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Annual consolidated financial statements of “Sopharma” AD
as of 31 December 2025
Contents:
Consolidated annual financial statements according to IFRS
Notes to the consolidated financial report according to IFRS
Management report
Corporate governance declaration
Declaration by responsible persons
Auditors’ report
SOPHARMA GROUP
Board of Directors: Ognian Donev, PhD
Vessela Stoeva
Alexander Chaushev
Bisera Lazarova
Ivan Badinski
Executive Director: Ognian Donev, PhD
Procurator: Simeon Donev
Finance Director: Boris Borisov
Preparer: Lyudmila Bondzhova
Head of Legal Department Alexander Yotov
Registered Address: Sofia
16, Iliensko Shousse Str.
Lawyer: Ventsislav Stoev
Stefan Vachev
Servicing Banks:
United Bulgarian Bank AD
DSK Bank EAD
Eurobank Bulgaria AD
ING Bank N.V. - Sofia Branch
UniCredit Bulbank AD
Auditors: Baker Tilly Klitou and Partners ЕOOD
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
5
CONSOLIDATED ANNUAL STATEMENT OF COMPREHENSIVE INCOME 1
CONSOLIDATED ANNUAL STATEMENT OF FINANCIAL POSITION 2
CONSOLIDATED ANNUAL STATEMENT OF CASH FLOWS 3
CONSOLIDATED ANNUAL STATEMENT OF CHANGES IN EQUITY 4
NOTES TO THE CONSOLIDATED ANNUAL FINANCIAL STATEMENTS
1. BACKGROUND INFORMATION ON THE GROUP 6
2. MATERIAL ACCOUNTING POLICIES OF THE GROUP 29
3. REVENUE FROM CONTRACTS WITH CUSTOMERS 90
4. OTHER OPERATING INCOME AND LOSSES 91
5. MATERIALS AND CONSUMABLES USED 92
6. HIRED SERVICES EXPENSE 92
7. EMPLOYEE BENEFITS EXPENSE 93
8. OTHER OPERATING EXPENSES 93
9. IMPAIRMENT OF ASSETS 94
10. IMPAIRMENT OF NON-CURRENT ASSETS OUTSIDE THE SCOPE OF IFRS 9 94
11. FINANCIAL INCOME 94
12. FINANCIAL EXPENSES 95
13. GAINS/LOSSES FROM ASSOCIATES AND JOINT VENTURES 95
14. INCOME TAX EXPENSE 96
15. OTHER COMPREHENSIVE INCOME 99
16. PROPERTY, PLANT AND EQUIPMENT 100
17. INTANGIBLE ASSETS 103
18. INVESTMENT PROPERTY 105
19. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES 107
20. OTHER LONG-TERM EQUITY INVESTMENTS 114
21. LONG-TERM RECEIVABLES FROM RELATED PARTIES 116
22. OTHER LONG-TERM RECEIVABLES 116
23. INVENTORIES 118
24. TRADE RECEIVABLES 118
25. RECEIVABLES FROM RELATED PARTIES 122
26. ASSETS HELD FOR SALE 124
27. OTHER CURRENT RECEIVABLES AND ASSETS 125
28. CASH AND CASH EQUIVALENTS 127
29. EQUITY 127
30. LONG-TERM BANK LOANS 130
31. DEFERRED TAX ASSETS AND LIABILITIES 134
32. NON-CURRENT PAYABLES TO RELATED PARTIES 135
33. LONG-TERM EMPLOYEE BENEFIT LIABILITIES 136
34. LEASE LIABILITIES 139
35. GOVERNMENT GRANTS 140
36. LONG-TERM TAX LIABILITIES 141
37. OTHER NON-CURRENT LIABILITIES 141
38. SHORT-TERM BANK LOANS 141
39. TRADE PAYABLES 142
40. LIABILITIES TO RELATED PARTIES 143
41. PAYABLES UNDER FACTORING AGREEMENT 143
42. PAYABLES TO PERSONNEL AND FOR SOCIAL SECURITY 144
43. TAX PAYABLES 144
44. LIABILITIES HELD FOR SALE 147
45. OTHER CURRENT LIABILITIES 147
46. CONTINGENT LIABILITIES AND COMMITMENTS 148
47. SEGMENT REPORTING 150
48. FINANCIAL RISK MANAGEMENT 152
49. ACQUISITIONS AND INCREASING INTERESTS IN SUBSIDIARIES 166
50. DISPOSAL OF SUBSIDIARIES 171
51. RELATED PARTIES TRANSACTIONS 173
52. EVENTS AFTER END OF THE REPORTING PERIOD 175
for the year ending December 31, 2025
2025 2024

|  |  | BGN'000 | BGN'000
Revenue from contracts with customers | 3 |  | 2 609 827 | 2 129 097
Other operating income / (losses), net | 4 |  | 31 090 | 24 667
Changes in inventories of finished products and work in progress |  |  | 21 092 | 19 994
Raw materials and consumables used | 5 |  | (105 089) | (103 636)
Hired services expense | 6 |  | (133 905) | (113 218)
Employee benefits expense | 7 |  | (261 996) | (206 562)
Depreciation and amortization expense | 16, 17 |  | (78 817) | (59 367)
Carrying amount of goods sold |  |  | (1 913 193) | (1 593 027)
Other operating expenses | 8 |  | (28 645) | (16 189)
Profit from operations |  |  | 140 364 | 81 759
Impairment of non-current assets outside the scope of IFRS 9 | 10 |  | (390) | (234)
Finance income | 11 |  | 4 472 | 3 125
Finance costs | 12 |  | (24 475) | (18 546)
Finance income / (costs), net |  |  | (20 003) | (15 421)
Profit from associates and joint ventures, net | 13 |  | 38 238 | 25 827
Profit/(Loss) on acquisition and disposal of and from subsidiaries |  |  | (15) | 151
Profit before income tax |  |  | 158 194 | 92 082
Income tax expense | 14 |  | (21 573) | (11 651)
Net profit for the period |  |  | 136 621 | 80 431
Other comprehensive income: |  |  |  |
Items that will not be reclassified to profit or loss: |  |  |  |
Subsequent revaluations of property, plant and equipment | 15 |  | - | (22)
Share of other comprehensive income of associates | 15 |  | 1 121 | 528
Subsequent valuations of defined benefit plans | 15 |  | (974) | (629)
Net change in the fair value of other long-term equity investments | 15 |  | (994) | (607)
Income tax related to components of other comprehensive income that will not be reclassified | 15 |  |  |
|  |  | - | 2
|  |  | (847) | (728)
Items that may be reclassified to profit or loss: |  |  |  |
Exchange differences on translating foreign operations | 15 |  | 37 | (1 089)
Share of other comprehensive income of associates | 15 |  | (2 350) | 123
|  |  | (2 313) | (966)
Other comprehensive income for the period, net of tax | 15 |  | (3 160) | (1 694)
TOTAL COMPREHENSIVE INCOME FOR THE PERIOD |  |  | 133 461 | 78 737
Net profit for the year attributable to: |  |  |  |
Equity holders of the parent |  |  | 129 159 | 76 310
Non-controlling interests |  |  | 7 462 | 4 121
Total comprehensive income for the period attributable to: |  |  |  |
Equity holders of the parent company |  |  | 125 830 | 74 927
Non-controlling interests |  |  | 7 631 | 3 810
Basic net earnings per share | 28 | BGN | 0.38 | 0.46
Diluted net earnings per share | 28 | BGN | - | 0.46

Executive Director:
Ognian Donev, PhD
Finance Director:
Boris Borisov
Preparer:
Lyudmila Bondzhova
Audit company Baker Tilly Klitou and Partners EOOD № 129:
Ivaylo Yanchev Galina Lokmadjieva-Nedkova
Registered auditor
Managing director
Baker Tilly Klitou and Partners EOOD
Notes
The accompanying notes on pages 5 to 176 form an integral part of the consolidated financial statements.
SOPHARMA GROUP
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
1
Ognian Ivanov
Donev
Digitally signed by Ognian
Ivanov Donev
Date: 2026.04.27 22:12:21
+03'00'
Boris Anchev Borisov
Digitally signed by Boris Anchev
Borisov
Date: 2026.04.27 22:15:59 +03'00'
Lyudmila Krumova
Bondzhova
Digitally signed by Lyudmila
Krumova Bondzhova
Date: 2026.04.27 22:19:03
+03'00'
IVAYLO
YANCHEV
YANCHEV
Digitally signed
by IVAYLO
YANCHEV
YANCHEV
Date: 2026.04.28
16:15:16 +03'00'
Galina Dimitrova
Lokmadjieva-
Nedkova
Digitally signed by Galina
Dimitrova Lokmadjieva-
Nedkova
Date: 2026.04.28 16:24:54
+03'00'
SOPHARMA GR OUP
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
as of December 31, 2025

ASSETS |  |  |
Non-current assets |  |  |
Property, plant and equipment | 16 | 408 078 | 392 452
Intangible assets | 17 | 249 174 | 257 276
Goodwill | 17 | 5 485 | 5 541
Investment property | 18 | 7 051 | 7 890
Investments in associates and joint ventures | 19 | 279 791 | 252 142
Other long-term equity investments | 20 | 9 768 | 12 048
Long-term receivables from related parties | 21 | 7 258 | 10 386
Other long-term receivables | 22 | 4 755 | 8 029
Deferred tax assets | 31 | 12 485 | 1 142
|  | 983 845 | 946 906
Curr ent asset s |  |  |
Inventories | 23 | 504 989 | 451 410
Trade receivables | 24 | 455 810 | 305 975
Receivables from related parties | 25 | 14 690 | 11 665
Assets held for sale | 26 | 7 593 | -
Other short-term receivables | 27 | 39 225 | 44 597
Cash and cash equivalents | 28 | 71 672 | 35 730
|  | 1 093 979 | 849 377
TOTAL ASSETS |  | 2 077 824 | 1 796 283
EQUITY AND LIABILITIES |  |  |
Equity attributable to equity holders of the parent |  |  |
Share capital |  | 539 158 | 179 100
Reserves |  | 72 023 | 190 713
Other equity components (reserve on warrant issue) |  | - | 260
Retained earnings |  | 335 607 | 448 032
| 29 | 946 788 | 818 105
Non-controllin g interests |  | 29 757 | 24 998
TOTAL EQUITY | 29 | 976 545 | 843 103
LIABILITIES |  |  |
Non-current liabilities |  |  |
Long-term bank loans | 30 | 112 442 | 64 652
Deferred tax liabilities | 31 | 4 884 | 8 314
Non-current liabilities to related parties | 32 | 16 311 | 19 250
Retirement benefit obligations | 33 | 11 737 | 9 784
Lease liabilities | 34 | 80 184 | 68 516
Government grants | 35 | 3 382 | 4 358
Long-term tax liabilities | 36 | 3 716 | 2 359
Other non-current liabilities | 37 | 3 385 | 4 474
|  | 236 041 | 181 707
Current liabilities |  |  |
Short-term bank loans | 38 | 333 834 | 194 154
Current portion of long-term bank loans | 30 | 45 527 | 112 499
Trade payables | 39 | 348 930 | 388 085
Payables to related parties | 40 | 35 097 | 3 471
Current portion of lease liabilities | 34 | 22 271 | 18 671
Payables to personnel and for social security | 42 | 30 136 | 26 488
Tax payables | 43 | 16 041 | 9 943
Liabilities held for sale | 44 | 1 660 | -
Other current liabilities | 45 | 31 742 | 18 162
|  | 865 238 | 771 473
TOTAL LIABILITIES |  | 1 101 279 | 953 180
TOTA L EQUITY A ND LIABILITIES |  | 2 077 824 | 1 796 283

The accompanying notes on pages 5 to 176 form an integral part of the consolidated financial statements.
Executive Director:
Ognian Donev, PhD
Finance Director:
Boris Borisov
Preparer:
Lyudmila Bondzhova
Audit company Baker Tilly Klitou and Partners EOOD № 129:
Ivaylo Yanchev Galina Lokmadjieva-Nedkova
Registered auditor Managing director
Baker Tilly Klitou and Partners EOOD
Приложения
2024
BGN'000
2025
BGN'000
The consolidated financial statements on pages 1 to 176 were approved for issue by the Board of Directors and signed on 27 April 2026 by:
2
Ognian
Ivanov
Donev
Digitally signed by
Ognian Ivanov
Donev
Date: 2026.04.27
22:12:51 +03'00'
Boris Anchev
Borisov
Digitally signed by Boris Anchev
Borisov
Date: 2026.04.27 22:16:29 +03'00'
Lyudmila
Krumova
Bondzhova
Digitally signed by
Lyudmila Krumova
Bondzhova
Date: 2026.04.27
22:19:39 +03'00'
IVAYLO
YANCHEV
YANCHEV
Digitally signed by
IVAYLO YANCHEV
YANCHEV
Date: 2026.04.28
16:17:40 +03'00'
Galina Dimitrova
Lokmadjieva-
Nedkova
Digitally signed by Galina
Dimitrova Lokmadjieva-
Nedkova
Date: 2026.04.28 16:25:46
+03'00'
SOPHARMA GROUP
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year endin g December 31, 2025
Notes
2025 2024

|  |  | BGN'000 BGN'000
Cash flows from operating activities |  |  |
Cash receipts from customers |  | 2 902 226 | 2 468 165
Cash paid to suppliers |  | (2 495 194) | (2 098 249)
Cash paid to employees and for social security |  | (251 684) | (201 410)
Taxes paid (except income taxes) |  | (95 271) | (66 817)
Taxes refunded (except income taxes) |  | 6 285 | 7 093
Income taxes paid |  | (32 626) | (13 544)
Income taxes refunded |  | 2 608 | 89
Interest and bank charges paid on working capital loans |  | (14 400) | (13 904)
Foreign currency exchange gains/(losses), net |  | (4 056) | (2 360)
Other proceeds/(payments), net |  | 1 663 | (2 335)
Net cash flows from operating activities |  | 19 551 | 76 728
Cash flows from investing activities |  |  |
Purchases of property, plant and equipment |  | (45 917) | (33 882)
Proceeds from sales of property, plant and equipment |  | 1 267 | 2 865
Purchases of intangible assets |  | (97 839) | (87 509)
Proceeds for the sale of a separate part of a commercial enterprise |  | 11 094 | -
Proceeds from sale of investment property |  | 352 | -
Purchases of equity investments |  | (4) | (9 012)
Proceeds from sales of equity investments |  | 1 290 | 19
Dividend income from investments in associated companies |  | 5 812 | 1 603
Dividend income from other long-term capital investments |  | 40 | 39
Payments on acquisition of subsidiaries, net of cash |  | (1 319) | (14 569)
Proceeds from disposal of subsidiaries, net оf cash |  | (11) | (240)
Purchases of investments in associates and joint ventures |  | (699) | (685)
Proceeds from sale of investments in associates and joint ventures |  | 4 219 | 1 721
Purchase of financial assets held for trading |  | - | (8 453)
Proceeds from the sale of financial assets held for trading |  | 1 | 8 584
Proceeds (Payments) from transactions with the non-controlling interest, net |  | (5 053) | (1 237)
Loans granted to related parties |  | (450) | (5 172)
Loan repayments by related parties |  | 3 000 | 61 727
Loans granted to third parties |  | (211) | (6 647)
Loan repayments by third parties |  | 722 | -
Interest received on loans and deposits |  | 2 123 | 2 758
Net cash flows used in investing activities |  | (121 583) | (88 090)
Cash flows from financing activities |  |  |
Proceeds from short-term bank loans (including increases in overdrafts) |  | 118 140 | 34 371
Repayment of short-term bank loans (including decreases in overdrafts) |  | (6 478) | (34 160)
Proceeds from long-term bank loans |  | 43 015 | 143 409
Repayment of long-term bank loans |  | (33 593) | (66 607)
Proceeds under factoring agreement |  | 199 | -
Interest and charges paid under factoring agreement |  | (3) | (12)
Interest and charges paid under investment purpose loans |  | (4 969) | (893)
Proceeds from issued shares |  | 2 557 | 26 884
Lease payments |  | (31 074) | (22 191)
Treasury shares |  | (1) | (7)
Proceeds from the sale of repurchased treasury shares |  | 62 996 | 5 756
Dividends paid |  | (13 603) | (168 435)
Government grants |  | 903 | 1
Proceeds/(payments) related to other equity components (warrants), net |  | (14) | -
Net cash flows from/(used in) financing activities |  | 138 075 | (81 884)
Net (decrease)/increase in cash and cash equivalents |  | 36 043 | (93 246)
Cash and cash equivalents at 1 January |  | 35 629 | 128 875
Cash and cash equivalents at 31 December | 28 | 71 672 | 35 629

Executive Director:
Ognian Donev, PhD
Finance Director:
Boris Borisov
Preparer:
Lyudmila Bondzhova
Audit company Baker Tilly Klitou and Partners EOOD № 129:
Ivaylo Yanchev Galina Lokmadjieva-Nedkova
Registered auditor Managing director
Baker Tilly Klitou and Partners EOOD
The accompanying notes on pages 5 to 176 form an integral part of the consolidated financial statements.
3
Ognian
Ivanov
Donev
Digitally signed
by Ognian Ivanov
Donev
Date: 2026.04.27
22:13:10 +03'00'
Boris Anchev
Borisov
Digitally signed by
Boris Anchev Borisov
Date: 2026.04.27
22:16:58 +03'00'
Lyudmila
Krumova
Bondzhova
Digitally signed by
Lyudmila Krumova
Bondzhova
Date: 2026.04.27
22:20:13 +03'00'
IVAYLO
YANCHEV
YANCHEV
Digitally signed by
IVAYLO YANCHEV
YANCHEV
Date: 2026.04.28
16:18:50 +03'00'
Galina Dimitrova
Lokmadjieva-Nedkova
Digitally signed by Galina
Dimitrova Lokmadjieva-Nedkova
Date: 2026.04.28 16:26:36 +03'00'
SOPHARMA GROUP
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
for the year endin g 31 December 2025

|  |  |  |  |  |  | Attributable to owners of the equity of the parent |  |  |  | Non-controlling | Total equity
|  |  |  |  |  |  |  |  |  |  | interests |
| Notes | Share | Treasury | Statutory | Revaluation | Reserve from | Translation of foreign | Other equity | Retained | Total |  |
|  | capital | shares | reserves | reserve - property, | financial assets at | operations reserve | components (reserve on | earnings |  |  |
|  |  |  |  | plant and | fair value through | warrants issue) |  |  |  |
|  |  |  |  | equipment | other comprehensive |  |  |  |  |
|  |  |  |  |  | income |  |  |  |  |  |
|  | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000 | BGN'000
Balance on 1 January 2024 | 29 | 172 591 | (57 452) | 196 759 | 29 328 | 506 | (1 154) | 1 857 | 395 897 | 738 332 | 15 294 | 753 626
Changes in owners' equity for 2024 |  |  |  |  |  |  |  |  |  |  |  |
Capital issue |  | 6 509 | - | 22 069 | - | - | - | (1 694) | - | 26 884 | - | 26 884
Effect of repurchased treasury shares |  | - | 3 892 | - | - | - | - | - | 1 857 | 5 749 | - | 5 749
*treasury shares sold |  | - | 3 899 | - | - | - | - | - | 1 857 | 5 756 | - | 5 756
*treasury shares acquired |  | - | (7) | - | - | - | - | - | - | (7) |  | (7)
Effects of restructuring |  | - | 1 | - | - | - | - | - | - | 1 | (1) | -
Other equity components, incl.: |  | - | - | - | - | - | - | 97 | - | 97 | - | 97
* exercised warrants rights |  | - | - | - | - | - | - | 97 | - | 97 | - | 97
Allocation of accumulated profits from previous years to: |  | - | - | - | - | - | - | - | (27 347) | (27 347) | - | (27 347)
* dividends from profit for 2023 |  | - | - | - | - | - | - | - | (14 916) | (14 916) | - | (14 916)
* advance six-month dividends from profit for 2024 |  | - | - | - | - | - | - | - | (12 431) | (12 431) | - | (12 431)
Effects assumed by the non-controlling interest on: |  | - | - | - | - | - | - | - | (538) | (538) | 5 895 | 5 357
* acquisition of/(disposal of) subsidiaries |  | - | - | - | - | - | - | - | - | - | 6 826 | 6 826
* increase in holdings in subsidiaries |  | - | - | - | - | - | - | - | (538) | (538) | (879) | (1 417)
*dividend distribution |  | - | - | - | - | - | - | - | - | - | (52) | (52)
Total comprehensive income for the period, incl.: |  | - | - | - | 508 | (607) | (668) | - | 75 694 | 74 927 | 3 810 | 78 737
* net profit for the period |  | - | - | - | - | - | - | - | 76 310 | 76 310 | 4 121 | 80 431
* other comprehensive income, net of taxes |  | - | - | - | 508 | (607) | (668) | - | (616) | (1 383) | (311) | (1 694)
Transfer to retained earnings |  | - | - | - | (2 477) | 8 | - | - | 2 469 | - | - | -
Balance at 31 December 2024 | 29 | 179 100 | (53 559) | 218 828 | 27 359 | (93) | (1 822) | 260 | 448 032 | 818 105 | 24 998 | 843 103
Balance at 1 January 2025 |  | 179 100 | (53 559) | 218 828 | 27 359 | (93) | (1 822) | 260 | 448 032 | 818 105 | 24 998 | 843 103
Changes in owners' equity for 2025 |  |  |  |  |  |  |  |  |  |  |  |
Capital issue |  | 360 058 | - | (130 840) | - | - | - | (228) | (226 530) | 2 460 | - | 2 460
* from excercised warrant`s rights |  | 619 | - | 2 069 | - | - | - | (228) | - | 2 460 | - | 2 460
* from reserves |  | 359 439 | - | (132 909) | - | - | - | - | (226 530) | - | - | -
Effects of sold and repurchased own shares, including: |  | - | 35 348 | - | - | - | - | - | 27 647 | 62 995 | - | 62 995
*repurchased shares sold |  | - | 35 349 | - | - | - | - | - | 27 647 | 62 996 | - | 62 996
*acquisition of repurchased shares |  | - | (1) | - | - | - | - | - | - | (1) | - | (1)
Other equity components, incl.: |  | - | - | 18 | - | - | - | (32) | - | (14) # | - | (14)
* deregistered warrants |  | - | - | 18 | - | - | - | (18) | - | - | - | -
* transaction costs |  | - | - | - | - | - | - | (14) | - | (14) |  | (14)
Profit distributing for: |  | - | - | (21 167) | - | - | - | - | (38 746) | (59 913) | - | (59 913)
* dividends from profit for 2024 |  | - | - | - | - | - | - | - | (13 666) | (13 666) | - | (13 666)
*advance six-month dividends from profit for 2025 |  | - | - | (21 167) | - | - | - | - | (25 080) | (46 247) | - | (46 247)
Effects assumed by the non-controlling interest on: |  | - | - | - | - |  | - | - | (2 675) | (2 675) | (2 872) | (5 547)
* acquisition of/(release from) subsidiaries |  | - | - | - | - | - | - | - | - | - | (10) | (10)
* increase in holdings in subsidiaries |  | - | - | - | - | - | - | - | (2 509) | (2 509) | (4 536) | (7 045)
* decrease in holdings in subsidiaries |  | - | - | - | - | - | - | - | (166) | (166) | 1 702 | 1 536
*dividend distribution |  | - | - | - | - | - | - | - | - | - | (28) | (28)
Total comprehensive income for the period, incl.: |  | - | - | - | 1 121 | (994) | (2 520) | - | 128 223 | 125 830 | 7 631 | 133 461
* net profit for the period |  | - | - | - | - | - | - | - | 129 159 | 129 159 | 7 462 | 136 621
* other comprehensive income, net of taxes |  | - | - | - | 1 121 | (994) | (2 520) | - | (936) | (3 329) | 169 | (3 160)
Transfer to retained earnings |  | - | - | - | (290) | 634 | - | - | (344) | - | - | -
Balance at 31 December 2025 | 29 | 539 158 | (18 211) | 66 839 | 28 190 | (453) | (4 342) | - | 335 607 | 946 788 | 29 757 | 976 545

The accompanying notes on pages 5 to 176 form an integral part of the consolidated financial statements.
Digitally signed by Ognian
Ognian Ivanov
Ivanov Donev
Executive Director:
Date: 2026.04.27 22:13:36
Donev
+03'00'
Ognian Donev, PhD
Digitally signed by Boris Anchev
Finance Director:
Boris Anchev Borisov
Borisov
Date: 2026.04.27 22:17:28 +03'00'
Boris Borisov
Digitally signed by Lyudmila
Preparer:
Lyudmila Krumova
Krumova Bondzhova
Lyudmila Bondzhova
Bondzhova
Date: 2026.04.27 22:20:50 +03'00'
Audit company Baker Tilly Klitou and Partners EOOD № 129:
Digitally signed by Galina
Galina Dimitrova
Digitally signed by
Dimitrova Lokmadjieva-
IVAYLO
IVAYLO YANCHEV
Lokmadjieva-
Nedkova
Ivaylo Yanchev Galina Lokmadjieva-Nedkova
YANCHEV
Date: 2026.04.28 16:27:19
Registered auditor Managing director
YANCHEV
Nedkova
Date: 2026.04.28
+03'00'
YANCHEV
Baker Tilly Klitou and Partners EOOD
16:19:46 +03'00'
4
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
6
1. BACKGROUND INFORMATION ON THE GROUP
Sopharma Group (the Group) is comprised of the parent company and its ninety (31 December 2024:
eighty-nine) subsidiaries. In addition, the Group has investments in six associates and two joint venture (31
December 2024: in six associates and two joint ventures).
Parent company
Sopharma AD (the parent company) is a business entity registered in Bulgaria with a seat and
registered management address: Sofia, 16, Iliensko Shousse Str. The company is registered in the
Commercial register on 1 April 2008.
The Company was registered with court on 15 November 1991 by Decision No 1/1991 of Sofia
City Court.
Explanation regarding the change in the name of the reporting entity after the end of the
previous reporting period:
During the year there was no change in the name of the reporting parent company.
Subsidiaries
The Group subsidiaries as at 31 December 2025 are as follows:
• Sopharma Trading AD – a business entity registered in Bulgaria by Decision No. 3594/16.10.1998
of Varna District Court, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar
Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy EOOD – a business entity registered in Bulgaria by Decision No.
201501191300026/19.01.2015 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 2 EOOD – a business entity registered in Bulgaria by Decision No.
20150617110324/17.06.2015 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 3 EOOD – a business entity registered in Bulgaria by Decision No.
20151202165822/02.12.2015 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 4 EOOD – a business entity registered in Bulgaria by Decision No.
20160229093338/29.02.2016 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 5 EOOD – a business entity registered in Bulgaria by Decision No.
20160301155620/01.03.2016 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
7
• Sopharmacy 6 EOOD – a business entity registered in Bulgaria by Decision No.
20140127170842/27.01.2014 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 7 EOOD – a business entity registered in Bulgaria by Decision No
20170315161212/15.03.2017 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 8 EOOD – a business entity registered in Bulgaria by Decision No
20170627142803/27.06.2017 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12’;
• Sopharmacy 9 EOOD – a business entity registered in Bulgaria by Decision No
20170911100706/11.09.2017 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 10 EOOD – a business entity registered in Bulgaria by Decision No
20170911101412/11.09.2017 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 11 EOOD – a business entity registered in Bulgaria by Decision No 20170302125338
/02.03.2017 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5
Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 12 EOOD – a business entity registered in Bulgaria by Decision No
20170306085236/06.03.2017 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 13 EOOD – a business entity registered in Bulgaria by Decision No
20170306080850/06.03.2017 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 14 EOOD – a business entity registered in Bulgaria by Decision No
20170306081205/06.03.2017 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 15 EOOD – a business entity registered in Bulgaria by Decision No
20170302134305/02.03.2017 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 16 EOOD – a business entity registered in Bulgaria by Decision No
20180515105543/15.05.2018 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
8
• Sopharmacy 17 EOOD – a business entity registered in Bulgaria by Decision No
20180515105543/15.05.2018 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 18 EOOD – a business entity registered in Bulgaria by Decision No
20190228133836/28.02.2019 of the Registry Agency, with a seat and management address: Sofia,
Izgrev Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 12;
• Sopharmacy 19 EOOD (until 27 January 2021 it was called Valentina Vasileva – Lyulin EOOD) a
business entity registered in Bulgaria by Decision of the Registry Agency, No 20090226110235
dated 26.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev
Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 20 EOOD (until 16 February 2021 it was called Vasilka Lilovska EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090518182226 dated
18.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 21 EOOD (until 4 February 2021 it was called Venera Mutashka EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090519084124 dated
19.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 22 EOOD (until 17 February 2021 it was called Veselka Vassileva EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090320091825 dated
20.03.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 23 EOOD (until 17 February 2021 it was called Victoria Angelova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090604184353 dated
04.06.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 24 EOOD (until 4 February 2021 it was called Desislava Yordanova EOOD), a
business entity registered in Bulgaria by Decision of the Registry Agency, No 20090604170149
dated 04.06.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev
Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 25 EOOD (until 4 February it was called Dimka Vladeva EOOD), a business entity
registered in Bulgaria by Decision of the Registry Agency, No 20090519080611 dated 19.05.2009;
with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str., Sopharma
Business Towers, Building A, floor 13;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
9
• Sopharmacy 26 EOOD (until 4 February 2021 it was called Donka Chivganova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090226120647 dated
26.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 27 EOOD (until 18 February 2021 it was called Ekaterina Mihaylova Shumen 1
EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No
20090604181926 dated 04.06.2009; with a seat and management address: Sofia, Izgrev Region, 5
Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 28 EOOD (until 27 January 2021 it was called Elka Neykova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090227145039 dated
27.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 29 EOOD (until 17 February 2021 it was called Emilia Angelova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090605085738 dated
05.06.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 30 EOOD (until 27 January 2021 it was called Zhuliana Kotova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090227160338 dated
27.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 31 EOOD (until 27 January 2021 it was called Ivan Ivanov 1 EOOD), a business entity
registered in Bulgaria by Decision of the Registry Agency, No 20080630143914 dated 30.06.2008;
with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str., Sopharma
Business Towers, Building A, floor 13;
• Sopharmacy 32 EOOD (until 2 February 2021 it was called Iliana Kalushkova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20080630143914 dated
30.06.2008; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 33 EOOD (until 4 February 2021 it was called Irina Toncheva EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090226112827 dated
26.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 34 EOOD (until 17 February 2021 it was called Kapka Nikolova – Voenna Bolnitsa
EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No
20090226165512 dated 26.02.2009; with a seat and management address: Sofia, Izgrev Region, 5
Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 13;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
10
• Sopharmacy 35 EOOD (until 16 February it was called Kostadin Gorchev EOOD), a business entity
registered in Bulgaria by Decision of the Registry Agency, No 20090513180047 dated 13.05.2009;
with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str., Sopharma
Business Towers, Building A, floor 13;
• Sopharmacy 36 EOOD (until 4 February it was called Krasimira Shunina EOOD), a business entity
registered in Bulgaria by Decision of the Registry Agency, No 20090519083827 dated19.05.2009;
with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str., Sopharma
Business Towers, Building A, floor 13;
• Sopharmacy 37 EOOD (until 4 February 2021 it was called Lora Doncheva EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090226102708 dated
26.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 38 EOOD (until 4 February 2021 it was called Lyudmila Zlatkova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090519090345 dated
19.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 39 EOOD (until 16 February 2021 it was called Lyudmila Kovacheva EOOD), a
business entity registered in Bulgaria by Decision of the Registry Agency, No 20090227150054
dated 27.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev
Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 40 EOOD (until 2 February 2021 it was called Manik Burgazyan EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20081220153409 dated
20.12.2008; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 41 EOOD (until 27 January 2021 it was called Mariyks Zhaygarova EOOD), a
business entity registered in Bulgaria by Decision of the Registry Agency, No 20090519080839
dated 19.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev
Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 42 EOOD (until 17 February 2021 it was called Maria Agova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090518183127 dated
18.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 43 EOOD (until 4 February 2021 it was called Maria Gancheva EOOD); a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090226105948 dated
26.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
11
• Sopharmacy 44 EOOD (until 4 February 2021 it was called Maria Kenova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090605134931 dated
05.06.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 45 EOOD (until 4 February 2021 it was called Maria Hristova – Motopista EOOD),
a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090519091916
dated 19.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev
Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 46 EOOD (until 17 February 2021 it was called Mariyana Markova EOOD), a
business entity registered in Bulgaria by Decision of the Registry Agency, No 20090519083054
dated 19.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev
Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 47 EOOD (until 17 February it was called Mary Ivanova EOOD), a business entity
registered in Bulgaria by Decision of the Registry Agency, No 20090227154137 dated 27.02.2009;
with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str., Sopharma
Business Towers, Building A, floor 13;
• Sopharmacy 48 EOOD (until 2 February it was called Nelly Stavreva EOOD), a business entity
registered in Bulgaria by Decision of the Registry Agency, No 20090227155742 dated 27.02.2009;
with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str., Sopharma
Business Towers, Building A, floor 13;
• Sopharmacy 49 EOOD (until 4 February 2021 it was called Preslava Becheva EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090518162442 dated
18.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 50 EOOD (until 27 January 2021 it was called Rayna Madzharova – Str. Geori
Sofiyski EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No
20090227152516 dated 27.02.2009; with a seat and management address: Sofia, Izgrev Region, 5
Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 51 EOOD (until 27 January 2021 it was called Rumyana Ignatova - Gancheva EOOD),
a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090227153607
dated 27.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev
Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 52 EOOD (until 17 February 2021 it was called Sashka Todorova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090518174837 dated
18.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
12
• Sopharmacy 53 EOOD (until 7 February 2021 it was called Svetla Harizanova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090226101122 dated
26.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 54 EOOD (until 17 February 2021 it was called Svetlana Pirpirova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090519085825 dated
19.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 55 EOOD (until 27 January 2021 it was called Ceiba Blagoevgrad 1 EOOD), a
business entity registered in Bulgaria by Decision of the Registry Agency, No 20090414165833
dated 14.04.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev
Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 56 EOOD (until 17 February 2021 it was called Silvia Veneva EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090519071228 dated
19.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 57 EOOD (until 18 February 2021 it was called Siyana Milanova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090604164039 dated
04.06.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 58 EOOD (until 27 January 2021 it was called Stoyanka Radenkova EOOD), a
business entity registered in Bulgaria by Decision of the Registry Agency, No 20090227160132
dated 27.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev
Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 59 EOOD (until 8 February 2021 it was called Ana Advzhieva EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090114162615 dated
14.01.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 60 EOOD (until 2 February 2021 it was called Radina Bekova EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20080422121447 dated
22.04.2008; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 61 EOOD (until 2 February 2021 it was called Rumen Raynov EOOD), a business
entity registered in Bulgaria by Decision of the Registry Agency, No 20090114170550 dated
14.01.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, floor 13;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
13
• Sopharmacy 62 EOOD (until 2 February 2021 it was called Hani Modhi EOOD), a business entity
registered in Bulgaria by Decision of the Registry Agency, No 20080512090050 dated 12.05.2008;
with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str., Sopharma
Business Towers, Building A, floor 13;
• Sopharmacy 63 EOOD (until 2 February 2021 it was called CSC Franchise EAD), a business entity
registered in Bulgaria by Decision of the Registry Agency, No2008041018022 dated 10.04.2008;
with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev Str., Sopharma
Business Towers, Building A, floor 13;
• Sopharmacy 64 EOOD (until 6 July 2021 it was called Sanita Franchising AD), a business entity
registered in Bulgaria by Decision of the Registry Agency, No 20080411103252 dated 11.04.2008;
with a seat and management address: Sofia, 1220, Nadezhda Residential Area, 16, Rozhen Blvd;
• Sopharmacy 65 EOOD - a business entity registered in Bulgaria by Decision of the Registry
Agency, No 2023122115545 dated 21.12.2023; with a seat and management address: Sofia, Izgrev
Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 66 EOOD - a business entity registered in Bulgaria by Decision of the Registry
Agency, No 20240108112701 dated 08.01.2024; with a seat and management address: Sofia, Izgrev
Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 67 EOOD - a business entity registered in Bulgaria by Decision of the Registry
Agency, No 20240109162219 dated 09.01.2024; with a seat and management address: Sofia, Izgrev
Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 13;
• Sopharmacy 68 EOOD - a business entity registered in Bulgaria by Decision of the Registry
Agency, No20240108112943 dated 08.01.2024; with a seat and management address: Sofia, Izgrev
Region, 5 Lachezar Stanchev Str., Sopharma Business Towers, Building A, floor 13;
• Sopharma Warsaw SP. Z.O.O., Poland – a business entity registered in Poland by Decision No.
DSR 0000372245 of 17 December 2010 by XII Economic Division of the State Court Register of
Warsaw, with a seat and management address: Poland, Warsaw, 8, Halubinskiego Str.;
• OOO Sopharma Ukraine, Ukraine – a business entity registered in Ukraine by Decision No.
10691020000029051/07.08.2012 in the Unified State Register of Legal Entities and Physical
Entities-Entrepreneurs, with a seat and management address: Ukraine, Kiev, Oblonski Region,
prospect Moskovskii No. 9, unit 4, floor 2, office 4-203;
• PAO Vitamini, Ukraine – a business entity registered in Ukraine by Decision No. 133/15.04.1994
of Uman City Court, with a seat and management address: Ukraine, Cherkasy Province, Uman, 31,
Leninski Iskri Str.;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
14
• Sopharma Trading, Serbia – a business entity registered in Serbia by Decision No 07829531/
05.02.1992 of the Business Registers Agency – Serbia, Belgrade, 48b Zorana Djindjica Boulevard;
• TOO Sopharma Kazakhstan, Kazakhstan – a business entity registered in Kazakhstan by Decision
No 5286-1910-04-ТОО/06.11.2014 of the Ministry of Justice, Auezov District, with seat and
management address: Kazakhstan, Almaty, Auezov District, Mamir-4, home 190;
• Pharmachim EOOD, Serbia – business entity registered in Serbia with BD 27219.2020 dated
14.04.2020 by the Business Registry Agency of Belgrade, with seat and management address:
Republic of Serbia, Belgrade, 6, Vladimira Popovicha Str.
• Sopharma Rus OOO, Russia - a trading company registered in Russia with decision No.
1237700691524 dated 13.10.2023 of the Unified State Register of Legal Entities and with its
registered office and management address - Russia, Moscow, Letnikovskaya Str. no. 10.
• Pharmanova D.O.O., Serbia – a trading company registered in Serbia with decision No. 20408642
on 04/15/2008. from the Agency for Business Registers of Belgrade and with headquarters and
address of management - Republic of Serbia, c. Belgrade, 1 "Baye Pivlianina" Str.;
• SOOO Brititrade, Belarus – a trading company registered in Belarus with decision No. 190567633
on 09/24/2004. by the Minsk Regional Executive Committee and with its seat and address of
management - Republic of Belarus, Minsk region, Stomyslitsky village council No. 18;
• OOO DabradzeyaPharm, Belarus – a trading company registered in Belarus with decision No.
591034846 on 06/17/2020. by the Grodno City Executive Committee and with headquarters and
address of management - Republic of Belarus, c. Grodno, str. "Garbarskaya", d.4;
• OOO Ne Ska , Belarus – a trading company registered in Belarus with decision No. 191582872 on
04/12/2011. by the Minsk District Executive Committee and with its seat and address of
management – Republic of Belarus, Minsk District, Stomyslitskiy Selsky Sovet No. 18;
• OOO Bellerophon , Belarus – a trading company registered in Belarus with decision No.
190470316 on 07/17/2003. by the Minsk Regional Executive Committee and with its seat and
address of management - Republic of Belarus, Minsk region, Stomyslitsky village council No. 18;
• OOO AlfaApteka, Belarus – a trading company registered in Belarus with decision No. 692109178
on 12/21/2018. by the Minsk District Executive Committee and with its seat and address of
management – Republic of Belarus, Minsk District, Stomyslitskiy Selsky Sovet No. 18;
• OOO Fitobel, Belarus – a trading company registered in Belarus with decision No. 100456458 on
02/03/2020. by the Minsk District Executive Committee and with its seat and address of
management – Republic of Belarus, Minsk District, Stomyslitskiy Selsky Sovet No. 18;
• OOO Tabina, Belarus – a trading company registered in Belarus with decision No. 101260261 on
12/29/1999. by the Minsk Regional Executive Committee and with its seat and address of
management - Republic of Belarus, Minsk region, Stomyslitsky village council No. 18;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
15
• ODO Salusline, Belarus – a trading company registered in Belarus with decision No. 500046184
on 05.05.2006. by the Grodno Regional Executive Committee and with its registered office and
management address - Republic of Belarus, Grodno, 5 Slavinskogo Str.;
• Sopharmacy D.o.o., Serbia – a trading company registered in Serbia with the decision of the
Register of Health Institutions BZU 1160/2024 of 30.08.2024 and with headquarters and
management address – Republic of Serbia, Belgrade-Novi Belgrade, 29 "Marshala Tolbukhina"
Blvd.;
• Apotekarska ustanova (AU) Great Pharmacy, Serbia – a commercial company registered in Serbia
by decision of the Register of Health Institutions BZU 85/2024 of 18.01.2024 and with its
registered office and management address – Republic of Serbia, Belgrade-Palilula, Viline Vode
Str.;
• BOOO SpetsApharmacy, Belarus – a commercial company registered in Belarus by decision No.
700432245 of 09.03.1998 by the Mogilev Regional Executive Committee and with its registered
office and management address – Republic of Belarus, Mogilev Region, Bobruisk City, Pushkina
Street, 163;
• SofTech Services EOOD – a commercial company registered in Bulgaria by decision of the Registry
Agency No. 20250228081900 of 28.02.2025 with its registered office and address of management:
Sofia 1756, Izgrev District, Iztok residential district, 5 Lachezar Stanchev Street, Sopharma Business
Towers, Building A, Floor 15;
• Sopharmacy Plus EOOD – a commercial company registered in Bulgaria by decision of the Registry
Agency No. 20250716141706 of 16.07.2025, with its registered office and address of management:
Sofia 1220, Nadezhda District, 16 Rozhen Blvd.;
On January 2, 2025 the subsidiary Sopharma Poland ZOO was liquidated.
On February 28, 2025 the parent company established the company SofTech Services EOOD.
On July 16, 2025 the subsidiary Sopharma Trading AD established the company Sopharmacy Plus
EOOD.
On February 21, 2024, through its subsidiary Sopharmacy EOOD, the Group acquired the company
Sopharmacy 66 EOOD. Sopharmacy 67 EOOD and Sopharmacy 68 EOOD.
On July 10, 2024, through its subsidiary Sopharma Trading AD, the Group acquired 79% of the
capital of SOOO Brititrade, Belarus.
On August 13, 2024, Sopharma AD acquired control of the company Pharmanova D.O.O, Serbia,
by purchasing an additional share of 50% of the company's capital.
On August 30, 2024, the subsidiary Sopharma Trading D.o.o., Belgrade established its subsidiary
Sopharmasi D.o.o., Belgrade.
On March 13, 2024, through its subsidiary Sopharmacy EOOD, the Group acquired the company
Sopharmacy 65 EOOD.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
16
The merger of Veta Pharma AD (transforming company) into Sopharma AD (acquiring company)
was realized through the legal form of transformation regulated in the Commercial Law. The merger was
entered in the Commercial Register at the Registration Agency on September 2, 2024. As a result of the
transaction, all assets of Veta Pharma AD are transferred to Sopharma AD, and Veta Pharma AD is
terminated without liquidation.
The purpose of the transaction on the transformation of the two companies was:
• restructuring of the companies in the Sopharma group in order to eliminate duplicate activities;
• focusing efforts on production and commercial activities, respectively to optimizing administrative
costs;
• increasing efficiency and achieving a synergistic effect both for the management and performance
of production and commercial activities, as well as for cost optimization.
For accounting purposes, January 1, 2024 was accepted as the date of the merger.
On 09.10.2024, through its subsidiary Sopharma Trading D.o.o., Belgrade, the Group acquired the
company Apotekarska ustanova (AU) Great Pharmacy, Serbia.
Joint ventures
As at 31 December 2025, the Group’s joint ventures are:
• Momina Krepost AD – a business entity registered in Bulgaria by Decision No. 3426/1991 of
Veliko Tarnovo District Court, with a seat and management address: Veliko Tarnovo, 23,
Magistralna Str.
• ZAO Kompaniya Interpharm , Belarus – a trading company registered in Belarus with decision No.
300000556 on 27.11.1996. by Vitebsk Regional Executive Committee and with headquarters and
address of management - Republic of Belarus, 210027, Vitebsk, blvd. "Builders", 3/2-162;
Associates
The Group’s associates as at 31 December 2025 are as follows:
• Doverie United Holding AD – a business entity registered in Bulgaria by Sofia City Court under
Company File No. 13056 of 1996, with a seat and management address: Sofia, Izgrev Region, 5
Lachezar Stanchev Str., building A, floor 7;
• Sopharma Properties REIT – a business entity registered in Bulgaria by Decision No. 1/24.03.2006
of Sofia City Court, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar
Stanchev Str.
• Sopharma Buildings REIT – a commercial company registered in the Sofia City Court with
decision No. 1/14.08.2007 and with its registered office and management address in the city of
Sofia at 1756, 5 Lachezar Stanchev Street.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
17
• OOO Galenapharm, Belarus – a trading company registered in Belarus with decision No.
291192483 on June 12, 2013 by the Minsk Regional Executive Committee and with its seat and
address of management - Republic of Belarus, Minsk region, Stomyslitsky village council No. 18;
• ODO Medzhel, Belarus – a trading company registered in Belarus with decision No. 100100334
on June 22, 1993 by the Minsk Regional Executive Committee and with its seat and address of
management - Republic of Belarus, Minsk region, Stomyslitsky village council No. 18;
• ODO Alenpharm-plus, Belarus – a trading company registered in Belarus with decision No.
191068124 on September 25, 2008 by the Minsk Regional Executive Committee and with its seat
and address of management - Republic of Belarus, Minsk region, Stomyslitsky village council No.
18;
1.1. Ownership and management of the parent company
Sopharma AD is a public company under the Bulgarian Public Offering of Securities Act. Starting from
November 2011, the shares of the company are traded in the Warsaw Stock Exchange.
The shareholding structure of the parent company as at 31 December 2025 is as follows:
%
Donev Investments Holding AD
40.25
Telecomplect Invest AD
16.72
Sopharma AD (treasury shares)
2.53
Other legal entities
25.10
Ognian Ivanov Donev
9.09
Other individuals
6.31
100.00
Sopharma AD has a one-tier management system with a five-member Board of Directors.
Company's management in the form of Board of Directors is composed as at 31 December 2025 as follows:
Ognian Donev, PhD
Chairperson
Vessela Stoeva
Deputy Chairperson
Bisera Lazarova
Member
Alexander Chaushev
Member
Ivan Badinski
Member
The parent company is represented and managed by its Executive Director Ognian Donev, PhD.
Pursuant to a business management contract dated 9 June 2020, the Company’s Procurator is Simeon
Donev.
The Audit Committee supports the work of the Board of Directors and plays the role of those
charged with governance that exercise monitoring and control over the internal control system, risk
management and Company's system of financial reporting.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
18
The composition of the Audit Committee is as follows:
Vasil Naidenov
Chairman
Tsvetanka Zlateva
Member
Kristina Atanasova – Elliot
Member
Name of the Group’s parent:
No parent or other controlling entity have been identified other than the parent company exercising
control over Sopharma AD.
Name of the Group’s ultimate parent:
No ultimate parent or other controlling entity have been identified other than the parent company
exercising control over Sopharma AD.
1.2. Structure of the Group and principal activities
The structure of the Group includes Sopharma AD as a parent company and the subsidiaries stated
below:
Subsidiaries
31.12.2025
31.12.2024
Date of
acquisition of
control
Date of release
from
control/merger
Companies in Bulgaria
Participation
%
Participation
%
Sopharma Trading AD
87.2
87.99
08.06.2006
Pharmalogistics AD
-
-
15.08.2002
19.12.2024
Electroncommerce EOOD
-
-
09.08.2005
19.12.2024
Fito Palauzovo AD
-
-
21.09.2012
07.11.2024
Veta Pharma AD
-
-
11.11.2016
02.09.2024
Sopharmacy EOOD**
87.22
87.99
19.01.2015
Sopharmacy 2 EOOD**
87.22
87.99
17.06.2015
Sopharmacy 3 EOOD**
87.22
87.99
02.12.2015
Sopharmacy 4 EOOD**
87.22
87.99
29.02.2016
Sopharmacy 5 EOOD**
87.22
87.99
01.03.2016
Sopharmacy 6 EOOD**
87.22
87.99
03.12.2015
Sopharmacy 7 EOOD**
87.22
87.99
15.03.2017
Sopharmacy 8 EOOD**
87.22
87.99
27.06.2017
Sopharmacy 9 EOOD**
87.22
87.99
11.09.2017
Sopharmacy 10 EOOD**
87.22
87.99
11.09.2017
Sopharmacy 11 EOOD**
87.22
87.99
07.12.2017
Sopharmacy 12 EOOD**
87.22
87.99
07.12.2017
Sopharmacy 13 EOOD**
87.22
87.99
07.12.2017
Sopharmacy 14 EOOD**
87.22
87.99
07.12.2017
Sopharmacy 15 EOOD**
87.22
87.99
07.12.2017
Sopharmacy 16 EOOD**
87.22
87.99
15.05.2018
Sopharmacy 17 EOOD**
87.22
87.99
15.05.2018
Sopharmacy 18 EOOD**
87.22
87.99
28.02.2019
Sopharmacy 19 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 20 EOOD**
87.22
87.99
01.10.2020
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
19
Subsidiaries
31.12.2025
31.12.2024
Date of
acquisition of
control
Date of release
from
control/merger
Companies in Bulgaria
Participation
%
Participation
%
Sopharmacy 21 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 22 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 23 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 24 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 25 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 26 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 27 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 28 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 29 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 30 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 31 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 32 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 33 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 34 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 35 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 36 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 37 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 38 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 39 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 40 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 41 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 42 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 43 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 44 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 45 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 46 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 47 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 48 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 49 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 50 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 51 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 52 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 53 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 54 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 55 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 56 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 57 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 58 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 59 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 60 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 61 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 62 EOOD**
87.22
87.99
01.10.2020
Sopharmacy 63 EAD**
87.22
87.99
01.10.2020
Sopharmacy 64 AD**
87.22
87.99
01.10.2020
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
20
Subsidiaries
31.12.2025
31.12.2024
Date of
acquisition of
control
Date of release
from
control/merger
Companies in Bulgaria
Participation
%
Participation
%
Sopharmacy 65 EOOD**
87.2
87.99
13.03.2024
Sopharmacy 66 EOOD**
87.22
87.99
21.02.2024
Sopharmacy 67 EOOD**
87.2
87.99
21.02.2024
Sopharmacy 68 EOOD**
87.2
87.99
21.02.2024
SofTech Services EOOD
100.00
-
28.02.2025
Sopharmacy Plus EOOD**
87.22
-
16.07.2025
* effective percentage of participation
** indirect participation
Foreign companies
Participation
%
Participation
%
PAO Vitamini
100.00
100.00
18.01.2008
Sopharma Warsaw SP. Z.O.O
100.00
100.00
23.11.2010
Sopharma Poland Z.O.O. - in liquidation
-
60.00
16.10.2003
OOO Sopharma Ukraine
100.00
100.00
07.08.2012
02.01.2025
TOO Sopharma Kazakhstan
100.00
100.00
06.11.2014
Sopharma Trading D.o.o.**
87.22
87.99
09.08.2017
Pharmachim EOOD
100.00
100.00
14.04.2020
Sopharma Rus ООО
100.00
100.00
13.10.2023
Pharmanova D.O.O.
100.00
75.00
13.08.2024
Sopharmacy D.O.O.**
87.22
87.99
30.08.2024
SOO Brititrade**
68.90
69.51
10.07.2024
ODO SalusLine**
44.79
45.18
10.07.2024
ООО Tabina**
68.15
68.75
10.07.2024
ООО Bellerophon**
48.92
49.35
10.07.2024
ООО Ne Ska**
68.90
69.51
10.07.2024
OOO Fitobel**
68.90
69.51
10.07.2024
ООО AlfaApoteka**
68.90
52.13
10.07.2024
ООО DabradzeyaPharm**
68.90
69.51
10.07.2024
AU Great Pharmacy**
87.22
87.99
09.10.2024
BOOO SpetsAPharmacia**
68.90
69.51
31.12.2024
* effective percentage of participation
** indirect participation
• Sopharmacy EOOD is a subsidiary of Sopharma Trading AD whereas the latter holds 100% of the
capital of Sopharmacy EOOD;
• Sopharmacy 2 EOOD is a subsidiary of Sopharmacy EOOD whereas the latter holds 100% of the
capital of Sopharmacy 2 EOOD;
• Sopharmacy 3 EOOD is a subsidiary of Sopharmacy EOOD whereas the latter holds 100% of the
capital of Sopharmacy 3 EOOD;
• Sopharmacy 4 EOOD is a subsidiary of Sopharmacy EOOD whereas the latter holds 100% of the
capital of Sopharmacy 4 EOOD;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
21
• Sopharmacy 5 EOOD is a subsidiary of Sopharmacy EOOD whereas the latter holds 100% of the
capital of Sopharmacy 5 EOOD;
• Sopharmacy 6 EOOD is a subsidiary of Sopharmacy EOOD whereas the latter holds 100% of the
capital of Sopharmacy 6 EOOD;
• Sopharmacy 7 EOOD is a subsidiary of Sopharmacy EOOD whereas the latter holds 100% of the
capital of Sopharmacy 7 EOOD;
• Sopharmacy 8 EOOD is a subsidiary of Sopharmacy EOOD whereas the latter holds 100% of the
capital of Sopharmacy 8 EOOD;
• Sopharmacy 9 EOOD is a subsidiary of Sopharmacy EOOD whereas the latter holds 100% of the
capital of Sopharmacy 9 EOOD;
• Sopharmacy 10 EOOD is a subsidiary of Sopharmacy EOOD whereas the latter holds 100% of the
capital of Sopharmacy 10 EOOD;
• Sopharmacy 11 EOOD is a subsidiary through Sopharma Trading AD whereas the latter holds
100% of the capital of Sopharmacy 11 EOOD;
• Sopharmacy 12 EOOD is a subsidiary through Sopharma Trading AD whereas the latter holds
100% of the capital of Sopharmacy 12 EOOD;
• Sopharmacy 13 EOOD is a subsidiary through Sopharma Trading AD whereas the latter holds
100% of the capital of Sopharmacy 13 EOOD;
• Sopharmacy 14 EOOD is a subsidiary through Sopharma Trading AD whereas the latter holds
100% of the capital of Sopharmacy 14 EOOD;
• Sopharmacy 15 EOOD is a subsidiary through Sopharma Trading AD whereas the latter holds
100% of the capital of Sopharmacy 15 EOOD;
• Sopharmacy 16 EOOD is a subsidiary through Sopharmacy EOOD whereas the latter holds 100%
of the capital of Sopharmacy 16 EOOD;
• Sopharmacy 17 EOOD is a subsidiary thro of Sopharmacy EOOD whereas the latter holds 100%
of the capital of Sopharmacy 17 EOOD;
• Sopharmacy 18 EOOD is a subsidiary through Sopharmacy EOOD whereas the latter holds 100%
of the capital of Sopharmacy 18 EOOD;
• Sopharmacy 19 EOOD is a subsidiary through Sopharmacy 61 EOOD whereas the latter holds
100% of the capital of Sopharmacy 19 EOOD;
• Sopharmacy 20 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 20 EOOD;
• Sopharmacy 21 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 21 EOOD;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
22
• Sopharmacy 22 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 22 EOOD;
• Sopharmacy 23 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 23 EOOD;
• Sopharmacy 24 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 24 EOOD;
• Sopharmacy 25 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 25 EOOD;
• Sopharmacy 26 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 26 EOOD;
• Sopharmacy 27 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 27 EOOD;
• Sopharmacy 28 EOOD is a subsidiary through Sopharmacy 60 EOOD whereas the latter holds
100% of the capital of Sopharmacy 28 EOOD;
• Sopharmacy 29 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 29 EOOD;
• Sopharmacy 30 EOOD is a subsidiary through Sopharmacy 61 EOOD whereas the latter holds
100% of the capital of Sopharmacy 30 EOOD;
• Sopharmacy 31 EOOD is a subsidiary through Sopharmacy 60 EOOD whereas the latter holds
100% of the capital of Sopharmacy 31 EOOD;
• Sopharmacy 32 EOOD is a subsidiary through Sopharmacy 63 EOOD whereas the latter holds
100% of the capital of Sopharmacy 32 EOOD;
• Sopharmacy 33 EOOD is a subsidiary through Sopharmacy 61 EOOD whereas the latter holds
100% of the capital of Sopharmacy 33 EOOD;
• Sopharmacy 34 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 34 EOOD;
• Sopharmacy 35 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 35 EOOD;
• Sopharmacy 36 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 36 EOOD;
• Sopharmacy 37 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 37 EOOD;
• Sopharmacy 38 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 38 EOOD;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
23
• Sopharmacy 39 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 39 EOOD;
• Sopharmacy 40 EOOD is a subsidiary through Sopharmacy 63 EOOD whereas the latter holds
100% of the capital of Sopharmacy 40 EOOD;
• Sopharmacy 41 EOOD is a subsidiary through Sopharmacy 60 EOOD whereas the latter holds
100% of the capital of Sopharmacy 41 EOOD;
• Sopharmacy 42 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 42 EOOD;
• Sopharmacy 43 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 43 EOOD;
• Sopharmacy 44 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 44 EOOD;
• Sopharmacy 45 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 45 EOOD;
• Sopharmacy 46 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 46 EOOD;
• Sopharmacy 47 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 47 EOOD;
• Sopharmacy 48 EOOD is a subsidiary through Sopharmacy 61 EOOD whereas the latter holds
100% of the capital of Sopharmacy 48 EOOD;
• Sopharmacy 49 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 49 EOOD;
• Sopharmacy 50 EOOD is a subsidiary through Sopharmacy 60 EOOD whereas the latter holds
100% of the capital of Sopharmacy 50 EOOD;
• Sopharmacy 51 EOOD is a subsidiary through Sopharmacy 60 EOOD whereas the latter holds
100% of the capital of Sopharmacy 51 EOOD
• Sopharmacy 52 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 52 EOOD;
• Sopharmacy 53 EOOD is a subsidiary through Sopharmacy 40 EOOD whereas the latter holds
100% of the capital of Sopharmacy 53 EOOD;
• Sopharmacy 54 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 54 EOOD;
• Sopharmacy 55 EOOD is a subsidiary through Sopharmacy 60 EOOD whereas the latter holds
100% of the capital of Sopharmacy 55 EOOD;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
24
• Sopharmacy 56 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 56 EOOD;
• Sopharmacy 57 EOOD is a subsidiary through Sopharmacy 59 EOOD whereas the latter holds
100% of the capital of Sopharmacy 57 EOOD;
• Sopharmacy 58 EOOD is a subsidiary through Sopharmacy 60 EOOD whereas the latter holds
100% of the capital of Sopharmacy 58 EOOD;
• Sopharmacy 59 EOOD is a subsidiary through Sopharmacy 63 EOOD whereas the latter holds
100% of the capital of Sopharmacy 59 EOOD;
• Sopharmacy 60 EOOD is a subsidiary through Sopharmacy 63 EOOD whereas the latter holds
100% of the capital of Sopharmacy 60 EOOD;
• Sopharmacy 61 EOOD is a subsidiary through Sopharmacy 63 EOOD whereas the latter holds
100% of the capital of Sopharmacy 61 EOOD;
• Sopharmacy 62 EOOD is a subsidiary through Sopharmacy 63 EOOD whereas the latter holds
100% of the capital of Sopharmacy 62 EOOD;
• Sopharmacy 63 EAD is a subsidiary through Sopharma Trading AD whereas the latter holds 100%
of the capital of Sopharmacy 63 EAD;
• Sopharmacy 64 AD is a subsidiary through Sopharma Trading AD whereas the latter holds 100%
of the capital of Sopharmacy 64 AD;
• Sopharmacy 65 EOOD is a subsidiary through Sopharmacy EOOD whereas the latter holds 100%
of the capital of Sopharmacy 65 EOOD;
• Sopharmacy 66 EOOD is a subsidiary through Sopharmacy EOOD whereas the latter holds 100%
of the capital of Sopharmacy 65 EOOD;
• Sopharmacy 67 EOOD is a subsidiary through Sopharmacy EOOD whereas the latter holds 100%
of the capital of Sopharmacy 67 EOOD;
• Sopharmacy 68 EOOD is a subsidiary through Sopharmacy EOOD whereas the latter holds 100%
of the capital of Sopharmacy 68 EOOD;
• Sopharma Trading D.o.o., Serbia is a subsidiary of Sopharma Trading AD whereas the latter holds
100% of the capital of Sopharma Trading d.o.o.;
• Sopharmacy D.o.o., Serbia is a subsidiary through Sopharma Trading D.o.o. - Sopharma Trading
D.o.o. owns 100% of the capital of Sopharmacy D.o.o.;
• SOOO Brititrade, Belarus is a subsidiary through Sopharma Trading AD - Sopharma Trading AD
owns 79% of the capital of SOOO Brititrade;
• ODO SalusLine, Belarus is a subsidiary through SOOO Brititrade - SOOO Brititrade owns 65% of
the capital of ODO SalusLine;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
25
• OOO Tabina, Belarus is a subsidiary through SOOO Brititreid - SOOO Brititreid owns 98.9% of
the capital of OOO Tabina;
• OOO Bellerophon, Belarus is a subsidiary through SOOO Brititreid - SOOO Brititreid owns 71%
of the capital of OOO Bellerophon;
• OOO Ne Ska, Belarus is a subsidiary through SOOO Brititreid - SOOO Brititreid owns 80% of the
capital of OOO Ne Ska;
• OOO Fitobel, Belarus is a subsidiary through SOOO Brititrade - SOOO Brititrade owns 100% of
the capital of OOO Fitobel;
• OOO AlfaApteka, Belarus is a subsidiary through SOOO Brititrade – SOOO Brititrade owns 75%
of AlfaApteka's capital;
• OOO DabradzeyaPharm, Belarus is a subsidiary through OOO Brititrade - SOOO Brititrade owns
100% of the capital of OOO DabradzeyaPharm;
• Apotekarska Ustanova (AU) Great Pharmacy, Serbia is a subsidiary through Sopharma Trading
D.o.o. - Sopharma Trading D.o.o. owns 100% of the capital of Apotekarska Ustanova (AU) Great
Pharmacy;
• BOOO SpetsApharmacia, Belarus is a subsidiary through SOOO Brititrade - SOOO Brititrade
owns 100% of the capital of BOOO SpetsApharmacia;
• Sopharmacy Plus EOOD is a subsidiary through Sopharma Trading AD - Sopharma Trading AD
owns 100% of the capital of Sopharmacy Plus EOOD;
The main activity of the companies in the Group is concentrated in the pharmaceutical sector, with
the exception of certain companies whose activity is in the field of securities investment.
The parent company holds a license for the manufacture/import of medicinal products No. BG /
MIA -0543 dated 30.10.2025, issued by the Bulgarian Drug Agency (BDA).
The parent company holds a license for wholesale trade in medicinal products No. BG / WDAIMP
– 0583 dated 07.08.2025, issued by the Bulgarian Drug Agency (BDA).
The subject of activity of the companies of the Group is as follows:
• Sopharma AD - production and trade of medicinal substances (active ingredients) and medicinal
forms; scientific-research and engineering-implementation activity in the field of medicinal
products; production and trade of veterinary medical products and performance of laboratory
services related to the examination of animal blood samples; production and sale of medicines,
cosmetic products, food supplements, packaging of active substances, chemical substances and
mixtures.
• Sopharma Trading AD - trade in pharmaceutical products;
• Sopharmacy EOOD – franchising, know-how, property rental, trade and others;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
26
• Sopharmacy 2 EOOD to Sopharmacy 5 EOOD, Sopharmacy 7 EOOD to Sopharmacy 62 and
Sopharmacy 65 EOOD to Sopharmacy 68 EOOD – retail trade in medicinal products;
• Sopharmacy 6 EOOD – online and offline retail trade of medicinal products;
• Sopharmacy 63 EAD and Sopharmacy 64 AD - retail trade in medicinal products, franchising and
other services;
• PAO Vitamini, Ukraine - production and trade of pharmaceutical products;
• OOO Sopharma Ukraine, Ukraine - trade in pharmaceutical products and market and public
opinion research;
• Sopharma Trading D.o.o. - wholesale trade in medicinal products;
• Sopharma Warsaw SP. Z.O.O., Poland - wholesale trade in pharmaceutical and medical goods and
market research and public opinion;
• Sopharma Kazakhstan LLP, Kazakhstan - trade in pharmaceutical products;
• Pharmachim EOOD, Serbia – consulting activity.
• Sopharma Rus OOO, Russia - wholesale trade in pharmaceutical products and market and public
opinion research.
• Pharmanova D.O.O., Serbia - production of and trade with pharmaceutical products.
• SOOO Britireid, Belarus - wholesale of medicinal products and medical devices.
• ODO SalusLine, Belarus - retail of medicinal products.
• OOO Tabina, Belarus - retail of medicinal products.
• OOO Bellerofon, Belarus - retail of medicinal products.
• OOO Ne Ska, Belarus - retail of medicinal products.
• OOO Fitobel, Belarus - retail of medicinal products.
• OOO AlfaApteka, Belarus - consulting activities.
• OOO DabradzeyaPharm, Belarus - retail of medicinal products.
• Sopharmacy D.o.o., Serbia - retail of pharmaceutical products.
• Pharmacy Establishment (AU) Great Pharmacy, Serbia - retail of pharmaceutical products.
• BOOO SpetApharmacy, Belarus - retail trade in medicinal products.
• SofTech Services EOOD - provision and development of software services and solutions
• Sopharmacy Plus EOOD – wholesale trade in OTC products.
The parent company and subsidiaries: Sopharma Trading AD, Sopharmacy EOOD - Sopharmacy 62
EOOD, Sopharmacy 63 EAD, Sopharmacy 64 AD, Sopharmacy 65 EOOD - Sopharmacy 68 EOOD,
SofTech Services EOOD and Sopharmacy Plus EOOD operate in Bulgaria.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
27
Sopharma Warsaw SP. Z.O.O. operate in Poland, PAO Vitamini and OOO Sopharma Ukraine - in
Ukraine, Sopharma Trading D.o.o., Pharmachim EOOD, Pharmanova D.O.O., Sopharmacy D.o.o. and
Apotekarska ustanova (AU) Great Pharmacy - in Serbia, TOO Sopharma Kazakhstan - in Kazakhstan,
Sopharma Rus ООО – in Russia, SOOO Britireid, ODO SalusLine, ООО Tabina, ООО Bellerophon, ООО
Ne Ska, ООО Fitobel, ООО AlfaApteka, ООО Dabradzeya Pharm and BOOO SpetsApharmacia – in
Belarus.
As at 31 December 2025, the interest of the Group in joint ventures is as follows:
• Momina Krepost AD – 37.47% interest of Sopharma AD. The principal activities of the joint
venture include development, implementation and production of human and veterinary medical
products. It has been a Joint venture for the Group since 10 March 2021.
• ZAO Kompaniya Interpharm , Belarus - joint venture through SOOO Brititrade 50% participation.
The business activity of the joint venture is retail trade in pharmaceutical products. The company
is a joint venture for the Group from 10.07.2024.
As at 31 December 2025, the interest of the Group in associates is as follows:
• Doverie United Holding AD – 20.81% interest of Sopharma AD. The principal activities of the
company include acquisition, management, assessment and sale of shares in Bulgarian and foreign
companies – legal entities.
• Sopharma Properties REIT – 45.65% interest of Sopharma AD. The principal activities of the
company include investing cash raised by issues of securities in real estate through purchase pf
right of ownership and other rights in rem over real estate, construction and enhancements in order
to provide the real estate for management, lease and/or sale.
