Annual standalone financial statements of
“Sopharma” AD
as of 31 December 2024
Contents:
Standalone annual financial statements according to IFRS
Notes to the standalone financial report according to IFRS
Management report
Corporate governance declaration
Report regarding the application of the remuneration policy
Declaration by responsible persons
Auditors’ report
Audtors’ declaration
Company Name:
SOPHARMA AD
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
Chief Accountant: Yordanka Petkova
Head of Legal Department: Alexander Yotov
Registered Office: Sofia
16, Iliensko Shousse St.
Lawyers: Ventsislav Stoev
Stefan Vachev
Servicing Banks:
United Bulgarian Bank AD
DSK Bank AD
Eurobank Bulgaria AD
ING Bank N.V. - Sofia branch
Unicredit Bulbank AD
Citibank Europe plc, Bulgaria Branch
Auditor:
Baker Tilly Klitou and Partners EOOD
SOPHARMA AD
SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
SEPARATE STATEMENT OF COMPREHENSIVE INCOME 1
SEPARATE STATEMENT OF FINANCIAL POSITION 2
SEPARATE STATEMENT OF CASH FLOWS 3
SEPARATE STATEMENT OF CHANGES IN EQUITY 4
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
1. BACKGROUND CORPORATE INFORMATION 5
2. SUMMARY OF THE MATERIAL ACCOUNTING POLICIES OF THE COMPANY 8
3. REVENUE 52
4. OTHER OPERATING INCOME AND LOSSES 55
5. RAW MATERIALS AND CONSUMABLES USED 57
6. HIRED SERVICES EXPENSE 58
7. EMPLOYEE BENEFITS EXPENSE 59
8. OTHER OPERATING EXPENSES 60
9. IMPAIRMENT OF CURRENT ASSETS 60
10. IMPAIRMENT OF NON-CURRENT ASSETS, OUTSIDE THE SCOPE OF IFRS 9 61
11. FINANCE INCOME 61
12. FINANCE COSTS 62
13. INCOME TAX EXPENSE 62
14. OTHER COMPREHENSIVE INCOME 65
15. PROPERTY, PLANT AND EQUIPMENT 66
16. INTANGIBLE ASSETS 70
17. INVESTMENT PROPERTY 72
18. INVESTMENTS IN SUBSIDIARIES 76
19. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES 79
20. OTHER LONG-TERM EQUITY INVESTMENTS 81
21. LONG-TERM RECEIVABLES FROM RELATED PARTIES 83
22. OTHER LONG-TERM RECEIVABLES 85
23. INVENTORIES 86
24. RECEIVABLES FROM RELATED PARTIES 88
25. TRADE RECEIVABLES 94
26(A). LOANS GRANTED TO THIRD PARTIES 97
26(B). OTHER RECEIVABLES AND PREPAYMENTS 99
27. FINANCIAL ASSETS HELD FOR TRADING 101
28. CASH AND CASH EQUIVALENTS 101
29. EQUITY 103
30. LONG-TERM BANK LOANS 108
31. DEFERRED TAX LIABILITIES 110
32. GOVERNMENT GRANTS 112
33. LEASE LIABILITIES TO RELATED PARTIES 113
34. LEASE LIABILITIES TO THIRD PARTIES 114
35. RETIREMENT BENEFIT OBLIGATIONS 115
36. SHORT-TERM BANK LOANS 118
37. TRADE PAYABLES 119
38. PAYABLES TO RELATED PARTIES 121
39. TAX PAYABLES 121
40. PAYABLES TO PERSONNEL AND FOR SOCIAL SECURITY 122
41. OTHER CURRENT LIABILITIES 123
42. CONTINGENT LIABILITIES AND COMMITMENTS 124
43. RESTATEMENT RESULTING FROM MERGER 125
44. FINANCIAL RISK MANAGEMENT 134
45. SEGMENT REPORTING 152
46. RELATED PARTY TRANSACTIONS 154
47. EVENTS AFTER THE REPORTING PERIOD 159
for the year ended 31 December 2024
restated*
Revenue
3 237,596 253,276
Other operating income/(losses), net
4 19,571 16,298
Changes in inventories of finished goods and work in progress 17,463 11,949
Raw materials and consumables used
5 (85,796) (86,806)
Hired services expense
6 (56,770) (46,711)
Employee benefits expense
7 (75,906) (68,406)
Depreciation and amortisation expense
15,16 (19,493) (21,463)
Other operating expenses
8,9 (8,361) (8,871)
Profit from operations
28,304 49,266
Net gain/(loss) on sale of investments in subsidiaries and associates 18,19 5,213 2,400
Impairment of non-current assets outside the scope of IFRS 9
10 (234) (1,991)
Finance income
11 5,232 7,598
Finance costs
12 (5,981) (3,637)
Finance income/(costs), net
(749) 3,961
Profit before income tax
32,534 53,636
Income tax expense
13 (4,307) (6,066)
Net profit for the year
28,227 47,570
Other comprehensive income:
Items that will not be reclassified to profit or loss:
Revaluation of property, plant and equipment
15 (22) 33
Remeasurement of defined benefit pension plans liabilities
35 (523) (860)
Net change in the fair value of other long-term equity investments
20 (607) 1,766
Income tax relating to items of other comprehensive income
that will not be reclassified
13
2 (3)
Other comprehensive income for the year, net of tax
14
(1,150) 936
TOTAL COMPREHENSIVE INCOME FOR THE YEAR
27,077 48,506
Basic net earnings per share
29
0.17 0.36
Diluted net earnings per share
29
0.17 0.34
The accompanying notes on pages 5 to 159 form an integral part of these separate financial statements.
Executive Director:
Ognian Donev, PhD
Finance Director:
Boris Borisov
Chief Accountant (preparer):
Yordanka Petkova
Audit company Baker Tilly Klitou and Partners EOOD, № 129:
Ivaylo Yanchev Galina Lokmadjieva-Nedkova
Registered auditor, responsible for the audit Managing director
Baker Tilly Klitou and Partners EOOD
* Combined indicators (Note 43)
SOPHARMA AD
SEPARATE STATEMENT OF COMPREHENSIVE INCOME
Notes
2023
BGN'000
2024
BGN'000
1
Ognian Ivanov
Donev
Digitally signed by Ognian
Ivanov Donev
Date: 2025.03.28 16:56:52
+02'00'
Boris Anchev
Borisov
Digitally signed by Boris Anchev
Borisov
Date: 2025.03.28 17:10:25 +02'00'
Yordanka Nikolova
Petkova
Digitally signed by Yordanka
Nikolova Petkova
Date: 2025.03.28 17:14:32 +02'00'
IVAYLO
YANCHEV
YANCHEV
Digitally signed by
IVAYLO YANCHEV
YANCHEV
Date: 2025.03.28
18:30:03 +02'00'
Galina Dimitrova
Lokmadjieva-
Nedkova
Digitally signed by
Galina Dimitrova
Lokmadjieva-Nedkova
Date: 2025.03.28
18:57:25 +02'00'
SOPHARMA AD
SEPARATE STATEMENT OF FINANCIAL POSITION
as at 31 December 2024
*
restated* restated*
ASSETS
Non-current assets
Property, plant and equipment
15
211,216 212,079 232,782
Intangible assets
16
176,533 7,908 6,556
Investment property
17
50,512 49,886 49,267
Investments in subsidiaries
18
96,668 83,901 76,370
Investments in associates and joint ventures
19
107,672 112,094 69,372
Other long-term equity investments
20
11,976 3,870 4,706
Long-term receivables from related parties
21
16,771 62,664 67,471
Other long-term receivables
22
7,053 3,357 3,526
678,401 535,759 510,050
Current assets
Inventories
23
115,011 107,227 83,321
Receivables from related parties
24
83,633 84,909 68,263
Trade receivables
25
25,991 22,767 18,116
Loans granted to third parties
26 (а)
11,552 11,203 8,317
Other receivables and prepayments
26 (b)
14,786 6,715 6,712
Financial assets held for trading
27
1 - -
Cash and cash equivalents
28
12,853 106,687 6,362
263,827 339,508 191,091
TOTAL ASSETS
942,228 875,267 701,141
EQUITY AND LIABILITIES
EQUITY
Share capital
179,100 172,591 134,798
Treasury shares
(53,559) (57,452) (52,203)
Reserves
465,322 445,274 461,748
Other equity components (reserve under issued warrants)
260 1,857 12,488
Retained earnings
17,434 13,827 36,639
29
608,557 576,097 593,470
LIABILITIES
Non-current liabilities
Long-term bank loans
30
19,904 35,698 1,860
Deferred tax liabilities
31
3,262 3,469 5,292
Government grants
32
4,358 4,935 6,155
Lease liabilities to related parties
33
15,006 14,774 14,739
Lease liabilities to third parties
34
1,873 2,250 594
Retirement benefit obligations
35
6,094 5,351 4,402
Tax payables
39
708 - -
51,205 66,477 33,042
Current liabilities
Short-term bank loans
36
48,390 44,838 11,734
Current portion of long-term bank loans
30
108,597 854 468
Trade payables
37
103,739 21,991 40,274
Payables to related parties
38
2,607 100,109 2,688
Tax payables
39
914 2,426 898
Payables to personnel and for social security
40
10,438 10,672 9,891
Other current liabilities
41
7,781 51,803 8,676
282,466 232,693 74,629
TOTAL LIABILITIES
333,671 299,170 107,671
TOTAL EQUITY AND LIABILITIES
942,228 875,267 701,141
The accompanying notes on pages 5 to 159 form an integral part of these separate financial statements.
Executive Director:
Ognian Donev, PhD
Finance Director:
Boris Borisov
Chief Accountant (preparer):
Yordanka Petkova
Audit company Baker Tilly Klitou and Partners EOOD, № 129:
Ivaylo Yanchev
Galina Lokmadjieva-Nedkova
Registered auditor, responsible for the audit
Managing director
Baker Tilly Klitou and Partners EOOD
* Combined indicators (Note 43)
1 January
2023
BGN'000
Notes
31 December
2023
BGN'000
31 December
2024
BGN'000
The separate financial statements on pages 1 to 159 were approved for issue by the Board of Directors and were signed on 28
March 2025 by:
2
Ognian Ivanov
Donev
Digitally signed by Ognian
Ivanov Donev
Date: 2025.03.28 16:57:33
+02'00'
Boris Anchev
Borisov
Digitally signed by Boris Anchev
Borisov
Date: 2025.03.28 17:11:07 +02'00'
Yordanka Nikolova
Petkova
Digitally signed by Yordanka
Nikolova Petkova
Date: 2025.03.28 17:15:14 +02'00'
IVAYLO
YANCHEV
YANCHEV
Digitally signed
by IVAYLO
YANCHEV
YANCHEV
Date: 2025.03.28
18:31:19 +02'00'
Galina Dimitrova
Lokmadjieva-
Nedkova
Digitally signed by Galina
Dimitrova Lokmadjieva-
Nedkova
Date: 2025.03.28 18:58:17
+02'00'
for the year ended 31 December 2024
2024 2023
BGN'000 BGN'000
restated*
Cash flows from operating activities
Cash receipts from customers
268 519 248 898
Cash paid to suppliers
(170 744) (168 018)
Cash paid to employees and for social security
(74 105) (65 422)
Taxes paid (except income taxes)
(11 322) (10 444)
Taxes refunded (except income taxes)
2 377 4 829
Income taxes paid, net
(6 314) (8 205)
Interest and bank charges paid on working capital loans
(2 595) (2 222)
Foreign currency exchange gains/(losses), net
(761) (461)
Other proceeds/(payments), net
81 (1 782)
Net cash flows from/(used in) operating activities
5 136 (2 827)
Cash flows from investing activities
Purchases of property, plant and equipment
(18 692) (13 424)
Proceeds from sales of property, plant and equipment
2 266 14 658
Purchases of intangible assets
(82 995) (2 089)
Purchases of investment property
(395) (290)
Purchases of shares in associates
(685) (27 933)
Proceeds from sales of shares in associates
1 721 2 845
Purchases of other long-term equity investments and financial derivatives
(9 012) (13 440)
Proceeds from sale of other long-term equity investments
19 578
Purchases of stocks/shares in subsidiaries
(9 403) (7 606)
Proceeds from sales of stocks/shares in subsidiaries
648 218
Proceeds from dividend from investments in associates
1 603 1 488
Proceeds from dividends from other long-term equity investments
39 26
Loans granted to related parties
(5 172) (25 704)
Loan repayments by related parties
61 728 39 039
Loans granted to other companies
(2 958) (2 740)
Interest received on loans granted
2 311 2 393
Proceeds under granted recoverable additional capital contributions
2 859 -
Proceeds from interest on granted recoverable additional capital contributions
745 -
Purchase of financial assets held for trading
(8 453) -
Proceeds from sale of financial assets held for trading
8 584 -
Interest received on deposits
100 946
Proceeds from charges on guarantor contracts
384 424
Granted recoverable additional capital contributions to subsidiaries
- (9 134)
Net cash flows used in investing activities
(54 758) (39 745)
Cash flows from financing activities
Proceeds from capital issue
26 884 156 084
Proceeds from long-term bank loans
94 437 36 565
Repayment of long-term bank loans
(27 888) (2 337)
Proceeds/(Repayment) from short-term bank loans (overdraft), net
29 073 33 063
Interest and charges paid under investment purpose loans
(820) (89)
Treasury shares
(7) (5 252)
Proceeds from sales of treasury shares
5 756 -
Dividends paid and unexercised warrant rights
(168 383) (71 889)
Lease payments to related parties
(2 097) (1 929)
Lease payments to third parties
(965) (864)
Government grants for agricultural land
1 36
Proceeds/(payments), net, related to other equity components (warrants)
- (791)
Net cash flows from/(used in) financing activities
(44 009) 142 597
Net increase/(decrease) in cash and cash equivalents
(93 631) 100 025
Cash and cash equivalents at 1 January
106 387 6 362
Cash and cash equivalents at 31 December 28
12 756 106 387
The accompanying notes on pages 5 to 159 form an integral part of these separate financial statements.
Executive Director: Finance Director:
Chief Accountant (preparer):
Ognian Donev, PhD Boris Borisov
Yordanka Petkova
Audit company Baker Tilly Klitou and Partners EOOD, № 129:
Ivaylo Yanchev Galina Lokmadjieva-Nedkova
Registered auditor, responsible for the audit Managing director
Baker Tilly Klitou and Partners EOOD
* Combined indicators (Note 43)
SOPHARMA AD
SEPARATE STATEMENT OF CASH FLOWS
Notes
3
Ognian
Ivanov
Donev
Digitally signed by
Ognian Ivanov
Donev
Date: 2025.03.28
16:58:16 +02'00'
Boris Anchev
Borisov
Digitally signed by
Boris Anchev Borisov
Date: 2025.03.28
17:11:45 +02'00'
Yordanka
Nikolova
Petkova
Digitally signed by
Yordanka Nikolova
Petkova
Date: 2025.03.28 17:16:00
+02'00'
IVAYLO
YANCHEV
YANCHEV
Digitally signed
by IVAYLO
YANCHEV
YANCHEV
Date: 2025.03.28
18:33:04 +02'00'
Galina Dimitrova
Lokmadjieva-
Nedkova
Digitally signed by Galina
Dimitrova Lokmadjieva-
Nedkova
Date: 2025.03.28
19:00:04 +02'00'
SOPHARMA AD
for the year ended 31 December 2024
BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000 BGN'000
Balance at 1 January 2023 (originally accounted for)
134 798 (52 203) 68 628 27 106 560 365 155 12 488 43 843 600 375
Effects of subsidiary merger
29,43
- - - 299 - - - (7 204)
*
(6 905)
*
Balance at 1 January 2023 (restated)
134 798 (52 203) 68 628 27 405 560 365 155 12 488 36 639 593 470
Capital issue
29
37 793 - 128 131 - - - (9 840) - 156 084
Effects of subsidiary merger
29,43
- 3 - (131) - - - 128 -
Effects of treasury shares, including:
- (5 252) - - - - - - (5 252)
- acquisition of treasury shares
- (5 252) - - - - - - (5 252)
Other equity components, including:
- - - - - - (791) - (791)
- transaction costs
- - - - - - (791) - (791)
Distribution of reserves for:
- - - - - (138 625) - - (138 625)
- dividends from profit for 2022
- - - - - (32 604) - - (32 604)
- advance six-month dividends from profit for 2023
- - - - - (106 021) - - (106 021)
Distribution of profit for: - - - - - - - (77 308) (77 308)
- dividends from profit for 2022
- - - - - - - (40 187) (40 187)
- advance six-month dividends from profit for 2023
- - - - - - - (37 121) (37 121)
Total comprehensive income for the year (originally accounted for), including:
- - - 30 1 766 - - 47 266 49 062
- net profit for the year
- - - - - - - 48 121 48 121
- other comprehensive income, net of taxes
- - - 30 1 766 - - (855) 941
Effects of subsidiary merger
29,43
- - - - - - - (543) (543)
Total comprehensive income for the year (restated), including:
- - - 30 1 766 - - 46 710 48 506
- net profit for the year
- - - - - - - 47 570 47 570
- other comprehensive income, net of taxes
- - - 30 1 766 - - (860) 936
Transfer to retained earnings
- - - (5 825) (1 820) - - 7 645 -
Balance at 31 December 2023 (originally accounted for)
172 591 (57 455) 196 759 21 311 506 226 530 1 857 21 446 583 545
Effects of subsidiary merger
- 3 - 168 - - - (7 619) (7 448)
Balance at 31 December 2023 (restated)
29,43
172 591 (57 452) 196 759 21 479 506 226 530 1 857 13 827 576 097
Changes in equity for 2024
Capital issue
29
6 509 - 22 069 - - - (1 694) - 26 884
Effects of subsidiary merger
- 1 - - - - - (1) -
Effects of treasury shares, including:
- 3 892 - - - - - 1 857 5 749
- treasury shares sold
- 3 899 - - - - - 1 857 5 756
- acquisition of treasury shares
- (7) - - - - - - (7)
Other equity components, including:
- - - - - - 97 - 97
- exercised rights on warrants
- - - - - - 97 - 97
Distribution of profit for:
- - - - - - - (27 347) (27 347)
- dividends from profit for 2023
- - - - - - - (14 916) (14 916)
- advance six-month dividends from profit for 2024
- - - - - - - (12 431) (12 431)
Total comprehensive income for the year, including:
- - - (20) (607) - - 27 704 27 077
- net profit for the year
- - - - - - - 28 227 28 227
- other comprehensive income, net of taxes
- - - (20) (607) - - (523) (1 150)
Transfer to retained earnings
- - - (1 402) 8 - - 1 394 -
Balance at 31 December 2024
29
179 100 (53 559) 218 828 20 057 (93) 226 530 260 17 434 608 557
The accompanying notes on pages 5 to 159 form an integral part of these separate financial statements.
Executive Director:
Finance Director: Chief Accountant (preparer):
Ognian Donev, PhD Boris Borisov
Yordanka Petkova
Audit company Baker Tilly Klitou and Partners EOOD, № 129:
Ivaylo Yanchev Galina Lokmadjieva-Nedkova
Registered auditor, responsible for the audit Managing director
Baker Tilly Klitou and Partners EOOD
* Combined indicators (Note 43)
Changes in equity for 2023
Reserve of
financial assets
at fair value
through other
comprehensive
income
Statutory
reserves
Revaluation
reserve - property,
plant and
equipment
Notes
SEPARATE STATEMENT OF CHANGES IN EQUITY
Total equity
Share
capital
Treasury
shares
Additional
reserves
Retained
earnings
Other equity
components
(reserve under
issued
warrants)
4
Ognian Ivanov
Donev
Digitally signed by Ognian
Ivanov Donev
Date: 2025.03.28 16:58:44 +02'00'
Boris Anchev
Borisov
Digitally signed by Boris
Anchev Borisov
Date: 2025.03.28 17:12:16
+02'00'
Yordanka
Nikolova Petkova
Digitally signed by Yordanka
Nikolova Petkova
Date: 2025.03.28 17:23:15
+02'00'
IVAYLO
YANCHEV
YANCHEV
Digitally signed
by IVAYLO
YANCHEV
YANCHEV
Date: 2025.03.28
18:34:25 +02'00'
Galina Dimitrova
Lokmadjieva-Nedkova
Digitally signed by Galina Dimitrova
Lokmadjieva-Nedkova
Date: 2025.03.28 19:00:56 +02'00'
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
5
1. BACKGROUND CORPORATE INFORMATION
SOPHARMA AD is a business entity registered in Bulgaria with a seat and registered address of
management: Sofia, 16, Iliensko Shousse St. The Company was entered in the Commercial Registry on
11 April 2008 with UIC 831902088.
The Company was registered with court on 15 November 1991 by Decision No 1/1991 of Sofia City Court.
1.1. Ownership and management
Sopharma AD is a public company under the Public Offering of Securities Act.
As at 31 December 2024, the structure of Company's joint-stock capital was as follows:
%
Donev Investments Holding AD
40.24
Telecomplect Invest AD
16.03
Sopharma AD (treasury shares)
7.46
Ognyan Ivanov Donev
9.07
Other legal persons
21.71
Natural persons
5.49
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 2024 as follows:
Ognian Donev, PhD
Chairperson
Vessela Stoeva
Deputy Chairperson
Bisera Lazarova
Member
Alexander Chaushev
Member
Ivan Badinski
Member
The Company is represented and managed by its Executive Director Ognian Donev, PhD.
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.
The composition of the Audit Committee is as follows:
Vasil Naidenov
Chairperson
Tsvetanka Zlateva
Member
Kristina Atanasova - Elliot
Member
Pursuant to a business management contract dated 9 June 2020, the Company’s Procurator is Simeon Donev.
The average number of Company's personnel for 2024 is 1,758 workers and employees (2023: 1,773).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
6
1.2. Principal activities
The principal activities of the Company include the following types of transactions and deals:
• production and trade in medicinal substances and finished drug forms;
• research and development as well as engineering and implementation activities in the field of
medicinal products;
• production and trade in veterinary medical products and lab services related to lab tests of animal
blood samples;
• production and sale of pharmaceuticals, cosmetics, food additives, active substances, chemical
substances and mixtures.
The Company holds manufacturing / import authorisation for medicinal products No BG / MIA -0481 dated
17 December 2024, issued by the Bulgarian Drug Agency (BDA).
1.3. Main indicators of the economic environment
The main economic indicators of the business environment that have affected the Company's activities
throughout the period 2020 – 2024 are presented in the table below:
Indicator
2019
2020
2021
2022
2023
2024
GDP in million levs*
120 342
121 088
139 602
168 360
185 233
145 274
Actual growth of GDP**
4.0 %
- 3.2%
7.8%
4.0%
1.9%
2.3 %
Year-end inflation (HICP)***
3.1 %
0.0 %
6.6 %
14.3 %
5.0 %
2.1 %
Average exchange rate of USD for the year****
1.75
1.72
1.65
1.86
1.81
1.81
Exchange rate of the USD at year-end****
1.74
1.59
1.73
1.83
1.77
1.88
Unemployment rate at year-end******
5.9 %
6.7 %
4.8 %
5.4 %
5.6 %
5.2 %
Basic interest rate at year-end*****
0.00
0.00
0.00
1.30
3.80
3.04
Credit rating of Republic of Bulgaria according
to Standard&Poors (long-term)
BBB
BBB
BBB
BBB
BBB
BBB
Credit rating of Republic of Bulgaria according
to Moody’s (long-term)
Baa2
Baa1
Baa1
Baa1
Baa1
Baa1
Credit rating of Republic of Bulgaria according
to Fitch (long-term)
BBB
BBB
BBB
BBB
BBB
BBB
Credit rating of Republic of Bulgaria according
to Scope Ratings (long-term)
BBB
BBB
BBB+
BBB+
BBB+
BBB+
* Preliminary BNB data for Q4 2024 as at 17 January 2025
** Preliminary BNB data for 2024 as at January 2025
***Preliminary NSI data for 2024 as at December 2024
**** Preliminary BNB data for 2024 as at 31 December 2024
*****Preliminary BNB data for 2024 as at 31 December 2024
****** Preliminary BNB data for 2024 as at 17 January 2025
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
7
1.4. Macroeconomic situation
The Company maintains a stable capital base and leverage ratio. The management manages to maintain the
Company’s good financial position by indexing its revenue and expenses within reasonable limits.
1.5. War in Ukraine – impact and effects
The military conflict between Russia and Ukraine and the economic sanctions and other measures related
thereto as taken by governments around the world have had a significant impact, both on the countries’ local
economies, and on the global economy. Usually in such conflicts pharmaceuticals are not subject to sanctions
or other restrictions, in order to avoid a humanitarian crisis. Therefore, the Company’s operations on the
territory of the two countries is and could be restricted mainly due to reasons such as difficulties in logistics
and restrictions in the free movement of cash.
The Company holds investments in two subsidiaries in Ukraine. As at 31 December 2024, the amount of the
investment in the subsidiary Sopharma Ukraine is BGN 9,669 thousand, and the amount of the investment in
Vitamini is BGN 1,283 thousand. At the date of approval of these separate financial statements, the assets of
these subsidiaries have not been physically affected by the military actions, but in the future it may be
necessary to review the amounts of these investments, depending on the development of the war and its
impact on the companies’ operations.
In 2024, the Company registered a decline in sales in Russia by 19% and growth in sales in Ukraine by 11%
compared to 2023.
Despite the potential adverse economic effects of the war and its development into a long and continued
conflict, the Company has sufficient current assets and financing to continue as a going concern.
1.6. Climate issues
Environmental protection and fighting climate change is part of the Company’s corporate social responsibility
policy, and it therefore develops its activities in accordance with environmental protection requirements. The
Company applies measures for: separate waste collection; minimizing, utilizing, and recycling manufacturing
and domestic waste; relevant staff training on matters related to environmental protection and pollution
prevention. The Company actively invests in renewable energy sourced for own use.
As of 31 December 2024, the Company has identified insignificant climate change induced risks to its assets
and liabilities. The Company monitors changes in legislation that result from climate issues and has not
identified any possible direct impact on its future cash flows, financial performance and financial position at
this stage.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
8
2. SUMMARY OF THE MATERIAL ACCOUNTING POLICIES OF THE COMPANY
2.1. Basis for preparation of the separate financial statements
The separate annual financial statements of SOPHARMA AD have been prepared in accordance with all
International Financial Reporting Standards (IFRS), which comprise Financial Reporting Standards and the
International Financial Reporting Interpretations Committee (IFRIC) interpretations, approved by the
International Accounting Standards Board (IASB), as well as the International Accounting Standards (IAS)
and the Standing Interpretations Committee (SIC) interpretations, approved by the International Accounting
Standards Committee (IASC), which are effectively in force on 1 January 2024 and have been accepted by
the Commission of the European Union. IFRSs as adopted by the EU is the commonly accepted name of the
general purpose framework – the basis of accounting equivalent to the framework definition introduced by §
1, p. 8 of the Additional Provisions of the Accountancy Act "International Accounting Standards" (IASs).
For the current financial year the Company has adopted all new and/or revised standards and interpretations,
issued by the International Accounting Standards Board (IASB) and respectively, by the International
Financial Reporting Interpretations Committee (IFRIC), which have been relevant to its activities.
The adoption of these standards and/or interpretations, effective for annual periods commencing on 1 January
2024, has not resulted in changes to the Company’s accounting policy, except in relation to the classification
and disclosure of non-current liabilities subject to restrictive conditions, as well as certain new and the
expansion of already established disclosures, without this leading to other changes in the valuation of
individual reporting items and operations.
The new and/or amended standards and interpretations include:
• Amendments to IAS 1 “Presentation of Financial Statements” (in force for annual periods
beginning on or after 1 January 2024, endorsed by EC). These amendments address the criteria
for classification of liabilities as current or non-current. According to them, an entity classifies
its liabilities as current or non-current depending on the rights thereof that are in existence at the
end of the reporting period, and the classification is unaffected by expectations about whether it
will exercise its right to defer settlement of the liabilities. The classification shall not be impacted
by the entity’s expectations for or events after the reporting period. The amendments made clear
that “settlement” refers to the transfer to a counterparty of cash, equity instruments, other assets
or services. The classification does not address derivatives of convertible liabilities, which
constitute equity instruments. The amendments are applied retrospectively. Earlier application
is permitted, but simultaneously with applying the amendments to IAS 1 Presentation of
Financial Statements, Non-current Liabilities with Covenants.
• Amendments to IAS 1 “Presentation of Financial Statements, Non-Current Liabilities with
Covenants/Indicators” (in force for annual periods beginning on or after 1 January 2024,
endorsed by EC). These amendments specify that only covenants/indicators under loan
contracts, with which an entity is required to comply on or before the reporting date affect the
entity’s right to defer the respective liabilities for at least twelve months after the reporting date
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
9
and respectively, only these are to be considered upon assessing the classification of liabilities
as current or non-current. These covenants/indicators have an impact on whether the right exists
at the reporting date, even if compliance with the conditions is determined thereafter (for
instance, a covenant/indicator based on the entity’s financial position at the reporting date but
assessed thereafter). Covenants/indicators calculated based on the entity’s financial position
after the reporting date (for instance, based on the entity’s financial position six months after the
reporting date) shall not be considered upon determining the classification od liabilities and the
right of deferral thereof.
Entities shall disclose information about the covenants/indicators regarding liabilities classified
as non-current, and the respective entity shall comply with the respective covenant/indicator
within twelve months from the reporting date: carrying amount of the liability; information about
the covenants/indicators and when they should be complied with; certain facts and
circumstances indicated that the entity would encounter difficulties to comply therewith. The
amendments are applied retrospectively. Earlier application is permitted, but simultaneously
with the application of amendments to IAS 1 Presentation of Financial Statements regarding the
classification of liabilities as current and non-current.
• Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures:
Supplier Finance Arrangements (effective for annual periods beginning on or after 1 January
2024, endorsed by EC). The amendments are intended to enhance the transparency of accounting
from supplier finance arrangements and to enable users of financial statements to assess the
effect of those arrangements on an entity’s liabilities, cash flows, and liquidity risk, by adding
additional disclosures relating to such arrangements. The amendments are related to the
requirements to add information to assess the effects of such arrangements on liabilities and cash
flows, as follows: a) the terms and conditions of each arrangement; b) the carrying amount of
financial liabilities recognised in the entity’s statement of financial position under such
arrangement and the line item(s) in which those financial liabilities are presented; c) the carrying
amount and line item(s) in the statement of financial position of the payments already received
from the finance providers (finance institutions); d) the range of payment due dates of financial
liabilities under supplier finance arrangements and the comparable range of liabilities that are
not part of a supplier finance arrangement. e) the type and effect of non-cash changes in the
carrying amount of financial liabilities that are part of supplier finance arrangements.
