Chairwoman of the Management Board; Sofika Group AD independent member of the Board of directors; Terminated: Balkani Consult AD Member of the Board of directors up to 27.07.2007 (based on request as per Art. 233, paragraph 5 of CA), whereas as of 31. 12. 2011 the person is not a member of the Board of directors; United Tales OOD Manager up to 27. 07. 2007 г. (based on request as per Art. 233, paragraph 5 of CA), whereas as of 31. 12. 2011 the person is not a manager; State enterprise Management of the air traffic Chairwoman of the Management Board up to 06. 11. 2006, whereas as of 31. 12. 2011 the person is not a chairwoman of the Management board. Details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years As of 31. 12. 2011 there are no details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years. Relevant experience professional Zlatolina Mukova has over 10-years experience in the field of business administration and financial management. Her carrier includes numerous management positions in public and private sector as executive director, chief financial officer and internal controller of private companies, vice minister of the transportation and communications responsible for the financing, European integration and structural reform, manager in Bulgarian Post Privatization Fund, established by European Bank of Reconstruction and Development. Zlatolina Mukova is graduate of Transportation Faculty of Technical University of Sofia, she has master degree in Economics from the University of National and world Economy, Sofia. She has certified diploma from ACCA (Association of Chartered Certified Accountants), United kingdom. Details for any official public incriminations and/ or administrative sanctions During previous 5 years the person has not been subject of any official public incrimination and/ or administrative sanctions with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. Name Position Business address Assen Emanouilov Assenov Member of the Management Board 43 Christopher Columbus Blvd., Sofia Details of performed activity besides the company, which is substantial to the company Avto Union AD Executive director; Avto Union Properties EOOD Manager; Auto 1 OOD Manager; Auto Italia EAD Executive member of the Board of directors; 35

Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years BG Autolease Group B.V. - Manager; BG Autolease Holding B.V. - Manager; Bulvaria Holding EAD Chairman of the Board of directors; Bulvaria Varna EOOD Manager; Gransport Auto EOOD Manager; Eurolease Asset EAD Chairman of the Board of directors; Eurolease Auto EAD Chairman of the Board of directors; Eurolease Auto IFN S.A. Chairman of the Board of directors; Euromobil Leasing AD Executive member of the Board of directors; Eurotruck EOOD Manager; Cargoexpress Imoti EAD Chairman of the Board of directors; Milano Motors EOOD - Manager; Motobul EOOD Manager; Nissan Sofia AD Chairman of the Board of directors; Sofia Motors EOOD Manager; Star Motors EOOD Manager. Present: Motobul Express EOOD Manager Terminated: Avto Union Center EOOD Manager up to 05.10.2009, whereas as of 31. 12. 2011 the person is not a Manager; Avto Union Group AD Executive member of the Board of directors up to 12. 10. 2011, whereas as of 31. 12. 2011 the person is not an Executive member of the Board of directors; Bulvaria Rent a Car EOOD Manager up to 09. 03.2011, whereas as of 31. 12. 2011 the person is not a manager; Eurolease Auto EAD, Skopje Chairman of the Board of directors up to 12.08.2010, whereas as of 31. 12. 2011 the person is not a Chairman of the Board of directors; Eurolease Rent a Car EOOD Manager up to 09.03.2011, whereas as of 31. 12. 2011 the person is not a manager. Details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years As of 31. 12. 2011 there are no details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years. Relevant experience professional Assen Assenov has Master degree in Accountancy and Control and Bachelor degree of International Trade Relations from the University of National and World Economy, Sofia. Mr. Assenov has Master of Business Administration diploma from the University of Economics Vienna. The professional carrier of Assen Assenov starts in Eurohold AD 11 years ago as accountant. In the period 2002 2004 he is chief accountant of Eurohold AD. At the end of 2001 Mr. Assenov was elected as Executive director of Eurolease Auto AD the leasing company in the structure of Eurohold at that time. Currently Mr. Assenov is responsible for leasing and automotive business of the economic group of Eurohold Bulgaria AD. Mr. Assenov is executive director of Avto Union and leads the leasing companies of the group in Romania and Macedonia in additions he heads the automotive dealers of Nissan, Renault, Dacia, Saab, Opel, Chevrolet, Fiat, Lancia, Alfa Romео, Mazda, Maserati and lubricant products Castrol and BP (Motobul), all part of the holding structure. Details for any official public incriminations and/ or administrative sanctions During previous 5 years the person has not been subject of any official public incrimination and/ or administrative sanctions with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. 36