• Sopharma Buildings REIT – 32.72% participation of Sopharma AD. The subject of the company's
activity is the investment of funds raised through the issuance of securities in real estate (real estate
securitization) through the purchase of ownership rights and other real rights over real estate,
renting, leasing, leasing and/or selling. them
• ODO Alenpharm-plus – associated company through SOOO Brititrade 40.10% participation. The
company's business activity is retail trade in medicinal products.
• OOO Galenapharm – associated company through SOOO Brititrade 47% participation. The
company's business activity is retail trade in medicinal products.
• ODO Medzhel – associated company through SOOO Brititrade 40% participation. The company's
business activity is retail trade in medicinal products.
As of the date of these consolidated annual financial statements, the average number of Group's
personnel was 5,932 workers and employees (2024: 5,599 workers and employees).
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
28
1.3. Main indicators of the economic environment
Currency exchange rates are among the main economic indicators of the business environment that
have affected the activities of the Group companies throughout the period 2023 – 2025. The relevant
exchange rates are presented in the table below:
Indicator
2023
2024
2025
USD/BGN average for the year/period
1.79134
1.80797
1.73424
USD/BGN at the end of the year.period
1.76998
1.88260
1.66355
PLN/BGN average for the year.period
0.43095
0.45431
0.46124
PLN/BGN at the end of the year.period
0.4507
0.4575
0.46278
RSD/BGN average for the year.period
0.01668
0.0167
0.01669
RSD/BGN at the end of the year.period
0.01669
0.01671
0.01668
UAH/BGN average for the year.period
0.04945
0.04506
0.04162
UAH/BGN at the end of the year.period
0.04633
0.04453
0.03923
EUR/BGN average for the year.period
1.95583
1.95583
1.95583
EUR/BGN at the end of the year.period
1.95583
1.95583
1.95583
KZT/BGN average for the year.period
0.00397
0.00386
0.00333
KZT/BGN at the end of the year.period
0.00389
0.00358
0.00331
RUB/BGN average for the year.period
0.02140
0.01953
0.02081
RUB/BGN at the end of the year.period
0.01985
0.01657
0.02125
BYN/BGN average for the year.period
-
0.55697
0.56536
BYN/BGN at the end of the year.period
-
0.54022
0.57251
Source: BNB, National Banks of Ukraine, Poland, Serbia, Belarus, Kazakhstan, Russia, Belarus, and Moldova.
1.4. Macroeconomic situation
The Group maintains a stable capital base and gearing ratio.
The parent company and a large part of the subsidiaries in the Group carry out their activities in
the conditions of increasing inflation. The management managed to maintain a good financial condition of
the companies in the Group by indexing the income and expenses within reasonable limits.
The group maintains a stable capital base and debt ratio.
1.5. Military conflicts between Rusia and Ukraine and in the Middle East – impact and effects
The military conflicts in the Middle East, as well as the one between Russia and Ukraine, and the
related economic sanctions and other measures taken by governments around the world, have a significant
impact on both the local economies of individual countries and the global economy. Typically, in such
conflicts, pharmaceutical products are not subject to sanctions or other restrictions in order to avoid a
humanitarian crisis.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
29
The Group's management has not identified areas in the financial statements on which the military
conflict in the Middle East has a direct and material impact and effects, including in relation to the valuation
of individual assets and liabilities. The Group has no significant operations in the Middle EaStr.
The Group has investments in two subsidiaries in Ukraine and one subsidiary in Russia. As of the
date of preparation of these consolidated financial statements, the assets of these subsidiaries are not
physically affected by military actions, but it is possible that in the future the value of these investments
may need to be reviewed depending on the development of the war and its impact on the activities of the
companies.
Despite the potential negative economic effects of the war and its development into a long and
protracted conflict, the Group has sufficient current assets and financing to continue its existence as a going
concern.
1.6. Climate matters
The Group considers environmental protection and the slowing down of climate change to be part
of its corporate social policy and develops its activities in accordance with environmental protection
requirements. The Groups applies measures for: separate waste collection, minimizing, utilization and
recycling of manufacturing and general waste; providing appropriate training to staff on matters related to
environmental protection and pollution prevention. The Group actively invests in renewable energy sources
for own use.
As of December 31, 2025, the Group has identified insignificant risks caused by climate change
that would affect the Group's assets and liabilities. The Group is monitoring changes in legislation resulting
from climate issues and at this stage has not identified a possible direct impact on the Group's future cash
flows, financial results and financial position.
2. MATERIAL ACCOUNTING POLICIES OF THE GROUP
2.1. Basis of preparation of the consolidated financial statements
The consolidated financial statements for the year ending 31 December 2025 have been prepared
in accordance with all IFRS accounting standards, which consist of: financial reporting standards and
interpretations of the IFRS Interpretations Committee (IFRIC) approved by the International Accounting
Standards Board (IASB), and International Accounting Standards and Interpretations of the Standards
Interpretations Committee (SIC) approved by the International Accounting Standards Committee (IASC),
which are effective on 1 January 2025, and which have been adopted by the European Commission. IFRS
accounting standards as adopted by the EU is the commonly accepted name of the general purpose
framework-accounting basis equivalent to the framework introduced by the definition under § 1, p. 8 of the
Supplementary Provisions of the Accounting Law under the title “International Accounting Standards”
(IAS).
The consolidated financial statements of the Group have been prepared on a going concern basis
with the assumption that the Group will continue to exist for the foreseeable future.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
30
For the current financial year, the Group has adopted all new and/or revised standards and
interpretations issued by the International Accounting Standards Board (IASB) and the IFRS Interpretations
Committee, respectively, that were relevant to its activities.
Since the adoption of these standards and/or interpretations, effective for annual periods beginning
on or after January 1, 2025, there have been no changes in the company's accounting policies, except in
relation to the classification and disclosure of non-current liabilities subject to restrictive covenants, as well
as some new and expansion of already established disclosures, without leading to other changes in the
classification or measurement of individual reporting items and transactions.
The new and/or amended standards and interpretations include:
• Amendments to Amendments to IAS 21 Effects of Changes in Foreign Exchange Rates: No
Exchange Rates (effective for annual periods beginning on or after 1 January 2025,
adopted by the EC). These amendments clarify and require entities to apply a consistent
approach in determining: a) when a currency is convertible into another currency and
when it is not, as they introduce definitions for this. A currency is convertible into another
currency when the entity can acquire the other currency within a reasonable time frame,
including normal administrative delays and a market mechanism that allows the currency
exchange transaction to give rise to enforceable rights and obligations. If the entity can
obtain only an insignificant part of the other currency at the measurement date for the
specified purpose, it is considered that the currency is not convertible into the other
currency; b) what exchange rate to apply when one currency cannot be converted into
another, specifying two mechanisms: the first is the use of an observable exchange rate -
without further adjustments, an observable rate for another purpose and the first exchange
rate at which the conversion can be made; the second is by using another valuation
technique; c) the information that an entity should disclose when one currency cannot be
converted into another to enable users of its financial statements to understand how this
affects the entity's financial performance, financial position and cash flows. The
amendments shall be applied retrospectively. Earlier application is permitted.
As of the date of approval for issue of these financial statements, the following new standards,
amended standards and interpretations have been issued, but are effective for subsequent reporting periods
or are not yet effective (and/or have not been adopted by the EC):
• Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments:
disclosures – Contracts relating to electricity from renewable sources (effective for annual
periods beginning on or after 1 January 2026, not adopted by the EC). The amendments
introduce requirements for the accounting of contracts relating to electricity from
renewable sources, namely: a) adding factors and requirements that an entity must
consider when applying paragraph 2.4 of IFRS 9 when accounting for contracts for
electricity from renewable sources to clarify under what circumstances the purchase of
electricity can be accounted for as “own use” and benefit from an exemption from the
accounting requirements;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
31
b) adding requirements for the accounting of contracts relating to electricity from
renewable sources as hedging instruments and; c) adding new disclosure requirements to
enable investors to understand the effect of these contracts on the financial performance
and cash flows of entities using such contracts.
• Amendments to IFRS 9 Financial Instruments and IFRS 7 Financial Instruments:
Disclosures – Classification and Measurement of Financial Instruments (effective for
annual periods beginning on or after 1 January 2026, not adopted by the EC). The
amendments relate to: a) clarifying the date of initial recognition and derecognition of
financial assets and liabilities and introducing a new exception for financial liabilities
settled through an electronic payment system; b) adding additional guidance for assessing
whether a financial asset meets the “only payment of principal and interest” (SPE)
criterion; c) updating the disclosures for equity instruments measured at fair value through
other comprehensive income; and d) adding new disclosures for certain instruments with
contractual terms that can change the timing or amount of the agreed cash flows.
• Annual Improvements, Part 11 to: IFRS 1 First-time Adoption of International Financial
Reporting Standards, IFRS 7 Financial Instruments: Disclosures, Guidance on the
Implementation of IFRS 7 Financial Instruments: Disclosures, IFRS 9 Financial
Instruments, IFRS 10 Consolidated Financial Statements, IAS 7 Cash Flow Statement
(effective for annual periods beginning on or after 1 January 2026, not endorsed by the
EC). These improvements make partial changes to the following standards: a) IFRS 1 - in
the requirements for hedge accounting by a first-time adopter of IFRS in order to align the
terminology between IFRS 1 and IFRS 9 with regard to hedge accounting. In IFRS 1, the
term “conditions” is replaced by the term “criteria”, in addition, references are made to
the paragraphs in IFRS 9 relating to hedge accounting; b) IFRS 7 – in the requirements
for disclosure of gain or loss on derecognition. The change corrects a reference to
paragraph 27A in IFRS 7, which was removed from the standard upon the entry into force
of IFRS 13 Fair Value Measurement, and a new reference is made to the relevant
paragraphs in IFRS 13. The terminology “material information that was not based on
observable market data” is replaced by “significant adverse input data”; c) Guidance on
the implementation of IFRS 7: - in the “Introduction” it is specified that the guidance does
not illustrate all the requirements in the cited paragraphs of IFRS 7; - in disclosure of
deferred difference between fair value and transaction price on initial recognition of
financial instruments, inconsistencies between paragraph NB14 of the Guidelines and
paragraph 28 of IFRS 7 that arose with the entry into force of IFRS 13 are corrected; - in
disclosure of credit risk, the wording is changed to make the text easier to understand;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
32
d) IFRS 9 - in derecognition of a lease liability - the improvements add a reference to
paragraph 3.3.3 of IFRS 9 in order to resolve potential confusion for a lessee applying the
derecognition requirements in the standard; - in transaction price - the term “transaction
price” is deleted from paragraph 5.1.3 and Appendix A of IFRS 9, and in paragraph 5.1.3.
the improvements refer to the definition in IFRS 15, the meaning of which is required by
the specific paragraph; e) IFRS 10 – Determining De facto Agents – the improvements
remove inconsistencies between paragraphs B73 and B74 of IFRS 10 in order to eliminate
potential confusion related to determining whether individuals are acting as de facto
agents; e) IAS 7 – Cost Method – the improvements remove the term “cost method” from
paragraph 37 of IAS 7, as the term no longer exists as a definition in IFRS.
• IFRS 18 – Presentation and Disclosure in Financial Statements (effective for annual
periods beginning on or after 01.01.2027, not adopted by the EC). IFRS 18 replaces IAS
1 Presentation of Financial Statements. The requirements in IAS 1 that are unchanged
have been transferred to IFRS 18 with immaterial adjustments to the wording or to IAS 8
Accounting Policies, Changes in Accounting Estimates and Errors and IFRS 7 Financial
Instruments: Disclosures, again with immaterial adjustments to the wording. The new
standard introduces immaterial changes to IAS 7 Statement of Cash Flows, IAS 33
Earnings per Share and IAS 34 Interim Financial Reporting. IFRS 18 aims to improve
financial reporting by: a) adding certain categories (operating, investing and financial) an d
subtotals (operating profit and profit before financial income and expenses and income
taxes) in the income statement to facilitate comparability and consistency in financial
information; b) requiring disclosure in the notes to the financial statements of
management-defined indicators related to the income statement in order to increase
transparency regarding their calculation and to gain an understanding of how the entity’s
management views its financial performance; d) adding new principles for grouping
(aggregation and disaggregation) of information, setting requirements for whether
information should be presented as part of the components (elements) of the financial
statements or in the notes to them. Providing principles for the required level of deta il
makes the disclosed information more effective. Although IFRS 18 will not affect the way
entities calculate their financial results, the standard will introduce changes to how they
are presented and disclosed.
• IFRS 19 – Non-Publicly Reporting Subsidiaries: Disclosures (effective for annual periods
beginning on or after 1 January 2027, not adopted by the EC). IFRS 19 allows qualifying
subsidiaries to provide reduced disclosures when applying IFRSs in their financial
statements. The reduced disclosure requirements of IFRS 19 balance the need for financial
statement users to provide information with the cost savings required for qualifying
subsidiaries to prepare full IFRS disclosures. IFRS 19 is a voluntary standard for
qualifying subsidiaries.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
33
A subsidiary is eligible if: it does not have a public reporting entity; and has an ultimate
or intermediate parent undertaking that prepares consolidated financial statements that are
available for public use and that comply with IFRS requirements.
• Amendments to IFRS 19 – Non-Publicly Reported Subsidiaries: Disclosures (effective for
annual periods beginning on or after 1 January 2027, not adopted by the European
Commission). The amendments update the disclosure requirements for new and/or
amended standards issued between 28 February 2021 and 1 May 2024, reflecting the
principles set out in IFRS 19 for developing reduced disclosure requirements. The relevant
requirements were fully included in the edition of the standard published in May 2024.
The amendments introduce reduced disclosure requirements in the following standards:
IFRS 18 – Presentation and Disclosure in Financial Statements; Amendments to IFRS 9
Financial Instruments and IFRS 7 Financial Instruments: Disclosures – Contracts relating
to electricity from renewable sources; IAS 7 Cash Flow Statements – Supplier Financing
Arrangements; Amendments to IAS 12 Income Taxes – International Tax Reform –
Sample Rules for Pillar 2 Model International Tax Reform; and Amendments to IAS 21
The Effects of Changes in Exchange Rates: No Exchange Rates.
• Amendments to IAS 21 The Effects of Changes in Exchange Rates Translation of Financial
Statements into a Presentation Currency of a Hyperinflationary Economy (effective for
annual periods beginning on or after 1 January 2027, not adopted by the EC). These
amendments provide guidance on how to translate the financial statements of entities
whose functional currency is not a currency of a hyperinflationary economy into a
presentation currency that is a hyperinflationary economy. When an entity translates
amounts from a functional currency that is the currency of a non-hyperinflationary
economy into a presentation currency that is the currency of a hyperinflationary economy,
the entity translates those amounts, including comparative information, using the closi ng
rate at the date of the most recent statement of financial position; when the entity's
presentation currency ceases to be the currency of a hyperinflationary economy and its
functional currency continues to be the currency of a non-hyperinflationary economy, the
entity applies prospectively (without restatement of comparative information) the method
currently applicable in IAS 21 in similar circumstances.
• IFRS 10 (amended) – Consolidated financial statements and IAS 28 (amended) –
Investments in associates and joint ventures – on sales or contributions of assets between
an investor and its associates or joint ventures (with a deferred effective date subject to
determination by IAASB). These changes are aimed at addressing the accounting
treatment of sales or contributions of assets between an investor and its associates or joint
ventures. They confirm that the accounting treatment depends on whether or not the assets
sold or the non-monetary assets contributed constitute a substantial "business" within the
meaning of IFRS 3.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
34
If these assets as a whole do not meet the definition of a “business” the investor
recognizes a gain or loss up to the percentage corresponding to the share of the other
unrelated investors in the associate or joint venture. In cases where assets are sold or non-
monetary assets are contributed that collectively constitute a "business", the investor fully
recognizes the profit or loss from the transaction. These changes will be applied
prospectively. The IAASB postponed the start date of application of these changes
indefinitely.
Management is in the process of studying, analyzing and assessing the potential effects of the
aforementioned new standards, amended standards and interpretations on the financial statements and
accounting policies of the Group.
The consolidated annual financial statements have been prepared on the basis of historical cost,
with the exception of property, plant and equipment, investment properties, financial assets in the form of
derivative financial instruments (warrants) and debt securities (bonds) through profit or loss and financial
assets in the form of equity investments through other comprehensive income, which are measured at
revalued or fair value.
The Bulgarian subsidiaries of the Group, the associated companies: Doverie United Holding AD,
Sopharma Properties REIT and Sopharma Buildings REIT and the joint venture Momina Krepost AD keep
their accounting records in Bulgarian lev (BGN), which they accept as their functional and reporting
currency of presentation. The foreign subsidiaries organize their accounting and reporting in accordance
with the requirements of the relevant local legislation: OOO Sopharma Ukraine and PAO Vitamini –
legislation of Ukraine, Sopharma Trading D.o.o., Pharmahim EOOD, Pharmanova D.O.O., Sopharmacy
D.o.o. and Apothecary Institution (AU) Great Pharmacy – legislation of Serbia, Sopharma Poland Z.O.O.
– in liquidation, Sopharma Warsaw SP. Z.O.O. - Polish legislation, TOO Sopharma Kazakhstan -
legislation of Kazakhstan, Sopharma Rus OOO – Russian legislation and subsidiaries: SOOO Brititrade,
ODO SalusLine, OOO Tabina, OOO Bellerophon, OOO Ne Ska, OOO Fitobel, OOO Alfaapteka and OOO
DabradzeyaPharm, associated companies: ODO Alenpharm-plus, OOO Galenapharm, ODO Medzhel and
BOOO SpecApharmatsiya and joint venture: ZAO Company Interpharm – Belarusian legislation. The
companies maintain their accounting records in the respective local currency - Ukrainian hryvnia (UAH),
Serbian dinar (RSD), euro (EUR), Polish zloty (PLN), Kazakh tenge (KZT), Russian ruble (RUB) and
Belarusian ruble (BYN).
The data in the consolidated annual financial statements and the notes are presented in BGN ‘000
unless explicitly stated otherwise, and the Bulgarian Lev has been adopted as the Group’s presentation
currency. The separate financial statements of foreign companies are restated from local currencies into BGN
for the purposes of the consolidated financial statements as per the Group’s policy (Note 2.5).
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35
The presentation of the consolidated annual financial statements in accordance with International
Financial Reporting Standards requires the management to make best estimates, accruals and reasonable
assumptions that affect the reported values of assets and liabilities, the amounts of income and expenses
and the disclosure of contingent receivables and payables as at the date of the consolidated financial
statements.
These estimates, accruals and assumptions are based on the information, which is available as of
the date of the consolidated financial statements, and therefore, the future actual results might be different
from them (whereas in the conditions of financial crisis the uncertainties are more significant).
The items presuming a higher level of subjective assessment or complexity or where the
assumptions and accounting estimates are material for the consolidated financial statements, are disclosed
in Note 2.32 and Notes 16, 17, 18, 19, 20, 21, 22, 45.
2.2. Definitions
Parent company
This is a company that has control over one or more other companies, in which it has invested.
Having control means that the investor is exposed, or has rights, to variable returns from its involvement
with the investee, and has the ability to affect those returns through its power over the investee.
The parent company is Sopharma AD, Bulgaria (Note 1).
Subsidiary
A subsidiary is a company, or another entity, that is controlled directly or indirectly by the parent
company.
The subsidiary companies are consolidated as from the date on which the effective control over
them has been acquired by the Group and are de-consolidated as from the date when the control over them
ceases and is transferred outside the Group. The full consolidation method is applied for their consolidation.
The subsidiaries are presented in Note 1.2.
Joint venture
A joint venture is a company or another entity established by virtue of a contractual arrangement
between the parent company as an investor and one or more other parties (companies) that start a common
business undertaking, and on which the joint venturers (including the parent, which also has such a status)
have a joint control.
Joint control exists when it is contractually agreed that the strategic financial and operating
decisions, relating to the joint venture, shall require mandatory unanimous consent of the joint venturers.
The latter have rights to the net assets of the joint venture.
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The joint venture is included in the consolidated financial statements of the Group by applying the
equity method – as from the date on which the joint control has been acquired by the venturer (the parent
company) and its consolidation under this method is ceased when the joint venture is transformed into a
subsidiary or when the joint control is transferred from the venturer to third parties.
The joint ventures are Momina Krepost AD and ZAO Company Interpharm (Note 1.2).
Associate
An associate is a company in which the investor (the parent company) exercises significant
influence but is neither a subsidiary nor a joint venture with the investor.
Significant influence is the right of participation in decision-taking with regard to financial and
operating policies of the investee but is not control or joint control over these policies. Usually it exists in
case of: (a) possession by the investor, directly or indirectly, of 20% to 50% of the shares in the capital of
the investee company (including by virtue of an agreement between shareholders), and (b) in addition, the
investor is represented in the managing body of the investee and/or participates in the decision-taking
process with regard to the policy and strategy of the investee, and/or significant transactions exist between
the investor and the investee.
The associate is included in the consolidated financial statements of the Group by applying the
equity method – from the date on which the investor (the parent company) acquires significant influence
and its consolidation under this method is ceased when associate is transformed into a subsidiary or when
it is accepted that the significant influence is transferred from the investor to third parties.
The associates are Doverie United Holding AD, Sopharma Properties REIT, Sopharma buildings
REIT, ODO Alenpharm-plus, OOO Galenpharm and ODO Medzhel (Note 1.2).
2.3. Consolidation principles
The consolidated financial statements include the financial statements of the parent company and
the subsidiaries, the joint ventures and the associates, prepared as at 31 December, which is the reporting
date of the Group’s financial year. The 'economic entity' assumption has been applied in the consolidation
whereas for the measurement of non-controlling interest in business combinations and other forms of
acquisition of subsidiaries for which the 'proportionate share of net assets' method has been chosen.
For the purposes of consolidation, the financial statements of the subsidiaries, the joint ventures
and the associates have been prepared for the same reporting period as the parent company using uniform
accounting policies.
2.3.1. Consolidation of subsidiaries
In the consolidated financial statements, the financial statements of the included subsidiaries are
consolidated under the 'full consolidation' method, line-by-line, by applying accounting policies that are
uniform with regard to the significant reporting items. The investments of the parent company are
eliminated against its share in the equity of the subsidiaries at the date of acquisition.
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Intra-group transactions and balances, including unrealised intra-group gains and losses, are
eliminated in full. The effect of deferred taxes has been taken into account in these eliminating
consolidation entries.
The shares of shareholders – third parties in the subsidiaries other than these of the shareholders of
the parent company are presented separately in the consolidated statement of financial position, the
consolidated statement of comprehensive income and the statement of changes in equity as 'non-controlling
interest'. The non-controlling interest includes: (a) the combined share of the shareholders – third parties at
the date of initial consolidation in the fair value (deemed cost) of all identifiable assets acquired, liabilities
and contingent (crystallised) liabilities of the respective subsidiaries assumed, determined (based on the
share) through the proportionate method, and (b) the change in the share of these third parties in the equity
of each respective subsidiary from their initial consolidation to the end of the reporting period.
2.3.2. Acquisition of subsidiaries
The acquisition (purchase) method of accounting is used on the acquisition of a subsidiary (entity)
by the Group in business combinations. The consideration transferred includes the fair value at the date of
exchange of the assets transferred, the incurred or assumed liabilities and the equity instruments issued by
the acquirer in exchange of the control over the acquiree. It includes the fair value of any asset or liability
resulting from a contingent consideration arrangement. Acquisition-related direct costs are recognised as
current expenses when incurred except for the issue costs of debt or equity instruments, which are
recognised as equity components.
All identifiable assets acquired, liabilities and contingent (crystallised) liabilities assumed in the
business combination are measured initially at their fair values at the date of exchange. Any excess of the
aggregate consideration transferred (measured at fair value), the amount of non-controlling interest in the
acquiree and, in a business combination achieved in stages, the acquisition-date fair value of the acquiree's
previously held equity, over the acquired identifiable assets and assumed liabilities of the acquirer, is treated
and recognised as goodwill. If acquirer's share in the fair value of acquired net identifiable assets exceeds
the cost of acquisition of the business combination, this excess is recognised immediately in the
consolidated statement of comprehensive income of the Group in the item 'gains/(losses) on
acquisition/(disposal) of subsidiaries'. Any non-controlling interest in a business combination is measured
based on the method of the 'proportionate share of the net assets' of the acquiree.
When a business combination for the acquisition of a subsidiary is achieved in stages, all previous
investments held by the acquirer at the acquisition date are revalued to fair value and the effects of this
revaluation are recognised in the current profit or loss of the Group, respectively in 'finance income' and
'finance costs' or 'gains/(losses) from associates and joint ventures', and all previously recorded effects in
other comprehensive income are recycled.
The Group applies provisionary accounting for the items resulting from business combinations
(acquisitions) when the initial reporting is not complete at the end of the reporting period when the business
combinations was performed.
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This provisionary accounting is adjusted in the period of measurement, or additional assets and
liabilities are recognised to reflect the new information on facts and circumstances which were already
present at the date of acquisition. Adjustments made in the measurement period are stated retrospectively,
and the comparatives are adjusted as at the acquisition date.
2.3.3. Disposal of subsidiaries
Upon a sale or other form of loss (transfer) of control over a subsidiary:
• The carrying amounts of the assets and liabilities (including any attributable goodwill) of
the subsidiary are derecognised at the date when control is lost;
• The non-controlling interest in the subsidiary is derecognised at carrying amount in the
consolidated statement of financial position at the loss of control date, including all components of other
comprehensive income related thereto;
• The fair value of the consideration received from the transaction, event or operation that
resulted in the loss of control is recognised;
• All components of equity, representing unrealised gains or losses in accordance with the
respective IFRS under the provisions of which these components fall, are reclassified to 'profit or loss for
the year' or are transferred directly to retained earnings;
• Any resulting difference as a 'gain or loss from a disposal (sale) of a subsidiary' attributable
to the parent is recognised in the consolidated statement of comprehensive income.
• The remaining shares held that form investments in associates, joint ventures or other long-
term equity investments are initially measured at fair value at the date of sale and subsequently – following
the accounting policy adopted by the Group (Note 2.13 and Note 2.14).
The acquisition (purchase-and-sale) method is applied also in transactions of uniting and/or
restructuring of entities under a common control with companies of the Group, provided that they represent
direct acquisitions from the perspective of the parent company.
2.3.4. Transactions with non-controlling interests
The Group treats transactions with non-controlling interests as transactions with holders of the
common equity of the Group. The effects from sales of parent company’s shares, without loss of control,
to holders of non-controlling interests are not treated as components of the current profit or loss of the
Group but as movements directly in its equity components, usually to the ‘retained earnings’ reserve. And
vice versa, when the parent company purchases additional shares from holders of non-controlling interest,
without acquisition of control, the difference between the consideration paid and the relevant share acquired
of the carrying amount of net assets of the subsidiary is also directly recognised in the consolidated
statement of changes in equity, usually to the ‘retained earnings’ reserve.
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CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
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When the Group ceases to have control, joint control and significant influence, any retained
minority investment as interest in the capital of the respective entity, is remeasured to its fair value, with
the change in carrying amount recognised in profit or loss. Respectively, any amounts previously
recognised in other comprehensive income in respect of that entity are accounted for as if the Group had
directly disposed of all components related to the initial investment (in a subsidiary, joint venture or
associate).
2.3.5. Consolidation of associates and joint ventures
Associates and joint ventures are included in the consolidated financial statements by applying the
equity method whereby the investment of the parent company is initially stated at cost and is subsequently
recalculated to reflect the changes in investor’s (the parent company) share in the post-acquisition net assets
of the associate or joint venture. Group's investment in an associate or joint venture includes also the
goodwill identified on their acquisition net of any recognised impairment.
The post-acquisition gains or losses for the Group (through the parent company) from associates
and joint ventures for the respective reporting period represent its share in the net (post-tax) financial results
of their business activities for the period, which share is recognised and presented on a separate line in the
consolidated statement of comprehensive income. Analogously, the Group's share in post-acquisition
changes in other components of comprehensive income of associates and joint ventures is also recognised
and presented as movement in the other components of comprehensive income in the consolidated
statement of comprehensive income, and respectively the consolidated reserves of the Group - in the
statement of changes in equity. The Group recognises its share in the losses of associates and joint ventures
up to the amount of its investment, including the granted internal loans, unless it has assumed certain
obligations or payments on behalf of the associate or joint venture.
The internal accounts and balances between the Group and associates and joint ventures are not
eliminated. The unrealised gains or losses from transactions between them are eliminated to the percentage
of Group's interest in the associates and joint ventures by also making tests for impairment in case of loss.
The effect of deferred taxes on these consolidation procedures has also been taken into account.
2.4. Comparatives
In these consolidated financial statements, the Group presents comparative information for one
prior year. Where necessary, comparative data is reclassified (and restated) in order to achieve
comparability in view of the current year presentation changes.
2.5. Functional currency and recognition of exchange differences
The functional currency of the Group companies in Bulgaria being also presentation currency for
the Group is the Bulgarian Lev. The Bulgarian Lev is fixed to the Euro, under the BNB Act, at the ratio
BGN 1.95583:EUR 1.
Upon its initial recognition, a foreign currency transaction is recorded in the functional currency
whereas the exchange rate to BGN at the date of the transaction or operation is applied to the foreign
currency amount.
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CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
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Cash, receivables and payables, as monetary reporting items, denominated in a foreign currency,
are recorded in the functional currency by applying the exchange rate as quoted by the Bulgarian National
Bank (BNB) for the last working day of the respective month. At 31 December, these amounts are presented
in BGN at the closing exchange rate of BNB.
The non-monetary items in the consolidated statement of financial position, which are initially
denominated in a foreign currency, are accounted for in the functional currency by applying the historical
exchange rate at the date of the transaction and are not subsequently re-valued at the closing exchange rate.
Foreign exchange gains or losses arising on the settlement or recording of foreign currency
commercial transactions at rates different from those at which they were converted on initial recognition,
are recognised in the consolidated statement of comprehensive income in the period in which they arise
and are presented net under 'other operating income/(losses)'.
The functional currency of the company in Poland (Sopharma Warsaw SP. ZOO) is the Polish
zloty, for the subsidiary TOO Sopharma Kazakhstan – the Kazakh tenge, for the subsidiaries in Ukraine
(PAO Vitamini, OOO Sopharma Ukraine) – the Ukrainian hryvnia, for the subsidiaries in Serbia (Sopharma
Trading D.o.o., Pharmahim EOOD, Pharmanova D.O.O. Sopharmasi D.o.o. and Apothecary Institution
(AU) Great Pharmacy) – the Serbian dinar, for the subsidiary Sopharma Rus OOO – the Russian ruble, for
the subsidiaries in Belarus (SOOO Brititrade, ODO SalusLine, OOO Tabina, OOO Bellerophon, OOO Ne
Ska, OOO Fitobel, OOO AlfaApteka, OOO DabradzeyaPharm and BOOO SpetsApharmatsiya) – the
Belarusian ruble. For the purposes of the consolidated financial statements, the financial statements of the
subsidiaries abroad are restated from the functional currency of the respective subsidiary to the presentation
currency (BGN) adopted for the consolidated financial statements, whereas:
(a) all assets and liabilities are restated to the currency of the Group by applying the closing
exchange rate of the local currency thereto at 31 December or at the date of disposal of the company;
(b) all income and expenses are restated to the currency of the Group at average rate of the
local currency thereto for the reporting period (Note 2.6 and Note 2.7);
(c) all exchange differences resulting from the restatements are recognised and presented as a
separate component of equity in the consolidated statement of financial position – 'translation of foreign
operations reserve', and
(d) the exchange differences resulting from the restatement of the net investment in the
companies abroad together with the loans and other currency instruments, accepted as hedge of these
investments, are presented directly in equity.
On disposal (sale) of a foreign operation (company), the cumulative amount of exchange
differences that have been directly stated as a separate component of equity, are recognised as part of the
profit or loss in the consolidated statement of comprehensive income on the line 'gains/(losses) on
acquisition and disposal of subsidiaries, net', obtained on disposal (sale).
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
41
Goodwill and adjustments to fair value arising on acquisition of a company abroad are treated
analogously to the assets and liabilities of this company and are restated to the presentation currency at
closing exchange rate.
2.6. Revenue
2.6.1. Recognition of revenue under contracts with customers
The Group’s usual revenue is from the activities disclosed in Note 1.2.
The Group’s revenue is recognised when control of the goods or services promised in the contract
with the customer are transferred to the customer. Control is transferred to the customer upon satisfaction
of the contractual performance obligations through transfer of the promised goods and/or provision of the
promised services.
Valuation of contracts with customers
The Group accounts for a contract with a customer only if upon its enforcement: а/ it has
commercial substance and rationale; b/ the parties to the contract have approved the contract (in writing,
orally or in accordance with other customary business practices) and are committed to perform it; c/ each
party’s rights can be identified; d/ the payment terms can be identified; and e/ it is probable that the Group
will collect the consideration to which it is entitled upon performing its performance obligations.
In assessing whether collectability of an amount of consideration is probable, the Group considers
all relevant facts and circumstances of the transaction, including past experience, customary business
practices, published rules and declarations made by the Group, collaterals and possibilities for satisfaction.
A contract for which any of the above criteria has not yet been met is subject to new assessment in
each reporting period. The consideration received under such contracts shall be recognised as a liability
(contract liability) in the statement of financial position, until: а/ all criteria for recognizing a contract with
a customer are met; b/ the Group meets its performance obligations and has received all or substantially all
of the consideration (which is non-refundable); and/or c/ when the contract is terminated and the
consideration received is non-refundable.
Upon the initial assessment of its contracts with customers, the Group makes additional analysis
and judgement whether two or more contracts should be combined and accounted for as a single contract,
respectively whether the goods and/or services promised in each separate and/or combined contract should
be accounted for as a single and/or multiple performance obligation(s).
Each promise to transfer goods and/or services which are distinct (in nature and in the context of
the contract), is accounted for as a separate performance obligation.
The Group recognises revenue for each separate performance obligation on an individual contracts
basis with customers, by analysing the type, term and conditions of each specific contract. For contracts
with similar features, revenue is recognised on a portfolio basis, only if their grouping into a portfolio would
not have a materially different impact on the financial statements.
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When another party is involved in providing goods or services to a customer, the Group shall
determine whether the nature of its promise is a performance obligation to provide the specified goods or
services itself (i.e. the Group is a principal) or to arrange for those goods or services to be provided by the
other party (i.e. the Group is an agent). The Group is a principal and recognises as revenue the gross amount
of consideration if it controls the specified goods and/or services prior to their transfer to the customers. If,
however, the Group does not obtain control over the specified goods and/or services and its obligation is
only to arrange for a third party to provide these specified goods and/or services, the Group is an agent and
recognises as revenue the net amount it retains for the goods or services to be provided in its capacity as
agent.
2.6.2. Measurement of revenue under contracts with customers
Revenue is measured based on the transaction price determined for each contract.
The transaction price is the amount of consideration to which the Group expects to be entitled,
excluding amounts collected on behalf of third parties. Upon determining the transaction price, the Group
takes into consideration the contractual conditions and its customary business practices, including the
impact of variable consideration, the existence of a significant financing component in the contract, non-
cash consideration, consideration payable to the customer (if any). In contracts with more than one
performance obligations, the transaction price is allocated between each performance obligation based on
the standalone selling prices of each good and/or service determined based on one of the methods permitted
under IFRS 15, priority being given to the method of “observable selling prices”.
The change in the scope or price (or both) of the contract is accounted for as a separate contract
and/or as part of the existing contract, depending on whether the change is related to the addition of goods
and/or services which are distinct, and on the price determined for them. Based on that:
а) the Group accounts for a contract modification as a separate contract if the scope of the contract
increases because of the addition of promised goods or services that are distinct, and the price of the contract
increases by an amount of consideration that reflects the entity's stand-alone selling prices of the additional
promised goods or services; b) the Group accounts for the contract modification as if it were a termination
of the existing contract and the creation of a new contract (future application), if the remaining goods and/or
services are distinct from the goods and/or services transferred before the contract modification, but the
change in the contract price does not reflect the standalone selling price of the goods and/or services added;
c) the Group accounts for the contract modification as if it were a part of the existing contract (cumulative
catch-up adjustment) if the remaining goods or services are not distinct and, therefore, form part of a single
performance obligation that is partially satisfied.
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2.6.3. Performance obligations under contracts with customers
Sales of finished goods
Wholesale of medicinal substances and medicinal forms are carried out in the country and abroad,
both based on the Group’s specification (technology) and based on the customer’s specification
(technology).
Sales of finished goods based on the Group’s specifications
Upon sales of finished goods based on the Group’s specifications, control is transferred to the
customer at a point in time.
Upon domestic sales, this is usually upon handover of the products and the physical possession of
the customer thereof, when the customer has the ability to direct the use of, and by obtaining substantially
all of the remaining benefits from, the finished goods.
Upon export sales, the judgement at the point in which the customer obtains control over the
finished goods sold is made based on the INCOTERMS applicable for the contract.
Sales of products based on the customer’s specifications
Regarding the finished goods based on the customer’s specifications, the Group has a legal and
contractual restriction to direct for other use (sales to another party) and it has no alternative use. In these
cases, the method of transfer is determined specifically for each contract with customers (at individual
contract basis). For this purpose, it is determined if the Group is entitled to payment for the work performed
to date, which should at least compensate for the cost incurred plus a reasonable margin should the contract
be terminated for reasons other than the Group’s default (legally enforceable right to payment).
If in the specific contract the Group has a legally enforceable right to payment, revenue is
recognised over time, and the output method is used to measure the progress (stage of completion) of the
contract. This method has been determined to the most appropriate to measure the progress, as the results
achieved best depicts the Group’s activity towards complete satisfaction of the performance obligations.
The progress is measured based on the units produced versus the total number of units ordered by the
customer.
The assessments of revenue, costs and/or stage of progress towards complete satisfaction of the
performance obligations are reviewed at the end of each reporting period, incl. in case of change in the
circumstance/occurrence of new circumstances. Each subsequent increase or decrease of expected revenue
and/or costs is stated within profit or loss for the period in which the circumstances resulted in the review
became known to the management.
If in the specific contract the Group does not have a legally enforceable right to payment, revenue
is recognised at a point in time, when control of the finished goods sold is transferred to the customer:
when the finished goods are provided to the customer and it has physical possession thereon (for domestic
sales) and in accordance with the contract’s applicable INCOTERMS (for export sales).
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Sales of pharmaceuticals and medical goods
Sales of pharmaceuticals and medical goods by the Group’s distributor companies are to customers
which are pharmacies, hospitals and wholesalers (wholesale) in the country and abroad.
Wholesale
Upon wholesale, the control of the goods sold is assessed to be transferred to the customer at a
point in time. This is usually upon handover of the goods and the physical possession of the customer
thereon, when the customer has the ability to direct the use of, and by obtaining substantially all of the
remaining benefits from, the goods.
Retail sales
Upon retail sales, control of the goods sold is transferred to the customer upon their handover
thereto.
Customer loyalty programmes
The Group maintains a loyalty programme whereby customers holding a club card may accumulate
points for each purchase. The points accumulated may be exchanged for products participating in the
programme without payment by the customer within a period set in the programme conditions. The Group
management has determined that the loyalty points grant customers with a material right they cannot obtain
without concluding a contract for the initial purchase. Therefore, the promise for future discounts through
giving points is a separate performance obligation. The transaction price is allocated between the goods
and/services already sold and the points which the Group expects to be claimed and compensated, based
on the respective standalone selling prices. The standalone selling price of a point reflects the discount that
the customer would get, adjusted for the probability of the points being claimed and compensated,
determined based on information about the points used (past experience). The stand-alone selling price of
the goods and/or services sold is determined based on the price list effective at the sale date. Payables under
the loyalty programme are stated as a contract liability in the consolidated statement of financial position.
The Group recognises revenue when the loyalty points are claimed or when their validity expires. The
Group reviews its estimate of the points to be claimed and compensated at the end of each reporting period,
and if necessary, adjusts the payable (contract liability) recognised, respectively the recognised revenue,
through cumulative catch-up adjustment.
Medical equipment (appliances) sales
The sales of medical equipment usually include delivery, installation, commissioning, operation
training and warranty service, and the selling price is total for the respective contract and/or equipment.
Revenue from the sales of medical equipment is recognised on an individual contracts basis, and for each
contract it is assessed whether the promised goods and/or services are separate performance obligations.
This assessment is made based on the timing of transfer of control over the medical equipment and the
interrelated components of the contract.
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Usually, control over the medical equipment (appliances) is transferred to the customer at a point
in time, when the equipment is delivered at the agreed location and the physical possession is handed over
to the customer. At this point, the Group transfers all risks and rewards related to the medical equipment,
subject of the contract with the customer, and the customer has the ability to direct the use of the asset.
The distinct installation, commissioning and training services which are sold together with the
equipment are usually rendered following its delivery and are relatively independent. These services are
accounted for as separate performance obligations, since a/ they may be performed by another supplier; b/
in most cases the services are short-term and not specific in nature; c/ they do not modify the equipment
delivered and are not interrelated and integrated therewith. Therefore, it has been determined that in this
case, control over the installation, commissioning and training services is transferred over the period of
their rendering, since they are performed on an asset controlled by the customer, and the customer
simultaneously receives and consumes the benefits provided by the Group’s performance as the Group
performs the services. The revenue from the services performed is recognised over time, and to measure
contract progress (stage of completion), the output method is used. This method has been determined to be
the most appropriate to measure progress, as it is most relevant in depicting the scheme of transfer of control
and satisfying performance obligations, respectively most accurately reflects the level of all outstanding
activities.
Warranty service
The warranty service usually includes a standard warranty clause that guarantees that the medical
equipment sold meets the contractual specifications and quality standards for the usual warranty period
(usually 12 months) and is covered by the producer.
Transportation of the finished goods and goods sold
Usually, upon export sales, the Group is responsible for transporting the goods to the location
agreed, and the transportation is organised by the Group, and the cost of transport is included (calculated)
as part of the selling price. Depending on the transportation conditions agreed with the customer, it may be
carried out also after control over the products sold has been transferred to the customer. Until the transfer
of control over the products, the sales of products and the transportation service are accounted for as a
single performance obligation, since they constitute parts of an integrated service.
The transportation service following transfer of control over the finished goods sold is accounted
for as a separate performance obligation, since the transportation can be provided by another supplier (i.e.
the customer may use the finished goods sold with readily available resources), and the transportation
service does not modify or amend the finished goods sold in any way. In this case, the consideration the
Group expects to be entitled to (the transaction price) is allocated between the separate performance
obligations based on their stand-alone selling prices. The stand-alone selling price of the finished goods
sold is determined based on the price list effective at the transaction’s date, and the stand-alone selling price
of the transportation service is determined as an approximation by using the cost plus margin approach.
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46
To render the transportation service, the Group uses transportation companies – subcontractors.
The Group has determined it controls the services prior to their provision to the customer and therefore it
acts in its capacity as principal, since a/ it is primarily responsible for rendering the services and for the
acceptability of the services to the customer (i.e. the Group is responsible for fulfilling the promise in the
contract irrespective of whether it performs the services itself or hires a third-party service supplier to
perform them); and b/ it has the discretion in establishing the price for the services independently, without
interference by the customer.
Revenue from the sales of transportation services are recognised over time, since it is not necessary
for the work performed to date to be repeated if another party has to perform the remaining work, therefore,
the customer simultaneously receives and consumes the benefits provided by the Group’s performance as
the Group performs the services. In order to measure the contract progress (stage of completion), the input
method is used. This method has been determined as the most appropriate to measure the progress since it
best depicts the Group’s activity regarding the transfer of control and satisfaction of obligations;
respectively, it most accurately reflects the level of performance of obligations, in as far as the Group’s
efforts (costs incurred) are directly related to the transfer of the service to the customer. The progress is
measured based on the costs incurred to the total costs planned for contract performance.
Bill-and-hold arrangements
In certain cases, upon wholesale, the goods sold are physically possessed by the Group. The Group
has analysed these arrangements and has determined that although the customer does not have physical
possession over the goods, usually they have control thereon, since: a/ the hold is done at the customer’s
request; b/ the goods can be identified separately as belonging to the customer; c/ the goods are available
for immediate shipment at the customer’s request; d/ the Group does not have the ability to direct the use
of the goods or direct them to another customer and e/ a separate consideration is agreed for the storage
service. In these cases, the delivery of goods and the storage service rendering are accounted for as separate
performance obligations. Respectively: a/ control over the goods sold is transferred to the customer at a
point in time, when the goods can be identified separately as belonging to the customer, and the customer
has legal title thereon; b/ the obligation to perform the storage services is satisfied over time, while this
service is being provided.
Sales of services
The services provided by the Group include: storage services (pre-distribution) for customer goods,
subscription extra-warranty servicing of medical equipment, medical representation etc. Service revenue is
presented as other income in the statement of comprehensive income, in as far as it does not constitute a
portion of the Group’s primary business activities.
Extra-warranty (maintenance) service
A Group’s company provides extra-warranty services under subscription. The extra-warranty
service contracts are usually concluded for a period of 2 years. The consideration is fixed and is determined
on an annual basis and/or for the entire term of the contract, allocated on a monthly basis.
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The services performed are usually invoiced on a monthly basis, and the payment period is 30 to
60 days from the date of issuing an invoice to the assignor.
The extra-warranty service comprises various tasks/activities of continuous and/or repetitive
nature, which are distinct and form part of an integrated service. They constitute a series of distinct services
and are therefore a single performance obligation, since: a) the integrated maintenance service covers
numerous distinct time periods (usually one month); b) the services are substantially the same, since the
customer obtains continuous benefit therefrom for each separate time period (each month) even of the tasks
performed differ in their nature and quantity; c) control is transferred over time, since the customer
simultaneously receives and consumes the benefits provided by the Group as the Group performs the
service and there is no need for another company to substantially repeat the work done by the Group
company at a given date if this other company has to perform the remaining portion of the performance
obligation.
Revenue is recognised over time, and the progress (stage of completion) is measured based on the
time passed (on a linear basis – monthly). This method has been determined as the most appropriate one to
measure the progress, since services are rendered on a monthly basis and form part of a series, therefore, it
best depicts the Group’s activity regarding transfer of control and satisfaction of performance obligations.
Other services
For the other services performed by the Group, control is transferred to the customer over the period
of their rendering, since the customer simultaneously receives and consumes the benefits provided by the
Group. The revenue from other sales is recognised over time by measuring the degree of performance of
the Group’s obligations (stage of completion). In order to measure the progress (stage of completion), the
Group applies the output method based on the quantity of services provided.
2.6.4. Refund obligations under contracts with customers
The refund obligation includes the Group’s obligation to reimburse a portion or all of the
consideration received (or subject to receipt) from the customer under contracts with a right of return and/or
for the expected retrospective discounts, rebates and discount volumes.
The obligation is initially measured at the amount which the Group does not expect to be entitled
to and which it expects to reimburse to the customer. At the end of each reporting period, the Group reassess
the measurement of the refund obligations, respectively of the transaction price and of the recognised
revenue.
Refund obligations under contracts with customers are stated within “Other current liabilities” in
the statement of financial position.
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2.6.5. Transaction price and payment terms
Finished goods, pharmaceutical and medical produces
The selling prices of the products (finished goods and goods) sold by the Group are usually fixed,
based on a common and/or customer-specific price list, and are individually determined for each product.
Upon determining the transaction price, the Group also takes into account the various forms of variable
consideration and other amounts (consideration) owed to the customer.
Variable consideration
The variable consideration is included in the transaction price only to the extent that it is highly
probable that a significant reversal in the amount of cumulative revenue recognised will not occur. The
forms of variable consideration applicable for the Group include:
• Volume discounts: Retrospective trade discounts provided to the customer upon reaching
monthly, quarterly and/or annual turnover determined in advance, set as a uniform threshold and/or
progressive bonus scheme. Upon measuring the variable consideration, the Group determines the
customer’s estimated turnover by using the most probable outcome method. The discounts granted are
offset against the amounts due by the customer.
• Price discounts from the common price list: under the pricing policy adopted, upon wholesale,
the selling price from the common price list is reduced by the discount usually applicable for the respective
product. The discount applicable for each customer is determined based on the turnover agreed for a certain
period as compared to the total potential turnover with the customer. These price discounts are granted to
the customer upon each sale and/or at the end of each month. If the customer fails to meet the turnover
targets and does not compensate the difference over the next period, the Group is entitled to claiming default
compensation set as a percentage of the turnover default.
• Price protection: With regards to domestic sales, the Group is obliged, upon price reduction
imposed by a state regulatory body, to compensate the buyer and/or its customers for finished goods
purchased at a higher price and not yet sold to end clients. The payment of this consideration depends on
the state policy on medicinal products price regulation and is beyond the Group’s control.
• Compensation for hidden flaws: the customer may claim returns due to hidden flaws (quality
claims) throughout the validity period of the finished goods sold, which may vary from one to five years.
Quality claims are settled by the provision of new replacement goods or by refund of the amount paid by
the customer.
Upon determining the compensations for hidden flaws due at the end of the reporting period, the Group takes
into consideration the quality assurance system implemented thereby and the accumulated experience.
• Compensations due to the customer: in case of inaccurate performance of contractual
obligations by the Group, usually in relation of failure to meet the negotiated delivery deadline. These are
included within a decrease of the transaction price only if the payment is very likely.
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The Group’s experience shows that historically, contract terms are complied with, and the Group has not
recorded liabilities for payment of compensations.
• Right of return: Some sales contracts allow the customer to return the goods within a given
period. The Group accounts for the right of return as a form of variable consideration and recognises
revenue from sales only at the amount of consideration it is reasonably assured it is entitled to (considering
the goods expected to be returned). Upon determining what proportion of the goods sold is expected to be
returned, the Group uses historical data about goods returned by customers over the past year.
• Compensations owed by the customer: variable consideration in the form of compensations
for delayed payment by the customer. Receiving such consideration depends on the customer’s actions and
is beyond the Group’s control. They are included within the transaction price only when the uncertainty
regarding their receipt has been resolved.
Including compensations (owed by and due to the customer) as part of the transaction price is
determined for each individual contract and is subject to reassessment at the end of each reporting period.
The variable consideration expected in the form of various discounts, defaults and compensations
is determined and measured based on the accumulated experience and is recognised as adjustment of the
transaction price only and respectively the revenue (as an increase or a decrease) only to the extent that it
is highly probable that a significant reversal in the amount of cumulative revenue recognised will not occur,
including due to assessment restrictions. Any subsequent changes to amount of the variable consideration
are recognised as adjustment of revenue (as an increase or a decrease) at the date of change and/or resolving
the uncertainty. At the end of each reporting period, the Group updates the transaction prices, including
whether the estimated price contains restrictions, so as to accurately present circumstances existing and
occurring during the reporting period. Upon assessing the variable consideration, the Group uses the most
likely outcome approach.
Discounts accrued but not settled at the end of the reporting period, to which the customer still does
not have unconditional right, are presented as refund liabilities in the statement of financial position.
Consideration due to the customer
The consideration due to the customer includes amounts that the Group companies pay and/or have
promised to pay to the customer. It is included as a component of the transaction price, unless the payment
to the customer is in return to distinct goods and/or services which the customer transfers and/or grants to
the Group companies and the fair value of these distinct goods and/or services does not exceed the amount
of consideration paid by the Group. If the latter is higher than the fair value of the goods and/or service
received by the customer, only the excess is included within the transaction price. The consideration paid
to the customer is recognised as contract assets and are included within the transaction price, respectively
in a decrease of revenue from contracts with customers, upon transfer of control over the goods sold or
when the Group promises to pay, whichever occurs later.
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Significant financing component
In wholesale sales, the usual credit period is from 30 to 270 days after delivery of the goods. In
some sales, payment may be partially in advance, with advance payments being refunded if the contract is
cancelled. Advance payments collected from the customer are presented in the statement of financial
position as liabilities under contracts with customers. Due to the specific financial condition and credit risk
of some of the hospital customers, it is common for them to pay for the delivered goods with a significant
delay from the agreed payment term, and in some cases the period between the date of transfer of control
over the goods and the date of payment by the relevant hospital customer may reach up to and over 2 years.
The Group has performed an analysis and determined that in contracts with such customers, the transaction
price does not contain an element of financing, since: a) the payment term agreed with the customer does
not differ from the usual for this type of transaction and there is no explicitly agreed deferred payment
when concluding the sales contract; b) the sales prices themselves do not include a financing element
(interest).
They are regulated by law and do not differ significantly from the sales price of the same goods
and/or services when sold to other customers and/or when sold to the same customer by another trader of
medicines and medical supplies. The differences (if any) are a result of the variable remuneration provided
in the form of discounts, and not as a result of the agreed and/or expected payment terms; c) the delay in
payments is a result of the financial condition and credit risk of the customers - hospitals; d) in the event of
a delay in payment by the customers - hospitals, the Group charges interest (penalty) in the amount of the
legal interest, starting from the date of default; e) the financing element arises from the date of default, from
which date the Group charges interest for delay on the amounts determined on the basis of the sales prices;
f) the hospital client pays the accrued interest (penalties), which also reflect the effect of the time value of
money.
Recognized interest income due to non-payment on time by hospital clients is presented as financial
income in the statement of comprehensive income (Appendix No. 11).
In the case of retail sales, payment is due immediately at the time of sale. The exception is retail
sales on the territory of Bulgaria, where the NHIF reimburses part of the price. This part of the sales price
is paid by the NHIF within 60 days.
Medical equipment (Appliances)
The agreed selling price related to contracts for sale of medical equipment (appliances) is usually
aggregated for the specific contract and/or equipment is aggregate. As a result, the consideration which the
Group expects to be entitled is allocated to each separate performance obligation on the basis of stand-
alone selling prices determined approximately by using the cost plus a margin approach.
Significant financing component
Upon the sale of medical equipment, the payment terms for the transaction price are determined
individually for each contract.
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The customer usually makes an advance payment of up to 20% of the contracted consideration, and
the remaining part is paid after performance of the contractual obligations, at a later date or in accordance
to a payment schedule. Deferred payment is usually made after 30 days to 2 years.
For contracts with deferred payment of over 1 year, the Group has determined that a financing
component exists which is significant for revenue. In these cases the transaction price is adjusted so as to
reflect the impact of the time value of money by using a discount rate reflecting the credit characteristics
of the counterparty receiving the financing (the customer). The payments collected in advance from the
customer are presented in the statement of financial position as contract liabilities, and the interest charged
– as finance income in the statement of comprehensive income (Note 11 and Note 45).
For contracts where the period for transferring the control of the promised goods and services to
the customer and the payment is up to 12 months, the Group does not adjust the transaction price to reflect
the effect of the financing component.
Sales of services
The selling prices of services are usually fixed. The consideration upon extra-warranty
(maintenance) service is fixed and determined on an annually and/or for the entire duration of the contract,
and it is allocated equally on a monthly basis.
The services performed are most often invoiced monthly, and the payment period is within 30 to
60 days from the date of the invoice issuance to the customer.
2.6.6. Contract costs
The Group states as contract costs the following:
• the incremental and directly related expenses it incurs upon concluding a contract with a
customer, which it expects to recover over a period longer than twelve months (costs to obtain a contract
with a customer) and
• the expenses it incurs to fulfil a contract with a customer and which are directly related to
the specific contract, enhance the generation of resources to be used in the contract fulfilment and the Group
expects to recover them over a period longer than twelve months (costs of fulfilling contracts with
customers).
The Group in its primary business activity does not incur direct or specific costs to obtain contracts
with customers and costs of fulfilling such contracts, which would have not been incurred if the contracts
had not been obtained.
2.6.7. Contract balances
Trade receivables and contract assets
A contract asset is the Group's right to receive consideration in exchange for goods or services that
it has transferred to a customer but is not unconditional (receivable accrual).
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If by transferring the goods and/or providing the services the Group performs its obligation before
the customer to pay the respective consideration and/or before the payment is due, a contract asset is
recognised for the consideration earned (which is conditional). Recognised contract assets are reclassified
as trade receivables when the right to consideration becomes unconditional. A right to consideration is
unconditional if only the passage of time is required before payment of that consideration is due.
Contract liabilities
The Group presents as a contract liability the consideration received from the customer and/or the
unconditional right to receive consideration before it has performed its contractual obligations. Contract
liabilities are recognised as revenue when (or as) the performance obligations are satisfied.
Contract assets and contract liabilities are presented in other receivables and payables in the
statement of financial position. They are included in current assets when their maturity is within 12 months
or within the Group’s usual operating cycle, and the others are stated as non-current. Assets and liabilities
from a single contract are presented on a net basis in the statement of financial position, even if they result
from difference performance obligations in the contract.
Following their initial recognition, trade receivables and contract assets are subject to review for
impairment in accordance with the requirements of IFRS 9 Financial Instruments.
Right of return assets from contracts with customers
The right of return is the Group’s right to receive sold goods which are expected to be returned by
the customers (Note 23). This right is initially measured at the carrying amount of the goods which are
expected to be returned, less any expected costs to recover the goods, including any potential decreases in
the value of products returned, including due to passage of their expiry date. At the end of each reporting
period the Group reassess the measurement of right of return assets recognised related to changes in
expectations about the volume of goods returned and other decreases in their value.
Right of return assets are presented in inventories in the statement of financial position and are
separately disclosed in the notes to the annual financial statements.
2.7. Expenses
Expenses are recognised in the Group when they are incurred based on the accrual and matching
concepts (to the extent that this would not lead to recognition of an asset or liability not satisfying the
definitions for assets and liabilities in the Framework and IFRS themselves).
Deferred expenses are put off and recognised as current expenses in the period when the contracts,
whereto they refer, are performed.
Losses from revaluation of investment property to fair value are presented in the consolidated
statement of comprehensive income (within profit or loss for the year) on the line 'other operating
income/(losses)'.
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2.8. Finance income and costs
2.8.1. Finance income
Finance income is included in the statement of comprehensive income (within profit or loss for the
year) when earned and comprises: interest income on granted loans and term deposits, interest income on
receivables under special contracts, interest income on past due receivables, income/gains from deals with
investments in available-for-sale securities at fair value through profit or loss, or through other
comprehensive income, including dividends, net gains on exchange differences under loans in foreign
currency, income from debt settlement transactions, gain on fair value measurement of available-for-sale
investments in securities at fair value through profit or loss, or through other comprehensive income, gains
from fair value measurement of investments in the acquisition of a subsidiary performed in stages, interest
income from debt securities (bonds) held for trading, profits from operations with debt securities held for
trading.
Interest income is calculated by applying the effective interest rate on the gross carrying amount of
financial assets, with the exception of financial assets, which are credit-impaired (Stage 3), for which
interest income is calculated by applying the effective interest rate on their amortised cost (i.e. the gross
carrying amount after deducting the impairment allowance).
Finance income is presented separately from finance expenses on the face of the statement of
comprehensive income (in profit or loss for the year).
2.8.2. Finance costs
Finance costs are included in the statement of comprehensive income (in profit or loss for the year)
when they arise, separately from finance income and consist of: interest expense on loans received, interest
expense on leases, bank fees on loans and guarantees, net loss from exchange differences on foreign
currency loans and lease contracts, impairment of fees on guarantees provided, provisions for financial
guarantee contracts, losses from revaluation of financial assets to fair value and impairment of trade loans
provided.
Finance income is presented separately from finance expenses on the face of the statement of comprehensive
income (in profit or loss for the year).
2.9. Property, plant and equipment
Property, plant and equipment, including permanent plants (fixed tangible assets) are presented in
the consolidated financial statements at revalued amount less the accumulated depreciation and impairment
losses in value.
Initial acquisition
Upon their initial acquisition, property, plant and equipment are valued at acquisition cost (cost),
which comprises the purchase price, including customs duties and any directly attributable costs of bringing
the asset to working condition for its intended use.
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The directly attributable costs include the cost of site preparation, initial delivery and handling
costs, installation costs, and professional fees for people involved in the project, non-refundable taxes,
expenses on capitalised interest for qualifying assets, etc.
Property, plant and equipment of acquired subsidiaries are measured at fair value at the transaction
(business combination) date which is accepted as acquisition price for consolidation purposes.
Upon acquisition of property, plant and equipment under deferred settlement terms, the purchase
price is equivalent to the present value of the liability discounted on the basis of the interest level of the
attracted by the Group credit resources with analogous maturity and purpose. The Group has set a value
threshold of BGN 500, below which the acquired assets, regardless of having the features of fixed assets,
are treated as current expense at the time of their acquisition.
Subsequent measurement
The chosen by the Group approach for subsequent measurement of property, plant and equipment,
is the revaluation model under IAS 16, i.e. measurement at revalued amount less any subsequent
accumulated depreciation and subsequent accumulated impairment losses.
The revaluation of property, plant and equipment is accepted to be performed by certified appraisers
normally in a period of five years. Where the fair value changes materially in shorter periods, revaluation
may be performed more frequently.
Subsequent costs
Repair and maintenance costs are recognised as current expenses as incurred. Subsequent costs
incurred in relation to property, plant and equipment having the nature of replacement of certain
components, significant parts and aggregates or improvements and restructuring, are capitalised in the
carrying amount of the respective asset whereas the residual useful life is reviewed at the capitalisation
date. At the same time, the non-depreciated part of the replaced components is derecognised from the
carrying amount of the assets and is recognised in the current expenses for the period of restructure.
Depreciation methods
The Group applies the straight-line depreciation method for property, plant and equipment.
Depreciation of an asset begins when it is available for use. Land is not depreciated. The useful life of the
groups of assets is dependent on their physical wear and tear, the characteristic features of the equipment,
the future intentions for use and the expected obsolescence.
The useful life per group of assets is as follows:
• buildings – 20-70 years;
• installations and transmission devices – 5-35 years;
• machinery and equipment – 5-40 years;
• computers and mobile devices – 2-5 years;
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• motor vehicles – 5-20 years;
• servers and systems – 4-18 years;
• furniture and fixtures – 3-13 years;
• other tangible assets – 3-12 years.
• for biological assets (carriers) – 10-12 years
The useful life set for any tangible fixed asset is reviewed by the management of each company
within the Group and respectively, by the parent company, at the end of each reporting period and in case
of any material deviation from the future expectations of their period of use, the latter is adjusted
prospectively.
Impairment of assets
The carrying amounts of property, plant and equipment are reviewed for impairment when events
or changes in circumstances indicate that the carrying amount might permanently differ from their
recoverable amount. If any indications exist that the estimated recoverable amount of an asset is lower than
its carrying amount, the latter is adjusted to the recoverable amount of the asset. The recoverable amount
of property, plant and equipment is the higher of fair value less costs to sell or the value in use. In assessing
value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount
rate that reflects current market conditions and assessments of the time value of money and the risks,
specific to the particular asset. Impairment losses are recognised in the consolidated statement of
comprehensive income (within profit or loss for the year) unless a revaluation reserve has been set aside
for the respective asset. Then the impairment is treated as a decrease in this reserve (through other
comprehensive income) unless it exceeds its amount and the excess is included as expense in the
consolidated statement of comprehensive income (within profit or loss for the year).
Gains and losses on disposal (sale)
Tangible fixed assets are derecognised from the consolidated statement of financial position when
they are permanently disposed of and no future economic benefits are expected therefrom or on sale. The
gains or losses arising from the sale of an item of 'property, plant and equipment' group are determined as
the difference between the consideration that the Group expects to be entitled to (sales revenue) and the
carrying amount of the asset on the date when the recipient obtains control thereon. They are stated net
under 'other operating income/(losses), net' on the face of the consolidated statement of comprehensive
income (within profit or loss for the year). The part of 'revaluation reserve' component attributable to the
asset sold is directly transferred to 'retained earnings' component in the consolidated statement of changes
in equity.
2.10. Biological assets
Biological assets are measured at fair value less the estimated costs to sell.
The fair value of biological assets is determined on the basis of their present location and condition
based on a price quoted in an active market or other alternative sources of current prices.
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Gain or loss on initial recognition of a biological asset at fair value less estimated costs to sell and
changes in fair value less estimated costs to sell is recognised in the consolidated statement of
comprehensive income (within profit or loss for the year) in the period in which it arises and is presented
in 'other operating income/(losses), net'. When the fair value of a biological asset cannot be reliably
measured, it is measured at cost less accumulated depreciation or impairment losses.
Subsequently, when the fair value of this biological asset becomes reliably measurable, the Group
changes its approach and switches to measuring the asset at fair value less the estimated costs to sell.
2.11. Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition (the consideration given) over the fair
value of Group's share in the net identifiable assets of the acquired company at the date of acquisition (the
business combination). Goodwill is initially measured in the consolidated financial statements at
acquisition cost (cost) and subsequently – at cost less accumulated impairment losses. Goodwill is not
amortised.
Goodwill arising on the acquisition of a subsidiary is presented in the consolidated statement of
financial position in the group of 'intangible assets' while goodwill arising on the acquisition of a joint
venture or an associate (entities) is incorporated in the total amount of the investment and is stated in the
group of 'investments in joint ventures' or respectively 'investments in associates'.
The goodwill on the acquisition of joint ventures and associates (entities) is tested as part of the
total balance (amount) of the investment. The individually recognised goodwill on the acquisition of
subsidiaries (entities) is mandatory tested for impairment at least once in a year. Impairment losses on
goodwill are not subsequently reversed. Gains or losses on the sale (disposal) of a particular subsidiary
(entity) of the Group include the carrying amount of the goodwill relating to the entity sold (disposed of).
On the realisation of a particular business combination, each recognised goodwill is allocated to a
particular cash generating unit and this unit is used for impairment testing. The allocation is made to those
cash generating units that are expected to benefit from the business combination in which the goodwill
arose.
Impairment losses on goodwill are presented in the consolidated statement of comprehensive
income (within profit or loss for the year) in the item 'impairment of non-current assets'.
Other intangible assets
Intangible assets are stated in the consolidated financial statements at acquisition cost less
accumulated amortisation and any impairment losses in value. The intangible assets include mainly
intellectual property rights, software and complex intangible assets (licences and pharmacy chain
locations).
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The useful life by asset group is as follows:
• for software products – from 2 years to 12 years;
• for patents and licenses – from 2 years to 10 years;
• for trademarks – from 5 years to 15 years;
• contractual rights on trade permits and trademarks – 20 years;
• copyright – from 3 to 10 years;
• for other intangible assets – from 5 years to 15 years.
The carrying amount of the intangible assets is subject to review for impairment when events or
changes in the circumstances indicate that the carrying amount might exceed their recoverable amount.
Then impairment is recognised as an amortisation expense in the consolidated statement of comprehensive
income (within profit or loss for the year).
Intangible assets are derecognised from the consolidated statement of financial position when they
are permanently disposed of and no future economic benefits are expected therefrom or on sale at the date
of transfer of control to the asset recipient. The gains or losses arising from the sale of an item of intangible
assets are determined as the difference between the consideration that the Group expects to be entitled to
(sales revenue) and the carrying amount of the asset on the date when the recipient obtains control thereon.
They are stated net within “other operating income/(losses) on the face of the statement of comprehensive
income (within profit or loss for the year).
2.12. Investment property
Investment property is property lastingly held by the Group to earn rentals and/or for capital
appreciation. They are presented in the consolidated statement of financial position at fair value (Note 18).
Gains or losses arising from a change in the fair value of investment property are recognised in the
consolidated statement of comprehensive income (within profit or loss for the year) as 'other operating
income/(losses), net' for the period in which they arise. The income gained on investment property is
presented in the same item of the consolidated statement of comprehensive income.
Investment properties are derecognised from the consolidated statement of financial position when
they are permanently withdrawn from use and no future economic benefits are expected therefrom or on
disposal. Gains or losses arising from the disposal of investment property are determined as the difference
between the consideration that the Group expects to be entitled to (sales revenue) and the carrying amount
of the asset on the date when the recipient obtains control thereon. They are presented under 'other operating
income/(losses), net' in the consolidated statement of comprehensive income (within profit or loss for the
year).
Transfers to, or from, the group of 'investment property' is made only when there is a change in the
functional designation and the use of a particular property. In case of a transfer from 'investment property'
to 'owner-occupied property', the asset is recognised in the new group at deemed cost, which is its fair value
at the date of transfer.
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To the opposite, in case of a transfer from 'owner-occupied property' to 'investment property' the
asset is measured at fair value at the date of transfer while the difference to its carrying amount is presented
as a component of the consolidated statement of comprehensive income (within other comprehensive
income) and within 'revaluation reserve – property, plant and equipment' in the statement of changes in
equity.
