site.btaBulgarian Energy Holding Reports Declining Income, Profit in 2014

Bulgarian Energy Holding Reports Declining Income, Profit in 2014

Sofia, May 8 (BTA) - The operating income of the Bulgarian
Energy Holding (BEH) EAD dived by 64.16 per cent in 2014 from
2013, and the profit before tax plummeted from 414,824,000 leva
to 285,937,000 leva, according to the company's Annual Report
for 2014 that has been published.

On March 20, 2015,Fitch Ratings downgraded BEH's long-term
foreign and local currency issuer default ratings (IDR) and its
foreign currency senior unsecured rating one level to 'BB' from
'BB+' and placed the ratings on rating watch negative (RWN), the
report recalls. "The rating downgrade reflects a substantial
deterioration of BEH group's credit metrics driven by a wider
tariff deficit at its subsidiary Natsionalna Elektricheska
Kompania EAD (NEK) amid an unfavourable regulatory and market
environment," the ratings agency said. Fitch views the Bulgarian
regulatory environment as less developed and far less
predictable than in western Europe. "Several legislative and
regulatory changes aimed at narrowing NEK's deficit are planned
by the government, parliament and the regulatory office for
2015, but may be subject to delays or may yield
lower-than-expected positive impact as happened in 2014 with
some planned changes." A substantial narrowing of NEK's deficit
and increased predictability of cash flows at BEH group could
lead to a positive rating action, the report points out.

The company's principal sources of income are dividends
received, interest received on loans extended to subsidiaries,
and services provided to subsidiaries in financial management,
project management, corporate governance and business planning,
legal and regulatory matters, public relations and
communications.

In 2014, BEH lent 60 million leva to the Maritsa East Mines, 62
million leva to Bulgargaz and 53 million leva to NEK. NEK's
outstanding debts amounting to 1,209 million leva were
rescheduled. BEH purchased Bulgargaz's receivables from
Toplofikacia Sofia approximating 120 million leva and sold its
own receivables: 4 million euro to the Maritsa East Mines and 21
million leva to the Maritsa East 2 TPP.