Name Position Business address Details of performed activity besides the company, which is substantial to the company Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years Expat Capital AD Member of the Management Board 96A Georgi S. Rakovski Str., Sofia As of 31. 12. 2011 there are no details of performed activity besides the company, which is substantial to the company. Present: As of 31. 12. 2011 there are no details of performed activity, which is not substantial to the company. Terminated: Extracta AD (formerly named Torn AD) member of the Board of directors up to 02.12. 2011, whereas as of 31. 12. 2011 the entity is not a member of the Board of directors. Details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years As of 31. 12. 2011 there are no details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years. Relevant experience professional Expat Capital AD is founded in 2006 in city of Sofia. The company offers services in the field of assets management and financial consultation on matters related to financing, initial public offering, capital markets, mergers and acquisitions, investments, investment projects in the field of real estates, industry and services. The Company is a sole owner of licensed management company, which manages 3 contractual funds and many individual portfolios. Expat Capital AD is management company of Expat Beta a PLC with special purpose, which invests in real estates in Bulgaria. Details for any official public incriminations and/ or administrative sanctions During previous 5 years the person has not been subject of any official public incrimination and/ or administrative sanctions with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. Name Position Business address Nicola Simeonov Yankov Representative of Expat Capital AD in the Management Board 96A Georgi S. Rakovski Str., Sofia Details of performed activity besides the company, which is substantial to the company Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years Expat Capital AD Executive member of the Board of directors. Present: Expat Asset Management EAD Executive member of the Board of directors; Expat Alfa AD Executive member of the Board of directors; Dextra realty SA Executive member of the Board of directors; Zonata AD Executive member of the Board of directors; Grenada OODД Manager and shareholder with 50% participation; Symol EAD Executive member of the Board of directors; Mall of Bansko EAD member of the Board of directors. Terminated: Dextra Assets AD company s representative up to 23.01.2011, whereas as of 31. 12. 2011 the person is not company s representative; Zonata Clubs EOOD manager up to 07.07.2011, whereas after this date and as of 31. 12. 2011 the person is liquidator of the company. Bulgarian Rating Agency LLC member of the Board of directors up to 15.06.2009, whereas as of 31. 12. 2011 the person is not a member of the Board of directors. Details of any insolvency, Zonata Clubs EOOD manager up to 07.07.2011, whereas after this date and as of 31. 37

bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years 12. 2011 the person is liquidator of the company. Relevant experience professional Nicola Yankov was vice minister of transportation and communication (2003-2005), and he was responsible for state-controlled companies from section of transportation and communications, as well as for the raising of private investments in infrastructural projects such as airports and ports. At the same time he was chairman of the Board of directors of National company Ports and member of the councils of Economic Policy and of Economic Growth to the Council Ministry. From 2001 to 2003 Nicola Yankov was vice-minister of economy and was in charge for the development and regulation of industrial sector and he presided at the Interim committee for protection of duties and quotas. Nicola Yankov occupied different managerial positions in private companies he was member of the Supervisory Board of Lukoil Neftochim AD, member of the Board of directors of Naftex Bulgaria Holding AD, executive directors of Naftex Petrol AD, financial manager of Solvey Sodi AD and manager Cash operations at Craft Jacobs Suchard Bulgaria AD. Nicola Yankov is Bachelor in Demand-side Economy in Cornell University, USA. He is fluent in English, Russian and French language. Details for any official public incriminations and/ or administrative sanctions During previous 5 years the person has not been subject of any official public incrimination and/ or administrative sanctions with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. Name Position Business address Lyubomir Christov Stoev Representative of Expat Capital AD in the Management Board 96A Georgi S. Rakovski Str., Sofia Details of performed activity besides the company, which is substantial to the company Details of any and all other participations as member of a management/ supervisory body and/ or partner during last 5 years Expat Capital AD Member of the Board of directors; Present: Dar Finance EOOD Manager; Acreda EOOD sole shareholder and manager; AFG Invest GmbH (Vienna) Managing director. Terminated: Bentom Investments EOOD Manager up to 13. 