2.13. Investments in associates and joint ventures
Long-term investments, representing shares in associates and joint ventures, are presented in the
consolidated financial statements under the equity method – value that includes the acquisition cost being
the fair value of the consideration paid, including the direct costs on investment acquisition adjusted by
investor's share of profits or losses and respectively the other reserves of the joint ventures and associates
after the dates of their acquisition.
The share of profits and losses after the date of acquisition of an associate and a joint venture is
presented on a separate line in the consolidated statement of comprehensive income (within profit or loss
for the year) while the share of other components of comprehensive income – on the respective line of the
consolidated statement of comprehensive income (within other comprehensive income) and as a separate
movement of the individual components of reserves in the consolidated statement of changes in equity.
The investments in associates and joint ventures held by the Group together with the included
goodwill are subject to review for impairment at the date of the financial statements. Where conditions for
impairment are identified and its amount is determined, the impairment is included in the consolidated
statement of comprehensive income (within profit or loss for the year) in the item 'gain/(loss) from
associates and joint ventures'.
In purchases and sales of investments in associates and joint ventures the date of trading (conclusion
of the deal) is applied.
Investments in associates and joint ventures are derecognised when the rights related thereto are
transferred to third parties as a result of occurrence of legal rights for that and thus the significant influence
over or joint control of the economic benefits from the investments is being loStr. The income from their
sale is presented in 'gain/(loss) from associates and joint ventures' of the consolidated statement of
comprehensive income (within profit or loss for the year).
2.14. Other long-term equity investments
The other long-term equity investments are non-derivative financial assets in the form of shares in
the capital of other companies (minority interest), held for a long term.
Initial measurement
Equity investments are initially recognised at cost, being the fair value of the consideration given
including the direct expenses associated with the investment (financial asset) acquisition (Note 2.25).
All purchases and sales of equity instruments are recognised at the transaction’s “trade date”, i.e.
the date on which the Group undertakes to purchase or sell the asset.
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Subsequent measurement
The equity investments held by the Group are subsequently measured at fair value (Note 2.31)
determined with support by an independent licensed valuator.
The effects from subsequent revaluation to fair value are carried within a separate component of
the statement of comprehensive income (in other comprehensive income), respectively in the reserve for
financial assets at fair value through other comprehensive income.
These effects are transferred to retained earnings upon disposal of the respective investment.
Dividend income
Dividend income related to long-term investments constituting shares in other entities (non-
controlling interest) is recognised as current income and stated in the statement of financial position (within
profit or loss for the year) in the “finance income” item.
Upon derecognising shares at disposal or sale, the weighted-average price method is used, applying
the price determined at the end of the month when the derecognition is performed.
2.15. Inventories
Inventories are valued in the consolidated financial statements as follows:
• raw materials, materials and goods - at the lower of: the purchase price (cost) and their net
realizable value;
• finished products, semi-finished products and work in progress - at the lower of: the production
cost and the net realizable value;
• agricultural products - at the lower of the fair value upon initial acquisition and the net realizable
value.
The costs incurred to bring a given product from the inventories to its current condition and location
are included in the acquisition price (cost), as follows:
• raw materials, materials and goods - all delivery costs, which include the purchase price, import
duties and taxes, transportation costs, non-refundable taxes and other costs that contribute to
bringing the materials and goods to a condition ready for their use (sale);
• finished goods, semi-finished goods and work in progress – all necessary production costs that
form the production cost, including direct costs of materials and labor and the deductible part of
general production costs (variable and fixed), excluding administrative costs, exchange rate
differences and costs of attracted financial resources.
The inclusion of conditionally fixed general production costs in the production cost of
manufactured finished goods, semi-finished goods and work in progress is carried out on the basis of normal
capacity, determined on the basis of a usual average maintained volume, confirmed by the production plan.
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The selected basis for their distribution at the level of individual products is the rate of man-hours
of the directly employed personnel in the production of the specific product.
The parent company applies as a current assessment “standard production cost” in relation to
finished goods, semi-finished goods and work in progress, and respectively. “standard delivery cost” – for
the main raw materials and materials for production.
At the end of each reporting period, management analyses the factors that led to the formation of
deviations in: a) delivery of raw materials and materials for production - by comparing actual and standard
delivery costs and b) production of finished products, semi-finished products and work-in-progress - by
comparing actual and standard production costs. If necessary, adjustments are made to the assessment of
available inventories in the financial statements. Based on studies of good accounting practices in the
pharmaceutical industry, materiality thresholds have been adopted for: a) deviation in delivery of raw
materials and materials for production - up to 2% and b) production deviation - up to 1.5%, within which
the current assessment of available final inventories of raw materials and materials, finished products and
work-in-progress is not adjusted for the purposes of the financial statements.
Non-production inventories and inventories related to the production of veterinary vaccines are
written off as they are used (input and sale) using the weighted average cost method.
Net realizable value is the estimated selling price of an asset in the ordinary course of business, less
the estimated costs of completing the asset in commercial form and the estimated costs of realization.
2.16. Trade receivables
Trade receivables constitute the Group’s unconditional entitlement to consideration under contracts
with customers and other counterparties (i.e. it is only dependent on the passage of time before payment of
the consideration).
Initial measurement
Trade receivables are initially recognised and carried at fair value based on the transaction price,
which is usually equal to the invoice amount, unless they contain a significant financial component, which
is not additionally charged. In this case they are recognised at their present value determined by applying a
discount rate which is equal to the interest rate specific to the customer-debtor.
Subsequent measurement
The Group holds trade receivables only for the purpose of collecting contractual cash flows and
subsequently measures them at amortised cost less the amount of impairment accumulated for expected
credit losses. (Note 2.25 Financial instruments).
Impairment
The Group applies the expected credit losses model for the entire term of all trade receivables,
using the simplified approach under IFRS 9, and based on the matrix model for loss percentage (Note 24).
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2.17. Interest-bearing loans and other financial resources granted
All loans and other financial resources granted are initially recognised at acquisition cost (nominal
amount), which is accepted to be the fair value of the consideration received on the transaction, net of the
direct costs related to these loans and granted resources. After the initial recognition, the interest-bearing
loans and other granted resources are subsequently measured and presented in the consolidated financial
statements at amortised cost by applying the effective interest rate method. They are classified in that
category as the business model of the Group is solely to collect contractual cash flows of principal and
intereStr.
Amortised cost is calculated by taking into account all types of charges, commissions, and other
costs, associated with these loans. Gains and losses are recognised in the consolidated statement of
comprehensive income (within profit or loss for the year) as 'finance income' (interest) or 'finance costs'
throughout the amortisation period, or when the receivables are settled, derecognised or reduced.
Interest income is recognised in accordance with the stage in which the respective loan or other
receivables has been classified based on the effective interest method.
Interest-bearing loans and other financial resources granted are classified as current ones unless
(and for the relevant portion thereof) the Group has unconditionally the right to settle its obligation within
a term of more than 12 months after the end of the reporting period (Note 2.25).
2.18. Cash and cash equivalents
Cash includes cash on hand and cash at current accounts, and cash equivalents – bank deposits with
original maturity up to three months, and funds in deposits with longer maturity which are readily available
to the Group under its agreements with the banks over the deposits’ terms (Note 2.25).
Subsequent measurement
Cash and cash equivalents at banks are subsequently measured at amortised cost, less the
impairment accumulated for expected credit losses.
For the purposes of the statement of cash flows:
• cash proceeds from customers and cash paid to suppliers are presented at gross amount,
including value added tax (20%);
• interest on investment purpose loans received is reported as payments for financial
activities while the interest on loans for current activities (for working capital) is included in the operating
activities;
• interest received on overdue trade receivables is reported as receipts from customer in cash
flows from operating activities;
• interest received from bank deposits is included within cash flows from investing activities;
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• VAT paid on fixed assets purchased from foreign suppliers is presented on the line 'taxes
paid' while that paid on assets purchased from local suppliers is presented as 'cash paid to suppliers' in the
cash flows from operating activities as far as it represents a part of the operating flows of the Group
companies and is recovered therewith in the respective period (month).
• overdraft proceeds and payments are stated net by the Company.
• permanently blocked funds for a period of more than 3 months are not treated as cash and
cash equivalents.
• proceeds under factoring agreements are stated within cash flows from financing activities.
2.19. Trade and other payables
Trade and other current amounts payable are carried to the consolidated financial statements at
original invoice amount (acquisition cost), which is the fair value of the consideration to be paid in the
future for goods and services received. In case of payments deferred over a period exceeding the common
credit terms, where no additional interest payment has been envisaged or the interest considerably differs
from the common market interest rates, the payables are initially valued at their fair value based on their
present value at a discount rate applicable for the Group, and subsequently – at amortised cost (Note 2.25).
2.20. Interest-bearing loans and other borrowings
All loans and other borrowings are initially recognised in the consolidated financial statements at
cost (nominal amount), which is accepted to be the fair value of the consideration received on the
transaction, netted of the direct costs related to these loans and borrowings. After the initial recognition,
the interest-bearing loans and other borrowings are subsequently measured and presented in the
consolidated financial statements at amortised cost by applying the effective interest rate method.
Amortised cost is calculated by taking into account all types of charges, commissions and other
costs, including any discount or premium on settlement, associated with these loans. Gains and losses are
recognised in the consolidated statement of comprehensive income (within profit or loss for the year) as
finance income or costs (interest) throughout the amortisation period, or when the liabilities are
derecognised or reduced (Note 2.25).
Interest costs are recognised for the term of the financial instrument based on the effective interest
method.
Interest-bearing loans and other borrowings are classified as current ones unless (and for the
relevant portion thereof) the Group has unconditionally the right to settle its obligation within a term of
more than 12 months after the end of the reporting period.
2.21. Capitalisation of borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a
qualifying asset of the Group are capitalised as part of the cost of that asset. A qualifying asset is an asset
that necessarily takes a period of at least 12 months to get ready for its intended use or sale.
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The amount of borrowing costs eligible for capitalisation to the value of a qualifying asset is
determined by applying a capitalisation rate. The capitalisation rate is the weighted average of the
borrowing costs applicable to the borrowings that are outstanding during the period, other than borrowings
made specifically for the purpose of obtaining a qualifying asset.
The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when the
following conditions are met: expenditures for the asset are being incurred, borrowing costs are being
incurred and activities that are necessary to prepare the asset for its intended use or sale are in progress.
Borrowing costs are also reduced by any investment income earned on the temporary investment
of those borrowed funds.
2.22. Leases
A contract constitutes or contains elements of a lease if, under that contract, the right to control the
use of an asset is transferred for a consideration for a specified period of time.
At the lease inception, which is the earlier of the date of a lease agreement and the date of
commitment by the parties to the principal terms and conditions of the lease, the Group performs analysis
and assesses whether the contract is, or contains, a lease. A contract is, or contains, a lease, if the contract
conveys the right to control the use of an identified asset for a period of time in exchange for consideration.
Lessee
The Group applies a single recognition and measurement model for all lease contracts, except for
short-term lease contracts (a lease contract with a term of 12 months or less from the lease commencement
date and which does not contain a purchase option) and lease contracts of low-value assets (such as tablets,
personal computers, telephones, office equipment and others).
Initial measurement
At the lease commencement date (the date on which the underlying asset is available for use), the
lessee recognises a right-of-use asset and a lease liability.
The cost of acquiring the right-of-use asset includes:
• the amount of the initial measurement of the lease liability;
• lease payments made on or before the commencement date, less any lease incentives
received;
• the lessee's initial direct costs;
• provisions for costs associated with dismantling and moving the asset.
The Group depreciates the right-of-use asset to the earlier of the end of the useful life of the right-
of-use asset or the end of the lease term. If ownership of the asset is transferred under the lease by the end
of the lease term, the Group shall depreciate it to the end of the useful life. Depreciation shall be charged
from the commencement date.
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The depreciation terms by types of underlying assets are as follows:
• land – 4 to 5 years
• buildings – 2 to 10 years
• for equipment and transmission devices – 2-10 years
• motor vehicles – 2 to 5 years
• furniture and fixtures – 2 to 3 years
The Group has elected to apply the acquisition cost model for all of its right-of-use assets.
Right-of-use assets are tested for impairment in accordance with IAS 36 Impairment of Assets, by
applying an impairment determination and reporting policy analogous to the one for property, plant, and
equipment. The recoverable amount of right-of-use assets is the higher of the fair value less disposal costs,
or value in use. To determine assets’ value in use, future cash flows are discounted to their present amount,
by applying a pre-tax discount rate reflecting the market conditions and time value of money and the risks
inherent to the respective asset. Impairment losses are determined as the difference between the recoverable
and carrying amount (when the recoverable amount is lower than the carrying amount) and are carried to
the statement of comprehensive income as impairment of non-current assets.
Right-of-use assets are presented within property, plant and equipment in the consolidated
statement of financial position, and depreciation thereof – within depreciation and amortization expenses
in the consolidated statement of comprehensive income.
The Group companies recognise lease liabilities at the commencement date, measured at the present value
of the lease payments that are not paid at this date. They include:
• fixed lease payments (including in-substance fixed payments), less any lease inceptives
receivable;
• variable lease payments that depend on an index or rate, initially measured using the index
or rate at the commencement date;
• the exercise price of the purchase options, if the lessee is reasonably certain to exercise this
option;
• payments of penalties for terminating the lease, of the lease term reflects the exercise of an
option to terminate the lease;
• the amount expected to be payable by the Group to lessor under residual value guarantees.
Lease liabilities are stated on separate lines in the consolidated statement of financial position:
Lease liabilities – non-current portion of liabilities, current portion of lease liabilities – for the current
portion of liabilities, non-current payables to related parties – non-current portion, and payables to related
parties – current portion.
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Lease payments are discounted using the interest rate implicit in the lease, of that rate can be readily
determined, or the Company’s incremental borrowing rate, which it would have to pay to borrow over a
similar term, and with a similar security, the funds necessary to obtain an asset of a similar value to the
right-of-use asset in a similar economic environment.
Lease payments (instalments) contain a certain ratio of the finance cost (interest) and the respective
portion of the lease liability (principal). Interest costs for the lease are presented in the statement of
comprehensive income (within profit or loss for the year) for the lease period on a periodic basis, so as to
achieve constant periodic rate of interest on the remaining balance of the lease liability, and are presented
as “finance costs”.
Subsequent measurement
The Group has elected to apply the acquisition cost model for all of its right-of-use assets. They
are presented at acquisition cost less the depreciation accumulated, impairment losses and adjustments from
restatement and adjustments to the lease liability.
The Group subsequently measures the lease liability by:
• increasing the carrying amount to reflect the interest on the lease liability;
• reducing the carrying amount to reflect the lease payments made;
• remeasuring the carrying amount to reflect any reassessment or lease modifications of the
lease;
Accounting for remeasurement and modifications to leases
As a result of remeasurement, the lessee recognises the amount of remeasurement of the lease
liability as an adjustment to the right-of-use asset. If the carrying amount of the asset is lower, the residual
amount of remeasurements is recognised within profit or loss.
The Group remeasures the lease liabilities whenever:
• the modification increases the scope of the lease by adding another right-of-use of one or more
additional underlying assets;
• the lease payment increases by an amount corresponding to the standalone price of the increase
in the scope and potential adjustments reflecting circumstances of the respective lease.
Payments related to short-term leases and leases in which the underlying asset is of a low value, as
well as variable lease payments are recognised directly as current expenses in the statement of
comprehensive income on a straight-line basis over the lease term.
Lessor
Finance lease where a substantial portion of all risks and rewards incidental to the ownership of the
leased asset is transferred outside the Group, is written-off from the assets of the lessor upon transfer to the
asset’s lessee and is presented in the statement of financial position as a receivable at an amount equal to
the net investment in the lease. The net investment in the lease agreement represents the difference between
the total amount of minimum lease payments under the finance lease agreement and the non-guaranteed
residual value, accrued for the lessor and the non-earned finance income.
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The difference between the carrying amount of the leased asset and the immediate (fair selling) value is
recognised in the statement of comprehensive income (within profit or loss for the year) in the inception of
the lease term (when the asset is delivered) as assets sales income.
The recognition of the earned finance income as current interest income is based on the application of the
effective interest rate method.
In operating leases, the lessor continues to hold a significant part of all risks and rewards of ownership over
the said asset. Therefore the asset is still included in its property, plant and equipment, while its depreciation
for the period is included in the current expenses of the lessor.
Rental income from operating leases is recognised on a straight-line basis over the lease term. Initial direct
costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased
asset and recognised on a straight-line basis over the lease term.
2.23. Pensions and other payables to personnel under the social security and labour legislation
Labor and social security relations with employees in the Group are based on the provisions of the
Labor Code and the provisions of the current social security legislation for companies operating in Bulgaria,
the Polish Code for companies in Poland, the labor legislation and the Collective Labor Agreement for
companies in Ukraine, the labor legislation, the General Collective Labor Agreement and the current Labor
Regulations for companies in Serbia, the Law of the Republic of Kazakhstan on Social Security Obligations
for the company in Kazakhstan, the Labor Code of the Russian Federation for the company in Russia and
the Labor Code of the Republic of Belarus for companies in Belarus.
Short-term benefits
Short-term benefits to hired personnel in the form of remuneration, bonuses and social payments
and benefits (due for payment within 12 months after the end of the period when the employees have
rendered the service or have satisfied the required terms) are recognised as an expense in the statement of
comprehensive income (within profit or loss for the year) for the period when the service thereon has been
rendered and/or the requirements for their receipt have been met, unless a particular IFRS requires
capitalisation thereof to the cost of an asset, and as a current liability (less any amounts already paid and
deductions due) at their undiscounted amount.
At each date of consolidated balance sheet, the companies of the Group measure the estimated costs
on the accumulating compensated absences, which amount is expected to be paid as a result of the unused
entitlement. The measurement includes the estimated amounts of employee's remuneration and the statutory
social security and health insurance contributions due by the employer thereon.
Tantieme and bonus schemes
Under conditions explicitly included in the articles of association of companies in the Group and
upon a decision taken by the general meetings of the companies, the executive director and/or other
management personnel are entitled to receive a one-time remuneration (bonus), usually determined as a
percentage of the company's net profit.
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This type of remuneration expense is recognized in the statement of comprehensive income (in
profit or loss) under the item "staff costs". When a certain part is required to be deferred for a period longer
than 12 months, this part is measured at its present value at the date of the financial statement and is stated
under non-current liabilities in the statement of financial position, item "payables to staff".
The amounts due to staff, incl. members of key management personnel, under various bonus
schemes applied by the companies in the Group, are usually accrued for the reporting year to which the
achieved results relate.
This type of remuneration costs are recognized in the statement of comprehensive income (in profit
or loss) under the item “staff costs” and in the statement of financial position as “employee liabilities” and
are usually short-term.
Long-term retirement benefits
Long-term stock incentive program for key employees
The main objective of this program is to provide additional material incentive for employees in the
form of a long-term incentive in shares for achieving results and long-term loyalty, by offering selected
key employees the opportunity to become shareholders of the parent company. The program provides for
part of the annual additional remuneration (bonus) for key employees of the company to be paid in the form
of shares. Members of the Board of Directors and / or other members of the management / supervisor y
bodies of the company do not participate and will not participate in the program.
The allocation of shares in the form of a long-term incentive is based on the achievement of certain
performance targets, which include both financial and non-financial indicators.
Financial indicators may include, but are not limited to, criteria based on earnings before taxes,
interest and depreciation (EBITDA), income from ordinary activities, revenue growth, gross profit,
efficiency and value of new business.
The specific financial indicators and their parameters at the company level are determined by a
decision of the Board of Directors by April 30 of the current calendar year for the same year, based on an
analysis of the results achieved according to the financial criteria set for the previous year, as well as on
the basis of an approved budget and strategy for the current calendar year.
Non-financial indicators may include, but are not limited to, those related to customer satisfaction,
related to the implementation of a specific project set in the company's development plans, with the
expansion of production capacity or stable and sustainable development of the company in economic, social
and environmental aspects.
Non-financial indicators and their parameters are determined by a decision of the Board of
Directors by April 30 of the current calendar year for the same year, in accordance with the short-term and
medium-term development plans of the parent company.
A target performance level of 100% is determined for each of the set indicators.
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A long-term incentive in shares for the relevant year is only granted if the specific financial
indicators are met at least 80% of the set targets.
For non-financial indicators, a minimum performance level (threshold) of 60% is set, below which
the relevant indicator is considered unmet.
The value of the shares from the long-term incentive is calculated according to the following scale:
• for achieving 60% to 90% of a given target, the payout percentage starts at 50% and is added 1
point for each percentage of performance;
• for achieving 90% of a given target, 80% of the target level is paid;
• for achieving 90% to 99% of a given target, 2 points are added for each percentage of success.
The number of shares from the long-term incentive to be granted is determined by the Board of
Directors at the time of allocation of the long-term number of shares based on the average price of the
parent company's shares in the month preceding the allocation date. This average price is taken as the
acquisition price of the shares from the long-term incentive.
Defined contribution plans
For Bulgaria
The major duty of the companies - employers in Bulgaria is to make the mandatory social security
contributions for the hired employees to the Pensions Fund, the Supplementary Mandatory Pension Security
(SMPS) Fund, to the General Diseases and Maternity (GDM) Fund, the Workers' and Employees' Claims
Guarantee Fund (WEGF), the Unemployment Fund, the Labour Accident and Professional Diseases
(LAPD) Fund, and for health insurance.
The rates of the social security and health insurance contributions are regulated in the Social
Security Code (SSC), as well as in the Law on the Budget of State Social Security and the Law on the
Budget of National Health Insurance Fund for the respective year. The contributions are split between the
employer and employee in line with rules of the SSC.
These pension plans, applied by the Group in its capacity as an employer, are defined contribution
plans. Under these plans, the employer pays defined monthly contributions to the government funds as
follows: Pensions Fund, GDM Fund, Unemployment Fund, LAPD Fund as well as to universal and
professional pension funds – on the basis of rates fixed by law, and has no legal or constructive obligation
to pay further contributions if the funds do not hold sufficient means to pay the respective individuals the
benefits they have worked-out over the period of their service. The obligations referring to health insurance
are analogous.
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For companies abroad
The amounts of social security contributions in Poland are established by the Law on the National
Social Security System, in Ukraine - by the Law on Pension Provision, in Serbia - by the Law on Labor in
the Republic of Serbia, in Kazakhstan - by the Law of the Republic of Kazakhstan on Social Security
Obligations, in Russia - by the Law on Mandatory Pension Insurance in the Russian Federation and in the
Republic of Belarus - by the Law on the Fundamentals of State Social Security, the Decree of the Presiden t
of the Republic of Belarus on Insurance Activities, the Law of the Republic of Belarus on Pension
Insurance. The distribution of social security contributions between the employer and the insured person is
determined in proportions regulated by the relevant local legislation.
The Group does not have an established and functioning private voluntary social security fund.
Contributions due by Group companies to defined contribution plans for social and health insurance
are recognized as a current expense in the statement of comprehensive income (in profit or loss), unless an
IFRS requires this amount to be capitalized in the cost of a specific asset, and as a current liability in an
undiscounted amount, together with the period of service and accrual of the relevant employee benefits to
which the contributions relate.
Defined benefit plans
According to the Labor Code, the employer of companies in Bulgaria is obliged to pay its staff
compensation in the amount of the gross salary of the respective employee for two months upon termination
of the employment relationship with him due to retirement. In case the employee has acquired ten years of
work experience in the enterprise or in the same group of enterprises in the last twenty years, the
compensation is in the amount of the gross salary for six months.. By their characteristics, these schemes
are unfunded defined benefit plans.
According to the Labor Law in Serbia, the employer of the Serbian company is obliged to pay the
staff upon reaching retirement age a retirement compensation in the amount of at least three average
salaries, calculated at the time of payment. According to the labor legislation in Ukraine and the collective
labor agreement of the Ukrainian company, the employer is obliged to pay the staff upon reaching
retirement age a benefit, which, depending on the length of service in the enterprise, can vary between 250
and 500 Ukrainian hryvnias. Also, the company in Ukraine accrues social benefits, which are paid before
retirement to employees due to specific working conditions. According to the labor legislation in Poland,
the employer has an obligation to pay upon retirement - one gross monthly salary. According to the labor
legislation in Belarus, there are no obligations to the staff upon retirement.In their nature these are unfunded
defined benefit schemes.
The calculation of the amount of these liabilities necessitates the participation of qualified actuaries
in order to determine their present value at the date of the financial statements, at which they are presented
in the consolidated statement of financial position, and respectively, the change in their value – in the
consolidated statement of comprehensive income as follows:
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(a) current and past service costs, interest costs and the gains/losses on a curtailment and
settlements are recognised immediately when incurred and are presented in current profit or loss under
'employee benefits expense'; and (b) effects from revaluation of obligations that in substance represent
actuarial gains and losses are recognised immediately when occurred and are presented to other
comprehensive income in the item 'revaluation of defined benefit pension plans'. Actuarial gains and losses
arise from changes in the actuarial assumptions and experience adjustments.
At the date of issue of the consolidated financial statements, the companies of the Group assign
certified actuaries who provide their report with calculations regarding the long-term retirement benefit
obligations upon termination of employment relations due to retirement. For this purpose, they apply the
Projected Unit Credit Method. The present value of the defined benefit obligation is determined by
discounting the estimated future cash flows, which are expected to be paid within the maturity of this
obligation, and using the interest rates of long-term government bonds of similar term, quoted in the
respective country where the company itself operates.
Share based payments
Share based payments to employees and others providing similar services are measured at fair value
of the equity instruments as of the grant date. Form remunerations related to share based payments with
conditions which have not vested rights the fair value as of the grant date is measured in a way to reflect
these conditions and not to account for differences between expected and actual results.
Termination benefits
In accordance with the local provisions of the employment and social security regulations of the
Group companies, the employer is obliged, upon termination of the employment contracts of employees
prior to retirement, to pay certain types of indemnities.
The Group recognises employee benefit obligations on employment termination before the normal
retirement date when it is demonstrably committed, including based on an announced plan (for instance,
for restructuring), to terminating the employment contract with the respective individuals without
possibility of withdrawal or in case of formal issuance of documents in the case of voluntary redundancy.
Termination benefits due more than 12 months are discounted and presented in the consolidated statement
of financial position at their present value.
2.24. Share capital and reserves
Sopharma AD (the parent company) is a joint-stock company and is obliged to register with the
Commercial Register a specified share capital, which should serve as a security for the creditors for
execution of their receivables. Shareholders are liable for the obligations of the Group up to the amount of
the capital share held by each of them and may claim returning of this share only in liquidation or
bankruptcy proceedings. The parent company reports its share capital at the nominal value of the shares
registered in the court.
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According to the requirements of the Commercial Act and the Articles of Association, the parent
company is obliged to set aside a Reserve Fund by using the following sources:
• at least one tenth of the profit, which should be allocated to the Fund until its amount
reaches one tenth of the share capital or any larger amount as may be decided by the General Meeting of
Shareholders;
• any premium received in excess of the nominal value of shares upon their issue (share
premium reserve);
• other sources as provided for by a decision of the General Meeting.
The amounts in the Fund can only be used to cover annual loss or losses from previous years. When
the amount of the Fund reaches the minimum value specified in the Articles of Association, the excess may
be used for share capital increase.
The treasury shares are presented in the consolidated statement of financial position at acquisition
cost (cost) and Group's equity is decreased by their gross purchase price. Gains or losses on sales of treasury
shares are at the expense of retained earnings and are carried directly to Group's equity in the 'retained
earnings' component.
Revaluation reserve – property, plant and equipment is set aside from:
• the revaluation surplus between the carrying amount of property, plant and equipment and
their fair values at the date of each revaluation;
• the revaluation surplus between the carrying amount of property stated as owner-occupied
property and their fair values at the date when they are transferred to investment property.
Deferred tax effect on the revaluation reserve is directly carried at the account of this reserve.
Revaluation reserve is transferred to accumulated profits when the assets are derecognised from
the consolidated statement of financial position of the Group or are fully depreciated.
The revaluation reserve covers the impairment of the assets to which it relates. It may be used in
the implementation of Group's dividend and capital policies only after it is transferred to the 'retained
earnings' component.
The reserve for financial assets at fair value through other comprehensive income is formed by
the effects of fair-value measurement of other long-term equity investments. Upon derecognition of these
investments, the reserve form is not recycled through the statement of comprehensive income (through
profit or loss for the year), but is transferred to the component “retained earnings”.
The translation of foreign operations reserve includes the effects of restating the financial
statements of the companies abroad from local currency to the presentation currency of the Group.
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This reserve is recognised as a separate component of equity in the consolidated statement of financial
position and as part of the profit or loss in the consolidated statement of comprehensive income on the line
'gains/(losses) on acquisition and disposal of subsidiaries, net' on disposal (sale) of a foreign operation
(company).
The other equity components constitute a reserve on warrants issued, which is formed by the
difference between the issue value of the registered warrants and the transaction costs related to the issue.
The warrants are issued and registered at a fixed price, denominated in BGN, and grant future rights to
conversion into a fixed number of ordinary, dematerialised, registered, freely transferrable parent company
shares, and are therefore classified as an equity instrument.
2.25. Financial instruments
A financial instrument is any contract that simultaneously gives rise to a financial asset at one entity
and a financial liability or equity instrument at another entity.
Financial assets
Initial recognition, classification and measurement
At initial recognition, financial assets are classified in three groups, as subsequently measured: at
amortised cost; at fair value through other comprehensive income, and at fair value through profit or loss.
The Group initially measures financial assets at fair value, and in the case of financial assets which
are not stated at fair value through profit and loss, the direct transaction costs are added. An exception to
this rule are trade receivables that do not contain a significant financing component – they are measured
based on the transaction price determined under IFRS 15 Revenue from contracts with customers (Note
2.6.2).
Purchases or sales of financial assets that require delivery of assets within a time frame established
by regulation or convention in the market place (regular way trades) are recognised on the trade date, i.e.,
the date that the Group commits to purchase or sell the asset.
The classification of financial assets at their initial recognition depends on the characteristics of the
contractual cash flows of the respective financial asset and on the Group’s business model for management
thereof. In order for a financial asset to be classified and measured at amortised cost or fair value through
OCI, it needs to give rise to cash flows that are ‘solely payments of principal and interest (SPPI)’ on the
principal amount outstanding. This assessment is referred to as the SPPI test and is performed at an
instrument level.
The Group’s business model for managing financial assets refers to how it manages its financial
assets in order to generate cash flows. The business model determines whether cash flows will result solely
from collecting contractual cash flows, selling the financial assets, or both.
Subsequent measurement
For the purpose of subsequent measurement, financial assets are classified in the following
categories:
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- Financial assets at amortised cost (debt instruments)
- Financial assets at fair value through other comprehensive income without “recycling” of
cumulative gains or losses (equity instruments)
- Financial assets ar fair value through profit or loss (debt securities – bodns and derivative
financial instruments – warrants).
Classification groups
Financial assets at amortised cost (debt instruments)
The Group measures a financial asset at amortised cost if both of the following conditions are met:
- the financial asset is held within a business model whose objective is to hold financial
assets in order to collect contractual cash flows and
- the contractual terms of the financial asset give rise on specified dates to cash flows that
are solely payments of principal and interest on the principal amount outstanding.
Financial assets at amortised cost are subsequently measured using the effective interest method.
They are subject to impairment. Gains and losses are recognised in the statement of comprehensive income
(within profit or loss for the year) upon asset disposal, modification or impairment.
The Group’s financial assets at amortised cost include: cash and cash equivalents at banks, trade
receivables, including from related parties, loans to related and third parties (Note 21, Note 22, Note 24,
Note 25, Note 27 and Note 28).
Financial instruments at fair value through other comprehensive income (equity instruments)
At initial recognition, the Group companies may make an irrevocable election to classify certain
equity instruments as financial instruments at fair value through other comprehensive income, but only if
they meet the equity definition under IAS 32 Financial Instruments: Presentation and are not held for
trading. The classification is determined at an individual level, on an instrument by instrument basis.
At derecognition of these assets, gains and losses from measurement to fair value, recognised in
other comprehensive income, are not transferred to (recycled through) profit or loss. Dividends are
recognised as “financial income” in the statement of comprehensive income (within profit or loss for the
year) when the right of payment has been established, except when the Group benefits from such proceeds
as a recovery of part of the cost of the financial asset, in which case, such gains are recorded in other
comprehensive income. Equity instruments designated as financial instruments at fair value through other
comprehensive income are not subject to impairment teStr.
The Group has made an irrevocable election to classify into this category minority equity
investments which it holds in the long term and in relation to its business interests in these entities.
Significant part of these instruments are listed. They are presented in the consolidated statement of financial
position within the „Other long-term equity investments” component.
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Financial assets at fair value through profit or loss (debt securities - bonds and derivative financial
instruments - warrants)
Upon initial recognition, they are measured at acquisition cost, which includes the fair value of the
financial asset and all costs associated with the acquisition - commissions, fees, permits and the like.
All subsequent changes in fair value are recognized immediately as "finance income" or "finance
expenses" in the statement of comprehensive income (in profit or loss for the year).
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar
financial assets) is primarily derecognised (i.e., removed from the Group’s consolidated statement of
financial position) when:
- the rights to receive cash flows from the asset have expired, or
- the Group has transferred its rights to receive cash flows from the asset or has assumed an
obligation to pay the received cash flows in full without material delay to a third party under a ‘pass-
through’ arrangement; and either (a) the Group has transferred substantially all the risks and rewards of the
asset, or (b) the Group has neither transferred nor retained substantially all the risks and rewards of the
asset, but has transferred control of the asset
When the Group has transferred its rights to receive cash flows from an asset or has entered into a
pass-through arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of
ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset,
nor transferred control of the asset, the Group continues to recognise the transferred asset to the extent of
its continuing involvement. In that case, the Group also recognises an associated liability. The transferred
asset and the associated liability are measured on a basis that reflects the rights and obligations that the
Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured
at the lower of the original carrying amount of the asset and the maximum amount of consideration that the
Group could be required to repay.
Impairment of financial assets
The Group recognises an allowance (impairment provision) for expected credit losses for all debt
instruments which are not held at fair value through profit or loss. Expected credit losses are based on the
difference between the contractual cash flows due in accordance with the contract and all the cash flows
that the Group expects to receive, discounted at an approximation of the original effective interest rate.
The expected cash flows will include cash flows from the sale of collateral held or other credit
enhancements that are integral to the contractual terms
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To calculate the expected credit losses for loans to related and third parties, incl. cash and cash
equivalents at banks, the Group applies the general impairment approach defined by IFRS 9. Under this
approach, the Group applies a 3-stage impairment model based on changes at the initial recognition of the
credit quality of the financial instrument (asset).
Expected credit losses are recognised at two stages:
а. A financial asset which is not credit impaired at its initial recognition/acquisition is classified in
Stage 1. These are loans granted to debtors with low risk of default, classified as performing and not
overdue.
Since its initial recognition, its credit risk and characteristics are subject to continuous monitoring
and analyses. The expected credit losses for the financial assets classified in Stage 1 are determined based
on credit losses resulting from probable events or default that are possible in the next 12 months of the
respective asset’s lifetime (12-month expected credit losses for the instrument).
b. When there has been a significant increase in credit risk since the initial recognition of a financial
asset, and as a result its characteristics deteriorate, it is classified in Stage 2. Expected credit losses for
financial assets classified in Stage 2 are determined for the remaining lifetime of the respective asset,
irrespective of the point of default (lifetime expected credit loss (ECL)).
The Group’s management has developed a policy and a set of criteria to analyse, ascertain and
assess the occurrence of a condition of “significant increase in credit risk”. The main points of the policy
and set of criteria are disclosed in Note 48.
In the cases when the credit risk of a financial instrument increases to a level that indicates default,
the financial asset is considered to be impaired, and is classified in Stage 3. At this stage, the losses incurred
for the lifetime of the respective asset are identified and calculated.
The Group’s management has performed the respective analyses, based on which it has determined
a set of criteria for default events. One of them is delay in contract payments by over 90 days, unless
circumstances exist for a certain instrument that make such claim refutable. Along with that, there are other
events, based on internal and external information, which indicate that the debtor is not able to repay all
contracted amounts due, including in consideration of all loan collaterals and credit enhancements held by
the Group. The main points of the policy and set of criteria are disclosed in Note 48.
The Group adjusts expected credit losses determined based on historical data, with forecasted
macroeconomic indicators for which it has been established that correlation exists and which are expected
to impact the amount of expected credit losses.
In order to calculate expected credit losses for trade receivables and contract assets the Group has
elected and applies a simplified approach based on an expected credit losses calculation matrix and does
not monitor subsequent changes in their credit risk. In this approach, it recognises an allowance (impairment
provision) based on lifetime expected credit losses at each reporting date.
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The Group has developed and applies a provisioning matrix based on its historical experience with
credit losses, adjusted with forecast factors specific for debtors and the economic environment, for which
a correlation has been established with the percentage of credit losses (Note 46).
Derecognition
Impaired financial assets are derecognised when there is no reasonable expectation of recovering
the contractual cash flows.
Financial liabilities
Initial recognition, classification and measurement
The Group’s financial liabilities include trade and other payables, loans and other borrowings,
including bank overdrafts.
All financial assets are initially recognised at fair value, and in the case of loans and borrowings
and trade and other payables, net of direct transaction costs.
The Group’s financial liabilities include trade and other payables, loans and borrowings, including
bank overdrafts, derivative financial instruments.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as described
below:
Classification groups
Loans and borrowing
After initial recognition, the Group measures interest-bearing loans and borrowings at amortised
cost, applying the effective interest method. Gains and losses are recognised in the statement of
comprehensive income (within profit or loss for the year) when the respective financial liability is
derecognised, as well as through amortisation based on the effective interest rate.
The amortised cost is calculated by taking into consideration any discounts or premiums at
acquisition, as well as fees or costs that constitute an integral part of the effective interest rate. Amortisation
is included as a “finance expense” in the statement of comprehensive income (within profit or loss for the
year).
Derecognition
Financial liabilities are derecognised when the obligation under the liability is discharged or
cancelled or expires. When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially modified, such an
exchange or modification is treated as the derecognition of the original liability and the recognition of a
new liability. The difference in the respective carrying amounts is recognised in the statement of profit or
loss.
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Offsetting (netting) of financial instruments
Financial assets and financial liabilities are offset and the net amount is reported in the consolidated
statement of financial position if there is a currently enforceable legal right to offset the recognised amounts
and there is an intention to settle on a net basis, to realise the assets and settle the liabilities simultaneously.
This requirement results from the concept of the economic substance of the Group’s relations with
a given counterparty stating that in the simultaneous presence of these two requirements the expected actual
future cash flow and rewards for the Group is the net flow, i.e. the net amount reflects the Group’s actual
right and obligation resulting from these financial instruments – in all cases to only receive or pay the net
amount. If the two conditions are not simultaneously met, it is assumed that the Group’s rights and
obligations with respect to these offsetting financial instruments are not exhausted in all situations by only
the payment or receipt of the net amount.
The offsetting policy is also related to the measurement, presentation and management of actual
credit risk and the liquidity risk pursuant from these offsetting instruments.
The criteria applied to establish the “current and legally enforceable entitlement to offsetting” are:
• lack of dependence on a future event, i.e. it should not only be applicable upon the
occurrence of a future event;
• the offsetting should be enforceable and legally defendable during (cumulatively):
- the usual business operations;
- in case of default/delay, and
- in case of insolvency
The applicability of criteria is measured against the requirements of the Bulgarian legislation and
the contractual relations between the parties. The condition of “presence of current and legally enforceable
right to offsetting” is always and mandatorily assessed together with the second condition – for “mandatory
settling of these instruments on a net basis”.
2.26. Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make specified payments to
reimburse the holder for a loss it incurs because a specified debtor fails to make payment when due in
accordance with the original or modified terms of a debt instrument
Financial guarantee contracts are initially recognised as a financial liability at fair value determined
based on the present value of the difference in cash flows between contract payments required under the
debt instrument, and payments that would be required without a guarantee payable to a third party upon
commitment.
The subsequent measurement of financial guarantee liabilities is the higher of the following:
• the amount determined in accordance with the expected credit losses model, and
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• the initially recognised amount, less, when applicable, the cumulative amount of the revenue
recognised under the principles of IFRS 15 Revenue from Contracts with Customers.
The allowance for expected credit losses on financial guarantee contracts is included in the consolidated
statement of financial position as ‘other current liabilities”.
2.27. Income taxes
Current income taxes of the Bulgarian companies of the Group are determined in accordance with
the requirements of the Bulgarian tax legislation – the Corporate Income Taxation Act (CITA). The nominal
income tax rate in Bulgaria for 2025 is 10% (2024: 10%).
The subsidiaries and joint ventures abroad are charged in accordance with the requirements of the
respective local tax regulations by applying the following tax rates:
Country
Tax rate
2025
2024
Ukraine
18%
18%
Serbia
15%
15%
Poland
19%
19%
Kazakhstan
20%
20%
Russia
25%
20%
Belarus
20%
20%
Deferred income taxes are determined using the liability method on all temporary differences of
each consolidated company existing at the consolidated financial statements date, between the carrying
amounts of the assets and liabilities and their tax bases, including for those arising from consolidation
adjustments.
Deferred tax liabilities are recognised for all taxable temporary differences, with the exception of
those originating from recognition of an asset or liability, which has not affected the accounting and the
taxable profit/(loss) at the transaction date.
Deferred tax assets are recognised for all deductible temporary differences and the carry-forward
of unused tax losses, to the extent that it is probable they will reverse and a taxable profit will be available
or taxable temporary differences might occur, against which these deductible temporary differences can be
utilised, with the exception of the differences arising from the recognition of an asset or liability, which has
affected neither the accounting nor taxable profit /(loss) at the transaction date.
The carrying amount of all deferred tax assets is reviewed at each reporting date and reduced to the
extent that it is probable that they will reverse and sufficient taxable profit will be generated or taxable
temporary differences will occur in the same period, whereby they could be deducted or compensated.
Deferred taxes, related to items directly credited or charged as other components of comprehensive
income or as an equity item in the consolidated statement of financial position, are also reported directly in
the respective component of the comprehensive income or the equity item in the statement of financial
position.
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Deferred tax assets and liabilities are measured at the tax rates that are expected to apply to the
period and type of operations when the asset is realised or the liability – settled (repaid) on the basis of the
tax laws that have been enacted or substantively enacted, and at tax rates of the country under the
jurisdiction of which the respective deferred asset or liability is expected to be recovered or settled.
Deferred tax assets of a Group company are presented net against the deferred tax liabilities of this
company when it is the tax payer in the respective jurisdiction, and this is only in cases where the company
is legally entitled to perform or receive net payments of current tax liabilities or income tax receivables.
2.28. Government grants
Government grants represent various forms of providing gratuitous resources by a government
(local and central authorities and institutions) and/or intergovernmental agreements and organisations.
Government grants (from municipal, government and international institutions, including under the
procedure of using the European funds and programmes) are initially recognised as deferred income
(financing) when there is reasonable assurance that they will be received by the Group and that the latter
has complied and complies with the associated thereto requirements.
A government grant that compensates the Group for expenses incurred is recognised in current
profit or loss on a systematic basis in the same period in which the expenses are recognised.
A government grant that compensates investment expenses incurred to acquire an asset is
recognised in current profit or loss on a systematic basis over the useful life of the asset usually
proportionately to the amount of the recognised depreciation charge.
2.29. Non-current assets (or disposal groups) held for sale and discontinued operations
The Group classifies a non-current asset (or disposal group) as held for sale if its carrying amount
will be recovered principally through a sale transaction rather than through continuing use. For this to be
the case, the asset (or disposal group) must be available for immediate sale in its present condition, subject
only to terms that are customary and accepted for sales of such assets (or disposal groups) and the sale must
be highly probable.
A disposal group is one that will be disposed of, by sale or otherwise, together as a group in a single
transaction and the liabilities directly associated with the assets that will be transferred in the transaction.
A discontinued operation is a component of an entity that is either disposed of or classified as held
for sale and: (a) constitutes a separate major line of business or geographical area of operations; (b) is part
of a coordinated plan to dispose of a separate major line of business or geographical area of operations; or
(c) is a subsidiary acquired exclusively with the intention of being resold.
The Group measures a non-current asset (or disposal group) classified as held for sale at the lower
of its carrying amount and fair value less costs to sell. The fair value is determined with the assistance of
an independent licensed valuer. Immediately before the initial classification of an asset (or disposal group)
as held for sale, the carrying amounts of the asset (or of all assets and liabilities of the group) are valued in
accordance with applicable IFRSs.
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The Group does not depreciate a non-current asset while it is classified as held for sale or while it
is part of a disposal group classified as held for sale.
The Group presents a non-current asset classified as held for sale and the assets of a disposal group
classified as held for sale separately from other assets in the statement of financial position. The liabilities
of a disposal group classified as held for sale are presented separately from other liabilities in the statement
of financial position.
2.30. Net earnings or losses per share
Basic net earnings or losses per share are calculated by dividing net profit or loss attributable to
ordinary equity holders of the parent company by the weighted average number of ordinary shares
outstanding during the period.
The weighted average number of ordinary shares outstanding during the period is the number of
ordinary shares outstanding during at the beginning of the period, adjusted by the number of ordinary shares
bought back or issued during the period multiplied by a time-weighting factor.
This factor represents the number of days that the shares are outstanding as a proportion of the total
number of days in the period.
In case of a capitalisation, bonus issue or splitting, the number of the outstanding ordinary shares
as at the date of such event, is adjusted as to reflect the proportional change in the number of outstanding
ordinary shares as if the event has occurred in the beginning of the earliest presented period.
Diluted net earnings or losses per share are calculated dilutive potential ordinary shares (warrants)
have been issued by the parent.
Upon the calculation of diluted net earnings or loss per share for the period attributable to the
parent, adjustment is made to the net profit or loss for the period which is subject to distribution to
shareholders – holders of ordinary shares of the parent, and the average weighted number of shares in
circulation, with the effect of all dilutive potential ordinary shares, comprising warrants.
The potential ordinary shares are aimed to offset the decrease in the net earnings per share when
the conversion thereof would increase the net earnings per share or would decrease loss per share from
continuing operations.
The profit or loss for the period which is subject to distribution to shareholders – holders of ordinary
shares in the parent is increased by adding the amount of dividends and post-tax interest recognized in the
period in relation to the dilutive potential ordinary shares, and is adjusted for any other changes to profit or
loss that might arise as a result of the conversion of dilutive potential ordinary shares.
The options and warrants have a decreasing value only when the average market price of ordinary
shares for the period exceeds the price upon exercising the options or warrants (i.e. they generate profit).
Earnings per share reported in prior periods are not adjusted retrospectively to account for changes in the
prices of ordinary shares.
Diluted net earnings or losses per share is calculated based on the calculated base net earnings or
loss per share, adjusted as follows:
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(a) the profit or loss for the period attributable to holders of ordinary shares of the parent, is
increased by the amount of post-tax dividend and interest recognised in the period in relation to the dilutive
potential ordinary shares, and is adjusted for all other changes in profit and loss that might arise as a result
of the conversion of dilutive potential ordinary shares; and
(b) The average weighted number of ordinary shares in circulation in the period is increased by
adding the average weighted number of the additional ordinary shares that would be in circulation upon
conversion of all dilutive potential ordinary shares.
2.31. Segment reporting
The Group identifies its reporting segments and discloses segment information in accordance with
the organisational and reporting structure used by the management of the parent company for current
general monitoring and management of the Group and its components. Operating segments are business
components, which are regularly measured by members of the management who take operating decisions
by using financial and operating information prepared specifically on the segment for the purposes of
current monitoring and assessment of results and allocating Group's resources.
Group's operating segments are currently monitored and directed separately as each of them
represents a separate business area that offers various products and bears various business risks and
rewards. The operating segments that the Group’s management monitors, measures and controls risks and
return therefrom are defined based on the main business operations performed on pharmaceutical products,
namely: production and trade.
Information by operating segments
The Group uses one basic measuring unit – gross margin (profit) for measuring the results in the
operating segments and allocation of resources between them. It is defined as the difference between
segment revenue and segment expenses directly attributable to the respective segment.
Segment assets, liabilities, respective revenue, expenses and results include those that are and can
be directly attributable to the respective segment as well as such that can be allocated on a reasonable basis.
Usually they include: (a) for revenue - sales of finished products; (b) for expenses - raw materials and
consumables used, depreciation and amortisation and production staff remuneration, cost of goods sold; (c)
for assets - property, plant and equipment and inventories, receivables from related parties, trade receivables
and cash and cash equivalents; (d) for liabilities - payables to personnel and for social security, payables to
related parties, trade payables and bank loans for direct financing (long-term and short-term).
Capital expenditures (investments) by business segments are differentiated expenses incurred in
the period of acquisition or construction of segment non-current assets, which are expected to be used for
more than one period.
The Group manages its investments in securities, trade accounts and financial resources
granted/received as well as taxes at Group and entity level and they are not allocated at segment level.
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The results of the operations regarded as accidental ones compared to the main types of operations
(activities) of the Group as well as revenue, expenses, liabilities and assets that are not subject to allocation
are stated separately in the item 'total at Group level'. In general, these amounts include: other operating
income unless originating from the operation of a particular segment, administrative expenses, interest
income and expenses, realised and unrealised gains and losses from foreign currency transactions and
investments, investments in other companies, trade and other receivables, trade payables and loans
received, tax accounts, general-purpose production and administrative equipment.
Inter-segment transfers: segment revenue, expenses and results, include internal transfers between
business segments. These transfers are accounted for at competitive market prices charged to third party
customers of similar goods, and are eliminated at consolidated financial statements level.
Investments in joint ventures and associates, accounted for by using the equity method, are
excluded from segment assets and segment revenue. They are stated within non-allocated assets, and
revenue therefrom is presented within the item “gains/(losses) from joint ventures and associates, net”.
The applied accounting policy for segment reporting is based on that used by the Group for the
preparation of its statutory financial statements for public purposes.
Additionally, the Group discloses information about important customers when the amount of
revenue realised from the respective client exceeds 10% of the total amount of Group’s consolidated
operating revenue.
2.32. Fair value measurement
Some of Group's assets and liabilities are measured and presented and/or just disclosed at fair value
for financial reporting purposes. These include: (a) on a recurring (annual) basis – other long-term equity
investments, investment property, bank loans granted and received and loans to/from third parties, certain
trade and other receivables and payables, receivables and payables under finance leases, etc. (b) on a non-
recurring (periodical) basis – non-financial assets such as property, plant and equipment.
Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between independent market participants at the measurement date. Fair value is an exit
price and is based on the assumption that the sale transaction will take place either in the principal market
for this asset or liability or in the absence of a principal market – in the most advantageous market for the
asset or liability. Both the designated as a principal market and the most advantageous market are markets
to which the Group companies must have an access.
Fair value is measured from the perspective of using the assumptions and judgments that potential
market participants would use when pricing the respective asset or liability assuming that market
participants act in their economic best intereStr.
In measuring the fair value of non-financial assets the starting point is always the assumption what
would be the highest and best use of the particular asset for the market participants.
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The Group applies various valuation techniques that would be relevant to the specific features of
the respective conditions and for which it has sufficient available inputs while trying to use at a maximum
the publicly observable information, and respectively, to minimize the use of unobservable information. It
uses the three acceptable approaches – the market approach, the income approach and the cost approach
– whereas the most frequently applied valuation techniques include direct and/or adjusted quoted market
prices, market comparables (analogues) and discounted cash flows, including based on capitalised rental
income.
All assets and liabilities that are measured and/or disclosed in the consolidated financial statements
at fair value, are categorised within the following fair value hierarchy, namely:
• Level 1 — Quoted (unadjusted) market prices in active markets for identical assets or
liabilities;
• Level 2 — Valuation techniques that use inputs other than directly quoted prices but are
observable, either directly or indirectly, including where the quoted prices are subject to certain
adjustments; and
• Level 3 — Valuation techniques for which the lowest level input that is significant to the
fair value measurement is unobservable.
For assets and liabilities that are recognised at fair value in the consolidated financial statements
on a recurring basis, the Group determines at the date of the consolidated financial statement whether
transfers between levels in the fair value hierarchy are deemed to be made for a particular asset or liability
depending on the inputs available and used at that date.
Internal rules and procedures for measuring the fair value of various types of assets and liabilities
have been developed centrally in the parent company. For the purpose, a specifically designated individual,
subordinated to the Finance Director of the Group, organised the performance of the overall valuation
process and also coordinates and observes the work of the external appraisers.
The Group uses the expertise of external certified appraisers to determine the fair value of the
following assets and liabilities: other long-term equity investments Level 2 and Level 3, investment
properties – Level 1, property, plant and equipment – Level 2. The choice of such appraisers is made on an
annual basis using the following criteria: applied professional standards, professional experience and
knowledge, reputation and market status. The need for rotation of external appraisers is periodically
assessed – every three to five years.
The applied valuation approaches and techniques as well as the used inputs for each case of fair
value measurement are subject to mandatory discussion and coordination between the external experts –
appraisers and the specifically designated individual, engaged with measurements, and so is the acceptance
of the issued appraiser's reports – especially with regard to the significant assumptions and the final
conclusions and proposals for the fair value amount. The final fair value measurements are subject to
approval by the Finance Director and/or Chief Accountant, Executive Director and the Board of Directors
of the respective company and the Finance Director of the Group.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
84
In accordance with Group accounting policy, at the end of each reporting period the specifically
designated individual, engaged with measurements, performs a general analysis of collected in advance
information about the movement in the values of assets and liabilities of the Group companies that are
subject to valuation or to a disclosure at fair value, the type of available data and the possible factors for
the observed changes, and proposes for approval to the Finance Director, the approach for measuring the
fair value of the respective assets and liabilities at that date. Where necessary, this is explicitly consulted
with the involved external appraisers.
The results of the assessment of the fair value measurement procedure are presented to the audit
committee and to the independent auditors of the respective companies as well as to the Finance Director
and the independent auditors of the Group.
For the purposes of fair value disclosures, the Group has classified the respective assets and
liabilities on the basis of their nature, basic characteristics and risks as well as of the fair value hierarchical
level.
2.33. Critical accounting judgments on applying the Group's accounting policies. Key estimates
and assumptions of high uncertainty.
Revenue from contracts with customers
Upon revenue recognition and preparation of the consolidated annual financial statements, the
management performs various judgements, estimates and assumptions that impact the revenue, costs, assets
and liabilities accounted for and the respective disclosures thereto. As a result of the uncertainty regarding
these assumptions and estimates, significant adjustments may occur in the carrying amount of the assets
and liabilities concerned in the future, respectively the costs and revenue recorded.
The key judgements and assumptions that materially impact the amount and term for recognition
of revenue from contracts with customers, including the timing, transfer of the control of the promised
finished goods, goods and/or services, the estimation of variable consideration for returned assets and
volume rebates, are disclosed in Note 2.6.1.
Fair value measurement of equity investments
When the fair value of equity investments carried in the statement of financial positions cannot be
obtained based on quoted prices on active markets, their fair value is determined by using other valuation
models and techniques, including the discounted cash flows model.
The input used in these models is obtained from observable markets, where possible, but when this
cannot be done, significant judgement is applied to determine fair values. Such judgement involves the
review, analysis and assessment of input, for instance regarding liquidity risk, credit risk, and volatility.
The changes in assumptions for these factors may impact the amount of the fair value of financial
instruments stated.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
85
Calculation of expected credit losses for loans and guarantees granted, trade receivables,
including from related parties, and cash and cash equivalents
The measurement of expected credit losses for financial assets stated at amortised cost (loans
granted, trade receivables and contract assets, cash and cash equivalents), as well as for financial guarantees
granted is an area that requires the use of complex models and material assumptions for future economic
conditions and the credit behaviour of customers and debtors (for instance, the probability of counterparties
not meeting their obligations and the pursuant losses).
In order to apply these requirements, the Group’s management makes a number of material
judgements, such as:
(a) determining criteria to identify and measure significant credit risk increases;
(b) selection of suitable models and assumptions to measure expected credit losses;
(c) establishing groups of similar financial assets (portfolios) for the purpose of measuring expected
credit losses,
(d) establishing and assessing the correlation between historical default rates and the behaviour of
certain macro indicators to reflect the effects of forecasts for these macro indicators in the
calculation of expected credit losses. (Note 46).
Regarding trade receivables, including from related parties
The Group uses provisioning matrixes calculate expected credit losses from trade receivables and
contract assets. The provision rates are based on days past due for groups from different customer segments
(portfolios) sharing similar loss models (type of client sector).
Each provisioning matrix is initially based on detailed historical observation of default rates in the
Group companies’ receivables and the movement of receivables by delay groups. Usually, historical data
is used for at least three years as per the financial statement’s date. Moreover, the Company calibrates the
matrix so as to adjust historically ascertained dependence for credit losses with forecast information by also
using probability scenarios. If certain forecast economic conditions, measured by means of certain macro
indicators, are expected to aggravate or improve in the next year, which might result in established
correlational increase in payment delays for a certain sector (type of client), the historic default rates are
adjusted. At each reporting date, the observable historical default rates are updated and the effects of
changes in the estimates are accounted for.
The assessment of the relation between observable historical default rates, the forecast economic
conditions and expected credit losses is a significant accounting judgement. The amount of expected credit
losses is sensitive to changes in circumstances and forecast conditions. The Group’s historical credit closes
and the forecast economic conditions may deviate from actual collection rates in the future.
Regarding loans and guarantees granted:
The Group has adopted the general approach for calculating impairment based expected credit
losses of the loans granted, pursuant to IFRS 9. For this purpose, the Group applies a model of its choice.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
86
Its application goes through several stages. First, the debtor’s credit rating is determined by means of
several rating agencies’ methodologies for the respective economic sectors and ratios, quantitative and
qualitative parameters and indicators of the entity. Second, by using statistical models including historical
default probability data (PD), transfer between ratings, macro-economic data and forecast, the relevant
marginal PD are calculated by year for each rating.
Third, based on this analysis and the determined rating, and based on a set of indicators for the
instrument’s characteristics at the date of each financial statements, the following parameters are
determined: instrument stage (Stage 1, Stage 2 or Stage 3), PD needed for the instrument’s lifetime, as well
as loss given default (LGD). The main formula used to calculate expected credit losses is:
ЕCL=EADxPDxLGD, where:
ECL is the expected credit losses indicator;
ЕAD is the exposure at default indicator;
PD is the probability of default indicator;
LGD is the loss given default indicator.
Upon determining losses, all guarantees and/or collaterals and/or insurances are taken into
consideration. Thus, in the final step, by using all these parameters and following discount, the expected
credit loss for the respective period of the respective financial assets is calculated.
Stage 1 includes loans granted which are classified as “regular” according to the internal risk
classification scheme developed. These are loans granted to debtors with low default rates, regular
servicing, without considerable aggravation of key indicators (financial and non-financial), and without
amounts past due. The expected impairment loss for such loans is calculated based on default probability
for the next 12 months and the Group’s expectation for loss amount upon exposure default over the next
12 months.
Stage 2 includes granted loans classified as “renegotiated”. These are loans with respect to which
(based on a set of indicators) a significant aggravation of the credit risk related to the debtor has been
established as compared to the exposure’s initial recognition. The expected impairment loss for these loans
is calculated based on the default probability for the lifetime of the loan which is considered to be credit-
unimpaired, and the Group’s expectations for loss amount upon exposure default over the lifetime.
Stage 3 includes granted loans which are classified as “underperforming”. These are loans for
which evidence exists that the asset is credit-impaired, i.e. a credit event has occurred (according to the
policy on default event eligibility). Therefore, an analysis is performed of a system of indicators used to
identify the occurrence of credit losses. Impairment losses for such loans are calculated based on
probability-weighted scenarios for the Group’s expectations for the loss amount of the non-performing
credit-impaired exposure throughout its lifetime.
A granted loan is credit-impaired when one or more events have occurred which have an adverse
effect on expected future cash flows from this loan, accordingly financial assets.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
87
The Group applies the same model with respect to expected credit losses from guarantees granted
and certain individual receivables.
Cash
To calculate expected credit losses for cash and cash equivalents at banks, the Group applies the
general “three-stage” impairment model under IFRS 9. For this purpose, it applies a model based on the
bank’s public ratings as determined by internationally recognised rating firms like Moody’s, Fitch, S&P,
BCRA and Bloomberg. Based on this, on the one hand, PD (probability of default) indicators are set by
using public data about PD referring to the rating of the respective bank, and on the other hand, through the
change in the rating of the respective bank from one period to the next, the Company assesses the presence
of increased credit risk. Loss given default is measured by using the above formula. Upon determining
LGD, the presence of secured and/or insured amounts in the respective bank accounts is taken into
consideration.
Leases
The application of IFRS 16 requires the company's management to make various judgments,
estimates and assumptions that affect the reported right-of-use assets and lease liabilities. The main key
judgments concern the determination of an appropriate discount rate and the determination of the term of
each lease contract, including whether it is sufficiently certain that the options to extend / terminate the
contract term will be exercised. As a result of the uncertainty regarding these assumptions and estimates, it
is possible that material adjustments may occur in the carrying amount of the affected assets and liabilities
in the future and the corresponding reported expenses and income.
Recognition of tax assets
Upon recognition of deferred tax assets, the Group’s management assesses the probability of future
reversal of individual temporary differences and the abilities of each Group’s company to generate
sufficient profit to compensate such reversal. With respect to subsidiaries which have continued to state
losses over the last few years, the Group’s management has identified as at the date of issuance of the
consolidated financial statement significant uncertainty about whether and to what extent these companies
would be able to generate sufficient taxable profit within the period designated under the respective local
tax legislation on tax losses carry forward. .
Inventories
Normal capacity
Group's normal production capacity is determined on the basis of management assessments (made
after relevant analyses) for optimum load of the production facilities and return on the investments made
therein, with structure of the manufactured finished products accepted as being common for the Group.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
88
Impairment
At the end of each financial year, the Group companies review the state, useful life and usability of
the existing inventories. In case of identified inventories bearing a potential of not being realised at their
current carrying amount in the following reporting periods, the Group companies impair these inventories
to net realisable value.
Revaluation of property, plant and equipment
As at 31 December 2021, a thorough review was performed of the changes which have occurred in
the fair value of the Group companies’ non-current tangible assets, as well as of the physical and technical
condition thereof, operation means and residual useful lives. Respectively, revaluation was carried out,
since at this date the five-year period for revaluation adopted in accordance with the policy expires. The
review and revaluation were performed with the professional support of independent licensed appraisers.
The management has performed detailed analysis of the licensed appraisers’ reports, incl. the
sensitivity tests. As a result, it has stated revaluation, and has recognized new revaluation reserve at the
amount of BGN 9,466 thousand, net of impairment and deferred tax (Note 15) and deferred tax and has
stated current impairment expense at the amount of BGN 9,779 thousand. In addition, a current expense
for impairment was stated at the amount of BGN 697 thousand of PPE in process.
The outcomes of the fair value measurement process are presented to the Group auditors.
In 2025, impairment of property, plant and equipment amounting to BGN 389 thousand (2024:
BGN 234 thousand) was charged.
Impairment of goodwill
At each date of the consolidated statement of financial position, management assesses whether
there are any indicators of impairment of goodwill. The calculations were made by management with the
assistance of independent licensed appraisers.
As a result of the calculations made in 2025, no need to recognize impairment of goodwill was
identified (2024: none)
Actuarial calculations
Calculations of certified actuaries have been used every year when determining present value of
long-term payables to personnel upon retirement on the basis of assumptions for mortality rate, staff
turnover rate, future salaries level and discount factor.
Cash pool
In 2021 a cash pool scheme was introduced at Sopharma Trading Group for the purpose of more
effective short-term management of the group’s cash flows by gathering the bank balances of domestic
subsidiaries within a single bank account. Participants’ balanc es are transferred on a daily basis to a main
bank account managed by the cash pool leader – the subsidiary Sopharma Trading AD.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
89
Litigation provisions
With regard to the pending litigations against companies of the Group, the management of
respective companies have judged, jointly with their lawyers, that at this stage the probability and risks of
a negative outcome therefrom is still below 50% and therefore, no provisions for payables under litigations
have been included in the consolidated annual statement of financial position as at 31 December 2025 (31
December 2024: none).
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
90
3. REVENUE FROM CONTRACTS WITH CUSTOMERS
Group revenue from contracts with customers includes:
2025
2024
BGN'000
BGN'000
Revenue from sales of goods
2,254,842
1,818,473
Revenue from sales of finished products
354,985
310,624
Total
2,609,827
2,129,097
Contract balances are as follows:
2025
2024
BGN ‘000
BGN ‘000
Receivables under contracts with customers – third parties, net of
impairment (Note 24)
412,944
264,801
Receivables under contracts with customers – related parties, net
of impairment (Note 25)
13,496
11,665
Liabilities under contracts with customers – third parties (Note 45)
15
3,393
Contract liabilities at 31 December 2025 include advance payments received for the delivery of
medicinal and medical products – BGN 15 thousand (31 December 2024: BGN 24 thousand) and for the
delivery of medical equipment - none (31 December 2024: BGN 3,369 thousand).
The change in contract liabilities for the period from 1 January to 31 December 2025 is as follows:
2025
2024
BGN'000
BGN'000
Balance at 1 January (Note 45)
3,393
3,274
Revenue stated, which was recognised as contract liabilities,
incl.:
(3,393)
(3,274)
- Advance payments received
(3,393)
(3,274)
Payments from clients (excluding those recognised as revenue
in the period)
15
3,393
Balance at 31 December
15
3,393
The reimbursement obligations as at 31 December 2025 amount to BGN 12,201 thousand (31 December
2024: BGN 9,974 thousand) and include liabilities under retrospective trade volume discounts payable
under contracts with customers which have been or will be reimbursed over the next reporting period. (Note
45).
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
91
4. OTHER OPERATING INCOME AND LOSSES
2025
2024
BGN'000
BGN'000
Services rendered
22,068
17,957
Written-off liabilities and released provisions for liabilities
2,890
1,731
Foreign exchange losses on trade receivables and payables and current
settlement accounts
(2,203)
(3,819)
Interest on current accounts
1,796
347
Rentals
1,133
1,145
Amounts awarded in court cases
1,001
3,977
Government funding
580
592
Gain on sale of fixed assets
508
1,160
Gain on sale of materials
336
315
Social services and events
278
245
Gain/(loss) from changes in the fair value of investment properties
(Note 18)
214
(186)
Gain from lease agreements
137
21
Other income
2,352
1,182
Total
31,090
24,667
The services rendered include:
2025
2024
BGN'000
BGN'000
Fees to National Health Insurance Fund
6,006
4,129
Subcontractor services
5,953
7,173
Advertising and marketing
5,550
3,618
Regulatory services
1,501
118
Pre-distribution income
1,038
854
Lab analysis services
472
369
Gamma irradiation
302
207
Transport services
182
239
Licensing fees and charges
165
191
Subscription-based technical service
100
249
Other
799
810
Total
22,068
17,957
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
92
5. MATERIALS AND CONSUMABLES USED
2025
2024
BGN'000
BGN'000
Raw materials
68,330
69,126
Electricity
9,783
8,197
Spare parts, laboratory and technical supplies
8,075
7,953
Fuels and lubricants
4,331
3,914
Heat energy
3,739
3,292
Advertising materials
1,872
1,977
Write-down of materials
1,766
3,503
Office supplies
1,652
1,517
Supporting materials
1,312
1,093
Work clothing and personal protective equipment
1,265
1,273
Samples
1,020
243
Assets below materiality threshold
918
705
Water
456
483
Other
570
360
Total
105,089
103,636
6. HIRED SERVICES EXPENSE
Hired services expenses include:
2025
2024
BGN'000
BGN'000
Advertising and marketing
52,775
51,190
Consulting services
14,344
11,887
Manufacturing
8,926
5,560
Freight forwarding and transportation services
8,772
5,309
Building and equipment maintenance
7,136
5,689
Rent and related overhead expenses
6,184
5,217
Bank and regulatory fees
5,749
4,103
Messaging and communications
5,408
4,236
Subscription fees
3,745
3,485
Security
2,669
2,467
Insurance
2,617
1,424
Local taxes and fees
2,519
2,367
Services under civil contracts
2,252
1,296
Car repairs
1,241
977
License fees and charges
1,166
1,071
Courier services
1,143
1,027
Medical services
1,125
906
Drug registration services
900
593
Taxes on expenses
847
439
Commission fees
635
843
Document translation
608
713
Other
3,144
2,419
Total
133,905
113,218
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
93
The accrued expenses for the year for the mandatory audit of the individual and consolidated annual
financial statements are in the amount of BGN 858 thousand (2024: BGN 753 thousand)
In 2025, the auditors of the parent company’s annual report performed agreed-upon procedures in
connection with prospectuses for 3-year, 5-year, and 7-year warrants in the amount of BGN 25 thousand
(2024: none).