Requirements have been added to IFRS 7 to disclose assessment of an entity’s exposure to
liquidity risk and the potential effect of terminating the arrangements on the entity. The
amendments are applied retrospectively; there are exemptions for the non-disclosure of
information for periods before the initial application of the amendments, as well as some
qualitative disclosures referring to the starting date of the initial application period. Earlier
application is permitted.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
10
• Amendments to IFRS 16 “Leases” – Lease Liability in a Sale and Leaseback (in force for annual
periods beginning on or after 1 January 2024, endorsed by EC). The amendments aim to
elaborate requirements to the seller-lessee in measuring lease liabilities in sale and leaseback
transactions. They require a seller-lessee to subsequently (after the date of providing the
underlying asset) determine lease payments and revised leased payments in a way that it does
not recognize any amount of the gain or loss that relates to the right of use it retains. The
amendments do not apply to the recognition of gains or losses in relation to partial or full
termination of a lease. The amendments are applied retrospectively and in particular with respect
to sale and leaseback transactions where the lease payments include variable payments not
dependent on an index or percentage. Earlier application is permitted.
As of the date of approval for the issuance of these separate financial statements, the following new standards,
amended standards and interpretations have been issued, but have not yet been adopted by the EC:
• Amendments to IAS 21 “The Effects of Changes in Foreign Exchange Rates: Lack of
Exchangeability” (in force for annual periods beginning on or after 1 January 2025, endorsed
by EC). These amendments specify and require entities to apply a consistent approach when
determining: a) when a currency is exchangeable or not, by introducing definitions thereof. A
currency is exchangeable into another currency when an entity is able to obtain the other currency
within a time frame that allows for a normal administrative delay and through a market or
exchange mechanism in which an exchange transaction would create enforceable rights and
obligations. If an entity is able to obtain no more than an insignificant amount of the other
currency at the measurement date for the specified purpose, the currency is not exchangeable into
the other currency; b) estimating the spot exchange rate when a currency is not exchangeable, by
identifying two mechanisms: 1) the first one is using an observable exchange rate without
adjustment, such as a spot exchange rate for a purpose other than that for which an entity assesses
exchangeability or the first exchange rate at which an entity is able to obtain the other currency;
2) the second one is through using another estimation technique; c) the information that the entity
should disclose when a currency is not exchangeable, in order to allow users of the financial
statements to understand the impact thereof on the entity’s financial results, financial position,
and cash flows. The amendments are applied retrospectively. Earlier application is permitted.
• Amendments to IFRS 9 “Financial Instruments” and IFRS 7 “Financial Instruments:
Disclosure” – Contracts Referencing Nature-Dependent Electricity (in force for annual periods
beginning on or after 1 January 2026, not endorsed by EC). The amendments introduce
requirements for accounting for contracts referencing nature-dependent electricity, namely: a)
addition of factors and requirements an entity is required to consider when applying paragraph
2.4 of IFRS 9 in accounting for contracts for renewable electricity in order to clarify in what
circumstances the purchase of electricity can be accounted for “own-use” purchase and to make
use of the exemption from reporting requirements;
b) hedge accounting requirements – to permit
an entity using a contract for renewable electricity as a hedging instrument; and c) addition of
new disclosure requirements to enable investors to understand the effects of such contracts on
the financial performance and cash flows of entities using such contracts.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
11
• Amendments to IFRS 9 “Financial Instruments” and IFRS 7 “Financial Instruments:
Disclosure” – Classification and Measurement of Financial Instruments (in force for annual
periods beginning on or after 1 January 2026, not endorsed by EC). The amendments relate to:
a) specifying the date of initial recognition and derecognition of certain financial assets and
liabilities, and introducing a new exception for certain financial liabilities settled using an
electronic payment system; b) adding further guidance to assess whether a financial asset meets
the criterion for “solely payments of principal and interest” (SPPI); c) update of disclosures
regarding equity instruments at fair value through other comprehensive income; and d) adding
new disclosures regarding certain instruments with contractual terms that could change the timing
or amount of contractual cash flows.
• Annual Improvements, Volume 11: IFRS 1 “First-time Adoption of International Financial
Reporting Standards”, IFRS 7 “Financial Instruments: Disclosures”, Implementation Guidance
for IFRS 7 “Financial Instruments: Disclosures”, IFRS 9 “Financial Instruments”, IFRS 10
“Consolidated Financial Statements”, IAS 7 “Statement of Cash Flows” (in force for annual
periods beginning on or after 1 January 2026, not endorsed by EC). These improvements
introduce partial changes to the following standards: A) IFRS 1 – in the requirements for hedge
accounting by first-time IFRS adopter in order to align the wording and requirements of IFRS 1
and IFRS 9 regarding hedge accounting. In IFRS 1, the term “conditions” is replaced by the term
“criteria”, and references are made to paragraphs in IFRS 9 that treat hedge accounting; B) IFRS
7 – 1) in the requirements for disclosure of gain or loss on derecognition. The amendment corrects
a reference to paragraph 27A in IFRS 7, which was deleted from the standard when IFRS 13
“Fair Value Measurement” was enforced, and a cross-reference was made instead to the
respective paragraphs in IFRS 13.
The wording “significant inputs that were not based on
observable market data” is replaced by “significant unobservable inputs”; 2) Implementation
Guidance for IFRS 7: a) it is specified in the Introduction that the guidance does not necessarily
illustrate all the requirements in the references paragraphs of IFRS 7; b) in the disclosure of the
difference between the fair value and the transaction price at initial recognition of financial
instruments corrections are made to adjust discrepancies between paragraph HB14 of the
Guidance and paragraph 28 of IFRS 7 resulting from the enforcement of IFRS 13; c) in the
disclosure of credit risk, a change is made to the wording for the purpose of easier and more
accurate understanding; C) IFRS 9: 1) in derecognition of lease liabilities – the Improvements
add references to Paragraph 3.3.3 of IFRS 9 to resolve potential confusion of a lessee applying
the Standard’s derecognition requirements; 2) in transaction price – the wording “transaction
price” is deleted from paragraph 5.1.3 and Appendix A to IFRS 9, and in paragraph 5.1.3., the
Improvements cross-reference to the definition in IFRA 15, whose meaning is required by the
specific paragraph; D) IFRS 10 – definition of “de facto agent” – the Improvements eliminate
the discrepancies between paragraphs B73 and B74 of IFRS 10 in order to avoid potential
confusion related to determining whether a party acts as a de-facto agent; E) IAS 7 – cost – the
Improvements delete the term “cost method” from paragraph 37 of IAS 7, since the term no
longer exists in the IFRS accounting standards.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
12
• IFRS 18 “Presentation and Disclosure in Financial Statements” (in force for annual periods
beginning on or after 1 January 2027, not endorsed by EC). IFRS 18 replaces IAS 1 “Presentation
of Financial Statements”. The requirements of IAS 1 that remain unchanged have been
transferred to IFRS 18, with insignificant wording adjustments, or to IAS 8 “Accounting Policies,
Changes in Accounting Estimates and Errors”, and IFRS 7 “Financial Instruments: Disclosure”,
again with insignificant wording adjustments. The new standard makes insignificant changes to
IAS 7 “Statement of Cash Flows”, IAS 33 “Earnings Per Share” and IAS 34 “Interim Financial
Reporting”. IFRS 18 focuses mainly on better presentation of financial performance and aims to
improve financial reporting in the statement of profit and loss by means of: a) change in the
structure of the statement of profit and loss by adding certain categories/indicators (operating,
investing, and financing) and subtotals (operating profit and loss before financing and income
taxes) to the statement of profit and loss to improve comparability and compatibility in the
financial information; b) requirement for disclosure in the note to the financial statements of
management-defined performance measures related to the statement of profit and loss in order to
enhance the transparency of calculation thereof and communicating to users management’s view
of the financial performance of the entity; c) addition of new principles on grouping
(aggregation/disaggregation) of information, setting requirements on whether the information
should be presented as part of the components (elements) of the financial statements or in the
notes thereto. The provision of principles on the necessary level of detail makes the disclosed
information more effective. Even though IFRS 18 will not impact the way in which entities
calculate their financial performance, the standard will impose changes on how this performance
is presented and disclosed by all entities.
• IFRS 19 – Subsidiaries without Public Accountability: Disclosures (in force for annual periods
beginning on or after 1 January 2027, not endorsed by EC). IFRS 19 allows subsidiaries that
meet certain requirements to provide a reduced volume of disclosures when applying IFRS
accounting standards in their financial statements. The reduced disclosure requirements
introduced by means of IFRS 19 aim to strike a reasonable balance between the information
needs of users of the financial statements and the costs of volume and efforts necessary to prepare
full disclosures under all IFRS Accounting Standards by eligible subsidiaries. IFRS 19 is a
voluntary standard for eligible subsidiaries. A subsidiary is eligible if: it does not have public
accountability; it has an ultimate or intermediate parent that produces consolidated financial
statements available for public use that comply with all IFRS Accounting Standards.
• IFRS 10 (amended) “Consolidated Financial Statements” and IAS 28 (amended) “Investments
in Associates and Joint Ventures” – regarding the sale or contribution of assets between an
investor and its associates or joint ventures (postponed effective date, to be determined by the
IASB). These amendments address the accounting treatment of the sale or contribution of assets
between an investor and its associates or joint ventures. They confirm that the accounting
treatment depends on whether the assets sold or contributed constitute in substance a business as
defined in IFRS 3. If these assets as an aggregate do not meet the definition of a business, then
the investor shall recognise gain or loss only to the extent of other unrelated investor's interests
in the associate or joint venture. In cases of sale or contribution of assets, which as an aggregate
constitute a business, the investor shall recognise the full gain or loss on the transaction. The
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
13
amendments will be applied on a prospective basis. IABS postponed the initial date of application
of these amendments for an indefinite period.
The management is in the process of studying, analyzing and evaluating the potential effects of these new
standards, changed standards and interpretations on the company's financial statements and accounting
policies.
The separate financial statements of the Company have been prepared on a historical cost basis except for
property, plant and equipment, investment property, 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 amount and
respectively, at fair value.
The Company keeps its accounting books in Bulgarian Levs (BGN), which is accepted as being its
presentation currency. The data in the separate financial statements and the notes thereto is presented in
thousand Bulgarian Levs (BGN’000) except where it is explicitly stated otherwise.
The presentation of 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 financial statements. These estimates, accruals and assumptions
are based on the information, which is available at the date of the 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 separate financial
statements, are disclosed in Note 2.33.
2.2. Consolidated financial statements of the Company
The Company has started the process of preparation of its consolidated annual financial statements for year
2024 in accordance with IFRS effective for year 2024 whereas these separate annual financial statements will
be included therein. In accordance with the planned dates, the management expects that the consolidated
annual financial statements will be approved for issue by the Board of Directors of the Company not later
than 30 April 2025 and after this date the financial statements will be publicly made available to third parties.
2.3. Merger of Veta Pharma AD into Sopharma AD
a) legal form of the merger
The merger of Veta Pharma AD (transforming company) into Sopharma AD (receiving company) was carried
out by means of the legal form of transformation as regulated in the Commercial Act. The merger was entered
in the Trade Registry at the Registry Agency on 2 September 2024. As a result of the transaction, the entire
property of Veta Pharma AD was transferred to Sopharma AD, and Veta Pharma AD was terminated without
liquidation.
On 16 January 2024, a merger transformation agreement was concluded between Sopharma AD (receiving
company) and Veta Pharma AD (transforming company) laying out the transformation procedure. The fair
value of shares of the entities involved in the transformation was determined based on generally accepted
valuation methods, based on which an exchange ratio was set of 0.22.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
14
The transformation agreement and the reviewer’s report were approved by the General Meeting of the
receiving company on 9 August 2024.
The aim of the transformation transaction between the two entities was as follows:
• restructuring of Sopharma Group entities to eliminate overlapping activities;
• focusing efforts on manufacturing and trade activities, respectively – optimization of
administrative costs;
• enhancing efficiency and achieving a synergy for both management and manufacturing and trade,
and for cost optimization.
b) accounting for the merger
For accounting purposes, the merger date was stated as 1 January 2024. Until this point, Veta Pharma AD
was a subsidiary of Sopharma AD. The transaction was treated as restructuring of the activities of the two
entities. The merger was accounted for by applying the “pooling of interest” approach. According to the
requirements and rules of this approach, the activities and property of the entities are carried to these financial
statements as if they had been combined from the beginning of the earliest period presented in the financial
statements (1 January 2023), irrespective of the legal events and procedures and effects thereof on the legal
status and life cycle of the receiving and transforming companies. The effects of all business transactions
between the receiving company and the transforming company were eliminated, including the balances
between the two, irrespective of whether they originated before or after the restructuring date. All differences
from the merger transaction were carried to equity – “retained earnings” component and “revaluation reserve
of PPE” component (Note 43).
2.4. Comparatives
The Company usually presents comparative information for one prior year in its separate financial statements.
Where necessary, comparative data is reclassified (and restated) in order to achieve comparability in view of
the current year presentation changes.
The comparative information for year 2023 presented in the statement of financial position, statement of
comprehensive income and statement of cash flows was prepared based on the combined data from the
separate annual financial statements of Sopharma AD (receiving company) and Veta Pharma AD
(transforming company) in relation to the merger executed, in accordance with the common accounting
policies and eliminated balances, transactions and payments between the two. The statement of financial
position includes two comparable periods – 31 December 2023 and 1 January 2023, as far as the combination
of data from the financial statements of the two entities results in indicators that deviate significantly from
the separate indicators of Sopharma AD for these periods (Note 43).
The comparative information for year 2023 in the statement of changes in equity also presents the combined
indicators for the balance and change in each equity component (share capital, reserves, retained earnings)
compared to the separate financial statements for year 2023 of the receiving and transforming companies,
irrespective of the fact that the merger was legally effected on 2 September 2024.
Information about the content of components of the equity of the receiving and transforming companies is
disclosed in Note 29.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
15
2.5. Functional currency and recognition of exchange differences
The functional and reporting (presentation) currency of the Company is the Bulgarian Lev. Starting from
1 July 1997 the Bulgarian Lev was fixed under the Bulgarian National Bank Act to the German Mark at the
ratio of BGN 1 : DEM 1, and with the introduction of the Euro as the official currency of the European Union,
it has been fixed to the Euro at a ratio of 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.
Cash and cash equivalents, 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 statement of financial position, which have been initially denominated in a
foreign currency, are accounted for in the functional currency by applying the historical exchange rate at the
transaction date and are not subsequently revalued at the closing exchange rate.
Foreign exchange gains or losses arising on the settlement or recording of foreign currency transactions at
rates different from those at which they were converted on initial recognition, are recognised in the statement
of comprehensive income (within profit or loss for the year) in the period in which they arise and are treated
as 'other operating income/(losses)' (within profit or loss for the year) and presented net.
2.6. Revenue
Revenue from contracts with customers
The Company’s usual revenue is from the activities disclosed in Note 3.1.
2.6.1. Recognition of revenue from contracts with customers
The Company’s revenue is recognised when control over the goods promised in the contract with the
customer is 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.
Measurement of contracts with customers
The Company accounts for a contract with a customer only if upon its enforcement: a/ it has commercial
essence 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
and the d/ payment conditions can be identified; and e/ it is probable that the Company will collect the
consideration to which it is entitled upon performing its performance obligations. In evaluating whether
collectability of an amount of consideration is probable, the Company considers all relevant facts and
circumstances of the transaction, including past experience, customary business practices, published rules
and declarations made by the Company, collaterals and possibilities for satisfaction.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
16
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 payable (contract
liability) in the statement of financial position, until: a/ all criteria for recognizing a contract with a customer
are met; b/ the Company meets its performance obligations and has received the whole or almost the whole
remuneration (which is not recoverable); and/or c. when the contract is terminated and the remuneration
received is not recoverable.
Upon the initial measurement of its contracts with customers, the Company makes additional analysis and
judgement whether two or more contracts should be combined and accounted for as a single contract,
respectively whether the products 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 which are distinct (in nature and in the context of the contract), is accounted
for as a separate performance obligation.
The Company recognises revenue for each separate performance obligation at the level of individual
contracts with customers, by analysing the type, term and conditions of each particular 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.
When another (third) party is involved in the performance of obligations, the Company determines whether
it acts in its capacity as principal or agent, by assessing the nature of its promise to the customer: to provide
the finished goods or services on its own (principal) or to arrange for another party to provide them (agent).
The Company is a principal and recognises as revenue the gross amount of remuneration if it controls the
promised finished goods and/or services prior to their transfer to the customers. If however the Company
does not obtain control over the promised goods and/or services and its obligation is only to organise for a
third party to provide these finished goods and/or services, the Company is an agent and recognises as revenue
the net amount it retains for the services granted 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 an entity expects to be entitled, excluding
amounts collected on behalf of third parties. Upon determining the transaction price, the Company 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. Depending on that: a) the Company
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
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
17
amount of consideration that reflects the entity's stand-alone selling prices of the additional promised goods
or services; b) the Company 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 Company
accounts for the contract modification as if it were a part of the existing contract (cumulative adjustment) if
the remaining goods or services are not distinct and, therefore, form part of a single performance obligation
that is partially satisfied.
2.6.3. Performance obligations under contracts with customers
Revenue from the sale of products
Wholesales of medical substances and medical forms are made in the country and abroad, both based on the
Company’s specification (technology) and based on the customer’s specification (technology). As a whole,
the Company has concluded that it acts as principal in its contracts with customers, unless it has been
explicitly stated otherwise for certain transactions, since usually the Company controls its goods and/or
services prior to their transfer to the customer.
Sales of products based on the Company’s specifications
Upon sales of products based on the Company’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 ownership of the
customer thereof, when the customer may dispose of the finished goods by obtaining substantially all
remaining rewards.
Upon export sales, the judgement on the point in which the customer obtains control over the finished
products is made based on the INCOTERMS applicable for the contract.
Sales of products based on the customer’s specifications
Regarding products produced based on the customer’s specifications, the Company has a legal and
contractual restriction on direction 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 level). For this purpose, it is determined if the Company 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 Company’s default (legally exercisable right to payment).
If in the specific contract the Company has a legally exercisable right to payment, revenue is recognised over
time, and the output method is used to measure progress (stage of completion) of the contract. This method
has been determined as most suitable to measure progress, as the results achieved best describe the
Company’s activity towards complete satisfaction of the performance obligations. 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
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
18
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 Company does not have a legally exercisable right to payment, revenue is
recognised revenue is recognised at a point in time, when control over the products sold is transferred to the
customer: when the products are handed over to the customer and it has physical title thereon (for domestic
sales) and in accordance with the contract’s applicable INCOTERMS (for export sales).
Transportation of the products sold
Usually, upon export sales, the Company is responsible for transporting the goods to the location agreed, and
transport is organised by the Company, 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 products 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 products sold with easily accessible resources), and the transportation service does not modify or
amend the products sold in any way. In this case, the remuneration the Company expects to be entitled to (the
transaction price) is allocated between the separate performance obligations based on their standalone selling
prices. The standalone selling price of the products sold is determined based on the price list effective at the
transaction’s date, and the standalone selling price of the transport service is determined in an approximate
manner by using the cost plus margin approach.
To render the transportation service, the Company uses transportation companies – subcontractors. The
Company 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 bears the responsibility for rendering the services and that the services
are acceptable to the customer (i.e. the Company 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 negotiates the service price 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 receives and consumes rewards simultaneously with the service rendition. In order to measure the
contract progress (stage of completion), the input method is used. This method has been determined as most
appropriate to measure progress since it best describes the Company’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 Company’s efforts (costs incurred) are directly related to the transfer of the service
to the customer. Progress is measured based on the costs incurred versus the total costs planned for contract
performance.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
19
Transaction price and payment terms
Selling prices are fixed based on a common or customer-specific price list and are individually determined
for each product. The usual credit period is 30 to 270 days. In certain cases, the Company collects short-term
advances from clients which do not have a significant financing component. The advances from clients are
presented in the statement of financial position as contract liabilities.
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 include:
o 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 Company determines
the customer’s estimated turnover by using the most probable value method. The discounts granted
are offset against the amounts due by the customer.
o Price protection: With regards to domestic sales, the Company is obliged, upon price reduction
imposed by a state regulatory body, to compensate the buyer and/or its customers for finished
products 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
Company’s control.
o 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 compliant goods or by recovery of the
amount paid by the customer. Upon determining the compensations for hidden flaws due at the end
of the reporting period, the Company takes into consideration the quality assurance system
implemented thereby and the accumulated experience.
o Compensations due to the customer: in case of inaccurate performance of contractual obligations
by the Company, 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. The
Company’s experience shows that historically, contract terms are complied with, and the Company
has not charged payables for payment of compensations.
o 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 Company’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) within the transaction price is
determined for each individual contract and is subject to review 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 historical trade experience with customers and is
recognised as adjustment for the purpose of the transaction price only and respectively the revenue (as an
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
20
“increase” or a “decrease” component) 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 Company 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 Company uses the most likely value 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 obligations in the statement of financial position.
2.6.4. Contract costs
The Company treats as contract costs the following:
o the additional 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
o the expenses it incurs to fulfil a contract with a customer and which are directly related to the
specific contract, support the generation of resource to be used in the contract fulfilment and the
Company expects to recover them over a period longer than twelve months (costs to fulfil such
contracts).
In its usual activity, the Company does not incur direct and specific costs to enter contracts with customers
or costs to fulfil contracts with customers which would not have occurred if the respective contracts had not
been concluded.
2.6.5. Contract balances
Trade receivables and contract assets
A contract asset is the Company's right to consideration in exchange for goods or services that it has
transferred to a customer but is not unconditional (receivable accrual). If by transferring the products and/or
providing the services the Company performs its obligation to the customer to pay the respective
consideration and/or before the payment is due, a contract asset is recognised for the consideration worked-
out (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
A contract liability is 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 stated within other receivables and payables in the statement of
financial position. They are included within current assets when their maturity is within 12 months or are part
of the Company’s usual operating cycle, and the others are stated as non-current. Assets and liabilities from
a single contract are stated net in the statement of financial position, even if they result from difference
performance obligations in the contract.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
21
Following their initial recognition, trade receivables and contract assets are subject to review for impairment
pursuant to the conditions of IFRS 9 Financial Instruments.
2.6.6. Refund obligations under contracts with customers
The refund obligation includes the Company’s obligation to reimburse a portion or the whole consideration
received (or subject to receipt) from the customer under contracts with a right of return – for the expected
retrospective discounts, rebates and discount volumes. The obligation is initially measured at the amount
which the Company does not expect to be entitled to and which it expects to return to the customer. At the
end of each reporting period, the Company updates 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.
Other revenue
Other revenue comprises revenue from operating leases of investment property and non-current tangible
assets. It is stated within the statement of comprehensive income (within profit or loss for the year) in the
“revenue” item.
2.7. Expenses
Company’s expenses are recognised upon incurrence and based on the accrual and comparability principles
to the extent at which this would not result in the recognition of assets/liabilities that do not meet the
definitions for such under IFRS.
Deferred expenses are postponed for recognition as deferred expense in the period that contracts related
thereto are performed.
Losses from the remeasurement of investment property to fair value are stated in the statement of
comprehensive income (within profit or loss for the year), within “other operating income/(losses)”.
Losses from remeasurement of agricultural produce (yellow acacia) upon initial fair value measurement are
stated in the statement of comprehensive income (within profit or loss for the year), within “other operating
income/(losses)”.
2.8. Finance income
Finance income is included in the statement of comprehensive income (within profit or loss for the year)
when earned, and comprises: interest revenue from loans granted and term deposits, interest revenue from
receivables under special contracts, interest income from receivables under cession agreements, interest
income on recoverable shares, net foreign exchange gain on sale of subsidiaries, dividends on equity
investments, net giants from exchange differences under loans denominated in a foreign currency, net foreign
exchange gain on recoverable shares, revenue from guarantees, revenue from debt settlement transactions,
gains from fair value measurements of investments in securities at fair value through profit or loss, or through
other comprehensive income, gains from the fair value of long-term equity investments which constitute part
of stage-by-stage acquisition of a subsidiary, interest income on debt securities (bonds) held for trading, gains
on transactions with debt securities held for trading.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
22
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 stated separately from finance costs on the face of the statement of comprehensive income
(within profit or loss for the year).
2.9. Finance costs
Finance income is included in the statement of comprehensive income (within profit or loss for the year)
when incurred, and are stated separately from finance income and comprise: interest expenses on loans,
expenses related to payment of dividends, interest expenses on leases, bank charges and guarantees, net
foreign exchange loss from loans in a foreign currency, net loss on recoverable shares, net foreign exchange
loss on receivables from sale of subsidiaries, impairment of charges on guarantor agreements, provisions
under financial guarantee contracts, losses on revaluation of financial assets to fair value and impairment of
commercial loans granted.
Finance costs are stated separately from finance income on the face of the statement of comprehensive income
(within profit or loss for the year).
2.10. Property, plant and equipment
Property, plant and equipment, including biological assets (carriers) are presented at revalued amount less the
accumulated depreciation and impairment losses in value.
Initial acquisition
Upon their initial acquisition, non-current tangible assets 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. 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.
Upon acquisition of non-current tangible assets 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 Company credit resources with analogous maturity and purpose.
The Company 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 approach chosen by the Company for subsequent measurement of non-current tangible assets 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.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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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 Company applies the straight-line depreciation method for property, plant and equipment. Depreciation
of an asset begins when it is available for use. Land (except for land with the right of use) 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:
• for buildings – from 20 to 70 years;
• for facilities and transmitter devices – from 5 to 35 years;
• for machinery and equipment – from 6 to 40 years;
• for computers and mobile devices – from 2 to 5 years;
• for servers and systems – from 4 to 18 years;
• for motor vehicles – from 5 to 18 years;
• for furniture and fixtures – from 3 to 13 years;
• for other tangible assets - from 3 to 12 years;
• for biological assets (carriers) – from 10 to 12 years.
The term of use of right-of-use assets is as follows:
• for land – from 4 to 5 years;
• for buildings – from 2 to 10 years;
• for facilities and transmission devices – from 2 to 10 years;
• for motor vehicles – from 2 to 5 years;
• for furniture and fixtures – from 2 to 3 years.
The useful life set for any tangible fixed asset is reviewed at the end of each reporting period and in case of
any material deviation from the future expectations on the period of use, the latter is adjusted prospectively.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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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 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 at
the expense of this reserve and is presented in the statement of comprehensive income (within other
comprehensive income) unless it exceeds the reserve amount and the surplus is included as expense in the
statement of comprehensive income (within profit or loss for the year).
Gains and losses from sale
Tangible fixed assets are derecognised from the 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 'property, plant and
equipment' group are determined as the difference between the consideration the Company expects to be
entitled to (sales revenue) and the carrying amount of the assets on the date when the recipient obtains control
thereon. They are stated under 'other operating income/(losses), net' on the face of the 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 statement of changes
in equity.
2.11. Biological assets and agricultural produce
Upon initial acquisition, biological assets (non-fruit-bearing) are valued at acquisition cost (cost), which
includes the purchase price and all direct costs necessary to align the asset to a fruit-bearing condition. Direct
costs are mainly: costs for land preparation and processing, costs for planting, fertilization, irrigation and
other activities performed over a long period (4-5 years) in which biological assets (non-fruit-bearing) will
be transferred into biological assets (carriers).
Agricultural produce (yellow acacia crops) is measured at fair value as at the date of acquisition, less the sales
costs. The fair value of agricultural produce is determined with the support of an independent appraiser.
The agricultural produce – yellow acacia seeds – is presented within the Company’s inventories, on line
“herbs”, and is subsequently measured according to the requirements of IAS 2 Inventories.
Gains on losses on measurement of agricultural produce at fair value, less sales costs, are recognized in the
statement of comprehensive income (within profit or loss for the year) when incurred and are stated within
“other operating income/(losses), net”.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
25
2.12. Intangible assets
Goodwill
Goodwill represents the excess of the cost of an acquisition (the consideration given) over the fair value of
the share of Sopharma AD in the net identifiable assets of the subsidiaries (Bulgarian Rose Sevtopolis AD,
Medica AD, Unipharm AD, Biopharm Engineering AD and Veta Pharma AD) at the date of its acquisition
(the business combination).This goodwill on the merger of the subsidiaries into the parent company is
recognised in the separate statement of financial position of the parent. Goodwill is presented within the
'intangible assets' group.
Goodwill is measured at acquisition cost (cost), determined at the date of the actual business combination,
less the accumulated impairment losses. It is not amortised. It is subject to annual review for existence of
impairment indicators. Impairment losses on goodwill are presented in the separate 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 financial statements at acquisition cost (cost) less accumulated amortisation
and any impairment losses in value.
The Company applies the straight-line amortisation method for the intangible assets.
The useful life per group of assets is as follows:
• for software – from 2 to 12 years;
• for patents and licenses – from 2 to 10 years;
• for trademarks – from 5 to 15 years;
• contractual rights over sales permits and trademarks – 20 years;
• for other intangible assets – from 5 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 expense in the statement of comprehensive income (within profit or loss for the year).
Intangible assets are derecognised from the 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 the Company expects to be entitled to (sales revenue)
and the carrying amount of the assets on the date when the recipient obtains control thereon. They are stated
under 'other operating income/(losses), net' on the face of the statement of comprehensive income (within
profit or loss for the year).
2.13. Investment property
Investment property is property lastingly held by the Company to earn rentals and/or for capital appreciation.
They are presented in the statement of financial position at fair value (Note 2.32).
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
26
Gains or losses arising from a change in the fair value of investment property are recognised in the 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 statement of
comprehensive income (within profit or loss for the year) within “income”.
Investment property is derecognised from the 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. Gains or losses arising from the disposal of investment property are determined
as the between the consideration the Company expects to be entitled to (sales revenue) and the carrying
amount of the assets on the date when the recipient obtains control thereon. They are presented under 'other
operating income/(losses), net' in the 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 function
and purpose 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.
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 statement of comprehensive income (within other comprehensive income) and within
'revaluation reserve – property, plant and equipment' in the statement of changes in equity.
2.14. Investments in subsidiaries, associates, and joint ventures
Long-term investments, in the form of stocks and shares in subsidiaries, associates and joint ventures are
presented in the financial statements at acquisition cost (cost) being the fair value of the consideration paid
for the investment including any directly attributable costs incurred on the acquisition less accumulated
impairment.
Company's investments in subsidiaries, associates and joint ventures are subject to annual review for
impairment. Where conditions for impairment are identified, the impairment is recognised in the statement
of comprehensive income (within profit or loss for the year).
In purchases and sales of investments in subsidiaries, associates and joint ventures the date of trading
(conclusion of the deal) is applied.
Dividend income
The income from dividends related to long-term investments in the form of stocks and shares in subsidiaries,
associates and joint ventures is recognised as current income and carried to the statement of comprehensive
income (within profit or loss for the year) within “finance income”.
Investments 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 control over the economic benefits from the respective specific
type of investments are being lost. Gain/(loss) on disposal is presented in the statement of comprehensive
income (within profit or loss for the year).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
27
2.15. Other long-term equity investments
The other long-term equity investments constitute 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 acquisition cost, which is the fair value of consideration paid,
including direct costs to acquire the investment (financial asset) (Note 2.26).
All purchases and sales of equity instruments are recognised at the transaction’s “trade date”, i.e. the date on
which the Company undertakes to purchase or sell the asset.
Subsequent measurement
The equity investments held by the Company are subsequently measured at fair value (Note 2.32) determined
with support by an independent licensed valuator.