10. 2011, whereas as of 31.12. 2011 the person is not a Manager; Cremplé OOD manager and shareholder with 50% participation, whereas as of 31. 12. 2011 the person is not a manager and a shareholder; Logo Company EOOD sole shareholder of the company up to 08.06.2011; manager of the company until its reorganization into Cremplé OOD as mentioned above; Details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years As of 31. 12. 2011 there are no details of any insolvency, bankruptcy, receivership or liquidation related to the person as member of management or supervisory bodies for the previous five years. Relevant experience professional Currently, Lubomir Stoev is also Managing Partner at AFG Invest GmbH (Vienna). His extensive professional experience also includes working at Vitosha Unternehmensbeteiligungs AG (Vienna) as Executive Director (2005-2007), as well as at a few other companies in Vienna. Mr. Stoev holds a Master of Science degree in Sociology and Economics from the University of Economics and Business Administration in Vienna. He speaks German, English and Russian and has basic knowledge of Serbo-Croatian. Details for any official public incriminations and/ or administrative sanctions During previous 5 years the person has not been subject of any official public incrimination and/ or administrative sanctions with relation to its activity; has no convictions in relation to fraudulent offences; in its capacity of professional has not been involved directly or by related parties in to insolvency/ bankruptcy procedures; has not been disqualified by court from acting as a member of management or supervisory bodies of the company or other companies. 38

7. Contracts, signed in 2011, with the members of the MB and the SB or related parties, which go beyond the usual activity of the company or substantially deviate from market conditions There have been no contracts signed with members of the MB and the SB or related parties, which go beyond the usual activity of the company or substantially deviate from market conditions. 8. Conflicts of Interest The are no conflicts of interest that have arisen from the duties performed by the abovementioned persons and the Company or other private interests There are no agreements among shareholders, clients, suppliers and/or other people, according to which members of the Company s management and supervisory bodies have been elected/ appointed. The guarantees, provided by the members of the management and supervisory bodies, amount to three salaries. No restrictions apply to the members of the management and supervisory bodies regarding the Company s shares they own, as well as the way they dispose with those shares. 9. Planned economic policy during the next year, including expected investments and human resources development, expected investment yieldс, as well as upcoming transactions of great importance for the Company s operations EuroHold Bulgaria AD plans to support the ongoing operations of the three subsidiaries insurance, leasing, automotive. Through the insurance subholding (Euroins Insurance Group AD) in 2012 the Company will support the insurance companies in Bulgaria and Romania by increasing their total capital basis and risk sustainability via capital investments in the two companies. By ensuring high coverage of insurance reserves, the companies will be able to attain a greater part of the net insurance risks, hence, expand their market presence. Eurohold Bulgaria AD considers the leasing business a main driver of the Company s growth. Positioning the leasing subholding as a company with sufficient capital resources and high market share is very important at the beginning of an economic recovery. The leasing business is funded mainly by bank loans and bond issues. The leasing funding support will positively affect the sales of both the automobile and insurance divisions. Furthermore, these funds will support the capital bases of the leasing companies in Macedonia and Romania, which have also ensured funding and operate with increased business volumes. The acquisitions of competitive companies for the purposes of a faster expansion and an increase in market shares are envisioned for these two particular markets. The financing of the automotive subsidiary with working capital is essential for the timely delivery of cars under fleet contracts with large corporate clients. The automobile dealers will be assisted in completing and equipping showrooms and car repair centers. Special emphasis is put on car repair centers as a main source of revenue due to the low margins on sales of new cars in the current market situation. 