7. EMPLOYEE BENEFITS EXPENSE
2025
2024
BGN'000
BGN'000
Current compensation
207,451
164,073
Social security contributions
38,161
28,846
Social benefits and payments
10,527
8,159
Accrued amounts for unused vacation
2,493
1,930
Accrued expenses for long-term employee benefits upon
retirement (Note 33)
1,686
1,510
Bonuses
1,223
1,713
Accrued amounts for vacation pay
434
331
Retirement benefits
21
-
Total
261,996
206,562
8. OTHER OPERATING EXPENSES
2025
2024
BGN'000
BGN'000
Accrued/(reversed) impairment of inventory, finished goods, and
work in progress
5,454
4,736
Net change in the allowance for credit losses on trade, legal, and
other receivables (Note 9)
5,230
(1,699)
Representational events
4,353
2,696
Waste and shortage of goods
3,257
2,501
Business trips
2,978
2,602
Unrecognized tax credit
1,565
784
Scrap of finished goods and work in progress
1,040
1,540
Donations
842
615
Write-off of fixed assets
664
338
Training
582
431
Payments to the budget for taxes and tax interest
243
116
Fines and penalties to suppliers
115
148
Written-off receivables
105
91
Other
2,217
1,290
Total
28,645
16,189
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
94
9. IMPAIRMENT OF ASSETS
2025
2024
BGN'000
BGN'000
Accrued impairment for credit losses on receivables, including
from related parties
6,862
2,094
Reversal of impairment for credit losses on receivables, including
from related parties
(1,632)
(3,793)
Net change in the allowance for credit losses on receivables,
including from related parties (Note 8)
5,230
(1,699)
Accrued/(reversed) impairment of inventory, finished goods, and
work in progress (Note 8)
5,454
4,736
Impairment of materials (Note 5)
1,766
3,503
Total
12,450
6,540
10. IMPAIRMENT OF NON-CURRENT ASSETS OUTSIDE THE SCOPE OF IFRS 9
2025
2024
BGN'000
BGN'000
Impairment of property, plant and equipment (Note 16)
389
234
Impairment of long-term intangible assets (Note 17)
1
-
Total
390
234
11. FINANCIAL INCOME
Financial income includes:
2025
2024
BGN'000
BGN'000
Net gain on foreign exchange differences on foreign currency loans
and lease agreements
1,379
-
Income from equity investments (dividends)
983
39
Interest income on past-due trade receivables
971
988
Interest income on loans granted
688
1,234
Income from recovery of discount on long-term receivables
234
-
Interest income from assignment agreements
127
127
Interest on receivables under special agreements
65
106
Net gain from exchange rate differences on receivables from
recoverable equity contributions from subsidiaries
13
-
Interest income on bank deposits
12
100
Net gain on exchange rate differences on receivables from securities
transactions
-
225
Net gain on transactions in debt securities held for trading
-
123
Net change in the allowance for credit losses on receivables from
commercial loans granted
-
81
Reinstated provision for financial guarantees
-
46
Income from sureties and guarantees provided
-
56
Total
4,472
3,125
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
95
12. FINANCIAL EXPENSES
Financial expenses include:
2025
2024
BGN'000
BGN'000
Interest expense on loans received
15,857
9,949
Lease interest expense
5,641
2,969
Bank fees on loans and guarantees
1,597
1,576
Net change in the allowance for credit losses on receivables from
commercial loans granted
624
-
Net foreign exchange loss on receivables from sales of subsidiaries
439
-
Expenses related to guarantees and sureties received
179
164
Other interest expenses
100
119
Expenses related to dividend payments
18
36
Provision for financial guarantees
18
-
Interest and commission expenses on factoring
1
12
Expenses related to securities abroad
1
10
Expenses for discounting long-term receivables
-
1,291
Losses from revaluation of financial assets to fair value
-
245
Net foreign exchange loss on foreign currency loans and lease
agreements
-
2,175
Total
24,475
18,546
13. GAINS/LOSSES FROM ASSOCIATES AND JOINT VENTURES
2025
2024
BGN'000
BGN'000
Net profit from associates
38,227
25,821
Net income from joint ventures
11
6
38,238
25,827
Profit from associates includes:
2025
2024
BGN'000
BGN'0
00
The Group’s share in the current profit of associates
34,846
23,901
Net gain on sale of shares
3,381
1,364
Effect of fair value measurement of previously held shares in
companies upon the Group’s acquisition of control over them
-
556
Total
38,227
25,821
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
96
Gains / (Losses) from joint ventures, net, include:
2025
2024
BGN'000
BGN'000
Effects of transactions with Group companies
11
(3)
The Group’s share in the current loss of joint ventures
-
9
Total
11
6
14. INCOME TAX EXPENSE
Global Minimum Corporate Tax of 15%
Effective January 1, 2024, a global minimum corporate tax of 15% shall be imposed on multinational
and large domestic corporate groups.
The Pillar Two rules introduce the following new tax mechanisms, under which multinational and
large domestic groups of companies will pay a minimum level of tax (global minimum corporate tax):
• National Top-up Tax (Qualified Domestic Top-up Tax Rule)
• Primary tax (Income Inclusion Rule)
• Secondary tax (Underpayment Tax Rule)
The new tax mechanisms may impose a minimum tax on income arising in any jurisdiction where
multinational and large domestic groups of enterprises operate at an effective tax rate of 15%.
Sopharma Group falls within the scope of entities subject to the additional corporate tax and has
quantified the additional corporate tax expense for its constituent entities. The additional tax is determined
for each jurisdiction.
Based on the calculations of the additional corporate tax (through the application of the rules for
the national additional tax and primary additional tax), the Group has determined that the taxable profit in
Bulgaria for 2025, amounting to BGN 111,335 thousand (2024: BGN 85,091 thousand) should be taxed at
the applicable calculated 4.18% tax rate for the additional tax for 2025, amounting to BGN 3,716 thousand.
(2024: the tax rate is 3.92%, and the tax amount is BGN 2,359 thousand). As of December 31, 2025, and
December 31, 2024, the Group is not subject to primary and secondary tax on the activities performed by
its constituent entities abroad.
The Group applies the mandatory temporary exemption under IAS 12 regarding the accounting
treatment of deferred taxes arising from amendments to the Corporate Income Tax Act (CITA) in
connection with the implementation of the OECD Pillar Two Model Rules.
The additional profit for the purposes of determining the national and primary additional tax is
derived by applying adjustments specific to the new tax regime to the consolidated net income, totaling
BGN 23,050 thousand (2024: BGN 25,393 thousand) at the jurisdiction level. Furthermore, the Group
applies the significant business activity exception totaling BGN 22,457 thousand (2024: BGN 24,947
thousand). The effective tax rate for the purposes of the additional tax and the subsequent rate of additional
taxes have a separate definition for the purposes of the Corporate Income Tax Act and are not directly
related to the calculations of the effective corporate tax before and after the application of the Pillar Two
rules presented below.
The calculated additional tax for 2025 for the Group amounts to BGN 3,716 thousand (2024: BGN
2,359 thousand).
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
97
The reconciliation between income tax expense and accounting profit/loss for the Group
companies, multiplied by the applicable tax rate for the years ending December 31, 2025, and December
31, 2024, is presented below:
Consolidated Statement of Comprehensive Income
2025
2024
(profit or loss for the year)
BGN'000
BGN'000
Tax profit for the year of the Group companies
208,316
92,380
Revaluation reserve included as an increase in the tax return
(328)
(477)
Taxable income for the year
207,988
91,903
Current income tax expense for the year (Note 2.27)
32,257
10,857
National supplementary tax
3,716
2,359
Adjustment for prior-period tax
415
259
Deferred income taxes
Recognition and reversal of temporary differences
(14,815)
(1,824
Total income tax expense recognized in the consolidated statement
of comprehensive income
21,573
11,651
(in profit or loss for the year)
Reconciliation of income tax expense based on consolidated net
income
2025
2024
BGN'000
BGN'000
Net income for the year
158,194
92,082
Current income tax expense for the year (Note 2.27)
19,773
10,195
From unrecognized amounts on tax returns
Related to increases
3,954
3,482
Related to decreases
(7,295)
(5,637)
Tax loss for the current year on which no deferred tax asset has been
recognized
1,189
1,225
Deferred taxes recognized on temporary differences from prior periods
236
27
Income tax expense recognized in the consolidated statement of
comprehensive income (in profit or loss for the year) before the
effects of the Pillar Two Model
17,857
9,292
Effective corporate tax rate before the effects of the Pillar Two Model
11.29%
10.09
Effects of the Pillar Two Model
3,716
2,359
Income tax expense recognized in the consolidated statement of
comprehensive income (in profit or loss for the year), including effects
of the Pillar 2 Model
21,573
11,651
Effective corporate tax rate, including effects of the Pillar Two Model
13.64%
12.65%
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
98
The tax effects on other components of comprehensive income are as follows:
2025
2024
BGN'000
BGN'000
Pre-tax
amount
Tax savings
/ (Tax
expense)
Net value
after tax
Pre-tax
value
Tax savings
/ (Tax
expense)
Net
amount
after tax
Items that will not be reclassified to profit or loss
(Loss)/Gain from revaluation of
property, plant, and equipment
Share of other comprehensive income
of associates
-
-
-
(22)
2
(20)
1,121
-
1,121
528
-
528
Net change in the fair value of other
long-term equity investments
Subsequent valuations of defined
benefit pension plans
(994)
-
(994)
(607)
-
(607)
(974)
-
(974)
(629)
-
(629)
(847)
-
(847)
(730)
2
(728)
Items that may be reclassified to profit or loss
Foreign currency translation
differences
Share of other comprehensive income
of associates
37
-
37
(1,089)
-
(1,089)
(2,350)
-
(2,350)
123
-
123
(2,313)
-
(2,313)
(966)
-
(966)
Other comprehensive income for the
year
(3,160)
-
(3,160)
(1,696)
2
(1,694)
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
99
15. OTHER COMPREHENSIVE INCOME
Other components of comprehensive income include:
Other components of
comprehensive income
relating to the Group
Other components of
comprehensive income
attributable to non-
controlling interests
Total other components of
comprehensive income
2025
2024
2025
2024
2025
2024
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Components that will not be
reclassified to profit or loss
Revaluation of property, plant
and equipment
-
(22)
-
-
-
(22)
Share of other comprehensive
income of associates and joint
ventures
1,121
528
-
-
1,121
528
Net change in fair value of
equity investments designated
at fair value through other
comprehensive income
(994)
(607)
-
-
(994)
(607)
Subsequent valuations of
defined benefit plans
(936)
(616)
(38)
(13)
(974)
(629)
Income tax related to
components of other
comprehensive income
-
2
-
-
-
2
Components that may be
reclassified to profit or loss
Exchange differences from
translation of foreign operations
(156)
(819)
193
(270)
37
(1,089)
Share of other comprehensive
income of associates and joint
ventures
(2,364)
151
14
(28)
(2,350)
123
Other comprehensive income
for the year
(3,329)
(1,383)
169
(311)
(3,160)
(1,694)
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
100
16. PROPERTY, PLANT AND EQUIPMENT
Land
and buildings
Plant
and equipment
Other
Assets
in progress
Total
2025
2024
2025
2024
2025
2024
2025
2024
2025
2024
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Book value
Balance at 1 January
376,521
333,564
298,172
283,505
61,570
57,435
17,678
7,075
753,941
681,579
Additions
34,480
27,371
9,862
6,903
12,985
7,444
27,280
19,701
84,607
61,419
Effects from newly acquired subsidiaries
-
22,605
-
4,619
-
1,557
-
205
-
28,986
Effect from foreign currency recalculations
(601)
(664)
(648)
(276)
(53)
(279)
(4)
(10)
(1,306)
(1,229)
Written-off
(23,895)
(6,649)
(4,390)
(1,320)
(4,986)
(5,040)
(1)
(138)
(33,272)
(13,147)
Written-off book value of assets upon disposal
of subsidiaries
-
(3,034)
-
(180)
-
(178)
-
(41)
-
(3,433)
Impairment
(338)
(234)
(3)
-
(48)
-
-
-
(389)
(234)
Transfer to property, plant and equipment
3,641
3,562
13,901
4,921
1,523
631
(19,065)
(9,114)
-
-
Transfer to/from investment properties
290
-
213
-
9
-
-
-
512
-
Transfer to/from assets held for sale
(7,176)
-
(17,404)
-
(358)
-
(132)
-
(25,070)
-
Balance at 31 December
382,922
376,521
299,703
298,172
70,642
61,570
25,756
17,678
779,023
753,941
Accumulated depreciation and impairment
Balance at 1 January
128,932
107,600
195,412
181,817
37,145
34,538
-
-
361,489
323,955
Depreciation charge for the year
30,443
25,118
16,270
14,985
9,123
7,316
-
-
55,836
47,419
Impairment
-
22
-
-
-
-
-
-
-
22
Effects from translation of foreign currency
(176)
(64)
(429)
(182)
(115)
(140)
-
-
(720)
(386)
Written-off depreciation
(19,191)
(2,904)
(3,961)
(1,036)
(4,259)
(4,411)
-
-
(27,411)
(8,351)
Depriciation as a result of transfer to/from assets
held for sale
(4,461)
-
(13,470)
-
-
-
-
-
(17,931)
-
Depreciation written-off upon disposal of
subsidiaries
-
(840)
-
(172)
(318)
(158)
-
-
(318)
(1,170)
Balance at 31 December
135,547
128,932
193,822
195,412
41,576
37,145
-
-
370,945
361,489
Carrying amount at 31 December
247,375
247,589
105,881
102,760
29,066
24,425
25,756
17,678
408,078
392,452
Carrying amount at 1 January
247,589
225,964
102,760
101,688
24,425
22,897
17,678
7,075
392,452
357,624
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
101
As of December 31, 2025, the “Land and Buildings” group includes: land valued at BGN 49,481
thousand (December 31, 2024: 49,861 thousand BGN) and buildings with a carrying amount of 197,894
thousand BGN (December 31, 2024: 197,728 thousand BGN).
The costs of acquiring property, plant, and equipment as of December 31 include:
• costs for the construction of new buildings – BGN 6,099 thousand (December 31, 2024: BGN
2,306 thousand);
• renovation of buildings – BGN 1,325 thousand (December 31, 2024: BGN 787 thousand);
• purchase of equipment – BGN 1,089 thousand (December 31, 2024: BGN 1,329 thousand);
• Advances granted – BGN 16,635 thousand (December 31, 2024: BGN 13,134 thousand);
• Other – BGN 608 thousand (December 31, 2024: BGN 122 thousand).
The total cash outflow under lease agreements in 2025 amounted to BGN 31,074 thousand (2024: BGN
22,191 thousand).
As of December 31, 2025, the Group has leased out property, plant, and equipment to third parties
with a carrying amount of BGN 1,169 thousand (December 31, 2024: BGN 1,255 thousand).
As of December 31, 2025, Property, plant, and equipment included right-of-use assets with a carrying
amount of BGN 102,351 thousand in the Land and buildings group (December 31, 2024: BGN 96,709
thousand), in the Machinery, Plant, and Equipment group – BGN 757 thousand (December 31, 2024: BGN
897 thousand), and in the Other group – BGN 14,317 thousand (December 31, 2024: BGN 10,180 thousand).
Assets held under right of use are disclosed in detail in Note 34.
Other Information
As of December 31, 2025, there are encumbrances on the Group’s property, plant, and equipment
in connection with loans received (Notes 30 and 38), as follows:
• Land and buildings with a carrying amount of BGN 29,632 thousand and BGN 63,713 thousand,
respectively (December 31, 2024: BGN 27,822 thousand and BGN 64,914 thousand);
• Pledges of equipment, vehicles, and inventory – BGN 35,569 (December 31, 2024: BGN 27,754
thousand);
In 2025, property, plant, and equipment with a carrying amount of BGN 6,821 thousand were
transferred to assets held for sale. Detailed information is provided in Note 26
Periodic Fair Value Revaluation
As of December 31, 2021, a revaluation of property, plant, and equipment was performed with the
assistance of independent licensed appraisers to determine the fair value of the assets, in accordance with the
requirements of IFRS 13 and IAS 16.
The following main approaches and valuation methods were applied in this revaluation to measure
the fair value of the individual types of property, plant, and equipment:
• “Market Approach” using the “Comparable Market Transactions Method” – for regulated land and
agricultural land for which there is an active market, comparable properties and transactions involving them
are monitored, and a basis for comparability exists; their market price, determined using the comparative
method, is accepted as fair value;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
102
• “Cost approach” using the “depreciated replacement cost method” and the “cost of construction or
replacement with analogues method” – for specialized buildings, machinery, facilities, equipment, and other
assets for which there is no real market and no comparable sales of similar assets—their fair value is taken
to be their depreciated replacement cost based on the asset’s indexed historical cost and on current costs of
creation or replacement with similar items.
•“Income approach” through “Capitalized income from the use/production of biological assets”—
for permanent yellow acacia plantations in the fruiting stage.
The effects of the revaluation performed as of December 31, 2021, are as follows:
• Fair value measurement recognized in the statement of comprehensive income (in profit or loss
for the year) in the amount of BGN 10,476 thousand, including BGN 697 thousand for Property, Plant, and
Equipment in the process of acquisition;
• Fair value measurement recognized in the statement of comprehensive income (in other components
of comprehensive income) in the amount of BGN 10,616 thousand, including the effect of fair value
measurement in a joint venture;
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
103
17. INTANGIBLE ASSETS
Goodwill
Software
Intellectual property rights
and others
In the process of acquisition
Total
2025
2024
2025
2024
2025
2024
2025
2024
2025
2024
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Carrying amount
Balance as of January 1
23,891
21,789
45,228
41,720
274,851
74,241
9,294
4,256
353,264
142,006
Acquired
-
-
3,251
3,379
388
159
10,861
171,467
14,500
175,005
Assets in newly acquired subsidiaries
-
2,208
-
98
-
37,777
-
238
-
40,321
Effects of currency translation
(56)
(106)
(25)
(27)
1,323
(1,216)
2
(2)
1,244
(1,351)
Transfer
-
-
2,356
843
1,001
165,725
(3,357)
(166,568)
-
-
Impairment
-
-
(1)
-
-
-
-
(1)
-
Written off
-
-
(1,118)
(785)
(274)
(1,835)
(21)
(97)
(1,413)
(2,717)
Balance as of December 31
23,835
23,891
49,691
45,228
277,289
274,851
16,779
9,294
367,594
353,264
Accumulated depreciation and impairment
Balance as of January 1
18,350
18,350
26,110
22,721
45,987
39,667
-
-
90,447
80,738
Accumulated depreciation for the period
-
-
4,598
4,195
18,405
7,825
-
-
23,003
12,020
Effects of currency translation
-
-
(21)
(26)
118
(11)
-
-
97
(37)
Depreciation written off
-
-
(489)
(780)
(123)
(1,494)
-
-
(612)
(2,274)
Balance as of December 31
18,350
18,350
30,198
26,110
64,387
45,987
-
-
112,935
90,447
Balance as of December 31
5,485
5,541
19,493
19,118
212,902
228,864
16,779
9,294
254,659
262,817
Book value as of January 1
5,541
3,439
19,118
18,999
228,864
34,574
9,294
4,256
262,817
61,268
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
104
The cost of acquisition of intangible assets as of December 31 includes:
• costs for acquiring licenses and authorizations for the use of medicinal products – 4,306 BGN
(December 31, 2024: 1,467 BGN);
• expenses for the acquisition of software products – BGN 11,996 (December 31, 2024: BGN 7,437);
• advances granted – BGN 319 (December 31, 2024: BGN 98);
• expenses for the acquisition of copyrights – 31 BGN (December 31, 2024: 192 BGN);
• other – BGN 127 thousand (December 31, 2024: BGN 100 thousand);
As of December 31, 2025, there are encumbrances established in connection with loans received by
the Group on software products with a carrying amount of BGN 1,444 thousand (December 31, 2024: BGN
1,915 thousand) (Notes 30 and 38).
Intellectual property rights include products from R&D activities related to drug substances (active
ingredients) and dosage forms, acquired patents and trademarks, complex intangible assets (licenses and
networks of pharmacy locations), contractual rights to marketing authorizations, copyrights, and medical
registrations.
On November 29, 2024, Sopharma AD acquired contractual rights to 68 marketing authorizations
for 14 well-known trademarks in the company’s traditional export markets. Under the agreement with the
seller, legal ownership of the trademarks and the replacement of the seller with Sopharma in the marketing
authorizations will take place in stages according to a plan agreed upon by the parties. Under the agreement,
until the legal transfer of ownership and the replacement of the seller’s name in the marketing aut horizations,
Sopharma will be authorized by the seller to exercise the rights under the marketing authorizations and
trademarks for the markets covered by the transaction.
The Group’s total intellectual property includes internally developed trademarks that are not
capitalized in the consolidated statement of financial position.
Intangible assets acquired as a result of business combinations, primarily in Serbia and Belarus,
include exclusive contracts with counterparties, licenses, and a distribution network.
Goodwill Impairment
The Group’s management has performed the necessary procedures to conduct the mandatory
impairment test on the goodwill recognized in the consolidated statement of financial position upon the
acquisition of the subsidiaries. For this purpose, it is assumed that each individual company acts as a “cash-
generating unit.”
The financial budgets developed by the management of the respective companies and of the Group
as a whole, covering a three- to five-year period, as well as other medium- and long-term plans and intentions
for the development and restructuring of operations within the Group. The recoverable amount of each cash-
generating unit is determined on a “value in use” basis.
The key assumptions used in the calculations are determined specifically for each company holding
goodwill, treated as a separate cash-generating unit, and in accordance with the specifics of its operations,
business environment, and risks.
The Group’s management’s impairment tests and assessments of recognized goodwill are conducted
through the lens of its forecasts and intentions regarding the future economic benefits the Group expects to
receive from its subsidiaries, including through the use of their internally generated trademarks, commercial
and industrial experience, and the revenue generated and expected in the future from them, securing positions
in Bulgarian and foreign markets (development and retention), expectations for future sales and restructuring
of operations, etc.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
105
As a result of the analyses performed by the Group’s management, no goodwill impairment was
recognized as of December 31, 2025 (December 31, 2024: none).
18. INVESTMENT PROPERTY
31/12/2025
31/12/2024
BGN '000
BGN '000
Balance at 1 January
7,890
11,198
Transfer to property, machinery and equipment (Note 16)
(512)
-
Acquired
-
20
Net gain from adjustment to fair value through profit or loss (Note 4)
214
(186)
Disposals
(541)
(3,142)
Balance at 31 December
7,051
7,890
Investment properties consist of buildings and the land attached to them, as well as separately
designated parts of buildings intended for independent use and intended for long-term lease. By asset group,
they are as follows:
Group of assets
31/12/2025
31/12/2024
BGN '000
BGN '000
Warehouse premises
4,040
3,990
Offices
1,780
1,754
Industrial buildings
990
1,435
Retail spaces
241
199
Social facilities
-
512
Total
7,051
7,890
Fair value measurement
Fair value hierarchy
The fair values of the groups of investment properties are categorised as Level 2 and Level 3fair
values based on the inputs to the valuation technique used. The investment property revaluation to fair value
is recurring and is due to the application of the fair value model under IAS 40. It is performed regularly at
the end of each reporting period. Fair value is determined with the assistance of independent certified
appraisers.
The table below shows reconciliation between the opening and closing balances of the fair values of
investment properties measured at Level 2 and Level 3:
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
106
Warehouse
premises
Offices
Production
buildings
Social
facilitie
s
Retail
facilities
Total
Balance as of January 1,
2024
5,313
2,272
2,915
513
185
11,198
Acquired
4
-
16
-
-
20
Fair value measurement
through profit or loss—
unrealized
(182)
(14)
(3)
(1)
14
(186)
Written off
(1,145)
(504)
(1,493)
-
-
(3,142)
Balance as of December 31,
2024
3,990
1,754
1,435
512
199
7,890
Fair value revaluation
through profit or loss—
unrealized
53
26
93
-
42
214
Written off
(3)
-
(538)
-
-
(541)
Transfers to/from property,
plant, and equipment (Note
16)
-
-
-
(512)
-
(512)
Balance as of December 31,
2025
4,040
1,780
990
-
241
7,051
Valuation techniques and significant unobservable inputs
The table below shows a description of the valuation techniques, used in measuring the fair value of
all groups of Level 2 investment properties as well as the used significant unobservable inputs:
Groups of assets
(Level 2)
Valuation approaches and techniques
Significant unobservable inputs
Offices
Retail stores
Social premises
Valuation Approach: Income Approach
Appraisal technique: Appraisal based on the
present value, corresponding to a methodology
related to the fulfillment of the requirements of
BSO 2018, including valuation based on
capitalized rental income, as a scheme for
applying the method of discounted cash flows,
using data, parameters and calculation results
resulting from the application of valuation
techniques from the approach of market
comparisons and from the approach based on the
costs of creation/ replacement.
a) comparative rental values for
analogues
b) rate of return
c) term for realization of rental
transactions
Warehouse premises
Valuation Approach: Income Approach
Appraisal technique: Appraisal based on the
present value, corresponding to a methodology
related to the fulfillment of the requirements of
BSO 2018, including valuation based on
capitalized rental income, as a scheme for
applying the method of discounted cash flows,
using data, parameters and calculation results
resulting from the application of valuation
techniques from the approach of market
comparisons and from the approach based on the
costs of creation/ replacement.
a) comparative rental values for
analogues
b) rate of return
c) term for realization of rental
transactions
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
107
Groups of assets
(Level 3)
Valuation approaches and techniques
Significant unobservable inputs
Shops and
production - warehouse
bases
(including land, buildings,
structures and construction
equipment)
Valuation Approach: Income Approach
Appraisal technique: Appraisal based on the
present value, corresponding to a methodology
related to the fulfillment of the requirements of
BSO 2018, including valuation based on
capitalized rental income, as a scheme for
applying the method of discounted cash flows,
using data, parameters and calculation results
resulting from the application of valuation
techniques from the approach of market
comparisons and from the approach based on the
costs of creation/ replacement.
a) comparative rental values for
analogues
b) rate of return
c) term for realization of rental
transactions
Facilities, installations,
equipment and furniture
for real estate
Valuation Approach: Cost Approach
Appraisal technique: Appraisal based on the
present value, corresponding to a methodology
related to the fulfillment of the requirements of
BSO 2018, including valuation on an as-needed
basis - the inherent costs of acquisition or
replacement (acquisition of an alternative asset of
equal utility) of a relevant asset, as of the
valuation date, i.e. formation of replacement value
of the asset in its status as new, using data,
parameters and calculative results arising from
valuation techniques related to the approach of
market comparisons
a) comparative values for new
analogues
b) user modification indices
prices according to NSI data
19. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
31/12/2025
31/12/2024
BGN '000
BGN '000
Investments in associates
279,791
252,142
Total
279,791
252,142
19.1. Investments in associates
As at 31 December 2025, the Group has significant influence in
% interest
Carrying amount
Date of shares acquisition
BGN'000
Doverie United Holding AD
20.81%
166,625
21.12.2016
Sopharma Properties REIT
45.65%
82,800
8.12.2021
Sopharma Buildings REIT
32.72%
29,320
8.9.2023
ООО GalenaPharm
47.00%
600
10.7.2024
Medjel ODO
40.00%
446
10.7.2024
ODO Alenpharm-Plus
40.10%
-
10.7.2024
279,791
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
108
As at 31 December 2025, the Group has significant influence in:
%
ownership
Carrying
amount
Date of acquisition
of the interest
BGN'000
Doverie United Holding AD
22.60%
139,614
21.12.2016
Sopharma Properties REIT
45.65%
82,200
8.12.2021
Sopharma Buildings REIT
32.48%
29,256
8.9.2023
ООО GalenaPharm
47.00%
588
10.7.2024
Medjel ODO
40.00%
484
10.7.2024
ODO Alenpharm-Plus
40.10%
-
10.7.2024
252,142
The principal activities of Doverie United Holding AD include acquisition, management, valuation
and disposal of shares/interest in Bulgarian and foreign companies. Doverie United Holding Group includes
18 subsidiaries. They perform operations mainly in the following sectors and areas: banks, trade in DIY
goods, insurance medical services, and textile industry and investments in real estate.
The shares of Doverie United Holding AD are traded on the stock exchange, with the average
monthly price of executed trades for December 2025 being BGN 10.54 per share (December 2024: BGN
8.03). The book value per share based on net assets for 2025 is BGN 2.81 (2024: BGN 2.39).
Sopharma Properties REIT is an associated company whose business activity consists of investing
funds raised through the issuance of securities in real estate by acquiring ownership rights and other real
property rights, carrying out construction and improvements to such properties for the purpose of
managing, rental, leasing, letting, and/or sale.
The shares of Sopharma Properties REIT are traded on the stock exchange, with the average monthly
price of executed trades for December 2025 standing at BGN 9.11 per share (December 2024: BGN
8.03). The book value per share based on net assets for 2025 is BGN 4.59 (2024: BGN 4.36).
Sopharma Buildings REIT is an associated company whose business is the investment of funds raised
through the issuance of securities in real estate through the purchase of ownership rights and other real
property rights, carrying out construction and improvements thereto, for the purpose of managing, renting,
leasing, letting, and/or selling them.
The shares of Sopharma Buildings REIT were not traded on the stock exchange in December 2025
(December 2024: BGN 16.70). The book value per share based on net book assets for 2025 is BGN 1.78
(2024: BGN 1.84).
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
109
The movement of the investments in associates is presented below:
31/12/2025
31/12/2024
BGN '000
BGN '000
Balance as of January 1
252,142
231,292
Share in current profit for the period
34,846
23,901
Share in other components of comprehensive income
(1,229)
703
Acquisition of shares and interests
699
1,928
Effect of fair value measurement of previously held interests in
companies upon the Group’s acquisition of control over them
-
556
Transfer to investments in subsidiaries
-
(4,212)
Dividends
(5,812)
(1,603)
Sale of shares
(816)
(348)
Effects of transactions with Group companies
(39)
(75)
Balance as of December 31
279,791
252,142
19.2. Investments in joint ventures
As of December 31, 2025, the Group exercises joint control over Momina Krepost AD and ZAO
Kompaniya Interpharm:
% interest
Carrying
amount
Date of acquisition
of interest
BGN'000
Momina Krepost AD
37.47%
-
March 10, 2021
ZAO Company
Interpharm
50.00%
-
July 10, 2024
As at 31 December 2024 the Group exercises joint control over Momina Krepost AD and ZAO Kompaniya
Interpharm:
% interest
Carrying
amount
Date of acquisition
of interest
BGN'000
Momina Krepost AD
37.46%
-
March 10, 2021
ZAO
CompanyInterpharm
50.00%
-
July 10, 2024
Momina Krepost AD is a joint venture whose principal activities include development,
implementation and production of medicinal products for human and veterinary medicine.
ZAO Interpharm is a joint venture company since 10.07.2024; with the scope of activity retail trade
in pharmaceutical products.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
110
The movement of investments in joint ventures is presented below:
31/12/2025
31/12/2024
BGN '000
BGN '000
Balance as of January 1
-
-
Acquisition of shares and equity interests
-
435
Share of current profit for the period
-
9
Share in other components of comprehensive income
-
(52)
Transfer to investments in subsidiaries
-
(365)
Effects of transactions with Group companies
-
(27)
Balance as of December 31
-
-
19.3. General information about associates
The table below presents summary financial information for the Group’s associates and the Group’s share in
the results of the associates.
Financial indicators
Doverie
United
Holding AD*
Sopharma
Properties
REIT
Sopharma
Buildings
REIT
ООО
GalenaPharm
Medjel
ODO
Alenpharm
-Plus ODO
Summary information
from the statement of
financial position
31/12/2025
31/12/2025
31/12/2025
31/12/2025
31/12/2025
31/12/2025
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Current assets
2,492,773
3,142
33,752
2,282
1,981
2,673
Non-current assets
2,091,300
104,386
1,014
2,804
2,730
3,323
Current liabilities
(1,297,070)
(5,196)
(17,871)
(2,745)
(2,694)
(5,674)
Non-current liabilities
(2,429,478)
(1,557)
(9,956)
(929)
(778)
(1,178)
Net assets
857,525
100,775
6,939
1,412
1,239
(856)
including
Non-controlling
interest
(179,270)
-
-
-
-
-
678,255
100,775
6,939
1,412
1,239
(856)
Summary information
from the statement of
comprehensive income
2025
2025
2025
2025
2025
2025
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Revenue
637,772
18,698
66
14,764
12,917
14,729
Net income/(loss) for
the year
137,298
14,037
(234)
(9)
(133)
(344)
Other comprehensive
income for the year, net
of tax
(6,239)
-
-
82
75
(32)
Total comprehensive
income for the year
131,059
14,037
(234)
73
(58)
(376)
The Group’s share of
current profit (loss) for
the period
28,572
6,408
(77)
(4)
(53)
-
The Group’s share in
other components of
comprehensive income
(1,298)
-
-
39
30
-
Items recognized by
the Group
-
-
-
-
-
(151)
*Consolidated figures
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
111
Financial
indicators
Doverie
United
Holding
AD*
Sopharma
Properties
REIT
Sopharma
Buildings
REIT
Galena-
Pharm
ООО
Medjel
ODO
Alenpharm-
Plus ODO
Pharmana
D.O.O.
Summary
information from
the statement of
financial position
31/12/2024
31/12/2024
31/12/2024
31/12/2024
31/12/2024
31/12/2024
31/12/2024
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Current assets
2,337,681
6,269
14,498
1,944
1,780
2,541
-
Non-current assets
1,588,132
99,946
988
3,154
2,855
3,175
-
Current liabilities
(1,506,449)
(8,819)
(688)
(2,566)
(2,479)
(5,127)
-
Non-current
liabilities
(1,700,874)
(1,708)
(7,625)
(1,193)
(859)
(1,069)
-
Net assets
718,490
95,688
7,173
1,339
1,297
(480)
-
including
Non-controlling
interest
(156,768)
-
-
-
-
-
-
561,722
95,688
7,173
1,339
1,297
(480)
-
Summary
information from
the statement of
comprehensive
income
2024
2024
2024
2024
2024
2024
January 1,
2024–
August 13,
2024
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Revenue
606,876
19,406
85
6,853
6,124
7,298
11,695
Net income/(loss)
for the year
76,952
15,061
(92)
(6)
(30)
(88)
(1,278)
Other
comprehensive
income for the
year, net of tax
3,468
-
-
(93)
(92)
28
-
Total
comprehensive
income for the year
80,420
15,061
(92)
(99)
(122)
(60)
(1,278)
The Group’s share
of current profit
(loss) for the
period
17,391
6,875
(30)
(3)
(12)
-
(320)
The Group’s share
in other
components of
comprehensive
income
784
-
-
(44)
(37)
-
-
Items recognized
by the Group
-
-
-
-
-
(24)
-
*Consolidated figures
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
112
The reconciliation between the summary financial information for investments in associates and their carrying amounts as
of December 31, included in these consolidated financial statements, is presented in the table below:
Doverie
United
Holding AD
Sopharma
Properties
REIT
Sopharma
Buildings
REIT
ООО
GalenaPharm
Medjel
ODO
Alenpharm-
Plus ODO
31/12/2025
31/12/2025
31/12/2025
31/12/2025
31/12/2025
31/12/2025
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Net assets
678,255
100,775
6,939
1,412
1,239
(856)
Group share (%)
20.81%
45.65%
32.72%
47.00%
40.00%
40.10%
Group’s share of net assets
141,145
46,004
2,270
664
495
(343)
Goodwill and other
adjustments
25,480
36,796
27,050
(64)
(49)
343
Carrying amount of the
investment
166,625
82,800
29,320
600
446
-
Doverie
United
Holding AD
Sopharma
Properties
REIT
Sopharma
Buildings
REIT
ООО
GalenaPharm
Medjel
ODO
Alenpharm-
Plus ODO
31/12/2024
31/12/2024
31/12/2024
31/12/2024
31/12/2024
31/12/2024
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Net assets
561,722
95,688
7,173
1,339
1,297
(480)
Group share (%)
22.60%
45.65%
32.48%
47.00%
40.00%
40.10%
Group’s share of net assets
126,949
43,682
2,330
629
519
(192)
Goodwill and other
adjustments
12,665
38,518
26,926
(41)
(35)
192
Carrying amount of the
investment
139,614
82,200
29,256
588
484
-
19.4. General Information on Joint Ventures
The table below presents summary financial information for the Group’s joint ventures and the
Group’s share in the results of the joint ventures.
Financial indicators
Momina
Krepost AD
ZAO
Interpharm
Momina
Krepost AD
ZAO
Interpharm
BOOO
SpetsApharm
acia
Summary information from the
statement of financial position
31/12/2025
31/12/2025
31/12/2024
31/12/2024
31/12/2024
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Current assets, including
4,530
1,926
4,994
1,553
-
Cash and cash equivalents
63
42
56
71
-
Non-current assets
9,713
1,582
10,111
1,688
-
Current liabilities, including
(9,476)
(3,315)
(8,596)
(2,776)
-
Non-current liabilities, including
(6,723)
(408)
(6,726)
(491)
-
Net assets
(1,956)
(215)
(217)
(26)
-
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
113
Summary information from the
statement of comprehensive income
2025
2025
2024
2024
July 10,
2024–
December
31, 2024
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Revenue
1,201
7,804
1,427
3,655
2,340
Depreciation expense
(312)
(316)
(306)
(154)
(102)
Interest expense
(285)
(41)
(265)
(26)
(13)
Income tax benefit/(expense)
4
(50)
31
(10)
(7)
Net (loss) for the year
(1,739)
(185)
(1,732)
(112)
(23
Other comprehensive income for the
year, net of tax
-
(4)
15
(4)
(50)
Total comprehensive income for the
year
(1,739)
(189)
(1,717)
(116)
(73)
The Group’s share of current profit
(loss) for the period
-
-
-
(43)
52
The Group’s share in other
components of comprehensive income
-
-
-
(2)
(50)
Items recognized by the Group
(652)
(95)
(643)
(13)
-
The reconciliation between the summarized financial information for the significant interests in joint
ventures and their carrying amounts as of December 31, included in these consolidated financial statements,
is presented in the table below:
Momina
Krepost AD
ZAO
Interpharm
Momina
Krepost AD
ZAO
Interpharm
31/12/2025
31/12/2025
31/12/2024
31/12/2024
BGN’000
BGN’000
BGN’000
BGN’000
Net assets
(1,956)
(215)
(217)
(26)
Group share (%)
37.47%
50.00%
37.46%
50.00%
Group’s share of net assets
(733)
(108)
(81)
(13)
Goodwill and other adjustments
733
108
81
13
Carrying amount of the investment
-
-
-
-
19.5. Cash flows from the acquisition of shares in associates
31/12/2025
31/12/2024
Cash flows from the acquisition of shares:
BGN'000
BGN'000
Cash flows from the acquisition of shares
(699)
(685)
Cash flows from sale of shares
4,219
1,721
3,520
1,036
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
114
20. OTHER LONG-TERM EQUITY INVESTMENTS
Other long-term equity investments include shares in the following companies:
Country
31/12/2025
Interest
31/12/2024
Interest
BGN '000
%
BGN '000
%
Traded securities
Achieve Life Sciences Inc.
USA
8,323
1.98
8,414
3.15
Lavena AD
Bulgaria
1,165
5.01
3,355
13.10
MFG Invest AD
Bulgaria
148
0.46
147
0.46
9,636
11,916
Unlisted securities
Balkanpharma Razgrad AD
Bulgaria
70
0.33
70
0.33
Inventor I KDA
Bulgaria
50
1.36
50
1.36
Others
12
-
12
-
132
132
As of December 31, 2025, “other” includes long-term equity investments in the amount of BGN 12
thousand (December 31, 2024: BGN 12 thousand), representing the Group’s small minority interests in the
equity of a total of three companies (December 31, 2024: three companies).
The fair value per share as of December 31, 2025, and as of December 31, 2024, by company is as
follows:
Equity investments
number of
shares
held
Fair value
per share
31/12/2025
Number of
shares held
fair value per
share
31/12/2024
BGN '000
BGN '000
Achieve Life Sciences Inc. -
USA
1,092,308
7.62
8,323
1,092,308
7.70
8,414
Lavena AD
497,000
2.34
1,165
1,299,026
2.58
3,355
MFG Invest AD
50,000
2.96
148
50,000
2.93
147
Total shares
9,636
11,916
The table below presents the Group's other long-term equity investments by fair value levels in the
consolidated annual statement of financial position:
Equity investments
Fair value
(Level 1)
(Level 2)
31/12/2025
BGN'000
BGN'000
BGN'000
Achieve Life Sciences Inc. - USA
8,323
8,323
-
Lavena AD
1,165
-
1,165
MFG Invest AD
148
-
148
Total
9,636
8,323
1,313
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
115
Capital investments
Fair value
(Level 1)
(Level 2)
31/12/2024
BGN'000
BGN'000
BGN'000
Achieve Life Sciences Inc. - USA
8,414
8,414
-
Lavena AD
3,355
-
3,355
MFG Invest AD
147
-
147
Total
11,916
8,414
3,502
The table below shows the movement between the opening and closing balances of the fair values at
Level 1 and Level 2:
Level 1
Level 2
Total
BGN'000
BGN'000
BGN'000
Balance as of January 1, 2024
172
3,638
3,810
Capital issue
8,732
-
8,732
Sales
(12)
(7)
(19)
Transfer from Level 1 to Level 2
(148)
148
-
Unrealized loss included in other comprehensive income (Note
15)
(330)
(277)
(607)
Balance as of December 31, 2024
8,414
3,502
11,916
Purchases
-
4
4
Sales
-
(1,290)
(1,290)
Unrealized loss included in other comprehensive income (Note
15)
(91)
(903)
(994)
Balance as of December 31, 2025
8,323
1,313
9,636
Long-term loans as of December 31, 2024, were granted to a company controlled by an associate to
assist in financing activities related to common strategic objectives. They are secured by pledges of securities
(shares) and promissory notes.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
116
21. LONG-TERM RECEIVABLES FROM RELATED PARTIES
Long-term receivables from related parties as of December 31 are:
31/12/2025
31/12/2024
BGN '000
BGN '000
Receivables under assignment agreements
4,138
4,011
Receivables from securities transactions
2,604
2,843
Deposits provided under lease agreements
580
580
Allowance for credit losses
(64)
(64)
Deposits received under lease agreements, net
516
516
Long-term loans granted to related parties
-
3,016
Total
7,258
10,386
Long-term loans as of December 31, 2024, were granted to a company controlled by an associate to
assist in financing activities related to common strategic objectives. They are secured by pledges of securities
(shares) and promissory notes.
The terms of the long-term loans granted to related parties are as follows:
Currency
Agreed amount
Maturity
Interest
Rate
31/12/2025
31/12/2024
'000
BGN'000
BGN'000
BGN'000
BGN'000
including
interest
including
interest
BGN
3,000
12/31/2026
4.93%
-
-
3,016
16
-
-
3,016
16
22. OTHER LONG-TERM RECEIVABLES
The Group’s other long-term receivables include:
31/12/2025
31/12/2024
BGN'000
BGN'000
Loans granted
2,957
2,865
Deposits under long-term lease agreements
1,314
973
Receivables from securities transactions
427
4,229
Allowance for credit losses
-
(41)
Securities trading receivables, net
427
4,188
Guarantees provided under long-term service contracts
45
-
Other
12
3
Total
4,755
8,029
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
117
Receivables from securities transactions as of December 31 are as follows:
• receivable from the sale of an investment in a subsidiary in the amount of BGN 427 thousand
(December 31, 2024: BGN 464 thousand). These are denominated in BGN and mature on December 31,
2033.
• receivable from a sold investment in a subsidiary, which was reclassified in 2025 as trade
receivables (December 31, 2024: BGN 3,724 thousand). These are denominated in USD and mature on
September 30, 2026, which is contingent upon the completion of certain regulatory actions regarding the
registration of medical product approvals;
The movement of the allowance for impairment of receivables from securities transactions is as
follows:
31/12/2025
31/12/2024
BGN '000
BGN '000
Balance as of January 1
41
183
Decrease in the allowance for credit losses recognized in profit or
loss during the year, net
-
(142)
Transfer to trade receivables
(41)
-
Balance as of December 31
-
41
The terms of the long-term loans granted to third parties are as follows:
Currency
Agreed amount
Maturity
Interest
Rate
31/12/2025
31/12/2024
'000
BGN'000
BGN'000
BGN
2,847
12/31/2027
6.05%
2,957
2,865
2,957
2,865
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
118
23. INVENTORIES
Inventories include:
31/12/2025
31/12/2024
BGN'000
BGN'000
Inventories
369,842
324,199
Finished goods
61,026
54,572
Materials
47,783
55,001
Work in progress
16,243
13,564
Semi-finished goods
10,095
4,074
Total
504,989
451,410
As of December 31, 2025, special pledges have been established on inventories in the amount of
BGN 253,293 (December 31, 2024: BGN 249,281) as collateral for bank loans received by the Group and
bank guarantees issued (Notes 30, 38, and 46).
24. TRADE RECEIVABLES
31/12/2025
31/12/2024
BGN'000
BGN'000
Trade receivables
417,323
269,488
Allowance for credit losses
(4,379)
(4,687)
Trade receivables, net
412,944
264,801
Advances granted
39,619
36,284
Receivables from securities transactions
3,327
-
Allowance for credit losses
(80)
-
Securities trading receivables, net
3,247
-
Receivables under assignment agreements
-
4,890
Total
455,810
305,975
Trade receivables are interest-free and are primarily denominated in Bulgarian leva, Russian rubles,
RSD, and EUR.
Typically, Group companies agree with customers on payment terms for trade receivables ranging
from 30 to 180 days, unless specific terms have been established for certain customers or in cases where new
markets and products are being developed and new trading counterparties are being attracted. The Group has
established a standard credit period of up to 60 days for customers and pharmacies, and up to 180 days for
other customers, for which it does not charge interest to customers, except in cases of restructured receivables
under a special agreement, where a longer term with a repayment schedule and interest has been agreed upon.
For sales of medical equipment in the hospital market, the credit period could reach up to and over 2 years
due to the financial specifics of the counterparties.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
119
The movement of the allowance for impairment of trade receivables from third parties is as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
Balance as of January 1
4,687
6,254
Increase/(decrease) in the allowance for credit losses recognized in
profit or loss during the period, net
720
(1,412
Effect of foreign currency translation
(45)
(36)
Amounts written off as uncollectible receivables
(983)
(170)
Impairment losses recognized in business combinations
-
51
Balance as of December 31
4,379
4,687
The movement in the allowance for impairment of receivables from securities transactions is as
follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
Balance as of January 1
-
-
Increase in the allowance for credit losses recognized in profit or loss
during the period, net
39
-
Transfer from other long-term receivables
41
-
Balance as of December 31
80
-
The age structure of non-past-due (current) trade receivables is as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
up to 30 days
193,412
145,384
31 to 90 days
157,770
85,349
91 to 180 days
37,459
4,814
181 to 365 days
3,242
3,336
1 to 2 years
2,275
38
over 2 years
7,755
10,240
Gross value of non-past-due (current) trade receivables
401,913
249,161
Expected credit losses
(984)
(1,044)
Non-past due (current) trade receivables, net
400,929
248,117
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
120
The allowance for credit losses on non-past due (performing) trade receivables is as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
up to 30 days
437
616
31 to 90 days
311
305
91 to 180 days
117
69
181 to 365 days
34
39
from 1 to 2 years
77
-
over 2 years
8
15
Total
984
1,044
The age structure of past-due trade receivables by invoice date is as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
31 to 90 days
6,949
11,536
91 to 180 days
3,186
3,695
181 to 365 days
2,127
1,263
1 to 2 years
1,435
1,780
over 2 years
1,713
2,053
Gross value of past-due trade receivables
15,410
20,327
Allowance for credit losses
(3,395)
(3,643)
Past due trade receivables, net
12,015
16,684
The allowance for credit losses on past due trade receivables is as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
31 to 90 days
97
2
91 to 180 days
44
2
from 181 days to 365 days
305
39
from 1 to 2 years
1,250
1,547
over 2 years
1,699
2,053
Total
3,395
3,643
For the most part, the past-due receivables are from state-owned hospitals. The Group’s policy is to
accrue, invoice, and collect additional late payment interest, which fully compensates for the delay in
payments and the incurred costs/losses, both through special agreements with the respective debtor hospital
and through legal proceedings.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
121
The Group applies the simplified approach under IFRS 9 to measure expected credit losses on trade
receivables, recognizing expected losses over the entire life of the instrument for all trade receivables (Note
2.16) On this basis, the allowance for credit losses as of December 31, 2025, and December 31, 2024, is
determined as follows:
December 31, 2025
Current
Past due up
to 90 days
Past due over
90 to 365
days
Past due over
365 days
Total
Expected % of credit
losses
0.24%
2.49%
7.27%
99.12%
1.05%
Trade receivables (gross
carrying amount)
BGN'000
401,913
8,998
3,467
2,945
417,323
Expected credit loss
(Impairment allowance)
BGN'000
(984)
(224)
(252)
(2,919)
(4,379)
December 31, 2024
Current
Past due up
to 90 days
Past due over
90 to 365
days
Past due over
365 days
Total
Expected % of credit
losses
0.42%
0.02%
1.02%
99.86%
1.74%
Trade receivables (gross
carrying amount)
BGN'000
249,161
12,711
4,011
3,605
269,488
Expected credit loss
(Impairment allowance)
BGN 000
(1,044)
(2)
(41)
(3,600)
(4,687)
As of December 31, 2025, special pledges have been established on trade receivables in the amount
of BGN 237,433 (December 31, 2024: BGN 171,305 thousand) as collateral for bank loans received by the
Group and bank guarantees issued (Notes 30, 38, and 46).
Advances paid and other receivables from suppliers are current, primarily in BGN and EUR, and
relate to the purchase of:
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
122
31/12/2025
31/12/2024
BGN'000
BGN'000
Goods
35,299
29,885
Services
2,898
3,528
Raw materials and supplies
1,413
2,864
Other
9
7
Total
39,619
36,284
25. RECEIVABLES FROM RELATED PARTIES
Receivables from related companies by type are as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
Receivables under contracts with customers
13,496
11,671
Allowance for credit losses
-
(6)
Trade receivables, net
13,496
11,665
Receivables from dividends
943
-
Trade loans granted
3,608
3,052
Allowance for credit losses
(3,608)
(3,052)
Trade loans granted, net
-
-
Advances granted
251
-
Receivables from guarantees and sureties provided
4
4
Allowance for credit losses
(4)
(4)
Receivables from guarantees and sureties provided, net
-
-
Other receivables
-
160
Allowance for credit losses
-
(160)
-
-
Total
14,690
11,665
Trade receivables from related parties are interest-free and denominated in Bulgarian leva.
Typically, Group companies agree on payment terms for receivables from product sales ranging from
90 to 180 days, and for receivables from sales of materials (including substances—active ingredients) up to
30 days.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
123
The Group applies the simplified approach under IFRS 9 to measure expected credit losses on trade
receivables from related parties, recognizing expected losses over the entire term of the instrument for all
trade receivables (Note 2.16).
The movement in the impairment allowance for trade and other receivables from related parties is as
follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
Balance as of January 1
170
312
Decrease in the allowance for credit losses recognized in profit or loss
during the year
(167)
(140)
Effect of foreign currency translation
1
(2
Balance as of December 31
4
170
The movement in the allowance for impairment of loans from related parties is as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
Balance as of January 1
3,052
2,154
Increase in the allowance for credit losses recognized in profit or loss
during the year
556
899
Write-offs of uncollectible receivables
-
(1)
Balance as of December 31
3,608
3,052
The aging structure of non-past-due (current) trade receivables from related parties is as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
Up to 30 days
1,158
18
31 to 90 days
1,492
367
91 to 180 days
10,846
10,938
from 1 to 2 years
-
348
Gross value of non-past-due (current) receivables from related
companies
13,496
11,671
Allowance for credit losses
-
(6)
Total
13,496
11,665
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
124
26. ASSETS HELD FOR SALE
On October 27, 2025, the parent company entered into a preliminary agreement for the sale of a
separate part of its commercial enterprise, consisting of a production unit in the city of Sliven, whose business
activity is the production and trade of veterinary medicinal products and laboratory testing of food and
biological products. The transaction was approved by the General Meeting of Shareholders held on December
5, 2025. The deadline for concluding the final sales agreement is January 30, 2026.
The planned sale includes non-current and current assets and related liabilities of the identified
segment of the business that meet the definition of a disposal group under IFRS 5 Non-current Assets Held
for Sale and Discontinued Operations.
The Group’s management has concluded that the separate part of the business does not constitute a
separate major line of business or geographical area of operations and therefore does not constitute a
discontinued operation within the meaning of IFRS 5.
As of December 31, 2025, the assets and liabilities included in the disposal group are presented
separately in the statement of financial position.
31/12/2025
31/12/2024
BGN '000
BGN '000
Property, plant, and equipment
6,821
-
Inventories
772
-
Total assets held for sale
7,593
-
The Group measures the disposal group at the lower of carrying amount and fair value less costs to
sell.
As a result of the calculations and analyses performed in 2025, no impairment loss was identified.
Liabilities related to the disposal group are presented in Note 44.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
125
27. OTHER CURRENT RECEIVABLES AND ASSETS
The Group’s other receivables and prepaid expenses include:
31/12/2025
31/12/2024
BGN'000
BGN'000
Taxes recoverable
22,969
24,682
Loans granted to third parties
11,194
11,633
Allowance for credit losses on loans granted to third parties
(150
(81)
Loans to third parties, net
11,044
11,552
Prepaid expenses
4,244
2,722
Receivables from deposits provided as collateral
319
380
Judicial and awarded receivables
6,192
5,797
Allowance for credit losses on judicial and adjudicated receivables
(5,928)
(1,302)
Litigated and adjudicated receivables, net
264
4,495
Cash provided for dividend payment
59
146
Other
326
620
Total
39,225
44,597
Taxes to be refunded include:
31/12/2025
31/12/2024
BGN'000
BGN'000
VAT
11,025
14,877
Excise tax
7,531
6,465
Income taxes
4,400
3,328
Local taxes and fees and other taxes
13
12
Total
22,969
24,682
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
126
Prepaid expenses include:
31/12/2025
31/12/2024
BGN'000
BGN'000
Subscriptions
1,257
826
Advertising
1,089
56
Insurance
999
838
Rentals
275
139
Bank fees and commissions
196
33
License and patent fees
178
98
Vouchers
8
37
Other
242
695
Total
4,244
2,722
Loans granted to third parties in the amount of BGN 11,044 thousand (December 31, 2024: BGN
11,552 thousand) were provided to three business entities—counterparties—to support the financing of their
activities in line with common strategic objectives. The annual agreed interest rate on these loans for 2025 is
between 3.05% and 6% (2024: 3.05% and 6%).
The movement in the allowance for impairment of legal and adjudicated receivables is as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
Balance as of January 1
1,302
1,313
Increase/(decrease) in the allowance for credit losses recognized in
profit or loss for the year, net
4,638
(5)
Write-offs
(12)
(6)
Balance as of December 31
5,928
1,302
The movement in the allowance for impairment of loans to third parties is as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
Balance as of January 1
81
507
Increase/(decrease) in the allowance for credit losses recognized in
profit or loss for the year, net
68
(862)
Effect of foreign currency translation
1
-
Transfer from other long-term receivables
-
436
Balance as of December 31
150
81
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
127
28. CASH AND CASH EQUIVALENTS
31/12/2025
31/12/2024
BGN'000
BGN'000
Cash in bank accounts
48,581
25,333
Short-term deposits
16,591
5,559
Cash on hand
6,479
4,704
Short-term blocked cash
21
33
Cash and cash equivalents presented in the consolidated
statement of cash flows
71,672
35,629
Blocked funds for dividend payments and in a savings account for
exercising rights under warrants
-
101
Cash and cash equivalents presented in the consolidated
statement of financial position
71,672
35,730
The cash and cash equivalents available to the Group are denominated mainly in BGN, Russian
rubles, Ukrainian hryvnias and euros (31.12.2024: euros, BGN and Ukrainian hryvnias).
As of 31.12.2025, short-term blocked cash amounts to BGN 21 thousand (31.12.2024: BGN 33
thousand) and mainly represent blocked funds under performance guarantees.
29. EQUITY
Share Capital
As of December 31, 2025, the registered share capital of Sopharma AD amounted to BGN 539,158
thousand, divided into 539,157,603 shares with a par value of one lev per share (December 31, 2024: 179,100
thousand BGN, divided into 179,100,063 shares with a par value of one BGN per share).
Issued and fully paid-in common shares
Shares
Share capital, net of
treasury shares
number
BGN '000
Balance as of January 1, 2024
158,262,242
115,139
Capital issue
6,509,485
6,509
Repurchased shares sold
972,308
3,899
Effects of the merger of a subsidiary
232
1
Treasury shares repurchased
(1,200)
(7
Balance as of December 31, 2024
165,743,067
125,541
Issued capital
360,057,540
360,058
Effect of capital issue on treasury shares
(17,789,926)
-
Sold repurchased shares
17,522,581
35,349
Treasury shares repurchased
(200)
(1)
Balance as of December 31, 2025
525,533,062
520,947
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
128
The shares of Sopharma AD are ordinary, book-entry shares with the right to receive dividends and
a liquidation share and are listed for trading on the Bulgarian Stock Exchange AD and the Warsaw Stock
Exchange.
On January 27, 2025, the capital increase of Sopharma AD was entered in the Commercial Register
through the issuance of 619,138 ordinary, registered, book-entry shares with voting rights, with a par value
of 1 lev each and an issue price of 4.13 levs per share.
The shares resulting from the capital increase were subscribed by the holders of warrants.
On July 18, 2025, the capital increase of Sopharma AD was entered in the Commercial Register
through the issuance of 359,438,402 ordinary, registered, book-entry, voting shares with a par value of 1 lev
each. The capital increase was carried out pursuant to Article 197(1) and Article 246(4) of the Commercial
Act using the company’s own funds as follows:
• from the Premium Reserve in the amount of BGN 132,909;
• from Retained Earnings (Other Reserves) in the amount of BGN 226,530;
The number of repurchased treasury shares is 13,624,541, amounting to BGN 18,211 thousand
(December 31, 2024: 13,356,996 shares amounting to BGN 53,559 thousand). During the current year, 200
treasury shares were purchased and 17,522,581 treasury shares were sold (2024: 1,200 shares purchased and
972,308 shares sold).
The effect on the repurchased shares resulting from the company’s capital increase on July 18, 2025,
is 17,789,926 shares.
Statutory reserves in the amount of BGN 66,839 thousand (December 31, 2024: BGN 218,828
thousand) represent the Reserve Fund, which is formed in accordance with the Commercial Act and the
company’s Articles of Association, and includes two components: a) amounts from the distribution of profit
to the Reserve Fund in the amount of BGN 59,843 thousand (December 31, 2024: BGN 59,843 thousand)
and b) a share premium reserve arising from the positive difference between the issue price and the par value
upon a capital issue in the amount of BGN 6,996 thousand (December 31, 2024: BGN 158,985 thousand).
The revaluation reserve—for property, plant, and equipment in the amount of BGN 28,190
thousand (December 31, 2024: BGN 27,359 thousand) is formed from the positive difference between the
carrying amounts of the property, plant, and equipment of the Group companies and their fair values as of
the dates of the respective periodic revaluations. The effect of deferred taxes on the revaluation reserve is
recognized directly through other components of comprehensive income for the year.
The reserve for financial assets at fair value through other comprehensive income in the amount
of BGN 453 thousand – a negative amount (December 31, 2024: BGN 93 thousand – negative amount) is
formed from the effects of fair value measurement of other long-term equity investments (including the
consolidated share of the change in this reserve in associates when they are accounted for using the equity
method). Upon derecognition of these investments, the reserve formed is not recycled through the statement
of comprehensive income (through profit or loss for the period).
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
129
The translation reserve in the presentation currency of foreign operations in the amount of BGN
4,342 thousand—a negative amount (December 31, 2024: BGN 1,822 thousand – a negative amount) is
formed from exchange rate differences arising from the translation of the financial statements of foreign
entities into the Group’s presentation currency.
Other equity components (warrant issuance)
Pursuant to Article 25 of the Articles of Association of Sopharma AD, on May 21, 2021, the Board
of Directors determined the parameters and resolved to issue warrants through an initial public offering. By
Decision No. 804-E of November 4, 2021, the Financial Supervision Commission registered an issue of
44,932,633 book-entry, freely transferable, and registered warrants with a par value of BGN 0.28, issued by
“Sopharma” AD pursuant to Article 112b, paragraph 11 of the Public Offering of Securities Act. The
underlying asset of the issued warrants is future ordinary, registered, book-entry, freely transferable shares,
entitling the holder to one vote at the General Meeting of Shareholders, which will be issued by the company
subject to conditions, solely for the benefit of the warrant holders. Each subscribed warrant entitles its holder
to subscribe for one share from a future issue. Warrant holders may exercise their right to subscribe for the
corresponding number of shares from a future capital increase of the company within a 3-year period at a
fixed price of BGN 4.13 per share. The right to exercise arises from the date on which the warrant issue was
registered with Central Depository AD—November 16, 2021.
The warrants are admitted to trading on the main market of the Bulgarian Stock Exchange AD,
effective November 17, 2021.
In November 2024, the final capital increase procedure will commence through the issuance of up
to 623,779 ordinary, registered, book-entry, freely transferable shares, provided that the shares from the
increase are subscribed by the holders of warrants with ISIN 9200001212, in accordance with the terms and
conditions described in the Prospectus for the public offering of warrants.
The last date for trading in warrants is November 4, 2024, and the expiration date for exercising the
warrants is January 13, 2025.
The “Retained Earnings” reserve includes the “other reserves” component, which contains
allocated amounts from realized profits from prior years of Group companies, and the “accumulated gains
and losses” component.
As of December 31, retained earnings amounted to BGN 335,607 thousand (December 31, 2024:
BGN 448,032 thousand), and includes the recognized accumulated actuarial loss of BGN 4,189 thousand
(December 31, 2024: BGN 3,253 thousand), recognized in subsequent valuations of defined benefit plans in
connection with the amendment to IAS 19 Employee Benefits.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
130
Basic net earnings per share
2025
2024
Weighted average number of shares
343,193,010
164,251,094
Net profit for the year attributable to equity holders of the parent
company (BGN’000)
129,159
76,310
Net earnings per share (BGN)
0.38
0.46
Diluted earnings per share
31/12/2025
31/12/2024
Weighted average number of shares outstanding
-
164,251,094
Cumulative effect of warrants
-
497,156
Shares outstanding with warrants
-
164,748,250
Net income for the year attributable to equity holders of the parent
company (BGN’000)
-
76,310
Diluted earnings per share
-
0.46
30. LONG-TERM BANK LOANS
Agreed loan
amount
Maturity
31/12/2025
31/12/2024
Long-
term
portion
Short-term
portion
Total
Long-
term
portion
Short-term
portion
Total
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Credit lines and working capital loans
EUR/RSD
8,100
31.08.2027
8,202
-
8,202
1,564
-
1,564
EUR
3,235
31.01.2030
6,319
46
6,365
-
-
-
EUR/RSD
8,100
31.08.2027
5,655
-
5,655
1,760
-
1,760
EUR
1,100
31.10.2027
2,150
-
2,150
1,566
-
1,566
EUR/RSD
8,100
31.08.2027
978
-
978
11,735
-
11,735
EUR
2,470
22.06.2027
439
878
1,317
1,318
878
2,196
EUR
15,000
31.10.2028
-
22,702
22,702
-
25,492
25,492
EUR
500
19.12.2026
-
652
652
652
326
978
EUR
500
27.12.2025
-
-
-
652
652
BGN
30,000
01.10.2026
-
-
-
25,727
-
25,727
EUR
2,062
30.04.2025
-
-
-
-
269
269
EUR
400
06.02.2025
-
-
-
-
87
87
Investment loans
EUR
40,000
04.04.2032
58,137
11,324
69,461
-
78,138
78,138
EUR
20,000
25.12.2032
25,356
7,776
33,132
12,963
3,229
16,192
BGN
9,544
25.12.2029
5,206
1,727
6,933
6,941
1,738
8,679
EUR
5,210
31.03.2026
-
422
422
426
1,690
2,116
Total
112,442
45,527
157,969
64,652
112,499
177,151
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
131
The Group has gradually established a policy of annually renegotiating the terms of initially agreed
long-term credit lines, including maturity dates. From the date of renegotiation, the extended credit lines are
presented as short-term bank loans (Note 38).
Bank loans received in EUR are primarily agreed upon at an interest rate based on EURIBOR plus a
margin of up to 3.6% and up to 8.5% fixed; for loans in Bulgarian levs—up to 1.91% fixed (2024: for EUR
loans – EURIBOR plus a margin of up to 3.85%, for BGN loans – up to 1.91% fixed). The loans are for
working capital.
Investment loans are intended for the purchase of long-term tangible assets and business expansion.
The following have been established in favor of the lending banks as collateral for the above-
mentioned loans:
• Mortgages on real estate (Note 16);
• Special pledges on:
- machinery and equipment (Note 16);
- inventories (Note 23);
- trade receivables (Note 24).
Long-term bank loan agreements contain clauses requiring the maintenance of certain financial
ratios. The Group’s management continuously monitors compliance with these financial ratios in
communication with the respective lending bank.
Group companies must comply with certain additional covenants under long-term loan agreements,
which generally relate to:
- a total liquidity ratio, which must be at least 1.1x;
- net debt, which must not exceed four times annual earnings before interest, taxes, and
depreciation;
- maintaining an equity ratio of 40% or higher;
- no reduction in equity relative to the most recent audited financial statements.
The Group does not expect to breach these covenants in the next 12-month period.
As of the date of issuance of the current financial statements, the Group has not reported any breaches of
the loan agreements.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
132
Reconciliation of changes in liabilities arising from financial activities
The table below presents the changes in liabilities arising from financial activities, showing both cash and non-cash changes. Liabilities arising from
financial activities are those for which cash flows are, or future cash flows will be, classified in the Company’s statement of cash flows as cash flows from
financial activities.