The effects from subsequent remeasurement 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 equity 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 average weighted price method is used, applying the price
determined at the end of the month when the derecognition is performed.
2.16. Inventories
Inventories are valued in the financial statements as follows:
• raw materials, materials and goods – at the lower of acquisition cost (cost) and net realisable value;
• finished products, semi-finished products and work in progress – at the lower of production cost and
net realisable value;
• agricultural produce – at the lower of fair value at initial acquisition and net realisable value.
Expenses incurred in bringing a certain product within inventories to its present condition and location, are
included in the acquisition cost (cost) as follows:
• raw materials, materials and goods – all delivery costs, including the purchase price, import customs
duties and charges, transportation expenses, non-refundable taxes and other expenses, incurred for
rendering the materials and goods ready for usage/sale;
• finished products, semi-finished products and work in progress – all necessary expenses on
production that constitute the production cost, which includes the cost of direct materials and labour
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
28
and the attributable proportion of production overheads (both variable and fixed), but excluding
administrative expenses, exchange rate gains and losses and borrowing costs. Fixed production
overheads are included in the production cost of manufactured finished products, semi-finished
products and work in progress based on the normal operating capacity determined on the grounds of
commonly maintained average volume of production confirmed by the production plan. The base,
chosen for their allocation at unit-of-production level, is the standard rate of man-hours of directly
engaged staff in the production of the particular unit.
The Company applies 'standard production cost' for current valuation of finished products, semi-finished
products and work in progress, and respectively, 'standard purchase cost' for basic raw materials and other
production materials.
At the end of each reporting period the management performs analysis of factors leading to variances on: (a)
the supply of raw materials and other production materials – by comparing the actual and standard acquisition
costs, and (b) the production of finished products, semi-finished products and work in progress – by
comparing the actual and standard production costs. Where necessary, the value of inventories, included in
the financial statements, is adjusted. On the basis of research on the good reporting practices in the
pharmaceutical industry, the Company has adopted materiality thresholds regarding: (a) variance on supply
of raw materials and other production materials – up to 2%, and (b) variance on production – up to 1.5%,
within which the current value of the existing closing stocks of raw and other materials, finished products
and work in progress are not adjusted for the purposes of the financial statements (Note 2.33).
Non-production inventories and inventories related to the production of veterinary vaccines are currently
expensed upon use thereof (application and sale) by applying the weighted average cost (cost) method.
The net realisable value represents the estimated selling price of an asset in the ordinary course of business
less the estimated cost for completion of this asset and the estimated costs necessary to make the sale.
2.17. Trade receivables
Trade receivables constitute the Company’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 amount determined at a discount equal
to the interest associated to the client - debtor.
Subsequent measurement
The Company 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 credit losses.
(Note 2.26).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
29
Impairment
The Company 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 2.26 and Note
2.33).
Impairment of receivables is accrued through the respective corresponding allowance account for each type
of receivable to the “other operating expenses” on the face of the statement of comprehensive income (within
profit or loss for the year).
2.18. Interest-bearing loans and other financial resources granted
All loans and other financial resources granted are initially presented at acquisition cost (nominal amount),
which is accepted to be the fair value of the amount given in the transaction, net of the direct costs related to
these loans and granted resources. Following their initial recognition, interest-bearing loans and other funding
granted is subsequently measured and stated in the statement of financial position at amortised cost,
determined by applying the effective interest method. They are classified in this group since the Company’s
business model only aims to collect contractual cash flows of principal and interest. 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 statement of comprehensive income (within profit or loss for
the year) as finance income (interest) or 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 Company has unconditionally the right to settle its payable within a term of more
than 12 months after the end of the reporting period (Note 2.26).
2.19. Cash and cash equivalents
Cash includes cash in hand and cash in 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
Company under its agreements with the banks over the deposits’ terms.
Subsequent measurement
Cash and cash equivalents at banks are subsequently measured at amortised cost, less the impairment
accumulated for expected credit losses (Note 2.26).
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 received investment purpose loans 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 from bank deposits is included within cash flows from investing activities;
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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• VAT paid on fixed assets purchased from foreign suppliers is presented within the item 'taxes paid',
while that paid on assets purchased from local suppliers is presented within the items ‘purchase of
PPE’, ‘purchase of intangible assets’ and ‘purchase of investment property’ within cash flows from
investing activities;
• 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.
2.20. Trade and other payables
Trade and other current amounts payable in the statement of financial position are carried 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 Company, and subsequently – at amortised cost (Note 2.26).
2.21. Interest-bearing loans and other borrowings
In the statement of financial position, all loans and other borrowings are initially presented at acquisition cost
(nominal amount) which is designated as the fair value of the transaction’s deliverable, net of the direct costs
related to these loans and borrowings. Following their initial recognition, interest-bearing loans and other
borrowings are subsequently measured and presented in the statement of financial position at amortised cost,
determined by means of the effective interest method. The amortised cost is calculated by considering all
charges, commissions and other costs, including discounts and premiums associated with these loans. Gains
and losses are recognised in the statement of comprehensive income (within profit or loss for the year) as
finance income or finance expenses (interest) over the amortisation period or when the payables are written-
off or reduced (Note 2.26).
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, except from the portion thereof
regarding which the Company has an unconditional right to settle its payable within over 12 months after the
end of the reporting period.
2.22. Capitalisation of borrowing costs
Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying
asset 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.
The amount of borrowing costs eligible for capitalisation to the value of a qualifying asset is determined by
applying a capitalisation rate.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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The capitalisation rate is the weighted average of the borrowing costs applicable to the borrowings of the
Company 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.
2.23. Leases
Lessee
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.
The Company as elected to state all lease payments under short-term leases (up to 12 months) as current
expenses over a straight-line basis for the lease term.
Initial recognition
The Company recognises right-of-use assets in the statement of financial position at the commencement date
of the lease (the date on which a lessor makes an underlying asset available for use by the lessee).
The acquisition cost of the right-of-use asset includes:
• the amount of the initial measurement of the lease liability;
• any lease payments made at or before the commencement date, less any lease incentives received;
• any initial direct costs incurred by the lessee;
• provisions for expenses related to dismantling and removing the underlying asset.
The Company 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.
Right-of-use assets are presented in the statement of financial position, within ‘property, plant and
equipment’, and depreciation thereof – in the statement of comprehensive income, within ‘depreciation and
amortisation expenses’.
The lease liabilities include the net present value of the following lease payments:
• fixed lease payments less any lease inceptives receivable;
• variable lease payments that depend on an index or rate;
• the exercise price of the purchase options, if the lessee is reasonably certain to exercise this option;
• payments of penalties for terminating the lease;
• residual value guarantees.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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Lease payments are discounted using the interest rate implicit in the lease, if 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). Finance costs for the lease are presented in the statement of comprehensive
income 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.
Subsequent measurement
The Company 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 Company 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 Company 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 Company, 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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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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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.
2.24. Pensions and other payables to personnel under the social security and labour legislation
The employment and social security relations with the workers and employees of the Company are based on
the provisions of the Labour Code and the effective social security legislation in Bulgaria.
Short-term benefits
Short-term benefits 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 the end of each reporting period, the Company measures 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
In accordance with Company's Articles of Association and upon a decision of the General Meeting of
Shareholders, the Executive Director is entitled to one-off remuneration (tantieme) at the amount of up to 1%
of Company's net profit and is empowered to determine the circle of employees among whom to distribute
up to 2% of Company's profit for the year as a bonus for each calendar year. When a certain portion is required
to be deferred for a period of more than 12 months, this portion is measured at present value at the reporting
date and is stated within non-current liabilities in the statement of financial position in the item 'payables to
personnel'.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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Long-term retirement benefits
Defined contribution plans
The major duty of the Company as an employer 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 Unemployment Fund, the Labour
Accident and Professional Diseases (LAPD) Fund, the Guaranteed Receivables of Workers and Employees
(GRWE) Fund and for health insurance. The rates of the social security and health insurance contributions
are defined annually 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 Social Security Code (SSC).
These pension plans applied by the Company 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.
There is no established and functioning private voluntary social security fund at the Company.
The contributions payable by the Company under defined contribution plans for social security and health
insurance are recognised as a current expense in the statement of comprehensive income (within profit or loss
for the year) unless a particular IFRS requires this amount to be capitalised to the cost of an asset, and as a
current liability at their undiscounted amount along with the accrual of the respective employee benefits to
which the contributions refer and in the period of rendering the underlying service.
Defined benefit plans
In accordance with the Labour Code, the Company in its capacity as an employer in Bulgaria is obliged to
pay an indemnity to its personnel when coming of age for retirement, at an amount which, depending on the
length of service with the entity, varies between two and six gross monthly salaries at the employment
termination date. 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 shall be presented in the
statement of financial position, and respectively, the change in their value – in the statement of comprehensive
income as follows: (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 remeasurement 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 'remeasurements of defined benefit pension plans'. Actuarial gains and
losses arise from changes in the actuarial assumptions and experience adjustments.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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At the end of each reporting period, the Company assigns certified actuaries who issue a report with their
calculations about the long-term retirement benefit obligations to personnel. 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 Bulgaria
where the Company itself operates.
Share-based payments
Share-based payments to employees and other persons rendering similar services are measured at the fair
value of the equity instruments at the date of provision. For conditional share-based payments the fair value
at the date of share-based payment is measured so as to reflect these conditions without actual differences
between the expected and actual results.
Termination benefits
In accordance with the local provisions of the employment and social security regulations in Bulgaria, the
Company as an employer is obliged, upon termination of the employment contracts prior to retirement, to
pay certain types of indemnities.
The Company recognises employee benefit obligations on employment termination before the normal
retirement date when it is demonstrably committed, based on a publicly announced plan, including for
restructuring, to terminating the employment contract with the respective individuals without possibility of
withdrawal or in case of formal issuance of documents for voluntary redundancy. Termination benefits due
more than 12 months are discounted and presented in the statement of financial position at their present value.
2.25. Share capital and reserves
The Company is a joint-stock one and is obliged to register with the Commercial Register a specified share
capital, which should serve as a security for the creditors of the Company for execution of their receivables.
Shareholders are liable for the obligations of the Company 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 Company
reports its share capital at the nominal value of the shares registered in the court.
According to the requirements of the Commercial Act and the Articles of Association, the Company is obliged
to set aside a Reserve Fund by using the following resources:
• 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.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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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.
Treasury shares are presented in the statement of financial position at cost (acquisition price) and their gross
amount is deducted from Company's equity. Gains or losses on sales of treasury shares are at the account of
retained earnings and are carried directly to Company'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; and
• gain from the difference between the carrying amount of property, stated within the group 'owner
occupied property', and their fair value at the date on which they are transferred to the group
'investment property'.
Deferred tax effect on the revaluation reserve is directly carried at the account of this reserve.
Revaluation reserve is transferred to the 'accumulated profits' component when the assets are derecognised
from the statement of financial position or are fully depreciated.
The revaluation reserve covers the impairment of the assets with which it relates. It may be used in the
implementation of Company'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 transferred to ‘retained earnings’.
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 Company shares, and are therefore
classified as an equity instrument.
2.26. 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
Upon initial recognition, the Company’s financial assets are classified in three groups, based on which they
are subsequently measured: at amortised cost; at fair value through other comprehensive income, and at fair
value through profit or loss.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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The Company 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 (Note 2.6.1.).
The purchases and sales of financial assets whose conditions require asset delivery within a certain period,
usually pursuant to legislation or the effective practice of the respective market (regular way purchases), are
recognised using trade date accounting, i.e. on the date when the Company committed to purchase or sell the
asset.
The classification of financial assets upon their initial recognition depends on the characteristics of the
contractual cash flows of the respective financial asset and on the Company’s business model for management
thereof. In order for a financial asset to be classified and measured at amortised value or at fair value through
other comprehensive income, its conditions should give rise to cash flows that are “solely payments of
principal and interest (SPPI)” on the principal amount outstanding. For this purpose, analysis is performed
by means of SPPI test at instrument level.
The Company’s business model for the management of financial assets reflects the way the Company
manages its financial assets to generate cash flows. The business model determines if cash flows are generated
by the collection of contractual cash flows, the sale of financial assets, or both.
Subsequent measurement
For the purpose of subsequent measurement, the Company’s financial assets are classified in the following
categories:
• 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 at fair value through profit or loss (debt securities – bonds and derivative financial
instruments – warrants ).
Classification groups
Financial assets at amortised cost (debt instruments)
The Company 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.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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The Company’s financial assets at amortised cost include: cash and cash equivalents at banks, trade
receivables, including from related parties, receivables under cession agreements, receivables under
recoverable shares, and loans to third parties (Note 21, Note 22, Note 24, Note 25, Note 26 (a) and Note 28).
Financial instruments at fair value through other comprehensive income (equity instruments)
Upon their initial recognition, the Company may make an irrevocable choice 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. The classification is determined at the level of
individual instruments.
Upon derecognition of these assets, gains and losses from measurement to fair value, recognised in other
comprehensive income, are not stated (recycles) through profit or loss. Dividends are recognised as “finance
income” in the statement of comprehensive income (within profit or loss for the year) when the right to
payment is established, with the exception of cases when the Company obtains rewards from these proceeds
as compensation of a portion of the financial asset’s acquisition price – in this case, gains are stated in other
comprehensive income. Equity instruments designated as financial instruments at fair value through other
comprehensive income are not subject to impairment test.
The Company has made an irrevocable commitment 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. Some of these
instruments are traded on stock exchanges, and some aren’t. They are stated in the statement of financial
position within the „other long-term equity investments” item.
Financial assets at fair value through profit or loss (debt securities – bonds and derivative financial
instruments (warrants)
On initial recognition, they are measured at cost, which includes the fair value of the financial asset and all
acquisition-related costs - commissions, fees, permits and the like.
Any subsequent changes in fair value are recognised immediately as 'finance income' or 'finance costs' in the
statement of comprehensive income (in profit or loss for the year).
They are presented in the statement of financial position under 'financial assets held for trading'.
Derecognition
A financial asset (or, when applicable, a portion of a financial asset or a group of similar financial assets)
is derecognised from the Company’s statement of financial position, when:
• the rights to cash flows from the asset have expired, or
• the rights to cash flows from the asset have been transferred or the Company has assumed an
obligation to pay in full the cash flows received, without undue delay, to a third party under a transfer
agreement, in which: a) the Company has transferred substantially all risks and rewards from
ownership of the asset; or b) the Company has neither transferred nor retained substantially all risks
and rewards from ownership of the asset, but has transferred control thereon.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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When the Company has transferred its right to obtain cash flows from the asset or has concluded a transfer
agreement, it assesses the extent to which it has retained the risks and rewards of ownership. When the
Company has neither transferred, not retained substantially all risks and rewards from ownership of the
financial assets, it continues to recognise the asset transferred to the extent of its continuing interest therein.
In this case, the Company also recognises the respective liability. The transferred asset and the related liability
are measured on a basis reflecting the rights and obligations that the Company has retained.
Continuing involvement in the form of a guarantee on the transferred asset is measured at the lower of the
two values: the initial carrying amount of the asset and the maximum amount of consideration that the
Company may be required to pay.
Impairment of financial assets
The Company recognises an allowance (impairment provision) for expected credit losses for all debt
instruments which are not carried at fair value through profit or loss. Expected credit losses are calculated as
the difference between the contractual cash flows due under the contractual conditions, and all cash flows the
Company expects to receive, discounted at the initial effective interest rate. Expected cash flows also include
cash flows from the sale of collateral held or other credit enhancements that constitute an integral part of the
contractual conditions.
To calculate the expected credit losses for loans and guarantees to related and third parties, incl. cash and
cash equivalents at banks, the Company applies the general impairment approach defined by IFRS 9. Under
this approach, the Company applies a 3-stage impairment model based on changes versus the initial
recognition of the credit quality of the financial instrument (asset).
Expected credit losses are recognised at two stages:
a. A financial asset which is not credit impaired upon its initial recognition/acquisition is classified in
Stage 1. These are loans granted: to debtors with a low risk of default with stable key indicator
(financial and non-financial) trends, regularly services and without any outstanding past due amounts.
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, which could over 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 transferred to 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 Company’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 aspects related thereto are
disclosed in Note 2.33.
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.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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The Company’s management has performed the respective analyses, based on which it has determined a set
of criteria for default events, in accordance with the specifics of the respective financial instrument. 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 contract amounts due, including in consideration of all
loan collaterals and reliefs held by the Company. The main aspects of the policy and the set of criteria are
disclosed in Note 2.33.
The Company adjusts expected credit losses determined based on historical data, with forecast
macroeconomic indicators for which it has been established that correlation exists and which are expected to
impact the amount of future credit losses.
In order to calculate expected credit losses for trade receivables and contract assets the Company 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. The Company 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 44).
Derecognition
Impaired financial assets are derecognised when no reasonable expectation exists to collect contractual cash
flows.
Financial liabilities
Initial recognition, classification and measurement
The Company’s financial assets include trade and other payables, loans and borrowings, including bank
overdrafts. Upon their initial recognition, financial assets are usually classified as liabilities at amortised cost.
All financial liabilities are initially recognised at fair value, and in the case of loans and borrowings and trade
and other payables, net of direct transaction costs.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification. They are usually
classified and measured at amortised cost.
Classification groups
Loans and borrowing
Following their initial recognition, the Company 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.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
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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 stated 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 specified in the contract is discharged or cancelled
or expires. An exchange between an existing borrower and lender of debt instruments with substantially
different terms is accounted for as an extinguishment of the original financial liability and the recognition of
a new financial liability. The difference between the respective carrying amounts is recognised in the
statement of comprehensive income (within profit or loss for the year).
Offsetting (netting) of financial instruments
Financial assets and liabilities are offset and the net amount reported in the statement of financial position, if
a legally enforceable right exists to offset the recognised amounts and if there is an intention to settle on a net
basis or realise the asset and settle the liability simultaneously.
This requirement results from the concept of the actual economic nature of the Company’s relations with a
given counterpart stating that in the simultaneous presence of these two requirements the expected actual
future cash flow and rewards for the Company is the net flow, i.e. the net amount reflects the Company’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 Company’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 Company’s 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”.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
42
2.27. Financial guarantee contracts
A financial guarantee contract is a contract that requires the issuer to make certain payments to recover the holder’s
loss incurred when a debtor failed to make payment when due, in accordance with the initial or amended conditions
of a debt instrument.
Financial guarantee contracts are recognised a financial liabilities at guarantee issuance. The liability is initially
measured at fair value, and subsequently – at the higher of the following:
• the amount determined in accordance with the expected credit losses model, and
• the initially recognised amount, less the cumulative amount of the revenue (where applicable)
recognised under the principles of IFRS 15 Revenue from Contracts with Customers.
The fair value of financial guarantees is 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 at the amount of expected losses under financial
guarantee contracts is included in the statement of financial position, within “other current liabilities”.
2.28. Income taxes
Company's current income taxes are determined in accordance with the requirements of the Bulgarian tax
legislation – the Corporate Income Taxation Act. The nominal income tax rate in Bulgaria for 2024 is 10%
(2023: 10%).
Deferred income taxes are determined using the liability method on all of Company's temporary differences
between the carrying amounts of the assets and liabilities and their tax bases, existing at the date of the
financial statements.
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 that are accounted for as other components of comprehensive income or an
equity item in the 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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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
43
Deferred tax assets and liabilities are measured at the tax rates and on the bases 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 (Bulgaria) under
the jurisdiction of which the respective deferred asset or liability is expected to be recovered or settled.
The deferred tax assets of the Company are presented net against its deferred tax liabilities when and as much
as it is the tax payer for them in the respective jurisdiction (Bulgaria), 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.
The deferred income tax liabilities of the Company as at 31 December 2024 were assessed at a rate valid for
2025, at the amount of 10% (31 December 2023: 10%).
2.29. Government grants
Government grants represent various forms of providing gratuitous resources by a government (local and
central bodies and institutions) and/or intergovernmental agreements and organisations.
Government grants (municipal, government and international, 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 Company and that the latter has complied and complies
with the associated thereto requirements.
Government grants constitute different forms of provision of state grants (local and central bodies and
institutions) and/or intragovernmental agreements and organisations.
A government grant that compensates the Company 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 proportionately to the amount of
the recognised depreciation charge.
2.30. Net earnings or loss per share
The base net earnings or loss per share are calculated by dividing net profit or loss attributable to ordinary
equity holders 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 split, 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.
The diluted net earnings or loss per share are calculated because dilutive potential ordinary shares (warrants)
have been issued.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
44
Upon the calculation of diluted net earnings or loss per share, adjustment is made to the net profit or loss for
the period which is subject to distribution to shareholders – holders of ordinary shares, and the average
weighted number of shares in circulation, with the effect of all dilutive potential ordinary shares.
The profit or loss for the period which is subject to distribution to shareholders – holders of ordinary shares
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 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 Company identifies its reporting segments and discloses segment information in accordance with the
organisational and reporting structure used by the management. 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 Company's resources.
Company'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. Company's
operating segments include the business fields by individual lines of medicinal forms production – tablets,
ampoules, medical products, other forms and other revenue.
Information by operating segments
The Company uses one basic measuring unit – gross margin (profit) for measuring the results in the operating
segments and allocation of resources between them. The gross margin 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; (c) for assets - property, plant and
equipment, investment property and inventories; (d) for liabilities – government grants, payables to personnel
and for social security. 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 Company manages its investments in securities, trade accounts and financial resources granted/received
as well as taxes at entity's level and they are not allocated at segment level.
The results of the operations regarded as accidental ones compared to the main types of operations (activities)
of the Company as well as revenue, expenses, liabilities and assets that are not subject to allocation are stated
separately in the item 'total at Company level'.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
45
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.
The applied accounting policy for segment reporting is based on that used by the Company for the preparation
of its statutory financial statements for public purposes.
2.32. Fair value measurement
Some of Company's assets and liabilities are measured and presented and/or just disclosed at fair value for
financial reporting purposes. Such are: (a) on a recurring (annual) basis – other long-term equity investments,
investment property, bank loans to/from third parties, certain trade and other receivables and payables; and
other (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
Company 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 interest.
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.
The Company 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 directly quoted 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 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.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
46
For assets and liabilities that are recognised at fair value in the financial statements on a recurring basis, the
Company determines at the end of each reporting period 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.
The Company has developed internal rules and procedures for measuring the fair value of various types of
assets and liabilities. For the purpose, a specifically designated individual, subordinated to the Company’s
Finance Director, organised the performance of the overall valuation process and also coordinates and
observes the work of the external valuators.
The Company uses the expertise of external certified appraisers to determine the fair value of the following
assets and liabilities: financial assets at fair value through other comprehensive income Level 1 and Level 2,
investment property – Level 2 and level 3, property, plant and equipment – Level 2 and Level 3. The choice
of licensed 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 Company's Finance Director and/or Chief
Accountant, Executive Director and the Board of Directors.
In accordance with Company's 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 the Company’s assets and liabilities 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 from the process of fair value measurement are presented to the audit committee and to Company's
independent auditors.
For the purposes of fair value disclosures, the Company has determined 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 Company's accounting policies. Key estimates and
assumptions of high uncertainty.
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.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
47
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. The main key assumptions and components of the model are disclosed
in Note 20.
Calculation of expected credit losses for loans and guarantees granted, guarantorships, trade
receivables, incl. from related parties, and cash and cash equivalents
The measurement of expected credit losses for financial assets stated at amortised cost (loans granted,
guarantees, contract receivables and 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 Company’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 44).
Regarding trade receivables, including from related parties
The Company 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 Company’s
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 Company’s historical credit closes and the
forecast economic conditions may deviate from actual collection rates in the future.
Information about expected credit losses from trade receivables and contract losses is disclosed in Note 21,
Note 22, Note 24, Note 25 and Note 26b.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
48
In 2024, impairment was reversed of trade receivables, incl. from related parties, at the amount of BGN 2.230,
net of the impairment charged (2023, impairment of trade receivables was charged, incl. trade receivables
from related parties, at the amount of BGN 957 thousand, net of impairment reversal) (Note 8, Note 9, Note
22, Note 24, Note 25 and Note 26b).
Regarding loans and guarantees granted:
The Company has adopted the general approach for calculating impairment based expected credit losses of
the loans granted, pursuant to IFRS 9. For this purpose, the Company applies a model of its choice. 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:
ECL=EADxPDxLGD, where:
ECL is the expected credit losses indicator;
EAD 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 Company’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 Company’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 Company’s expectations for the loss amount of the non-performing credit-impaired exposure throughout
its lifetime.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
49
A granted loan, respectively financial assets, 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.
The Company applies the same model with respect to expected credit losses from guarantees granted and
certain individual receivables.
The main matters related to the policy and set of criteria to assess the Company’s exposure to credit risk
related to loans granted are disclosed in Note 44.
Information about expected credit losses from loans and guarantee agreement charges and financial guarantee
contracts are disclosed in Note 21, Note 24, Note 26a and Note 41.
In 2024, a provision for expected credit losses on loans granted was accrued at the amount of BGN 674
thousand, net of reversal (in 2023, a provision for expected credit losses on loans granted was accrued at the
amount of BGN 808 thousand, net of reversal) (Note 12, Note 21, Note 24 and Note 26a).
In 2024, the reversal of impairment of expected credit losses on financial guarantee contracts amounts to
BGN 444 thousand, net of accrual (in 2023, the reversal of impairment of expected credit losses on financial
guarantee contracts amounts to BGN 1,284 thousand, net of accrual) (Note 11, Note 12 and Note 41).
In 2024, expected credit losses were accrued on guarantor contract charges at the amount of BGN 1 thousand,
net of reversal (2023: expected credit losses were accrued on guarantor contract charges at the amount of
BGN 2 thousand, net of reversal) (Note 11, Note 12 and Note 24).
Cash
To calculate expected credit losses for cash and cash equivalents at banks, the Company 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 amounts in the respective bank accounts is taken into consideration.
Leases
The application of IFRS 16 requires the management to perform various assessments, estimates and
assumptions that impact the accounting for right-of-use assets and lease liabilities. The main key assessments
concern determining an appropriate discount rate and determining the term of each lease, including whether
it is reasonably certain that the extension/termination options will be exercised. As a result of the uncertainty
regarding these assumptions and estimates, significant adjustments may be made to the respective assets and
liabilities in the future, respectively the revenue and expenses stated (Note 33, Note 34, Note 38 and Note 41).
Revenue from contracts with customers
Upon revenue recognition and preparation of the 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.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
50
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
stated.
The key judgements and assumptions that materially impact the amount and term for recognition of revenue
from contracts with customers are related to determining the point in time when control over the goods and/or
services promised in the contract is transferred to the customer and assessment of the variable consideration
for returned goods and volume rebates (Note 2.6.1.).
Inventories
Normal capacity
Company'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 Company. When the
actually achieved volume for individual articles is below the volume at the normal production capacity, set
by the Company, the relevant recalculation are made for the fixed overheads, included in the cost of stocks
of finished products and work in progress.
Allowance for impairment
At the end of each financial year, the Company reviews 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 Company impairs these inventories to net realisable value.
As a result of the reviews and analyses made in 2024, impairment of inventories was stated at the amount of
BGN 7,894 thousand (2023: BGN 3,458 thousand) (Note 5 and Note 8).
Remeasurement 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 Company’s non-current tangible assets, as well as of the physical and technical condition thereof,
operation means and residual useful lives. Respectively, remeasurement was carried out, since at this date the
five-year period for remeasurement adopted in accordance with the policy expires. The review and
remeasurement were performed with the professional support of independent licensed appraisers.
The licensed appraisers also developed a sensitivity test for the fair value measurements proposed thereby,
determined by means of the different valuation methods, in accordance with the reasonably possible changes
to the main assumptions, and comments on the deviations found.
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 8,338
thousand, net of impairment.
As a result of the reviews and analyses carried out in 2024, impairment was stated of property, plant and
equipment at the amount of BGN 234 thousand (2023: BGN 1,890 thousand) (Note 10 and Note 15).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
51
Goodwill impairment
At each reporting date, the management determines whether indicators exist for goodwill impairment. The
calculations are made by the management with support from independent licensed appraisers.
As a result of the calculations made, in 2024 it was determined that no goodwill impairment had to be stated
(2023: none) (Note 16).
Impairment of investments in subsidiaries
At each reporting date, the management makes an assessment about whether indicators for impairment exist
in respect of its investments in subsidiaries. The calculations were made by the management with the
assistance of independent certified appraisers.
As a result of the calculations made in 2024, the Company found it was not necessary to recognise impairment
of particular investments in subsidiaries (2023: none) (Note 18).
Impairment of investments in associates and joint ventures
At each reporting date, the management makes an assessment about whether indicators for impairment exist
in respect of its investments in associates and joint ventures. The calculations were made by the management
with the assistance of independent certified appraisers.
As a result of the calculations made in 2024, the Company did not find it was necessary to recognise
impairment of particular investments in joint ventures (2023: identified need to recognise an impairment of
investments in joint ventures in the amount of BGN 101 thousand) (Note 10 and Note 19).
Actuarial calculations
Calculations of certified actuaries have been used 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. They are disclosed in Note 35.
Long-term retirement benefit obligations to personnel at the amount of BGN 5,775 thousand (31 December
2023: BGN 5,120 thousand) have been stated as a result of these calculations (Note 35).
Deferred tax assets
There are unrecognised deferred tax assets at the amount of BGN 3,148 thousand (31 December 2023: BGN
3,306 thousand), because the management concluded that it is unlikely the temporary difference to be
manifested in a foreseeable future. The temporary difference on which no tax asset is recognised amounts to
31,480 thousand (31 December 2023: BGN 33,064 thousand) (Note 31).
Litigation provisions
With regard to the pending litigations against the Company, the management, jointly with Company's
lawyers, has decided that at this stage the probability and risks of a negative outcome therefrom is still
minimal and therefore, it has not included provisions for litigation payables in the statement of financial
position as at 31 December 2024.