10. Number of employees During the reporting period EuroHold Bulgaria AD has recruited no employees under permanent or temporary agreements. As of 31.12.2011 EuroHold Bulgaria AD had 9 employees under term-labor agreements. There have been no syndicate organizations of employees in EuroHold Bulgaria AD since its incorporation. Х. COMPANY BRANCHES EuroHold Bulgaria AD does not have any registered branches in the country and abroad. XI. INFORMATION ABOUT THE CORPORATE GOVERNANCE PROGRAM OF EUROHOLD BULGARIA AD Eurohold Bulgaria AD adheres to the recommendations of the Bulgarian National Code for Corporate Governance (2007), which essentially follows the framework of the internationally accepted corporate governance rules provided by the Organization for Economic Cooperation and Development (OECD) in 2004. The Company follows the best practices in the field of corporate governance. Good corporate governance is a set of relationships between the governing body of the company, its shareholders and any interested parties - employees, business partners, creditors of the company, prospective investors and society as a whole. If a certain corporate governance principle is not applied by the company consistently, or is occasionally violated, the company is required to disclose information about that in due time. In addition, the company is required to publish a report on 39

how it complies with the corporate governance rules ("comply or explain") in the respective financial year as an attachment to its annual report. As a result its consistent policy regarding the introduction, improvement and perfection of the corporate governance system in the Company, the Management Board of Eurohold Bulgaria AD has established active procedures to ensure compliance with all principles of the Bulgarian National Code for Corporate Governance. Therefore, after analysing the results achieved in this field, in 2011 the Management Board decided that the company joins the Bulgarian National Code for Corporate Governance. In doing so Eurohold Bulgaria AD declares its willingness to maintain and develop the corporate governance procedures and practices introduced in the last four years. The established management system guarantees the survival and prosperity of the Company by setting a framework for the management bodies to operate in the best interest of the company and in line with the reasonable expectations of its shareholders and all interested parties. Detailed information regarding the corporate policy of EuroHold Bulgaria and the procedures about its implementation is set out in the Program for Corporate Governance. REPORT ON THE COMPLIANCE WITH THE REQUIREMENTS OF THE BULGARIAN NATIONAL CODE FOR CORPORATE GOVERNANCE Providing all shareholders with the opportunity to participate in the General Meeting of the shareholders The shareholders receive comprehensive and timely information about the agenda, date and place of every ordinary or extraordinary session of the General Meeting of the shareholders of Eurohold Bulgaria AD. The invitation and materials related to the agenda are published on the web page of the following authorized by BSE - Sofia financial medium X3News (www.x3news.com), in the Newsletter section of Investor (www.investor.bg), as well as on the corporate site of the Company www.eurohold.bg; Company s policy for transactions with interested related parties The company has developed and applies rules for the transactions with interested and related parties which have been approved by the Supervisory Board of Eurohold Bulgaria AD. In defining persons as related or interested parties, the definitions from the Law on the Public Offering of Securities are used. Eurohold Bulgaria AD abides to the requirements and restrictions set forth in Articles 114 and 114a of the Law on Public Offering of Securities. The Management Board monitors the transactions carried out by the company or its subsidiaries, which could materially affect the company or, combined, could lead to a change which exceeds the thresholds defined. The Management Board of Eurohold Bulgaria AD makes every effort to maximise the benefits for the shareholders in ensuring their equal treatment, including that of minority and foreign shareholders, by: Providing more secure methods for property registration The shares of Eurohold Bulgaria AD are registered for trade on the Bulgarian Stock Exchange - Sofia and since 15.12.2011 the shares have been traded on the Warsaw Stock Exchange. All current shareholders and potential investors can freely purchase or sell the Company s shares. The Company has signed a contract with the Central Depository to keep a shareholders ledger which reflects the current legal standing of the Company and where any changes in ownership are reflected. The Supervisory Board carefully monitors and controls all transactions where one or more of the directors have a personal interest or an interest, pertaining to third parties. In this regard, and in order to prevent any abuse of inside information, the MB of Eurohold Bulgaria AD, with the prior approval of the SB, has prepared, approved and applies a Code of Ethics regarding the internal rules of ethics and the standards of business behaviour of the managers in the holding structure of Eurohold Bulgaria AD. (The full text of the document can be found on the web page of the company (www.eurohold.bg). 40