January 1,
2025
Changes in cash
flows from financing
activities (*)
Non-cash changes
New liabilities arising
during the year
Recognized
financing
income
Other changes
December 31, 2025
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
Bank loans (Notes 30 and 38)
371,305
116,115
-
-
4,383
491,803
Factoring (Note 41)
-
196
-
-
(196)
-
Liabilities under lease agreements (Note 34)
109,547
(31,074)
41,199
-
2,182
121,854
Dividends
1,338
(13,603)
59,941
-
(686)
46,990
Government grants received
4,935
903
-
(580)
-
5,258
Total
487,125
72,537
101,140
(580)
5,683
665,905
Proceeds from issuance of equity
-
2,557
-
-
(2,557)
-
Treasury shares repurchased (Note 29)
(53,559)
62,995
-
-
(27,647)
(18,211)
Reserve for issued warrants
260
(14)
2,460
-
(2,706)
-
Net cash flows from financing activities
433,826
138,075
103,600
(580)
(27,227)
647,694
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR 2025
133
January 1,
2024
Changes in
cash flows from
financing
activities (*)
Non-cash changes
December 31,
2024
Acquisition of a
subsidiary (Note 47)
New liabilities
arising during the
year
Recognized
financing income
Other changes
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
Bank loans (Notes 30 and 38)
263,072
76,120
30,858
-
-
1,255
371,305
Factoring (Note 41)
-
(12)
-
-
-
12
-
Liabilities under lease agreements (Note 34)
87,779
(22,191)
14,886
30,690
-
(1,617)
109,547
Dividends
142,618
(168,435)
-
27,399
-
(244)
1,338
Government funding received
5,528
1
-
-
(592)
(2)
4,935
Total
498,997
(114,517)
45,744
58,089
(592)
(596)
487,125
Proceeds from issuance of equity
9,840
26,884
-
-
-
(36,724)
-
Treasury shares repurchased (Note 29)
(57,452)
5,749
-
1
-
(1,857)
(53,559)
Reserve for issued warrants
1,857
-
-
97
-
(1,694)
260
Net cash flows from financing activities
453,242
(81,884)
45,744
58,187
(592)
(40,871)
433,826
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
134
31. DEFERRED TAX ASSETS AND LIABILITIES
The total change in the Group’s deferred tax assets and liabilities during the relevant fiscal year is
as follows:
2025
2024
BGN'000
BGN'000
Balance as of January 1
(7,172)
(1,597)
including: Deferred tax assets
1,142
2,818
including: Deferred tax liabilities
(8,314)
(4,415)
Acquired upon purchase of subsidiaries
-
(8,064)
Recognized in profit or loss for the year
14,815
1,824
Recognized in other components of comprehensive income
-
(2)
Written off upon disposal of a subsidiary
-
361
Recognized in the statement of equity and the current tax return
33
36
Translation reserve in the presentation currency
(75)
270
Balance as of December 31
7,601
(7,172)
including: Deferred tax assets
12,485
1,142
including: Deferred tax liabilities
(4,884)
(8,314)
As of December 31, 2025, the Group has not recognized deferred tax assets in the amount of BGN 7,033
thousand (December 31, 2024: BGN 7,690 thousand) for cumulative temporary differences, including tax
loss carryforwards of BGN 40,426 thousand (December 31, 2024: BGN 44,441 thousand). In recognizing
deferred tax assets, consideration was given to the likelihood that the individual differences will reverse in
the future and the ability of the Group companies to generate sufficient taxable income (Note 2.27)
The change in the balance of deferred tax assets/(liabilities) for 2025 by source of temporary
differences is as follows:
Deferred tax assets
(from temporary
differences)
Balance as of
January 1, 2025
Recognized
in profit or
loss for the
year
Recognized in
other
components of
comprehensive
income
Recognized in
the statement of
equity and the
current tax
return
Translation
reserve in
the
presentation
currency
Balance as of
December 31,
2025
Assets/(Liabilities)
Assets/(Liabilities)
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Intangible assets
(692)
(16)
-
-
(6)
(714)
Inventories
2,323
5,035
-
-
26
7,384
Trade receivables
1,577
2,464
-
-
9
4,050
Liabilities to
employees upon
retirement
1,644
482
-
-
(1)
2,125
Other current
liabilities
2,192
4,983
-
-
73
7,248
Property, plant, and
equipment
(6,022)
585
(29)
33
67
(5,366)
Intangible assets
from business
combinations
(7,172)
1,190
-
-
(242)
(6,224)
Lease agreements
290
280
-
-
(1)
569
Investment
properties
(1,312)
(188)
29
-
-
(1,471)
(7,172)
14,815
-
33
(75)
7,601
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
135
The change in the balance of deferred tax assets/(liabilities) for 2024 by source of temporary
differences is as follows:
Deferred tax
assets (from
temporary
differences)
Balance as
of
January 1,
2024
Acquired
upon
purchase
of a
subsidiary
Recogni
zed in
profit or
loss for
the year
Recognized
in other
components
of
comprehens
ive income
Written
off upon
disposal
of a
subsidiary
Recognized
in the
statement of
equity and
current tax
return
Translation
reserve in
the
presentation
currency
Balance as of
December 31,
2024
Assets
/(Liabilities)
Assets/
(Liabilities)
BGN '000
BGN '000
BGN
'000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Intangible
assets
79
(326)
(440)
-
(1)
-
(4)
(692)
Inventories
1,610
10
699
-
(4)
-
8
2,323
Trade
receivables
2,030
(146)
(311)
-
-
-
4
1,577
Liabilities to
employees
upon
retirement
1,635
1
10
-
-
-
(2)
1,644
Other
current
liabilities
1,672
-
561
-
(1)
-
(40)
2,192
Property,
plant, and
equipment
(5,218)
(1,341)
310
(2)
170
36
23
(6,022)
Intangible
assets from
business
combination
s
(2,211)
(6,262)
1,021
-
-
-
280
(7,172)
Lease
agreements
145
-
144
-
-
-
1
290
Investment
properties
(1,339)
-
(170)
-
197
-
-
(1,312)
(1,597)
(8,064)
1,824
(2)
361
36
270
(7,172)
32. NON-CURRENT PAYABLES TO RELATED PARTIES
Non-current payables to related parties at 31 December include:
31/12/2025
31/12/2024
BGN'000
BGN'000
Liabilities under lease agreements
16,311
19,250
Total
16,311
19,250
The lease payments due within 12 months are presented in the annual consolidated statement of financial
position within current payables, within “payables to related parties” (Note 40).
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
136
33. LONG-TERM EMPLOYEE BENEFIT LIABILITIES
The long-term employee benefits as at 31 December include:
31/12/2025
31/12/2024
BGN '000
BGN '000
Long-term retirement benefit liabilities
11,355
9,404
Long-term benefit liabilities for tantieme
382
380
Total
11,737
9,784
Long-term employee benefit obligations
Long-term employee benefits include the present value of the obligation of the Group companies
operating primarily in Bulgaria and Ukraine to pay benefits to employees upon reaching retirement age as
of the statement of financial position date. Under the Labor Code of Bulgaria, every employee is entitled to
a severance payment equal to two months’ gross salary upon retirement; if the employee has worked for the
same employer for the last 10 years of their employment, the severance payment is equal to six months’ gross
salary at the time of retirement (Note 2.23).
The employer’s obligations to staff upon retirement for companies outside Bulgaria are as follows:
• Ukraine – the employer is obligated to pay between 250 and 500 Ukrainian hryvnias depending on
the employee’s length of service, as well as social pensions that the company accrues after the
employees’ retirement under specific working conditions and a collective labor agreement;
• Kazakhstan – under Kazakhstani law, the employer has no legal obligation to employees upon
retirement;
• Serbia – the employer is obligated to pay 3 average monthly salaries;
• Russia – under Russian law, the employer has no legal obligation to employees upon retirement.
• Belarus – the employer has no legal obligation to employees upon retirement.
The change in the present value of retirement obligations to employees is as follows:
2025
2024
BGN'000
BGN '000
Present value of the liability as of January 1
9,404
8,097
Effect of acquisition of subsidiaries
-
59
Effect of divestiture of subsidiaries
-
(20)
Current service cost for the year
1,217
953
Interest expense for the year
437
422
Net actuarial (gain) recognized during the year
32
89
Past service costs related to staff reductions
-
46
Effect of restatement
(41)
(13)
Payments during the year
(668)
(858)
Effects of subsequent valuations for the year, including:
974
629
Actuarial (gains) from changes in financial assumptions
666
448
Actuarial (gains) from changes in demographic assumptions
56
(1)
Actuarial losses from adjustments due to past experience
252
182
Present value of the liability as of December 31
11,355
9,404
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
137
The amounts recognized in the consolidated statement of comprehensive income for long-term
employee benefits upon retirement are as follows:
2025
2024
BGN'000
BGN '000
Current service cost for the year
1,217
953
Interest expenses for the year
437
422
Net actuarial (gain) recognized during the year
32
89
Costs related to past service in connection with staff reductions
-
46
Components of defined benefit plan expenses recognized in
profit or loss (Note 8)
1,686
1,510
Effects of subsequent valuations of post-employment benefits,
including from:
Actuarial (gains) from changes in financial assumptions
666
448
Actuarial (gains) from changes in demographic assumptions
56
(1)
Actuarial losses from adjustments due to past experience
252
182
Components of defined benefit plan expenses recognized in
other comprehensive income (Note 15)
974
629
Total
2,660
2,139
In determining the present value as of December 31, 2025, the following actuarial assumptions were
made:
• To determine the discount factor, an annual interest rate range of 0.5% to 10% was used.
(2024: 4% and 12%). This assumption is based on data regarding the yield on long-term government
securities with a 10-year maturity;
• the assumption regarding the future level of wages is based on information provided by the
company’s management and ranges between 5% and 12% annual growth compared to the previous
reporting period (2024: 4% and 15.14%);
• mortality – based on the NSI mortality table for the overall mortality of the Bulgarian
population for the period 2022–2024 (2024: 2021–2023);
• turnover rate – between 0% and 16% depending on four distinct age groups (2024: between
2% and 20%);
• early retirement due to illness – between 0.03% and 0.32% depending on five distinct age
groups (2024: between 0.03% and 0.32%).
This defined benefit plan exposes the Group companies to the following risks: investment risk,
interest rate risk, longevity risk, and wage growth risk. The parent company’s management defines them as
follows:
• For investment risk—since this is an unfunded plan, Group companies should monitor and
continuously balance upcoming payments under the plan by ensuring sufficient cash resources.
Historical experience, as well as the structure of the liability, indicate that the annual cash
requirement is not material relative to the liquid funds typically maintained;
• For interest rate risk—any decrease in the yield on government securities with a similar
maturity leads to an increase in the plan’s liability;
• Regarding longevity risk—the present value of the retirement obligation to employees is
calculated using best estimates and current mortality data for plan participants.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
138
An increase in life expectancy would result in a potential increase in the obligation. In recent years,
this indicator has shown relative stability; and
• Regarding the risk associated with wage increases—the present value of the post-
employment benefit obligation is calculated using best estimates of future wage increases for plan
participants. Such an increase would lead to an increase in the plan’s obligation.
The sensitivity analysis of the key actuarial assumptions is based on reasonably possible changes in
these assumptions at the end of the reporting period, assuming that all other factors remain unchanged.
The effects of a 1% change (increase or decrease) in salary growth, the discount rate, and turnover
on the amount of reported service cost and interest for 2025 and, respectively, on the present value of the
defined benefit obligation, are estimated as follows:
Effects on the amount of reported expenses resulting from changes in key assumptions:
2025
2024
Increase
Decrease
Increase
Decrease
BGN '000
BGN '000
BGN '000
BGN '000
Change in wage growth
186
(158)
146
(124)
Change in discount rate
(62)
72
(103)
118
Change in turnover
(97)
306
(74)
85
Effects on the present value of the liability from changes in key assumptions:
2025
2024
Increase
Decrease
Increase
Decrease
BGN '000
BGN '000
BGN '000
BGN '000
Change in wage growth
876
(774)
707
(623)
Change in discount rate
(787)
902
(625)
719
Change in turnover
(497)
1,674
(411)
463
The weighted average duration of the defined benefit obligations is in the range of 2.9 to 27.5 years.
The expected retirement benefit payments under the defined benefit plan for the next five years are as
follows:
Projected payments
Retirement based
on age and service
Retirement due
to disability
Total
BGN '000
BGN '000
BGN '000
Payments in 2026
1,881
34
1,915
Payments in 2027
717
34
751
Payments in 2028
821
35
856
Payments in 2029
1,011
35
1,046
Payments in 2030
1,097
34
1,131
5,527
172
5,699
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
139
Liabilities under long-term income for bonuses
31/12/2025
31/12/2024
BGN '000
BGN '000
Liabilities under long-term income for bonuses maturing in 2027
251
200
Liabilities under long-term income for bonuses maturing in 2028
131
-
Long-term income liabilities for bonuses maturing in 2026
-
180
Total
382
380
34. LEASE LIABILITIES
The lease liabilities to third parties and related parties included in the statement of financial position
are presented net of future interest payable and are as follows:
31/12/2025
31/12/2024
Lease
liabilities
Lease liabilities
to related
parties (Note
31)
Total
Lease
liabilities
Lease liabilities
to related
parties (Note
31)
Total
Term
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Up to one year
22,271
3,088
25,359
18,671
3,110
21,781
Over one year
80,184
16,311
96,495
68,516
19,250
87,766
102,455
19,399
121,854
87,187
22,360
109,547
Lease liabilities to related parties are presented in Long-term liabilities to related parties (Note 32)
and Liabilities to related entities (Note 40).
The minimum lease payments to third parties and related parties are due as follows:
31/12/2025
31/12/2024
Third
parties
Related
parties
Total
Third
parties
Related
parties
Total
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Term
Up to one year
26,326
3,414
29,740
20,836
3,489
24,325
Over one year
91,239
17,228
108,467
76,529
20,473
97,002
117,565
20,642
138,207
97,365
23,962
121,327
Future finance charges on
finance leases
(15,110)
(1,243)
(16,353)
(10,178)
(1,602)
(11,780)
Present value of lease
liabilities to third parties
and related parties
102,455
19,399
121,854
87,187
22,360
109,547
In the statement of financial position, under the heading Property, Plant, and Equipment, the
following items and amounts related to lease agreements are presented:
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
140
35. GOVERNMENT GRANTS
As of December 31, government grants to the Group’s companies include:
31/12/2025
31/12/2024
BGN'000
BGN'000
Long-term portion of government grants
3,382
4,358
Short-term portion of government funding (Note 45)
429
577
Total
3,811
4,935
As of December 31, government grants received were from the following Group companies:
31/12/2025
31/12/2024
BGN'000
BGN'000
Sopharma AD
3,811
4,935
Total
3,811
4,935
Government funding is provided under European operational programs and is primarily related to
the acquisition of machinery and equipment. (Note 16). The short-term portion of the funding in the amount
of BGN 429 thousand (as of December 31, 2024: 577 thousand BGN) will be recognized as current revenue
over the next 12 months from the date of the consolidated annual statement of financial position and is
presented as “other current liabilities” (Note 45).
Land and buildings
Machinery, plant,
and equipment
Other
Total
2025
2024
2025
2024
2025
2024
2025
2024
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Carrying amount
Balance as of
January 1
146,431
112,510
1,264
1,210
17,681
14,170
165,376
127,890
Increases/acquisitions
32,070
40,863
-
54
9,129
4,864
41,199
45,781
Write-downs/write-
offs
(22,936)
(6,942)
(54)
-
(2,892)
(1,353)
(25,882)
(8,295)
Balance as of
December 31
155,565
146,431
1,210
1,264
23,918
17,681
180,693
165,376
Accumulated
depreciation
Balance as of
January 1
49,722
35,902
367
208
7,501
5,099
57,590
41,209
Accumulated
depreciation for the
period
21,851
17,093
139
159
4,731
3,239
26,721
20,491
Depreciation written
off
(18,359)
(3,273)
(53)
-
(2,631)
(837)
(21,043)
(4,110)
Balance as of
December 31
53,214
49,722
453
367
9,601
7,501
63,268
57,590
Book value as of
December 31
102,351
96,709
757
897
14,317
10,180
117,425
107,786
Book value as of
January 1
96,709
76,608
897
1,002
10,180
9,071
107,786
86,681
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
141
36. LONG-TERM TAX LIABILITIES
31/12/2025
31/12/2024
BGN ‘000
BGN ‘000
National top-up tax
3,716
2,359
Total
3,716
2,359
37. OTHER NON-CURRENT LIABILITIES
31/12/2025
31/12/2024
BGN'000
BGN'000
Liabilities related to the purchase of shares
3,385
4,474
3,385
4,474
Liability related to the purchase of shares
Pursuant to share purchase agreements dated October 1, 2020, a Group company acquired control
over the companies SCS Franchise AD and Sanita Franchising AD. As of December 31, 2025, the shares of
Sanita Franchising AD have been paid in full. Part of the consideration under the share purchase agreements
for SCS Franchise AD was paid on the date of transfer of control, and for the remaining portion, a deferred
payment schedule was agreed upon, with the final payment due by December 31, 2029. The liability is
measured at present value using an interest rate that reflects the current market assessment of the risks
associated with the liability.
38. SHORT-TERM BANK LOANS
The Group’s short-term bank loans as of December 31 are as follows:
Currency
Agreed
amount
Maturity
31/12/2025
31/12/2024
Bank loans (overdrafts)
'000
BGN'000
BGN'000
BGN
76,000
25.10.2026
70,211
58,241
BGN
65,000
31.07.2026
56,825
17,490
EUR
34,200
30.09.2026
32,390
3,435
BGN
20,000
01.10.2026
19,840
20,014
BGN
20,000
31.07.2026
16,591
-
EUR
8,400
02.09.2026
16,535
16,187
EUR/RSD
8,000
09.06.2026-
31.08.2026
14,658
7,823
BGN
19,558
01.10.2026
12,393
18,528
BGN
20,000
01.10.2026
10,604
19,746
BGN
10,000
31.07.2026
9,726
28
BGN
9,779
01.10.2026
8,768
9,777
EUR
3,000
29.06.2026
2,936
-
EUR
1,000
01.04.2026
1,956
-
EUR
1,050
31.05.2027
973
-
EUR
10,000
05.02.2026
3
43
EUR
1,300
19.09.2025
-
592
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
142
Currency
Agreed
amount
Maturity
31/12/2025
31/12/2024
Bank loans (overdrafts), continue
'000
BGN'000
BGN'000
USD
1,900
20.06.2025
-
3,059
USD
2,200
24.02.2025
-
4,141
RSD
27,000
19.08.2025
-
414
274,409
179,518
Credit lines
BGN
45,000
01.06.2026
44,789
-
EUR
7,500
25.10.2026
14,636
14,636
59,425
14,636
Total
333,834
194,154
Bank loans received in EUR are primarily agreed upon at an interest rate based on EURIBOR plus a
margin of up to 2.9% and a fixed rate of 7.5%; for loans in Bulgarian levs – the reference interest rate of the
respective bank plus a margin of up to 3.25%; for RSD loans – an interest rate based on Belibor plus a margin
of up to 0.61% (2024: EURIBOR plus a margin of up to 2.35%; for BGN loans – the respective bank’s
reference interest rate plus a margin of up to 3.25%; for RSD 8.5% fixed and for USD 10% fixed).
The loans are for working capital.
In favor of the lending banks, special pledges have been established to secure the above-mentioned
loans on:
- machinery and equipment (Note 16);
- raw materials, supplies, and finished goods (Note 23);
- trade receivables (Note 24).
As of December 31, 2025, special pledges have been established on receivables from related parties
subject to consolidation and eliminated for the purposes of the consolidated annual financial statements in the
amount of BGN 112,039 thousand (December 31, 2024: BGN 74,993 thousand) as collateral for bank loans
received by the Group and bank guarantees issued (Notes No. 30, No. 38, and No. 46).
39. TRADE PAYABLES
Trade payables include:
31/12/2025
31/12/2024
BGN'000
BGN'000
Trade payables
338,308
387,301
Advances received from customers
10,622
784
Total
348,930
388,085
Payables to suppliers are as of:
31/12/2025
31/12/2024
BGN'000
BGN'000
Suppliers outside Bulgaria
258,063
317,246
Suppliers from Bulgaria
80,245
70,055
Total
338,308
387,301
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
143
Accounts payable to suppliers are current, interest-free, and relate to materials, goods, and services
received. The average credit period for which interest is not typically charged on trade payables is up to 180
days.
40. LIABILITIES TO RELATED PARTIES
Liabilities to related parties include:
31/12/2025
31/12/2024
BGN'000
BGN'000
Liabilities to shareholder companies with significant influence
27,099
162
Liabilities to key management personnel
4,048
-
Liabilities to joint ventures and associates
3,054
3,128
Liabilities to companies related through key management personnel
847
151
Liabilities to companies controlled by an associate
43
24
Liabilities to other related parties
6
6
Total
35,097
3,471
Liabilities to related parties by type are:
31/12/2025
31/12/2024
BGN'000
BGN'000
Dividend liabilities
31,079
-
Current liabilities under lease agreements
3,088
3,110
Liabilities for supplies of goods and materials
842
170
Provision of services
82
185
Other
6
6
Total
35,097
3,471
Liabilities to related parties are current, denominated in BGN, interest-free, and are not additionally
secured by a special pledge or guarantee from the Group.
41. PAYABLES UNDER FACTORING AGREEMENT
A Group company has entered into factoring agreements with a financial institution (the Factor)
under the following terms:
• Under the agreement dated April 11, 2025, for the transfer of existing non-due receivables
from its customers, the Factor has no right of recourse for the amounts paid in advance,
regardless of whether they are included in the approved credit limit. The approved credit
limit as of December 31, 2025, is BGN 16,177 thousand (RUB 800,000 thousand). The
transferred invoices are paid in advance up to 95% (ninety-five percent) of their value,
including VAT. The interest on the funds transferred in advance is the Central Bank of the
Russian Federation’s base rate + 2.35% on an annual basis and is deducted within five days
after the end of the calendar month.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
144
• Under the agreement dated August 11, 2025, for the assignment of existing non-due
receivables from its clients, the Factor has no right of recourse for the amounts paid in
advance, regardless of whether they are included in the approved credit limit. The approved
credit limit as of December 31, 2025, is BGN 14,155 thousand (RUB 700,000 thousand).
The transferred invoices are paid in advance up to 100% (one hundred percent) of their
value, including VAT. The interest on the funds transferred in advance is the Central Bank
of the Russian Federation’s base rate + 3.00% on an annual basis and is deducted within
five days after the end of the calendar month.
As of December 31, 2025, the company has no obligations under the factoring agreement
(December 31, 2024: none).
Total financing provided in 2025 amounts to BGN 199 thousand (2024: none) (Note 2.17).
42. PAYABLES TO PERSONNEL AND FOR SOCIAL SECURITY
Payables to personnel and for social security include:
31/12/2025
31/12/2024
BGN'000
BGN'000
Payables to personnel, including:
23,892
21,582
current wages and salaries
15,917
13,693
accruals on unused compensated leaves
4,370
4,124
tantieme
3,605
3,765
Payables for social security/health insurance, including:
6,244
4,906
current payables for social security contributions
5,531
4,260
accruals on unused compensated leaves
713
646
Total
30,136
26,488
43. TAX PAYABLES
Tax payables include:
31/12/2025
31/12/2024
BGN'000
BGN'000
VAT
5,503
6,787
Income taxes
4,524
1,575
National supplementary tax
2,516
-
Personal income taxes
2,020
1,101
Taxes on expenses
548
388
Taxes on dividends
390
-
Income tax on foreign persons
480
29
Local taxes and fees
58
61
Withholding taxes
2
2
Total
16,041
9,943
By the date of issue of these annual consolidated financial statements the following inspections and
audits of Group companies have been performed:
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
145
As of the date of issuance of this consolidated annual report, the following audits and inspections have
been conducted in the Group companies:
Company
Full tax audit
VAT audit
Social Security
Inspection
Sopharma AD
31.05.2025
30.11.2025
31.12.2021
Sopharma Trading AD
31.12.2011
31.12.2017
30.04.2018
Sopharmacy EOOD
none
31.07.2020
none
Sopharmacy 2 EOOD
none
30.06.2019
none
Sopharmacy 3 EOOD
none
30.11.2017
none
Sopharmacy 4 EOOD
none
30.06.2022
none
Sopharmacy 5 EOOD
none
31.08.2020
none
Sopharmacy 6 EOOD
none
30.05.2023
none
Sopharmacy 7 EOOD
none
31.05.2019
none
Sopharmacy 8 EOOD
none
31.08.2020
none
Sopharmacy 9 EOOD
none
31.12.2020
none
Sopharmacy 10 EOOD
none
30.11.2022
none
Sopharmacy 11 EOOD
none
31.07.2022
none
Sopharmacy 12 EOOD
none
30.06.2023
none
Sopharmacy 13 EOOD
none
31.07.2022
none
Sopharmacy 14 EOOD
none
31.12.2018
none
Sopharmacy 15 EOOD
none
30.06.2022
none
Sopharmacy 16 EOOD
none
31.12.2019
none
Sopharmacy 17 EOOD
none
31.12.2020
none
Sopharmacy 18 EOOD
none
05.09.2025
none
Sopharmacy 19 EOOD
none
17.09.2025
none
Sopharmacy 20 EOOD
none
31.12.2013
none
Sopharmacy 21 EOOD
none
31.10.2024
31.08.2017
Sopharmacy 22 EOOD
none
31.12.2012
30.04.2020
Sopharmacy 23 EOOD
none
31.05.2014
30.04.2020
Sopharmacy 24 EOOD
none
30.11.2024
30.04.2020
Sopharmacy 25 EOOD
none
30.09.2023
30.04.2020
Sopharmacy 26 EOOD
none
31.08.2017
none
Sopharmacy 27 EOOD
none
31.12.2013
none
Sopharmacy 28 EOOD
none
07.02.2025
none
Sopharmacy 29 EOOD
none
30.04.2024
none
Sopharmacy 30 EOOD
none
31.08.2024
30.04.2020
Sopharmacy 31 EOOD
none
13.10.2025
30.04.2020
Sopharmacy 32 EOOD
31.12.2010
31.12.2019
30.04.2020
Sopharmacy 33 EOOD
none
30.04.2024
30.04.2020
Sopharmacy 34 EOOD
none
none
30.04.2020
Sopharmacy 35 EOOD
none
31.12.2013
30.04.2020
Sopharmacy 36 EOOD
none
31.01.2015
31.05.2021
Sopharmacy 37 EOOD
none
31.08.2024
30.04.2020
Sopharmacy 38 EOOD
none
29.02.2024
30.04.2020
Sopharmacy 40 EOOD
none
none
30.04.2020
Sopharmacy 41 EOOD
none
25.09.2025
31.05.2019
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
146
Company
Full tax audit
VAT audit
Social Security
Inspection
Sopharmacy 42 EOOD
none
none
30.11.2020
Sopharmacy 43 EOOD
31.12.2016
none
31.05.2019
Sopharmacy 44 EOOD
none
31.12.2013
30.04.2020
Sopharmacy 45 EOOD
none
None
30.04.2020
Sopharmacy 46 EOOD
none
17.10.2025
none
Sopharmacy 47 EOOD
none
31.11.2016
31.03.2020
Sopharmacy 48 EOOD
none
30.06.2021
31.08.2017
Sopharmacy 49 EOOD
31.12.2015
31.12.2014
31.05.2020
Sopharmacy 50 EOOD
none
30.06.2024
31.03.2020
Sopharmacy 51 EOOD
none
30.09.2023
30.04.2020
Sopharmacy 52 EOOD
none
none
31.12.2015
Sopharmacy 53 EOOD
none
08.08.2025
31.08.2017
Sopharmacy 54 EOOD
none
16.06.2025
31.03.2020
Sopharmacy 55 EOOD
none
02.09.2025
31.03.2020
Sopharmacy 56 EOOD
none
31.12.2015
30.04.2020
Sopharmacy 57 EOOD
none
none
31.05.2020
Sopharmacy 58 EOOD
none
29.02.2024
none
Sopharmacy 63 EAD
31.12.2012
none
31.12.2019
Sopharmacy 64 AD
31.12.2016
31.07.2023
none
Sopharmacy 65 EOOD
none
06.02.2025
none
Sopharmacy 66 EOOD
none
31.07.2024
none
Sopharmacy 67 EOOD
none
06.06.2025
none
Sopharmacy 68 EOOD
none
31.07.2024
none
Sopharmacy 39 EOOD
none
09.06.2025
none
Sopharmacy 61 EOOD
none
31.01.2025
none
Sopharmacy 62 EOOD
none
09.12.2025
none
Sopharmacy 60 EOOD
none
11.09.2025
none
Sopharmacy 59 EOOD
none
15.12.2025
none
PAO Vitamini
31.12.2013
31.12.2013
01.04.2014
ООО Sopharma Ukraine
31.12.2014
31.12.2014
30.06.2016
Sopharma Warsaw Sp. z o.o.
none
none
06.07.2017
Sopharma Trading D.o.o., Serbia
31.03.2017
30.06.2017
15.04.2017
ООО FitoBel
30.09.2012
30.09.2012
30.09.2017
ООО Tabina
30.09.2010
30.09.2010
30.09.2006
ООО Ne Ska
none
none
31.12.2015
ODO SalusLine
31.10.2007
31.10.2007
30.06.2021
BOOO SpetsApharmacia
31.03.2014
31.03.2014
31.03.2014
Sopharma Rus ООО
none
30.09.2025
none
For companies in Bulgaria, a tax audit is conducted within five years of the end of the year in which
the tax return for the relevant tax liability was filed. The audit definitively confirms the tax liability of the
relevant company—the taxpayer—except in cases expressly provided for by law.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
147
For companies outside Bulgaria, tax audits are conducted as follows: in Ukraine—within a three-
year period, in Poland and Kazakhstan—within a five-year period, in Serbia—within a ten-year period, in
Russia—within a three-year period, and in Belarus—on a sampling basis according to criteria that assess the
degree of risk with respect to taxpayers in accordance with a methodology determined by the Council of
Ministers of the Republic of Belarus.
No comprehensive tax audits, VAT audits, or inspections were conducted on the companies TOO
Sopharma Kazakhstan, Pharmachim EOOD, Pharmanova D.O.O., Sopharmacy D.o.o., SOOO Brititrade,
OOO DabradzeyaPharm, OOO AlfaApteka, Bellerophon ООО, and the Great Pharmacy pharmacy have
not undergone full tax audits, VAT audits, or social security compliance inspections.
44. LIABILITIES HELD FOR SALE
In connection with the preliminary agreement concluded on 27 October 2025 for the sale of a separate part
of its commercial enterprise disclosed in Note 26, the liabilities as part of the Disposal group are as follows:
31/12/2025
31/12/2024
BGN '000
BGN '000
Government grants
1,447
-
Liabilities to personnel and for social security
207
-
Tax liabilities
6
-
Total liabilities held for sale
1,660
-
The government grants are under agreements concluded with the Executive Agency for Promotion of Small
and Medium-Sized Enterprises for financial assistance under the Operational Programme ‘Innovation and
Competitiveness 2014–2020’.
45. OTHER CURRENT LIABILITIES
Other current liabilities include:
31/12/2025
31/12/2024
BGN'000
BGN'000
Dividend liabilities
15,911
1,338
Liabilities for refunds under contracts with customers
12,201
9,974
Liabilities related to the purchase of shares
1,180
1,252
Government grants (Note 35)
429
577
Liabilities from deposits received as guarantees
296
133
Payroll deductions
84
85
Provision for financial guarantees
22
4
Amounts awarded in court cases
18
18
Liabilities under contracts with customers
15
3,393
Other
1,586
1,388
Total
31,742
18,162
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
148
46. CONTINGENT LIABILITIES AND COMMITMENTS
Guarantees and sureties provided
Sopharma AD
As of December 31, 2025, the company has provided collateral to banks for loans received from
associated companies in the form of mortgages on real estate with a carrying amount of BGN 5,479 thousand
(December 31, 2024: BGN 5,699 thousand).
The company is a co-debtor and guarantor for bank loans received, bank guarantees issued, and lease
agreements entered into by the following companies:
Maturity period
Currency
Contract amount
Amount of the
guaranteed sum
Original
31/12/2025
Currency
BGN'000
BGN'000
Sopharma Buildings REIT
2027
BGN
10,000
10,000
10,000
Doverie United Holding AD
2027
BGN
30,000
30,000
6,250
Energoinvestment AD
2027
BGN
1,800
1,800
1,550
Total
17,800
Bank guarantees
Sopharma Trading AD
Bank guarantees issued for the company as of December 31, 2025, amount to BGN 23,161 thousand
(December 31, 2024: BGN 25,008 thousand) and are intended to guarantee payments to suppliers of goods,
for performance—guaranteeing future deliveries of pharmaceutical and medical products to hospitals under
concluded supply contracts, customs guarantees, and participation in tenders.
The bank guarantees were issued by:
31/12/2025
31/12/2024
BGN '000
BGN '000
DSK AD
12,221
12,577
ING Bank N.V.
6,517
3,264
UBB AD
4,423
4,935
Eurobank Bulgaria AD (PostBank)
-
4,232
23,161
25,008
As of December 31, 2025 Sopharma Trading AD has provided bank guarantees in the amount of
BGN 2,434 thousand (December 31, 2024: BGN 2,059 thousand) as collateral under lease agreements for
commercial premises (pharmacies), to which its subsidiaries are parties.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
149
Sopharma Trading d.o.o., Serbia
As of December 31, 2025, the bank guarantees issued for the company amount to BGN 22,991
(December 31, 2024: BGN 14,410 thousand) and are intended to guarantee payments to suppliers of goods,
for performance—guaranteeing future deliveries of pharmaceutical and medical products to hospitals under
concluded supply contracts, customs guarantees, and participation in tenders.
The bank guarantees were issued by:
31/12/2025
31/12/2024
BGN '000
BGN '000
Raiffeisenbank AD Belgrade
22,991
12,454
Eurobank AD Belgrade
-
1,003
Banca Intesa AD Belgrade
-
953
22,991
14,410
Pharmanova D.O.O.
As of December 31, 2025, the Company has issued one customs bank guarantee in the amount of
BGN 37 thousand (2,215 RSD thousand) (December 31, 2024: BGN 25 thousand (1,500 RSD thousand)).
The guarantee was issued by Banca Intesa AD Belgrade.
Insurance of performance guarantees
Sopharma Trading AD
As of December 31, 2025, the company has entered into contracts for performance bond insurance
in tenders for the supply of medicines and medical supplies to healthcare facilities and the Ministry of Health
in the amount of BGN 9,836 thousand (December 31, 2024: BGN 13,514 thousand).
Assets received in trust
Sopharma Trading AD
Pursuant to concluded pre-distribution agreements, as of December 31, 2025, the company accepted
goods in custody in the amount of BGN 11,571 thousand (December 31, 2024: BGN 10,000 thousand).
Pharmanova D.o.o.
Pharmanova D.o.o. accepted raw materials worth BGN 20 thousand (1,216 RSD thousand) for
safekeeping as of December 31, 2025 (December 31, 2024: BGN 53 thousand (3,153 RSD thousand)).
Significant irrevocable contracts and commitments
Sopharma AD
The Company has received government funding under the Operational Program “Development of
the Competitiveness of the Bulgarian Economy 2007–2013”, Operational Program “Energy Efficiency”, and
the Operational Program “Recovery and Resilience Plan” (Note 35 and Note 45), primarily related to the
acquisition of fixed assets, building renovations and technological upgrades and modernization of tablet
production, introduction of innovative products in ampoule production, acquisition of general-purpose
ventilation and air conditioning systems for the production of medical products, and introduction of
innovative “artificial tears” eye drops (Note 17).
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
150
The company has committed that, for a period of 5 years following the completion of the relevant
projects, no significant changes shall occur that affect the nature and conditions of performance or give rise
to unjustified benefits for the company, nor shall changes occur resulting from a change in the nature of
ownership of the acquired assets related to the financing. In the event of non-compliance with these
requirements, the funding provided is subject to repayment. As of the date of this report, all contractual
requirements have been met.
47. SEGMENT REPORTING
Segment reporting within the Group is organized on the basis of two main business segments:
“manufacture of pharmaceutical products” and “distribution of pharmaceutical products (goods).” The
“other” segment includes the manufacture and distribution of non-pharmaceutical products.
The revenue, expense, and profit items of the business segments defined within the Group include:
Manufacture of
pharmaceutical
products
Distribution of
pharmaceutical
products (goods)
Other
Elimination
Consolidated
2025
2024
2025
2024
2025
2024
2025
2024
2025
2024
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
External sales
300,114
254,502
2,277,902
1,833,904
31,812
40,691
-
-
2,609,827
2,129,097
Intra-segment
sales
-
-
39,290
-
-
-
(39,290)
-
-
-
Inter-segment
sales
206,815
131,130
4,329
443
18,045
8,884
(229,189)
(140,457)
-
-
Total revenue
506,929
385,632
2,321,521
1,834,347
49,857
49,575
(268,479)
(140,457)
2,609,827
2,129,097
Segment
profit
(margin)
275,875
123,664
305,573
276,271
16,786
14,345
(122,557)
(2,969)
475,677
411,311
Unallocated operating income
31,090
24,667
Unallocated operating expenses from operations
(366,403)
(354,219)
Operating profit
140,364
81,759
Financial (expenses)/income, net
(20,003)
(15,421)
Impairment of non-current assets
(390)
(234)
(Loss)/gain on acquisition and disposal of subsidiaries
(15)
151
Net profit from associates
38,238
25,827
Profit before income tax
158,194
92,082
Income tax expense
(21,573)
(11,651)
Net income for the year
136,621
80,431
Attributable to equity holders of the parent company
129,159
76,310
Non-controlling interest
7,462
4,121
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
151
The assets and liabilities of the business segments include:
Assets by business segment
Manufacturing of
pharmaceutical
products
Distribution of
pharmaceutical products
(goods)
Others
Total
2025
2024
2025
2024
2025
2024
2025
2024
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Property, machinery, and equipment
127,154
137,328
182,344
166,808
7,079
4,247
316,577
308,383
Inventories
111,694
111,650
379,453
291,726
10,919
43,339
502,065
446,716
Receivables from related companies
1,194
342
12,352
11,323
1,144
-
14,690
11,665
Trade receivables
19,617
28,141
428,334
264,626
3,775
8,811
451,726
301,577
Cash and cash equivalents
29,337
14,305
42,082
21,307
254
119
71,673
35,730
Segment assets
288,996
291,766
1,044,564
755,790
23,171
56,516
1,356,731
1,104,071
Unallocated assets
721,093
692,212
Total assets
2,077,824
1,796,283
Liabilities by business segment
Manufacture of
pharmaceutical
products
Distribution of
pharmaceutical products
(goods)
Other
Total
2025
2024
2025
2024
2025
2024
2025
2024
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Liabilities to employees and for
social security
2,934
2,678
18,552
15,649
220
70
21,706
18,397
Trade payables
28,745
105,041
313,382
233,049
6,803
49,995
348,930
388,085
Liabilities to related parties
33,918
1,098
67,959
2,572
(66,780)
(199)
35,097
3,471
Bank loans
245,027
178,405
246,776
192,900
-
-
491,803
371,305
Segment liabilities
310,624
287,222
646,669
444,170
(59,757)
49,866
897,536
781,258
Unallocated liabilities
203,743
171,922
Total liabilities
1,101,279
953,180
Capital expenditures, depreciation, and non-cash expenses other than depreciation by business
segment include:
Manufacture of
pharmaceutical
products
Distribution of
pharmaceutical products
(goods)
Other
Total
2025
2024
2025
2024
2025
2024
2025
2024
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Capital expenditures
19,208
11,915
61,742
47,188
49
536
80,999
59,639
Depreciation
12,939
11,670
47,354
38,088
1,131
682
61,424
50,440
Non-cash expenses
other than depreciation
2,082
8,014
1,523
883
174
105
3,779
9,001
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
152
The breakdown of the Group’s revenue by type and by geographic region is as follows:
Bulgaria
Europe
Other countries
Total
2025
2024
2025
2024
2025
2024
2025
2024
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Revenue from sales of
finished goods
115,419
127,743
190,504
145,756
49,063
37,125
354,986
310,624
Revenue from sales of
goods
1,520,355
1,362,466
730,013
454,400
4,473
1,607
2,254,841
1,818,473
1,635,774
1,490,209
920,517
600,156
53,536
38,732
2,609,827
2,129,097
The carrying amount as of December 31 of the Group’s non-current assets, other than financial
instruments, broken down by geographic region, is as follows:
Bulgaria
Europe
Other countries
Total
2025
2024
2025
2024
2025
2024
2025
2024
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Property, machinery,
and equipment
349,497
340,204
57,297
50,844
1,284
1,404
408,078
392,452
Intangible assets
206,021
209,224
43,149
48,009
4
43
249,174
257,276
Reputation
2,813
2,813
2,672
2,728
-
-
5,485
5,541
Investment properties
7,051
7,890
-
-
-
-
7,051
7,890
565,382
560,131
103,118
101,581
1,288
1,447
669,788
663,159
48. FINANCIAL RISK MANAGEMENT
In the ordinary course of business, the Group can be exposed to a variety of financial risks the most
important of which are market risk (including currency risk, risk of a change in the fair value and price risk),
credit risk, liquidity risk and risk of interest-bearing cash flows.
The general risk management is focused on the difficulty to forecast the financial markets and to
achieve minimizing the potential negative effects that might affect the financial results and position of the
Group.
The financial risks are currently identified, measured and monitored through various control
mechanisms in order to establish adequate prices for the finished products and services of the Group
companies and the borrowed thereby capital, as well as to assess adequately the market circumstance of its
investments and the forms for maintenance of free liquid funds through preventing undue risk concentrations.
Risk management is currently performed by the management of the parent company and
respectively, the managing bodies of the subsidiaries, in line with the policy defined by the Board of Directors
of the parent.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
153
The Board of Directors has approved the basic principles of general financial risk management, on
the basis of which specific procedures have been established for management of the separate specific types
of risk such as currency, price, interest, credit and liquidity risk and the risk of use of non-derivative
instruments.
The structure of financial assets and liabilities as of December 31, 2025, is as follows:
Categories of financial instruments:
31/12/2025
31/12/2024
BGN '000
BGN '000
Financial assets
Financial assets at amortized cost, including:
526,035
351,476
Receivables and loans (Notes No. 21, No. 22, No. 24, No. 25, and No. 27)
454,363
315,750
Cash and cash equivalents (Note 28)
71,672
35,726
Financial assets at fair value through other comprehensive income,
including:
9,768
12,048
Equity investments (Note 20)
9,768
12,048
Total financial assets
535,803
363,524
Financial liabilities
Financial liabilities at amortized cost, including:
1,014,547
880,866
Short-term and long-term bank loans (Notes 30 and 38)
491,803
371,305
Other loans and liabilities (Notes 37, 39, 40, and 45)
400,890
400,014
Lease obligations (Note 34)
121,854
109,547
Total financial liabilities
1,014,547
880,866
The net effect of accrued/(reversed) impairment losses related to financial assets and financial
guarantees recognized in the statement of comprehensive income (in profit or loss) is as follows:
31/12/2025
31/12/2024
BGN '000
BGN '000
Judicial and awarded receivables
4,638
(5)
Loans granted at amortized cost
624
(81)
Trade and other receivables, including from related parties
592
(1,694)
Total
5,854
(1,780)
Credit risk
Credit risk is the risk that any of the Group's clients will fail to discharge in full and within the
normally envisaged terms the amounts due under trade receivables.
The Group’s credit risks arises both from its business operations, through trade receivables, and from
its financing activities, including the granting of loans to related and third parties, commitments undertaken
under loans and guarantees and bank deposits. The Group has developed policies, procedures and rules for
control and monitoring of credit risk behaviour.
Trade receivables
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
154
In its business practice, the Group has applied various schemes of distribution until arriving at its
current effective approach, which considers the market environment, various forms of payments, as well as
the inclusion of trade rebates. The Group works with counterparts with whom it has a history on its main
markets, and partners with over 70 Bulgarian and foreign licensed distributors of medicinal products.
Work with the NHSSO and with distributors working with state hospitals also require the adoption
of a deferred payment policy in Bulgaria. In this sense, even though credit risk concentration exists, this
risk is controlled by means of selection, ongoing monitoring of the liquidity and financial stability of sales
partners, as well as direct communication therewith and seeking quick measures upon indications for
problems.
The Group’s credit policy envisages assessing each new customer’s creditworthiness before proposing
standard delivery and payment conditions.
The Group uses provisioning matrixes to calculate expected credit losses from trade receivables and
contract assets. The latter are grouped into groups (portfolios) from various client segments sharing similar
characteristics, incl. for credit risk.
The percentages applied in the provisioning matrix are based on days past due for each portfolio.
Each matrix percentage is initially determined based on historical data observed by the Group
companies for a period of three years. The method is based on analysis of the history and assessing behaviour
for each invoice within a group issued over at least the last three years, including pays past due, going period
by period among the different past due ranges, payments and outstanding receivables, etc. Based on that, the
loss percentage is determined as bad debt for the given group of factors versus past due invoices by days.
The period of occurrence on an economic loss from uncollectability is determined by customer portfolios:
wholesalers, pharmacy market, hospital market, and by geographic regions. This period is examined and
historically assessed. The Group does not have a practice to request collateral of trade receivables and does
not insure them.
Second, the Group makes the impairment provisioning matrixes for each portfolio precise by
adjusting certain percentages based on historical data for the behaviour of payments under the invoices issued
and historical losses from bad debt, by including scenarios and forecast information about certain macro
factors. Historical percentages are adjusted to reflect the effect of the future behaviour of macroeconomic
factors for which a statistical dependence has been identified and which are considered to impact the
customers’ ability to service and settle their payables.
Court and awarded receivables
Upon determining the collectability of court and awarded receivables, the management analyses on
an individual basis the overall exposure from each counterpart (counterpart type) in order to determine the
actual likelihood of their collection. Upon establishing it is highly unlikely to collect a given receivable
(group of receivables), it is assessed what portion thereof is secured (pledge, mortgage, guarantors, and bank
security) to thus guarantee collectability (through potential future realisation of the collateral or payment by
the guarantor). The receivables or portion thereof for which the management determines are highly unlikely
to be collected, are 100% impaired.
Loans and financial guarantees granted
The assessment of each credit exposure for the management’s purposes is a process that requires the
use of models to reflect impact on exposure by changes in market conditions and the debtor’s operation,
estimated cash flows and time left to maturity.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
155
The assessment of the credit risk of loans granted leads to further judgement on the possibility of
default, on the loss coefficients related to this judgement and to correlation between counterparts. The
Company measures credit risk by using probability of default (PD), exposure at default (EAD) and loss given
default (LGD).
To determine the credit risk of loans and financial guarantees granted, and of certain individual trade
receivables, the Group’s management has developed a methodology that includes two main components:
determining the debtor’s credit rating, and statistical models for calculating marginal PD by year for each
rating. With respect to the rating, it uses internal credit ratings of its counterparts based on the global
methodologies of world’s leading rating agencies. The rating reflects financial indebtedness, liquidity,
profitability ratios, etc. quantitative (for instance, sales volumes) and qualitative (for instance, financial
policy, diversifications, etc.) criteria depending on the respective methodology and industry.
By means of statistical models based on historical global data about probability of default (PD) and
transitions between different ratings, as well as forecasts for key macroeconomic indicators (GDP growth,
inflation, etc.), the necessary marginal PD are determined by year for each rating.
Based on the specific rating established and the analysis of the debtor’s characteristics and the
loan/guarantee, incl. changes which have occurred therein compared to the prior period, the instrument’s
stage is determined (Stage 1, Stage 2, and Stage 3). The Group considers that a certain financial instrument
has undergone a significant increase in credit risk when one or more of the following quantitative or
qualitative criteria are met:
Quantitative criteria:
• An increase in the probability of default (PD) for the financial instrument’s lifetime at the reporting
date versus the possibility of default for the instrument’s lifetime at the date on which the asset was
initially recognised
• Payment is past due for over 30 days, but less than 90 days, past due
• An actual or expected significant adverse change in the debtor’s operating result, above the
permissible change range, measured based on the debtor’s main financial and operating indicators
• A significant change in the value of the collateral, which is expected to increase the loss and risk of
default.
Qualitative criteria:
• Significant adverse changes in the business, financial and/or economic conditions of the debtor;
• Actual or expected adverse changes in the debtor’s operating results;
• A significant change in the collateral quality, which is expected to increase the risk of default;
• Early signs of cash flow/liquidity issues, such as delays in servicing trade creditors/bank loans.
The criteria used to identify a substantial increase in credit risk are monitored, and their viability
is reviewed on a periodic basis by the Group’s Finance Director.
The Company designates a financial instrument as non-performing and the credit loss as incurred,
when it meets one or more of the following criteria:
Quantitative criteria
• The debtor’s contract payments are over 90 days past due
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
156
• Significant adverse changes have occurred or are expected in the debtor’s business, financial
conditions and economic environment, manifest in a serious decrease in the debtor’s main financial
and operational indicators;
• The debtor states a number of losses and negative net assets;
• Significant adverse changes have occurred or are expected in value of the loan’s key collateral,
incl. loss of collateral.
Qualitative criteria
The debtor is unable to pay due to significant financial difficulties. This includes cases when:
• The debtor is in default of the financial contract, for instance with respect to interest payments,
collaterals and/or another significant contract, including for financing;
• Adverse changes in the debtor’s business, market, environment, and regulations;
• Concessions and reliefs have been made in relation to the debtor’s financial difficulties;
• There is probability that the debtor declares insolvency.
The default definition is subsequently applied to modelling the probability of default (PD), the
exposure at default (EAD), and the loss given default (LGD) determined through calculation of the Group’s
expected credit losses.
Expected credit losses have been determined by discounting the product of: the probability of
default (PD), exposure at default (EAD), and the loss given default (LGD), determined as follows:
• PD is the probability of the debtor not meeting their financial obligations, either over the next 12
months, or over the financial asset’s lifetime (lifetime PD) determined based on public PD data from
generally accepted sources and statistical models of the impact of forecast macroeconomic factors.
Moreover, the Company’s management has conducted historical analysis and has identified the main
economic variables impacting credit risk and expected credit losses per loan (portfolio) type.
• EAD is the amount payable to the Company by the debtor at default, over the next 12 months or over
the remaining period of the loan, determined in accordance with the specific instrument’s
characteristics (amount due, repayment plans, interest, term, etc.).
• LGD is the Company’s expectation for the amount of loss from a non-performing exposure. LGD
varies depending on the type of counterpart, the type and superiority of the claim and the presence
of collateral or other credit support. LGD is measured as a loss percentage for an open exposure at
default.
• The discount rate used to calculate expected credit losses (ECL) is the instrument’s initial effective
interest or in the case of financial guarantees and other instruments without an applicable interest
rate – the risk-free rate for the respective period, currency, etc.
The Group applies a number of policies and practices to lower the credit risk from loans granted.
Most frequently, it accepts collateral. The Company assigns valuation to external experts – independent
valuators, of the collateral received, as part of the process of granting loans. This valuation is reviewed on a
periodic basis, but at least once per year.
The table below presents the quality of the Group's financial assets and contractual assets, as well
as the maximum exposure to credit risk according to the adopted credit rating assessment:
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
157
31/12/2025
Notes
Internal credit risk
categorization
Expected
credit losses
(IFRS 9)
Gross
carrying
amount
Impairment
loss
(adjustment)
Carrying
amount
BGN '000
BGN '000
BGN '000
Receivables under
assignment agreements
from related companies
20
N/A
For the entire
term (credit
collateral)
4,138
-
4,138
Short-term loans granted
to related parties
24
Renegotiated
Stage 2
For the entire
term
(collateral)
3,608
(3,608)
-
Long-term loans granted
to third parties
21
Initially contracted
loans Stage 1
For the entire
term (credit
collateral)
2,957
-
2,957
Short-term loans granted
to third parties
25
Initially contracted
loans Stage 1
Lifetime
(credit
collateral)
3,525
(140)
3,385
Short-term loans granted
to third parties
25
Renegotiated
Stage 2
Lifetime
(credit
collateral)
7,669
(10)
7,659
Short-term receivables
from third parties arising
from securities
transactions
21
N/A
For a 12-
month period
3,327
(80)
3,247
Long-term receivables
from related parties
arising from securities
transactions
20
N/A
For a 12-
month period
2,604
-
2,604
Trade and other
receivables from related
parties
20, 24
N/A
For a 12-
month period
15,023
(68)
14,955
Trade and other
receivables from third
parties
21, 23, 25
Not applicable
For a 12-
month period
425,725
(10,307)
415,418
including court-ordered
receivables
25
6,192
(5,928)
264
Financial assets
468,576
(14,213)
454,363
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
158
31/12/2024
Notes
Internal credit risk
categorization
Expected
credit losses
(IFRS 9)
Gross
carrying
amount
Impairment
loss
(adjustment)
Carrying
amount
BGN '000
BGN '000
BGN '000
Receivables under
assignment agreements
from related companies
21
N/A
For the entire
term (credit
collateral)
4,011
-
4,011
Long-term loans granted
to related parties
21
Initially agreed
loans Stage 1
For the entire
term
(collateral)
3,016
-
3,016
Short-term loans granted
to related parties
25
Renegotiated
Stage 2
Lifetime
(credit
protection)
3,052
(3,052)
-
Long-term loans granted
to third parties
22
Initially agreed
loans Stage 1
For the entire
term (credit
collateral)
2,865
-
2,865
Short-term loans granted
to third parties
26
Initially contracted
loans Stage 1
Lifetime
(credit
collateral)
3,132
(75)
3,057
Short-term loans granted
to third parties
26
Renegotiated
Stage 2
For the entire
term
(collateral)
8,501
(6)
8,495
Long-term receivables
from related parties
arising from securities
transactions
21
N/A
For a 12-
month period
2,843
-
2,843
Trade and other
receivables from related
parties
21, 25
N/A
For a 12-
month period
12,415
(234)
12,181
Trade and other
receivables from third
parties
22, 24, 26
Not applicable
For a 12-
month period
285,312
(6,030)
279,282
including legal claims
26
5,797
(1,302)
4,495
Financial assets
325,147
(9,397)
315,750
The table below provides information on the Group’s exposure to credit risk and credit loss allowances
for loans granted, trade receivables, and other receivables as of December 31, 2025:
Category
Correspondence
with external
credit rating
Average
expected loss
rate
Gross
amount
Impairment
loss
(adjustment)
BGN '000
BGN '000
Renegotiated loans (Stage 2)
B3
0.13%
7,669
(10)
Receivables under assignment agreements
from related parties
N/A
0.00%
4,138
-
Renegotiated loans (Stage 2)
Caa1
100.00%
3,608
(3,608)
Initially Agreed Loans (Stage 1)
B3
3.97%
3,525
(140)
Receivables from third parties arising from
securities transactions
N/A
2.40%
3,327
(80)
Initially agreed loans (Stage 1)
Caa1
0.00%
2,957
-
Receivables from related parties arising from
securities transactions
N/A
0.00%
2,604
-
Trade and other receivables, including related
parties (Stage 1)
Not applicable
1.02%
434,556
(4,447)
Doubtful receivables (judicial and awarded
receivables)
N/A
95.75%
6,192
(5,928)
Total
468,576
(14,213)
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
159
The Group has a concentration of receivables from related parties (trade receivables and loans) as follows:
31/12/2025
31/12/2024
BGN'000
BGN'000
Client 1
22.94%
21.38%
Client 2
20.00%
18.19%
Client 3
13.62%
13.68
The Group currently manages the concentration of receivables from related parties by applying credit
limits and additional collateral in the form of pledges of securities and other assets, as well as by applying
promissory notes.
The concentration of the top five customers in the Group’s trade receivables is as follows:
31/12/2025
% of credit exposure
relative to total trade
receivables
31/12/2024
% credit exposure
relative to total trade
receivables
BGN'000
%
BGN'000
%
Client 1
13,460
3%
15,205
6%
Client 2
7,378
2%
5,075
2%
Client 3
6,198
2%
5,020
2%
Client 4
4,996
1%
4,029
2%
Client 5
4,131
1%
3,704
1%
Cash
The Group’s cash and payment operations are concentrated in different first-class banks. To calculate
expected credit losses for cash and cash equivalents, it applies a model based on the bank’s public ratings as
determined by internationally recognised rating firms like Moody’s, Fitch, S&P, BCRA and Bloomberg and
the reference public data about PD referring to the rating of the respective bank. The management monitors
changes in a bank’s rating on an ongoing basis in order to assess the presence of increased credit risk, ensure
the current management of incoming and outgoing cash flows and the allocation of cash in the bank accounts
and banks.
Foreign currency risk
The Group companies perform their operations with active exchange with foreign suppliers and
clients and therefore, they are exposed to currency risk.
The Group through the companies in Belarus, Ukraine, Serbia and Russia carries out business in these
countries and, therefore, has significant exposure in BYN, UAH, RSD and RUB. The currency risk is related
with the adverse floating of the exchange rate of these currencies against BGN in future business transactions
as to the recognised assets and liabilities denominated in foreign currency and as to the net investments in
foreign companies.
The rest of the companies abroad perform sales mainly to the local markets, which leads to currency risk to
their currencies as well – Polish Zloty (PLN), US Dollar (USD), British Pound (GBP) and Kazakhstani Tenge
(KZT).
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
160
Most operations of the Group companies are usually denominated in BGN and the fact that the
BGN is fixed to the EUR reduces the potential currency volatility for the companies of the Group.
To control foreign currency risk, there is an implemented system in the whole Group for planning
import supplies, sales in foreign currency as well as procedures for daily monitoring of US dollar exchange
rates and control on pending payments. The exposures of almost all subsidiaries in Bulgaria to foreign
currency risk are insignificant because almost all sales are performed to the local market in Bulgarian Levs
(BGN). The import of goods is performed mainly in Euro (EUR). The loans denominated in a forei gn
currency have been granted mainly in EUR.
The Group’s assets and liabilities denominated in Bulgarian levs, presented in various
foreign currencies, are as follows:
December 31, 2025
in BGN
in EUR
in RSD
in USD
in
UAH
in BYN
in RUB
in other
currency
Total
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
Capital investments
1,445
-
-
8,323
-
-
-
-
9,768
Financial assets at
amortized cost, including:
213,085
25,002
108,629
9,067
11,186
20,667
130,891
7,508
526,035
Receivables and loans
184,884
19,282
102,089
7,459
1,233
19,317
115,504
4,595
454,363
Cash and cash
equivalents
28,201
5,720
6,540
1,608
9,953
1,350
15,387
2,913
71,672
Total financial assets
214,530
25,002
108,629
17,390
11,186
20,667
130,891
7,508
535,803
December 31, 2025
in BGN
in EUR
in RSD
in USD
in
UAH
in BYN
in RUB
in other
currency
Total
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN '000
Short-term and long-term
bank loans
276,849
209,097
5,857
-
-
-
-
-
491,803
Other loans and liabilities
134,735
104,406
93,694
5,542
1,263
16,461
43,270
1,519
400,890
Lease liabilities
74,824
24,147
5,981
1,054
-
8,329
7,302
217
121,854
Total financial liabilities
486,408
337,650
105,532
6,596
1,263
24,790
50,572
1,736
1,014,547
December 31, 2024
in
BGN
in
EUR
in RSD
in
USD
in
UAH
in BYN
in
RUB
in other
currency
Total
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
Capital investments
3,634
-
-
8,414
-
-
-
-
12,048
Financial assets at amortized cost,
including:
181,753
43,968
86,361
7,953
7,677
17,449
244
6,071
351,476
Receivables and loans
172,561
31,889
81,395
7,339
2,187
16,000
-
4,379
315,750
Cash and cash equivalents
9,192
12,079
4,966
614
5,490
1,449
244
1,692
35,726
Total financial assets
185,387
43,968
86,361
16,367
7,677
17,449
244
6,071
363,524
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
161
December 31, 2024
in
BGN
in
EUR
in
RSD
in
USD
in
UAH
in BYN
in
RUB
in other
currency
Total
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
Short-term and long-term bank
loans
196,300
151,026
-
23,979
-
-
-
-
371,305
Other loans and liabilities
76,896
197,101
69,834
8,120
3,042
3,449
39,981
1,591
400,014
Lease liabilities
68,295
26,486
4,167
1,437
25
8,743
-
394
109,547
Total financial liabilities
341,491
374,613
74,001
33,536
3,067
12,192
39,981
1,985
880,866
Foreign currency sensitivity analysis
The foreign currency sensitivity of the Group exposures is mainly related with the Ukrainian
Hryvnia (UAH), the Serbian Dinar (RSD) and the Belarussian Rubble (Br). With regard to the other
currencies in which the Group operates or in which other companies of the Group operate (Polish Zloty, US
Dollar and Kazakhstani Tenge) the foreign currency risk of the Group is limited, because their exposures in
these currencies are relatively small and are more easily regulated by the managing bodies of the respective
subsidiaries.
The effect of foreign currency sensitivity to 10% increase/decrease in current exchange rates of
BGN to the Serbian Dinar (RSD), Belarusian Ruble (BYN), Ukrainian Hryvnia (UAH), US Dollar (USD),
Belarussian ruble, russian ruble and in general to the other foreign currency exposures, based on the structure
of foreign currency assets and liabilities at 31 December and on the assumption that the influence of all other
variables is ignored, has been measured and presented as impact on the post-tax consolidated financial result
and on the equity of the Group.
31/12/2025
31/12/2024
RSD
USD
UAH
BYN
RUB
RSD
USD
UAH
BYN
RUB
BGN '000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
BGN
'000
Financial
result
263
971
814
(330)
6,024
1,051
(1,545)
378
421
(3,179)
Retained
earnings
263
971
814
(330)
6,024
1,051
(1,545)
378
421
(3,179)
Other currencies mainly include: 3,895 thousand BGN in Polish zlotys and 1,939 thousand BGN in
Kazakhstani tenge net financial assets (as of December 31, 2024: 2,998 thousand BGN in Polish zlotys and
2,048 thousand BGN in Kazakhstani tenge in net financial assets).
With a 10% increase/decrease, respectively, in the exchange rate of the Polish zloty and the
Kazakhstani tenge against the Bulgarian lev, the net effect on the Group’s profit (after tax) is:
31/12/2025
31/12/2024
PLN
KZT
PLN
KZT
BGN '000
BGN '000
BGN '000
BGN '000
Financial result
315
155
243
164
Retained earnings
315
155
243
164
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
162
The effect on equity is of the same amount and in a direction of a decrease and reflects in the
component 'retained earnings'.
The Group analyses currency exposure and takes timely measures to mitigate effects thereof on
the Group’s results.
Price risk
The Group companies are exposed to price risk of inventories based on three main factors:
(a) a possible increase of purchase prices of raw materials and consumables, since a significant portion of
the raw materials used are imported and they represent a significant share of production costs;
(b) a possible increase in supplier prices of goods; and
(c) the growing competition on the Bulgarian pharmaceutical market, affecting the prices of
pharmaceuticals.
For the purpose of mitigating this influence, the management of the Group applies a strategy aimed
at optimisation of production costs, validation of alternative suppliers that offer beneficial commercial
conditions, expanding product range by means of new generic products development and last but not least,
adoption of a flexible marketing and price policy. Price policy is a function of three main factors – structure
of expenses, prices of competitors and purchasing capacity of customers.
The Group is exposed to a significant price risk also with regard to the shares held thereby,
classified as other long-term equity investments, mostly through the parent company. For this purpose, the
management monitors and analyses all changes in security markets and also uses consulting services of one
of the most authoritative in the country investments intermediaries. In addition, at this stage, the management
has taken a decision for a reduction in its operations on stock markets, retaining of the purchased shares for
longer periods with current monitoring of the reported by the respective issuer financial and business
indicators as well as the development of the operations in the environment of crisis.
Liquidity risk
The liquidity risk is the adverse situation when the Group encounters difficulty in meeting
unconditionally its obligations within their maturity.
The Group generates and maintains a significant volume of liquid funds. An internal source of
liquid funds for the Group is its main economic activity of its companies generating sufficient operational
flows. Banks and other permanent counterparts represent external sources of funding. To isolate any possible
general liquidity risk, the group implements a system of alternative mechanisms of acts and prognoses, the
final aim being to maintain good liquidity and, respectively, ability to finance its economic activities. This is
supplemented by current monitoring of the maturities of assets and liabilities, control over cash outflows and
ensuring their current balancing with inflows, including renegotiation of maturities and optimisation of debt
structure, increase and internal restructuring of self-generated funds and their investment.
The Group does not have supplier financing arrangements.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
163
Maturity analysis
The table below presents the financial non-derivative liabilities of the Group, classified by remaining term
to maturity, determined against the contractual maturity at the consolidated financial statements date. The
table is prepared on the basis of undiscounted cash flows and the earliest date on which a payable becomes
due for payment. The amounts include principal and intereStr.
Maturity Analysis
December 31, 2025
Up to 1
month
1 to 3
months
3 to 6
months
6 to 12
months
from 1 to
2 years
from 2 to
5 years
over 5
years
Total
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Short-term and long-term
bank loans
5,763
17,877
124,329
244,092
43,990
64,188
14,445
514,684
Other loans and liabilities
226,848
133,984
12,349
17,464
1,439
9,057
-
401,141
Lease liabilities
2,448
5,147
7,705
14,403
27,034
54,254
27,216
138,207
Total liabilities
235,059
157,008
144,383
275,959
72,463
127,499
41,661
1,054,032
Maturity analysis
December 31, 2024
up to 1
month
1 to 3
months
3 to 6
months
6 to 12
months
from 1 to
2 years
from 2 to
5 years
over 5
years
Total
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Short-term and long-term
bank loans
79,914
13,428
112,065
108,401
50,778
15,920
-
380,506
Other loans and liabilities
158,243
90,510
135,104
3,999
1,170
11,440
-
400,466
Lease liabilities
1,975
4,193
6,000
12,088
22,239
46,201
28,631
121,327
Total liabilities
240,132
108,131
253,169
124,488
74,187
73,561
28,631
902,299
Risk of interest-bearing cash flows
Interest-bearing assets in the structure of the Group are: cash, bank deposits and loans granted at fixed
interest rate. On the other hand, the borrowings of the Group in the form of long-term and short-term loans are
usually with a floating interest rate. This circumstance makes the cash flows of the Group partially dependent on
interest risk. This risk is covered in two ways:
(a) optimisation of resources and structure of credit resources for achieving relatively lower price of attracted
funds; and
(b) combined structure of interest rates on loans comprising two components – a permanent one and a
variable one; the correlation between them, as well as their absolute value, are maintained in a proportion
favourable for the Group companies. The fixed component has a relatively low absolute value and
sufficiently high relative share in the total interest rate.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
164
This circumstance eliminates the probability of a significant change in interest rate levels in case of
variable component updating. Thus the probability for an unfavourable change of cash flows is reduced
to a minimum.
The managing bodies of the Group companies together with the management of the parent currently
monitor and analyse the exposure of the respective company to the changes in interest levels. Simulations are
carried out for various scenarios of refinancing, renewal of existing positions, and alternative financing. The
impact of a defined interest rate shift, expressed in points or percentage, on the financial result and equity is
calculated based on these scenarios. For each simulation, the same assumption for interest rate shift is used for all
major currencies. The calculations are made for major interest-bearing positions.
Interest Rate Analysis
non-interest-
bearing
with floating
interest rate
with fixed
interest rate
Total
December 31, 2025
BGN '000
BGN '000
BGN '000
BGN '000
Capital investments
9,768
-
-
9,768
Financial assets at amortized cost, including:
452,922
26,493
46,620
526,035
Receivables and loans
424,111
-
30,252
454,363
Cash and cash equivalents
28,811
26,493
16,368
71,672
Total financial assets
462,690
26,493
46,620
535,803
Interest analysis
Interest-free
with floating
interest rate
with fixed
interest rate
Total
December 31, 2025
BGN '000
BGN '000
BGN '000
BGN '000
Short-term and long-term bank loans
332
466,946
24,525
491,803
Other loans and liabilities
400,890
-
-
400,890
Lease obligations
-
6,207
115,647
121,854
Total financial liabilities
401,222
473,153
140,172
1,014,547
Interest analysis
Interest-free
with floating
interest rate
with fixed
interest rate
Total
December 31, 2024
BGN '000
BGN '000
BGN '000
BGN '000
Capital investments
12,048
-
-
12,048
Financial assets at amortized cost, including:
295,205
12,915
43,356
351,476
Receivables and loans
277,800
15
37,935
315,750
Cash and cash equivalents
17,405
12,900
5,421
35,726
Total financial assets
307,253
12,915
43,356
363,524
Interest analysis
Interest-free
with floating
interest rate
with fixed
interest rate
Total
December 31, 2024
BGN '000
BGN '000
BGN '000
BGN '000
Short-term and long-term bank loans
246
345,036
26,023
371,305
Other loans and liabilities
400,012
-
2
400,014
Lease obligations
-
5,040
104,507
109,547
Total financial liabilities
400,258
350,076
130,532
880,866
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
165
The table below demonstrates Group's sensitivity to possible changes in interest rates by 0.50% based
on the structure of assets and liabilities as at 31 December and with the assumption that the influence of all other
variables is ignored. The effect is measured and presented as impact on the financial result after taxes and on
equity.
Increase / decrease in interest rate
Impact on post-tax financial result and
equity profit/(loss)
31.12.2025
31.12.2024
BGN’000
BGN’000
Increase
(2,129)
(1,575)
Decrease
2,129
1,575
Capital risk management
The capital management objectives of the Group are to build and maintain capabilities to continue its
operation as a going concern and to provide return on the investments of shareholders and economic benefits to
other stakeholders and participants in its business as well as to maintain an optimal capital structure to reduce the
cost of capital. Analogous approach is applied also at the level of a separate Group company with regard to its
capital structure and financing.