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
52
3. REVENUE
Company’s revenue includes:
2024
2023
BGN '000
BGN '000
Revenue from contracts with customers
234,658
250,973
Other revenue
2,938
2,303
Total
237,596
253,276
3.1. The revenue from contracts with customers is from sales of medication produced and includes:
2024
2023
BGN '000
BGN '000
Export
138,733
157,437
Domestic market
95,925
93,536
Total
234,658
250,973
Revenue from export sales by product includes:
2024
2023
BGN '000
BGN '000
Tablet dosage forms
106,260
118,917
Ampoule dosage forms
12,618
16,424
Syrup dosage forms
9,989
11,057
Ointments
4,711
6,406
Lyophilic products
1,740
1,586
Drops
1,185
760
Medical cosmetics
1,060
1,030
Suppositories
363
73
Plasters
333
406
Wound dressings
214
361
Sachets
173
250
Veterinary vaccines
85
96
Sanitary and hygienic products
2
2
Substances
-
69
Total
138,733
157,437
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NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
53
Revenue from domestic sales by product:
2024
2023
BGN '000
BGN '000
Tablet dosage forms
50,095
47,589
Ampoule dosage forms
16,133
15,830
Wound dressings
6,583
6,490
Syrup dosage forms
3,825
4,256
Ointments
3,758
3,472
Plasters
3,409
3,161
Solutions
2,493
2,441
Lyophilic products
2,469
3,318
Veterinary vaccines
2,181
2,230
Sachets
1,561
1,283
Drops
887
1,090
Haemodialysis concentrates
681
651
Sanitary and hygienic products
621
621
Medical cosmetics
595
598
Suppositories
541
432
Chemical substances and mixtures
93
74
Total
95,925
93,536
The breakdown of sales by geographic region is as follows:
2024
BGN ‘000
Relative share
2023
BGN ‘000
Relative share
Europe
112,133
48%
126,119
51%
Bulgaria
95,925
41%
93,536
37%
Other countries
26,600
11%
31,318
12%
Total
234,658
100%
250,973
100%
The total revenue from transaction with the largest clients of the Company is as follows:
2024
BGN ‘000
% of revenue
2023
BGN ‘000
% of revenue
Client 1
93,841
40%
90,080
36%
Client 2
23,448
10%
21,613
9%
Client 3
14,956
6%
52,918
21%
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
54
Contract balances are as follows:
31.12.2024
31.12.2023
BGN ‘000
BGN ‘000
Receivables under contracts with customers – related parties, net of
impairment (Note 24)
83,036
71,955
Receivables under contracts with customers – third parties, net of
impairment (Note 25)
18,868
13,950
101,904
85,905
Reimbursement obligations as at 31 December 2024: BGN 4,771 thousand (31 December 2023: BGN 4,885
thousand). These include liabilities under retrospective trade volume discounts payable under contracts with
customers which will be reimbursed over the next reporting period. (Note 41).
3.2. The Company’s other revenue is from leased assets and amounts to BGN 2,938 thousand (2023:
BGN 2,303 thousand).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
55
4. OTHER OPERATING INCOME AND LOSSES
The Company’s other operating income and losses include:
2024
2023
BGN '000
BGN '000
Services rendered
8,936
7,252
Awarded amounts
3,977
1
Sales of goods
10,113
7,211
Book value of goods sold
(6,293)
(4,763)
Gain on sale of goods
3,820
2,448
Payables written off
1,496
765
Income from government grants under European projects
592
1,383
Revenue on sale of non-current assets
590
15,728
Carrying amount of non-current assets sold
(55)
(11,439)
Gain on sale of non-current assets
535
4,289
Sales of materials
2,141
1,771
Cost of materials sold
(1,823)
(1,560)
Gain on sale of materials
318
211
Gain on remeasurement of investment property to fair value (Note
17)
314
194
Assets surplus
78
79
Lease liabilities written-off
82
264
Carrying amount of lease assets written-off
(78)
(214)
Gain on leases
4
50
Revenue from grants for agricultural land
1
36
Net foreign exchange gains/(losses) on trade receivables and payables
and current accounts
(631)
(550)
Gains on revaluation of agricultural produce (yellow acacia) to fair
value (Note 23)
-
5
Revenue from liquidation of non-current assets
-
15
Costs for liquidation of non-current assets
-
(26)
(Losses)/Gains on liquidation of non-current assets
-
(11)
Other income
131
146
Total
19,571
16,298
The sales of materials comprise mainly: sales of substances, chemical products and packaging materials.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
56
Services rendered include:
2024
2023
BGN '000
BGN '000
Manufacturing services
7,413
6,098
Social activity
245
229
Gamma irradiation
207
272
Laboratory analyses
200
270
Regulatory services
118
113
Transport services
97
39
Other
656
231
Total
8,936
7,252
Sales of goods include:
2024
2023
BGN '000
BGN '000
Medical products
7,761
5,280
Foodstuffs
1,624
1,564
Nutritional supplements
721
342
Goods with technical designation
7
25
Total
10,113
7,211
The book value of goods sold by types of goods is as follows:
2024
2023
BGN '000
BGN '000
Medical products
4,561
3,196
Foodstuffs
1,317
1,302
Nutritional supplements
410
240
Goods with technical designation
5
25
Total
6,293
4,763
The payables written-off are as follows:
2024
2023
BGN '000
BGN '000
Provision for trade payables
801
6
Tantieme
512
665
Bonuses
179
-
Payables to personnel
4
9
Dividends
-
85
Total
1,496
765
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
57
5. RAW MATERIALS AND CONSUMABLES USED
The raw materials and consumables used include:
2024
2023
BGN '000
BGN '000
Basic materials
64,167
65,398
Electricity
5,142
5,774
Laboratory materials
4,095
4,024
Impairment of materials (Note 9)
3,503
282
Heating
3,030
4,474
Technical materials
1,369
2,243
Spare parts
1,225
1,275
Auxiliary materials
1,068
1,026
Working clothes and personal protective equipment for labour
940
941
Fuels and lubricating materials
603
644
Water
422
507
Scrappage of materials
232
218
Total
85,796
86,806
Expenses on basic materials include:
2024
2023
BGN '000
BGN '000
Substances
26,124
25,854
Packaging materials
11,995
12,294
Liquid and solid chemicals
10,092
11,844
Herbs
3,686
2,946
Aluminium and PVC foil
3,115
3,048
Sanitary-hygienic and dressing material
3,113
3,071
Ampoules
2,674
2,277
Vials
2,428
2,568
Tubes
636
1,151
Materials for manufacturing veterinary vaccines
304
345
Total
64,167
65,398
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
58
6. HIRED SERVICES EXPENSE
Hired services expense includes:
2024
2023
BGN '000
BGN '000
Advertising and marketing services
20,061
13,985
Consulting services
7,725
3,987
Manufacturing of medical products
5,629
6,418
Building and equipment maintenance
3,878
3,304
Transportation and shipping services
3,272
4,071
Subscription fees
2,321
2,728
Shipping services – domestic market
2,034
1,238
State and regulatory charges
1,493
1,188
Security
1,381
1,385
Local taxes and charges
1,325
1,359
Services under civil contracts
1,075
914
License fees
978
651
Medical services
894
711
Shipping services (export)
725
550
Translation of documentation
662
616
Insurance
471
510
Communications
421
385
Car repair and maintenance
357
464
Taxes on expenses
339
354
Rentals
245
326
Courier services
238
210
Registration of medicines
220
134
Destruction of medicines
208
160
Commissions
143
256
Current bank account servicing fees
121
134
Patent fees
83
256
Clinical trial services
45
37
Repair of leased assets
41
74
Agricultural land processing
-
53
Other
385
253
Total
56,770
46,711
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
59
Rental costs comprise:
2024
2023
BGN '000
BGN '000
Rentals related to short-term leases
232
221
Rentals related to leases of low-value assets
13
6
Rentals related to variable consideration on long-term leases
-
99
Total
245
326
The expenses accounted for the year on statutory audit of the separate annual financial statements amount to
BGN 95 thousand (2023: BGN 104 thousand).
In 2024 and 2023, the statutory auditors did not render other services.
7. EMPLOYEE BENEFITS EXPENSE
Employee benefits expense includes:
2024
2023
BGN '000
BGN '000
Current wages and salaries
57,890
51,205
Social security contributions
10,482
9,470
Social benefits and payments
3,326
3,556
Accruals for unpaid leaves
1,710
2,004
Tantieme
1,438
1,171
Accruals for long-term retirement benefit obligations (Note 35)
759
667
Social security/health insurance contributions on leaves
301
333
Total
75,906
68,406
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
60
8. OTHER OPERATING EXPENSES
Other expenses include:
2024
2023
BGN '000
BGN '000
Impairment of finished products and work in progress (Note 9)
4,286
2,739
Entertainment allowance
2,092
1,950
Scrappage of finished products and work in progress
1,536
224
Business trips
1,003
801
Unrecognised input tax under VAT
412
218
Donations
321
612
Trainings
223
176
Scrappage of non-current assets
140
98
Impairment of goods (Note 9)
105
437
Awarded amounts
97
46
Other taxes and payments to the state budget
72
58
Interest on trade payables
29
28
Costs on the transformation of a subsidiary
21
43
Return claims
10
-
Scrappage of goods
9
133
Receivables written-off
1
-
Accrued/(reversed) impairment of credit losses on receivables, incl. from
related parties, net (Note 9)
(2,230)
957
Other
234
351
Total
8,361
8,871
9. IMPAIRMENT OF CURRENT ASSETS
Impairments of current assets comprise:
2024
2023
BGN '000
BGN '000
Impairment of finished products and work in progress (Note 8)
4,286
2,739
Impairment of materials (Note 5)
3,503
282
Impairment of goods (Note 8)
105
437
Impairment of credit losses for receivables
5,461
8,101
Reversed impairment of credit losses for receivables
(7,691)
(7,144)
Net change in the provision for impairments of credit losses (Note 8)
(2,230)
957
Total
5,664
4,415
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
61
10. IMPAIRMENT OF NON-CURRENT ASSETS, OUTSIDE THE SCOPE OF IFRS 9
Impairment losses on non-current assets include:
2024
2023
BGN '000
BGN '000
Impairment of PPE (Note 15)
234
1,890
Impairment of investments in joint ventures (Note 19)
-
101
Total
234
1,991
11. FINANCE INCOME
Finance income includes:
2024
2023
BGN'000
BGN'000
Income from shareholding
1,642
1,514
Interest income on loans granted
1,137
2,642
Interest income on recoverable shares
718
60
Income from guarantor contract fees
662
799
Reversed provision on financial guarantees
480
1,284
Impairment of credit losses on provisions on financial guarantees
(36)
-
Reversed provision on financial guarantees, net
444
1,284
Net foreign exchange gain on sale of subsidiary
225
-
Interest income on cession agreements
127
127
Net gain on transactions in debt securities held for trading (Note 27)
123
-
Income on term deposits
100
954
Net foreign exchange gain on receivable of recoverable shares in
subsidiaries
54
212
Net foreign exchange gain on leases
-
6
Total
5,232
7,598
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
62
12. FINANCE COSTS
Finance costs include:
2024
2023
BGN'000
BGN'000
Interest charges on loans obtained
2,852
1,966
Expenses for discounting long-term receivables
1,291
-
Impairment of credit losses under business loans granted
812
848
Reversed impairment of credit losses on receivables under business
loans granted
(138)
(40)
Net change in the impairment of loans granted
674
808
Bank charges on loans and guarantees
560
427
Interest charges on leases
300
300
Loss on remeasurement of financial assets to fair value
245
-
Costs related to dividend payment
36
6
Net foreign exchange loss on leases
12
-
Costs related to foreign securities
10
-
Impairment of credit losses on receivables under guarantor
agreements
1
4
Reversed impairment of credit losses on receivables under guarantor
agreements
-
(2)
Net change in the impairment of guarantorships
1
2
Net foreign exchange loss on receivable upon subsidiary sale
-
128
Total
5,981
3,637
13. INCOME TAX EXPENSE
Amendments to the Corporate Income Tax Act related to a global minimum corporate tax of 15%
At the end of 2023, amendments to the Corporate Income Tax Act were adopted, which effectively introduce
a global minimum corporate tax of 15% on multinational and large national groups of enterprises as from
01.01.2024, in accordance with the terms specified in the Corporate Income Tax Act. These amendments are
in the context of the so-called Pillar Two Model rules of the Organization for Economic Co-operation and
Development (OECD) in line with the agreement at global and European level, launched with the OECD's
BEPS (Base erosion and profit shifting) initiative to address the tax challenges arising from the digitalization
of the economy.
The Pillar Two Model rules introduce the following new tax mechanisms, according to which multinational
and large national groups of enterprises will pay a minimum level of tax (global minimum corporate tax):
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
63
• Qualified Domestic Top-up Tax Rule
• Income Inclusion Rule
• Underpayment Tax Rule
The new tax mechanisms may impose a minimum tax on income arising in any jurisdiction where
multinational and large national groups of enterprises operate at an effective tax rate of 15%.
Sopharma AD is the ultimate parent company of Sopharma Group, which falls within the scope of the top-
up tax provisions and has quantified the top-up tax expense for its constituent enterprises.
The amendments to the Corporate Income Tax Act, related to a global minimum tax of 15% effective from
01.01.2024, are applicable to the Group and its constituent entities in Bulgaria and abroad. The top-up tax is
determined for each jurisdiction.
Based on the calculations performed regarding the top-up tax (through the application of the qualified
domestic top-up tax rule and income inclusion rule), the Group has determined that the GloBE Income in
Bulgaria for 2024 in the amount of BGN 85,091 thousand should be taxed at the applicable calculated 3.92%
tax rate for the top-up tax for 2024 in the amount of BGN 2,359 thousand.
The Group applies the mandatory temporary exemption under IAS 12 to the accounting of deferred taxes
resulting from the amendments to the Corporate Income Tax Act under the application of the OECD Pillar
Two Model Rules.
The excess profit for the purposes of determining the qualified domestic top-up tax and income inclusion tax
been arrived at by making adjustments to the accounting result for consolidation purposes specific to the new
tax regime (totaling BGN 25,393 thousand) at a jurisdictional level. Also, the Group applies the substance-
based income exclusion (totaling BGN 24,947 thousand). The effective tax rate for the purposes of the top-
up tax and the subsequent top-up tax rate carry 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 Model rules presented below.
For the parent company, Sopharma AD, the calculated top-up tax at the separate financial statements level
for 2024 is in the amount of BGN 708 thousand.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
64
The reconciliation between the income tax expense and the accounting profit for the years ending on
31.12.2024 and 31.12.2023 is presented below:
2024
2023
BGN '000
BGN '000
Accounting profit for the year before tax
32,534
53,636
Income tax expense at the applicable tax rate of 10% for 2024
(2023: 10%)
3,253
5,364
From unrecognised amounts as per tax returns related to:
increases – BGN 8,601 thousand (2023: BGN 12,850 thousand)
860
1,285
decreases – BGN 5,627 thousand (2023: BGN 6,615 thousand)
(563)
(662)
Recognised deferred taxes originated in prior periods
27
78
Tax expense from past period
22
1
Income tax expense before effects of the Pillar Two Model Rules
3,599
6,066
Effective corporate tax rate before effects of the Pillar Two Model rules
11.06%
11.31%
Effects of the Pillar 2 Model Rules
708
-
Income tax expense incl. effects of the Pillar Two Model Rules
4,307
6,066
Effective corporate tax rate, including effects of the Pillar Two Model
Rules
13.24%
11.31%
The reconciliation between the income tax expense and the taxable profit for the years ended 31.12.2024 and
31.12.2023 is presented below:
2024
2023
BGN '000
BGN '000
Taxable profit for the year under tax return
37,975
78,775
Revaluation reserve included as an increase in the annual tax return
(477)
(1,538)
Taxable profit for the year
37,498
77,237
Current income tax expense for the year - 10% (2023: 10%)
3,750
7,724
Domestic top-up tax
708
-
Deferred income taxes related to:
Origination and reversal of temporary differences
(173)
(1,659)
Tax expense from past period
22
1
Total income tax expense carried to the statement of comprehensive
income (within profit or loss for the year)
4,307
6,066
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
65
The tax effects related to other components of comprehensive income are as follows:
2024
2023
BGN '000
BGN '000
Pre-tax
amount
Tax effects
recognised in
equity
Amount net
of tax
Pre-tax
amount
Tax effects
recognised in
equity
Amount
net of tax
Items that will not be reclassified
to profit or loss
(Losses)/gains on revaluation of
property, plant and equipment
(22)
2
(20)
33
(3)
30
Remeasurement of liabilities
under defined benefit pension
plans
(523)
-
(523)
(860)
-
(860)
Net change in the fair value of
equity investments at FVOCI
(607)
-
(607)
1,766
-
1,766
Total other comprehensive
income for the year
(1,152)
2
(1,150)
939
(3)
936
14. OTHER COMPREHENSIVE INCOME
Other comprehensive income includes:
2024
2023
BGN '000
BGN '000
Remeasurement of PPE
(22)
33
Remeasurement of liabilities under defined benefit pension plans
(523)
(860)
Net change in the fair value of equity investments measured at
FVOCI
(607)
1,766
Total comprehensive income for the year
(1,152)
939
Income tax relating to items of other comprehensive income
2
(3)
Total comprehensive income for the year, net of taxes
(1,150)
936
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
66
15. PROPERTY, PLANT AND EQUIPMENT
The Company’s property, plant and equipment is as follows:
Land and
buildings
Plant and
equipment
Other
Assets in
progress
Total
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
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
183,290
196,600
232,488
231,557
22,687
23,185
3,728
4,527
442,193
455,869
Additions
2,493
888
2,586
2,428
788
3,130
12,417
7,212
18,284
13,658
Transfer to property, plant
and equipment
127
1,355
2,734
6,346
71
310
(2,932)
(8,011)
-
-
Transfer to investment
property
-
(353)
-
(107)
-
(86)
-
-
-
(546)
Effect from remeasurement
to fair value
-
-
-
20
-
13
-
-
-
33
Impairment
(234)
-
-
(34)
-
-
-
-
(234)
(34)
Disposals
(288)
(15,200)
(1,498)
(7,722)
(1,251)
(3,865)
(3,037)
(26,787)
Balance at 31 December
185,388
183,290
236,310
232,488
22,295
22,687
13,213
3,728
457,206
442,193
Accumulated depreciation
Balance at 1 January
57,677
53,955
155,548
150,554
16,889
18,578
-
-
230,114
223,087
Depreciation charge for the
year
6,453
6,372
10,341
12,340
1,815
1,890
-
-
18,609
20,602
Transfer to investment
property
-
(204)
-
(87)
-
(72)
-
-
-
(363)
Impairment
22
1,726
-
130
-
-
-
-
22
1,856
Depreciation written-off
(233)
(4,172)
(1,384)
(7,389)
(1,138)
(3,507)
-
-
(2,755)
(15,068)
Balance at 31 December
63,919
57,677
164,505
155,548
17,566
16,889
-
-
245,990
230,114
Carrying amount at
31 December
121,469
125,613
71,805
76,940
4,729
5,798
13,213
3,728
211,216
212,079
Carrying amount at
1 January
125,613
142,645
76,940
81,003
5,798
4,607
3,728
4,527
212,079
232,782
The Company’s land and buildings as at 31 December include:
• buildings of carrying amount BGN 81,648 thousand (31 December 2023: BGN 85,776 thousand);
• land amounting to BGN 39,821 thousand (31 December 2023: BGN 39,837 thousand).
The Company’s other PPE as at 31 December includes:
• Motor vehicles with carrying amount BGN 3,251 thousand (31 December 2023: BGN 3,986
thousand);
• Fixtures and fittings with carrying amount BGN 1,063 thousand (31 December 2023: BGN 1,340
thousand);
• Biological assets (carriers) with carrying amount BGN 415 thousand (31 December 2023: BGN 472
thousand).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
67
Tangible fixed assets in progress as at 31 December include:
• advances for the purchase of machines and equipment – BGN 10,702 thousand (31 December 2023:
BGN 2,567 thousand);
• expenses on new buildings - BGN 2,273 thousand (31 December 2023: BGN 1,116 thousand);
• buildings reconstruction – BGN 119 thousand (31 December 2023: BGN 25 thousand);
• other – BGN 119 thousand (31 December 2023: BGN 20 thousand).
As at 31 December, the carrying amount of property, plant and equipment includes machinery and equipment,
purchased using Grant Agreements under Operational Programme “Development of the Competitiveness of
the Bulgarian Economy” 2007 – 2013, Operational Programme “Innovations and Competitiveness 2014-
2020” and Operational Programme “Energy Efficiency” (Note 32) as follows:
• for a tablet production facility at the amount of BGN 4,699 thousand (31 December 2023: BGN 5,267
thousand);
• compact line for insulated phial filling – BGN 3,229 thousand (31 December 2023: BGN 3,562
thousand);
• for ampoule production at the amount of BGN 2,223 thousand (31 December 2023: BGN 2,627
thousand);
• combined exchange ventilation and air conditioning installation for the production of medical
products at the amount of BGN 353 thousand (31 December 2023: BGN 413 thousand);
• air conditioning installation with water cooling unit at the amount of BGN 100 thousand (31
December 2023: BGN 107 thousand) ;
• for the production of innovative eye drops, “artificial tears” type, at the amount of BGN 81 thousand
(31 December 2023: BGN 107 thousand);
• control and monitoring system for air conditioning cameras, chillers and lighting installation at the
amount of BGN 72 thousand (31 December 2023: BGN 77 thousand) ;
• dispensing machine for liquid pharmaceuticals at the amount of BGN 61 thousand (31 December
2023: BGN 92 thousand);
• automatic sachet machine at the amount of BGN 29 thousand (31 December 2023: BGN 43 thousand)
;
• diesel forklift truck at the amount of BGN 6 thousand (31 December 2023: BGN 9 thousand);
• system for liquid and gas chromatography at the amount of BGN 5 thousand (31 December 2023:
BGN 7 thousand);
• reactors at the amount of BGN 3 thousand (31 December 2023: BGN 4 thousand);
• automatic filling and capping line for vials with zero carrying amount. (31 December 2023: BGN 2
thousand).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
68
Leases
The Company’s right-of-use assets are as follows:
Land and buildings
Machinery, equipment
and facilities
Other
Total
2024
2023
2024
2023
2024
2023
2024
2023
BGN‘000
BGN ‘000
BGN‘000
BGN ‘000
BGN ‘000
BGN ‘000
BGN ‘000
BGN ‘000
Book value
Balance at 1
January
17,377
17,248
1,124
88
3,751
2,295
22,252
19,631
Additions
2,493
873
-
1,124
572
2,877
3,065
4,874
Disposals
(72)
(744)
-
(88)
(185)
(1,421)
(257)
(2,253)
Balance at 31
December
19,798
17,377
1,124
1,124
4,138
3,751
25,060
22,252
Accumulated
depreciation
Balance at 1
January
1,904
747
141
28
745
1,199
2,790
1,974
Depreciation charge
for the year
2,200
1,886
143
171
875
798
3,218
2,855
Depreciation
written-off
(72)
(729)
-
(58)
(107)
(1,252)
(179)
(2,039)
Balance at 31
December
4,032
1,904
284
141
1,513
745
5,829
2,790
Carrying amount on
31 December
15,766
15,473
840
983
2,625
3,006
19,231
19,462
Carrying amount on
1 January
15,473
16,501
983
60
3,006
1,096
19,462
17,657
The Company’s right-of-use land and buildings as at 31 December are as follows:
• Buildings with carrying amount BGN 15,766 thousand (31 December 2023: BGN 15,472 thousand);
• Land with zero carrying amount (31 December 2023: BGN 1 thousand).
The other non-current tangible right-of-use assets of the Company as at 31 December include:
• Vehicles with carrying amount BGN 2,617 thousand (31 December 2023: BGN 2,965 thousand);
• Furniture and fixtures with carrying amount BGN 8 thousand (31 December 2023: BGN 41 thousand).
The Company has included its right-of-use assets within the same item in which the assets would have been
stated if they were the Company’s own.
The Company has leased PPE to related parties with carrying amount as at 31 December 2024: BGN 69
thousand (31 December 2023 – BGN 72 thousand). It has also leased to third parties PPE with carrying
amount as at 31 December 2024: BGN 1,255 thousand (31 December 2023: BGN 1,103 thousand).
Other data
The book value of fully depreciated tangible fixed assets, used in the Company's activities by group, is as
follows:
• Buildings – BGN 7,540 thousand (31 December 2023: BGN 7,174 thousand);
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
69
• Plant and equipment – BGN 78,373 thousand (31 December 2023: BGN 68,768 thousand);
• Other – BGN 12,339 thousand (31 December 2023: BGN 11,640 thousand).
The following encumbrances were constituted on Company's tangible fixed assets as at 31 December 2024
in relation to received loans:
• Land and buildings with a carrying amount of BGN 21,380 thousand and BGN 45,021 thousand,
respectively (31 December 2023: respectively, BGN 21,380 thousand and BGN 38,949 thousand)
(Note 30, Note 36 and Note 42);
• Pledges on equipment – BGN 13,664 thousand (31 December 2023: BGN 18,325 thousand) (Note
30, Note 36 and Note 42).
Periodical fair value remeasurement
The latest revaluation of property, plant and equipment was carried out as at 31 December 2021with the
assistance of independent certified appraisers for the purpose of determining the fair value of the assets in
accordance with the requirements of IFRS 13 and IAS 16.
During this revaluation, the following main approaches and valuation methods were applied to measure the
fair value of the different types of tangible assets:
• ‘market approach’ and ‘market comparables’ approach – for regulated land plots and agricultural
land for which an actual market exists, there are market comparables and transactions therewith and there is
basis for comparison – the fair value adopted is the market value determined using the comparative method;
• ‘cost approach’ through ‘amortised recoverable amount’ method and ‘method based on the cost
to create or replace the asset’ – for specialized buildings, machinery, equipment, facilities and other assets
for which there is no actual market and comparable sales of comparable assets – the fair value adopted is the
amortised recoverable amount based on the indexed historical value of the asset and based on current costs
to create or replace the asset.
• ‘income approach’ through ‘capitalized income on use/production of biological assets’ – for
permanent yellow acacia crops in fruit-bearing stage.
From this valuation, the revaluation reserve recognised, net of tax, of BGN 7,767 thousand is as follows:
• In Sopharma AD (receiving company) the revaluation reserve recognised net of tax is BGN 7,468
thousand;
• In Biopharm Engineering AD (transforming company) the revaluation reserve recognised, net of
tax, amounted to BGN 154 thousand;
• In Veta Pharma AD (transforming company) the recognised revaluation reserve, net of taxes, is
BGN 145 thousand.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
70
16. INTANGIBLE ASSETS
The Company’s intangible assets are as follows:
The Company’s intellectual property rights as at 31 December include:
• Contractual rights over sales permits and trademarks with carrying amount BGN 165,039 thousand (31
December 2023: none);
On 29.11.2024, the Company purchased contractual rights over 68 sales permits for 14 well-known
trademarks in traditional export markets for the Company. According to the agreement with the seller,
the legal ownership of the trademarks and the replacement of the seller with Sopharma in the sales
permits will occur in stages according to a plan determined by the parties. According to the agreement,
until the legal transfer of ownership and the replacement of the seller's name in the sales permits,
Sopharma will be authorized by the seller to exercise the rights under the sales permits and trademarks
on the markets for which the deal was made.
• Medical registrations with carrying amount BGN 1,514 thousand (31 December 2023: BGN 1,711
thousand);
• Trademarks with carrying amount BGN 1,086 thousand (31 December 2023: BGN 1,333 thousand);
Goodwill
Intellectual property
rights
Software
Assets in
progress
Total
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
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
9,512
9,512
13,420
13,145
4,475
4,604
3,143
1,356
30,550
28,617
Additions
-
-
97
19
64
19
169,419
2,340
169,580
2,378
Transfer
-
-
165,578
485
146
68
(165,724)
(553)
-
-
Written-off
-
-
(3)
(229)
(1)
(216)
-
-
(4)
(445)
Balance at 31
December
9,512
9,512
179,092
13,420
4,684
4,475
6,838
3,143
200,126
30,550
Accumulated
amortisation and
impairment
Balance at 1
January
8,744
8,744
9,620
9,067
4,278
4,250
-
-
22,642
22,061
Amortisation charge
for the year
-
-
849
708
105
244
-
-
954
952
Amortisation written-
off
-
-
(3)
(155)
-
(216)
-
-
(3)
(371)
Balance at 31
December
8,744
8,744
10,466
9,620
4,383
4,278
-
-
23,593
22,642
Carrying amount at
31 December
768
768
168,626
3,800
301
197
6,838
3,143
176,533
7,908
Carrying amount at
1 January
768
768
3,800
4,078
197
354
3,143
1,356
7,908
6,556
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
71
• Licenses with carrying amount BGN 539 thousand (31 December 2023: BGN 434 thousand) ;
• Copyright with carrying amount BGN 448 thousand (31 December 2023: BGN 322 thousand).
The expenses for acquisition of non-current intangible assets as at 31 December include:
• Software implementation expenses – BGN 5,316 thousand (31 December 2023: BGN 1,820 thousand);
• Expenses for acquisition of licenses: BGN 653 thousand (31 December 2023: BGN 579 thousand);
• Expenses for acquisition of use permits for medicinal products – BGN 695 thousand (31 December 2023:
BGN 574 thousand);
• Expenses for acquisition of copyright – BGN 171 thousand (31 December 2023: BGN 162 thousand);
• Other – BGN 3 thousand (31 December 2023: BGN 8 thousand).
Goodwill impairment
The goodwill which results from the merger of subsidiaries (Bulgarian Rose – Sevtopolis AD, Medica AD,
Unipharm AD, Biopharm Engineering AD and Veta Pharma AD) into the parent and is recognised in the
Company’s separate statement of financial position (Note 2.12).
At each date of the statement of financial position, the management assesses if indicators exist for impairment
of the existing goodwill, with the support of independent licensed appraisers.
The key assumptions used in the calculation in the recoverable amount at 31 December 2024 are:
• growth rate – 1,35%;
• growth in the post-forecast period at terminal value calculation – 2.00%;
• discount rate (CAPM-based) – 12.74%.
For 2024, no need was identified to recognise impairment of goodwill stated.
The book value of fully amortised intangible fixed assets, used in the Company's activities according to their
groups, is as follows:
• rights on intellectual property – BGN 5,689 thousand (31 December 2023: BGN 5,340
thousand);
• software – BGN 4,192 thousand (31 December 2023: BGN 4,089 thousand).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
72
17. INVESTMENT PROPERTY
Investment property represents buildings and the land they stand on, differentiated parts of buildings for
independent use, intended for long-term lease to subsidiaries and third parties.
31.12.2024
31.12.2023
BGN '000
BGN '000
Balance at 1 January
49,886
49,267
Additions
330
241
Net profit/(loss) on remeasurement to fair value included in profit
or loss (Note 4)
314
194
Disposals
(18)
-
Transfer from property, plant and equipment
-
184
Balance at 31 December
50,512
49,886
The investment property per groups of assets is as follows:
Group of assets
31.12.2024
31.12.2023
BGN '000
BGN '000
Warehouse premises
46,612
46,250
Offices
1,754
1,686
Production buildings
1,435
1,252
Social objects
512
513
Retail sites
199
185
Total
50,512
49,886
There are established encumbrances as at 31 December 2024 on investment property as follows:
• mortgage of warehouse premises – BGN 15,660 thousand (31 December 2023: BGN 15,244
thousand) (Note 36 and Note 42);
• pledges on attached equipment – BGN 18,852 thousand (31 December 2023: BGN 4,950
thousand) (Note 36).
Fair value measurement
Fair value hierarchy
The fair values of the groups of investment properties are categorised as Level 2 and Level 3 fair values based
on the inputs to the valuation technique used.