Management bodies The two-tier management system of the Company separates the management functions from the control functions. The decision-making process is divided between the two bodies and this is a prerequisite which results in a more thorough decision-making process and reduces the possible errors and gaps. The efficient cooperation between the two bodies ensures the high quality of the Company's governance. The Supervisory Board determines the type, amount and frequency of the information provided by the Management Board. The Management Board, on the other hand, gives detailed and timely information to the Supervisory Board about all issues related to the development of Eurohold Bulgaria AD, including the risk exposure of the company, respectively the risk management policy, and the specific measures and procedures in this area. The members of the SB and the MB of Eurohold Bulgaria AD, as per the requirements of the Law on Public Offering of Securities, inform the Financial Supervision Commission (FSC), BSE- Sofia and the Company itself, about cases when: their participation as members of management and control bodies in other companies, in which they hold directly or indirectly more than 25 per cent of the capital; their participation in companies as members of management and control bodies, or as procurators; current or future transactions for which they expect to be defined as interested parties. The members of MB and SB declare these circumstances within seven days of their occurrence. Remuneration of the members of the Management Board and the Supervisory Board In compliance with the statutory requirements and the good corporate governance practices, the amount and structure of the remunerations of the members of the Management Board reflect the duties and contribution of each member of the Management Board in the activity and results of the Company; the ability to retain qualified and loyal managers; the necessity for compliance with the interests of the members of the Management Board and with the long-term interests of the Company. The remunerations of the members of the Management Board consists of two parts: a permanent part and an additional incentives. The additional incentives are set out in the Rules of Procedure of the Management Board. The remunerations of the members of the Supervisory Board reflect their duties and do not depend on the results of the activity of the Company. The remunerations of the independent members of the Supervisory Board are permanent and reflect their participation in sessions and the execution of their duties to control the actions of the executive management. The independent members are not entitled to additional incentives. Policy on the disclosure of information The Management Board of Eurohold Bulgaria AD treats all shareholders equally with regarding any disclosure of information. The Company publishes periodical statements and notifications of inside information within the meaning of Article 4 of the Law on the Market Abuse of Financial Instruments, by the deadlines and with the contents as per the requirements of the Law on Public Offering of Securities. Eurohold Bulgaria AD has signed contracts with Service Financial Markets OOD (the specialized financial media X3News to BSE-Sofia) and with the financial media Investor BG for the disclosure of regulated information to the general public, the regulated market and FSC, within the meaning of the Law on Public Offering of Securities. The information is available on the respective web addresses of the media -www.x3news.com and www.investor.bg, as well as on the corporate site of Eurohold Bulgaria AD www.eurohold.bg. ХІІ. ADDITIONAL INFORMATION UNDER APPENDIX 10 OF REGULATION 2 OF THE FINANCIAL SUPERVISION COMMISSION 1. Information about revenues from sales during the reported fiscal year As a holding company, the main activities of Eurohold Bulgaria AD are the acquisition, management, valuation and sale of participations in Bulgarian and foreign companies, and the financing of its subsidiaries. The Company does not perform any independent commercial and manufacturing activities. The revenues of Eurohold Bulgaria are formed by its financing activities. There have been no substantial transactions or transactions that affect significantly the Holding s operations during the reported period. Eurohold Bulgaria AD has not published any forecasts for the fiscal year 2011. 41