The Group currently monitors capital availability and structure on the basis of the gearing ratio. This
ratio is calculated as net debt divided by the total amount of employed capital. Net debt is calculated as total
borrowings (current and non-current ones) as presented in the consolidated statement of financial position less
cash and cash equivalents.
Total employed capital is equal the sum of equity (including non-controlling interest) and net debt. It
is a characteristic feature for both presented periods that the Group finances its operations both through its own
generated profit and by maintaining a certain level of trade and other current payables and loans (bank, commercial
ones). The strategy of the parent company's management was to maintain the ratio within 23-40% at a Group
level.
In 2024, the parent company implemented a large-scale investment program, as a result of which the debt-
to-equity ratio increased significantly compared to previous years.
The table below presents the debt ratios based on the capital structure:
31/12/2025
31/12/2024
BGN'000
BGN'000
Total debt capital, including:
613,657
480,852
Bank loans
491,803
371,305
Lease obligations
121,854
109,547
Less: cash and cash equivalents
(71,672)
(35,726)
Net debt
541,985
445,126
Total equity attributable to the group
976,545
843,103
Total equity attributable to the group
1,518,530
1,288,229
Debt-to-equity ratio
0.36
0.35
The liabilities shown in the table above are disclosed in Notes 30, 32, 34, 38, and 41.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
166
Fair value measurement
The fair value concept presumes realisation of the financial instruments through sales, based on
the position, assumptions and judgements of independent market participants on the main or more profitable
market for given assets or liabilities. However, in most cases especially in regard of trade receivables and
payables as well as loans and deposits with banks, the Group expects to realise these financial assets also
through their total refund or respectively, settlement over time. Therefore, they are presented at amortised
coStr.
In addition, a large part of the financial assets and liabilities are either short-term in their nature
(trade receivables and payables, short-term loans) or are presented in the consolidated statement of financial
position based on market value (deposits placed with banks, investments in securities, loans with floating
interest rate) and therefore, their fair value is almost equal to their carrying amount.
For receivables and loans with a fixed interest rate, the methodology applied in determining it uses
as starting point for calculations Group’s observations of market interest rates.
As far as no sufficient market experience, stability and liquidity exist in regards of purchases and
sales of certain financial assets and liabilities, still no adequate and reliable quotes of market prices are
available thereof, due to which alternative assessment methods and techniques are used.
The management of the parent company is of the opinion that the estimates of the financial assets
and liabilities presented in the statement of financial position are as reliable, adequate and trustworthy as
possible for financial reporting purposes under the existing circumstances.
49. ACQUISITIONS AND INCREASING INTERESTS IN SUBSIDIARIES
49.1 Acquisition of Subsidiaries
In 2025, the Group established the following companies:
Acquisition
date
effective %
ownership
Amount of capital
contribution
BGN'000
SofTech Services EOOD
2/28/2025
100.00%
100
Through Sopharma Trading AD
Sopharmacy Plus EOOD
July 16, 2025
87.22%
12
In 2025, the Group did not acquire any new subsidiaries.
In 2024, the Group established the following companies:
Acquisition
date
effective %
ownership
Amount of capital
contribution
BGN'000
Through Sopharma Trading AD
Sopharmacy D.O.O.
August 30,
2024
88.04%
1
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
167
In 2024, the Group acquired the following new subsidiaries:
Acquisition date
effective %
ownership
Pharmanova D.O.O.
13.8.2024
75.00%
Through Sopharma Trading
AD
Sopharmacy 65 EOOD
13.3.2024
87.68%
Sopharmacy 66 EOOD
21.2.2024
87.68%
Sopharmacy 67 EOOD
21.2.2024
87.68%
Sopharmacy 68 EOOD
21.2.2024
87.68%
AU Great Pharmacies
9.10.2024
87.99%
SOOO Brititrade
10.7.2024
69.55%
AlfaApteka ООО
10.7.2024
52.16%
Bellerophon ООО
10.7.2024
49.38%
DabradzeyaPharm ООО
10.7.2024
69.55%
SalusLine OOD
10.7.2024
45.21%
Ne Ska ООО
10.7.2024
55.64%
Tabina ООО
10.7.2024
68.79%
FitoBel ООО
10.7.2024
69.55%
SpetsApharmacia ООО
31.12.2024
69.51%
The scope of business of the acquired subsidiaries is disclosed in Note 1.2.
The transactions completed in 2024 for the acquisition of the companies Sopharmacy 65 EOOD,
Sopharmacy 66 EOOD, Sopharmacy 67 EOOD, and Sopharmacy 68 EOOD, which operate in Bulgaria,
Pharmonova D.O.O. and AU Great Pharmasi – Serbia, as well as Brititrade S.O.O. and its subsidiaries,
associates, and joint ventures operating in Belarus, are a continuation of the Group’s strategy to expand its
operations and markets both domestically and internationally.
The fair values of net assets upon acquisition of the new subsidiaries in 2024 (Note 2.3.2) are
presented below:
In 2024:
fair value
BGN'000
Property, plant, and equipment (Note 16)
28,986
Intangible assets (Note 17)
38,113
Inventories
29,374
Other receivables and assets
45,426
Cash and cash equivalents
906
Loans
(30,858
Long-term liabilities to employees
(59)
Lease liabilities
(14,886)
Trade payables
(32,540)
Deferred tax liabilities
(7,967)
Other liabilities
(21,970)
Total net assets
34,525
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
168
Total net
assets at fair
value
Non-
controlling
interest
Share of non-
controlling
interest at fair
value
Net assets
acquired from
the Group at fair
value
BGN'000
%
BGN'000
BGN'000
Pharmanova D.O.O.
16,850
25.00%
4,213
12,637
Sopharmacy 65 EOOD
255
12.32%
31
224
Sopharmacy 66 EOOD
883
12.32%
109
774
Sopharmacy 67 EOOD
563
12.32%
69
494
Sopharmacy 68 EOOD
688
12.32%
85
603
AU Great Pharmacies
2,304
12.01%
277
2,027
Brittrade ООО
7,051
30.45%
2,147
4,904
AlfaApteka ООО
103
47.84%
49
54
Bellerophon ООО
215
50.62%
109
106
DabradzeyaPharm ООО
148
30.45%
45
103
SalusLine ODO
2,034
54.79%
1,114
920
Ne Ska ООО
1,493
44.36%
662
831
Tabina ООО
(997)
31.21%
(311)
(686)
FitoBel ООО
2,229
30.45%
679
1,550
BOOO SpetsApharmacia
706
30.49%
-
706
34,525
9,278
25,247
The cost of the investment in the acquisition of the subsidiaries and the resulting goodwill as of the
dates of the Group’s acquisition of control in 2024 are as follows:
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
169
In 2024:
Pharmanova
D.O.O.
Sopharm
acy 65-68
Brititrade
Group
AU Great
Pharmacy
BOOO
SpetsApharmac
y
Total
Serbia
Bulgaria
Belarus
Serbia
Belarus
Acquisition cost
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Transfer from
associates
4,212
-
-
-
-
4,212
Transfer from joint
ventures
-
-
-
-
365
365
Amounts paid in the
current period
8,447
2,985
2,875
-
14,307
Amounts payable in
the next period
-
150
-
-
-
150
Additional capital
issue
-
-
10,010
-
-
10,010
including cash
-
-
2,934
-
-
2,934
including
contribution of a
loan provided
-
-
7,076
-
-
7,076
Share of non-
controlling interest
in the investment
upon indirect
acquisition
-
(386)
(1,198)
(346)
-
(1,930)
Total acquisition
cost
12,659
2,749
8,812
2,529
365
27,114
Fair value of net
assets acquired
(12,637)
(2,095)
(7,782)
(2,027)
(706)
(25,247)
Goodwill / (Gain)
on acquisition of
subsidiaries
22
654
1,030
502
(341)
1,867
Net cash flows from the acquisition of control are as follows:
In 2024:
Cash flows from
the acquisition of
control
Pharmanova
D.O.O.
Sopharmacy
65-68
Brititrade
Group
AU Great
Pharmacies
BOOO
SpetsApharmac
ia
Total
Serbia
Bulgaria
Belarus
Serbia
Belarus
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Cash paid for the
acquisition of
control
(8,447)
(2,985)
-
(2,875)
-
(14,307)
Cash and cash
equivalents in
acquired companies
243
1
562
10
90
906
Cash outflow on
acquisition of
control, net
(8,204)
(2,984)
562
(2,865)
90
(13,401)
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
170
In 2025, cash payments totaling BGN 1,169 thousand (December 31, 2024: BGN 1,168 thousand)
were made for subsidiaries acquired in 2020.
49.2 Increases in equity interests (purchases from non-controlling interests)
The Group has entered into transactions to purchase additional shares from the non-controlling intereStr.
In 2025, the Group acquired the following shares:
Increases in equity interests
Transaction
date
% change
in
ownership
Net assets acquired
(purchases from non-controlling interest)
BGN '000
AlfaApteka ООО
June 30, 2025
17.21%
(10)
Pharmanova D.O.O.
July 18, 2025
25.00%
4,239
4,229
In 2024, the Group acquired the following shares:
Increases in holdings
Transaction
date
% change
in
ownership
Net assets acquired
(purchases from non-controlling interest)
BGN '000
Sopharma Trading AD
12/27/2024
0.31%
540
Ne Ska ООО
12/23/2024
13.87%
339
879
The acquisition cost of the additional shares purchased in 2025, the effects, and the cash outflows
from these transactions are as follows:
Increases in equity interests (purchases from non-controlling interests)
Total
BGN'000
Direct acquisition
7,006
Indirect acquisition through a subsidiary
39
Non-controlling interest
(307)
Total acquisition cost
6,738
Fair value of net assets acquired
(4,229)
Securities acquired by the Group charged to the group reserve - "retained earnings"
538
Cash outflow on increases in equity interests (purchases from non-controlling
interests)
(7,109)
including cash outflow for increases in equity interests in 2025
(7,032)
including cash outflow for increases in equity interests in 2024
(77)
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
171
The acquisition cost of the additional shares purchased in 2024, the effects, and the cash outflows
from these transactions are as follows:
Increases in equity interests (purchases from non-controlling interests)
Total
BGN'000
Direct acquisition
892
Indirect acquisition through a subsidiary
525
Non-controlling interest
-
Total acquisition cost
1,417
Fair value of net assets acquired
(879)
Securities acquired by the Group charged to the group reserve - "retained earnings"
538
Cash outflow on increases in equity interests (purchases from non-controlling
interests)
(1,237)
50. DISPOSAL OF SUBSIDIARIES
50.1 Complete divestment of subsidiaries
In 2025, the Group recorded the disposal of its interest in the following subsidiary:
Company
Date of
Liquidation
Effective % of
interest released
Sopharma Poland Z.O.O.
January 2,
2025
60.00%
In 2024, the Group reported the disposal of its interest in the following subsidiaries:
Company
Date of sale/
liquidation
Effective % of
interest released
Fito Palauzovo AD
11/7/2024
95.00%
Pharmalogistics AD
12/19/2024
89.39%
Electroncommerce EOOD
12/19/2024
100.00%
The net assets of the divested companies in 2024 are presented as follows:
Divestiture with loss of control
2024
BGN'000
Property, plant, and equipment (Note 16)
2,263
Investment property (Note 18)
3,129
Other receivables and assets
85
Cash and cash equivalents
751
Deferred tax liabilities
(361)
Long-term liabilities to employees
(20)
Commercial obligations
(8)
Other current liabilities
(19)
Net assets/(liabilities)
5,820
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
172
The financial result from the disposal of subsidiaries is as follows:
2024
BGN'000
Proceeds from the disposal of subsidiaries for the Group
5,108
Adjusted by:
Written-off net assets
(5,820)
Non-controlling interest
522
(Loss) on disposal of subsidiaries
(190)
Net cash flows from disposal of subsidiaries
Proceeds from the sale of companies in 2024
511
Less:
Cash of the divested companies
(751)
Net cash flows from the divestiture of subsidiaries
(240)
50.2 Decrease in equity interests (sales of non-controlling interests)
The Group has executed transactions to sell additional shares of the non-controlling intereStr.
In 2025, the Group sold the following shares:
Company
Transaction
date
% change
in
ownership
Net assets sold
Sopharma Trading AD
12/08/2025
(0.77%)
1,702
1,702
Decreases in holdings
Total
(sales of non-controlling interest)
BGN'000
Proceeds from partial disposal of shares in subsidiaries for the Group
1,536
Carrying amount of the Group’s share in net assets as of the date of the partial disposal
(1,702)
Effects on the Group
(166
Cash inflow from partial disposal of shares in subsidiaries
2,056
In 2024, there were no reductions in the Group’s equity interests in subsidiaries.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
173
51. RELATED PARTIES TRANSACTIONS
Related parties
Type of relationship
Period of relationship
Telecomplect Invest AD
Shareholder with significant influence
2025
2024
Donev Investments Holding AD
Shareholder with significant influence
2025
2024
Momina Krepost AD
Joint venture
2025
2024
Sopharma Properties REIT
Associate company
2025
2024
Doverie United Holding AD
Associate company
2025
2024
Sopharma Buildings REIT
Associate company
2025
2024
Pharmanova D.O.O.
Associate company
-
Until 12.08.2024
ODO Alenpharm-Plus
Associate company
2025
From 10.07.2024
GalenaPharm ООО
Associate company
2025
From 10.07.2024
Medjel ODO
Associate company
2025
From 10.07.2024
ZAO Interpharm Company
Joint venture
2025
From 10.07.2024
BOOO SpetsApharmacia
Joint venture
-
From 10.07.2024-
until 31.12.2024
Companies of the DOH Group
Companies controlled by an associate
2025
2024
Sofprint Group AD
Company related through key management personnel
2025
2024
Sofconsult Group AD
Company related through key management personnel
2025
2024
VES Electroinvest Systems EOOD
Company related through key management personnel
2025
2024
Eco Solar Invest EOOD
Company related through key management personnel
2025
2024
Alfa In EOOD
Company related through key management personnel
2025
2024
Konsumpharm EOOD
Company related through key management personnel
2025
2024
Consortium “Veterinary
Diagnostics”
Civil partnership for the conduct of joint activities
(direct participation)
2025
2024
Consortium “Sopharma Trading
Global Medical 2024”
Civil partnership for the conduct of joint activities
(indirect participation)
2025
From 04.09.2024
Pharmalogistics AD
Company related through key management personnel
2025
From 19.12.2024
Consortium “Sopharma Trading
Global Medical 2025“
Civil partnership for the conduct of joint activities
(indirect participation)
From 27.06.2025
-
Consortium "Sopharma Trading
Global Medical 2025-2"
Civil partnership for the conduct of joint activities
(indirect participation)
From 18.09.2025
-
Supplies from related parties
2025
2024
BGN ‘000
BGN ‘000
Supplies of inventories from:
Companies related through key management personnel
10,858
10,713
Joint ventures
194
334
Associates
123
3,085
Companies controlled by an associate
49
83
11,224
14,215
Services provided by:
Associated companies
702
620
Shareholder companies with significant influence
531
645
Companies controlled by an associate
404
1,494
Companies linked through key management personnel
115
156
Joint ventures
17
71
1,769
2,986
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
174
2025
2024
Deliveries of fixed assets from:
BGN ‘000
BGN ‘000
Companies controlled by an associate
3,519
3,017
A company linked through key management personnel
-
11
3,519
3,028
Other supplies from:
Companies controlled by an associate
108
348
108
348
Dividends accrued to:
Shareholder companies with significant influence
35,104
16,580
Key management personnel
5,629
2,789
40,733
19,369
Total supplies
57,353
39,962
Sales to related parties
Sales of inventories to:
Associated companies
34,423
16,579
Joint ventures
6,368
4,834
Companies linked through key management personnel
901
1,149
Companies controlled by an associate
178
356
41,870
22,918
Sales of services to:
Associated companies
244
86
Joint ventures
82
38
Companies controlled by an associate
23
11
Companies linked through key management personnel
8
215
357
350
Interest on loans granted:
Joint ventures
106
90
Companies controlled by an associate
20
719
126
809
Interest on assignment agreements:
Joint ventures
127
127
127
127
42,480
28,596
Lease Agreements
During the reporting period, the company recognized assets, liabilities, expenses, and payments
related to lease agreements with related parties.
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
175
Lease liabilities as of December 31 related to lease agreements with related parties are as follows:
31/12/2025
31/12/2024
BGN ‘000
BGN ‘000
Recognized lease liabilities as of January 1
22,360
19,626
Increases
415
5,789
Payments of lease obligations for the period
(3,376)
(3,055)
Lease liabilities as of December 31
19,399
22,360
The “right-of-use” assets as of December 31 related to lease agreements with related parties are as
follows:
31/12/2025
31/12/2024
BGN ‘000
BGN ‘000
“Right-of-use” assets as of January 1
21,686
19,323
Increases
418
6,330
Accrued depreciation
(3,651)
(3,321
Written-off carrying amount of right-of-use assets
(104)
(646)
Right-of-use assets as of December 31
18,349
21,686
Transactions with related parties are disclosed in Notes 21, 25, 32, and 40.
The Group’s key management personnel include the CEO and members of the Board of Directors of
the parent company, as disclosed in Note 1.1.
The remuneration and other income of key management personnel and of the executive directors,
members of the Board of Directors, and managers of the Group’s subsidiaries amounted to BGN 4,234
thousand (2024: BGN 2,916 thousand), including:
• current remuneration – BGN 3,435 thousand (2024: BGN 2,085 thousand);
• bonuses – BGN 799 (2024: BGN 831);
Remuneration and other income of the parent company’s key management personnel amounted to
BGN 1,610 (2024: BGN 1,928), including:
• current remuneration – 1,328 BGN (2024: 1,447 BGN);
• bonuses – BGN 282 thousand (2024: BGN 481 thousand).
52. EVENTS AFTER END OF THE REPORTING PERIOD
Pursuant to the Law on the introduction of the euro in the Republic of Bulgaria (LIERB), effective
January 1, 2026, the EUR becomes the official currency and legal tender in Bulgaria. The official exchange
rate is set at 1.95583 BGN per EUR. The introduction of the EUR as the official currency in the Republic of
Bulgaria constitutes a change in the Group’s functional (reporting) currency of the Group, which will be
reflected prospectively and does not constitute a post-reporting period event requiring an adjustment to the
financial statements for the year ending December 31, 2025.
The effects of the introduction of the euro from 1 January 2026 are as follows:
• When converting the opening balances of all assets and liabilities without the share capital, the effect is
in the amount of BGN 33 thousand (EUR 17 thousand);
SOPHARMA GROUP
CONSOLIDATED ANNUAL FINANCIAL STATEMENTS FOR YEAR 2025
176
• When converting the opening balance of the share capital, the effect is in the amount of BGN 1,362
thousand (EUR 697 thousand), which is reflected in "Retained earnings from prior years". According to the
provisions of Art. 31, paragraph 1 of the LIERB, the nominal value per share of the parent-company's capital
is converted from BGN into Euro, by dividing the nominal value of the share in BGN by the full numerical
value of the official exchange rate and rounding the result to the second decimal place according to the
mathematical rounding rule. The capital of the joint-stock parent-company on January 1, 2026 is formed by
the nominal value per share, determined in Euro (€0,51) and multiplied by the number of shares.
In January 2026, Sopharma AD initiated procedures for the initial public offering of three issues of
warrants, as follows:
• Prospectus for the issue approved by Decision No. 766-E of December 16, 2025, of the Financial
Supervision Commission
The number of securities offered is 8,985,960 warrants. The issue price of one warrant is BGN 0.27
(€0.14), and the exercise price is BGN 3.60 (€1.84). The exercise period is 3 years, and the minimum
success threshold for the issue is 1,797,192 warrants. The right to exercise arises on March 2, 2026,
when the issue is registered with the Central Depository;
• Prospectus for the issue approved by Decision No. 768-E of December 16, 2025, of the Financial
Supervision Commission
The number of securities offered is 8,985,960 warrants. The issue price of one warrant is BGN 0.27
(€0.14), and the exercise price is BGN 4.56 (€2.33). The exercise period is 5 years, and the minimum
success threshold for the issue is 1,797,192 warrants. The right to exercise arises on March 5, 2026,
when the issue is registered with the Central Depository;
• Prospectus for the issue approved by Decision No. 768-E of December 16, 2025, of the Financial
Supervision Commission
The number of securities offered is 8,985,960 warrants. The issue price of one warrant is BGN 0.27
(€0.14), and the exercise price is BGN 5.70 (€2.91). The exercise period is 7 years, and the minimum
success threshold for the issue is 1,797,192 warrants. The right to exercise arises on March 9, 2026,
when the issue is registered with the Central Depository.
The funds raised from the three warrant issues amount to EUR 3,744 thousand.
The Financial Supervision Commission has registered the three issues of warrants on March 26, 2026
with decisions 210-E, 211-E and 212-E. Bulgarian Stock Exchange AD has admitted the three issues for
trading on April 1, 2026.
On January 30, 2026, Sopharma AD sold a separate part of its enterprise in the field of manufacturing
and trading in veterinary medicinal products and laboratory testing of food and biological products. The
related assets and liabilities are presented under Assets and Liabilities Held for Sale, part of a disposal group,
in the consolidated financial statements for the year ended December 31, 2025 (Note 26 and Note 44).
On February 28, 2026, a joint U.S.-Israel operation against strategic targets in Iran began. As a result,
leading financial markets around the world are experiencing turmoil, uncertainty due to the conflict, and a
lasting impact on energy prices. The impact of the war in the Middle East on the global economy will depend
on its duration and the damage to infrastructure and industries in the region and in particular whether the
spikes in energy prices will be short-lived or long-lasting. The conflict could have a serious impact on the
global economy across a range of indicators—inflation, economic growth, and others. The Group monitors
and conducts ongoing analyses and assessments of the potential consequences and effects of the conflict on
Group companies, their operations, assets, and prospects.
No other significant events have occurred after December 31, 2025, that would require additional
adjustments and/or disclosures in the consolidated financial statements as of December 31, 2025.
1
“SOPHARMA” AD
27 April 2026
CONSOLIDATED MANAGEMENT REPORT
2025
2
CONTENT
I. General information about Sopharma Group ................................................................................... 6
1. Main activities ................................................................................................................................... 6
2. Registration and activity of the Company ......................................................................................... 6
3. Controlled companies ....................................................................................................................... 6
4. Board of directors ............................................................................................................................. 8
5. Shareholder structure as at 31 December 2025 ............................................................................... 9
II. Recent developments ............................................................................................................... 9
1. Production activity ............................................................................................................................ 9
2. Products ............................................................................................................................................ 9
3. Distribution ..................................................................................................................................... 10
III. Information under Article 39 of the Accountancy Act .............................................................. 11
1. An overview of the Group's performance and the main risks it faces (art. 39, para 1 of the
Accountancy Act) ............................................................................................................................. 11
2. Analysis of financial and non-financial key performance indicators of the Group /Article 39, item 2
of the Accountancy Act/ ...................................................................................................................... 13
3. Significant events occurring after the date of preparation of the annual financial statements
/Article 39, item 3 of the Accountancy Act/ ....................................................................................... 26
• The Financial Supervision Commission has approved prospectuses for the initial public offering of
three warrant issues, as follows: ........................................................................................................... 26
The number of securities offered is 8,985,960 warrants. The issue price of one warrant is BGN 0.27
(€0.14), and the exercise price is BGN 3.60 (€1.84). The exercise period is 3 years, with a minimum
success threshold for the issue of 1,797,192 warrants. The right to exercise arises on March 2, 2026,
when the issue is registered with the Central Depository; ..................................................................... 26
4. Future development of Sopharma Group (article 39, item 4 of the Accountancy Act) and
planned economic policy in the following year (Article 247 (3) of the Commerce Act) ..................... 27
5. Research and development (article 39, item 5 of the Accountancy Act) ................................. 28
6. Information on the acquisition of own shares required by Article 187d of the Commerce Act/
Article 39, Item 6 of the Accountancy Act/ ......................................................................................... 35
7. Existence of branches of the Company /Article 39, item 7 of the Accountancy Act/ .............. 35
8. Use of financial instruments /Article 39, item 8 of the Accountancy Act/ ............................... 35
9. Information about the main intangible resources and an explanation of how the business model
of the entity depends on them, as well as how these resources are a source of value creation for the
entity (Section 29(2) of the Accounting Act) ....................................................................................... 36
3
IV. Information under Article 247 and Art. 240b of the Commerce Act .......................................... 37
1. Information under Art. 247 of the Commerce Act ......................................................................... 37
2. Information under art. 240b of the Commercial Law on the obligation of Board members to notify
in writing the Board of Directors or the Management Board when they or their related parties
conclude contracts with the company outside its usual activity or substantially deviate from market
conditions ............................................................................................................................................ 40
V. Information on Annex 2 to art. 10, item 1 of Regulation 2 of LPOS ........................................... 40
1. Information given in value or quantitative terms about the main categories of goods, products
and / or services provided, including their share in sales revenue of the Group in general and
changes in the reporting year ............................................................................................................. 40
2. Information about the revenues allocated by separate categories of activities, domestic and
foreign markets and information on sources for supply of materials needed for production of goods
or the provision of services with the degree of dependence on any individual seller or buyer / user,
in case their share exceeds 10 per cent of the expenses or sales revenue, provide information for
each person for his share in sales or purchases and links with the issuer .......................................... 40
Information regarding revenue broken down by activity category, as well as domestic and foreign
markets, is provided in Section III, Item 2 of this report. For 2025, there are no customers whose
relative share exceeds 10% of total revenue. The raw materials and supplies used exceed 3,500
SKUs, which have a dynamic structure and diverse origins (synthetic, plant-based) and physical
states (liquid, solid, gaseous). The majority of raw materials and supplies are sourced through
imports. Supply sources are validated manufacturers, which is in accordance with regulatory
requirements and aims to maintain consistency and traceability in terms of quality. ...................... 41
3. Information on significant transactions .......................................................................................... 41
4. Information regarding transactions between the issuer and related parties during the reporting
period, proposals for concluding such transactions, as well as transactions that are outside its usual
activity or substantially deviate from market conditions when, the issuer or its subsidiary is party,
indicating the value of the transactions, the nature of relatedness and any information necessary to
assess the impact on the financial position of the issuer ................................................................... 41
5. Information about events and indicators unusual for the issuer that have a significant impact on
its activity and realized income and expenses; assessment of their impact on the current year
results .................................................................................................................................................. 41
6. Information on off-balance sheet transactions - nature and business purpose, the financial impact
of transactions on the activity, if the risks and benefits of these transactions are material to the
issuer and the disclosure of this information is essential for assessing the financial position of the
issuer ................................................................................................................................................... 41
7. Information on shares of the issuer, its major investments in the country and abroad (in
securities, financial instruments, intangible assets and real estate), as well as investments in equity
4
securities outside its group of companies under Accountancy Act and the sources /methods of
financing .............................................................................................................................................. 41
8. Information about the concluded by the issuer, its subsidiary or parent company in their capacity
as borrowers, loan contracts specifying the terms and conditions, including the deadlines for
repayment as well as information about guarantees and commitments........................................... 42
9. Information about the concluded by the issuer, its subsidiary or parent company in their capacity
of lenders, loan agreements, including the provision of guarantees of any kind, including related
parties, and the specific terms, including the deadlines for payment and the purpose for which they
were granted ....................................................................................................................................... 42
10. Information on the use of funds from the issuance of new securities during the reporting
period .................................................................................................................................................. 42
11. Analysis of the relationship between the financial results reflected in the financial statements
for the financial year and earlier published forecasts for these results ............................................. 43
12. Analysis and evaluation of the policy on the management of financial resources, including the
ability to meet its obligations, possible threats and measures that the issuer has taken or will take to
resolve them ....................................................................................................................................... 43
13. Assessment of the feasibility of investment intentions, indicating the amount of available
funds and possible changes in the financing structure of this activity ............................................... 43
The Company’s planned investment program for 2026 includes investments totaling €17.8 million
for the acquisition of land, buildings, machinery, equipment, and software. .................................... 43
14. Information about changes in the reporting period in the basic principles of management of
the issuer and its group of companies under the Accountancy Act ................................................... 43
15. Information about the main characteristics of the internal control system and risk
management system applied by the issuer in the process of preparing the financial statements, ... 43
16. Information about changes in management and supervisory boards during the accounting
year 43
17. Information on the amount of remuneration, rewards and / or benefits of each of the
members of the management and supervisory bodies for the financial year, paid by the issuer and
its subsidiaries, regardless of whether they have been included in the expenses of the issuer, or
arising from profit distribution, including: .......................................................................................... 43
18. Information on held by members of management and supervisory bodies, the procurators
and the senior management of the issuer shares, including the shares held by each of them
individually and as a percentage of shares of each class and provided by the issuer options on its
securities - type and amount of securities on which options have been set, exercise price of the
options, purchase price, if any, and the term of the options. ............................................................ 43
19. Arrangements (including after the end of the financial year) as a result of which future
changes may occur in the holding of shares or bonds by current shareholders or bondholders ...... 44
5
20. Information about pending legal, administrative or arbitration proceedings relating to
liabilities or receivables of the issuer of at least 10 percent of its equity; if total liabilities or
receivables of the issuer in all proceedings exceeds 10 per cent of its equity, provide information
about each case separately ................................................................................................................. 44
21. Information about the Investor Relations Director, including telephone number and
correspondence address: .................................................................................................................... 44
VI. Information under Annex 3 to Article 10, p. 2 of Ordinance 2 of LPOS ...................................... 44
1. Structure of the capital of the Company, including securities not admitted to trading on a
regulated market in Bulgaria or another Member State, indication of the different classes of shares,
the rights and obligations of each class of shares and the portion of the total capital represented by
each class ............................................................................................................................................ 44
2. Information regarding the direct and indirect ownership of 5 percent or more of the voting
rights at the General Meeting of the Company, including details of the Shareholders, the size of
their shareholding and the type of shareholding ............................................................................... 45
3. Information about shareholders with special control rights .................................................... 45
The Articles of Association of “Sopharma” AD do not provide for special control rights. ................. 45
4. Agreements between shareholders which are known to the Company and which may lead to
restrictions on the transfer of shares or voting right .......................................................................... 45
5. Significant contracts of the Company that take effect, are amended or terminated due to a
change in control of the company in a mandatory tender offer and the effects thereof, except
where disclosure of this information may cause serious damage to the company; exemption under
the preceding sentence shall not apply in cases where the company is obliged to disclose
information under the Law ................................................................................................................. 46
6
I. General information about Sopharma Group
1. Main activities
Sopharma Group (the Group) is a leading Bulgarian producer, exporter and local distributor of
pharmaceutical products with a strong presence in Eastern and South-eastern Europe, offering a wide
range of prescription medicines and OTC products, food supplements, cosmetics and medical devices.
The Group operates in the following areas:
• production of pharmaceutical products including medicines, primarily generics, herbal-
based substances and food supplements, which is mainly done by “Sopharma” AD (the Company)
from Farmanova D.O.O. in Serbia and from PAO Vitamins in Ukraine;
• production of medical devices and therapeutic cosmetics, such as plasters, dressing
products, and sanitary-hygienic products, concentrated at a production site in the town of
Sandanski;
• distribution of pharmaceutical products, medical consumables, sanitary materials,
vitamins, dietary supplements, and cosmetics, carried out by “Sopharma Trading” AD in Bulgaria
and Serbia and through subsidiaries in Russia, Ukraine, Kazakhstan, Poland, and Belarus.
2. Registration and activity of the Company
“Sopharma” AD is a company registered in Bulgaria under the Provisions of the Commercial Act,
with its registered office in Sofia, 16 Iliensko shose Str.
“Sopharma” AD was established in 1933. The court registration of the Group is from 15 November
1991, decision №1/1991 of Sofia City Court. “Sopharma” AD is a public company under the Law on Public
Offering of Securities.
The Company conducts the production and marketing of medicinal substances and dosage forms;
research, engineering and implementation activities in the field of phytochemistry, chemistry and
pharmacy, production of medical products and cosmetics, incl. - plasters, bandages, sanitary-hygiene
products, herbal cosmetics, concentrates for hemodialysis. “Sopharma” AD provides services related to
production, as well as to ancillary and supporting activities.
3. Controlled companies
Sopharma Group consists of “Sopharma” AD and the subsidiaries mentioned below, directly or
indirectly controlled by the Company. In addition, the Group has investments in six associated companies
(20.80% stake in “Doverie - United Holding” AD, 45.65% stake in “Sopharma Imoti” REIT, 32.72% stake in
“Sopharma Buildings” REIT, 40.10% stake in Alenfarm-plus through Brittrade SLLC, 47% stake in
Galenafarm LLC through Brittrade JLLC and 40% stake in Mejel ALC through Brittrade JLLC) and in two joint
ventures (37.47% stake in “Momina Krepost” AD and 50% stake in “Interpharm Company” CJSC through
“Brittrade” LLC).
Company
Interest as of
31.12.2025 in %
“Sopharma Trading” AD
87.22
“Sopharmacy” EOOD **
87.22
“Sopharmacy 2” EOOD **
87.22
“Sopharmacy 3” EOOD **
87.22
“Sopharmacy 4” EOOD **
87.22
“Sopharmacy 5” EOOD **
87.22
“Sopharmacy 6” EOOD **
87.22
7
“Sopharmacy 7” EOOD **
87.22
Company
Interest as of
31.12.2025 in %
“Sopharmacy 8” EOOD **
87.22
“Sopharmacy 9” EOOD **
87.22
“Sopharmacy 10” EOOD **
87.22
“Sopharmacy 11” EOOD **
87.22
“Sopharmacy 12” EOOD **
87.22
“Sopharmacy 13” EOOD **
87.22
“Sopharmacy 14” EOOD**
87.22
“Sopharmacy 15” EOOD**
87.22
“Sopharmacy 16” EOOD**
87.22
“Sopharmacy 17” EOOD**
87.22
“Sopharmacy 18” EOOD**
87.22
“Sopharmacy 19” EOOD **
87.22
“Sopharmacy 20” EOOD **
87.22
“Sopharmacy 21” EOOD **
87.22
“Sopharmacy 22” EOOD **
87.22
“Sopharmacy 23” EOOD **
87.22
“Sopharmacy 24” EOOD **
87.22
“Sopharmacy 25” EOOD **
87.22
“Sopharmacy 26” EOOD **
87.22
“Sopharmacy 27” EOOD **
87.22
“Sopharmacy 28” EOOD **
87.22
“Sopharmacy 29” EOOD **
87.22
“Sopharmacy 30” EOOD **
87.22
“Sopharmacy 31” EOOD **
87.22
“Sopharmacy 32” EOOD **
87.22
“Sopharmacy 33” EOOD **
87.22
“Sopharmacy 34” EOOD **
87.22
“Sopharmacy 35” EOOD **
87.22
“Sopharmacy 36” EOOD **
87.22
“Sopharmacy 37” EOOD **
87.22
“Sopharmacy 38” EOOD **
87.22
“Sopharmacy 39” EOOD **
87.22
“Sopharmacy 40” EOOD **
87.22
“Sopharmacy 41” EOOD **
87.22
“Sopharmacy 42” EOOD **
87.22
“Sopharmacy 43” EOOD **
87.22
“Sopharmacy 44” EOOD **
87.22
“Sopharmacy 45” EOOD **
87.22
“Sopharmacy 46” EOOD **
87.22
“Sopharmacy 47” EOOD **
87.22
“Sopharmacy 48” EOOD **
87.22
“Sopharmacy 49” EOOD **
87.22
“Sopharmacy 50” EOOD **
87.22
“Sopharmacy 51” EOOD **
87.22
8
“Sopharmacy 52” EOOD **
87.22
Company
Interest as of
31.12.2025 in %
“Sopharmacy 53” EOOD **
87.22
“Sopharmacy 54” EOOD **
87.22
“Sopharmacy 55” EOOD **
87.22
“Sopharmacy 56” EOOD **
87.22
“Sopharmacy 57” EOOD **
87.22
“Sopharmacy 58” EOOD **
87.22
“Sopharmacy 59” EOOD **
87.22
“Sopharmacy 60” EOOD **
87.22
“Sopharmacy 61” EOOD **
87.22
“Sopharmacy 62” EOOD**
87.22
“Sopharmacy 63” EAD **
87.22
“Sopharmacy 64” AD **
87.22
“Sopharmacy 6 5” EOOD **
87.22
“Sopharmacy 66” EOOD **
87.22
“Sopharmacy 6 7” EOOD **
87.22
“Sopharmacy 6 8” EOOD **
100.00
“SofTech Services”, EOOD
100.00
“Sopharma cy Plus”, EOOD.
87.22
PAO “Vitamini”
100.00
“Sopharma” Warsaw Sp. z. o. o
100.00
OOO “Sopharma” Ukraine
100.00
TOO “Sopharma” Kazakhstan
100.00
“Sopharma Trading” D.o.o. **
87.22
“Pharmachim” EOOD
100.00
Sopharma Rus ООО
100.00
Pharmanova D.o.o.
100.00
Sopharmacy D.o.o.**
87.22
SOOO Brititrade**
68.90
ODO SalusLine**
44.79
OOO Tabina**
68.15
OOO Bellerofon**
48.92
OOO Ne Ska**
68.90
OOO Phytobel**
68.90
OOO AlphaApteka**
68.90
OOO DabradzeyaPharm**
68.90
AU Great Pharmacy**
87.22
BOOO SpecAFarmacia**
68.90
*effective interest in percent
**indirect interest
4. Board of directors
“Sopharma” AD has a one tier management system with a Board of Directors of five members as
follows: Ognian Donev, PhD – Chairman, Vessela Stoeva – Deputy Chairman and members – Alexander
Tchaouchev, Bissera Lazarova and Ivan Badinski. The company has a procurator - Simeon Donev. The
company is represented and managed by the Executive Director Ognian Donev, PhD.
9
5. Shareholder structure as at 31 December 2025
II. Recent developments
1. Production activity
The production activities of the Company are realized and developed in the following main areas:
• Substances and drugs based on plant raw materials (phytochemical production);
• Ready-to-use dosage forms, incl.:
o Hard tablets, coated tablets, film-coated tablets, capsules;
o Galenic - suppositories, drops, syrups, ointments;
o Parenteral - injection solutions, lyophilic powder for injections.
• Medical and cosmetic products, incl.:
o Plasters;
o Bandages;
o Sanitary-hygiene products;
o Medicinal cosmetics;
• Concentrates for hemodialysis;
• Non-sterile medicinal products - powders, skin solutions and tinctures for oral administration.
2. Products
“Sopharma” AD
The Company has nearly 300 products in its portfolio: incl. nearly 190 medicinal products and 11
groups of medical devices, 73 food supplements and 48 license products. The medicinal products include
mainly generics and 15 traditional products, all of them plant-based.
The Company's traditional products make a major share to its export market income, while the
40.25%
16.72%
9.09%
27.63%
6.31%
"Donev Investments Holding" AD
"Telecomplect invest" AD
Ognian Ivanov Donev
Other legal persons
Other physical persons
10
company's generic products are of major importance for domestic sales, Analgin being the leader among
these products.
The product portfolio of “Sopharma” AD focuses on the following therapeutic areas: cardiology,
gastroenterology, pain management, cough and cold, immunology and dermatology, respiratory tract and
asthma, neurology and psychiatry, urology and gynecology, nephrology, surgery, orthopedics and
traumatology.
The most significant pharmaceutical products in terms of their contribution to the amount of
revenues are:
• Carsil – traditional plant-based product used to treat gastro-enterology diseases (liver diseases);
• Tempalgin – traditional analgesic (painkiller);
• Tabex – traditional plant-based smoking cessation drug;
• Tribestan – traditional plant-based product that stimulates the functions of the reproductive
system;
• Broncholitin – traditional plant-based product used to suppress cough;
• Analgin – generic analgesic (painkiller);
• Nivalin – traditional plant-based product used for diseases of the peripheral nervous system;
• Methylprednisolon – generic medicine for cases of severe allergies and certain life-threatening
conditions;
• Vitamin C – widely used nutritional supplement;
• Valeriana – generic non-prescription herbal medicine used to reduce stress;
• Medical devices – gauzes, compresses and bandages.
3. Distribution
“Sopharma Trading” AD
The core business of “Sopharma Trading” AD involves the wholesale and retail trade of
pharmaceutical products. The company offers a portfolio of over 25,000 items, including prescription and
over-the-counter drugs, medical equipment, consumables, hygiene products, dietary supplements, and
cosmetics. The company provides 100% national coverage in Bulgaria, thanks to its own fleet of over 100
vehicles and two distribution centers.
As a leading company in the healthcare sector, “Sopharma Trading” AD makes daily deliveries to
over 3,500 pharmacies and 400 medical facilities. Among the services offered are warehousing and
logistics services for pharmaceutical products from manufacturing companies, marketing of Bulgarian and
foreign brand products, and more.
In its operations, “Sopharma Trading” AD adheres to the highest standards of Good Distribution
Practice, and since its inception, “Sopharma Trading” ADAD has continuously invested in the development
of its logistics capabilities. As of 2025, “Sopharma Trading” AD has 100% national logistics coverage in
Bulgaria. Its owned and leased warehouse space in Bulgaria totals 20,800 square meters, with 15,761
pallet spaces and 10 cold storage rooms covering 570 square meters. The implemented warehouse
management system enables space optimization, full batch tracking of items stored in the warehouse, as
well as specific locations for product placement within the warehouse.
11
III. Information under Article 39 of the Accountancy Act
1. An overview of the Group's performance and the main risks it faces (art. 39, para 1 of the
Accountancy Act)
Key financial indicators
Indicators
1-12/2025
1-12/2024
Change
BGN '000
BGN '000
%
Revenues
2 609 827
2 129 097
22.6%
EBITDA
219 181
141 126
55.3%
Operating profit
140 364
81 759
71.7%
Net profit
136 621
80 431
69.9%
CAPEX*
99 107
236 424
-58.1%
31.12.2025
31.12.2024
Change
BGN '000
BGN '000
%
Non-current assets
983 845
946 906
3.9%
Current assets
1 093 979
849 377
28.8%
Equity
976 545
843 103
15.8%
Non-current liabilities
236 041
181 707
29.9%
Current liabilities
865 238
771 473
12.2%
* acquired tangible and intangible non-current assets
Indicators
1-12/2025
1-12/2024
EBITDA/ Revenues
8.4%
6.6%
Operating profit/ Revenues
5.4%
3.8%
Net profit/ Revenues
5.2%
3.8%
31.12.2025
31.12.2024
Debt/ Equity
1,13
1,13
Net debt*/ EBITDA on annual basis
2,5x
3,2x
* Net debt includes bank loans and leasing and factoring liabilities less cash
Risks related to the Group’s business and the industry the Group operates in
• The Group faces significant competition;
• The Group is dependent on regulatory approvals;
• Government regulations affecting the Group's business may change, thus possibly increasing
compliance costs or otherwise affecting its operations;
• Part of the Group’s revenues, in particular in Bulgaria, depends on the inclusion of the Company’s
medicines in reimbursement lists;
12
• The Group’s production facilities and processes are subject to strict requirements and regulatory
approvals that may delay or disrupt the Group’s operations;
• The Company’s ability to pay dividends depends on a number of factors and there can be no
guarantee that the Company will be able to pay dividends in accordance with its dividend policy in any
given year;
• The Group is subject to operational risk, which is inherent to its business activities;
• The Group is subject to numerous environmental and health and safety laws and regulations and
is exposed to potential environmental liabilities;
• Litigations or other out-of-court proceedings or actions may adversely affect the Group’s business,
financial position and results of operations.
Risks, related to Bulgaria and other markets in which the Group operates
• The macroeconomic environment, particularly in Bulgaria, Russia, Belarus and Ukraine, has a
significant effect on the Group’s operations and position;
• The political environment in Bulgaria and in the export markets of the Group, especially Russia,
Belarus and Ukraine, has a significant effect on the Group’s operations and financial position;
• Risks related to the Bulgarian legal system;
• Developing legal frameworks in some countries in which the Group sells its products, in particular
Russia, Belarus and the Ukraine, may negatively impact the Group’s operations in these countries;
• Risks relating to exchange rates and the Currency Board in Bulgaria;
• Interpretations of tax regulations may be unclear and tax laws and regulations applicable to the
Group may change.
Currency risk
The Group companies perform their activities in active exchange with foreign suppliers and
customers and are therefore exposed to currency risk.
Through its subsidiaries in Russia, Ukraine, Belarus, Serbia, Poland, and Kazakhstan, the Group
conducts business operations in these countries and, accordingly, has exposures in the respective local
currencies. Currency risk is associated with adverse movements in the exchange rates of these currencies
against the euro in future business operations, recognized currency assets and liabilities, and net
investments in foreign companies.
To manage currency risk, the Group has implemented a system for planning import deliveries and
sales in foreign currency, as well as procedures for daily monitoring of fluctuations in the U.S. dollar
exchange rate and control over upcoming payments.
Military conflict in Ukraine and the Middle East
The Group is monitoring the developments in the military conflict in Ukraine, as well as tensions
in the Middle East, and is assessing their impact on its operations, financial position, and future prospects.
The Group has business relationships with counterparties in Ukraine, Russia, and Belarus, and
management continuously monitors applicable sanctions regimes and assesses the associated risks.
Management has conducted an analysis and determined that no significant issues have arisen in recent
years regarding the collection of receivables from transactions typical of the business, and therefore
considers that, as of the date of this report, there is no indication of a direct negative impact on
transactions and operations with these counterparties, nor on their financial stability.
13
As of the reporting date, no material direct effects on the Group’s assets have been identified; the
potential impact is primarily indirect and manifests as increased volatility in energy and transportation
prices, disruptions in supply chains, and pressure on costs and margins. In preparing the financial
statements, management has taken these factors into account when determining key estimates and
assumptions, including regarding the collectability of receivables and future cash flows; as of the reporting
date, no need for significant impairments or other adjustments has been identified. The geopolitical
environment continues to be viewed as a source of uncertainty, but no events have occurred after the
balance sheet date that would require an adjustment.
Management believes that the Group has sufficient resources to continue as a going concern,
while continuing to actively monitor developments and manage the associated risks.
2. Analysis of financial and non-financial key performance indicators of the Group /Article 39, item
2 of the Accountancy Act/
Operating revenues
Sales revenues of the Group increased with BGN 480,7 million or 22.6%, reaching BGN 2 609,8
million in 2025 compared to BGN 2 129,1 million in 2024.
Sales of goods increased by BGN 436,4 million or 24%, reaching BGN 2 254,8 million in 2025
compared to BGN 1 818,5 million in 2024. Products related to the marketing authorizations for
pharmaceutical products newly acquired by the Group at the end of last year accounted for 28.5% of this
sales growth.
Revenue from sales of finished goods increased by BGN 44.4 million, or 14.3%, to BGN 355 million
in 2025, compared to BGN 310.6 million in 2024. The contribution to this growth in reported sales of
finished products from the Serbian subsidiary Farmanova, which will be fully consolidated in 2025,
amounts to 21.1%.
On a consolidated basis, sales of finished products in Bulgaria for 2025 increased by 0.2% compared
to the previous period. According to IQVIA data, as of the end of 2025, the company holds a 1.66% (17th
position) share of the total value of the Bulgarian pharmaceutical market and a 6.06% (2nd position) share
of sales in volume terms. The market shares of the major companies operating in the country’s
pharmaceutical market are as follows: Merck Sharp & Dohme – 6.13% (0.19% in volume), AstraZeneca –
5.36% (0.59% in volume), Swixx Biopharma – 4.71% (1.67% in units), Roche – 4.70% (0.26% in units),
Novartis – 4.20% (1.15% in units), AbbVie – 4.09% (0.10% in units), Pfizer – 3.73% (0.70% in units), Johnson
& Johnson – 3.11% (0.69% in units), Teva – 2.89% (8.55% in units), Stada – 2.72% (4.42% in units). The
Company’s products with the largest share of sales in the country are Analgin, Vicetin, Famotidine, Vitamin
C, Paracetamol, and Methylprednisolone. On a consolidated basis for 2025, revenue from sales of finished
products increased in the main foreign markets of Russia and Poland, rising by 71.4% and 24.9%,
respectively, for the current period. In the Company’s other traditional markets, growth was recorded in
Uzbekistan, Belarus, and Serbia, while sales in Ukraine remained unchanged from last year. A decline of
7.1% was recorded in Kazakhstan.
Other operating income increased by BGN 6,4 million to BGN 31,1 million in 2025 compared to BGN
24,7 million in 2024 as a result of an increase in income from manufacturing services provided.
14
Operating expenses
For the current period the expenses of materials increased by BGN 1,5 million to BGN 105,1 million,
as the most significant change was registered in the expenses for electricity.
The external service expenses increased by BGN 20,7 million to BGN 133,9 million, the biggest
change is in the costs of manufacturing, consulting, and freight forwarding services. Personnel expenses
increased by BGN 55,4 million to BGN 262 million as a result of updating the current remunerations and
an increase in the average number of personnel in the Group with 333 employees. Other operating
expenses increased by BGN 12,5 million, primarily as a result of recognized impairment losses.
Financial income and expenses
Financial income and expenses in 2025 net registered a loss of BGN 20 million, which is an increase
with BGN 4,6 million compared to the previous year. Financial income increased by BGN 1,3 million.
Financial expenses increased with BGN 5,9 million while interest expenses on loans received and on leases
for the current period increased by BGN 8,6 million.
Financial result from the activity
Earnings before interest, tax, depreciation and amortization (EBITDA) increased by BGN 78,1 million
or by 55.3%, and in 2025 it amounted to BGN 219,2 million compared to BGN 141,1 million in 2024. A key
factor behind the increase is the growth in sales revenue in both main segments, with the most significant
impact coming from the recorded sales of goods resulting from the new product brands acquired at the
end of last year.
Profit from operating activities increased by BGN 58,6 million or by 71.7%, to BGN 140,4 million in
2025 compared to BGN 81,8 million in 2024.
Net profit increased by BGN 56,2 million or 69.9% to BGN 136,6 million in 2025 compared to BGN
80,4 million in 2024. In addition to the factors already mentioned, this growth is also due to increase in
profit from associates and joint ventures to BGN 38.2 million.
141,126
81,759
80,431
219,181
140,364
136,621
0
50,000
100,000
150,000
200,000
250,000
EBITDA Operating profit Net profit
1-12/2024
1-12/2025
15
Assets
Non-current assets at the end of 2025 increased by BGN 36.9 million compared to the end of last
year, with the change in investments in associates and joint ventures having the most significant impact
on this increase. Long-term receivables from related companies decreased by BGN 3.1 million as a result
of loans granted by “Industrial Holding Doverie” AD being repaid.
Current assets at the end of 2025 increased by BGN 244.6 million compared to the end of last year.
The most significant contributor to this increase was the growth in trade receivables by BGN 149.8 million,
which is due, on the one hand, to the consolidation of sales related to the marketing authorizations for
pharmaceutical products acquired at the end of last year and the corresponding maintenance of deferred
payment terms with counterparties, and on the other hand, by the growth in sales of goods in the Group’s
distribution units.
Equity and liabilities
Soph arma Group’s equity at the end of 2025 increased by BGN 128.7 million compared to
December 31, 2024, as a result of an increase in share capital, reserves, and retained earnings.
Liabilities at the end of 2025 increased by BGN 148.1 million compared to the end of 2024 as a result
of an increase in bank loan and lease obligations, which rose by BGN 135.8 million. Trade payables
decreased by BGN 39.2 million, mainly as a result of the payment of the second and final tranche in
connection with the transaction for the marketing authorizations for pharmaceutical products acquired at
the end of last year. Current liabilities to related companies increased by BGN 31.6 million as a result o f
accrued dividend liabilities.
Cash flows
31.12.2025
BGN '000
31.12.2024
BGN '000
Net cash flows from operating activities
19 551
76 728
Purchases of and proceeds from sale of property, plant and equipment,
and intangible assets, net
(142 489)
(118 526)
Payments under lease agreements
(31 074)
(22 191)
Free cash flow (normalized)
(154 012)
(63 989)
The free cash flow (normalized), generated for 2025, amounts to BGN 154 million outflow compared
to BGN 64 million outflow in 2024.
Personnel
As at the date of this annual consolidated financial report the average number of employees of
Sopharma Group is 5, 932 workers and employees (compared to 5,599 workers and employees in 2024).
The Group strives to provide a safe and stimulating working environment that supports the long-
term development of its employees. As part of its human resources management strategy, the company
maintains active partnerships with leading universities and educational institutions. This partnership is
aimed at attracting new talent through internship programs, joint projects and initiatives, and providing
practical training and student participation in real business cases.
The Group is focused on maintaining long-term relationships with its employees, based on mutual
trust and a safe working environment. To this end, good practices are applied to position the companies
as a fair employer with proper employment practices. The hiring of personnel is in accordance with all
requirements of the relevant national legislation. The companies in the Group make systematic efforts to
ensure a safe and sustainable working environment through guaranteed social protection, based on:
16
• employment contracts with employees;
• mechanisms for planning adequate working hours and work patterns for employees
working in shifts, in order to minimize potential overload and overtime;
• clearly regulated procedures for determining remuneration are available – all companies
in the group have implemented clear and transparent mechanisms/procedures for determining
remuneration, which guarantees equality and adequate remuneration;
• ensuring freedom of association and implementing mechanisms for social dialogue, which
lead to more attractive working conditions and reduce labor disputes;
• support for work-life balance, which benefits employees' health, productivity and
motivation. The Group ensures work-life balance through the social protection it provides, as well as
through a policy to encourage employees to use their vacation and leave entitlements to avoid chronic
stress and fatigue;
• commitment to the principles of equality and diversity by promoting a work atmosphere
that embraces ethnocultural diversity, in which differences between people are valued and respected;
• A comprehensive social program is available, covering sports, health and recreation. The
company provides additional health insurance with dental care included, co-financing a sports card, as
well as the opportunity to relax in Sopharma's recreation centers. In addition, the company provides
annual medical examinations with a wide range of tests.
The parent company “Sopharma” AD is one of the founders of the Bulgarian Network of the UN
Global Compact and in 2025 “Sopharma Trading” AD became a member of the BMGC. The implementation
of the ten principles of the Global Compact is expressed in the development and adherence to policies
related to the implementation of responsible business practices in the field of human rights, labor
standards, the environment and the fight against corruption. The Codes of Ethics implemented in the
companies define the rules for professional and personal conduct of employees, ensuring loyalty,
responsibility and compliance with the law. They promote honesty, respect between colleagues,
confidentiality and avoidance of conflicts of interest.
In 2025, the Group introduced a Human Rights and Diversity Policy, through which it declares its
commitment to:
• respects internationally recognized human rights as enshrined in the International Bill of
Human Rights;
• acts in accordance with the UN Guiding Principles on Business and Human Rights (UNGPs)
and the 10 principles of the UN Global Compact;
• to be guided by the ILO Declaration on Fundamental Principles and Rights at Work –
freedom of association, elimination of child and forced labor, elimination of discrimination, decent
working conditions;
• to follow the OECD Guidelines for Multinational Enterprises;
• to comply with the applicable laws and regulations of the countries in which we operate
(and where there are differences between our standards and local customs, norms, rules or regulations,
to strive to apply the higher standards).
The Group applies a rights-based approach throughout its activities, which notes:
• striving for timely identification and management of risks for people who may be affected
by the Company 's activities , not just the risks for its own activities;
• striving to engage potentially affected people in shaping an approach to preventing and
mitigating the impacts of the Company's activities and realizing opportunities;
17
• striving for prioritization of the prevention and mitigation of the most severe adverse
impacts on people, with a focus on operational activities .
Discrimination, whether based on race, gender, disability, gender identity or expression, color,
creed, religion, national origin, nationality, citizenship, age, disability, genetic information, marital status
(including unmarried cohabitation and civil unions as defined and recognized by applicable law), sexual
orientation, culture, ancestry, veteran status, socioeconomic status, or other legally protected personal
characteristics, is unacceptable and completely inconsistent with the Parent Company's tradition of
providing a fair, professional, and dignified workplace. Retaliation against individuals who raise complaints
of discrimination or harassment is also prohibited.
The main goals that the Group sets for itself when implementing diversity policies are:
• Attracting, hiring and retaining people with a wide range of professional skills. The diverse
abilities of managers and employees open up new opportunities for innovative and creative solutions,
increasing creativity and innovation. This in turn would lead to more effective adaptation to the impact of
globalization and technological change. A more diverse workforce can increase the effectiveness of the
company in achieving its goals. It can lift employee morale, provide access to new market segments and
increase productivity;
• Promoting a work atmosphere that embraces ethnocultural diversity and in which
differences between people are valued and respected;
In the companies of the Group, procedures/policies for managing occupational health and safety
have been implemented and maintained, in accordance with the requirements and norms of the
applicable national legislation in the respective countries within the scope of reporting. The main focus is
the continuous identification of hazards, assessment and management of risks, in order to reduce the
possibility of incidents related to the health and safety of its employees, visitors, contractors and other
stakeholders. 100% of the companies' workforce is covered by the company's health and safety
management system.
In the companies of the Group, on the basis of Art. 11, para. 3 of Ordinance No. 5 of May 11, 1999
on the procedure, manner and periodicity of performing risk assessment (Promulgated, State Gazette,
issue 47 of 21.05.1999, supplemented by State Gazette, issue 100 of 24.11.2020), risk assessment is
carried out at all workplaces with the aim of preventing occupational accidents, near-accidents and
occupational diseases. In connection with Art. 16 (1) item 2 of the Occupational Health and Safety Act,
annual programs are prepared with measures to prevent, reduce and limit the risk, including all planned
actions during the calendar year for the prevention of occupational accidents, briefings and training on
compliance with the rules for safe work. Investments are also made in specialized training to ensure that
employees are qualified to perform their duties safely.
In accordance with the priorities set out in the EU Strategic Framework and the developed
National Program for Safety and Health at Work for the period 2022-2024, the company prepares internal
procedures, instructions, briefings and training for the implementation of corrective actions, outlines
commitments and directs the organization's efforts to ensure safe and secure working conditions, taking
into account changes in the workplace and the emergence of new occupational risks.
18
The companies have established Committees/Groups on Working Conditions, depending on the
number of employees in the individual company
. The bilateral social dialogue at the enterprise level in
the field of ensuring safe and healthy working conditions is carried out through the Committees and
Groups on Working Conditions (CWC and GWC). CWC and GWC work in close cooperation with the
specialized services and departments of the enterprise, which are related to the creation and provision of
healthy and safe working conditions.
The Working Conditions Committees and Groups perform the following functions:
• to discuss every quarter the overall activity of protecting the health and ensuring the safety of
workers and propose measures for its improvement;
• to discuss the results of the occupational risk assessment and analyses of the health status of
workers, the reports of the specialized occupational health services and other issues related to
ensuring and protecting the health and safety of workers;
• to discuss planned changes in technology, work organization and workplaces with regard to the
consequences of the choice of equipment, working conditions and the working environment and
propose solutions to protect the health and ensure the safety of workers;
• to carry out inspections of compliance with the requirements for health and safety at work;
• to monitor the status of occupational injuries and occupational morbidity;
• to participate in the development of programs for informing and training workers on the issues of
occupational health and safety.
Ecology and environmental protection
Companies in individual jurisdictions are committed to implementing the current environmental
protection regulations and issued permits, including control and monitoring of air, water and substance
pollution of concern.
At the level of an individual company, a number of standards and management systems have been
introduced in the Group, most notably:
• "Sopharma Trading" AD Bulgaria has developed, documented, implemented and
maintained an integrated management system in accordance with internationally recognized standards:
ISO 9001:2015 (Quality Management) and ISO 14001:2015 (Environmental Management). In accordance
with the requirements of ISO 14001:2015, "Sopharma Trading" AD has implemented a Standard Operating
Procedure (SOP) for Significant Environmental Aspects, which is based on the maintained Register of
Environmental Aspects.
• The pharmaceutical wholesale subsidiary “Sopharma Trading” AD in Serbia is certified to
ISO 9001 and ISO 45001, and although it is not currently certified to ISO 14001, the company adheres to
its principles. The introduction of ISO 14001 certification is planned for 2026.
• The subsidiary for the production of pharmaceutical products in Serbia " Pharmachim " is
certified according to HACCP, ISO 9001, ISO 13485, ISO 17025
• Good Manufacturing Practices (GMP) and Good Distribution Practices (GDP) are applied
throughout the Group.
I. Air, water and soil pollution due to the production of pharmaceutical products
1. Policy of " Sopharma" AD
19
The parent company is committed to implementing regulatory requirements for environmental
protection, including the control of air and water pollution and substances of concern and serious concern.
The policies are aimed at monitoring emissions and the use of substances of concern, in accordance with
applicable legislation.
A Standard Operating Procedure (SOP) for environmental protection (EP) has been developed and
is being implemented in the Parent Company. The procedure is applied by all persons in “Sopharma” AD
carrying out activities that have or may have an impact on the environment.
Environmental protection activities are implemented through the implementation of the
Regulations, Permits for the discharge of industrial wastewater and Permits for water abstraction.
All actions of the company are aimed at preventing, reducing, limiting and, if possible, eliminating
the identified significant adverse effects on the environment and human health. Funds are provided for
the implementation of specific activities and measures in the budgets of the responsible departments,
and specific deadlines for their implementation are determined and set.
According to the latest updated classifications, the production sites of “Sopharma” AD in Sofia,
Sandanski, Veliko Tarnovo and Vrabevo are not classified as an “enterprise/facility with low or high risk
potential”, and the site in Kazanlak is classified as an “enterprise/facility with low risk potential”. The
classifications have been approved by the ExEa for the site in Kazanlak and by the relevant Regional
Inspectorates for Environment, Water and Water for the other sites.
In order to minimize risks to human health and the environment, the parent company has the
following measures in place:
• Emergency plans (EP) have been prepared for the sites in the city of Sofia, the city of
Sandanski, the city of Kazanlak and the village of Vrabevo.
• Internal rules, instructions and emergency situation simulations.
• Emergency briefings in case of incidents.
• Risk assessment for the emergency plans for the city of Sofia and the city of Kazanlak.
• Specialized reports on the prevention of major accidents for plants with low risk potential.
2. Objectives and measures
The company aims to ensure compliance with the legislation and issued permits, which determine
the permissible norms and requirements for air and water emissions, water quality and noise pollution.
To this end, the company monitors environmental factors such as air, water emissions and noise in
accordance with the current legislation and in particular:
2.1. Emissions into atmospheric air
The sources of emissions from the various technological processes in production have been
determined. The main pollutants emitted from the production sites include powdery substances
(pharmaceutical powder), organic compounds (total carbon) and volatile organic compounds (VOC) as a
result of the use of solvents, active and auxiliary organic substances and mixtures in certain installations
and processes, and from the steam boilers – carbon monoxide (CO), sulfur dioxide (SO2) and nitrogen
oxides (NOx). The emissions arise from the technological processes in the plants in Sofia, Vrabevo,
Sandanski, Kazanlak, Veliko Tarnovo and from the steam boilers at the production sites in Sofia, Vrabevo,
Kazanlak and Sliven.
2.1.1. Air emissions from technological processes
Emissions are monitored at the production facilities in Sofia, Vrabevo, Sandanski, Kazanlak and
Veliko Tarnovo. Measurements are carried out every two years according to a plan approved by the
relevant Regional Inspectorate for Environment, Water and Water and Ordinance No. 6 of 1999. The
monitoring includes:
• Dust from stationary sources is being monitored at the plants in Sofia and Vrabevo. The
own monitoring for the sites in Sofia and Vrabevo is scheduled to be carried out in 2026.
20
• Emissions of organic compounds, defined as total organic carbon, from stationary sources
at the plants in Sofia and Veliko Tarnovo are monitored. In 2025, the monitoring results for the plant in
Veliko Tarnovo show compliance with the emission limit values (ELVs) according to Regulation No. 1 of
2005 for this site. The own monitoring for the site in Sofia is planned to be carried out in 2026.
Information on the consumption and quantity of organic solvents used - Volatile organic
compounds from solvents used in installations and processes for the plants in Sofia, Sandanski, Vrabevo
village, Kazanlak and Veliko Tarnovo has been submitted to the relevant Regional Inspectorate for
Environment, Water and Water Resources. The company has prepared a Solvent Management Plan (SMP)
for the sites in Kazanlak and Veliko Tarnovo.
For the calendar year 2025, the plants in Sofia, Sandanski and Vrabevo operate at a solvent
consumption that does not exceed the annual lower threshold value for solvent consumption (LSC) for the
Production of Pharmaceutical Products (LSC 50 tons/year), according to Regulation No. 7/2003, and the
plants in Kazanlak and Veliko Tarnovo operate at a solvent consumption that exceeds this limit and have
prepared a Solvent Management Plan (SMP). According to the prepared SMP, the emissions do not exceed
the permissible emission standards (PES) in waste gases, including the fugitive emission standards (FES).
2.1.2. Air emissions from steam boilers
Emissions of CO, SO 2 and N О x emitted into the atmospheric air from stationary sources - steam
boilers from the sites in the city of Sofia, the village of Vrabevo and the town of Kazanlak are monitored,
with monitoring carried out once every two years, according to an approved plan for Own Monitoring by
the relevant Regional Inspectorate for Environment, Water and Water and Ordinance No. 6 of 26.03.1999.
The company organizes and carries out control through measurements by an accredited laboratory of
indicators in accordance with the requirements of Ordinance No. 6 of 26.03.1999 on the procedure and
method for measuring emissions of harmful substances emitted into the atmospheric air from sites with
stationary sources. In 2025, the results of the monitoring and the measurements carried out by accredited
laboratories show compliance with the permissible emission standards (PES) according to Ordinance No.
1 of 2005 for these sites. The own monitoring for the sites in the city of Sofia, the village of Vrabevo and
the town of Kazanlak is to be carried out in 2026.
All technological facilities of the company have purification systems for capturing and purifying air
emissions. The results of the measurements are reported and provided to the Regional Inspectorate for
Environment, Water and Fire Protection in accordance with the requirements of the legislation.
3. Emissions to water
3.1. Wastewater discharge
The company discharges wastewater into water supply networks and surface waters as follows:
3.1.1. Discharge into the water supply network
According to contracts concluded with water supply companies, wastewater is discharged into the
sewerage networks of the relevant settlements for the following sites:
• Solid Dosage Forms Plant (SDFP) – Sofia, sites "A" and "B", under a contract with Sofia
Water AD for water supply, drainage and wastewater treatment.
• Plant for medical products, liquid and solid forms (MPLSF) "Sopharma" AD, town of
Sandanski, according to a contract concluded with "UVEX" EOOD;
• The Plant for Solid Dosage Forms, Phytochemical and Synthetic Products (SDFPSPP)
"Sopharma" AD, Kazanlak, according to a contract concluded with VIK "Stara Zagora";
• Plant for human and veterinary medical products (HVMPP) in the city of Sliven, under a
contract with VIK "Sliven"
• Plant "Sopharma" AD - Veliko Tarnovo in the city of Veliko Tarnovo, according to a
contract with VIK ‘Yovkovtsi” OOD.
21
3.1.2. Discharge into surface water bodies
The company has issued permits for discharge into surface water bodies for the following sites:
• Storage facility – Sofia site “B”, according to permit No. 13110054/15.01.2009 for
discharge into the Bankenska River (Kakach River).
• Plant for solid, semi-solid and liquid dosage forms (SSSLDFP) – village of Vrabevo,
according to Permit No. 13740061/04.10.2012 for discharge into a ravine, left tributary of the Vidima River
(mixed flow of domestic and industrial wastewater). The plant has a WWTP for water purification.
3.1.3. Control and monitoring of emissions in wastewater
The emissions into the waters that are released from the company's production sites and are
subject to monitoring are as follows:
• Facilities at Site B – Sofia: Solid Dosage Form Plant (SDFP) and Ampoule Dosage Form Plant
(ADF)
The following parameters are monitored: pH, suspended solids, BOD5, COD, trivalent chromium,
hexavalent chromium, ammonium ions, ammonia nitrogen, sulfates, phosphates, phosphorus in
phosphates, suspended solids, COD-DE, phenols, and arsenic. The water is treated by “Sofia Water” AD.