The investment property remeasurement to fair value is recurring (annual) 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.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
73
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:
Warehouse
premises
Offices
Production
buildings
Social
objects
Retail sites
Assets in
progress
Total
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN'000
Balance at 1
January 2023
45,902
1,662
1,193
510
-
-
49,267
Additions
-
-
-
-
-
241
241
Transfer from
property, plant and
equipment
-
-
-
-
184
-
184
Transfer
241
-
-
-
(241)
-
Remeasurement to
fair value through
profit or loss –
unrealised
107
24
59
3
1
-
194
Balance at 31
December 2023
46,250
1,686
1,252
513
185
-
49,886
Additions
-
-
-
-
-
330
330
Transfer
330
-
-
-
-
(330)
-
Disposals
(18)
-
-
-
-
-
(18)
Remeasurement to
fair value through
profit or loss –
unrealised
50
68
183
(1)
14
-
314
Balance at 31
December 2024
46,612
1,754
1,435
512
199
-
50,512
At the date of each statement of financial position, the management analyses and assesses the fair value of
the group of assets in the scope of investment property. The calculations are made by the management with
the support of independent licensed appraisers.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
74
Valuation techniques and significant unobservable inputs
The tables below show a description of the valuation techniques, used in measuring the fair value of all groups
of Level 2 and Level 3 investment properties as well as the used significant unobservable inputs:
Groups of assets
Level 2
Valuation approaches and techniques
Significant unobservable inputs
Offices, retail sites and
social objects
Valuation approach: Income approach
Valuation technique: Valuation based on
the present value, corresponding to a
methodology related to meeting the
requirements of BVS 2018, including
valuation based on capitalized rental
income, as a scheme to apply the
discount cash flows method, using data,
parameters, and calculation results from
applying the market comparative
approach and the costs for
creation/replacement approach.
a) comparative rental income for market
analogues
b) rate of return
c) realization term of rental transactions
Warehouse,
warehouse premises
and production -
storage facilities (incl.
land, buildings,
structures and
construction
equipment)
Valuation approach: Income approach
Valuation technique: Valuation based on
the present value, corresponding to a
methodology related to meeting the
requirements of BVS 2018, including
valuation based on capitalized rental
income, as a scheme to apply the
discount cash flows method, using data,
parameters, and calculation results from
applying the market comparative
approach and the costs for
creation/replacement approach.
a) comparative rental income for market
analogues
b) rate of return
c) realization term of rental transactions
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
75
Groups of assets
Level 3
Valuation approaches and techniques
Significant unobservable inputs
Retail sites and
production -
warehouse bases
(including land,
buildings and building
facilities)
Valuation approach: Income approach
Valuation technique: Valuation based on
the present value, corresponding to a
methodology related to meeting the
requirements of BVS 2018, including
valuation based on capitalized rental
income, as a scheme to apply the
discount cash flows method, using data,
parameters, and calculation results from
applying the market comparative
approach and the costs for
creation/replacement approach.
a) comparative rental income for market
analogues
b) rate of return
c) realization term of rental transactions
Facilities, installations,
equipment and
furniture adjacent to
real estate
Valuation approach: Income approach
Valuation technique: Valuation based on
the present value, corresponding to a
methodology related to meeting the
requirements of BVS 2018, including
valuation based on capitalized rental
income, as a scheme to apply the
discount cash flows method, using data,
parameters, and calculation results from
applying the market comparative
approach.
a) comparative values for new analogues
b) consumer price change indices based on
NSI data
Key assumptions used in the calculation of the fair value of investment properties as at 31 December 2024:
• rate of return – from 4.25 % to 9.40%;
• term to entrance into rental deals – from 6 to 12 months;
As a result of the calculations made in 2024, it was necessary to recognise gains on remeasurement to fair
value, at the amount of BGN 314 thousand (2023: gain of BGN 194 thousand) (Note 4).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
76
18. INVESTMENTS IN SUBSIDIARIES
The carrying amount of the investments by company is as follows:
31.12.2024
Interest
31.12.2023
Interest
BGN '000
%
BGN '000
%
Sopharma Trading AD
Bulgaria
65,009
87.99
64,295
87.68
Pharmanova D.O.O.
Serbia
13,398
75.00
-
-
Sopharma Ukraine EOOD
Ukraine
9,669
100.00
9,669
100.00
Sopharma Warsaw EOOD
Poland
6,807
100.00
6,807
100.00
Vitamini AD
Ukraine
1,283
100.00
1,283
100.00
TOO Sopharma Kazakhstan
Kazakhstan
502
100.00
502
100.00
Pharmalogistica AD
Bulgaria
-
-
961
89.39
Electroncommerce EOOD
Bulgaria
-
-
384
100.00
Total
96,668
83,901
As at 31 December 2024, the composition of investments in the subsidiaries includes the investment in
Sopharma Poland OOD – in liquidation, Poland, which is fully impaired (31 December 2023: fully impaired
investments in Sopharma Poland OOD – in liquidation, Poland and Phyto Palausovo AD). In 2024, there are
no newly established subsidiaries (2023: there is a newly established company, Sopharma Rus OOO, Russia).
Sopharma AD exercises direct control on the above-mentioned companies.
The scope of activities of the subsidiaries and the dates of their acquisition are as follows:
• Pharmalogistica AD – Scope of activities: secondary packaging and real estate leases. Date of
acquisition – 15 August 2002.On 19 December 2024, the Company sold all of its investment in
Pharmalogistica AD.
• Sopharma Poland OOD – in liquidation – Scope of activities: market and public opinion research.
Date of acquisition – 16 October 2003. The company is in a procedure of liquidation.
• Electroncommerce EOOD – Scope of activities: trade, transportation and packaging of
radioactive materials and nuclear equipment, household electronics and electrical equipment.
Date of acquisition – 9 August 2005. 19 December 2024, the Company sold all of its investment
in Electroncommerce EOOD.
• Sopharma Trading AD – Scope of activities: trade in pharmaceuticals. Date of acquisition – 8
June 2006.
• Vitamina AD – Scope of activities: production and trade in pharmaceuticals. Date of acquisition
– 18 January 2008.
• Sopharma Warsaw EOOD – Scope of activities: market and public opinion research. Date of
acquisition – 23 November 2010.
• Sopharma Ukraine EOOD – Scope of activities: trade in pharmaceuticals; Date of acquisition –
7 August 2012.
• Phyto Palauzovo AD – Scope of activities: production, collection of crops and trade in herbs and
medicinal plants. Date of acquisition (as from the merger of a subsidiary) – 1 January 2014. The
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
77
company was deleted from the Trade Registry on 8 November 2024.
• TOO Sopharma Kazakhstan – Scope of activities: trade in pharmaceuticals. Date of acquisition
– 30 September 2014.
• Pharmachim EOOD – Scope of activities: consulting services. Date of acquisition: 14 April 2020.
• Sopharma Rus OOO – scope of activities: wholesale trade in pharmaceuticals, market and public
opinion surveys. Date of acquisition – 13 October 2023.
• Pharmanova OOD – scope of activities: manufacturing of pharmaceuticals. Date of acquisition:
13 August 2024.
The shares of Sopharma Trading AD are traded on the stock exchange, the average monthly price of realised
transactions for December 2024 being BGN 5.84 per share (December 2023: BGN 6,05). The book value per
share based on accounting net assets for 2024 is BGN 6.11 (2023: BGN 4.89).
The movement of investments in subsidiaries is presented below:
Investments in
subsidiaries
31.12.2024
31.12.2023
Acquisition price
BGN '000
BGN '000
Balance at 1 January (originally stated)
108,985
111,120
Effect of merger of a subsidiary
-
(9,666)
Balance at 1 January (adjusted)
108,985
101,454
New interest acquired
8,639
-
Transfer from investments in associates
4,759
-
Additional interest acquired
764
1,122
Liquidation of a subsidiary
(190)
-
Interest sold with loss of control
(2,548)
-
Interest sold without loss of control
(51)
(75)
Additional shares
-
6,484
Balance at 31 December
120,358
108,985
Impairment accrual
Balance at 1 January (originally stated)
25,084
27,996
Effect of merger of a subsidiary
-
(2,912)
Balance at 1 January (adjusted)
25,084
25,084
Impairment reversed upon sale without loss of control
(1)
-
Impairment reversed upon sale with loss of control
(1,203)
-
Impairment written off upon liquidation of a subsidiary
(190)
-
Balance at 31 December
23,690
25,084
Carrying amount at 31 December
96,668
83,901
Carrying amount at 1 January
83,901
76,370
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
78
Impairment of investments in subsidiaries
At each reporting date, the management makes an analysis and assessment about whether indicators for
impairment exist in respect of its investments in subsidiaries.
The following are accepted as main indicators for impairment: significant volume reduction (over 25%)
and/or termination of activities of the investee; loss of markets, clients or technological problems, reporting
of losses for a longer period of time (over three years), reporting of negative net assets or assets below the
registered share capital, trends of deterioration of main financial ratios as well as a decrease in market
capitalisation. The calculations were made by the management with the assistance of independent certified
appraisers. As a base for projected pre-tax cash flows, the Company uses financial budgets developed by the
respective companies that cover a 3- to 5-year period, as well as other average-term and long-term plans and
intents for their development, including projections for basic economic ratios at national level and at the level
of EU/the Balkans. The key assumptions used in the calculations of recoverable amount as at 31 December
2024 are as follows:
• growth rate – from 3.98% to 13.22%;
• growth after the projected period upon calculation of terminal value – 2.50% to 6%;
• interest rate (cost of debt) – from 6.03% to 16.20%;
• discount rate (based on WACC) – from 9.70% to 24,90%;
• discount rate (based on CAPM) – from 19.94% to 27.80%.
The key assumptions used in the calculations have been determined specifically for each company, treated as
a separate cash-generating unit, and in line with the characteristic features of its operations, the business
environment and risks.
The tests and assumptions of the management for impairment of investments are made through the prism of
its projections and intents on the future economic benefits, which are expected from the subsidiaries,
including trade and industrial experience, ensuring position in the Bulgarian and in foreign markets,
expectations for future sales, etc. The calculations are performed with the assistance of an independent
certified appraiser.
As a result of the calculations made in 2024, the Company did not find it necessity to recognise impairment
of particular investments in subsidiaries (2023: none).
Net gain/(loss) on sale of investments in subsidiaries
The Company stated the following result from sale of investments in subsidiaries:
2024
2023
BGN '000
BGN '000
Gain on sale of investments in subsidiaries
3,850
143
Costs on sale of investments in subsidiaries
(1)
(1)
Net gain on sale of investments in subsidiaries
3,849
142
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
79
The Company holds investments in two subsidiaries in Ukraine. As at the date of approval of these separate
financial statements, the assets of these subsidiaries are not physically affected by hostilities, but the value of
these investments may need to be reviewed in the future depending on the development of the war and its
impact on the companies' operations.
The Company has placed in favour of a creditor bank in relation to a loan from a related party special pledge
on shares in the capital of a subsidiary with carrying amount as at 31 December 2024 BGN 10,126 thousand
(31 December 2023: BGN 10,050 thousand) (Note 42).
19. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES
The investments in associates are as follows:
31.12.2024
Interest
31.12.2023
Interest
BGN '000
%
BGN '000
%
Sopharma Properties REIT
69,922
45.65
69,912
45.65
Sopharma Buildings REIT
29,313
32.48
28,734
31.47
Doverie Obedinen Holding AD
8,437
22.60
8,689
23.46
Pharmanova DOO, Serbia
-
-
4,759
25.00
Total
107,672
112,094
Sopharma Properties REIT is an associated company with the business of investing cash raised through the
issuance of securities in real estate through the purchase of title and other property rights to real estate,
construction and improvements to real estate for the purpose of management, rental, leasing, lease and/or
sale.
Sopharma Buildings REIT is an associated company with the object of investing cash raised through the issue
of securities in real estate through the purchase of title and other rights in rem in real estate, the construction
and improvement of real estate for the purpose of management, lease, rental, leasehold and/or sale.
Doverie Obedinen Holding AD is an associate whose principal activities include acquisition, management,
assessment and sale of shares in Bulgarian and foreign companies - legal entities.
On 10.11.2023, the company acquired 25% of the capital of Pharmanova OOD, Serbia. On 13.08.2024 the
company acquired additional 50% of the capital of Pharmanova OOD, Serbia and this investment was
transferred to investments in subsidiaries.
The movement in investments in associates is presented below:
31.12.2024
31.12.2023
BGN '000
BGN '000
Balance at 1 January
112,094
69,271
Acquired shares in associates
685
27,933
Sold shares in associates
(348)
(573)
Transfer to investments in subsidiaries
(4,759)
-
Transfer from other long-term equity investments
-
15,463
Balance at 31 December
107,672
112,094
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
80
The shares of Sopharma Properties REIT are traded on the stock exchange, the average monthly price of
realised transactions for December 2024 being BGN 8,03 per share (December 2023: BGN 8.56 per share).
The accounting value per share based on accounting net assets in 2024 is BGN 4.36 (2023: BGN 4.04).
The shares of Sopharma Buildings REIT are traded on the stock exchange, the average monthly price of
realised transactions for December 2024 being BGN 16.70 per share (December 2023: BGN 19.45). The
accounting value per share based on accounting net assets in 2024 is BGN 1.84 (2023: BGN 1.86).
The shares of Doverie Obedinen Holding are traded on the stock exchange, the average monthly price of
realised transactions for December 2024 being BGN 8,03 per share (December 2023: BGN 8.56). The
accounting value per share based on accounting net assets in 2024 is BGN 2,39 (2023: BGN 2,19).
Net gain on sale of investments in associates
The Company stated a net gain on sale of investments in associates, as follows:
2024
2023
BGN '000
BGN '000
Gain on sale of investments in associates
1,373
2,272
Costs on sale of investments in associates
(9)
(14)
Net gain on sale of investments in associates
1,364
2,258
Impairment of investments in associates
At each reporting date, the management makes an assessment about whether indicators for impairment exist
in respect of its investments in associates.
The assessments of the management for impairment of investments are made through the prism of its
projections and intents on the future economic benefits, which are expected from the associates, including
trade and industrial experience, ensuring position in the Bulgarian and in foreign markets, expectations for
future sales, etc.
The calculations have been made by the management with the support of independent licensed appraisers.
The key assumptions used in the calculation in the recoverable amount at 31 December 2024 are:
• growth rate – from 1.34% to 356.51%;
• growth in the post-forecast period at terminal value calculation – from 0% to 2.00%;
• discount rate (WACC-based) – from 6.10% to 8.00%;
• discount rate (CAMP-based) – 15.08%;
• interest debt (debt price) – from 4.27% to 5.16%/
Momina Krepost AD is a joint venture whose principal activities include development, implementation and
production of medicinal products for human and veterinary medicine.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
81
The movement of investments in joint ventures is presented below:
31.12.2024
31.12.2023
BGN '000
BGN '000
Balance at 1 January
-
101
Impairment
(101)
Balance at 31 December
-
-
The assets of Momina Krepost AD were not traded on the stock exchange in December 2024 (December
2023: no trade). The accounting value per share based on accounting net assets in 2024 is BGN (0.13) (2023:
BGN 0.88).
Impairment of investments in joint ventures
The investment in the joint venture was fully impaired in 2023 (Note 10).
20. OTHER LONG-TERM EQUITY INVESTMENTS
The other long-term equity investments include the interest (shares) in the following companies:
31.12.2024
Interest
31.12.2023
Interest
BGN '000
%
BGN '000
%
Achieve Life Science Inc. – USA
8,414
3.15
13
0.01
Lavena AD
3,355
13.10
3,638
13.14
MFG Invest AD
147
0.46
148
0.46
Imventure 1 KDS
50
1.36
50
1.36
Ecobulpack AD
7
0.37
7
0.37
UniCredit Bulbank AD
3
0.001
3
0.001
Chimimport AD
-
-
11
0.01
Total
11,976
3,870
All above companies except for Achieve Life Science Inc. – USA, have their seat and operations in Bulgaria.
The fair value per share at 31 December is as follows:
31.12.2024
31.12.2023
Equity investments
Number of
shares
Fair value per
share
Fair value as per
the statement of
financial position
Number of
shares
Fair value
per share
Fair value as per
the statement of
financial position
BGN
BGN'000
BGN
BGN'000
Achieve Life Science Inc. – USA
1,092,308
7.70
8,414
1,796
7.52
13
Lavena AD
1,299,026
2.58
3,355
1,303,390
2.79
3,638
MFG Invest AD
50,000
2.93
147
50,000
2.96
148
Chimimport AD
-
-
-
16,656
0.66
11
Total
11,916
3,810
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
82
The table below presents Company's other equity investments, which are measured at fair value on a recurring
basis in the separate statement of financial position:
Equity investments
Fair
value
Level 1
Level 2
31.12.2024
BGN'000
BGN'000
BGN'000
Achieve Life Science Inc. – USA
8,414
8,414
-
Lavena AD
3,355
-
3,355
MFG Invest AD
147
-
147
Total
11,916
8,414
3,502
Equity investments
Fair
value
Level 1
Level 2
31.12.2023
BGN'000
BGN'000
BGN'000
Lavena AD
3,638
-
3,638
MFG Invest AD
148
148
-
Achieve Life Science Inc. – USA
13
13
-
Chimimport AD
11
11
-
Total
3,810
172
3,638
The table below shows reconciliation between the opening and closing balances of the fair values at Level 1
and Level 2:
Equity investments
Level 1
Level 2
Total
BGN '000
BGN '000
BGN '000
Balance at 1 January 2023
746
3,899
4,645
Purchases of shares
38
12,782
12,820
Capital issue
-
620
620
Transfer to associates
-
(15,463)
(15,463)
Sales
(557)
(21)
(578)
Unrealised gain/(loss), net, included in other comprehensive income (Note 14)
(55)
1,821
1,766
Balance at 31 December 2023
172
3,638
3,810
Capital issue
8,732
-
8,732
Sales
(12)
(7)
(19)
Transfer from Level 1 to Level 2
(148)
148
-
Unrealised gain/(loss), net, included in other comprehensive income (Note 14)
(330)
(277)
(607)
Balance at 31 December 2024
8,414
3,502
11,916
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
83
Valuation techniques and approaches
The market comparables approach was applied in the Level 2 fair value measurements. The valuation
technique was based on the trading multiples method. Upon preparing fair value measurements, the Company
has used the services of certified valuators.
For investments not traded on equity markets, the Company has used internal assessments by Company’s
specialists. Upon the analysis of the companies subject to these internal assessments the Company has
determined that the fair value of these equity investments do not materially deviate from their carrying
amounts.
21. LONG-TERM RECEIVABLES FROM RELATED PARTIES
The long-term receivables from related parties include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Receivables from recoverable additional shares in a subsidiary
6,385
9,311
Receivables under cession agreements
4,011
3,884
Long-term loans granted
3,016
49,070
Impairment of credit losses
-
(117)
Long-term loans granted, net
3,016
48,953
Receivables under transactions in securities
2,843
-
Deposits under leases (Note 33)
516
516
Total
16,771
62,664
Receivables on recoverable additional share contributions in a subsidiary are in PLN. They are interest-
bearing and mature on 31.12.2030.
Receivables under assignment agreements are in BGN and mature on 31.12.2027 and bear interest. They
were acquired in 2022 in connection with the repayment of bank loans of a joint venture on which Sopharma
AD is a co-debtor. They are secured by mortgages on land and buildings, as well as pledge of machinery and
equipment.
Long-term loans are granted and the conditions thereof as at 31 December 2024 are as follows:
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
84
Company
UIC
Relation
type
Currency
Contracted
amount
Contract
No/year
Date of latest
supplementary
agreement to
the contract
Maturity
Interest
%
Market value
of collaterals
31.12.2024
'000
BGN'000
BGN'000
BGN'000
Incl.
interest
Industrial
Holding
Doverie AD
121683066
company
controlled
by an
associate
BGN
3,000
606/2024
22.11.2024
31.12.2026
4.93%
3,694
3,016
16
3,694
3,016
16
Long-term loans are granted and the conditions thereof as at 31 December 2023 are as follows:
Company
UIC
Relation
type
Currency
Contracted
amount
Contract
No/year
Date of latest
supplementary
agreement to
the contract
Maturity
Interest
%
Market
value of
collaterals
31.12.2023
'000
BGN'000
BGN'000
BGN’000
incl.
interest
Doverie
Invest EAD
205426924
company
controlled
by an
associate
BGN
83,400
113/2019
18.03.2022
31.12.2025
3.00%
-
40,901
484
Industrial
Holding
Doverie AD
121683066
company
controlled
by an
associate
BGN
14,939
409/2022
04.12.2023
31.12.2025
4.36%
26,918
8,052
152
26,918
48,953
636
The long-term loans granted to related parties are intended to support the financing of these companies'
activities under common strategic objectives. They are secured by pledges of securities (shares) and
promissory notes.
The movement in the allowance for impairment of receivables from related parties under long-term loans
granted is as follows:
2024
2023
BGN '000
BGN '000
Balance on 1 January
117
156
Decrease in the credit loss allowance recognised in profit or loss
for the year
(117)
(39)
Balance at 31 December
-
117
Receivables from securities transactions represent a receivable on an investment sold in a subsidiary. They
are denominated in BGN and mature on 31.12.2033.
The deposits placed are under leases. They are denominated in EUR, with maturity on 1 August 2032.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
85
22. OTHER LONG-TERM RECEIVABLES
Company's other long-term receivables include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Receivables under transactions in securities
4,229
3,540
Impairment of credit losses
(41)
(183)
Receivables under transactions in securities, net
4,188
3,357
Long-term loans granted
2,865
-
Total
7,053
3,357
Receivables from securities transactions at 31 December were as follows:
- receivable on investment sold in a subsidiary in the amount of BGN 3,724 thousand (31 December 2023:
BGN 3,357 thousand). These are denominated in US dollars with a maturity date of 30.09.2026, which is
linked to the completion of certain regulatory actions for registrations of medical product authorizations;
- receivable on an investment sold in a subsidiary amounting to BGN 464 thousand (31 December 2023: nil).
They are in BGN and mature on 31.12.2033.
The movement in the allowance for impairment of receivables under transactions in securities is as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
183
142
Decrease in the allowance for credit losses recognized in
profit or loss for the year
(142)
-
Increase in the allowance for credit losses recognized in
profit or loss for the year
-
41
Balance at 31 December
41
183
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
86
The long-term loans granted and their terms as at 31 December 2024 are as follows:
Company
UIC
Currency
Contracted
amount
Contract
No/year
Date of latest
supplementary
agreement
Maturity
Interest
%
Market
value
of collateral
31.12.2024
'000
BGN'000
BGN'000
BGN'000
incl.
interest
Pharmaplant
AD
201837643
BGN
2,847
605/2024
22.11.2024.
31.12.2027
6.05%
4,056
2,865
18
4,056
2,865
18
23. INVENTORIES
Company's inventories include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Materials
49,876
54,170
Finished products
43,267
34,110
Work in progress
13,286
13,422
Goods
4,508
3,349
Semi-finished products
4,074
2,176
Total
115,011
107,227
Materials by type are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Basic materials
45,182
49,340
Materials in transit
2,952
3,846
Technical materials
793
400
Auxiliary materials
511
417
Spare parts
414
141
Other
24
26
Total
49,876
54,170
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
87
Basic materials by type are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Substances
24,308
25,086
Chemicals
7,325
9,289
Ampoules
3,336
3,719
PVC and aluminium foil
3,266
4,102
Herbs
2,806
2,169
Incl. own production
72
72
Packaging materials
1,556
1,685
Sanitary hygienic and dressing materials
1,498
1,423
Vials
699
670
Tubes
358
1,187
Materials for infusion solutions
18
-
Materials for veterinary vaccines
12
10
Total
45,182
49,340
The movement in herbs – own production (agricultural produce including yellow acacia seeds) is as
follows:
2024
2023
BGN '000
BGN '000
Agricultural produce at 1 January
72
5
Cost of produce yield in the year
-
62
Gain on fair value measurement
-
5
Agricultural produce at 31 December
72
72
Finished products include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Tablet dosage forms
26,240
19,412
Ampoule dosage forms
6,385
4,839
Syrups
4,059
1,929
Ointments
2,860
3,278
Dressing products
1,545
1,285
Sanitary-hygienic products
432
253
Sachets
359
447
Plasters
340
449
Drops
268
403
Medical cosmetics
238
303
Suppositories
231
97
Lyophilic products
230
1,149
Haemodialysis concentrates
70
57
Veterinary vaccines
10
-
Solutions
-
206
Chemical substances and mixes
-
3
Total
43,267
34,110
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
88
Goods by type are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Medicinal products
4,245
3,228
Nutritional supplements
177
42
Foodstuffs
86
79
Total
4,508
3,349
Pledges were established on Company's inventories with carrying amount of BGN 39,765 thousand as at 31
December 2024 as collateral to bank loans received (31 December 2023: BGN 33,817 thousand) (Note 36
and Note 42).
24. RECEIVABLES FROM RELATED PARTIES
Receivables from related parties include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Receivables from subsidiaries
87,570
74,189
Impairment of credit losses
(4,279)
(4,063)
Receivables from subsidiaries, net
83,291
70,126
Receivables from associates
348
2,085
Impairment of credit losses
(6)
(135)
Receivables from associates, net
342
1,950
Receivables from joint ventures
3,056
2,181
Impairment of credit losses
(3,056)
(2,155)
Receivables from joint ventures, net
-
26
Receivables from companies controlled by an associate
-
12,823
Impairment of credit losses
-
(16)
Receivables from companies controlled by an associate, net
-
12,807
Receivables from consortia registered under the Contracts
and Obligations Act
160
160
Impairment of credit losses
(160)
(160)
Receivables from consortia registered under the Contracts
and Obligations Act, net
-
-
Total
83,633
84,909
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
89
The receivables from related parties by type are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Receivables under contracts with customers
87,320
76,149
Impairment of credit losses
(4,284)
(4,194)
Receivables under contracts with customers, net
83,036
71,955
Advances granted
528
70
Receivables under guarantor contracts and guarantees
74
81
Impairment of credit losses
(5)
(4)
Receivables under guarantor contracts and guarantees, net
69
77
Trade loans granted
3,052
14,976
Impairment of credit losses
(3,052)
(2,169)
Trade loans granted, net
-
12,807
Other receivables
160
160
Impairment of credit losses
(160)
(160)
Other receivables, net
-
-
Total
83,633
84,909
The receivables under contracts with customers – related parties are interest-free and BGN 68,835 thousand
of them are denominated in BGN (31 December 2023: BGN 57,731 thousand) and in EUR – BGN 14,201
thousand (31 December 2023: BGN 14,224 thousand).
The receivables from a subsidiary with principal activities in the field of trade in pharmaceuticals were the
most significant and amounted to BGN 68,493 thousand as at 31 December 2024 or 82,49 % of all receivables
under contracts with customers - related parties (31 December 2023: BGN 55,781 thousand – 77,52%).
The Company usually negotiates with its subsidiaries payment terms ranging from 45 to 270 days for
receivables on sales of finished products and up to 90 days for receivables on sales of materials (incl.
substances).
The movement in the allowance for impairment of trade receivables from related parties is as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
4,194
3,822
Increase in the credit loss allowance recognised within profit or loss for
the year
4,284
4,194
Decrease in the credit loss allowance recognised within profit or loss
for the year
(4,194)
(3,822)
Balance at 31 December
4,284
4,194
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
90
The age structure of non-matured (regular) trade receivables from related parties is as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
up to 30 days
15,717
12,333
from 31 to 90 days
28,623
25,811
from 91 to 180 days
34,752
28,769
from 181 to 365 days
-
2,085
Over 365 days
348
-
Gross amount of non-matured (regular) receivables from related
parties
79,440
68,998
Impairment of credit losses
(1,366)
(1,525)
Non-matured (regular) receivables from related parties, net
78,074
67,473
The impairment of credit losses of non-matured (regular) trade receivables from related parties is as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
up to 30 days
271
253
from 31 to 90 days
492
538
from 91 to 180 days
597
599
from 181 to 365 days
-
135
Over 365 days
6
-
Total
1,366
1,525
The age structure of the invoice date of past due trade receivables from related parties is as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
from 31 to 90 days
139
1
from 91 to 180 days
446
920
from 181 to 365 days
3,871
3,206
over 365 days
3,424
3,024
Gross amount of past due receivables from related parties
7,880
7,151
Impairment of credit losses
(2,918)
(2,669)
Past due receivables from related parties, net
4,962
4,482
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
91
The Company applies the simplified approach under IFRS 9 to measure expected credit losses for trade
receivables by recognizing expected lifetime losses for all trade receivables (Note 2.17). Based on that, the
credit loss allowance as at 31 December is determined as follows:
31 December 2024
Regular
Up to 90
days past
due
Over 90
days past
due
Over 180
days past
due
Over 365
days past
due
Total
Expected average
percentage of credit
losses
2%
20%
27%
47%
100%
Trade receivables from
related parties (gross
carrying amount)
BGN '000
79,440
2,439
2,017
2,910
514
87,320
Expected credit loss
(Impairment allowance)
BGN '000
(1,366)
(482)
(549)
(1,373)
(514)
(4,284)
31 December 2023
Regular
Up to 90
days past
due
Over 90
days past
due
Over 180
days past
due
Over 365
days past
due
Total
Expected average
percentage of credit
losses
2%
10%
33%
60%
100%
Trade receivables from
related parties (gross
carrying amount)
BGN '000
68,998
3,110
1,017
2,498
526
76,149
Expected credit loss
(Impairment allowance)
BGN '000
(1,525)
(297)
(340)
(1,506)
(526)
(4,194)
Special pledges have been established as at 31 December 2024 on receivables from related parties at the
amount of BGN 74,993 thousand as collateral under bank loans received (31 December 2023: BGN 62,085
thousand) (Note 36).
Receivables under guarantorships by types of related parties are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Receivables from subsidiaries
70
77
Impairment of credit losses
(1)
-
Receivables from subsidiaries, net
69
77
Receivables from joint ventures
4
4
Impairment of credit losses
(4)
(4)
Receivables from joint ventures, net
-
-
Total
69
77
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
92
Receivables under guarantorships are interest-free; of them, BGN 69 thousand is denominated in EUR (31
December 2023: BGN 77 thousand), and in BGN – none (31 December 2023: none).
The movement in the allowance for impairment of receivables under guarantorships from related parties is
as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
4
2
Increase in the credit loss allowance recognized in profit or loss for
the year
1
4
Decrease in the credit loss allowance recognized in profit or loss for
the year
-
(2)
Balance at 31 December
5
4
Loans granted to related parties by type of related party are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Joint ventures
3,052
2,151
Impairment of credit losses
(3,052)
(2,151)
Joint ventures, net
-
-
Subsidiaries
-
15
Impairment of credit losses
-
(15)
Subsidiaries, net
-
-
Companies controlled by an associate
-
12,810
Impairment of credit losses
-
(3)
Companies controlled by an associate, net
-
12,807
Total
-
12,807
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
93
The terms and conditions of the loans by types of related parties as at 31 December 2023 are as follows:
Company
UIC
Relation
type
Currency
Contracted
amount
Contract
No/year
Date of latest
supplementary
agreement to
the contract
Maturity
Interest
%
Market
value of
collaterals
31.12.2023
'000
BGN'000
BGN'000
BGN'000
incl.
interest
Doverie
Grizha EAD
204956297
company
controlled
by an
associate
BGN
10,997
265a/2017
04.12.2023
31.12.2024
3.10%
11,453
8,740
692
Doverie
Capital AD
130362127
company
controlled
by an
associate
BGN
4,000
319/2021
04.12.2023
31.12.2024
3.33%
6,700
4,067
67
18,153
12,807
759
The short-term loans granted to related parties are intended to support the financing of these companies'
activities under common strategic objectives. They are secured by pledges on securities (shares).