2. Related Party Transactions As at the date of Activity Report there have been no transactions or proposals for related party transactions, which may substantially affect the activity of Eurohold or of any of its subsidiaries or which are unusual in their nature. There are constantly conducted transactions between the parent Company and its subsidiaries as a result of the normal business activity of the companies. All transactions are closed at arms length. Common transactions between the Holding and the subsidiaries consist of intergroup loans, which ensure that the liquidity of different companies is managed and the investment policy is applied. The company grants loans to its subsidiaries for the purposes of working capital funding. In 2011, Eurohold Bulgaria AD has made loan agreements with the following related parties: Loans extended by Eurohold Bulgaria to its subsidiaries with the purpose of working capital funding Subsidiary company Interest rate Outstanding balance as of 31.12.2011 Scandinavia Motors EOOD 4.00% 209 Avto Union AD 6.50% 5,848 Eurolease Auto AD 1 m euribor+ 4% 4,972 Espace Auto EOOD 7.00% 103 Total: 11,132 Loans extended by the subsidiaries to Eurohold Bulgaria for the purpose of working capital funding Subsidiary company Interest rate Outstanding balance as of 31.12.2011 Starcom Holding AD 5.00% 668 Eurolease rent-a-car EOOD 5.00% 45 Eurolease Auto AD 6.50% 2,305 Autoplaza AD 7.00% 14 Cargoexpress Imoti EAD 5.00% 104 Total: 3,136 During the reported period there have been no unusual events of substantial importance to the business of the Company or to and the revenues realized and costs incurred. The company does not have any off-balance sheet transactions. 1. Loan Agreements Oustanding obligations on bank loans for working capital funds Creditor Maturit y In euro as of 31.12.2011 UniCredit Bulbank AD 8.2013 5,240,000 The purpose of the loan is to finance the leasing activities of the Group. Outstanding obligations on non-bank loans Creditor Maturit y In euro as of 31.12.2011 Accession Mezzanine 12.2015 15,000,000 The loan is in the form of mezzanine financing. 1.Financial Resourses Management The main activity of Eurohold Bulgaria, as a holding company, is to effectively manage the cash resources, accumulated across the entire structure, and to distribute them according to the specific needs of individual subsidiaries. The Company policy in this area is that the funding is carried out only in the direction subsidiaries - mother"rather than "subsidiary - subsidiary". The management of the free financial resources of the subsidiary companies is carried out in compliance with regulatory requirements and is aimed at achieving a substantial return in case of prudent risk taking. The investment policy of Eurohold Bulgaria in 2011 was performed mainly through its own resources. In 2011 the Company repaid some of its obligations to financial institutions. 2. Information about changes that have occurred during the reported period No changes to the member structure of the managing and supervising bodies of the Company have occurred during the reported period. In addition, there have been no changes to the primary management principles of the Company. At the regular session of the General Meeting of the Shareholders of the Company, held on 30.06. 2011, the following changes in the composition of the Management Board and the Supervisory Board were adopted: Iva Garvanska and Borislav Feschiev were replaced as members of the Management Board by Zlatolina Mukova and Expat Capital AD, through its representatives Nikolay Yankov and Lubomir Stoev. Nikolay Vassilev was elected member of the Supervisory Board. There is a functioning internal control system within the structure of EuroHold Bulgaria AD, 42

which ensures that the systems for disclosure of information and accountability, and the risk management system function properly. Leading international audit companies carry out the external audit, the accounting procedures, policies and financial statements within the Holding and its subsidiaries. As at the date of the reporting period and after the end of the fiscal year, the Company is not aware of any arrangements that might cause changes in the relative part of shares held by current shareholders. The company is not a party in any pending court, administrative or arbitration procedures, which have or might have a significant impact on its financial position or its profitability. There are no decisions or requests for the termination of the Company or for its liquidation. 3.Changes in the share price of the Company The Company s shares are registered for trade on the Premium Equities Segment of the Bulgarian Stock Exchange Sofia AD with stock index - 4EH. Share price of the Company Source-BSE-Sofia The graph shows the price dynamics of EuroHold s shares on BSE-Sofia for the period 03.01.2011 30.12.2011 (the first and last stock exchange session for the fiscal 2011). Beginning price: BGN 0,866 (03.01.2011) Closing price: BGN 1,188 (30.12.2011) Maximum price: BGN 1,515 (29.06.2011) Minimum price: BGN 0,831 (07.02.2011) Change in value: + BGN 0,322 Relative change: +37.18% Average price BGN 1,207 Volume traded for the period 35,627,707 shares After the dual listing of EuroHold s shares in 2011, they have been traded on the Warsaw Stock Exchange, Main market with stock index EHG. Source: WSE 43