“Sofia Water” AD measures wastewater emissions at Site “B” three to five times a year; for 2025,
no deviations from the standards set forth in Ordinance No. 7 on the conditions and procedures for
discharging industrial wastewater into the sewer systems of populated areas were identified. "Sofiiska
Voda" AD carries out three to five annual measurements of wastewater emissions for site "B", and for
2025 no deviations from the standards set in Regulation No. 7 on the conditions and procedure for
discharging industrial wastewater into the sewage systems of settlements have been identified.
• Warehouse at site "B" – Sofia
For site "B", wastewater monitoring is carried out twice a year, according to the wastewater
discharge permit by accredited laboratories, and the analyses performed from own monitoring in 2025 do
not exceed the norms set out in the permit for use of a water body for wastewater discharge.
• Plant for solid, semi-solid and liquid dosage forms (SSLDF) – village of Vrabevo
The monitoring covers pH , BOD5, COD, oils and fats, phenols, petroleum products, AOX,
undissolved substances. The waters are purified by a WWTP before discharge into a ravine, a left tributary
of the Vidima River. Twice a year, own monitoring and control monitoring are carried out by the Regional
Inspectorate for Environmental Protection and Water Resources-Pleven. In 2025, a single - incidental
excess of undissolved substances was established; Absorbable organic halides (AOH); Chemical oxygen
demand; Biochemical oxygen demand; oils and fats, with the results of the additional monitoring carried
out after the established deviations showing compliance with the standards.
• Plant for medical products, liquid and solid forms (MPLSF) "Sopharma" AD, town of
Sandanski
pH, undissolved substances, BOD5, COD, fats, phenols, sulfates, undissolved substances are
monitored. Wastewater is discharged through the municipal company "UVEX". Twice a year, own
monitoring and control monitoring are carried out by the Regional Inspectorate for Environment, Water
and Water-Blagoevgrad, samples are taken in the presence of representatives of the company and tested
in an independent laboratory. The results for 2025 show that no deviations from the standards set in
Regulation No. 7 on the conditions and procedure for discharging industrial wastewater into the sewage
systems of settlements have been established.
• Plant for Phytochemical and Synthetic Products (PSP) "Sopharma" AD, Kazanlak
pH, COD, BOD5, and undissolved substances are monitored. Wastewater is discharged through
the local water supply company. The pollution category is level III . Samples are taken twice a year in the
presence of company representatives and tested in an independent laboratory.
22
The results for 2025 show that no deviations from the standards set in Regulation No. 7 on the
conditions and procedure for discharging industrial wastewater into the sewage systems of settlements
have been identified.
• Plant for Human and Veterinary Medical Products (HVMP) in the city of Sliven
pH, undissolved substances, BOD5, COD, oils and fats, phenols, petroleum products are
monitored. Wastewater is discharged through the local water supply company. Twice a year, RIEW-Stara
Zagora conducts its own monitoring and control monitoring, samples are taken in the presence of
company representatives and tested in an independent laboratory. The results for 2025 show that no
deviations from the standards set in Regulation No. 7 on the conditions and procedure for discharging
industrial wastewater into the sewage systems of settlements have been identified.
• Plant "Sopharma" AD - Veliko Tarnovo
pH, undissolved substances, BOD5, COD, oils and fats, phenols, petroleum products are
monitored. Wastewater is discharged through the local water supply company. Twice a year, own
monitoring and control monitoring are carried out by the Regional Inspectorate for Water and
Environment - Veliko Tarnovo, samples are taken in the presence of representatives of the company and
tested in an independent laboratory. The results for 2025 show that no deviations from the standards set
in Regulation No. 7 on the conditions and procedure for discharging industrial wastewater into the sewage
systems of settlements have been established.
3.1.4. Control and monitoring of drinking water quality
The company adheres to and complies with good manufacturing practices and guidelines to
ensure the safety and quality of its products, and in accordance with them organizes testing (brief chemical
and microbiological analysis) in accredited laboratories of drinking water in the production plants in Sofia,
Sandanski, Kazanlak and Vrabevo. Such monitoring is carried out quarterly for the plants in Sofia and
Sandanski and once a year for the other plants, monitoring various parameters, the main ones of which
are PH , electrical conductivity, dissolved oxygen, ammonium ions, nitrites, nitrates, chlorides,
phosphates, manganese, iron, etc.
The results of the analyses of drinking water submitted for analysis to an accredited laboratory in
2025 comply with the standards set out in Regulation No. 9 on the quality of water intended for drinking
and domestic purposes.
The company also monitors the quality of water used for irrigation of lawns, for domestic needs
in the holiday resorts managed by the company and used to maintain the ecological state of the water
body used for aquaculture for sport fishing and tourism. All analyses are carried out in accredited
laboratories. Monitoring is carried out regularly in accordance with the requirements of the relevant
permits, with the results for 2025 showing that the indicators are in line with the regulatory requirements
for drinking water, irrigation and environmental protection of water resources.
4. Noise pollution
Measurements of noise levels along the border of the industrial source and at the impact site -
the production and warehouse territories and zones of the sites in the city of Sofia, the village of Vrabevo,
the city of Sandanski and the city of Kazanlak are carried out once every two years. Monitoring was carried
out for the sites of “Sopharma” AD in the city of Sofia and the city of Sandanski in 2025, and the noise
levels met the permissible standards. In 2025, no control monitoring was carried out for the sites in the
village of Vrabevo and the city of Kazanlak, and it is to be carried out in 2026.
5. Substances of concern and substances of very high concern
Substances of concern are regulated based on their potential environmental and health impacts.
The company uses substances of concern as solvents, disinfectants, excipients, active pharmaceutical
ingredients, and auxiliaries in various manufacturing processes.
23
The company is committed to maintaining compliance with the REACH regulation and local
legislation and to responsibly manage the chemicals it uses. These substances are monitored, as required
by the legislation, by keeping relevant records, including emissions and flows leaving the production
facilities when used in installations for which specific reporting and monitoring is required.
Data is collected and analyzed to ensure compliance with environmental regulations and their safe
management. The Company has processes in place to ensure the safe handling, storage and use of
regulated chemicals at all production sites, which are continuously updated in response to changes in
legislation. The Company maintains a file with safety data sheets (SDS) of all available substances and
mixtures, which are regularly replaced with their current versions. Based on the information from the SDS,
all production sites of “Sopharma” AD prepare and maintain up-to-date information on the classification
of hazardous chemical substances and mixtures.
II . Circular economy and waste management
“Sopharma” AD upholds and complies with its commitments in accordance with national
legislation in the field of waste management, with the main goals being aimed at complying with legal
requirements in the field of waste management.
The company has implemented processes to ensure:
• separate waste collection, minimization, recovery and recycling of production and
household waste.
• handing over production waste to licensed recycling companies;
• compliance with legislative requirements related to the extended responsibility of
producers/importers placing packaging on the market.
As a result of its activities, the Company mainly generates packaging waste, industrial hazardous
and non-hazardous waste, household waste and waste from final products produced by the company.
“Sopharma” AD uses various types of packaging for its products, including:
• Paper and cardboard packaging
• Plastic packaging
• Metal packaging
• Composite/multilayer packaging
• Glass packaging
Also, packaging waste is generated as a result of the delivery of raw materials and materials and
their transportation between the company's warehouses and factories, which are necessary for the
production of “Sopharma” AD products, as well as during the distribution of final products, which include
transport packaging, pallets and protective materials. For the packaging placed on the market, the
company prepares and submits monthly reports on the imported and/or placed on the market packaging
by type of material, for which a monthly contribution is paid to Ecobulpack Bulgaria AD, with which
“Sopharma” AD has a contract for the recovery of packaging waste.
The waste generated as a result of production activities and the sale of final products is:
• Waste from the production of pharmaceutical dosage forms;
• Waste oils
• Packaging waste, absorbents, wiping cloths, filter materials and protective clothing;
• Organic and inorganic hazardous waste;
• Waste from laboratory activities;
• Textile waste;
• Waste from human or veterinary healthcare and related research activities;
The waste generated from transport, administrative and other activities is:
• Discarded tires;
24
• Discarded equipment containing hazardous components;
• Accumulators and batteries;
• Waste electrical and electronic equipment
During the reporting period, the following types of waste were generated from the production
sites in Sofia, Vrabevo, Kazanlak, Veliko Tarnovo, Sandanski and Sliven:
• Organic waste containing hazardous substances;
• Waste organic chemicals consisting of or containing hazardous substances;
• Packaging containing residues of hazardous chemicals or contaminated with hazardous
chemicals;
• Medicinal products;
• Waste from processed textile fibres;
• Absorbents, filter materials, wiping cloths and protective clothing;
• Metals (cast iron and steel) and
• Discarded electronic and electrical equipment
The quantities of waste generated at “Sopharma” AD by type and the methods for their
management are indicated in the table below:
Generated waste (in tons)
Non-
hazardous
Dangerous
Total
Total Quantity generated waste
851,793
142,730
994,523
Available as of 31.12.2025.
7.34
0.045
7.385
Provided for recycling
813,773
3.125
816,898
Others operations by utilization
(except on utilization on energy through burning)
-
4.112
4.112
Incineration without utilization on energy
-
135,448
135,448
Deposit
30.68
-
30.68
Total surrendered non-recyclable waste
30.68
139.56
170.24
Percentage on the surrendered non-recyclable
waste
3.08%
14.03%
17.12%
In "Sopharma Trading" AD, separate waste collection is carried out for the purpose of subsequent
recovery through recycling of production (packaging waste) and household waste. In compliance with the
legal requirements for waste disposal, discarded medicinal products, medical devices, cosmetic products
and food supplements are incinerated. The summarized information on all waste by codes is submitted
annually to the national waste information system. The waste transferred by "Sopharma Trading" AD for
2025 to contractors responsible for transport and subsequent treatment is as follows:
Generated waste (in tons)
Non-hazardous
Dangerous
Total
Total Quantity generated waste
449.001
1.253
450,254
Provided for recycling
394,943
-
394,943
Others recovery operations
(excluding energy recovery through combustion)
1.14
0.39
1.53
Incineration without energy recovery
52,918
0.863
53,781
Total non-recyclable waste delivered
54,058
1.253
55,311
Percentage of non-recyclables handed over
waste
12.01%
0.28%
12.28%
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Impact of transport on the environment
"Sopharma Trading" AD is focusing its efforts on reducing air pollution, by renewing part of its
fleet in 2025 by purchasing 21 trucks (buses) that have Euro 6D and Euro 6E certificates - a standard for
emissions of harmful gases into the atmosphere, and 14 light commercial vehicles with Euro 6 AP
certificates.
Addressing climate change risks
In 2025, “Sopharma Trading” AD assessed the main climate-related risks – physical and the
transition to a low-carbon economy – for its assets (excluding the pharmacy network). The analysis
includes two potential climate scenarios based on the sixth report of the IPCC - Intergovernmental Panel
on Climate Change.
The purpose of the assessment was to analyze how climate change could affect the Company's
operations, supply chain and sustainability. The methodology used, based on sources from recognized
international organizations, includes analysis of historical data, forecasts of future climate scenarios and
consultations with experts in the field of climate change.
As part of the assessment, the Company considered the following key aspects: physical risks such
as extreme weather events, rising temperatures and changes in precipitation patterns; transitional risks
related to regulatory changes and technological innovations; as well as social risks arising from public
opinion and expectations of companies regarding sustainability.
Summary of risks related to the physical climate
Type of physical climate risk
Validity for "Sopharma Trading" AD
High risk of heat waves and heat stress
All objects
Forest fires
One site (transshipment area)
Floods (overflow of water bodies)
Storage facilities next to rivers
Vectors of infectious diseases (Aedes albopictus
mosquitoes)
Risk to facility employees and drivers (Zika, Dengue,
encephalitis)
Drought/water stress, soil erosion and
landslides;
Change in wind regime;
Cryospheric risks;
Sea level rise;
Extreme storms;
Inapplicable, irrelevant and minimal risks
Summary of transitional climate risks
Short-term (2026-2029)
Medium-term (2030-2035)
Long-term (2036-2050)
Increase in operating costs
Reduced competitiveness
Limited business model
The main measures related to managing the identified risks include:
• Reducing the carbon footprint – phased electrification of the vehicle fleet and energy efficiency;
• Implementing circular practices – waste reduction, recycling, and packaging optimization;
• Joint initiatives with partners.
26
3. Significant events occurring after the date of preparation of the annual financial statements
/Article 39, item 3 of the Accountancy Act/
• Pursuant to the Law on the introduction of the euro in the Republic of Bulgaria (LIERB), effective
January 1, 2026, the EUR becomes the official currency and legal tender in Bulgaria. The official
exchange rate is set at 1.95583 BGN per EUR. The introduction of the EUR as the official currency
in the Republic of Bulgaria constitutes a change in the Group’s functional (reporting) currency of
the Group, which will be reflected prospectively and does not constitute a post-reporting period
event requiring an adjustment to the financial statements for the year ending December 31, 2025.
The effects of the introduction of the euro from 1 January 2026 are as follows:
• When converting the opening balances of all assets and liabilities without the share capital,
the effect is in the amount of BGN 33 thousand (EUR 17 thousand);
• When converting the opening balance of the share capital, the effect is in the amount of BGN
1,362 thousand (EUR 697 thousand), which is reflected in "Retained earnings from prior years".
According to the provisions of Art. 31, paragraph 1 of the LIERB, the nominal value per share of
the parent-company's capital is converted from BGN into Euro, by dividing the nominal value of
the share in BGN by the full numerical value of the official exchange rate and rounding the result
to the second decimal place according to the mathematical rounding rule. The capital of the joint-
stock parent-company on January 1, 2026 is formed by the nominal value per share, determined
in Euro (€0,51) and multiplied by the number of shares.
• The Financial Supervision Commission has approved prospectuses for the initial public offering of three
warrant issues, as follows:
The offering prospectus was approved approved by Decision No. 766-E of December 16, 2025, of the
Financial Supervision Commission.
The number of securities offered is 8,985,960 warrants. The issue price of one warrant is
BGN 0.27
(€0.14), and the exercise price is BGN 3.60 (€1.84). The exercise period is 3 years, with a minimum
success threshold for the issue of 1,797,192 warrants. The right to exercise arises on March 2, 2026,
when the issue is registered with the Central Depository;
The offering prospectus was approved by Decision No. 768-E of December 16, 2025, of the Financial
Supervision Commission.
The number of securities offered is 8,985,960 warrants. The issue price of one warrant is BGN 0.27
(€0.14), and the exercise price is BGN 4.56 (€2.33). The exercise period is 5 years, with a minimum issue
threshold of 1,797,192 warrants. The right to exercise arises on March 5, 2026, when the issue is
registered with the Central Depository;
The offering prospectus was approved by Decision No. 768-E of December 16, 2025, of the Financial
Supervision Commission.
The number of securities offered is 8,985,960 warrants. The issue price of one warrant is BGN 0.27
(€0.14), and the exercise price is BGN 5.70 (€2.91). The exercise period is 7 years, with a minimum issue
27
threshold of 1,797,192 warrants. The right to exercise arises on March 9, 2026, when the issue is
registered with the Central Depository.
The funds raised from the three warrant issues amount to EUR 3.744 million. The Financial
Supervision Commission has registered the three issues of warrants on March 26, 2026 with
decisions 210-E, 211-E and 212-E. Bulgarian Stock Exchange AD has admitted the three issues for
trading on April 1, 2026.
• On January 30, 2026, “Sopharma” AD sold a separate part of the Company in the field of
manufacturing and trading in veterinary medicinal products and laboratory testing of food and
biological products.
• On February 28, 2026, a joint U.S.-Israel operation against strategic targets in Iran began. As a
result, leading financial markets around the world are experiencing turmoil, uncertainty due to
the conflict, and a lasting impact on energy prices. The impact of the war in the Middle East on
the global economy will depend on its duration and the damage to infrastructure and industries
in the region and in particular whether the spikes in energy prices will be short-lived or long-
lasting. The conflict could have a serious impact on the global economy across a range of
indicators—inflation, economic growth, and others. The Group monitors and conducts ongoing
analyses and assessments of the potential consequences and effects of the conflict on Group
companies, their operations, assets, and prospects.
No other significant events have occurred after December 31, 2025, that would require additional
adjustments and/or disclosures in the consolidated financial statements as of December 31, 2025.
4. Future development of Sopharma Group (article 39, item 4 of the Accountancy Act) and planned
economic policy in the following year (Article 247 (3) of the Commerce Act)
Key moments of the strategy that the Group foresees:
• to increase sales under its existing portfolio, as well as by adding new products in categories in which
the Company has a strategic interest. To this end, the group is actively exploring various opportunities
to acquire products that would complement and diversify its own portfolio;
• to achieve a phased transformation of its production processes and capacities through the optimization
of the Company's production capacity through the purchase and modernization of new machinery and
equipment and the transfer of production activities and technologies. In addition to this, a strategy has
been developed and is in the process of implementation to optimize the processes of planning, supplies,
production, distribution through active management along supply chains.
This would allow the development of new business segments such as potential contract manufacturing;
• to maintain production operations in full compliance with good manufacturing practices adopted in the
EU;
• to implement new technologies to support the automation of business processes;
• to develop its personnel through training in order to increase qualifications and competencies and to
preserve and maintain the reputation of a preferred employer with opportunities for career
development, as well as to work closely with specialized higher education institutions and offer a career
start to personnel;
• to implement a diversity policy in order to create a working environment free from prejudice, cultivating
an atmosphere of respect and mutual trust, fostering a corporate culture of mutual respect and
valuing each individual. Managers and employees carry out their activities professionally,
impartially, with dignity and integrity, avoiding conflicts of interest;
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• implement a green policy in order to reduce the carbon footprint by using energy from renewable
sources.
"Sopharma" AD will strive to achieve a stable result of developing eight to ten new products per year
for its pharmaceutical business.
The main markets for the finished products, besides Bulgaria, continue to be Russia and Ukraine.
The Group plans to increase its presence on the Russian market through increased investments in
marketing and advertising activities and human resources. In addition, it is planned to expand the portfolio
and relationships with various counterparties. In Ukraine, in view of the military conflict at this stage, the
main immediate goal is to maintain market presence through its distribution company for the local market
“Sopharma Ukraine” and the production company PAO “Vitamini”. In the remaining traditional markets in
Poland, Serbia, Belarus, Kazakhstan, Moldova, the countries of the Caucasus region and the Baltic States,
the Group continues its presence and plans to strengthen its positions through additional marketing
activities and the imposition of products in therapeutic groups where there is potential for growth. The
group will continue to look for opportunities for an even more active presence in a highly developing
market such as that of Vietnam and Uzbekistan.
Key points of the strategy regarding the operations of “Sopharma Trading” AD as an integrated
healthcare provider:
• to diversify its business by expanding the portfolio of products and services offered on the Bulgarian,
Serbian, and Belarusian pharmaceutical markets, as well as by improving the quality and efficiency of
customer service;
• to optimize operations and increase the profitability of its distribution services, focusing primarily on
improving the turnover of current assets;
• to ensure the availability of pharmaceutical products in its main market segments—the hospital and
pharmacy markets.
In its pursuit of sustainable development, “Sopharma Trading” AD directs its efforts toward managing
the following environmental and social areas:
• Creating a stimulating and professional work environment by adhering to the Company’s ethical
principles and values, improving working conditions, and providing opportunities for training,
professional development, and dialogue with management representatives.
• Reducing air pollution by lowering harmful emissions from vehicle operations.
• Reducing the use of natural resources by lowering fuel consumption.
• Improving energy efficiency by implementing energy-saving measures in work processes and increasing
the amount of electricity generated from renewable sources.
• Controlled management of resources generated by operational activities and adherence to the
principles of the circular economy.
5. Research and development (article 39, item 5 of the Accountancy Act)
The Group focuses its research and development mainly on generic products. Research and
development projects are focused on finding and developing new formulas and composition or physical
properties (such as medicine form or tablet form) of a product in order to adapt it to current market needs.
The Parent Company mainly submits applications for new product authorizations including new
product forms in Bulgaria and / or export markets and for existing products in new markets.
29
Intellectual Property
Although oriented towards generic pharmaceutical products, “Sopharma” AD has been known for
years with the traditional production of several unique products based on plant extracts obtained using
proprietary technologies. These products are protected not only by trademark, but also by patent or
company know-how.
Regarding the generic products it produces, for their market distinctiveness, “Sopharma” AD relies
on brand names, all of which are registered trademarks of the Company.
In all the years of existence, “Sopharma” AD has generated and defended its industrial property. As
a result, the Group owns a large number of industrial property objects, the majority of which - registered
rights (trademarks, patents, designs) and fewer unregistered objects - mainly technology.
These assets are the result of the Company’s special policy towards product and technological
update, and in particular innovation.
New developments and products
During the reporting period January - December 2025 in the Division "Development and Regulatory
Compliance" the following activities were performed:
• New medicines
During the reporting period January - December 2025, the following activities were carried out in
the Development and Regulatory Compliance Department:
• New medicinal products
During the reporting period , Permissions received for use for 15 new medicinal products:
- Sydnopharm 4 mg tb. (Bulgaria);
- Nebivolol Sopharma 5 mg tb. (Bulgaria);
- Urimax modified-release 0.4 mg capsules, hard (Bulgaria)
- Syafen oral powder 400 mg (Bulgaria)
- Sophtica 60 mg film-coated tablets (Bulgaria)
- Sophtica 90 mg film-coated tablets (Bulgaria)
- Revelio 25 mg film-coated tablets (Bulgaria)
- Valdipin HCT 5 mg/ 160 mg/ 12.5 mg film-coated tablets (Bulgaria)
- Valdipin HCT 10 mg/ 160 mg/ 12.5 mg film-coated tablets (Bulgaria)
- Valdipin HCT 10 mg/ 160 mg/ 25 mg film-coated tablets (Bulgaria)
- Telmitan Duo 80 mg/ 5 mg tablets (Bulgaria)
- Telmitan Duo 80 mg/ 10 mg tablets (Bulgaria)
- Tussiphen bebe (Butamirate citrate) 5 mg/ml oral drops (Georgia)
- Nexopral 40 mg powder for solution for injection/ infusion; (Ukraine)
- Pantoprazole 40 mg powder for solution for injection (Ukraine)
• New registrations and re-registrations / changes
New registrations of medicinal products
• Documentation has been submitted for registration of 32 medicinal products:
- Sydnopharm 4 mg tb. (Bulgaria);
- Hedratusan 7 mg/mL syrup (Poland);
- Mucovent 30 mg/5 mL syrup (Poland);
- Pethidine Macure 50 mg/mL solution for injection (Netherland);
- Diclofenac Redcare Schmerzgel 2% 23.2 mg/g gel (Austria) MRP;
30
- Diclofenac Redcare Forte 20 mg/g 23.2 mg/g gel (Belgium) MRP;
- Diclofenac Redcare Schmerzgel forte 23.2 mg/g gel (Germany) MRP;
- Hederospan Med 7 mg/mL syrup (Poland);
- Paraceptin 120 mg/5 mL oral suspension (Poland);
- Paraceptin 500 mg tb. (Poland);
- Butamirate citrate (Tuspan) 5 mg/mL oral drops (Ukraine);
- Butamirate citrate (Antitussin) 5 mg/mL oral drops (Russia);
- Glicerax Pico 7.5 mg/mL oral drops, solution (Georgia);
- Revelio 25 mg film-coat. tb. (Ukraine);
- Syafen Duo 200 mg/ 500 mg granules (Bulgaria);
- Vit. C 200 mg/mL sol. for inj. DCP -(Latvia; Bulgaria; Romania);
- Tempalgin tb. (Albania);
- Buscolysin injection (Bosnia and Herzegovina);
- Syafen Duo 500/200 granules (Bulgaria);
- Felodexan 25 mg film-coated tablets (Poland);
- Digoxin Macure 0.25mg/mL sol. for Inj. (DCP FI NO SE);
- Dexketoprofen Sopharma 50 mg/2 mL sol. for inj./in. (EAEU in Armenia);
- Revelio (Dexketoprofen) film-coated tablets. 25 mg (Azerbaijan);
- Antitussin (Butamirate citrate) oral drops, solution 5 mg/mL (Uzbekistan);
- Picosulfate Sopharma (Sodium picosulfate) oral drops, solution 7.5 mg/mL (Uzbekistan);
- Antitussin oral drops, solution (Russia);
- Torasemide Sopharma 5 mg film-coated tb. (Bulgaria);
- Torasemide Sopharma 10 mg film-coated tablet (Bulgaria);
- Vitamin B1 Sopharma sol. for inj. – MRP (Georgia);
- Vitamin B6 Sopharma sol for inj. – MRP (Georgia);
- Vitamin B12 Sopharma sol. for inj.- MRP (Georgia);
- Vitamin C Sopharma 100 mg/mL sol. for inj.-MRP (Georgia).
• Medicinal products have been registered for 12 new indications:
- Paracetamol Siromed 500 mg tb. (Lithuania);
- Vitamin C Zentiva 100 mg/m L solution for injection/infusion (Poland);
- Ambrolytin 30 mg/5 mL syrup (Moldova);
- Ticarda 60 mg film-coated tb. (Ukraine);
- Ticarda 90 mg film-coated tb. (Ukraine);
- Tempalgin 500 mg/20 mg film-coated tb. (Armenia);
- Bromhexine Sopharma 2 mg/ml solution for injection (Iran);
- Tempaforte 500 mg tab. (Peru);
- Tempalgin Trio t b. (Peru);
- Pethidine Macure 50 mg/ml solution for injection (Netherland);
- Zondaron injection (Albania);
- Dexamethasone injection (Albania).
• Approval of registration in EAEU - 21:
- Belarus - Carsil 90 mg hard capsule;
- Belarus - Tribestan 250 mg film-coated tb.;
- Russia - Dusopharm 100 mg film-coated tb.;
- Russia - Dusopharm 200 mg film-coated tb.;
31
- Russia - Tuspan 7 mg/ml syrup;
- Russia - Ketoprofen Vramed 25 mg/g gel;
- Russia - Indometacin Sopharma 100 mg/g ointment;
- Russia - Indometacin Sopharma 25 mg gastro-resistant tb.;
- Russia - Ketotifen Sopharma 1 mg tb.;
- Russia - Piroxicam 10 mg hard capsule;
- Russia - Piroxicam 20 mg hard capsule;
- Russia - Tabex 1.5 mg film- coated tb.;
- Russia - Troxerutin Vramed 300 mg hard capsule;
- Kyrgyzstan - Carsil Forte 90 mg capsule, hard;
- Kyrgyzstan - Tribestan 250 mg film-coated tb.;
- Russia - Indometacin Sopharma 50 mg; 100 mg suppositories;
- Russia - Spasmalgon solution for injection;
- Russia - Tempalgin Trio tb.;
- Russia - Trixerutin Vramed 20 mg/g gel;
- Russia - Nivalin 1mg/ml, 2.5 mg/ml; 5 mg/ml; 10 mg/ml sol. for inj.;
- Russia - Ketotifen syrup 1mg/5ml .
• Submitted for harmonization in the EAEU - 7:
- Armenia - Vitamin B Complex sol. for injection;
- Armenia - Analgin 500 mg tb.;
- Armenia - Dimex syrup;
- Armenia - Paracetamol Sopharma 120/5ml syrup;
- Armenia - Salbutamol Sopharma 2mg/5ml syrup;
- Kazakhstan – Valeriana 30 mg film-coated tb.;
- Kazakhstan - Gorloin compressed lozenges.
• Submitted for recognition in the EAEU - 21:
Re-registrations/changes
• Renewed Marketing Authorizations for 78 medicinal products.
• Submitted documentation for renewal of Marketing Authorizations for 71 medicinal products to
agencies.
• 472 changes for medicinal products submitted to agencies;
• 424 changes to drug products approved by agencies .
Nutritional supplements
Food supplements submitted for registration: 33 pcs .
- Magnifico for Bulgaria;
- Magnifico Forte x 20 tablets for Bulgaria;
- Magnifico Forte x 60 tablets for Bulgaria;
- Vigor for healthy bones for Bulgaria;
- Vigor for sharp mind and balance on nervous system for Bulgaria;
- Vigor for memory and strong immune system for Bulgaria;
- Vigor synbiotic for balanced intestinal flora for Bulgaria;
- Vigor synbiotic for balanced intestinal flora and good digestion for Bulgaria;
- Vigor for healthy hair, skin and nails for Bulgaria;
32
- Vigor Omega 3 for normal function on the brain and the heart for Bulgaria;
- Vigor for days without stress for Bulgaria;
- Vigor for emotional balance and days without stress for Bulgaria;
- Vigor for good mood for Bulgaria;
- Vigor For calm menopause for Bulgaria;
- Vigor iron for healthy immune system and energy for Bulgaria;
- Vigor For normal function on the black one liver for Bulgaria;
- Vigor for healthy joints for Bulgaria;
- Iceland syrup for Ukraine;
- Iceland spray for Ukraine;
- Sleepfix Plus + B6 for Georgia;
- Broncholitin Phyto for Kazakhstan;
- Gastro Comfort mint for Kazakhstan;
- Valerian + Melatonin 25 mg + 1 mg , spray for Moldova;
- Magnifico Forte for Moldova;
- Gastro Comfort mint for Moldova;
- Gastro Comfort cherry for Moldova;
- Gastro Comfort orange for Moldova;
- Vigor intensive formula for energy and protection from oxidative stress, drinking solution for
Bulgaria;
- Vigor intensive formula for a healthy nervous system and concentration, drinking solution for
Bulgaria;
- Vigor intensive formula for strong immunity, drinking solution for Bulgaria;
- Melatonin Max 3 mg tablets for Moldova;
- Enzibalance, gastro-resistant tablets x10;
- Enzibalance, gastro-resistant tablets x60.
Approved registrations of food additives: 34 pcs.
- Valerian 50 mg + Melatonin 1 mg for Moldova;
- Valerian 150 mg + Melatonin 3 mg for Moldova;
- Magnifico for Bulgaria;
- Magnifico Forte x 20 tablets for Bulgaria;
- Magnifico Forte x 60 tablets for Bulgaria;
- Vigor for healthy bones for Bulgaria;
- Vigor for sharp mind and balance on nervous system for Bulgaria;
- Vigor for memory and strong immune system for Bulgaria;
- Vigor synbiotic for balanced intestinal flora for Bulgaria;
- Vigor synbiotic for balanced intestinal flora and good digestion for Bulgaria;
- Vigor for healthy hair, skin and nails for Bulgaria;
- Vigor Omega 3 for normal function on the brain and the heart for Bulgaria;
- Vigor for days without stress for Bulgaria;
- Vigor for emotional balance and days without stress for Bulgaria;
- Vigor for good mood for Bulgaria;
- Vigor For calm menopause for Bulgaria;
- Vigor iron for healthy immune system and energy for Bulgaria;
- Vigor For normal function on the black one liver for Bulgaria;
- Vigor for healthy joints for Bulgaria;
33
- Iceland syrup for Ukraine;
- Iceland spray for Ukraine;
- Sleepfix Plus + B6 for Georgia;
- Vigor intensive formula for energy and protection from oxidative stress, drinking solution for
Bulgaria;
- Vigor intensive formula for a healthy nervous system and concentration, drinking solution for
Bulgaria;
- Vigor intensive formula for strong immunity, drinking solution for Bulgaria;
- Gastro Comfort mint tablets for Moldova;
- Gastro Comfort cherry tablets for Moldova;
- Gastro Comfort orange tb. for Moldova;
- Magnisimo Forte tb. for Moldova;
- Valeriana + Melatonin 25 mg + 1 mg , spray for Moldavia;
- Melatonin Max 3 mg for Moldova;
- Broncholitin Phyto, pastilles for Kazakhstan;
- Broncholitin Phyto, lozenges for Armenia;
- Broncholitin Phyto, lozenges for Belarus;
Medical devices
- New submitted registrations – 13
- Approved new registrations - 11
• Developments
• Performs is pharmaceutical development on 44 new medicinal products / project a
- Cytisine 3.0 mg tb. – Project with Achieve company
- Dexketoprofen 25 mg TB;
- Xylmetazoline/Dexpanthenol 0.05% nasal spray;
- Xylmetazoline/Dexpanthenol 0.1% nasal spray;
- Molsidomine 4 mg tb.;
- Ketorolac 10 mg TB;
- Vitamin C 200 mg / mL engineer. rr;
- Vitamin C 100 mg / mL engineer. rr;
- Butamirate Citrate oral drops;
- Butamirate Citrate syrup;
- Ibuprofen 200; 400 and 600 mg film-coated tablets;
- Ibuprofen 100 and 200 mg /5 ml oral suspension;
- Ibuprofen/Paracetamol 200/500 mg tab.;
- Ibuprofen/Pseudoephedrine 200/30 mg film-coated tablets;
- Artichoke/Silymarin/Vitamin E/Lecithin caps. (3 FS);
- Milgama tb. – Project with the KRKA company;
- Metamizole sodium/Pitofenin/Fenpiverine bromide 500/5/0.1 mg tb.;
- Metamizole sodium 500 and 1000 mg oblong tab.;
- Tempalgin tablets;
- Tabex 1.5 mg tablets;
- Carsil 22.5 mg film-coated tablets;
- Carsil 35 mg tablets;
- Valerian 250 mg tablets;
- Buscolysin 20 mg tab.;
- Tuspan syrup;
34
- Paracetamol 500 mg tab.;
- Paracetamol suspension;
- Torazemide 5 and 10 mg tb.;
- Erdosteine 300 mg caps.;
- Ursodeoxycolic acid 250 and 500 mg tb.;
- Nicergoline 10 and 30 mg film-coated tablets;
- Oseltamivir 30; 45 and 75 mg caps.;
- Aceclofenac 100 mg film-coated tablets;
- Trazodone 75 and 150 mg SR tab.;
- Ademetionine 400 and 500 mg GR tab.;
- Sulfasalazine 500 mg GR tab.;
- Mesalazine 800 mg GR tab.;
- Citicoline 125 and 250 mg / mL inj. solution; 4 mL;
- Midazolam 1 and 5 mg / mL inj./inf. solution;
- Dexmedetomidine 0.1 mg / mL concentrate for solution for injection;
- Ethamsylate 125 mg / mL inj. p-r;
- Clindamycin 150 mg / mL injectable solution 2 and 4 mL;
- Thiocolchicoside 2 mg / mL injection 2 mL;
- Vitamin B complex, injection, 2 mL .
API - 3
- Dry extract of Elderberry;
- Dry extract of milk thistle fruit;
- Glaucine Hydrobromide.
• Transfer and validation of technological processes
• 13 new products have been transferred:
o Apiflorax throat spray;
o Apiflorax syrup;
o SleepFix spray;
o SleepFix Plus spray;
o Torasemide 5 mg tb.;
o Torasemide 10 mg tab.;
o Ketoprofen 50 mg / mL injection p-r;
o Dry Milk Thistle Extract+Artichoke Extract 150+150 mg caps.;
o Erdosteine 300 mg caps.;
o Vitamin B complex, injectable solution;
o Ethamsylate 125 mg / mL inj. p-r;
o Dexmedetomidine 1 µg / mL concentrate for injection p-p;
o Carsil 22.5 mg film-coated tablets.
• 7 production processes/technologies have been validated/optimized.
• Qualification/production documentation prepared
• Documentation for the qualification of raw materials for production – 223;
• Production Regulations – 242;
• Cleaning control instructions – 84;
• Documentation for qualification of finished forms – 356 .
35
6. Information on the acquisition of own shares required by Article 187d of the Commerce Act/
Article 39, Item 6 of the Accountancy Act/
During the current year, 200 shares were purchased and 17,522,581 shares were sold.
Shares
Share capital, net
of treasury shares
Number
BGN '000
Balance at 1 January 2024
158 262 242
115 139
Issue of capital
6 509 485
6 509
Effects of Subsidiary Merger
232
1
Treasury shares purchased
(1 200)
(7)
Expenses for treasury shares purchased
972 308
3 899
Balance at 31 December 2024
165 743 067
125 541
Issue of capital
360 057 540
360 058
Treasury shares sold
17 522 581
35 349
Effects of Subsidiary Merger
(17 789 926)
-
Treasury shares purchased
(200)
(1)
Balance at 31 December 2025
525 533 062
520 947
The Board of Directors is authorized to buy treasury shares under certain conditions, according to
the decisions of the GMS, held on 23 June 2010, the EGMS of 30 November 2011, the EGMS of 1 November
2012, the EGMS of 28 February 2013, the EGMS from 23 February 2018 and of the EGMS from 4 August
2023 and 25 October 2024.
Number and nominal value of the treasury shares held and the proportion of the capital they
represent
“Sopharma” AD holds
13 624 541 treasury shares, representing 2.53% % of the company's capital.
7. Existence of branches of the Company /Article 39, item 7 of the Accountancy Act/
“Sopharma” AD has no branches.
8. Use of financial instruments /Article 39, item 8 of the Accountancy Act/
Overall risk management focuses on the difficulties in predicting financial markets and minimizing
potential negative effects that may affect the financial performance and position of the Group.
Financial risks are currently identified, measured and monitored by various control mechanisms
introduced to determine adequate prices for the group's products and services and borrowed capital and
to adequately assess the market circumstances of the investments made by them and forms of
maintenance of the free liquid assets, without allowing unjustified concentration of risk.
Risk management is carried out on an ongoing basis by the management of the parent company
and respectively the management of the subsidiaries in accordance with the policy defined by the Board
of Directors. The Board of Directors has adopted basic principles for general financial risk management,
on the basis of which specific procedures have been developed for the management of individual specific
risks, such as currency, price, interest, credit and liquidity, and the risk of using non-derivative instruments.
36
Credit risk
Credit risk is the risk that the clients of the Group will not be able to pay fully and within the usual
time limits the amounts due from them under the trade receivables. Trade receivables are presented in
the statement of financial position in net amount after deducting the accrued impairment for doubtful
and bad debts. Such impairments are made where and when there are events identifying loss of
collectability under previous experience.
The Group has developed policies and procedures for assessing the creditworthiness of its
counterparties and setting credit rating and credit limits by group of clients.
Cash in the Group and the payment operations are concentrated in various premium banks. In the
distribution of cash flows between them, the management of the Company and the subsidiaries take into
account a number of factors, including the capital, security, liquidity, credit potential and rating of the
bank, etc.
Liquidity risk
The liquidity risk is expressed in the negative situation that the Group will not be able to meet
unconditionally all its obligations according to their maturity, including due to the presence of
hyperinflation, and the indexation of trade accounts for companies operating in such an environment.
The Group generates and maintains a sufficient volume of liquidity. An internal source of liquidity
for the Group is the main business of its companies generating sufficient operating flows. External sources
of funding are banks and other permanent partners.
Risk of interest-bearing cash flows
In the structure of the Group's assets, interest-bearing assets are represented by cash, bank
deposits and loans granted carrying a fixed interest rate. On the other hand, the borrowed funds of the
Group in the form of long-term and short-term loans are usually with variable interest rates. This
circumstance partly exposes the cash flows of the Group to interest rate risk. The coverage of this risk is
achieved in two ways:
a) Optimizing sources and structure of credit resources to achieve a relatively lower cost of borrowed
funds;
b) Combined structure of interest rates on loans, which contains two components - fixed and variable, the
ratio between which and their absolute value can be achieved and maintained at a favorable rate for the
companies in the Group. The fixed component has a relatively low absolute value and a large enough
relative share in the total interest rate.
This circumstance eliminates the probability of a significant change in interest rates upon a possible
update of the variable component. This also minimizes the probability of unfavorable change for the cash
flows.
The management of the companies in the Group together with the management of the Company
are currently monitoring and analyzing its exposure to changes in interest rates. Different scenarios of
refinancing, renewal of existing positions and alternative financing are simulated. Based on these
scenarios, the effect on the financial result and equity is measured upon changing certain points or
percentages. For each simulation, the same assumption of interest rate change applies to all major
currencies. Calculations are made for the significant interest-bearing items.
9. Information about the main intangible resources and an explanation of how the business model
of the entity depends on them, as well as how these resources are a source of value creation for the
entity (Section 29(2) of the Accounting Act)
37
Regarding the main intangible resources that management considers critical for the successful
implementation of the Group's development strategy and the achievement of the goals for creating
shareholder value, the following standards have been achieved in managing relationships with key
stakeholders, namely:
Regarding employees:
• Focus on specific knowledge and skills of hired employees and those acquired in the process of
working in the Group;
• Readiness of employees to engage and identify with the long-term goals of management;
• Readiness of employees to develop their knowledge and skills in the direction necessary for the
implementation of the Group's strategy.
• For the Group’s strategic development and in its day-to-day work, the team adheres to five core
values: Care, Responsibility, Teamwork, Continuous Improvement, and Integrity. These values embody
the team’s understanding of how we work and how we treat our stakeholders.
Regarding customers and suppliers
• Establishment of long-term contractual relationships based on reliability of quality and rhythm of
deliveries, and with regard to end users, consistency in the results of the applied therapies;
• Exchange of know-how, information, practices, policies and others that potentially lead to
benefits for both parties;
• Relationships built on trust and partnership;
• Private-label concept and retail chain know-how – In 2015, “Sopharma Trading” AD introduced its
own retail pharmacy concept, SOpharmacy, to the Bulgarian market, bringing global best practices to the
local market and offering an innovative approach to meeting the healthcare needs of Bulgarian patients.
SOpharmacy’s mission is to become a trusted partner in lifelong healthcare.
Regarding directly related communities
• Interest and commitment in solving significant social problems of the related communities;
• Focus on all areas related to health;
• Periodic initiatives related to disease prevention.
•
IV. Information under Article 247 and Art. 240b of the Commerce Act
1. Information under Art. 247 of the Commerce Act
Information concerning the course of activity and the position of the Company and explanations
regarding the annual financial statements
Section II, item 2 describes the operations and the position of the Group and explains the annual
financial statements.
Remuneration received during the year by members of the Board of directors
The remuneration and other short-term income received by the Board of Directors and the
authorized signatories for 2025, amounting to BGN 1,565 thousand is as follows:
• current remuneration – BGN 1,299 thousand;
• bonuses – BGN 266 thousand.
38
Acquired, held and transferred by the members of the Boards during the year shares and bonds of
the company
The Company's shares acquired, owned and transferred by the members of the Board of Directors
in 2025 are as follows:
Members of the
Board of
directors
31.12.2025
31.12.2024
Shares
Relative
share of
the capital
%
Shares
Relative
share of
the capital
%
Acquired
shares in
2025
Transferred
shares in
2025
Change in
shares
Ognian Donev
49 020 000
9,09%
16 244 050
9,07%
32 775 950
-
32 775 950
Vessela Stoeva
450
0,00%
150
0,00%
300
-
300
Alexander
Tchaouchev
1 378 826
0,26%
458 042
0,26%
920 784
-
920 784
Bissera Lazarova
112 600
0,02%
34 200
0,02%
78 400
-
78 400
Ivan Badinski
6 090
0,00%
2 030
0,00%
4060
-
4060
Simeon Donev
586 350
0,11%
195 450
0,11%
390 900
-
390 900
The Company has not issued any bonds.
Rights of members of the Board to acquire shares and bonds of the company
The Articles of Association of “Sopharma” AD do not contain any restrictions on the right of the members
of the Board of directors to acquire shares and bonds of the company.
Participation of members of the Board of directors in commercial companies as unlimited liability
partners, the holding of more than 25 percent of the capital of another company, as well as their
participation in the management of other companies or co-operatives, such as procurators, managers or
board members
Participation of the members of the Board of Directors by more than 25 per cent of the capital of other
companies:
Ognian Ivanov Donev has a direct / indirect significant share (over 25%) of the capital of the
following companies:
• “Donev Investments Holding” AD, UIC 831915121, with headquarters in Sofia, 12 Pozitano Str.
• “Telecomplect” AD, UIC 831643753, with headquarters in Sofia, 5, Lachezar Stanchev Str
Sopharma Business Towers, Building A, floor 3
• “Sofprint Group” AD, UIC 175413277, with headquarters: Sofia, 12, Pozitano Str.
• “Sofconsult Group” AD, UIC 175413245, with headquarters: Sofia, 12, Pozitano Str.
• “Sopharma” AD, UIC 831902088, with headquarters: Sofia, 16, Iliensko Shose Str.;
• “Energoinvestment” AD, UIC 200929754, with a registered office in Sofia, 9, P. R. Slaveykov Square
• “Simba Private Kindergarten” EOOD, UIC 204683684, with headquarters in Sofia, 16 Iliensko Shose
Str. – in liquidation.
• “Selso” EOOD, UIC 206522151, with headquarters in Sofia, 12, Pozitano Str.
• “TMS Properties” EAD, UIC: 208584064, with registered office at: Sofia, 29A, Arsenalski Blvd., fl.
3.
39
Vessela Lyubenova Stoeva controls or owns directly/indirectly a significant share (more than 25%)
of the capital of the following companies:
• “VES elekroinvest systems” EOOD, UIC 201712700, with headquarters: Sofia, 9, P. R. Slaveykov
Square.
• “Eco Solar Invest” OOD, UIC 201634905, with headquarters: Sofia, 9, P. R. Slaveykov Square.
• “Akvatiks” OOD, UIC 203934379, with headquarters: Sofia, 9, P. R. Slaveykov Square.
• “VLS” AD, UIC 175082980, with headquarters in Sofia, 9, P. R. Slaveykov Square.
• “Tulip Invest” AD, UIC: 208580183, with registered office at: Sofia, 9, P. R. Slaveykov Square.
Alexandar Viktorov Tchaouchev controls or owns directly/indirectly a significant share (more than
25%) of the capital of the following companies:
• “Alpha In” EOOD, UIC 131156322, with headquarters in Sofia, 1B, Dimcho Debelianov Str.,
Entrance A; Floor 3; fl. 8.
• "Assa Asset Management" OOD, UIC: 131156297, with headquarters: Sofia, 1B, Dimcho
Debelianov Str., Entrance A, Floor 3, fl. 8.
• “Pomorie vineyard” AD, UIC: 102819348, with headquarters: Pomorie, 19, Otets Paisiy Str.
Ivan Venetskov Badinski does not hold a direct / indirect significant share (over 25%) of the capital
of companies.
Bissera Nikolaeva Lazarova controls or owns directly/indirectly a significant share (more than
25%) of the capital of the following companies:
• “Consumpharm” OOD, UIC: 121148366, with headquarters in Sofia, 80, Yanko Sakazov Blvd.
Participation of Board members in the management of other companies or cooperatives as
procurators, managers or board members:
Ognian Ivanov Donev participates in the managing/controlling body in the following companies:
• “Sopharma Trading” AD, UIC 103267194, with headquarters in Sofia, 5, Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, Fl. 12 – Chairman of the Board of Directors.
• “Donev Investments Holding” AD, UIC 831915121, with headquarters in Sofia, 12, Pozitano Str. –
Chairman of the Board of Directors.
• “Telecomplect” AD, UIC 831643753, with headquarters in Sofia, 5, Lachezar Stanchev Str.,
Sopharma Business Towers, Building A – Chairman of the Supervisory Board.
• “Doverie Capital” AD, UIC 130362127, with headquarters in Sofia, 5, Lachezar Stanchev Str.,
Sopharma Business Towers, Building A, fl.7 – Member of the Supervisory Board.
• “Sopharma” AD, UIC 831902088, with seat and headquarters in Sofia, 16, Iliensko Shose Str. –
Мember of the Board of Directors and Executive Director.
Vessela Lyubenova Stoeva participates in the management/supervisory body of the following
companies:
• “VLS” AD, UIC 175082980, with headquarters in Sofia, 9, P. R. Slaveykov Square - Мember of the
Board of Directors.
• “VES Elekroinvest systems” EOOD, UIC 201712700, with headquarters: Sofia, 9, P. R. Slaveykov
Square – Manager.
• “Sopharma” AD, UIC 831902088, with seat and headquarters in Sofia, 16, Iliensko Shose Str. –
Deputy Chairman of the Board of Directors.
40
• “Tulip Invest” AD, UIC: 208580183, with registered office at: Sofia, 9, P. R. Slaveykov Square.
Alexandar Viktorov Tchaouchev participates in the management/supervisory body of the
following companies:
• “DK-Domostroene” AD, UIC 102148397, with registered office in Burgas, Pobeda area – Мember
of the Board of Directors.
• “Alpha In” EOOD, UIC 131156322; with seat and headquarters: Sofia, 1b, Dimcho Debelyanov Str.
– Manager.
• “Sopharma” AD, UIC 831902088, with seat and headquarters: Sofia, 16, Iliensko Shose Str. –
Member of the Board of Directors.
Ivan Venetskov Badinski participates in the management/supervisory body of the following
companies:
• “Sopharma” AD, UIC 831902088, with seat and headquarters: 16, Iliensko Shose Str. – Member of
the Board of Directors.
Bissera Nikolaeva Lazarova participates in the management/supervisory body of the following
companies:
• “Sopharma Imoti” REIT, UIC 175059266, with seat and headquarters in Sofia, 5, Lachezar Stanchev
Str. – Member of the Board of Directors.
• “Sopharma” AD, UIC 831902088, with seat and headquarters in Sofia, 16, Iliensko Shose Str. –
Member of the Board of Directors.
Planned economic policy in the next year (Article 247, paragraph 3 of the Commerce Act)
The information is reflected in Section III, p. 4 of this Report - Future development of Sopharma
Group (Article 39, paragraph 4, of the Accountancy Act).
2. Information under art. 240b of the Commercial Law on the obligation of Board members to
notify in writing the Board of Directors or the Management Board when they or their related parties
conclude contracts with the company outside its usual activity or substantially deviate from market
conditions
In 2025 there are no contracts that are outside the ordinary business of the company or significantly
deviate from market conditions.
V. Information on Annex 2 to art. 10, item 1 of Regulation 2 of LPOS
1. Information given in value or quantitative terms about the main categories of goods, products
and / or services provided, including their share in sales revenue of the Group in general and changes in
the reporting year
The information is included in Section III, item 2 of this document. The Group does not publish
quantitative information due to the specifics of the production.
2. Information about the revenues allocated by separate categories of activities, domestic and
foreign markets and information on sources for supply of materials needed for production of goods or
the provision of services with the degree of dependence on any individual seller or buyer / user, in case
their share exceeds 10 per cent of the expenses or sales revenue, provide information for each person
for his share in sales or purchases and links with the issuer
41
Information regarding revenue broken down by activity category, as well as domestic and foreign
markets, is provided in Section III, Item 2 of this report. For 2025, there are no customers whose relative
share exceeds 10% of total revenue. The raw materials and supplies used exceed 3,500 SKUs, which have
a dynamic structure and diverse origins (synthetic, plant-based) and physical states (liquid, solid, gaseous).
The majority of raw materials and supplies are sourced through imports. Supply sources are validated
manufacturers, which is in accordance with regulatory requirements and aims to maintain consistency
and traceability in terms of quality.
The relevant contracting companies operate in accordance with the requirements of GMP, GDP,
and other industry standards. “Sopharma” AD works with a number of Bulgarian and foreign suppliers,
selected in accordance with an established internal procedure aimed at ensuring both alternative security
in the supply chain and competitive flexibility in commercial relations. The key criteria that “Sopharma”
AD sets during the negotiation process are: consistent quality, competitive prices, attractive payment
terms, and regular and timely deliveries—which prevent the accumulation of inventory on the one hand
while ensuring the continuity of the production process on the other. For 2025, there are no suppliers
whose relative share exceeds 10% of total expenses for services and materials.
3. Information on significant transactions
The Company has defined material transactions as those that result in, or can reasonably be
expected to result in, a favorable or unfavorable change of 5 percent or more in revenue or net profit. In
2025, “Sopharma” AD did not enter into any such material transactions.
4. Information regarding transactions between the issuer and related parties during the reporting
period, proposals for concluding such transactions, as well as transactions that are outside its usual
activity or substantially deviate from market conditions when, the issuer or its subsidiary is party,
indicating the value of the transactions, the nature of relatedness and any information necessary to
assess the impact on the financial position of the issuer
Information regarding the transactions between “Sopharma” AD and related parties during the
period is specified in Note “Related Party Transactions” to the Annual Financial Statements.
“Sopharma” AD has not entered into any transactions that are outside its usual business or
significantly deviate from market conditions.
5. Information about events and indicators unusual for the issuer that have a significant impact on
its activity and realized income and expenses; assessment of their impact on the current year results
In 2025 there were no events and indicators of unusual nature for the Group.
6. Information on off-balance sheet transactions - nature and business purpose, the financial
impact of transactions on the activity, if the risks and benefits of these transactions are material to the
issuer and the disclosure of this information is essential for assessing the financial position of the issuer
The contingent obligations took by the Group as at 31 December 2025 are stated in the annual
financial statements in the note "Contingent Liabilities and Commitments".
7. Information on shares of the issuer, its major investments in the country and abroad (in
securities, financial instruments, intangible assets and real estate), as well as investments in equity
securities outside its group of companies under Accountancy Act and the sources /methods of financing
42
The information on shareholdings and major investments, domestic and foreign, of “Sopharma” AD
is provided in the Notes to the annual financial statements - "Other long-term equity investments" and
"Investments in associates and joint ventures". Information regarding investments in intangible assets and
real estate is presented in the Notes “Intangible assets”, “Property, plant and equipment” and
“Investment property”.
8. Information about the concluded by the issuer, its subsidiary or parent company in their
capacity as borrowers, loan contracts specifying the terms and conditions, including the deadlines for
repayment as well as information about guarantees and commitments
The information on concluded by “Sopharma” AD and its subsidiaries loan agreements are listed in
the notes to the annual consolidated financial statements "Long-term bank loans" and "Short-term bank
loans."
9. Information about the concluded by the issuer, its subsidiary or parent company in their
capacity of lenders, loan agreements, including the provision of guarantees of any kind, including
related parties, and the specific terms, including the deadlines for payment and the purpose for which
they were granted
Long-term trade loans granted by “Sopharma” AD to third parties:
• Recipient – “Pharmaplant” AD; Contracted amount – BGN 2,847 thousand; interest rate – 6.05%;
maturity date – December 31, 2027; balance as of December 31, 2025 – BGN 2,957 thousand;
The long-term loans granted to third parties are intended to support the financing of these
companies’ activities in line with common strategic objectives. They are secured by pledges of securities
(shares). Information regarding loan agreements entered into by subsidiaries of “Sopharma” AD will be
disclosed in the Group’s consolidated financial statements.
Current trade loans granted by “Sopharma” AD to third parties:
• Recipient – SOpharmacy MC; Contract amount – EUR 695 thousand; interest rate – 3.05%;
maturity – December 31, 2026; balance as of December 31, 2025 – BGN 639 thousand;
• Recipient – SOpharmacy MC; Contract amount – EU R 3,000 thousand; interest rate – 3.05%;
maturity – December 31, 2026; balance as of December 31, 2025 – BGN 7,020 thousand;
• Recipient – Black Star International AD; Contract amount – BGN 2,740 thousand; interest rate –
6%; maturity – December 31, 2026; balance as of December 31, 2025 – BGN 2,855 thousand.
• Recipient – SIA BAH; Contract amount – EUR 260 thousand; interest rate – 4.40%; maturity date
–December 31, 2026; balance as of December 31, 2025 – BGN 530 thousand.
Long-term loans granted to third parties are intended to help finance these companies’ activities
in line with overall strategic objectives. Some of these loans are secured by mortgages on buildings,
pledges of machinery and equipment, and pledges of securities (shares).
10. Information on the use of funds from the issuance of new securities during the reporting period
On January 27, 2025, an increase in the company’s capital was entered in the Commercial Register
through the issuance of 619,138 ordinary, registered, book-entry shares with voting rights, each with a
par value of BGN 1 and an issue price of BGN 4.13 per share. The shares from the capital increase were
subscribed by the holders of warrants. The proceeds from the new issue amounted to BGN 2,557 thousand
and were used to finance the Company’s working capital.
43
11. Analysis of the relationship between the financial results reflected in the financial statements
for the financial year and earlier published forecasts for these results
There are no published forecasts of financial results.
12. Analysis and evaluation of the policy on the management of financial resources, including the
ability to meet its obligations, possible threats and measures that the issuer has taken or will take to
resolve them
The management of the parent company and respectively the managements of the subsidiaries
currently control the collection of receivables, the implementation of financial ratios under bank
agreements and ensure regular servicing of their obligations.
Financial risk management is fully disclosed in the "Financial Risk Management" Note to the
consolidated financial statements of the Company.
13. Assessment of the feasibility of investment intentions, indicating the amount of available funds
and possible changes in the financing structure of this activity
The Company’s planned investment program for 2026 includes investments totaling €17.8 million
for the acquisition of land, buildings, machinery, equipment, and software.
The program will be financed using the Company’s own funds generated from its ordinary business
operations. The Company faces no difficulties in carrying out its investment plans and making payments
for its operating activities thanks to the positive cash flow generated and its strong liquidity.
14. Information about changes in the reporting period in the basic principles of management of
the issuer and its group of companies under the Accountancy Act
During the reporting period there were no changes in the main management principles of
“Sopharma” AD and its economic group.
15. Information about the main characteristics of the internal control system and risk
management system applied by the issuer in the process of preparing the financial statements,
The information is provided in item 3 of the Corporate Governance Declaration pursuant to Art.
100m, para 8 of LPOS, which is a separate report, published together with the management report.
16. Information about changes in management and supervisory boards during the accounting year
During the reporting period, there were no changes in the management and supervisory bodies of
“Sopharma” AD.
17. Information on the amount of remuneration, rewards and / or benefits of each of the members
of the management and supervisory bodies for the financial year, paid by the issuer and its subsidiaries,
regardless of whether they have been included in the expenses of the issuer, or arising from profit
distribution, including:
“Sopharma” AD prepares a separate report on the implementation of the remuneration policy of
the members of the Board of Directors.
18. Information on held by members of management and supervisory bodies, the procurators and
the senior management of the issuer shares, including the shares held by each of them individually and
as a percentage of shares of each class and provided by the issuer options on its securities - type and
amount of securities on which options have been set, exercise price of the options, purchase price, if
any, and the term of the options.
44
Information about the shares held by the members of the Board of directors of “Sopharma” AD is
indicated in Section IV of this report - information under Art 247 par. 2 from the Commerce Act.
Members of the Audit Committee
31.12.2025
31.12.2024
Number of
shares
Rel. share
of capital
%
Number of
shares
Rel. share
of capital
%
Change
Tzvetanka Zlateva
60
0.00%
-
-
60
Vasil Naidenov
16 928
0.00%
386
0.00%
16 542
Kristina Atanasova - Eliot
-
-
-
-
-
By Decision № 804 - Е of 4 November 2021, the Financial Supervision Commission registered an
issue in the amount of 44,932,633 dematerialized, freely transferable and registered warrants, with an
issue value of BGN 0.28, issued by “Sopharma” AD under Art. 112 b, para. 11 of the LPOS. The underlying
asset of the issued warrants are future ordinary, registered, dematerialized, freely transferable shares,
giving the right to one vote in the General Meeting of Shareholders, which will be issued by the company
on condition, only in favor of the owners of warrants. Each subscribed warrant entitles its holder to
subscribe for one share of a future issue. Holders of warrants may exercise their right to subscribe for the
respective number of shares from a future increase in the company's capital within 3 years at a fixed price
of BGN 4.13 per share.
As of 31 December 2025, none of the members of the Board of directors and the Audit Committee
has warrants.
19. Arrangements (including after the end of the financial year) as a result of which future changes
may occur in the holding of shares or bonds by current shareholders or bondholders
There are no such arrangements.
20. Information about pending legal, administrative or arbitration proceedings relating to liabilities
or receivables of the issuer of at least 10 percent of its equity; if total liabilities or receivables of the
issuer in all proceedings exceeds 10 per cent of its equity, provide information about each case
separately
There are no such pending legal, administrative or arbitration proceedings relating to liabilities or
receivables.
21. Information about the Investor Relations Director, including telephone number and
correspondence address:
Director of Investor Relations of “Sopharma” AD is Pelagia Viatcheva, tel. +359 2 8134 556,
correspondence address - Sofia, 5 Lachezar Stanchev Str., Building A, fl. 11.
VI. Information under Annex 3 to Article 10, p. 2 of Ordinance 2 of LPOS
1. Structure of the capital of the Company, including securities not admitted to trading on a
regulated market in Bulgaria or another Member State, indication of the different classes of shares, the
rights and obligations of each class of shares and the portion of the total capital represented by each
class
45
The total number of shares of “Sopharma” AD as at 31 December 2025 is 539 157 603 with a
nominal value of BGN 1 per share. All issued shares are registered, dematerialized, ordinary and indivisible,
in accordance with the Articles of Association of the company. All issued shares are of one class. Each
share gives the right to one vote in the General Meeting of Shareholders, the right to a dividend and a
liquidation share, proportional to the nominal value of the share.
Structure of the capital of “Sopharma” AD as at 31 December 2025:
Physical persons:
6 742
83 078 364 shares
15.41%
Legal persons:
142
456 079 239 shares
84.59%
The capital of the Company may be increased by a decision of the General Meeting of Shareholders
adopted by majority as required by law. In case of capital increase, each shareholder has the right to
acquire shares of the new emission, which correspond to their share in the capital before the increase. A
shareholder cannot participate in person or by proxy in voting related to:
• Claims against them;
• Taking action or refusal to act, related to the fulfillment of obligations to the Company;
• Taking of decision under art. 114, par. 1 of LPOS, in case they are an interested party within the
meaning of LPOS.
2. Information regarding the direct and indirect ownership of 5 percent or more of the voting rights
at the General Meeting of the Company, including details of the Shareholders, the size of their
shareholding and the type of shareholding
Shareholders holding more than 5 percent of the Company’s capital as at 31 December 2025 are as
follows:
SHAREHOLDERS
Shares
%
„Donev Investments Holding“ AD, UIC: 831915121, Sofia 12,
Pozitano Str.
217 008 000
40.25%
“Telekomplect Invest“ AD, UIC: 201653294, Sofia, 9, P.R.
Slaveikov sq.
90 127 825
16.72%
Ognian Donev
49 020 000
9.09%
3. Information about shareholders with special control rights
The Articles of Association of “Sopharma” AD do not provide for special control rights.
4. Agreements between shareholders which are known to the Company and which may lead to
restrictions on the transfer of shares or voting right
There are no such agreements.
46
5. Significant contracts of the Company that take effect, are amended or terminated due to a change
in control of the company in a mandatory tender offer and the effects thereof, except where disclosure
of this information may cause serious damage to the company; exemption under the preceding
sentence shall not apply in cases where the company is obliged to disclose information under the Law
There are no such contracts.
Date: 27 April 2026 Ognian Donev, PhD
Executive Director
Ognian
Ivanov
Donev
Digitally signed
by Ognian
Ivanov Donev
Date: 2026.04.27
22:14:13 +03'00'
1
DECLARATION
for corporate governance
according to art. 40 of the Accounting Act and art. 100n, para 8 of LPOS
of SOPHARMA GROUP
The undersigned Ognian Ivanov Donev, in his capacity as an Executive Director of “Sopharma” AD,
declare the following:
I. Information on compliance, as appropriate, with the Bulgarian Corporate Governance Code
prepared by the National Corporate Governance Commission (NCGC), approved by the Deputy
Chairman of the Financial Supervision and Corporate Governance Commission, which is applied by
Sopharma Group in addition to the Code.
The public companies in Sopharma Group adopted and continue to comply with the established
in October 2007, with subsequent amendments in 2012, 2016, 2021 and 2024 National Code of Corporate
Governance (NCCU), approved by the Deputy Chairman of the Financial Supervision Commission.
Good corporate governance is a set of balanced relationships between the Management bodies
of the Group, its shareholders and all stakeholders - employees, business partners, creditors of the
company, potential and future investors and society as a whole.
Along with the principles of recommendatory nature, public companies in Sopharma Group have
established a certain set of requirements for corporate governance, compliance with which is mandatory
for their management bodies, namely:
• Protection of shareholders' rights;
• Ensuring fair treatment of all shareholders, regardless of the number of shares held by them;
• Recognition of the rights of the interested parties and promotion of the cooperation between
the companies and the interested parties;
• Ensuring timely and accurate disclosure of information on all matters related to the companies,
including the financial condition, results, ownership and management of the companies;
• Supporting the strategic management of the companies, control over the activities of the
management and its accountability to the company and the shareholders.
The Corporate Governance Code is applied on a "comply or explain" basis. This means that
Companies comply with the Code, and in case of deviation, their management should clarify the reasons
for this. Companies will publish information on the implementation of the Code in their annual reports
and on their websites.
• The actions of the ir managements are aimed at establishing the principles of good corporate
governance, increasing the confidence of shareholders, investors and persons interested in the
management and activities of the Group;
• The managements of companies in the Group approve a Policy for Disclosure of Information in
accordance with legal requirements and and the Articles of Association.
“Sopharma” AD is a member and participated in the establishment of the National Corporate
Governance Commission.
1. MANAGEMENT OF THE PARENT COMPANY “SOPHARMA” AD - BOARD OF DIRECTORS
1.1. Functions and responsibilities
The Board of Directors of “Sopharma” AD manages the Company independently and responsibly
in accordance with the established vision, goals and strategies of the Company and the interests of the
shareholders. The members of the Board of Directors give a guarantee for their management in the
amount of their quarterly gross remuneration.
2
During their term of office, the members of the Board of Directors shall be guided in their activities
by the generally accepted principles of integrity, loyalty, managerial and professional competence. The
Board of Directors complies with the Code of Conduct of the Company's employees, adopted by the Board
of Directors on March 25, 2025 and Code of Conduct of the Board of directors adopted on 26 March, 2007.
The management of “Sopharma” AD, represented by the Board of Directors, also:
• monitors the results of the activities in the Parent Company and the Group and, if necessary,
initiates change in the management;
• treats all shareholders equally, acts in their interest and with care of a good trader;
• encourages the implementation and monitors the compliance of the subsidiaries with the
adopted principles of sustainable development at group level, also promotes the establishment of a
culture of sustainable development;
• ensures and controls the integrated functioning of the accounting and financial reporting
systems;
• ensures and controls the construction and operation of a risk management system, incl. for
internal control and internal audit;
• is responsible for the creation and reliable functioning of the financial information system of
the Parent Company and the Group;
• gives the guidelines, approves and controls the implementation of: the business plan of the
Parent Company and the Group, essential transactions and etc.;
• reports on its activities to the General Meeting of Shareholders, preparing an annual report and
submitting it for approval to the GMS.
1.2. Election and dismissal of members of the Board of Directors
The General Meeting of Shareholders elects and dismisses the members of the Board of Directors
of “Sopharma” AD, in accordance with the law and the Articles of Association of the Company, observing
the principles of continuity and sustainability of the work of the Board of Directors. All members meet the
legal requirements for holding office.
In case of proposals for election of new members of the Board of Directors, the principles of
compliance of the competence of the candidates with the nature of the activity of the Parent Company
and the Group.
The performance of the members of the Board of Directors is subject to annual evaluation.
1.3. Structure and competence
The number of the members and the structure of the Board of Directors are determined in the
Articles of Association of the Company. The company is managed and represented by a Board of Directors,
which consists of five individuals meeting the requirements of Article 234 of the CA and Art. 116a
1
, para.
2 (former Art. 116a, para. 2) of the Law on public offering of securities.
The composition of the Board of Directors elected by the General Meeting is structured in a way
that guarantees the professionalism, impartiality and independence of the decisions and actions of its
members in connection with the management of the Group.
The Board of Directors shall ensure a proper distribution of tasks and responsibilities among its
members. The main functions of the members of the Board of Directors and the number of independent
members are enshrined in the Articles of Association of the Company and the law. The main function of
the independent directors is to control the actions of the executive management and to participate
effectively in the work of the Company in accordance with the interests and rights of shareholders. There
is one independent member of the Board of Directors of “Sopharma” AD.
The competencies, rights and obligations of the members of the Board of Directors follow the
requirements of the law, the Articles of Association and the standards of good professional and
managerial practice.
3
The members of the Board of Directors of “Sopharma” AD have appropriate knowledges and
experience, which is required by their position. After their election, the new members of the Board of
Directors should be familiar with the main legal and financial issues related to the activities of the Group.
The company stimulates the raising of the qualification of the members of the Board of Directors.
The members of the Board of Directors have the necessary time to perform their tasks and duties.
The Articles of Association of the Company do not specify the number of companies in which the members
of the Board of Directors may hold managerial positions, in order not to limit their activities.