The movement in the allowance for impairment of loans granted to related parties is as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
2,169
1,340
Increase in the credit loss allowance recognised within profit or loss
for the year
898
829
Decrease in the credit loss allowance recognised within profit or loss
for the year
(15)
-
Balance at 31 December
3,052
2,169
The other receivables are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Receivables from consortia registered under the Contracts and
Obligations Act
160
160
Impairment of credit losses
(160)
(160)
Other
-
-
The other receivables are BGN-denominated and interest-free.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
94
The movement in the allowance for impairment of other receivables is as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
160
158
Increase in the credit loss allowance recognized within profit or loss
for the year
-
2
Balance at 31 December
160
160
25. TRADE RECEIVABLES
Trade receivables include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Receivables under contracts with customers
20,045
17,431
Impairment of credit losses
(1,177)
(3,481)
Receivables under contracts with customers, net
18,868
13,950
Receivables under cession agreements
4,890
4,890
Impairment of credit losses
-
(56)
Receivables under cession agreements, net
4,890
4,834
Advances granted
2,233
3,983
Total
25,991
22,767
The receivables under contracts with customers are interest-free and BGN 808 thousand of them are
denominated in BGN (31 December 2023: BGN 1,670 thousand), in EUR – BGN 14,673 thousand (31
December 2023: BGN 7,794 thousand), in USD – BGN 3,387 thousand (31 December 2023: BGN 4,486
thousand).
One main counterpart of the Company is accountable for about 17,86% of the receivables from clients (31
December 2023: one main counterpart accountable for 32,14% of trade receivables).
The Company usually agrees with its clients payment terms from 30 to 180 days for receivables under sales
except for the cases when new markets and products are being developed and new trade counterparts are
being attracted.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
95
The movement in the allowance for impairment of trade receivables from third parties is as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
3,481
4,051
Increase in the credit loss allowance recognised within profit or loss for
the year
1,177
3,481
Decrease in the credit loss allowance recognised within profit or loss for
the year
(3,481)
(4,051)
Balance at 31 December
1,177
3,481
The age structure of non-matured (regular) trade receivables is as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
up to 30 days
6,597
3,676
from 31 to 90 days
2,967
2,698
from 91 to 180 days
1,393
2,443
Gross amount of non-matured (regular) trade receivables
10,957
8,817
Impairment of credit losses
-
(100)
Non-matured (regular) trade receivables, net
10,957
8,717
The impairment of credit losses of non-matured (regular) trade receivables is as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
up to 30 days
-
41
from 31 to 90 days
-
31
from 91 to 180 days
-
28
Total
-
100
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
96
The age structure of the invoice date of past due but not impaired trade receivables is as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
from 31 to 90 days
5,379
2,328
from 91 to 180 days
1,480
1,832
from 181 to 365 days
819
2,924
over 365 days
1,410
1,530
Gross amount of past due trade receivables
9,088
8,614
Impairment of credit losses
(1,177)
(3,381)
Past due trade receivables, net
7,911
5,233
The Company applies the simplified approach under IFRS 9 to measure expected credit losses for trade
receivables by recognizing expected lifetime losses for all trade receivables (Note 2.17) Based on that, the
loss allowance as at 31 December is determined as follows:
31 December 2024
Regular
Up to 90
days past
due
Over 90
days past
due
Over 180
days past
due
Over 365
days past
due
Total
Expected average
percentage of credit losses
0%
0%
0%
0%
100%
Trade receivables (gross
carrying amount)
BGN '000
10,957
6,554
1,076
276
1,182
20,045
Expected credit loss
(Impairment allowance)
BGN '000
-
-
-
-
(1,177)
(1,177)
31 December 2023
Regular
Up to 90
days past due
Over 90
days past
due
Over 180
days past
due
Over 365
days past
due
Total
Expected average
percentage of credit
losses
1%
10%
34%
60%
100%
Trade receivables (gross
carrying amount)
BGN '000
8,817
3,269
2,194
2,107
1,044
17,431
Expected credit loss
(Impairment allowance)
BGN '000
(100)
(326)
(746)
(1,265)
(1,044)
(3,481)
There are no special pledged established as collateral of bank loans received on trade receivables.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
97
The receivables under cession agreements are denominated in EUR, interest-free, with maturity on 31
December 2025.
The movement in the allowance for impairment of receivables from cession agreements is as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
56
-
Decrease in the credit loss allowance recognised in profit or loss for
the year
(56)
-
Increase in the credit loss allowance recognised in profit or loss for the
year
-
56
Balance at 31 December
-
56
The advances granted to suppliers as at 31 December are for the purchase of:
31.12.2024
31.12.2023
BGN '000
BGN '000
Inventories
1,522
1,352
Services
711
2,631
Total
2,233
3,983
The advances granted are regular. They include: in BGN – BGN 775 thousand (31 December 2023:
BGN 520 thousand), in EUR – BGN 136 thousand (31 December 2023: BGN 2,299 thousand), in USD: BGN
962 thousand (31 December 2023: BGN 928 thousand), and in other currency – BGN 360 thousand (31
December 2023: BGN 236 thousand).
26(A). LOANS GRANTED TO THIRD PARTIES
The loans granted to third parties are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Trade loans granted to third parties
11,633
11,286
Impairment of credit losses
(81)
(83)
Total
11,552
11,203
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
98
The movement in the impairment allowance of loans to third parties is as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
83
3
Increase in the allowance for credit losses recognized in profit or
loss for the year
2
80
Decrease in the allowance for credit losses recognized in profit or
loss for the year
(4)
-
Balance at 31 December
81
83
Conditions under which loans to third parties were granted as at 31 December 2024:
Company
UIC
Currency
Contracted
amount
Contract
No/year
Date of latest
supplementary
agreement to
the contract
Maturity
Interest
%
Market value of
collaterals
31.12.2024
'000
BGN'000
BGN'000
BGN'000
incl.
interest
Sopharmacy MC
1017600023754
EUR
3,000
330/2018.
01.11.2024
31.12.2025
3.05%
8,043
6,845
977
Alliance Energy
Companies AD
206936182
BGN
2,740
52/2023
01.11.2024
31.12.2025
6.00%
-
2,752
12
Sopharmacy MC
1017600023754
EUR
695
470/2017
01.11.2024
31.12.2025
3.05%
2,008
1,651
292
Sia Bah
40203357399
EUR
152
308,408
/2024
12.09.2024
31.12.2025
4.40%
442
304
6
10,493
11,552
1,287
Conditions under which loans to third parties were granted as at 31 December 2023:
Company
UIC
Currency
Contracted
amount
Contract
No/year
Date of latest
supplementary
agreement to
the contract
Maturity
Interest
%
Market value
of collaterals
31.12.2023
'000
BGN'000
BGN'000
BGN'000
incl. interest
Sopharmacy MC
1017600023754
EUR
3,000
330/2018
21.12.2023
31.12.2024
3.05%
8,055
6,667
800
Alliance Energy
Companies AD
206936182
BGN
2,740
52/2023.
28.07.2023
31.12.2024
4.37%
-
2,691
-
Sopharmacy MC
1017600023754
EUR
695
470/2017
21.12.2023
31.12.2024
3.05%
2,140
1,610
250
Pharmaplant AD
201837643
BGN
4,184
95a/2012
04.12.2023
31.12.2024
4.30%
385
187
-
Pharmaplant AD
201837643
BGN
949
396/2014
04.12.2023
31.12.2024
4.70%
171
48
-
10,751
11,203
1,050
The loans granted to third parties are intended to provide support for financing of activities, performed by
these entities, but having common strategic objectives. They are secured through a mortgage on a building,
pledge on machinery and equipment, and pledges on securities (shares).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
99
26(B). OTHER RECEIVABLES AND PREPAYMENTS
Other receivables and prepayments include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Taxes refundable
9,143
4,872
Awarded receivables
4,635
481
Impairment of credit losses from awarded receivables
(475)
(481)
Awarded receivables, net
4,160
-
Prepayments
901
1,021
Receivables under deposits granted as guarantees
356
290
Cash provided for dividend payment
146
424
Receivables under litigation guarantees
-
25
Other
80
83
Total
14,786
6,715
Taxes refundable include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Excise duties
6,465
4,749
Corporate tax
2,521
123
VAT
157
-
Total
9,143
4,872
Prepayments include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Insurance
416
375
Subscriptions
224
395
Licence and patent fees
92
89
Consulting services
60
-
Advertisement
56
45
Bank charges and fees
33
83
Rentals
7
6
Vouchers
-
3
Other
13
25
Total
901
1,021
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
100
Deposits placed as guarantees include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Guarantees under contracts for supply of veterinary
vaccines
188
188
Guarantees under system implementation contracts
70
40
Guarantees under contracts for supply of non-current assets
38
-
Guarantees under rental agreements
37
32
Guarantees under leases
7
13
Guarantees under contracts for fuel
6
6
Guarantees under construction contracts
4
4
Guarantees under contracts for electricity supply
3
3
Guarantees under insurance contracts
1
1
Other
2
3
Total
356
290
The deposits placed as guarantees are: in BGN – BGN 276 thousand (31 December 2023: BGN 231
thousand), in EUR – BGN 75 thousand (31 December 2023: BGN 43 thousand); in USD – BGN 5 thousand
(31 December 2023: BGN 11 thousand), and in other currencies – none (31 December 2023: BGN 5
thousand).
The guarantees placed under litigations in BGN – none (31 December 2023: BGN 25 thousand).
The movement in the allowance for impairment of court and awarded receivables is as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
481
160
Decrease in the credit loss allowance recognised within profit or
loss for the year
(6)
(6)
Increase in the credit loss allowance recognised within profit or
loss for the year
-
327
Balance at 31 December
475
481
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
101
27. FINANCIAL ASSETS HELD FOR TRADING
The financial assets held for trading constitute corporate bonds of Doverie Obedinen Holding AD.
The movement in the financial assets held for trading is presented below:
31.12.2024
31.12.2023
BGN '000
BGN '000
Balance at 1 January
-
-
Debt securities acquired
8,453
-
Debt securities sold
(8,452)
-
Balance at 31 December
1
-
The Company has stated gain of sales of debt securities, as follows:
Net gain on sale of debt securities
2024
2023
BGN '000
BGN '000
Gain on sale of debt securities
131
-
Costs on sale of debt securities
(8)
-
Net gain on sale of debt securities (Note 11)
123
-
28. CASH AND CASH EQUIVALENTS
Cash includes:
31.12.2024
31.12.2023
BGN '000
BGN '000
Cash at current bank accounts
12,677
6,019
Cash in hand
60
87
Blocked cash includes
19
100,281
Cash and cash equivalents for cash flow
12,756
106,387
Fundraising account for the exercise of warrants
97
-
Deposits with an original maturity of more than three months
-
300
Cash and cash equivalents in the separate statement of
financial position
12,853
106,687
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
102
Cash structure at current bank accounts is as follows: in BGN: BGN 1,151 thousand (31 December 2023:
BGN 1,679 thousand), in EUR – BGN 10,656 thousand (31 December 2023: BGN 3,324 thousand), in USD
– BGN 602 thousand (31 December 2023: BGN 958 thousand) and in other currency – BGN 268 thousand
(31 December 2023: BGN 58 thousand).
Cash in hand is denominated in: BGN: BGN 60 thousand (31 December 2023: BGN 87 thousand).
The blocked cash includes:
31.12.2024
31.12.2023
BGN '000
BGN '000
Bank guarantees issued
19
70
Short-term deposits abroad
-
100,110
Short-term deposits in Bulgaria
-
101
19
100,281
The issued bank guarantees are: in BGN – none (31 December 2023: BGN 54 thousand), in EUR – BGN 19
thousand (31 December 2023: BGN 16 thousand). Deposits abroad – none (31 December 2023: in EUR
maturing on 10 January 2024), and deposits in Bulgaria – none (31 December 2023: maturing on 5 February
2024).
As a result of the analyses made and the methodology applied to calculate expected credit losses for cash and
cash equivalents, the management has determined that no impairment is necessary of cash and cash
equivalents. Therefore, the Company has not recognised a provision for the impairment of expected credit
losses on cash and cash equivalents as at 31 December 2024.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
103
29. EQUITY
Share capital
As at 31 December 2024, the registered share capital of Sopharma AD amounted to BGN 179,100 thousand
distributed in 179,100,063 shares of nominal value BGN 1 each.
Ordinary shares issued and fully paid
Shares
Share capital
net of treasury
shares
number
BGN '000
Balance at 1 January 2023
121,318,711
82,595
Capital issue
37,792,679
37,793
Effects of subsidiary merger
852
3
Treasury shares bought
(850,000)
(5,226)
Expense on treasury shares purchase
-
(26)
Balance at 31 December 2023
158,262,242
115,139
Capital issue
6,509,485
6,509
Sold treasury shares
972,308
3,899
Effects of subsidiary merger
232
1
Treasury shares bought
(1,200)
(7)
Balance at 31 December 2024
165,743,067
125,541
On 5 March 2024, an increase to the Company’s capital was registered with the Trade Registry, by means of
issue of 6,509,485 ordinary registered dematerialized voting shares with nominal value BGN 1 each and issue
value BGN 4.13 per share.
The shares from the capital increase were registered by the warrant holders.
The table below presents the paid joint-stock capital of the Company at 31 December:
31.12.2024
31.12.2023
BGN '000
BGN '000
Share capital (registered), nominal
179,100
172,591
Share premium
158,985
136,916
Total paid capital
338,085
309,507
Company's shares are ordinary, non-cash, with right of dividend and liquidation share and are registered for
trade in the Bulgarian Stock Exchange – Sofia AD and Warsaw Stock Exchange.
The treasury shares were 13,356,996 at the amount of BGN 53,559 thousand as at 31 December 2024 (31
December 2023: 14,328,336 shares at the amount of BGN 57,452 thousand). The number of shares purchased
in the current year was 1,200 (2023: 850,000 shares), and of those sold: 972,308 (2023: no shares sold). The
effect of the subsidiary merger is 232 shares for BGN 1 thousand (2023: 852 shares for BGN 3 thousand).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
104
Company's reserves are summarised in the table below:
31.12.2024
31.12.2023
BGN '000
BGN '000
Statutory reserves
218,828
196,759
Property, plant and equipment revaluation reserve
20,057
21,479
Reserve for financial assets at fair value through other
comprehensive income
(93)
506
Additional reserves
226,530
226,530
Total
465,322
445,274
Statutory reserves at the amount of BGN 218,828 thousand (31 December 2023: BGN 196,759 thousand)
constitute the Reserve Fund, which is set aside under a requirement of the Commercial Act and Company's
Articles of Association, and includes two components: (a) amounts from distribution of profit for the Reserve
Fund – BGN 59,843 thousand (31 December 2023: BGN 59,843 thousand), and (b) share premium
representing the excess of the issue value over the nominal value of the issued shares on the merger of a
subsidiary into Sopharma AD, as well as the shares registered and paid for by warrant holders at the amount
of BGN 158,985 thousand (31 December 2023: BGN 136,916 thousand).
The movements of statutory reserves were as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
196,759
68,628
Positive difference between issue and nominal value upon capital
issue
20,375
118,291
Transfer from other equity components (warrants issue) upon
exercise of rights on warrants
1,694
9,840
Balance at 31 December
218,828
196,759
The property, plant and equipment revaluation reserve, amounting to BGN 20,057 thousand (31 December
2023: BGN 21,479 thousand), is set aside from the surplus between the carrying amount of property, plant
and equipment and their fair value at the date of the respective revaluation. The deferred tax effect on the
revaluation reserve was directly carried to this reserve.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
105
The movements of property, plant and equipment revaluation reserve were as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January (originally stated)
21,311
27,106
Effect of subsidiary merger
168
299
Balance at 1 January (restated)
21,479
27,405
(Loss)/Gain on revaluation of property, plant and equipment, net
(22)
33
Effect of subsidiary merger
-
(131)
Transfer to retained earnings
(1,402)
(5,825)
Deferred tax relating to revaluations
2
(3)
Balance at 31 December
20,057
21,479
The reserve of financial assets at fair value through other comprehensive income, amounting to minus
BGN 93 thousand (31 December 2023: BGN 506 thousand) is formed of the effects of fair-value
measurement of other long-term equity investments. Upon derecognition of these investments, the reserve
formed is transferred to “retained earnings”.
The movements of the reserve of financial assets at fair value through other comprehensive income were as
follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
506
560
Transfer to retained earnings
8
(1,820)
Net change in the fair value of other long-term equity investments
(607)
1,766
Balance at 31 December
(93)
506
Additional reserves at the amount of BGN 226,530 thousand (31 December 2023: BGN 226,530 thousand)
are set aside from distribution of profits under a decision of shareholders and can be used for payment of
dividend, share capital increase as well as to cover losses.
The movements of additional reserves are as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
226,530
365,155
Dividend distributed from 2022 profit
-
(32,604)
Advance 6-month dividends from 2023 profit
-
(106,021)
Balance at 31 December
226,530
226,530
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
106
Other equity components (warrant issue)
Pursuant to Art. 25 of the Company’s Statute dated 21 May 2021, the Board of Directors approved parameters
and made a decision for issuing initial public offering of warrants. By means of Decision No 804 – E dated
4 November 2011, the Financial Supervision Commission registered an issue of 44 932 633 dematerialised,
freely transferrable and registered warrants, with issue value BGN 0.28, issued by Sopharma AD pursuant to
Art. 112b, Para 1 of POSA. The underlying asset of the issued warrants are future ordinary, registered, freely
transferrable voting right shares, each holding one vote in the General Meeting of Shareholders, which will
be issued by the Company conditionally, only in favour of warrant holders. Each registered warrant entitles
the holder thereof to register one share from the future issue. The warrants’ holders may exercise their right
to register the respective number of shares in future increase of the Company’s capital within a 3-year period,
at a fixed price of BGN 4.13 per share. The exercise right arises from the date on which the warrant issue was
registered with Central Depository AD – 16 November 2021.
The warrants were admitted to trade on the main BSE market of Bulgarian Stock Exchange – Sofia AD, as
from 17 November 2021.
In November 2024, a final capital increase procedure was launched by issuing up to 623,779 ordinary,
registered, dematerialised, freely transferable shares, subject to the subscription of the shares of the increase
by the holders of warrants ISIN 9200001212, in accordance with the terms and conditions described in the
Prospectus for the public offering of warrants.
The last date for transactions in warrants is 04.11.2024 and the exercise date for warrants is 13.01.2025.
The table below presents the funds raised from the warrant issue, net of issue costs.
Warrants issued and fully paid
Warrants
Other equity
components
number
BGN '000
Balance at 1 January 2023
44,925,943
12,488
Transaction costs
-
(791)
Transfer to premium reserve upon exercise of rights
on warrants
(37,792,679)
(9,840)
Balance at 31 December 2023
7,133,264
1,857
Warrants paid under capital raising account
-
97
Transfer to premium reserve upon exercise of rights
on warrants
(6,509,485)
(1,694)
Balance at 31 December 2024
623,779
260
Base net earnings per share
31.12.2024
31.12.2023
Weighted average number of shares
164,251,094
130,696,402
Net profit for the year (BGN '000)
28,227
47,570
Base net earnings per share (BGN)
0.17
0.36
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
107
Diluted net earnings per share
31.12.2024
31.12.2023
Average weighted number of shares in circulation
164,251,094
130,696,402
Cumulative effect of warrants
497,156
7,501,448
Shares in circulation with warrants
164,748,250
138,197,850
Net profit for the year (BGN '000)
28,227
47,570
Diluted net earnings per share
0.17
0.34
As at 31 December 2024, retained earnings amount at BGN 17,434 thousand (31.12.2023: BGN 13,827
thousand).
The movement in retained earnings is as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January (originally stated)
21,446
43,843
Effect of subsidiary merger
(7,619)
(7,204)
Balance at 1 January (restated)
13,827
36,639
Net profit for the year
28,227
48,121
Effect of treasury shares sold
1,857
-
Transfer from revaluation reserve of property, plant and
equipment
1,402
5,825
Transfer from revaluation reserve of financial assets at fair value
through other comprehensive income
(8)
1,820
Effects of subsidiary merger
(1)
(410)
Effects of actuarial losses upon revaluation on subsidiary merger
(11)
(5)
Actuarial losses on remeasurement
(512)
(855)
Advance 6-month dividends
(12,431)
(37,121)
Profit distribution for dividends
(14,916)
(40,187)
Balance at 31 December
17,434
13,827
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
108
30. LONG-TERM BANK LOANS
Long-term bank loans include:
31.12.2024
31.12.2023
Currency
Contracted
loan
amount
Maturity
Non-current
portion
Current portion
Total
Non-
current
portion
Current
portion
Total
'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Investment loans
EUR
40,000
04.04.2032
-
78,138
78,138
-
-
-
EUR
20,000
25.12.2032
12,963
3,229
16,192
-
-
-
BGN
9,544
25.12.2029
6,941
1,738
8,679
8,677
854
9,531
Extended credit lines
EUR
15,000
01.09.2025
-
25,492
25,492
27,021
-
27,021
19,904
108,597
128,501
35,698
854
36,552
Bank loans in BGN are contracted at an interest rate based on the short-term interest rate plus a premium of
1.9 percentage points , but not less than 1.9 percentage points, and for those in EUR - one-month EURIBOR
plus a premium of 1.1 to 2.9 percentage points (2023. : bank loans in BGN are contracted at an interest rate
based on the short-term interest rate plus a premium of 1,9 percentage points, but not less than 1,9 percentage
points, and for those in EUR - one-month EURIBOR plus a premium of 1,1 percentage points, but not less
than 1,1 percentage points).
The following were established as collateral under the loans listed:
• Mortgages of real estate with a carrying amount of BGN 56,559 thousand as at 31 December
2024 (31 December 2023: BGN 41,659 thousand) (Note 15);
• Special pledges on machinery and equipment with a carrying amount of BGN 9,589 thousand as
at 31 December 2024 (31 December 2023: BGN 10,644 thousand) (Note 15);
• Special pledges on inventories with a carrying amount of BGN 11,735 thousand as at 31
December 2024 (31 December 2023: BGN 11,735 thousand) (Note 23).
Long-term bank loan agreements contain clauses with requirements for maintaining certain financial ratios.
The company's management continuously monitors the implementation of these financial ratios in
communication with the respective creditor bank.
As of 31.12.2024, the Company reports a breach of a covenant under a bank loan agreement, as a result of
which the creditor bank has the right to declare the loan, in the amount of BGN 78,138 thousand as of
31.12.2024, as repayable on demand. The breached covenant represents a requirement for maintaining a debt
service coverage ratio of min. 1.1x. As a result, the loan liability is classified as a short-term liability in the
current financial statements. The Company's management has identified the breach of the covenant under the
bank loan agreement and has taken steps to renegotiate this condition with the bank.
By letter dated 26.03.2025, the creditor bank agrees that the covenant related ratio for 2024 per contract shall
be lower than the required minimum of 1.1x.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
109
As of the date of issuance of these separate financial statements, the Company's management considers that
the potential liquidity risk in connection with the above-mentioned breach has been eliminated in view of the
letter dated 26.03.2025 from the creditor bank described above.
The Company should comply with certain additional restrictive conditions under long-term loan agreements,
which are generally related to:
- total liquidity ratio, which should be at least 1.1x;
- net debt, which should not exceed four times the annual profit before interest, taxes and depreciation;
- maintaining an equity ratio greater than or equal to 40%;
- non-reduction of equity compared to the last audited financial statements.
The Company does not expect non-compliance with these restrictive conditions in the next 12-month period.
Reconciliation of the movement of liabilities from financing activities
The table below shows changes in liabilities from financing activities, representing both cash and non-cash
changes. Liabilities from financial liabilities 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 financing activities.
01.01.2024
Changes in
cash flows
from
financing
activities
Newly arising
liabilities over
the year
Other non-
cash
changes
31.12.2024
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Bank loans
81,390
94,802
-
699
176,891
Lease liabilities to related parties
16,507
(2,097)
2,493
162
17,065
Lease liabilities to third parties
3,195
(965)
572
(33)
2,769
Dividends and unexercised
warrant rights
142,449
(168,383)
27,347
(159)
1,254
Totals
243,541
(76,643)
30,412
669
197,979
Proceeds from capital issue
9,840
26,884
-
(36,724)
-
Treasury shares
(57,452)
5,749
1
(1,857)
(53,559)
Government grants for agricultural
land
-
1
-
(1)
-
Reserve for warrants issued
1,857
-
97
(1,694)
260
Net cash flows from financing
activities
197,786
(44,009)
30,510
(39,607)
144,680
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
110
01.01.2023
Changes in
cash flows
from
financing
activities
Newly arising
liabilities over
the year
Other non-
cash
changes
31.12.2023
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Bank loans
14,062
67,202
80
46
81,390
Lease liabilities to related parties
16,376
(1,929)
1,841
219
16,507
Lease liabilities to third parties
1,396
(864)
3,033
(370)
3,195
Dividends and unexercised
warrant rights
215
(71,889)
215,933
(1,810)
142,449
Total
32,049
(7,480)
220,887
(1,915)
243,541
Proceeds from capital issue
-
156,084
-
(146,244)
9,840
Treasury shares
(52,203)
(5,252)
-
3
(57,452)
Government grants for
agricultural land
-
36
-
(36)
-
Reserve for warrants issued
12,488
(791)
-
(9,840)
1,857
Net cash flows from financing
activities
(7,666)
142,597
220,887
(158,032)
197,786
31. DEFERRED TAX LIABILITIES
Deferred income taxes as at 31 December are related to the following items of the statement of financial
position:
Deferred tax (liabilities)/ assets
temporary difference
tax
temporary difference
tax
31.12.2024
31.12.2024
31.12.2023
31.12.2023
BGN '000
BGN '000
BGN '000
BGN '000
Property, plant and equipment
53,190
5,319
54,788
5,479
including revaluation reserve
18,102
1,810
19,359
1,936
Intangible assets
1,558
156
1,975
197
Investment property
18,557
1,856
16,409
1,641
including revaluation reserve
534
53
534
53
Total deferred tax liabilities
73,305
7,331
73,172
7,317
Payables to personnel
(9,943)
(994)
(10,095)
(1,010)
Receivables
(14,957)
(1,496)
(18,186)
(1,819)
Accrued liabilities
(7,046)
(705)
(6,072)
(607)
Inventories
(8,735)
(874)
(4,124)
(412)
Total deferred tax assets
(40,681)
(4,069)
(38,477)
(3,848)
Deferred income tax liabilities, net
32,624
3,262
34,695
3,469
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
111
On recognising deferred tax assets, the probability of a reversal of the individual differences and the abilities
of the Company to generate sufficient taxable profit in the future, had been taken into account.
The change in the balance of deferred taxes for 2024 is as follows:
Deferred tax (liabilities)/ assets
Balance at
1 January
2024
Recognised in
the statement
of
comprehensive
income
Recognised
in equity
Recognised in
the statement
of changes in
equity and the
current tax
return
Balance at
31 December
2024
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Property, plant and
equipment
(5,479)
126
(2)
36
(5,319)
Intangible assets
(197)
41
-
-
(156)
Investment property
(1,641)
(215)
-
-
(1,856)
Payables to personnel
1,010
(16)
-
-
994
Receivables
1,819
(323)
-
-
1,496
Inventories
412
462
-
-
874
Accrued liabilities
607
98
-
-
705
Total
(3,469)
173
(2)
36
(3,262)
The change in the balance of deferred taxes for 2023 is as follows:
Deferred tax (liabilities)/ assets
Balance at
1 January
2023
Recognised in
the statement
of
comprehensive
income
Recognised
in equity
Recognised in
the statement
of changes in
equity and the
current tax
return
Balance at
31 December
2023
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Property, plant and
equipment
(6,421)
787
4
151
(5,479)
Investment property
(1,448)
(202)
9
-
(1,641)
Intangible assets
(241)
44
-
-
(197)
Payables to personnel
917
93
-
-
1,010
Receivables
1,065
754
-
-
1,819
Inventories
175
237
-
-
412
Accrued liabilities
660
(53)
-
-
607
Costs for subsidiary
transformation
1
(1)
-
-
-
Total
(5,292)
1,659
13
151
(3,469)
Unrecognized deferred tax assets are as follows:
Unrecognised deferred tax assets
temporary
difference
tax
temporary
difference
tax
31.12.2024
31.12.2024
31.12.2023
31.12.2023
BGN '000
BGN '000
BGN '000
BGN '000
Impairment of investments in subsidiaries
(23,690)
(2,369)
(25,084)
(2,508)
Impairment of investments in associates
(4,844)
(484)
(5,034)
(503)
Impairment of investments in joint ventures
(2,946)
(295)
(2,946)
(295)
Total
(31,480)
(3,148)
(33,064)
(3,306)
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
112
32. GOVERNMENT GRANTS
The government grants are under concluded contracts with the Bulgarian Small and Medium Enterprises
Promotion Agency for gratuitous financial aid under Operational Programme "Development of the
Competitiveness of the Bulgarian Economy" 2007-2013, Operational Programme “Innovations and
Competitiveness” 2014-2020 and Operational Programme "Energy Efficiency".
The table below presents the non-current and the current portion of the grants received by type:
31.12.2024
31.12.2023
Non-current
portion
Current
portion
Total
Non-current
portion
Current
portion
Total
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Acquisition of machinery and
equipment for a new tablets
production line
1,563
179
1,742
1,742
179
1,921
Acquisition of a compact line for
insulated vial filling
1,447
167
1,614
1,613
167
1,780
Implementation of innovative
products in the production of
ampoule dosage forms
900
200
1,100
1,100
200
1,300
Acquisition on non-current assets
and building reconstruction
270
8
278
279
8
287
Acquisition of combined exchange
ventilation and air conditioning
installation
47
9
56
57
9
66
Air conditioning with water cooling
unit
46
4
50
50
4
54
Dispensing machine for liquid
dosage forms
39
6
45
44
6
50
Control and monitoring system for
air conditioning chambers, chillers
and lighting installation
33
3
36
36
3
39
Automatic sachet machine
13
1
14
14
2
16
Implementation of innovative
“artificial tears” eye drops
production
-
-
-
-
14
14
Automatic vial filling and capping
line
-
-
-
-
1
1
4,358
577
4,935
4,935
593
5,528
The current portion of the financing will be recognised as current income over the following 12 months from
the date of the separate statement of financial position and presented as 'other current liabilities' (Note 41).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
113
33. LEASE LIABILITIES TO RELATED PARTIES
The lease liabilities to related parties originate in relation to the lease of buildings and are presented net of
the interest due in the future, and are as follows:
Lease term
31.12.2024
31.12.2023
BGN '000
BGN '000
Up to one year
2,059
1,733
Over one year
15,006
14,774
Total
17,065
16,507
The minimum lease payments to related parties are due, as follows:
Lease term
31.12.2024
31.12.2023
BGN '000
BGN '000
Up to one year
2,261
1,929
Over one year
15,669
15,511
17,930
17,440
Future finance cost under leases
(865)
(933)
Present value of lease liabilities
17,065
16,507
The term of leases to related parties is until 1 August 2032.
The Company has provided deposits under the leases as collateral of lease liabilities, at the amount of BGN
516 thousand (31 December 2023: BGN 516 thousand) (Note 21).
The lease liabilities to related parties are denominated in EUR.
The lease payments due in the next 12 months are presented in the statement of financial position as “payables
to related parties” (Note 38).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
114
34. LEASE LIABILITIES TO THIRD PARTIES
The lease liabilities to third parties included in the statement of financial position have arisen in relation to
building rentals and are stated net of the future interest due, as follows:
Term
31.12.2024
31.12.2023
BGN '000
BGN '000
Up to one year
896
945
Over one year
1,873
2,250
Total
2,769
3,195
Minimum lease payments to third parties are due, as follows:
Term
31.12.2024
31.12.2023
BGN '000
BGN '000
Up to one year
917
1,018
Over one year
1,905
2,309
2,822
3,327
Future finance costs on finance leases
(53)
(132)
Present value of lease liabilities
2,769
3,195
The table below presents liabilities per types of leases to third parties:
31.12.2024
31.12.2023
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
Leases of motor vehicles
1,841
795
2,636
2,182
793
2,975
Leases of buildings
32
90
122
57
87
144
Leases of apparatuses
-
9
9
9
33
42
Leases of transmitters
-
2
2
2
25
27
Leases of land
-
-
-
-
7
7
Total
1,873
896
2,769
2,250
945
3,195
Lease liabilities to third parties in BGN amount to BGN 10 thousand (31 December 2023: BGN 76 thousand),
in EUR – BGN 2,174 thousand (31 December 2023: BGN 2,647 thousand), in USD – BGN 431 thousand
(31 December 2023: BGN 297 thousand), and in other currencies – BGN 154 thousand (31 December 2023:
BGN 175 thousand).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
115
The Company has provided deposits under leases as collateral of lease liabilities at the amount of BGN 7
thousand (31 December 2023: BGN 13 thousand) (Note 26b).
The lease payments due over the next 12 months are presented in the statement of financial position as “other
current payables” (Note 41).
35. RETIREMENT BENEFIT OBLIGATIONS
Long-term payables to personnel include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Long-term retirement benefit obligations
5,775
5,120
Long-term benefit obligations for tantieme
319
231
Total
6,094
5,351
Long-term retirement benefit obligations
The long-term retirement benefit obligations to personnel include the present value of Company's liability at
the date of the statement of financial position to pay indemnities to individuals of its employees upon coming
of age for retirement.
In accordance with the Labour Code in Bulgaria, every employee is entitled to an indemnity on retirement at
the amount of two gross monthly salaries, and if he or she has worked for the same employer during the last
10 years of their service the indemnity amounts to six gross monthly salaries at the time of retirement. This
is a defined benefits plan (Note 2.24).
For the purpose of establishing the amount of these obligations to personnel, the Company has assigned an
actuarial valuation as at 31 December 2024 by using the services of a certified actuary.
Movements in the present value of retirement benefit obligations to personnel are as follows:
2024
2023
BGN '000
BGN '000
Present value of the obligation at 1 January
5,120
4,199
Current service cost
469
397
Interest cost
238
262
Net actuarial loss recognised for the period
52
8
Payments made in the year
(627)
(606)
Remeasurement gains or losses on the retirement benefit obligations,
including:
523
860
Actuarial (gains)/losses arising from changes in demographic
assumptions
3
(47)
Actuarial losses arising from changes in financial assumptions
222
343
Actuarial losses arising from past experience adjustments
298
564
Present value of the obligation at 31 December
5,775
5,120
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
116
The amounts of long-term retirement benefits of personnel accrued in the statement of comprehensive income
are as follows:
2024
2023
BGN '000
BGN '000
Current service cost
469
397
Interest cost
238
262
Net actuarial loss recognised for the period
52
8
Components of defined benefit plan costs recognised in profit or
loss (Note 7)
759
667
2024
2023
BGN '000
BGN '000
Remeasurement gains or losses on the retirement benefit obligations,
including:
Actuarial (gains)/losses arising from changes in demographic
assumptions
3
(47)
Actuarial losses arising from changes in financial assumptions
222
343
Actuarial losses arising from past experience adjustments
298
564
Components of defined benefit plans cost recognised in other
comprehensive income (Note 14)
523
860
Total
1,282
1,527
The following actuarial assumptions were used in calculating the present value of the liabilities as at 31
December 2024:
• The discount factor is calculated by using as basis of 4% (2023: 4.50%). The assumption is based on
yield data for long-term government securities with 10-year maturity;
• The assumption for the future level of the salaries is based on the information provided by the
Company's management and amounts to 5% annual growth compared to the prior reporting period
(2023: 4% for Sopharma AD and 2% for Veta Pharma AD);
• Mortality rate – in accordance with the table issued by the National Statistics Institute for the total
mortality rate of the population in Bulgaria for the period 2021-2023 (2023: 2020 - 2022);
• Staff turnover rate – from 2% to 16% for the four age groups formed (2023: between 1% and 16%);
• Early retirement due to illness – between 0.03% and 0.32% for the five age groups formed (2023:
between 0.03% and 0.32%).
This defined benefit plan exposes the Company to the following risks: investment risk, interest risk, longevity
risk and salary growth related risk: The Company's management defines them as follows:
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
117
• investment risk – as far as this is unfunded plan, the Company should monitor and balance currently
the forthcoming payments under it with the ensuring of sufficient cash resources. The historical
experience and the liability structure show that the annual resource required is not material compared
to the commonly maintained liquid funds;
• interest risk – any increase in the yield of government securities with similar term will increase the
plan liability;
• longevity risk – the present value of the retirement benefit liability is calculated by reference to the
best estimate and updated information about the mortality of plan participants. An increase in life
expectancy would result in a possible increase in the liability. A relative stability of this indicator has
been observed in the recent years; and
• salary growth related risk – the present value of the retirement benefit liability is calculated by
reference to the best estimate of the future increase in plan participants' salaries. Such an increase
would increase the plan liability.
The sensitivity analysis of the main actuarial assumptions is based on the reasonably possible changes of
these assumptions at the end of the reporting period, assuming that all other assumptions are held constant.
The effects of the change (increase or decrease) by 1% of:
a. salary growth
b. discount rate
c. staff turnover rate
on the expenses and interest for current service, respectively on the present value of the obligation for
payment of defined retirement benefits, are assessed as follows:
• Impact on the amount of the present value of the obligation:
2024
2023
Increase
Decrease
Increase
Decrease
BGN '000
BGN '000
BGN '000
BGN '000
Change in salary growth
410
(369)
338
(306)
Change in discount rate
(364)
413
(300)
339
Change in staff turnover rate
(404)
454
(334)
374
• Impact on the amount of the expenses and interest for current service
2024
2023
Increase
Decrease
Increase
Decrease
BGN '000
BGN '000
BGN '000
BGN '000
Change in salary growth
77
(68)
59
(52)
Change in discount rate
(67)
77
(5)
5
Change in staff turnover rate
(74)
85
(57)
65
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
118
The expected indemnity payments upon retirement under the defined benefit plan for the following five years
are as follows:
Forecast payments
Old age and length of
service retirement
Poor health
retirement
Total
BGN '000
BGN '000
BGN '000
Payments in 2025
1,001
21
1,022
Payments in 2026
466
21
487
Payments in 2027
339
21
360
Payments in 2028
498
21
519
Payments in 2029
709
21
730
3,013
105
3,118
The average weighted duration of defined benefit obligations is 7 years (31 December 2023: 6.4 years for
Sopharma AD and 5.1 years for Veta Pharma AD).
Long-term benefit obligations for tantieme
31.12.2024
31.12.2023
BGN '000
BGN '000
Long-term benefit obligations for tantieme with maturity in 2027
182
-
Long-term benefit obligations for tantieme with maturity in 2026
137
137
Long-term benefit obligations for tantieme with maturity in 2025
-
94
319
231
36. SHORT-TERM BANK LOANS
Short-term bank loans include:
Currency
Contracted
amount
Maturity
31.12.2024
31.12.2023
'000
BGN '000
BGN '000
Extended bank loans (overdrafts)
BGN
20,000
01.10.2025
20,014
15,536
BGN
19,558
01.10.2025
18,528
19,574
BGN
9,779
01.10.2025
9,777
9,678
EUR
10,000
20.02.2025
43
44
BGN
10,000
31.07.2025
28
-
BGN
20,000
31.07.2025
-
6
48,390
44,838
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
119
Bank loans in euro are contracted at an interest rate determined on the basis of one-month EURIBOR plus a
surcharge of 1%, and for those in lev - one-month EURIBOR plus a surcharge of 1.25% and reference interest
rate plus a surcharge from 0.90% to 1.20% (2023: loans in euro are contracted at an interest rate determined
on the basis of one-month EURIBOR plus a surcharge of up to 1.25 points, and for those in lev - from 1.3%
to 2.65%). The loans are for working capital.
The following collateral has been established in favour of the creditor banks:
• Mortgages of real estate with a carrying amount of BGN 19,803 thousand as at 31 December 2024
(31 December 2023: BGN 19,807 thousand) (Note 15 and Note 17);
• Special pledges on:
- machinery and equipment with a carrying amount of BGN 22,927 thousand as at 31 December
2024 (31 December 2023: BGN 12,631 thousand) (Note 15 and Note 17);
- inventories with a carrying amount as at 31 December 2024: none (31 December 2023: BGN
22,082 thousand) (Note 23);
- receivables from related parties with a carrying amount of BGN 74,993 thousand as at 31
December 2024 (31 December 2023: BGN 62,085 thousand) (Note 24);
To secure one of the above mentioned loans, mortgages and pledges were established by a subsidiary,
as follows:
- mortgage on real estate with carrying amount of BGN 2,606 thousand as at 31 December 2024
(31 December 2023: none);
- trade receivables from third parties of a subsidiary with a carrying amount of BGN 6,259
thousand as at 31 December 2024 (31 December 2023: BGN 7,823 thousand).
Some of the loans drawn as at 31 December, amounting to BGN 18 thousand (31 December 2023: BGN 13
thousand) is in the form of bank guarantees issued to the National Health Insurance Institute to cover
payables.
The short-term bank loan contracts include clauses with covenants for maintaining certain financial ratios.
Company's management currently controls the observance of these financial ratios in communication with
the respective creditor bank.
37. TRADE PAYABLES
Trade payables include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Payables to suppliers
103,330
21,537
Advances received
409
454
Total
103,739
21,991
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
120
Payables to suppliers by type are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Payables for supply of non-current assets
86,888
2,734
Payables for supply of inventories
8,541
12,328
Payables for supply for services
7,901
6,475
Total
103,330
21,537
Payables to suppliers are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Payables to foreign suppliers
95,848
13,911
Payables to local suppliers
7,482
7,626
Total
103,330
21,537
The payables to suppliers are regular and interest-free. The payables in BGN amount to BGN 5,615 thousand
(31 December 2023: BGN 7,055 thousand), in EUR – BGN 92,124 thousand (31 December 2023: BGN 8,385
thousand), in USD – BGN 3,118 thousand (31 December 2023: BGN 4,672 thousand), and in other currency
– BGN 2,473 thousand (31 December 2023: BGN 1,425 thousand).
The usual credit period for which no interest is charged on trade payables, is 180 days. The Company has no
past due trade payables.
The advances from clients are for purchases of:
31.12.2024
31.12.2023
BGN '000
BGN '000
Finished products
346
387
Services
63
67
Total
409
454
The advances from clients as at 31 December are current. Of them, BGN 95 thousand (31 December 2023:
BGN 151 thousand) are denominated in BGN, and BGN 314 thousand are denominated in EUR (31
December 2023: BGN 303 thousand).
The Company has placed deposits and bank guarantees as security for payables to suppliers under commercial
transactions at the amount of BGN 386 thousand (31 December 2023: 360 thousand) (Note 26b, Note 28 and
Note 36).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
121
38. PAYABLES TO RELATED PARTIES
The payables to related parties refer to:
31.12.2024
31.12.2023
BGN '000
BGN '000
Payables to associates
2,092
1,749
Payables to subsidiaries
203
170
Payables to shareholders with significant influence
162
84,982
Payables to companies related through key management
personnel
150
209
Payables to key management personnel
-
12,991
Payables to companies controlled by an associate
-
8
Total
2,607
100,109
The payables to related parties by type are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Payables under leases (Note 33)
2,059
1,733
Service supply
388
199
Payables for supply of inventories
160
279
Dividend payables
-
97,898
Total
2,607
100,109
The trade payables to related parties are regular. The payables in Bulgarian Levs amount to BGN 363
thousand (31 December 2023: BGN 98,293 thousand), in EUR – BGN 2,243 thousand (31 December 2023:
1,814 thousand), and in PLN – BGN 1 thousand (31 December 2023: BGN 2 thousand).
The usual credit period for which no interest is charged on trade payables to related parties, is 90 days. The
Company has no overdue trade payables to related parties.
39. TAX PAYABLES
Short- term tax payables include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Individual income tax
546
460
Taxes on expenses
368
393
Tax on dividend
-
1,240
VAT
-
332
Corporate tax
-
1
Total
914
2,426
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
122
Long- term tax payables include:
31.12.2024
31.12.2023
BGN '000
BGN '000
Domestic top-up tax (Note 13)
708
-
Total
708
-
The following tax audits have been carried out of the Company:
• under VAT Act – until 31 October 2024;
• under CITA – until 31 December 2023;
• under Social Insurance Code – until 31 December 2021.
Tax audit is performed within a 5-year period after the end of the year when the tax return for the respective
liability has been submitted. The tax audit confirms finally the tax liability of the respective company-tax
liable person except in the cases explicitly stated by law.
40. PAYABLES TO PERSONNEL AND FOR SOCIAL SECURITY
Payables to personnel and for social security are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Payables to personnel, including:
8,661
8,908
Tantieme
3,711
3,430
current liabilities
2,925
3,210
accruals on unused compensated leaves
2,025
2,268
Payables for social security/health insurance, including:
1,777
1,764
current liabilities
1,429
1,376
accruals on unused compensated leaves
348
388
Total
10,438
10,672
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
123
41. OTHER CURRENT LIABILITIES
Other current liabilities are as follows:
31.12.2024
31.12.2023
BGN '000
BGN '000
Refund obligations under contracts with customers (Note 2.6.6)
4,771
4,885
Dividend payables and unexercised warrant rights
1,254
44,551
Lease liabilities to third parties (Note 34)
896
945
Government grants (Note 32)
577
593
Provision for financial guarantees granted (Note 2.26)
230
674
Deductions from work salaries
52
154
Liabilities under deposits received as guarantees
1
1
Total
7,781
51,803
The provision for financial guarantees granted, at the amount of BGN 230 thousand (31 December 2023:
BGN 674 thousand), arises as a result of commitment undertaken by the Company to perform payments for
a debtor which failed to make payment in accordance with a debt instrument (Note 2.27).
The movement in the provision for financial guarantees is as follows:
2024
2023
BGN '000
BGN '000
Balance at 1 January
674
1,958
Increase in provision for financial guarantees recognised
within profit or loss for the year
36
-
Decrease in provision for financial guarantees recognised
within profit or loss for the year
(480)
(1,284)
Balance at 31 December
230
674
The commitments undertaken by the Company to make certain payments for a debtor that did not make
payment in accordance with a debt instrument are to related parties.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
124
42. CONTINGENT LIABILITIES AND COMMITMENTS
Significant irrevocable agreements and commitments
The Company received government grants under Operational Programme "Development of the
Competitiveness of the Bulgarian Economy" 2007 – 2013, Operational Programme “Innovations and
Competitiveness” 2014-2020 and Operational Programme "Energy Efficiency" (Note 32 and Note 41), related
to acquisition of non-current assets, buildings reconstruction and technological renovation and modernisation
of tablet production facilities and implementation of innovative products in the ampoule production section
and the acquisition of combined exchanger installations for ventilation and air conditioning in the production
of medical products and implementation of innovative “artificial tears” eye drops (Note 15). The Company
undertook a commitment that for a period of 5 years after the completion of the respective projects they shall
not be subject to significant modifications affecting the essence and the terms and conditions for their
execution or giving rise to unjustified benefits to the company, neither modifications resulting from a change
in the nature of ownership over the assets acquired in relation to the grants. On non-compliance with these
requirements, the financing shall be returned. At the date of preparation of the financial statements, all
contractual requirements were being fulfilled.
Issued and granted guarantees
The Company has provided the following collateral in favour of banks under loans received by related parties:
(a) under loans of subsidiaries:
• Mortgages of real estate with a carrying amount of BGN 12,444 thousand as at 31 December
2024 (31 December 2023: BGN 37,392 thousand) (Note 15);
• Special pledges on:
- machinery and equipment as at 31 December 2024: none (31 December 2023: BGN 10,644
thousand) (Note 15);
- inventories with a carrying amount of BGN 28,030 thousand as at 31 December 2024 (31
December 2023: BGN 7,000 thousand) (Note 23);
- special pledge on shares of the capital of a subsidiary with carrying amount BGN 10,126
thousand as at 31 December 2024 (31 December 2023: BGN 10,050 thousand) (Note 18).
(b) under loans to associates
• Mortgage of real estate with a carrying amount of BGN 5,699 as at 31 December 2024 (31
December 2023: BGN 14,107 thousand) (Note 15).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
125
The Company is a co-debtor and guarantor of loans received, bank guarantees issued and leases of the
following companies:
Company
Maturity
period
Currency
Contracted amount
Amount
guaranteed as
at
Original
31.12.2024
currency
BGN'000
BGN'000
Sopharma Trading AD
2025 - 2026
BGN
191,669
191,669
157,922
Sopharma Trading AD
2025 -2026
EUR
37,500
73,344
7,024
Sopharma Trading doo,
Belgrade
2025 - 2026
EUR
35,010
68,474
42,494
Doverie Obedinen
Holding AD
2027
BGN
30,000
30,000
11,250
Sopharma Buildings
REIT
2027
BGN
10,000
10,000
7,625
Energoinvestment AD
2026
BGN
1,800
1,800
1,550
Total
227,865
43. RESTATEMENT RESULTING FROM MERGER
In its financial statements for 2024 Sopharma AD presents comparative data for 2023 based on the merger of
the separate financial statements of the transforming (Veta Pharma AD) and receiving (Sopharma AD)
companies (Note 2.3.), as follows:
43.1. Opening statement of financial position as at the date of merger – 1 January 2024
The opening statement of financial position of Sopharma AD resulting from the merger dated 1 January 2024
is prepared based on the carrying amount of the two companies’ assets and liabilities, as per their separate
statements of financial position as at 31 December 2023.
As far as the date of accounting for the merger is 1 January 2024, the data in the statement of financial position
at this date coincide with the comparative data as at 31 December 2023.
The assets and liabilities of the two companies, combined as at the date of accounting for the merger, 1
January 2024, have the following structure and amounts:
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
126
STATEMENT OF FINANCIAL
POSITION
Sopharma
AD
Veta
Pharma
AD
Adjustments
at merger
Combined
statement of
financial
position
31
December
2023
BGN'000
31
December
2023
BGN'000
31
December
2023
BGN'000
31
December
2023
BGN'000
ASSETS
Non-current assets
Property, plant and equipment
209,456
2,548
75
212,079
Intangible assets
5,893
-
2,015
7,908
Investment property
49,886
-
-
49,886
Investments in subsidiaries
90,655
-
(6,754)
83,901
Investments in associates and joint ventures
112,094
-
-
112,094
Other long-term equity investments
3,870
-
-
3,870
Long-term receivables from related parties
62,664
-
-
62,664
Other long-term receivables
3,357
-
-
3,357
537,875
2,548
(4,664)
535,759
Current assets
Inventories
106,651
576
-
107,227
Receivables from related parties
84,714
196
(1)
84,909
Trade receivables
22,759
8
-
22,767
Loans granted to third parties
11,203
-
-
11,203
Other receivables and prepayments
6,001
831
(117)
6,715
Cash and cash equivalents
105,354
1,333
-
106,687
336,682
2,944
(118)
339,508
TOTAL ASSETS
874,557
5,492
(4,782)
875,267
EQUITY AND LIABILITIES
EQUITY
Share capital
172,591
4,540
(4,540)
172,591
Treasury shares
(57,452)
-
-
(57,452)
Reserves
445,129
306
(161)
445,274
Other equity components
1,857
-
-
1,857
Retained earnings/Uncovered loss
14,000
(13)
(160)
13,827
576,125
4,833
(4,861)
576,097
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
127
STATEMENT OF FINANCIAL
POSITION
Sopharma
AD
Veta
Pharma
AD
Adjustments
at merger
Combined
statement of
financial
position
31
December
2023
BGN'000
31
December
2023
BGN'000
31
December
2023
BGN'000
31
December
2023
BGN'000
LIABILITIES
Non-current liabilities
Long-term bank loans
35,698
-
-
35,698
Deferred tax liabilities
3,304
(7)
172
3,469
Government grants
4,791
160
(16)
4,935
Lease liabilities to related parties
14,774
-
-
14,774
Lease liabilities to third parties
2,250
-
-
2,250
Long-term obligations to personnel
5,274
77
-
5,351
66,091
230
156
66,477
Current liabilities
Short-term bank loans
44,838
-
-
44,838
Current portion of long-term bank loans
854
-
-
854
Trade payables
21,723
268
-
21,991
Payables to related parties
100,043
67
(1)
100,109
Tax payables
2,515
3
(92)
2,426
Payables to personnel and for social
security
10,581
91
-
10,672
Other current liabilities
51,787
-
16
51,803
232,341
429
(77)
232,693
TOTAL LIABILITIES
298,432
659
79
299,170
TOTAL EQUITY AND LIABILITIES
874,557
5,492
(4,782)
875,267
The adjustments made to the statements of financial position of the two companies for the purpose of
combining them are mainly the result of: a) unification of the accounting policy and b) elimination of the
investments in a subsidiary and of intra-group accounts and balances between the companies, including the
effects on deferred taxes related thereto. The net effect on accumulated profit as at 1 January 2024 is a loss
of BGN 7,619 thousand, formed as follows:
• loss of BGN 7,446 thousand on the merger of Biopharm Engineering AD in 2023;
• loss of BGN 173 thousand on the merger of Veta Pharma AD in 2024.
43.2.Comparatives
The financial statements of Sopharma AD (receiving company) for year 2024 contains restatement of the
comparative data for 2023 and the earliest comparable period – 1 January 2023, solely for the purpose of
comparability. These restatements were made in order to combine data in: a) statement of financial position
as at 31 December 2023; b) statement of comprehensive income for the year ended 31 December 2023; c)
statement of cash flow for the year ended 31 December 2023 and d) statement of financial position as at 1
January 2023 of the two companies, as if the transforming and receiving company were always combined.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
128
The effects of the merger in the respective statements are presented as follows:
a) statement of financial position as at 31 December 2023
The data from the opening statement of financial position as at 1 January 2024 is presented as comparative
data as at 31 December 2023 in this statement (Note 43.1).
b)statement of comprehensive income for the year ended 31 December 2023:
STATEMENT OF COMPREHENSIVE
INCOME
Sopharma
AD
Veta
Pharma AD
Adjustments
at merger
Combined
statement of
comprehensive
income
2023
BGN'000
2023
BGN'000
2023
BGN'000
2023
BGN'000
Revenue
250,020
3,256
-
253,276
Other operating income/(losses), net
16,133
191
(26)
16,298
Changes in inventories of finished goods and work in
progress
11,967
(18)
-
11,949
Raw materials and consumables used
(85,392)
(1,416)
2
(86,806)
Hired services expense
(46,121)
(590)
-
(46,711)
Employee benefits expense
(67,239)
(1,172)
5
(68,406)
Depreciation and amortisation expense
(20,965)
(235)
(263)
(21,463)
Other operating expenses
(8,770)
(27)
(74)
(8,871)
Profit from operations
49,633
(11)
(356)
49,266
Net gain/(loss) on investments in subsidiaries and
associates
2,400
-
-
2,400
Impairment of non-current assets
(1,991)
-
-
(1,991)
Finance income
7,795
-
(197)
7,598
Finance costs
(3,635)
(3)
1
(3,637)
Finance income/(costs), net
4,160
(3)
(196)
3,961
Profit income tax
54,202
(14)
(552)
53,636
Income tax expense
Profit income tax
(6,081)
1
14
(6,066)
Net profit for the year
48,121
(13)
(538)
47,570
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
129
STATEMENT OF COMPREHENSIVE
INCOME
Sopharma
AD
Veta
Pharma AD
Adjustments
at merger
Combined
statement of
comprehensive
income
2023
BGN'000
2023
BGN'000
2023
BGN'000
2023
BGN'000
Other comprehensive income:
Items that will not be reclassified to profit or loss:
(Loss)/ Gain on revaluation of property, plant and
equipment
33
-
-
33
Net change in the fair value of other long-term equity
investments
1,766
-
-
1,766
Remeasurement of defined benefit pension plans
(855)
-
(5)
(860)
Income tax relating to items of other comprehensive
income that will not be reclassified
(3)
-
-
(3)
Other comprehensive income for the year, net of
tax
941
-
(5)
936
TOTAL COMPREHENSIVE INCOME FOR THE
YEAR
49,062
(13)
(543)
48,506
The effect on the total comprehensive income for year 2023 as a result from the merger of the subsidiary
amounts to BGN 556 thousand, formed as follows:
a) the total comprehensive income for the year of Veta Pharma AD is a loss of BGN 13 thousand;
b) the effects of the eliminations of intragroup transactions between the two companies and the
deferred tax related thereto amount to a loss of BGN 543 thousand.
c)statement of cash flows for the year ended 31 December 2023:
STATEMENT OF CASH FLOWS
Sopharma
AD
Veta
Pharma AD
Adjustments
at merger
Combined
statement of
cash flows
2023
BGN'000
2023
BGN'000
2023
BGN'000
2023
BGN'000
Cash flows from operating activities
Cash receipts from customers
244,819
4,136
(57)
248,898
Cash paid to suppliers
(162,725)
(5,350)
57
(168,018)
Cash paid to employees and for social
security
(64,262)
(1,160)
-
(65,422)
Taxes paid (except income taxes)
(10,433)
(11)
-
(10,444)
Taxes refunded (except income taxes)
2,361
2,468
-
4,829
Income taxes (paid)/refunded, net
(8,205)
-
-
(8,205)
Interest and bank charges paid on working
capital loans
(2,222)
-
-
(2,222)
Foreign currency exchange gains/(losses), net
(460)
(1)
-
(461)
Other proceeds/(payments), net
(1,480)
(2)
(300)
(1,782)
Net cash flows from operating activities
(2,607)
80
(300)
(2,827)
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
130
STATEMENT OF CASH FLOWS
Sopharma
AD
Veta
Pharma AD
Adjustments
at merger
Combined
statement of
cash flows
2023
BGN'000
2023
BGN'000
2023
BGN'000
2023
BGN'000
Cash flows from investing activities
Purchases of property, plant and equipment
(13,405)
(19)
-
(13,424)
Proceeds from sales of property, plant and
equipment
14,658
-
-
14,658
Purchases of intangible assets
(2,089)
-
-
(2,089)
Purchase of investment property
(290)
-
-
(290)
Purchases of shares in associates
(27,933)
-
-
(27,933)
Proceeds from sale of shares in associates
2,845
-
-
2,845
Purchase of other long-term equity
investments
(13,440)
-
-
(13,440)
Proceeds from sale of other long-term equity
investments
578
-
-
578
Purchases of shares in subsidiaries
(7,606)
-
-
(7,606)
Proceeds from sales of shares in subsidiaries
218
-
-
218
Proceeds from dividends from investments in
subsidiaries
197
-
(197)
-
Proceeds from dividends from investments in
associates
1,488
-
-
1,488
Proceeds from dividends from equity
investments
26
-
-
26
Loans granted to related parties
(25,704)
-
-
(25,704)
Loan repayments by related parties
39,039
-
-
39,039
Loans granted to third parties
(2,740)
-
-
(2,740)
Interest received on granted loans
2,393
-
-
2,393
Interest received on deposits
946
946
Granted additional recoverable shares in
subsidiaries
(9,134)
-
-
(9,134)
Proceeds from guarantor contract fees
424
-
-
424
Net cash flows from/(used in) investing
activities
(39,529)
(19)
(197)
(39,745)
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
131
STATEMENT OF CASH FLOWS
Sopharma
AD
Veta
Pharma AD
Adjustments
at merger
Combined
statement of
cash flows
2023
BGN'000
2023
BGN'000
2023
BGN'000
2023
BGN'000
Cash flows from financing activities
Proceeds from capital issue
156,084
-
-
156,084
Proceeds from long-term bank loans
36,565
-
-
36,565
Repayment of long-term bank loans
(2,337)
-
-
(2,337)
(Repayment) / Proceeds from short-term bank
loans (overdraft), net
33,063
-
-
33,063
Interest and charges on investment loans
(89)
-
-
(89)
Treasury shares
(5,252)
-
-
(5,252)
Dividend payments and unexercised warrant
rights
(71,889)
(197)
197
(71,889)
Lease payments to related parties
(1,929)
-
-
(1,929)
Lease payments to third parties
(864)
-
-
(864)
Government grants for agricultural land
36
-
-
36
Proceeds/(payments), net, related to other
equity components (warrants)
(791)
-
-
(791)
Net cash flows from/(used in) financing
activities
142,597
(197)
197
142,597
Net increase/(decrease) in cash and cash
equivalents
100,461
(136)
(300)
100,025
Cash and cash equivalents at 1 January
4,893
1,469
-
6,362
Cash and cash equivalents at 31 December
105,354
1,333
(300)
106,387
The adjustments made in the statement of cash flows are primarily the result of the elimination of cash flows
related to intragroup transactions between the two companies.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
132
d) statement of financial position at 1 January 2023:
The assets and liabilities of the two companies combined as at 1 January 2023, in terms of structure and
amount, are as follows:
STATEMENT OF
FINANCIAL POSITION
Sopharma
AD
Biopharm
Engineering
AD
Veta
Pharma
AD
Adjust-
ments at
merger
Combined
statement of
financial
position
1 January
2023
BGN'000
1 January
2023
BGN'000
1 January
2023
BGN'000
1 January
2023
BGN'000
1 January
2023
BGN'000
ASSETS
Non-current assets
Property, plant and equipment
217,894
11,738
2,764
386
232,782
Intangible assets
4,247
-
-
2,309
6,556
Investment property
49,267
-
-
-
49,267
Investments in subsidiaries
90,235
-
-
(13,865)
76,370
Investments in associates and
joint ventures
69,372
-
-
-
69,372
Other long-term equity
investments
4,706
-
-
-
4,706
Long-term receivables from
related parties
67,471
-
-
-
67,471
Other long-term receivables
3,526
-
-
-
3,526
506,718
11,738
2,764
(11,170)
510,050
Current assets
Inventories
82,618
142
563
(2)
83,321
Receivables from related parties
74,682
6
222
(6,647)
68,263
Trade receivables
18,095
26
1
(6)
18,116
Loans granted to third parties
8,317
-
-
-
8,317
Other receivables and
prepayments
6,057
21
634
-
6,712
Cash and cash equivalents
4,761
132
1,469
-
6,362
194,530
327
2,889
(6,655)
191,091
TOTAL ASSETS
701,248
12,065
5,653
(17,825)
701,141
EQUITY AND LIABILITIES
EQUITY
Share capital
134,798
5,540
4,540
(10,080)
134,798
Premium reserve
-
1,091
-
(1,091)
-
Treasury shares
(52,203)
-
-
-
(52,203)
Reserves
461,449
788
284
(773)
461,748
Other equity components
12,488
-
-
-
12,488
Retained earnings
43,843
(8,596)
220
1,172
36,639
600,375
(1,177)
5,044
(10,772)
593,470
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
133
STATEMENT OF
FINANCIAL POSITION
Sopharma
AD
Biopharm
Engineering
AD
Veta
Pharma
AD
Adjust-
ments at
merger
Combined
statement of
financial
position
1 January
2023
BGN'000
1 January
2023
BGN'000
1 January
2023
BGN'000
1 January
2023
BGN'000
1 January
2023
BGN'000
LIABILITIES
Non-current liabilities
Long-term bank loans
-
1,860
-
-
1,860
Deferred tax liabilities
4,728
375
(6)
195
5,292
Government grants
3,587
2,409
179
(20)
6,155
Lease liabilities to related parties
14,739
-
-
-
14,739
Lease liabilities to third parties
594
-
-
-
594
Retirement benefit obligations
4,192
148
62
-
4,402
27,840
4,792
235
175
33,042
Current liabilities
Short-term bank loans
11,734
-
-
-
11,734
Current portion of long-term
bank loans
-
468
-
-
468
Trade payables
40,031
18
225
-
40,274
Payables to related parties
2,632
7,248
56
(7,248)
2,688
Tax payables
885
7
6
-
898
Payables to personnel and for
social security
9,410
394
87
-
9,891
Other current payables
8,341
8
-
327
8,676
Government grants
-
307
-
(307)
-
73,033
8,450
374
(7,228)
74,629
TOTAL LIABILITIES
100,873
13,242
609
(7,053)
107,671
TOTAL EQUITY AND
LIABILITIES
701,248
12,065
5,653
(17,825)
701,141
The adjustments made to the statements of financial position of the three companies for the purpose of their
combination are mainly the result of: a) unification of the accounting policy and b) elimination of the
investments in the subsidiaries and of intra-group accounts and balances between the three companies,
including the effects on deferred taxes related thereto. The net effect on profit accumulated as at 1 January
2023 is a loss of BGN 7,204 thousand, formed as follows:
• loss on the merger of Biopharm Engineering AD – at the amount of BGN 7,574 thousand;
• gain on the merger of Veta Pharma AD – at the amount of BGN 370 thousand.