The election of the members of the Board of Directors of the Parent Company is done through a
transparent procedure, which provides, among other things, timely and sufficient information about the
personal and professional qualities of the candidates for members. The number of consecutive terms of
office of the members of the Board of Directors ensures the effective operation of the Parent Company
and compliance with legal requirements. According to the Articles of Association of the Parent Company,
the members of the Board of Directors may be re-elected without restriction.
1.4. Remuneration of the members Board of Directors
The Management of all public companies of the Group have prepared and implements a
Remuneration Policy, which is adopted by the General Meeting of Shareholders.
The Remuneration Policy has been developed in accordance with Ordinance № 48 of March 20
2013 of the Financial Supervision Commission and the Law on public offering of securities. The amount
and structure of the remunerations are determined by the General Meeting of Shareholders.
In accordance with the legal requirements and good practice for corporate governance, the
amount and structure of remuneration take into account:
• The obligations and the contribution of each member of management bodies in the activity and
the results of the respective company. The members of the management bodies receive a permanent
remuneration in the form of an amount determined by the General Meeting of Shareholders, paid under
the terms and conditions of the management contracts concluded between them and the Company.
• The possibility for selection and retention of qualified and loyal members of the management
bodies.
• The need for compliance of the interests of the members of the management bodies, the long-
term interests and the sustainable development of the companies. The remunerations of the members
are formed on the basis of the results of the company's activity and is in accordance with the business
strategy, goals, values and long-term interests of the Group.
• The executive member of the Board of Directors receives a permanent remuneration in the form
of an amount determined by the General Meeting of Shareholders, paid under the terms and conditions
of the management contract concluded between him and the Company.
• The remunerations and bonuses of the members of the management bodies and of the
Executive Director of the Company must be determined by the General Meeting of Shareholders.
According to the Articles of Association of the Parent Company, in case of a positive financial result /profit/
and by decision of the General Meeting, the Executive Director is entitled to receive a one-time
remuneration of up to one percent of the net profit of the Company.
• The remunerations and bonuses of the members of the management bodies and of the
Executive Director of the Company must be determined by the General Meeting of Shareholders.
• The remuneration of the independent directors is only permanent without additional incentives
and reflects their participation in meetings, as well as the implementation of their tasks to control the
actions of the executive management and to participate effectively in the work of the Company.
So far, the executive member has not been granted shares, stock options or other financial
instruments.
By qualified majority, the management bodies may decide to determine the range of employees,
among which an amount of up to 2% of the value of the Parent Company's profit for each financial year
shall be distributed as a bonus.
4
The same is possible only in the presence of a decision of Shareholders to determine the specific
amount of the bonus on the General Meeting, which adopts the relevant audited annual financial
statements and if there is a positive financial result /profit/.
The disclosure of information about the remuneration of the members of the Board of Directors
is in accordance with the legal norms and the Articles of Association of the public companies in the Group
and the Parent Company.
Shareholders have easy access to the adopted company policy for determining the remuneration
and bonuses of the members of the Board, as well as to information on the annual remuneration and
additional incentives received by them. Information on the remuneration of the members of the Board of
Directors is presented in the annual financial report, in the Report on the implementation of the
Remuneration Policy of the Board of Directors and is published on the websites of the companies.
1.5. Conflict of interests
The members of the management bodies shall endeavor to avoid and prevent any actual or
potential conflict of interest.
The procedures for avoiding and disclosing conflicts of interest are regulated in the Articles of
Association of the companies, internal document and rules.
The members of the management bodies have an obligation to immediately disclose conflicts of
interest and to provide the shareholders with access to information on transactions between the
companies and its subsidiaries and members of management bodies or related persons.
Every potential conflict of interest should be disclosed to management bodies.
A potential conflict of interest exists when the company intends to enter into a transaction with a
legal entity in which a member of the management body or related persons have a financial interest.
Art. 114 of the LPOS describes in detail the hypotheses under which the persons who manage and
represent a public company, including the persons - representatives of a legal entity that is a member of
the management body of the public company, without being expressly authorized by the general meeting
of the public company, cannot undertake certain transactions. Article 114 of the Law on public offering of
securities and subsequent, provide an opportunity for shareholders to review and approve in advance
transactions involving interested parties and related parties in order to avoid conflicts of interest and
violate the rights of shareholders.
1.6. Committees
The work of the management body is supported by committees, as the management body
determines the need for their establishment in accordance with the specifics of the company.
Committees are set up on the basis of a written structure, scope of tasks, functioning and
reporting procedures.
The Audit Committee of “Sopharma” AD consists of three people, with a 3-year term determined
by the GMS. The members of the Audit Committee meet the requirements of the Independent Financial
Audit Act.
2. INDEPENDENT FINANCIAL AUDIT AND INTERNAL CONTROL
The Audit Committee of “Sopharma” AD and its members, in their capacity as persons in charge
of general management, provide supervision of internal audit activities and monitor the overall
relationship with the external auditor, including the nature of non-audit services provided by the Group's
auditor.
The management of “Sopharma” AD, assisted by the Audit Committee, motivates in writing before
the General Meeting its proposal for selection of an auditor, guided by the established requirements for
professionalism.
5
The management of the companies in the Group ensures compliance with the applicable law
regarding the independent financial audit.
A rotation principle is applied in the proposals and selection of an external auditor. The auditors
are selected by the GMS for each financial year.
The companies of Sopharma Group have a system in place for internal control, which includes
identifying the risks associated with the activities of the Company and supporting their effective
management. It also ensures the effective functioning of reporting and disclosure systems.
3. PROTECTION OF SHAREHOLDERS 'RIGHTS
The management of the public companies in Sopharma Group guarantees equal treatment of all
shareholders, including minority and foreign shareholders and protects their rights, as well as facilitates
their exercise within the limits allowed by applicable law and in accordance with the Articles of Association
of the companies. The managements provide information to all shareholders about their rights, financial
results of the Company and corporate events through an information disclosure system and the
company's website.
3.1. General meeting of the shareholders
Information on the rules according to which general meetings of shareholders are convened and
held, including voting procedures, is available to all shareholders. The corporate managements of the
public companies in Sopharma Group provide sufficient and timely information on the date and place of
the General Meeting, as well as complete information on the issues to be considered and resolved at the
meeting.
During the General Meeting, the management of the respective public company of the Group
ensures the right of all shareholders to express their opinion and ask questions.
• Shareholders with voting rights have the opportunity to exercise their voting rights at the
General Meeting of the public company in person or through representatives, as well as by
correspondence or electronically. The procedure for shareholders' participation in the General Meeting is
announced in the Notice of its convening.
• The management maintains a database of contacts of its shareholders holding 5 or more than
5% of the company's capital, which allows sending direct messages to them or to a person designated by
them.
• The management exercises effective control by creating the necessary organization for the
voting of the authorized persons in accordance with the instructions of the shareholders or in the ways
permitted by law.
• The management organizes and conducts regular and extraordinary General Meetings of the
company's shareholders in accordance with statutory procedures that ensure equal treatment of all
shareholders, including minority and foreign, and the right of each shareholder to express its views on the
agenda of the General Meeting.
• The management determine the procedures for holding the General Meeting of Shareholders
in a manner that does not complicate or increase the cost of voting unnecessarily.
• The management takes actions to encourage the participation of shareholders in the General
Meeting of Shareholders, incl. by providing the opportunity for remote presence through technical means
(including the Internet) in cases where this is possible and necessary, and does not contradict the NCCU.
• The managements of the public companies in Sopharma Group believe that the prerequisites
for sufficient transparency in relations with investors, financial media and capital market analysts have
been created.
• The processes and procedures for holding General meetings of Shareholders guarantee equal
treatment of all shareholders, including minority and foreign shareholders, and protect their interests.
All members of the Managements try to attend the General Meetings of the shareholders of the
Company.
6
3.2. Materials of the General Meeting of Shareholders
The materials related to the General Meeting of Shareholders are available to the shareholders
from the day of announcing the invitation to convene it in the Commercial Register. They are submitted
to the Financial Supervision Commission and are published on the company's website, as well as in the
relevant media, at least 30 days before the date of the General Meeting and upon request are provided
free of charge to shareholders.
The texts in the written materials related to the agenda of the General Meeting are specific and
clear and do not mislead the shareholders. All proposals regarding major corporate events are presented
as separate items on the agenda of the General Meeting, incl. the profit distribution proposal.
The public companies of Sopharma Group maintain on their websites a special section on the
rights of shareholders and their participation in the General Meeting of Shareholders.
The managements of these companies assist the shareholders entitled under the current
legislation to include additional issues and to propose decisions on issues already included in the agenda
of the General Meeting.
3.3. The managements of the public companies in the Group guarantee the right of the shareholders
to be informed about the decisions taken by the General Meeting of Shareholders.
The minutes of the General meetings of shareholders are published within the statutory period,
subject to the requirements for maximum publicity and transparency of information provided, its
simultaneous publication, using sufficiently accessible platforms for information disclosure, including its
own website. All materials from the held general meetings of the shareholders shall be kept accessible to
the shareholders and all interested parties for a period determined in the LPOS.
In 2025 the public companies of Sopharma Group held General Meetings of Shareholders as
follows: In 2025, “Sopharma” AD held three General Meetings of Shareholders, “Sopharma Trading”AD
held three GMS, “Momina Krepost” AD held one GMS, “Sopharma Imoti” REIT held two GMS, “Sopharma
Buildings” REIT held one GMS, and “Doverie-United Holding” AD held two GMS.
The Board of Directors considers that preconditions have been created for sufficient transparency
in the relations with investors, financial media and capital market analysts.
3.4. Equal treatment of shareholders of one class
All shareholders in one class are treated equally.
All shares within one class give equal rights to shareholders of the same class.
3.5. The management of the public companies in Sopharma Group guarantee the provision of
sufficient information to investors regarding the rights granted by all shares of each class before their
acquisition.
All public companies in the Group have followed the provisions of the Public Offering of Securities
Act and have drawn up a prospectus upon their initial public offering. The subsequent information
available in the relevant platforms, registers and the company's website, as well as the opportunity for
each potential investor to ask all their questions to the Investor Relations Directors, provide reliable and
comprehensive information necessary for making a decision to invest in the Group's financial instruments.
3.6. Consultations between shareholders on fundamental shareholder rights
Within the limits allowed by the current legislation and in accordance with the provisions of the
Articles of Association of the respective companies, the managements of the public companies in
Sopharma Group do not prevent the shareholders from consulting each other on issues related to their
basic shareholder rights allows the commission of abuses.
7
3.7. Shareholder transactions with controlling rights and abusive transactions
The managements of the public companies in Sopharma Group do not allow the implementation
of transactions with shareholders with controlling rights, which violate the rights and/or legitimate
interests of other shareholders, including under the terms of negotiations with itself.
3.8. Remuneration policy
The management bodies of the public companies in the Group prepare a Report on the
implementation of the remuneration policy of the members of the Board of Directors in 2025. The report
reveals the way in which the Remuneration Policy is implemented, paying special attention to avoiding
the creation of incentives for excessive risk-taking, conflict of interest or other behavior leading to adverse
consequences. The amount and structure of the remunerations are determined by the General Meeting
of the relevant company.
4. DISCLOSURE OF INFORMATION
The managements of the public companies in the Group approve the Policy for disclosure of
information in accordance with the legal requirements and the Articles of Association.
In accordance with the adopted information disclosure policy, managements establish and
maintain a disclosure system.
The information disclosure policy guarantees equality of the addressees of the information
(shareholders, stakeholders, investment community) and does not allow misuse of inside information and
manipulation of the market of financial instruments.
The managements of the public companies in Sopharma Group also:
• ensure that the disclosure system provides complete, timely, accurate and comprehensible
information that allows for objective and informed decisions and assessments;
• promptly disclose the capital structure of the companies and agreements that lead to the
exercise of control in accordance with its rules for disclosure of information;
• within the limits of the current legislation and in accordance with the provisions of the Articles
of Association of the companies ensure that the rules and procedures under which the acquisition of
corporate control and extraordinary transactions such as mergers and sale of significant assets are clearly
and timely disclosed;
• approve and control the observance of internal rules for preparation of the annual and interim
reports and the procedure for disclosure of information;
• have adopted a Disclosure Policy, which ensure the timely disclosure of any material periodic
and incidental information about the companies, their managements, their corporate managements, their
operational activities, their shareholder structure;
• disclose non-financial information on an annual basis in accordance with national law and
applicable European law. The non-financial statement is part of the annual report, which includes
information on how and to what extent the company's activities can be classified as environmentally
sustainable, such as: what part of its turnover is due to products and services related to economic
activities which qualify as environmentally sustainable; what part of its capital expenditure, where
applicable, and what part of its operating costs are related to assets or processes related to economic
activities that qualify as environmentally sustainable.
As part of the disclosure system, Sopharma Group maintain a website with approved content,
scope and periodicity of the disclosed information. The Group`s website is:
www.sopharmagroup.com
The information disclosed through the Sopharma Group website includes:
➢ basic commercial and corporate information identifying the Group;
➢ up-to-date information on the shareholder structure;
8
➢ the rules and the adopted policies related to the activities and functioning of the Group;
➢ information on the structure and composition of the management and control bodies of the
Parent Company, as well as basic information on their members, including information on their
committees;
➢ financial statements for the last 10 years;
➢ the materials for the forthcoming general meetings of the shareholders of “Sopharma” AD, as
well as additional ones, received by law;
➢ information on the decisions taken by the general meetings of shareholders for at least the last
three years, incl. information on the dividends distributed by the Group for this period;
➢ information for auditors;
➢ information about upcoming events;
➢ information on issued shares and other financial instruments;
➢ important information related to the activities of the Group;
➢ information on the rights of shareholders, incl. sufficient information on the right of
shareholders to request the inclusion of issues and to propose decisions on issues already included in the
agenda of the General Meeting under Article 223a of the Commerce Act;
➢ contact information with the Investor Relations Director of “Sopharma” AD.
The Group also maintains foreign language versions of the corporate website with similar content
in the following languages: English, Russian and Polish.
The Group periodically discloses information about corporate governance. Disclosure of corporate
governance information is in accordance with the "comply or explain" principle.
The managements of the public companies in Sopharma Group ensure the disclosure of any
material periodic and incidental information about the Group, through channels that provide equal and
timely access to relevant information by users.
In 2025 the public companies in the Group disclose the publicly regulated information by
providing it to the Financial Supervision Commission and to the public. Regulated information is disclosed
to the public in a way that ensures it reaches the widest possible range of people at the same time, and
in a way that does not discriminate against them. This is done through the X3News and the Investor.bg
information systems, as well as on the Warsaw Stock Exchange, including through the Polish Information
Agency (PAP).
5. STAKEHOLDERS. SUSTAINABLE DEVELOPMENT.
Sustainable development is the achievement of a balance between social and environmental
principles, such as socially justified and environmentally friendly economic development. It aims to meet
the needs of the current generation without compromising the ability of future generations to meet their
own needs.
The Corporate Managements are committed to establishing specific actions and policies regarding
the sustainable development of the companies, including the disclosure of information related to climate
and social aspects of their activities.
The Managements ensure effective interaction with stakeholders. This category includes certain
groups of persons who are directly affected by the Group and who in turn can influence its activities, incl.
suppliers, customers, employees, creditors, public pressure groups and other employees. The companies
of the Group identify the stakeholders in relation to its activities based on their degree and areas of
influence, role and attitude to its sustainable development.
In its Disclosure Policy, the managements comply with legal requirements and the principles of
transparency, accountability and business ethics.
The managements of the companies guarantee sufficient information to all interested parties
about their legally established rights.
9
In accordance with this policy, the management of the companies in the Group develop specific
rules for taking into account the interests of stakeholders, which rules ensure their involvement in
resolving certain issues requiring their position. These rules guarantee the balance between the
development of the companies in the Group and the economic, social and environmentally friendly
development of the environment in which it operates.
Corporate managements of the companies in Sopharma Group maintain effective relationships
with stakeholders. Periodically, in accordance with the legal norms and the good international practice
for disclosure of non-financial information, the Group informs about economic, social and environmental
issues concerning the interested parties, such as: fight against corruption; work with employees, suppliers
and customers; the social responsibility of the Group; environmental protection and human rights
violations.
The managements of the companies in the Sopharma Group guarantee the right for timely and
regular access to relevant, sufficient and reliable information about the Group when the interested parties
participate in the corporate governance process.
6. INSTITUTIONAL INVESTORS, FINANCIAL INSTRUMENTS MARKETS AND OTHER INTERMEDIARIES
The corporate managements of the public companies in the Sopharma Group ensure effective
interaction of the companies with their shareholders - institutional investors, as well as with the regulated
markets of financial instruments and investment intermediaries on these markets.
Managements of the companies use the services of investment intermediaries whose
recommendations or actions are based on market information and principles. The same applies
accordingly to the operators of markets on which financial instruments issued by the Company are traded.
“Sopharma” AD encourages the involvement of investment intermediaries and institutional
investors in defining corporate governance policies and practices of the Parent Company.
The company is listed on the Bulgarian and Warsaw Stock Exchanges, as market operators disclose
and document the criteria and procedures for recognizing the requirements for listing on the main market.
II. Explanation of which parts of the Corporate Governance Code under item 1, letter “a” or letter
“b” of Art. 100 “n” para. 8 are not observed and what are the grounds for this, respectively when the
issuer has decided not to refer to any of the rules of the Corporate Governance Code - grounds for this
The public companies of Sopharma Group comply with all parts of the Corporate Governance
Code, applicable to the relevant Company.
III. Description of the main characteristics of the issuer's internal control and risk management
systems in connection with the financial reporting process
The internal control system of the financial reporting and reporting in the companies of Sopharma
Group has been developed as a result of studies of good accounting and control practices in Bulgaria and
of large pharmaceutical groups, as well as in compliance with national legal requirements, incl. for
companies and groups listed on regulated markets. It is in a constant process of monitoring by the
management and of further development and improvement.
The internal control system of the financial reporting and reporting of the companies in the Group
are set of behavioral and technical principles, rules, means, procedures and control actions, which are
specially developed and adapted to the specifics of the companies, its activities and reporting system. It
is aimed at:
• ensuring current monitoring and directing the reporting activities towards their goals and
expectations of its various users, and achieving their necessary efficiency and effectiveness, incl. when
using the borrowed resources; and
10
• ensuring adequate and timely addressing of identified business risks that have an impact on
financial, management and operational reporting.
In particular, it is designed to create leadership comfort that:
• the companies in the Group comply with the applicable legal requirements in the field of
accounting, reporting and other directly related areas and especially the requirements of the Accounting
Act and International Financial Reporting Standards;
• the Group follows the instructions and guidelines of the top management regarding the
reporting and documentation;
• there is the required efficiency and effectiveness of the financial and accounting process, incl.
consolidation and documentary justification;
• there is a high degree of security in the protection and maintenance of the assets of the
companies in the Group, incl. and prevention of fraud and error; and
• there is the provision of reliable, high-quality and timely financial and operational information
for internal and external users.
The main components of the internal control system for financial reporting and reporting include:
a) adoption and observance of the ethical principles and rules of conduct, which are adopted by
the Code of Ethics of the employees in the companies of Sopharma Group and with regard to financial
reporting and accounting and all related processes, procedures and actions of all staff of the company;
b) development and determination of an optimal structure of units involved in the processes
related to financial reporting, with clearly defined responsibilities and delegations, powers and
obligations, incl. through developed written internal documents;
c) developing policies for the selection, training and development of staff involved in accounting
and financial reporting;
d) development, implementation and maintenance of control procedures and rules for each stage
of the processes related to accounting, financial reporting and reporting, with priority phased introduction
of formalized written procedures;
e) development of procedures for identification, monitoring and management of risks related to
accounting, financial reporting and accounting, incl. the development of adequate measures and actions
for their minimization; and
f) development and maintenance of adequate organization of the information system, incl.
controls for access, input, processing and retrieval of data, changes in the system, distribution of
responsibilities of its employees, as well as storage and protection of the integrity and authenticity of data
in the system.
Control environment
Ethical principles and rules related to the processes of accounting, financial reporting and
accounting
The managements of the various levels of the companies in the Group has introduced and
constantly monitor the observance of ethical values such as integrity, independence and objectivity as the
foundations of the professional conduct of all persons involved in the processes related to accounting and
financial reporting in the Group.
They are the framework against which the control environment is built and which have influenced
the effectiveness of model design, administration and ongoing monitoring of other components of
internal control in the field of accounting and financial reporting. Integrity and ethical behavior are a
product of the established general ethical and behavioral standards of the companies in the Group. They
are clearly communicated with all financial and accounting and control staff and they are constantly
validated in practice.
11
The ethical principles that guide professional conduct that should be followed by all persons
directly or indirectly involved in accounting and financial reporting processes are: objectivity; impartiality;
independence; conservatism; transparency; methodological justification; consistency and use of
independent experts. These principles are applied at all stages of financial reporting when: choosing an
accounting policy; accounting closing; the preparation and application of accounting estimates and the
preparation of public and management financial statements, other public reports and documents
containing financial information.
Management bodies responsible for the individual components of the overall accounting and
financial reporting process
Management bodies that have certain responsibilities and powers regarding the process of
financial reporting and resp. other related processes are different for the Group companies. For the Group
they include: the Board of Directors, the Audit Committee, the Chief Financial Officer, the Chief
Accountant, the Head of the Reporting Department and the Head of the Internal Audit Department of the
Parent Company "Sopharma" AD.
Their functions and responsibilities can be summarized as follows:
• The Board of Directors accepts and approves: the accounting policy and the changes in it for
each reporting period, the developed accounting estimates as of the date of each reporting period, incl.
the applied methodology; financial statements and other public documents containing financial
information; the functions, organization and responsibilities of all structural units and their heads,
engaged in the processes of and related to financial reporting; the development, implementation and
ongoing monitoring of the functioning of the individual components of the internal control system, incl.
the activity of the Internal Audit Department;
• The Audit Committee independently monitors the implementation of the financial reporting
processes, the applied accounting policies and the effectiveness of the internal control system of the
company, incl. risk management, as well as the implementation and results of the external and internal
audit;
• The CFO is responsible for the overall organization, operation and ongoing control of accounting
and financial reporting. He directly manages the whole process, makes all key decisions related to financial
statements and other public documents with financial information. It also approves at the first level the
accounting policy, the main reporting methodologies and evaluates and accepts the work of used
independent experts (appraisers, actuaries, consultants, etc.) involved in the financial reporting process.
He monitors on an ongoing basis, together with the Chief Accountant and the Head of the Reporting
Department, the effects and risks on the financial statements of the identified business risks for the
company;
• The Chief Accountant organizes and manages the accounting activities of the company - controls
and methodologically directs the current accounting, manages the preparation of financial and
management reports; is responsible for the development and implementation of accounting
methodologies and techniques; is responsible for the process of closing the accounts and preparing all
accounting estimates, proposes and develops accounting policies and changes in them, monitors ongoing
changes in IFRS. It is the direct contact with the used internal and external experts for the purposes of
financial reporting;
• The Reporting Department and its head carry out the overall organization, methodological
support and implementation of the process related to the preparation of the consolidated financial
statements of the company, incl. the current control, instruction, monitoring and analysis of the financial
statements for the purposes of consolidation of the companies of Sopharma Group;
• The Internal Audit Department performs ex-post control over the operations and activities
related to the preparation of the company's financial statements and compliance with the established
internal controls over the individual routine and non-routine processes.
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Policy and practice related to human resources in the financial and accounting departments
The companies of the Group have established policies and rules related to the management of
human resources involved in the process of financial reporting and other processes related to it. These
include imposed and implemented policies and procedures in the selection and appointment of such staff,
aimed at education and professional experience, computer literacy and foreign language skills of the
candidates. The selection is guided by the requirements set out in the job descriptions of the individual
positions.
Personnel management policies also include those related to the continuous additional
professional training, updating and expanding the knowledge and skills of the employed specialists. It is
obligatory to conduct trainings in case of changes in normative acts, IFRS, tax laws and others, directly
related to their work. The purpose of this policy is to increase their expertise and improve their skills to
increase efficiency in the performance of their duties.
Process of the Group for risk assessment related to financial reporting
The Board of Directors, the Audit Committee, the Chief Financial Officer and the Chief Accountant
of the Group`s public companies have a key role in the process of continuous identification, monitoring
and control of business risks, incl. to establish and control the effects of those of them that have a direct
impact on individual processes and objects of accounting, financial reporting and reporting of the
company. Together, they provide comprehensive monitoring of the risk management process.
Risk factors related to sound financial reporting include external and internal events, transactions
and circumstances that may arise and adversely affect the entity's ability to create, maintain and process
accounting and operational data in a manner that ensures reliable financial statements, reports and
reports. The following factors are defined in the Group as main:
a) external risks are defined as: change in the business environment and the market environment
of the companies and its main products; the activity of competitors; change in the legal and regulatory
framework; changes in key suppliers or customers; unscrupulous or malicious actions by outsiders; rapid
corporate growth and group growth; development of companies in which it holds significant investments
in the form of participations and/or loans.
b) the internal risks include: change of the technological base of the companies, the manner and
intensity of use of its assets and resources; new products and activities; new accounting policies and IFRS;
changes in the staff of the departments responsible for and/or financial reporting; changes in information
systems; errors in work and/or insufficient knowledge or skills of staff, rapid expansion abroad; application
of multiple estimates - in particular the application of fair values and the calculation of the recoverable
amount of certain non-current assets, with the participation of external experts.
Risk factors that are recurring and/or related to the application of accounting policies and
estimates are currently monitored by the chief accountant of the Group, who proposes management
solutions and properly reflects their effects in the financial statements. The new risk factors are identified
by the CFO of the Parent Company and are assessed and developed by him, together with the Chief
Accountant and the Head of the Reporting Department. If necessary, the help of independent consultants
is used, incl. and the application of new IFRSs. The general monitoring of the process of managing the risks
related to financial reporting is carried out by the audit committee of the company.
Information system of the companies in the Group. Accounting Department - organization of the
accounting function in the companies in the Group and the financial reporting process
Information System
information system of “Sopharma” AD includes infrastructure (physical and hardware
components), software, people, procedures and data. In 2013, the Company implemented the Microsoft
Dynamics AX ERP system. It covers all processes of sales, warehousing, master planning, production and
accounting.
13
The system has been adapted and implemented, taking into account the specifics of the company
itself, but good practices have been borrowed from the pharmaceutical sector and other industries.
In addition to the main information system, the Company also uses the following systems: Hermes
- human resources management system, which covers the entire management cycle related to planning,
evaluation, remuneration and human capital development in “Sopharma” AD. The connection between
the two information systems is that Hermes data is entered into Microsoft Dynamics AX. The quality of
information generated by Microsoft Dynamics AX and other products provides significant opportunities
for management to make adequate, reasonable and timely decisions in the management and control of
activities for the preparation of various financial and management reports and other public documents
with financial information.
The information system of “Sopharma Trading” AD includes infrastructure (physical and hardware
components), software, people, procedures and data. The company started in 2014 the phased
implementation of the SAP ERP system. It covers all major transaction processes in the Company. The
system has been adapted and implemented, taking into account the specifics of the Company itself, but
good practices have been borrowed from the pharmaceutical sector and other industries.
In addition to the main information system, the Company also uses the following systems: FM +
transport planning and management, mobile application for driver management (on SAP mobile
platform), KNAPP WMS and SAP WMS - warehouse management, SAP Hybris - online management sales,
Hermes - HR management. The connection between them is made through interfaces. The quality of the
information generated by the ERP system SAP and other products provides significant opportunities for
the Management to make adequate, reasonable and timely decisions in the management and control of
the activities for the preparation of various financial and management reports and other public
documents with financial information. Given the smaller scale of the other companies in the Group, each
of them uses software appropriate to its needs. The information system relevant to the objectives and
process of financial reporting covers methods and documentation that:
• identify and reflect all valid transactions and operations;
• describe transactions and operations in a timely manner in sufficient detail to enable them to
be properly classified for financial reporting purposes;
• assess the value of transactions and operations in a way that reflects their appropriate monetary
value in the financial statements;
• determine the time period during which the transactions and operations have occurred in order
to allow their recording in the appropriate accounting period;
• present the transactions and operations and related disclosures in the financial statements in
accordance with the requirements of the reporting framework.
The "Information Technology" Department is responsible for the risk-free functioning of the
information system in the Parent company and in ”Sopharma Trading” AD – “Business and Technological
Development”. In each of the companies in the Group was established “Information technology”
department, which is responsible for the smooth functioning of the different types of software.
Accounting Department - fulfillment of the accounting function and key role in the financial
reporting process
The Accounting Department of the Parent Company is directly subordinated to the Executive
Director. It is headed by a chief accountant. It consists of: Deputy Chief Accountant, and heads of sectors
and operational accountants. Structurally, it consists of the following sectors: fixed assets, materials, cost,
sales, foreign exchange operations, lev operations, wages. According to its functional characteristics, it
covers and fully implements the accounting function in the Company, internal accounting control and
preparation of financial statements.
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His responsibilities include the correct and consistent application of the developed accounting
policies, the development and implementation of an internal chart of accounts; accounting
methodologies, current accounting; current accounting analysis and control of reporting data and
documentation; summarizing and classifying the reporting data for the purposes of the financial
statements; the preparation and/or processing of the input data for the accounting estimates together
with the engaged experts, as well as the reporting of established deviations and discrepancies to the
Financial Director; and compliance with regulatory requirements in the field of accounting, taxes and
other related areas.
The accounting department of "Sopharma Trading’’ AD is directly subordinate to the Financial
Director. It is managed by a chief accountant and a deputy chief accountant and supervisor. Structurally,
the accounting department of the company consists of a chief accountant, deputy chief accountant,
consolidation supervisor, senior tax and transfer pricing expert, 2 senior accountants, 7 accountants and
4 consolidation accountants. The accounting department of Sopharma Trading Group consists of three
structural divisions: 1) accounting of the company "Sopharma Trading" AD; 2) group accounting and 3)
accounting of the subsidiaries. The accounting of the Sopharmacy companies is managed by a head of the
accounting department, who is directly subordinate to the Chief Accountant and the Financial Director of
the Parent Company. The financial and accounting operations of the company in Serbia and Belarus are
handled by separate accounting teams, which operationally report to the Chief Accountant and the
Financial Director of the Sopharma Trading Group.
The financial and accounting operations of the company in Serbia and in the Retail segment in
Bulgaria are taken care of by two separate accounting teams.
In each of the companies in the Group there are respective structures that ensure the good
functioning of both the company itself and the control of its financial and accounting activities.
The accounting policy of the Parent Company and the Group, respectively, for the purposes of
preparing the consolidated financial statements, is subject to annual approval at two levels - by the
Financial Director and the Board of Directors of the Parent Company. The most important aspects of it,
necessary for the correct understanding of the financial statements, must be disclosed.
The choice of the reporting framework is defined on the basis of the requirements of the
Accounting Act. The company applies the International Financial Reporting Standards (IFRS) adopted by
the European Union. Ongoing control over the proper application of IFRS is performed by the Chief
Accountant, the Chief Financial Officer and the Audit Committee. Additional confirmation of the
correctness of the application is received from external auditors.
The preparation of the financial statements of the Parent Company for public use is the result of
a complete process of accounting closing of the reporting period. This process is formalized through
documents and rules adopted by the Management. They are related to the performance of certain actions
and procedures, and resp. the preparation of certain documents by persons from the Accounting
Department or by other officials and these actions and procedures are aimed at: carrying out inventories;
analysis of accounts; sending confirmation letters; determining best estimates such as depreciation,
revaluation, impairment and accruals based on reasonable assumptions, consolidation and classification
of accounting data; studies and analyzes of certain legal documents (contracts, lawsuits, opinions of legal
advisers); studies and evaluation of expert reports (appraisers, actuaries, internal auditors, other internal
experts and officials); preparation of reports and financial packages for consolidation; preparation,
analysis and discussion of draft financial statements.
The closing process is led directly by the Chief Accountant and Head of Reporting Department,
with the CFO monitoring and finalizing key issues related to the recognition, classification, valuation,
presentation and disclosure of certain items, transactions and events, and the overall presentation of the
financial statements – individual and consolidated financial statements of the Parent Company.
15
Control activities
The control actions, which are envisaged in the developed and implemented internal controls by
processes, include: reviews of the implementation and the results of the activity; information processing;
physical controls and division of duties and responsibilities.
The general controls related to financial reporting can be categorized as procedures related to
current and periodic reviews and analyzes of financial indicators and the input data for them, through
which the performance and results of the company's activities are presented in the financial statements.
These, in turn, include such reviews and analyzes of actual reported performance data against
budgetary, forecast, previous periods and industry. Such financial analyzes are performed with the
QlikView platform - upgrading the ERP system Axapta 2009. They can usually contain proposals for
optimization or revision of certain budgets.
The controls assigned to the Parent Company's information systems cover both the controls of
the application programs and the general IT controls, which are policies and procedures that help to
ensure the continuous proper functioning of the information systems. The typical controls on the
application programs that are set are: checking the mathematical accuracy of records, maintaining and
reviewing accounts and turnover sheets, automated controls, such as input checks and checks on the
sequence of numbering and non-automatic tracking of exception reports. Common IT controls include:
program change controls, controls that restrict access to programs or data, controls on the deployment
of new releases of bundled software applications, and controls on system software that restrict access or
ongoing monitoring of the use of system utilities that could change financial data or records without
leaving a trace for follow-up.
At “Sopharma Trading” AD the general controls relevant to financial reporting can be categorized
as procedures relating to ongoing and periodic reviews and analyses of financial performance and inputs
that are used to present the performance and results of the Company's operations in the financial
statements. These, in turn, include such reviews and analyses of actual reported performance data against
budget, forecast, prior period and industry data. Such financial analyses are performed using the SAP ERP
and SAP Bl platform.
For management purposes, separate forms have been established and approved under which
monthly reports are prepared. The reports contain actual and budget figures, analysis of variances,
comparison of current with previous period. They may also normally contain proposals for optimization
or revision of certain budgets.
Most of the Group companies have an Information Technology department responsible for
implementing control activities.
The applied physical controls of the companies of the Group include:
a) measures for the physical security of the assets - secure facilities and premises, as well as special
conditions for access to assets and documents;
b) a special procedure for granting access to computer programs and data files;
c) periodic inventories - procedures for organizing and conducting inventories by physical counting
/weighing/ sending appropriate letters for confirmation and comparison with the amounts reflected in
the control inventories and accounting documents/registers. Procedures have been introduced for the
timely analysis of the results of the inventories, development of solutions for their accounting and resp.
approval by the Executive Director.
The developed and implemented procedures for management, organization and implementation
of the main routine processes (supplies and sales), as well as for the processes of preparation and
acceptance of complex estimates (depreciation, impairment, revaluation, actuarial calculations and long-
term provisions) also provide internal controls.
16
They are aimed at: authorization of the individual operation and the issued primary documents;
review and verification of the issued documents and the assets involved in the operation; subsequent
recalculation and comparison with other documents (contracts, applications, confirmations, price lists,
etc.) and persons, as well as the division of duties and responsibilities of the participating officials at each
step of the process, to ensure mutual control between them, as and to reduce the possibility of allowing
a person to be in a position to both commit and conceal errors or fraud in the normal course of his or her
duties.
The Group is in the process of constantly expanding the formalized control procedures and
activities.
Ongoing monitoring of controls
An important priority goal of the management of the companies in Sopharma Group, in the person
of the CFO is to establish and maintain continuous and effective internal control. Ongoing monitoring of
controls by management includes an assessment of whether they are operating as intended and whether
they are being modified in an appropriate manner to reflect changes in conditions. Ongoing monitoring
of controls may include activities such as management review of whether internal management reports
are being prepared in a timely manner and whether key data in them are in line with third-party
confirmation and its projections, and internal auditors' assessment of compliance with policies and
procedures. on the implementation of routine processes (sales and deliveries) by the staff employed in
them, incl. the set internal controls, incl. and in comparison, with the contracts with the counterparties,
as well as supervision over the observance of the ethical norms or the policy for business practice by the
legal department of the companies and the department for relations with the investors. Ongoing
monitoring is carried out to ensure that controls continue to be effective over time.
Internal auditors, as well as other staff performing supervisory, monitoring or control functions,
incl. the accounting department and the reporting department also contribute to the ongoing monitoring
of internal controls over the company's processes through their assessments of individual controls or
groups of controls. They usually provide such information periodically, in the course of their duties and
functions, and their assessments of the functioning of certain internal controls, focusing considerable
attention on assessing their effectiveness, communicating with relevant persons information on identified
strengths and weaknesses of internal controls and make recommendations for their improvement.
Ongoing monitoring activities include the use of external information that identifies problems or
identifies areas for improvement. Such countries are customers, suppliers and servicing banks. In addition,
the regulatory body, represented by the FSC, may also communicate with the company's management
issues that affect the functioning of internal control, for example, exchange of information directly
monitored by the Commission related to the implementation of certain actions or transactions of the
company or inspections from the FSC itself. Also, in the implementation of ongoing monitoring activities,
the management always takes into account the communication with the external auditors related to the
internal control and the identified weaknesses and recommendations.
IV. Information referred to in Article 10 (1) (c), (d), (e), (h) and (i) of Directive 2004/25/EC of the
European Parliament and of the Council of 21 April 2004 on proposals for ingestion
1. Significant direct or indirect shareholdings (including indirect shares through pyramid structures
and cross-shareholdings) within the meaning of Article 85 of Directive 2001/34/EC;
None.
2. Holders of all securities with special control rights and description of these rights;
There are no securities with special rights for the Parent Company and for the other public
companies in the Group. According to the Articles of Association of the companies in the Group, all shares
issued by them are of one class, registered, dematerialized, ordinary and indivisible. Each share gives the
right to one vote in the General Meeting of Shareholders, the right to dividend and liquidation share,
proportional to the nominal value of the share.
17
3. Any restrictions on voting rights, such as restrictions on the voting rights of holders of a certain
percentage or number of votes, deadlines for the exercise of voting rights or systems through which, in
cooperation with the company, the financial rights granted to the securities, are separated from the
possession of the securities;
There are no restrictions on the voting rights in the Parent Company and for the other public
companies in the Group.
4. The rules governing the appointment or replacement of members of the board and the
amendment of the Articles of Association;
For “Sopharma” AD the Board of Directors proposes to the General Meeting amendments and/or
supplements to the Articles of Association, changes in the composition of the Board of Directors, dismissal
and election of a new Board of Directors.
Members of the Board of Directors may be natural and legal persons meeting the requirements
of Article 234 of the CA and Art. 116a
1
, para. 2 (former Art. 116a, para. 2) of the Law on public offering of
securities.
When a member of the Board of Directors is a legal entity, he/she appoints a representative/s for
the performance of his/her duties in the Board. The legal entity shall be jointly and severally liable with
the other members of the Council for the obligations arising from the actions of its representative. The
natural persons, who represent the legal entities - members of the Board of Directors, must meet the
requirements of art. 234, para 2 of the CA.
Persons who have been members of the management or supervisory body of a Company
terminated due to insolvency during the last two years preceding the date of the decision to declare
insolvency may not be members of the Board of Directors if unsatisfied creditors remain.
A person who has been a manager, a member of a management or control body of a company for
which a non-fulfillment of obligations to establish and maintain the levels of stocks determined by him by
an effective penal decree has been established by an effective penal decree may not be a member of the
Council stocks of oil and petroleum products.
At least one third of the members of the Board of Directors must be independent. The
independent member of the council may not be:
• employee in the public company;
• a shareholder who holds directly or through related parties at least 25 per cent of the votes at
the general meeting or is a person related to the company;
• a person who is in a lasting commercial relationship with the public company;
• member of a management or control body, procurator or employee of a company or other legal
entity;
• a person related to another member of the management or control body of the public company.
The members of the Board of Directors may be re-elected without restriction.
In case of changes in the legislation, at the next General Meeting of Shareholders a decision is
made to amend the Articles of Association in order to bring its provisions in line with those of the
applicable regulations. Until this decision is made, the affected texts of the Articles of Association shall be
interpreted in accordance with the Constitution and the laws of the country.
The Articles of Association are amended and supplemented by a decision of the General Meeting
of Shareholders by a majority of 2/3 /two thirds/ of the capital presented to the General Meeting. The
current Articles of Association of “Sopharma” AD are entered in the Commercial Register under number
№ 20260324114858.
5. The powers of the members of the board, and in particular the right to issue or repurchase
shares.
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The powers of the Board of Directors are regulated in the Articles of Association of the Parent
Company. The approval for the issuance of bonds is a decision that the Board of Directors may take by a
qualified majority of 2/3 of its members.
The Board of Directors is authorized to repurchase shares under certain conditions, in accordance
with Chapter Three, Article 11a of the Articles of Association and in accordance with the decision of GMS
dated 25.10.2024.
V. Composition and functioning of the administrative, management and supervisory bodies and
their committees
1. Composition of the members of the Board of Directors:
The Parent Company is managed and represented by a Board of Directors, which consists of five
individuals meeting the requirements of Article 234 of the CA and Art. 116a
1
, para. 2 (former Art. 116a,
para. 2) of the Law on public offering of securities. The composition of the Board of Directors may be
changed by the General Meeting at any time.
The composition of the Board of Directors is described in item I. General information about
“Sopharma” AD in the Management Report.
According to Art. 116a
1
, para. 2 (former Art. 116a, para. 2) of the Law on public offering of
securities, at least one third of the members of the Board of Directors must be independent persons. In
this case it is:
• Alexandar Viktorov Tchaouchev
The members of the Board of Directors are acquainted with the rights and obligations related to
their position.
2. Procedure for work of the Board of Directors
“Sopharma” AD has developed Rules for the work of the Board of Directors, which comply with
and are a continuation of the principles set out in the Good Corporate Governance Program. The Articles
of Association of the Company are in accordance with the requirements of the Law on public offering of
securities and the shareholders have the right to timely notification on various issues.
The Board of Directors meets at least once a month.
3. Minutes of meetings
Minutes of the decisions of the Board of Directors shall be kept and signed by all members present
at the meeting.
The minutes shall be kept by the Investor Relations Director of the company in a special register
according to the provision of art. 116d, para. 3, item 3 of the LPOS.
The protocols are a trade secret. Facts and circumstances thereof may be published, disclosed or
brought to the attention of third parties only by decision of the Board of Directors or when required by
law.
4. Responsibility
The members of the Board of Directors must provide a monetary guarantee for their management
in the amount determined by the General Meeting, but not less than their 3-month gross remuneration.
The members of the Board of Directors are jointly and severally liable for the damages they have
caused to the Company.
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Each member of the Board of Directors may be released from liability if it is established that there
is no fault for the damages. The General Meeting may release from liability a member of the Board of
Directors of the Regular Annual General Meeting in the presence of certified by a registered auditor Annual
Financial Statements for the previous year and interim financial statements for the period from the
beginning of the current year to the General Meeting.
The Board of Directors reports to the General Meeting of Shareholders.
5. Role of the Board of Directors for the application of the principles of good corporate governance
The Board of Directors makes decisions on all issues related to the activities of the Parent
Company, except for those which, according to the current legislation and the Articles of Association, are
within the exclusive competence of the General Meeting.
According to the structure and composition of the management bodies of each of the companies
in the Group, their functions are distributed according to the departments that exist in them. The way of
functioning of the management and control bodies is aimed at bringing the management of each company
in line with the set strategic goals, both of the company itself and those of the Group.
The Board of Directors assigns the implementation of its decisions and the implementation of the
operational management functions of the Company to one of its members /executive director/. The
Executive Director may be replaced at any time.
The members of the Board of Directors of the public companies in the Group submit a declaration
to the Financial Supervision Commission /FSC/, to “BSE” AD and to the Company itself under Art. 114b of
LPOS and under Art. 247, item 4 of the Commercial Law. The change in these circumstances shall be
declared in the respective terms after its occurrence.
In carrying out its activities, the Board of Directors complies with the accepted principles of
corporate governance of the Company.
The Board of Directors makes the best efforts to ensure easy and timely access to public
information in order to exercise the rights of shareholders in an informed manner, respectively to make
an informed investment decision by investors.
6. Due care. Avoiding conflicts of interest.
The members of the Board of Directors are obliged:
• to perform their functions with the care of a good trader, to be loyal to the Company and to act
in the best interest of its shareholders;
• to perform their duties with the skills, diligence and responsibility inherent in the professional
and in a way that they reasonably believe is in the interest of all shareholders of the Company, using only
information that they reasonably believe to be reliable, complete and timely;
• to prefer the interest of the Company and the investors in the Company to their own interest
and not to use for the benefit of themselves or others at the expense of the Company and the shareholders
facts and circumstances that they learned in the performance of their official and professional duties;
• to avoid direct or indirect conflicts between their interest and the interest of the Company, and
if such conflicts arise - to disclose them in a timely and complete manner and not to participate and not
to influence other members of the board in making decisions in these cases;
• not to disseminate information about the discussions and decisions of the meetings of the Board
of Directors, as well as other non-public information about the Company, including after they cease to be
members of the Board of Directors, until the public announcement of the relevant circumstances by the
Company;
• to provide and disclose information to shareholders and investors in accordance with the
requirements of the regulations and internal acts of the Company.
The Board of Directors is assisted by an Audit Committee, which according to the Independent
Financial Audit Act and International Standards on Auditing performs the following functions:
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• monitors the financial reporting processes in the enterprise;
• monitors the effectiveness of the company's internal control systems;
• monitors the effectiveness of risk management systems in the enterprise;
• oversees the independent financial audit of the enterprise;
• reviews the independence of the registered auditor of the company in accordance with the
requirements of the law and the Code of Ethics for Professional Accountants, including monitors the
provision of additional services by the registered auditor of the audited company.
At the Extraordinary General Meeting of Shareholders of “Sopharma” AD, held on November 20,
2008, an Audit Committee was elected consisting of three people: Vasil Naidenov, Tsvetanka Zlateva Vasil
Piralkov, replaced by Kristina Atanasova-Eliot by a decision of the GMS on 02.06.2017. The Audit
Committee has a 3-year term and has been re-elected 4 consecutive times, most recently by a decision of
the GMS on 02.06.2023.
VI. Description of the diversity policy applied to the issuer's administrative, management and
supervisory bodies in relation to aspects such as age, gender or education and professional experience,
the objectives of this diversity policy, the manner of its implementation and the results during the
reporting period
Sopharma Group makes every effort to ensure equal opportunities in appointment and to comply
with the form and substance of the full range of laws relating to fair practices in the work environment
and prevention of discrimination.
Discrimination, whether based on race, sex, sex or gender, skin color, beliefs, religion, national
origin, nationality, age, disability, genetic information, marital status (including unmarried and civil unions,
defined and recognized by applicable law), sexual orientation, culture, pedigree, veteran status, socio-
economic status or other legally protected personal characteristics are unacceptable and completely
incompatible with the Society's tradition of providing honest, professional and a decent job. Repressive
measures against people who complain of discrimination or harassment are also prohibited.
The main goals of the Group in the implementation of diversity policies are:
• Attracting, hiring and retaining people with a wide range of professional skills. The diverse
abilities of managers and employees open new opportunities for innovative and creative solutions,
increase creativity and innovation. This, in turn, would lead to a more effective adaptation to the impact
of globalization and technological change. A more diverse workforce can increase a company's efficiency
in achieving its goals. It can lift the spirits of employees, give access to new market segments and increase
productivity.
• Promoting a working atmosphere that embraces ethnocultural diversity and in which differences
between people are valued and respected.
• Solving one of the most important problems for the employer - that of labor shortages, as well
as problems related to hiring and retaining highly qualified workers.
• Improving the Group's reputation and overall performance to external stakeholders and society.
• Creating opportunities for disadvantaged groups and building the unity of society.
Sopharma Group strives to achieve the set goals by approving and applying in practice the types
of diversity important for the company. Adopting good practices from other companies and institutions,
the company's management wants to make diversity management a functioning part of the Group. The
Group strives to inform employees, consumers, customers and investors about the importance of diversity
for them and their work, aiming to build their trust and desire for support.
21
The policy of diversity provides diversity of the members of the governing bodies, which
guarantees a reliable system of management and control, and good corporate governance is a key element
of the secure and stable operation of Sopharma Group. They meet the high standards applied by the Group
in order to achieve its goals and strategies.
The composition of the management bodies of the companies in the Group and the number of
persons included in it is consistent with the size, complexity and scope of the Group's activities and ensures
a sufficient level of general expertise.
The members of management bodies of the companies in the Group have extensive professional
experience, both theoretical, acquired through education, training and qualifications, and practical,
acquired during previous positions. They are persons with good reputation and managerial abilities, with
high professional and moral qualities.
The principle of gender equality has been observed, as evidenced by the many women holding
senior management positions in the Group. The male-female ratio in most companies in the Group is in
favour of women and is dictated by the nature of the production process.
The policy of diversity with regard to governing bodies does not allow for age restrictions.
The companies of the Group have representatives from various minority ethnic groups. The
Company also employs disadvantaged people. The aim is to provide young people with opportunities for
professional and personal development.
There are no cases of discrimination in the companies of the Group on any grounds.
In Section V of the Rules of Procedure of “Sopharma” AD regulates the rights and protection of
employees with regard to any discriminatory actions by the employer.
On the grounds of Ordinance for employment /SG, issue 7/1987, amended and ext. No. 111 of
28.12.2001, amended, SG No. 78 of 30.09.2005, entered into force on 01.10.2005/, Ordinance №8 on
determining the jobs suitable for employment of persons with reduced working capacity /SG, issue
52/1987, SG, issue 47/1990/ and Ordinance for amendment and supplement of Ordinance № 8 for
determination of the jobs, suitable for employment of persons with reduced working capacity /SG, issue
44/1993/ and according to art. 27 of the Law on Integration of People with Permanent Disabilities, every
year an Employment Commission is established in “Sopharma” AD. The Commission shall prepare a list of
suitable places and positions for employment of persons with reduced working capacity and with
permanent disabilities in accordance with the percentage determined for the branch by the order of art.
315 of the Labor Code and of pregnant and lactating workers. The Commission shall examine the specific
employment cases and identify suitable places according to the approved list.
27.04.2026 Ognian Donev, PhD
Executive Director
Ognian
Ivanov
Donev
Digitally signed by
Ognian Ivanov
Donev
Date: 2026.04.27
22:14:36 +03'00'
DECLARATION
under art. 100о, par. 4, item. 3 of the Public Offering of Securities Act
We, the undersigned Ognian Ivanov Donev, in the capacity of Executive Director,
Boris Anchev Borisov, in the capacity of Financial Director, and Lyudmila Krumova
Bondzhova in the capacity as Preparer of the Annual Consolidated Financial statements of
Sopharma AD, UIC 831902088, entered in the Commercial Register of Sofia City Court
under company case № 9359/1991, with seat and address of management: Sofia, Nadezhda
district, 16 Iliensko shose Str.,
DECLARE that to our knowledge:
1. The Annual Consolidated Financial statements for 2025, prepared in accordance
with the applicable accounting standards, reflect a true and fair view of the assets
and liabilities, financial position and profit of Sopharma AD and the companies,
included in the consolidation.
2. The Annual Consolidated Management report for 2025 contains a fair presentation
of the development and operating results of Sopharma AD, as well as the state of
the companies, included in the consolidation, as well as a description of the main
risks and uncertainties, which they are facing.
27 April 2026 DECLARANTS:
Sofia
.........................................
/Ognian Donev/
.........................................
/Boris Borisov/
.........................................
/ Lyudmila Bondzhova /
Ognian
Ivanov
Donev
Digitally signed
by Ognian
Ivanov Donev
Date: 2026.04.27
22:14:55 +03'00'
Boris
Anchev
Borisov
Digitally signed
by Boris Anchev
Borisov
Date: 2026.04.27
22:18:15 +03'00'
Lyudmila
Krumova
Bondzhov
a
Digitally signed
by Lyudmila
Krumova
Bondzhova
Date: 2026.04.27
22:21:31 +03'00'
Baker Tilly Klitou and Partners EOOD
5, Stara planina street
5th Floor
Sofia 1000
Bulgaria
T: +359 2 9580980
F: +359 2 8592139
info@bakertilly.bg
www.bakertilly.bg
ADVISORY  ASSURANCE  TAX
Baker Tilly Klitou and Partners EOOD trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the members of
which are consolidated and independent legal entities.
INDEPENDENT AUDITORS’ REPORT
To the Shareholders of Sopharma AD
REPORT ON THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS
Opinion
We have audited the accompanying consolidated financial statements of Sopharma AD and its subsidiaries (“the
Group”), which comprise the consolidated statement of financial position as at December 31, 2025, and the
consolidated statement of comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the consolidated financial statements,
including material accounting policies.
In our opinion, the accompanying consolidated financial statements present fairly, in all material respects, the
consolidates financial position of the Group as at December 31, 2025, and its consolidtated financial performance
and its consolidated cash flows for the year then ended in accordance with International Financial Reporting
Standards (IFRS), as adopted by the European Union (“EU”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditors’ Responsibilities for the Audit of the consolidated financial
statements section of our report. We are independent of the Group in accordance with the International Code of
Ethics for Professional Accountants (including International Independence Standards) issued by the International
Ethics Standards Board for Accountants (IESBA Code), applicable to audits of consolidated financial statements
of public interest entities, together with the ethical requirements applicable to audits of consolidated financial
statements of public interest entities in Bulgaria. We have also fulfilled our other ethical responsibilities in
accordance with these requirements and the IESBA Code. We believe that the audit evidence we have obtained
is sufficient and appropriate to provide a basis for our opinion.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the consolidated financial statements of the current period. These matters were addressed in the context of our
audit of the consolidated financial statements as a whole, and in forming our opinion thereon, and we do not
provide a consolidated opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
1. Valuation of trade receivables, receivables
from related parties and loans granted to
third parties
As disclosed in Notes № 21, 22, 24, 25 and 27 to the
consolidated financial statements, the Group has
gross trade receivables, receivables from related
parties and loans granted to third parties amounting
to BGN 468,483 thousand and expected credit loss
allowances amounting to BGN 14,213 thousand.
In 2025 the Group has applied IFRS 9 “Financial
instruments”, according to which credit losses are
determined based on expected credit losses.
The application of the model for determination of
the allowance for credit losses for trade receivables,
receivables from related parties and loans granted to
third parties, results in significant complexity and
the necessity of key estimates and judgements for
the Management`s final calculations related to
identification of doubtful exposures as well as
determination of the amount of credit losses.
To determine the amount of impairment loss
allowance for expected credit losses, the Group
applies model based on significant estimates and
judgements:
• Application of the requirements for
determination of impairment loss allowance
in accordance with IFRS 9, on which the
Group`s model for determination and
calculation of the expected credit losses is
based;
• Calculation and interpretation of key
parameters as “probability of default”, “loss
given default” and “exposure at default”;
In this area our audit procedures performed are:
• We have obtained understanding of the
process for the application of IFRS 9, with
focus on implemented methodology in
Group`s model for determination of
impairment allowance for credit losses,
including the use of key assumptions and
estimates.
• Inquiries, walkthroughs and obtaining of
understanding of the process, related to
determination of credit losses for trade
receivables, receivables from related parties,
and loans granted to third parties.
• Assessment and tests of design and operating
effectiveness of key controls in the process of
monitoring and determination of the amount
of impairment allowance for credit losses.
• Review and assessment of the adequacy of the
methodology used by the Group for the
purposes of identification of credit losses and
calculation of impairment loss allowance in
accordance with the concept and the
requirements of IFRS 9.
• Analysis and assessment of the justification
and appropriateness of calculations for the
indicators of “probability of default” and “loss
given default” through inspection of the
assumptions used and the output data, as well
as the approach for inclusion of prospective
information in the models.
Key audit matter
How our audit addressed the key audit matter
• Assumptions and estimates in a number of
scenarios for estimated future cash flows,
based on past events, current conditions and
future economic forecasts;
• Assumptions, used by Management in the
review of individually significant
exposures, related to recent losses, number
of probable scenarios for future cash flows
and the results of these scenarios and their
future collectability.
Because of the significance of the above stated
circumstances: a) material amount of trade
receivables, receivables from related parties and
loans granted to third parties as captions in the
consolidated financial statements of the Group and,
b) inherent level of uncertainty in the use of multiple
estimates and judgements by the management of the
Group for the specific calculation of the amount of
credit losses, related to trade receivables,
receivables from related parties and loans granted to
third parties in accordance with the implemented
model, resulting from the application of IFRS 9, we
have determined this matter as a key audit matter.
• Assessment of the completeness,
appropriateness and adequacy of the
disclosures in the Group’s consolidated
financial statements with regard to credit risk
and impairment allowance for credit losses for
trade receivables, receivables from related
parties and loans granted to third parties.
Information Other than the consolidated financial statements and Auditors’ Report Thereon
The Management Board of the Group (“the Management”) is responsible for the other information. The other
information, which we have received prior to the audit report date, comprises the consolidated annual report on
activities and corporate governance statement prepared by the management in accordance with Chapter Seven of
the Accountancy Act, but does not include the consolidated financial statements and our auditors’ report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do not express
any form of assurance conclusion thereon, unless it is not specifically stated in our auditors’ report and to the
extent it is specifically stated.
In connection with our audit of the consolidated financial statements, our responsibility is to read the other
information and, in doing so, consider whether the other information is materially inconsistent with the
consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the consolidated financial
statements
Management is responsible for the preparation and fair presentation of the consolidated financial statements in
accordance with International Financial Reporting Standards (IFRS), as adopted by the EU, and for such internal
control as management determines is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, management is responsible for assessing the Group’s ability
to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going
concern basis of accounting unless management either intends to liquidate the Group or to cease operations, or
has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Group’s financial reporting process.
Auditors’ Responsibilities for the Audit of the consolidated financial statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole
are free from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes
our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in
accordance with ISAs will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of these consolidated
financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements, whether
due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit
evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a
material misstatement resulting from fraud is higher than for one resulting from error, as fraud may
involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that
are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness
of the Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions
that may cast significant doubt on the Group’s ability to continue as a going concern. If we conclude that
a material uncertainty exists, we are required to draw attention in our auditors’ report to the related
disclosures in the consolidated financial statements or, if such disclosures are inadequate, to modify our
opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report.
However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including
the disclosures, and whether the consolidated financial statements represent the underlying transactions
and events in a manner that achieves fair presentation.
• We plan and perform the audit of the Group in order to obtain sufficient and appropriate audit evidence
regarding the financial information of the entities or business units within the Group as a basis for forming
an opinion on the Group’s financial statements. We are responsible for the direction, supervision, and
review of the audit work performed for the purposes of the Group audit. We bear sole responsibility for
our audit opinion.
We communicate with those charged with governance regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and will communicate with them all relationships and other matters that
may reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of
most significance in the audit of the consolidated financial statements of the current period and are therefore the
key audit matters. We describe these matters in our auditor’s report unless law or regulation precludes public
disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be
communicated in our report because the adverse consequences of doing so would reasonably be expected to
outweigh the public interest benefits of such communication.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Additional matters, required to be reported by the Accountancy Act and Public Offering of Securities Act
In addition to our reporting responsibilities according to ISAs described in section “Information Other than the
consolidated financial statements and Auditors’ Report Thereon”, with respect to the consolidated annual report
on activities and the corporate governance statement, we have also performed the procedures required by the
Guidelines related to new extended audit reports and communication from the auditors of the Professional
Organization of Registered Auditors in Bulgaria - Institute of Certified Public Accountants.
These procedures include tests over the existence, form and content of the other information in order to assist us
in forming an opinion as to whether the other information includes the disclosures and reporting as required by
Chapter Seven of the Accountancy Act and the Public Offering of Securities Act (art. 100m, para 10 of POSA in
relation to art. 100m, para 8, p. 3 and 4 of POSA), applicable in Bulgaria.
Opinion under Article 37, paragraph 6 of the Accountancy Act
Based on the procedures performed, in our opinion:
a) The information included in the consolidated annual report on the activities for the financial year for
which the consolidated financial statements have been prepared, is consistent with the consolidated
financial statements.
b) The consolidated annual report on the activities has been prepared in accordance with the requirements
of Chapter Seven of the Accountancy Act and of Art. 100m, paragraph 7 of the Public Offering of
Securities Act.
c) The information required by Chapter Seven of the Accountancy Act and Art. 100m, para 8 of the Public
Offering of Securities Act is presented in the corporate governance statement covering the financial year
for which the consolidated financial statements have been prepared.
Opinion under Art. 100m, para 10 in relation to art. 100m, para 8, p. 3 and 4 of the Public Offering of
Securities Act
Based on the procedures performed and as a result of the acquired knowledge and understanding of the Group
and the environment in which it operates, acquired during our audit, in our opinion, the description of the main
features of the Group’s internal control and risk management systems in relation to the financial reporting process
as part of the annual report on activities (as element of the content of the corporate governance statement) and the
information under Article 10 , paragraph 1, letter "c", "d", "f", "h" and "i" of the Directive 2004/25/EC of the
European Parliament and of the EU Council of April 21, 2004 related to takeover bids, included in the corporate
governance statement do not contain cases of material misrepresentations.
Reporting on compliance of the electronic format of the consolidated financial statements, included in the
annual consolidated financial statements according to art. 100m, para 4 of the Public Offering of Securities
Act with the requirements of the ESEF Regulation
We have conducted engagement to express reasonable assurance regarding the compliance of the electronic
format of the consolidated financial statements of Sopharma AD for the year ended 31 December 2025, in the
attached electronic file „097900BGGW0000048796-20251231-EN-CON.zip“, with the requirements of
Commission Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC
of the European Parliament and of the Council with regard to regulatory technical standards on the specification
of a single electronic reporting format (“Regulation ESEF”). Our conclusion is only regarding the electronic
format of the consolidated financial statements and does not cover the other information included in the annual
consolidated financial statements for the activity under Art. 100m, para. 5 of the POSA.
Description of a subject matter and applicable criteria
The management has prepared the electronic format of the consolidated financial statements of the Group for the
year ended 31 December 2025 under the ESEF Regulation in order to comply with the requirements of the POSA.
The requirements for the preparation of consolidated financial statements in this electronic format are contained
in the ESEF Regulation and, in our view, have the characteristics of appropriate criteria for forming a reasonable
assurance conclusion.
Responsibilities of the management and those charged with governance
The Group's management is responsible for applying the requirements of the ESEF Regulation when preparing
the electronic format of the consolidated financial statements in XHTML. These responsibilities include the
selection and application of appropriate iXBRL markups using the taxonomy of the ESEF Regulation, as well as
the design and implementation of such internal control system that management determines necessary to prepare
the electronic format of the Group's annual consolidated financial statements that does not contain material non-
compliance with the requirements of the ESEF Regulation.
Those charged with governance are responsible for overseeing the process for preparation the Group's annual
consolidated financial statements, including the application of the ESEF Regulation.
Auditor's responsibilities
Our responsibility is to express a reasonable assurance conclusion as to whether the electronic format of the
consolidated financial statements is in compliance with the requirements of the ESEF Regulation.
For this purpose, we have complied with the „Guidelines related to issuing of audit opinion in relation to the
application of the European single electronic format (ESEF) for the financial statements of entities, which shares
are traded on a regulated market in the European union (EU)” of the Professional Organization of Registered
Auditors in Bulgaria - Institute of Certified Public Accountants and we have conducted an engagement to express
reasonable assurance in accordance with ISAE 3000 (revised) “Assurance Engagements Other than Audits or
Reviews of Historical Financial Information" (ISAE 3000 (revised)). This standard requires us to comply with
ethical requirements, plan and perform appropriate procedures to obtain reasonable assurance whether the
electronic format of the Group's consolidated financial statements has been prepared, in all material respects, in
accordance with the applicable criteria mentioned above. The nature, timing and scope of the selected procedures
depend on our professional judgment, including the assessment of the risk of material non-compliance with the
requirements of the ESEF Regulation, whether due to fraud or error.
A reasonable assurance is a high level of assurance, but it does not guarantee that an engagement performed in
accordance with ISAE 3000 (revised) will always detect material non-compliance, when such exist.
Quality management requirements
We apply the requirements of the International Standard on Quality Management (ISQM) 1, which requires
development, implementation and maintenance of system for quality management, including policies or
procedures regarding compliance with ethical requirements, professional standards and applicable legal and
regulatory requirements for registered auditors in Bulgaria.
We comply with the ethical and independence requirements of the International Code of Ethics for Professional
Accountants (including International Standards of Independence) of the International Ethics Standards Board for
Accountants (IESBA Code), adopted by ICPA through the IFAASRA.
Summary of the work performed
The purpose of the procedures planned and performed by us was to obtain a reasonable assurance that the
electronic format of the consolidated financial statements has been prepared, in all material respects in accordance
with the requirements of the ESEF Regulation. As part of our assessment of compliance with the ESEF
Regulation's electronic (XHTML) format for reporting on the Group's consolidated accounts, we maintained
professional skepticism and used professional judgment. We also:
- obtained understanding of the internal control and the processes related to the application of the ESEF Regulation
regarding the consolidated financial statements of the Group and including the preparation of the consolidated
financial statements of the Group in XHTML format and its marking up in machine readable language (iXBRL);
- checked if the applied XHTML format is valid;
- checked whether the human readable part of the electronic format of the consolidated financial statements
corresponds to the audited consolidated financial statements;
- assessed the completeness of the marking up in the consolidated financial statements of the Group using the
machine-readable language (iXBRL) in accordance with the requirements of the ESEF Regulation;
- assessed the appropriateness of the iXBRL markups selected from the main taxonomy used, as well as the
creation of an extended taxonomy element in accordance with the ESEF Regulation where an appropriate element
in the main taxonomy is missing;
- assessed the appropriateness of anchoring of the elements of the extended taxonomy in accordance with the
ESEF Regulation.
We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.
Conclusion on the compliance of the electronic format of the consolidated financial statements with the
requirements of the ESEF Regulation
In our opinion, based on the procedures performed, the electronic format of the consolidated financial statements
of the Group for the year ended 31 December 2025, contained in the attached electronic file
„097900BGGW0000048796-20251231-EN-CON.zip“ has been prepared in all material respects in accordance
with the requirements of the ESEF Regulation.
Reporting in accordance with Art. 10 of Regulation (EU) No 537/2014 in connection with the requirements
of Art. 59 of the Independent Financial Audit and Assurance of Sustainability Reporting Act
In accordance with the requirements of the Independent Financial Audit and Assurance of Sustainability
Reporting Act in connection with Art. 10 of Regulation (EU) No 537/2014, we hereby additionally report the
information stated below:
• Baker Tilly Klitou and Partners EOOD were appointed as statutory auditors of the consolidated financial
statements of the Group for the year ended December 31, 2025 by the general meeting of shareholders
held on June 27th, 2025 for a period of one year.
• The audit of the consolidated financial statements of the Group for the year ended December 31, 2025
represents ninth statutory audit engagement for that group carried out by Baker Tilly Klitou and Partners
EOOD.
• We hereby confirm that the audit opinion expressed by us is consistent with the additional report provided
to the Group’s audit committee, in compliance with the requirements of Art. 60 of the Independent
Financial Audit and Assurance of Sustainability Reporting Act.
• No prohibited non-audit services referred to in Art. 64 of the Independent Financial Audit and Assurance
of Sustainability Reporting Act were provided.
• We hereby confirm that in conducting the audit we have remained independent of the Group.
• For the period covered by our statutory audit, other than the audit, we have performed agreed upon
procedures on the financial information of Sopharma AD for 2022, 2023 and 2024, related to prospectuses
for the initial public offering of three warrant issues of Sopharma AD.
Audit company № 129 Baker Tilly Klitou and Partners EOOD
Ivaylo Yanchev
Galina Lokmadjieva - Nedkova
Registered auditor, responsible for the audit
Managing Director
April 28, 2026
Baker Tilly Klitou and Partners EOOD
5, Stara Planina Str., 5th floor
1000 Sofia, Bulgaria
IVAYLO
YANCHEV
YANCHEV
Digitally signed by
IVAYLO YANCHEV
YANCHEV
Date: 2026.04.28
17:12:07 +03'00'
Galina Dimitrova
Lokmadjieva-
Nedkova
Digitally signed by
Galina Dimitrova
Lokmadjieva-Nedkova
Date: 2026.04.28
17:14:16 +03'00'