The effect on the revaluation reserve of PPE as at 1 January 2023 is an increase of BGN 299 thousand, formed
of:
• the merger of Biopharm Engineering AD – at the amount of BGN 154 thousand;
• the merger of Veta Pharma AD – at the amount of BGN 145 thousand.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
134
44. FINANCIAL RISK MANAGEMENT
In the ordinary course of business, the Company 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 Company.
The financial risks are currently identified, measured and monitored through various control mechanisms in
order to establish adequate prices for the Company’s finished products and services 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 Company’s management following the policy adopted by the
Board of Directors. The latter has approved the basic principles of general financial risk management, on the
basis of which specific procedures have been established for management of the different types of specific
risk such as currency, price, interest, credit and liquidity risk and the risk in using non-derivative instruments.
The structure of financial assets and liabilities is as follows:
Categories of financial instruments
Financial assets
31.12.2024
31.12.2023
BGN '000
BGN '000
Financial assets at fair value through other
comprehensive income, incl.:
11,976
3,870
Equity investments
11,976
3,870
Financial assets held for trading
1
-
Financial assets at amortised cost, incl.:
159,754
288,273
Receivables and loans granted
146,901
181,586
Long-term receivables from related parties
16,771
62,664
Other long-term receivables
7,053
3,357
Receivables from related parties
83,105
84,839
Trade receivables
23,758
18,784
Loans to third parties
11,552
11,203
Other current receivables
4,662
739
Cash and cash equivalents
12,853
106,687
Total financial assets
171,731
292,143
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
135
Financial liabilities
31.12.2024
31.12.2023
BGN '000
BGN '000
Financial liabilities at amortised cost, incl.:
Long-term and short-term bank loans
176,891
81,390
Lease liabilities to related parties
17,065
16,507
Lease liabilities to third parties
2,769
3,195
Other loans and liabilities, incl.
105,133
164,465
Trade payables
103,330
21,537
Payables to related parties
548
98,376
Other current payables
1,255
44,552
Total financial liabilities
301,858
265,557
At 31 December 2024, recognised liabilities under financial guarantees amount at BGN 230 thousand (31
December 2023: BGN 674 thousand) (Note 41).
The impairment losses/(gains) net of reversed, related to financial assets and financial guarantees recognised
in the statement of comprehensive income are as follows:
2024
2023
BGN '000
BGN '000
Loans granted at amortised cost (Note 12)
674
808
Loss on remeasurement of financial assets to fair value (Note
12)
245
-
Receivables under guarantor contracts (Note 12)
1
2
Financial guarantees granted (Note 11)
(444)
(1,284)
Receivables from clients (Note 9)
(2,230)
957
Total
(1,754)
483
Credit risk
Credit risk is the risk that any of the Company's clients will fail to discharge in full and within the normally
envisaged terms the amounts due.
The Company’s credit risk arises both from its operating activities, through its trade receivables, and from its
financing activities, including granting loans to related and third parties, commitments undertaken under
loans and guarantees, and bank deposits. The Company has developed policies, procedures and rules for
credit risk control and monitoring.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
136
Trade receivables
In its commercial practice, the Company has applied different distribution schemes until arriving at the
current effective approach that takes into consideration the market operational condition, the various payment
methods, and the inclusion of sales rebates. The Company 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 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 Company’s credit policy envisages assessing each new customer’s creditworthiness before proposing
standard delivery and payment conditions.
Expected credit losses are calculated at the date of each reporting period.
The Company 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 Company 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 Company does
not have a practice to request collateral of trade receivables, and does not insure them.
Second, the Company 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.
In view of the short-term horizon of receivables, the management’s analysis of scenarios shows that the
impact of changes in the macroeconomic environment on the provisioning matrix are insignificant in their
amount as at 31 December 2024.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
137
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, 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, guarantor contracts 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. The assessment of the credit risk of loans and guarantor contracts 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, guarantor contracts and financial guarantees granted, and of certain
individual trade receivables, the Company’s management has developed a methodology that includes two
main components: determining the debtor’s credit rating, and statistical models for calculating marginal PR
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 Company 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
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
138
• 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 Company’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
• 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 Company’s expected
credit losses.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
139
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 Company 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 Company’s financial assets, contract assets and financial guarantee
contracts, as well as the maximum exposure to credit risk according to the credit rating adopted as at 31
December 2024:
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
140
Financial assets
Notes
Internal credit
risk
categorisation
Expected
credit losses
(IFRS 9)
Gross
carrying
amount
Impairment
loss
(allowance)
Carrying
amount at
31
December
2024
BGN '000
BGN '000
BGN '000
Trade receivables from
related parties
24
N/A
For a 12-
month period
87,320
(4,284)
83,036
Trade receivables from
third parties
25
N/A
For a 12-
month period
20,045
(1,177)
18,868
Long-term receivables
from third parties on
securities transactions
22
N/A
For a 12-
month period
4,229
(41)
4,188
Short-term loans granted
to third parties
26 (a)
Renegotiated
Stage 2
Lifetime
11,329
(81)
11,248
Receivables from
recoverable share
payments
21
N/A
For a 12-
month period
6,385
-
6,385
Receivables under
cession agreements from
third parties
25
N/A
For a 12-
month period
4,890
-
4,890
Receivables under
cession agreements from
related parties
21
N/A
For a 12-
month period
4,011
-
4,011
Long-term loans granted
to related parties
21
Regular
Stage 1
For a 12-
month period
3,016
-
3,016
Long-term loans granted
to third parties
22
Regular
Stage 1
For a 12-
month period)
2,865
-
2,865
Long-term receivables
from related parties under
transactions in securities
21
N/A
For a 12-
month period
2,843
-
2,843
Receivables under
deposits for leases
21
N/A
For a 12-
month period
516
-
516
Short-term loans granted
to third parties
26 (a)
Regular
Stage 1
For a 12-
month period
304
-
304
Receivables under
guarantor contracts and
guarantees to related
parties
24
N/A
For a 12-
month period
74
(5)
69
Short-term loans granted
to related parties
24
Renegotiated
Stage 2
Lifetime
(credit-
impaired)
3,052
(3,052)
-
Other receivables from
related parties
24
N/A
For a 12-
month period
160
(160)
-
Total:
151,039
(8,800)
142,239
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
141
The table below presents the quality of the Company’s financial assets, contract assets and financial guarantee
contracts, as well as the maximum exposure to credit risk according to the credit rating adopted as at 31
December 2023:
Financial assets
Notes
Internal credit
risk
categorisation
Expected
credit losses
(IFRS 9)
Gross
carrying
amount
Impairment
loss
(allowance)
Carrying
amount at
31
December
2023
BGN '000
BGN '000
BGN '000
Trade receivables from
related parties
24
N/A
For a 12-
month period
76,149
(4,194)
71,955
Long-term loans granted
to related parties
21
Regular
Stage 1
For a 12-
month period
49,070
(117)
48,953
Trade receivables from
third parties
25
N/A
For a 12-
month period
17,431
(3,481)
13,950
Long-term receivables
from third parties on
securities transactions
22
N/A
For a 12-
month period
3,540
(183)
3,357
Short-term loans to
related parties
24
Renegotiated
Stage 2
Lifetime
(credit-
impaired)
10,909
(2,169)
8,740
Receivables from
recoverable share
payments
21
N/A
For a 12-
month period
9,311
-
9,311
Short-term loans granted
to third parties
26 (a)
Renegotiated
Stage 2
Lifetime
(credit-
impaired)
8,516
(4)
8,512
Receivables under
cession agreements from
third parties
25
N/A
For a 12-
month period
4,890
(56)
4,834
Short-term loans granted
to related parties
24
Regular
Stage 1
For a 12-
month period
4,067
-
4,067
Receivables under
cession agreements from
related parties
21
N/A
For a 12-
month period
3,884
-
3,884
Short-term loans to third
parties
26 (a)
Regular
Stage 1
For a 12-
month period
2,770
(79)
2,691
Receivables under
deposits for leases
21
N/A
For a 12-
month period
516
-
516
Receivables under
guarantor contracts and
guarantees to related
parties
24
N/A
For a 12-
month period
81
(4)
77
Other receivables from
related parties
24
N/A
For a 12-
month period
160
(160)
-
Total:
191,294
(10,447)
180,847
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
142
The table below provides information about the Company’s exposure to credit risk and the impairment of
credit losses on loans granted and trade receivables as at 31 December 2024:
Category
Internal credit
risk
categorisation
Average
expected
impairment
loss
Gross
carrying
amount at 31
December
2024
Impairment
loss
(allowance) at
31 December
2024
BGN '000
BGN '000
Trade receivables and receivables on securities
transactions
N/A
4,81%
114,437
(5,502)
Renegotiated loans (Stage 2)
B3
0.71%
11,329
(81)
Receivables from recoverable share payments
N/A
0.00%
6,385
-
Receivables under cession agreements from third
parties
N/A
0.00%
4,890
-
Court and awarded receivables
N/A
10.25%
4,635
(475)
Receivables under cession agreements from related
parties
N/A
0.00%
4,011
-
Renegotiated loans (Stage 2)
Caa1
100.00%
3,052
(3,052)
Regular loans (Stage 1)
Ba3
0.00%
3,016
-
Regular loans (Stage 1)
Caa1
0.00%
2,865
-
Receivables under deposits for leases
N/A
0.00%
516
-
Regular loans (Stage 1)
B3
0.00%
304
-
Receivables under guarantor contracts and
guarantees to related parties
N/A
6.76%
74
(5)
Other receivables from related parties
N/A
100.00%
160
(160)
Total:
155,674
(9,275)
The table below provides information about the Company’s exposure to credit risk and the impairment of
credit losses on loans granted and trade receivables as at 31 December 2023:
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
143
Category
Internal credit
risk
categorisation
Average
expected
impairment
loss
Gross carrying
amount at 31
December 2023
Impairment loss
(allowance) at 31
December 2023
BGN '000
BGN '000
Trade receivables and receivables on securities
transactions
N/A
8.09%
97,120
(7,858)
Regular loans (Stage 1)
B3
0.45%
43,788
(196)
Renegotiated loans (Stage 2)
Caa1
19.36%
11,129
(2,155)
Receivables from recoverable share payments
N/A
0.00%
9,311
-
Renegotiated loans (Stage 2)
B3
0.04%
8,281
(3)
Regular loans (Stage 1)
Ba3
0.00%
8,052
-
Receivables under cession agreements from third
parties
N/A
1.15%
4,890
(56)
Regular loans (Stage 1)
Baa3
0.00%
4,067
-
Receivables under cession agreements from related
parties
N/A
0.00%
3,884
-
Receivables under deposits for leases
N/A
0.00%
516
-
Uncollectable trade receivables (court and awarded
receivables)
N/A
100.00%
481
(481)
Other receivables from related parties
N/A
100.00%
160
(160)
Receivables under guarantor contracts and
guarantees to related parties
N/A
4.94%
81
(4)
Regular loans (Stage 2)
Caa1
100.00%
15
(15)
Total:
191,775
(10,928)
The Company has concentration of receivables from related parties (trade receivables and loans), as follows:
31.12.2024
31.12.2023
Client 1
70%
39%
Client 2
3%
42%
The Company monitors concentration of receivables from related parties on a current basis by applying credit
limits and additional collaterals in the form of pledge on securities and other assets and applying promissory notes.
The Company has concentration of trade receivables from one client which is not a related party, at the amount of
18% of all trade receivables (31 December 2023: trade receivables from one client outside the related parties –
32%).
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
144
Cash
The Company’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 (probabilities of default), 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 Company performs its activities with an active exchange with foreign suppliers and clients. Therefore, it
is exposed to currency risk mainly in respect of USD. The Company supplies part of its basic raw and other
materials in USD. The currency risk is related with the adverse floating of the exchange rate of USD 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 remaining part of Company's operations is usually denominated in BGN and/or EUR. The Company sells
a significant part of its finished products in Euro and thus eliminates the currency risk. The accounts and
balances with the subsidiaries in Ukraine are also denominated in Euro. Nevertheless, in relation with the
instability in the country and the devaluation of the Ukrainian Hryvnia, for the purpose of mitigating the
currency risk the Company, through its subsidiaries, exercises currency policy that includes the immediate
translation in EUR of proceeds in a local currency as well as using higher trade margins to compensate
eventual future devaluation of the Hryvnia.
To control foreign currency risk, the Company has introduced a system for planning import supplies, sales in
foreign currency as well as procedures for daily monitoring of US dollar exchange rate movements and
control on pending payments.
The assets and liabilities denominated in BGN and foreign currency are presented as follows:
31 December 2024
in USD
in EUR
in BGN
in other
currency
Total
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Equity investments
8,414
-
3,562
-
11,976
Receivables and loans
granted
7,116
43,370
90,030
6,385
146,901
Financial assets held for
trading
-
-
1
-
1
Cash and cash equivalents
602
10,675
1,308
268
12,853
Total financial assets
16,132
54,045
94,901
6,653
171,731
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
145
31 December 2024
in USD
in EUR
in BGN
in other
currency
Total
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Long-term and short-term
bank loans
-
119,865
57,026
-
176,891
Lease liabilities to related
parties
-
17,065
-
-
17,065
Lease liabilities to third
parties
431
2,174
10
154
2,769
Other loans and payables
3,118
92,308
7,233
2,474
105,133
Total financial liabilities
3,549
231,412
64,269
2,628
301,858
31 December 2023
in USD
in EUR
in BGN
in other
currency
Total
BGN '000
BGN '000
BGN '000
BGN '000
BGN '000
Equity investments
13
-
3,857
-
3,870
Receivables and loans
granted
7,854
35,765
128,651
9,316
181,586
Cash and cash equivalents
958
103,450
2,221
58
106,687
Total financial assets
8,825
139,215
134,729
9,374
292,143
Long-term and short-term
bank loans
-
27,065
54,325
-
81,390
Lease liabilities to related
parties
-
16,507
-
-
16,507
Lease liabilities to third
parties
297
2,647
76
175
3,195
Other loans and payables
4,672
8,466
149,900
1,427
164,465
Total financial liabilities
4,969
54,685
204,301
1,602
265,557
Foreign currency sensitivity analysis
The effect of Company’s sensitivity to 10% increase/decrease in current exchange rates of BGN to USD and
to other 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, is presented below. The final effect
has been measured and presented as impact on the post-tax financial result and on the equity.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
146
USD
31.12.2024
31.12.2023
BGN '000
BGN '000
Financial result +
1,132
347
Accumulated profits +
1,132
347
Financial result -
(1,132)
(347)
Accumulated profits -
(1,132)
(347)
In case of 10% increase in the exchange rate of USD to BGN, the final effect on post-tax profit of the
Company for 2024 would be an increase by BGN 1,132 thousand (4.01%) (2023: increase at the amount of
BGN 347 thousand) (0.73%). The same effect in terms of value would be seen on equity – 'retained earnings'
component.
On 10% decrease in the exchange rate of USD to BGN, the ultimate impact on the (post-tax) profit of the
Company would be equal and reciprocal of the stated above.
The impact of the remaining currencies (other than USD) on 10 % increase in their exchange rates to BGN
on Company’s (post-tax) profit is a decrease by BGN 3,864 thousand (-13.69%) (2023: a decrease by BGN
1,735 thousand (-3.65%). The effect on equity is of the same amount and in a direction of increase / decrease
and reflects in the component 'retained earnings'.
The management is of the opinion that the presented above currency sensitivity analysis, based on the balance
sheet structure of foreign currency denominated assets and liabilities, is representative for the currency
sensitivity of the Company for the year.
Price risk
On the one hand, the Company is exposed to price risk due to two main factors:
(a) contingent increase of supplier prices of raw and starting materials, since more than 80% of the raw and
starting materials are imported and they represent 50% on the average of all production costs; and
(b) growing competition on the Bulgarian pharmaceutical market is also reflected in drug prices.
For the purpose of mitigating this influence, the Company applies a strategy aimed at optimization 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.
On the other hand, the Company is exposed to a price risk related to the held thereby shares, classified as
other long-term equity investments.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
147
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. At this stage,
because of the economic and financial crisis, the management has taken a decision for a significant 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.
Liquidity risk
Liquidity risk is the adverse situation when the Company encounters difficulty in meeting unconditionally all
of its obligations within their maturity.
The Company generates and maintains a sufficient volume of liquid funds. An internal source of liquid funds
for the Company is its main economic activity generating sufficient operational flows. Banks and other
permanent counterparts represent external sources of funding. The company has no agreements to finance
payments to its suppliers. To isolate any possible liquidity risk, the Company 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 complemented by the monitoring of due dates
and maturity of assets and liabilities as well as control of cash outflows.
Maturity analysis
The table below presents the financial non-derivative liabilities of the Company, grouped by remaining term
to maturity, determined against the contractual maturity at the reporting 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 interest.
31 December 2024
up to 1
month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 2
years
2 to 5
years
over 5
years
Total
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN '000
BGN '000
BGN '000
Long-term and short-
term bank loans
79,231
1,204
1,825
77,055
5,364
15,471
-
180,150
Lease liabilities to
related parties
188
377
565
1,131
2,261
6,783
6,625
17,930
Lease liabilities to
third parties
76
153
229
459
784
1,121
-
2,822
Other loans and
payables
10,834
6,121
86,022
2,156
-
-
-
105,133
Total liabilities
90,329
7,855
88,641
80,801
8,409
23,375
6,625
306,035
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
148
31 December 2023
up to 1
month
1 to 3
months
3 to 6
months
6 to 12
months
1 to 2 years
2 to 5
years
over 5
years
Total
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN '000
BGN '000
BGN '000
Long-term and
short-term bank
loans
300
453
669
45,834
28,060
243
9,535
85,094
Lease liabilities to
related parties
161
321
482
965
1,929
5,786
7,796
17,440
Lease liabilities to
third parties
82
169
276
491
799
1,510
-
3,327
Other loans and
payables
158,697
3,944
1,234
590
-
-
-
164,465
Total liabilities
159,240
4,887
2,661
47,880
30,788
7,539
17,331
270,326
Risk of interest-bearing cash flows
Interest-bearing assets are presented in the structure of Company's assets by cash, bank deposits and loans granted,
which are with fixed interest rate. Company's borrowings in the form of long-term and short-term loans are usually
with a floating interest rate. Operating lease liabilities have both variable and fixed interest rates. This circumstance
makes the cash flows of the Company partially dependent on interest risk. This risk is covered in two ways:
(a) optimisation of the sources 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, can be achieved and maintained in a
proportion favourable for the Company. The fixed component has a relatively low absolute value and
sufficiently high relative share in the total interest rate. 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 Company's management currently monitors and analyses its exposure to changes in interest rates. 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.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
149
31 December 2024
interest-free
with floating
with fixed
Total
interest %
interest %
BGN '000
BGN '000
BGN '000
BGN '000
Equity investments
11,976
-
-
11,976
Receivables and loans granted
120,719
-
26,182
146,901
Financial assets held for trading
1
-
-
1
Cash and cash equivalents
176
12,677
-
12,853
Total financial assets
132,872
12,677
26,182
171,731
Long-term and short-term loans
246
176,645
-
176,891
Lease liabilities to related parties
-
-
17,065
17,065
Lease liabilities to third parties
-
21
2,748
2,769
Other loans and liabilities
105,133
-
-
105,133
Total financial liabilities
105,379
176,666
19,813
301,858
31 December 2023
interest-free
with
floating
with fixed
Total
interest %
interest %
BGN '000
BGN '000
BGN '000
BGN '000
Equity investments
3,870
-
-
3,870
Receivables and loans granted
98,131
-
83,455
181,586
Cash and cash equivalents
265
6,120
100,302
106,687
Total financial assets
102,266
6,120
183,757
292,143
Long-term and short-term loans
80
81,310
-
81,390
Lease liabilities to related parties
-
-
16,507
16,507
Lease liabilities to third parties
-
62
3,133
3,195
Other loans and liabilities
164,465
-
-
164,465
Total financial liabilities
164,545
81,372
19,640
265,557
The table below demonstrates the Company's sensitivity to possible changes in interest rates by 0.50 points 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.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
150
2024
Increase/
Impact on
Impact on
decrease in
post-tax
equity
interest rate
financial result
profit/(loss)
increase/(decrease)
EUR
Increase
(626)
(626)
BGN
Increase
(259)
(259)
USD
Increase
(2)
(2)
AZN
Increase
(1)
(1)
EUR
Decrease
626
626
BGN
Decrease
259
259
USD
Decrease
2
2
AZN
Decrease
1
1
2023
Increase/
Impact on
Impact on
decrease in
post-tax
equity
interest rate
financial result
profit/(loss)
increase/(decrease)
EUR
Increase
(208)
(208)
BGN
Increase
(246)
(246)
AZN
Increase
(1)
(1)
USD
Increase
(1)
(1)
EUR
Decrease
208
208
BGN
Decrease
246
246
AZN
Decrease
1
1
USD
Decrease
1
1
Capital risk management
The capital management objectives of the Company 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.
The Company 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 the difference
between total borrowings, as presented in the statement of financial position, and cash and cash equivalents.
Total employed capital is calculated as the sum of equity and net debt.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
151
In 2024 the Company implemented a large-scale investment programme, as a result of which the gearing ratio
increased significantly compared to prior years.
The table below shows the gearing ratios based on capital structure:
2024
2023
BGN '000
BGN '000
Total borrowings, including:
196,725
101,092
bank loans
176,891
81,390
lease liabilities to related parties
17,065
16,507
lease liabilities to third parties
2,769
3,195
Less: Cash and cash equivalents
(12,853)
(106,687)
Net debt
183,872
(5,595)
Total equity
608,557
576,097
Total capital
792,429
570,502
Gearing ratio
0.23
(0.01)
The cash and liabilities shown in the table are disclosed in Notes 28, 30, 33, 34, 36, 38 and 41.
Fair value measurement
The fair value concept presumes realisation of financial assets through a sale based on the position,
assumptions and judgments of independent market participants in a principal or most advantageous market
for a particular asset or liability. The Company acknowledges as a principal market for its financial assets
and liabilities the financial market in Bulgaria – the Bulgarian Stock Exchange, the large commercial banks
– dealers, and for some specific instruments – direct transactions between the parties. However, in most cases
especially in regard of trade receivables and payables as well as loans and deposits, the Company expects to
realise these financial assets also through their total refund or respectively, settlement over time. Therefore,
they are presented at amortised cost.
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 statement of financial position at market
value determined by applying a particular valuation method (investments in securities, loans with floating
interest rate) and therefore, their fair value is almost equal to their carrying amount. Therefore, they are
presented at acquisition cost (cost). With regard to loans, extended with fixed interest rate, the method used
for setting this rate uses as a starting point for the calculations the current observations of the Company with
regard to the market interest levels.
As far as the Bulgarian market of various financial instruments is still not sufficiently active – with stability,
satisfactory volumes and liquidity for purchases and sales of certain financial assets and liabilities – there are
no sufficient and reliable market price quotations for them, and for this reason, the Company uses other
alternative valuation methods and techniques.
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
152
Company's management 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.
45. SEGMENT REPORTING
Company’s segment reporting is organised on the basis of the production of main groups of finished products:
• Tablet dosage forms
• Ampoule dosage forms
• Medical products
• Other dosage forms
• Other revenue
Medical products include: plasters, sanitary and hygienic products, dressings, and medical cosmetics.
The other dosage forms include: lyophilic products, ointments, syrups, drops, suppositories, inhalers,
haemodialysis concentrates, sachets, substances, infusion solutions, veterinary vaccines, solutions and
chemical substances and mixtures.
Other revenue includes revenue from assets leased.
Segment revenue, expenses and results include:
Tablet dosage forms
Ampoule dosage forms
Other forms
Medical products
Other revenue
Total
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Segment
revenue
156,355
166,506
28,751
32,254
36,735
39,544
12,817
12,669
2,938
2,303
237,596
253,276
Segment cost
(59,561)
(68,215)
(24,032)
(24,625)
(21,123)
(22,618)
(9,202)
(8,703)
(183)
(175)
(114,101)
(124,336)
Segment result
96,794
98,291
4,719
7,629
15,612
16,926
3,615
3,966
2,755
2,128
123,495
128,940
Non-allocated operating income
19,571
16,298
Non-allocated operating expenses
(114,762)
(95,972)
Profit from operations
28,304
49,266
Net gain/(loss) on sale of investments in
subsidiaries and associates
5,213
2,400
Impairment of non-current assets outside the
scope of IFRS 9
(234)
(1,991)
Finance income/(costs), net
(749)
3,961
Profit before income tax
32,534
53,636
Income tax expense
(4,307)
(6,066)
Net profit for the year
28,227
47,570
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
153
Segment assets include:
Segment liabilities include:
Tablet dosage forms
Ampoule dosage forms
Other dosage forms
Medical products
Other revenue
Total
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Government grants
2,020
2,208
1,100
1,300
1,759
1,954
56
66
-
-
4,935
5,528
Payables to personnel
551
651
350
384
637
673
61
64
-
-
1,599
1,772
Social security payables
217
252
169
200
266
279
28
27
-
-
680
758
Segment liabilities
2,788
3,111
1,619
1,884
2,662
2,906
145
157
-
-
7,214
8,058
Non-allocated liabilities
326,457
291,112
Total liabilities
333,671
299,170
The capital expenditures, depreciation/amortisation and non-monetary expenses other than
depreciation/amortisation by business segment include:
Tablet dosage forms
Ampoule dosage
forms
Other dosage forms
Medical products
Other revenue
Total
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Capital expenditures
600
643
5,016
1,617
5,119
1,779
15
35
330
241
11,080
4,315
Depreciation and amortisation
4,834
5,005
2,389
2,369
2,794
2,988
308
297
91
87
10,416
10,746
Non-monetary expenses, other
than depreciation and
amortisation
4,157
1,508
1,239
516
2,491
2,604
133
78
1
-
8,021
4,706
Tablet dosage forms
Ampoule dosage forms
Other dosage forms
Medical products
Other revenue
Total
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
2024
2023
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Property, plant
and equipment
54,220
58,567
21,123
18,566
34,474
33,603
2,122
2,288
1,324
1,175
113,263
114,199
Investment
property
-
-
-
-
-
-
-
-
50,512
49,886
50,512
49,886
Inventories
59,363
55,931
19,433
17,257
22,707
21,586
4,306
4,344
-
-
105,809
99,118
Segment
assets
113,583
114,498
40,556
35,823
57,181
55,189
6,428
6,632
51,836
51,061
269,584
263,203
Non-allocated assets
672,664
612,064
Total assets
942,228
875,267
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
154
46. RELATED PARTY TRANSACTIONS
The companies related to Sopharma AD and the type and period of their relationship are as follows:
Related parties
Relation type
Relation period
Donev Investments Holding AD
Shareholder with significant influence
2023 and 2024
Telecomplect Invest AD
Shareholder with significant influence
2023 and 2024
Sopharma Trading AD
Subsidiary company
2023 and 2024
Pharmalogistica AD
Subsidiary company
2023 and until 19
December 2024
Sopharma Poland OOD – in liquidation
Subsidiary company
2023 and 2024
Electroncommerce EOOD
Subsidiary company
2023 and until 19
December 2024
Vitamina AD
Subsidiary company
2023 and 2024
Sopharma Warsaw EOOD
Subsidiary company
2023 and 2024
Sopharma Ukraine EOOD
Subsidiary company
2023 and 2024
TOO Sopharma Kazakhstan,
Kazakhstan
Subsidiary company
2023 and 2024
Phyto Palauzovo AD – in liquidation
Subsidiary company
2023 and until 7
November 2024
Sopharma Rus OOD
Subsidiary company
From 13 October 2023
and 2024
Pharmachim EOOD
Subsidiary company
2023 and 2024
Pharmanova OOD, Serbia
Subsidiary company
From 13 August 2024
Sopharma Trading OOD, Serbia
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 2 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 3 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 4 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 5 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 6 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 7 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 8 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 9 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 10 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 11 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 12 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 13 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 14 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 15 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 16 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 17 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 18 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 19 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 20 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 21 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 22 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
155
Sopharmacy 23 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 24 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 25 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 26 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 27 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 28 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 29 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 30 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 31 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 32 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 33 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 34 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 35 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 36 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 37 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 38 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 39 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 40 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 41 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 42 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 43 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 44 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 45 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 46 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 47 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 48 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 49 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 50 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 51 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 52 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 53 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 54 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 55 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 56 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 57 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 58 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 59 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 60 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 61 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 62 EOOD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 63 EAD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 64 AD
Subsidiary company through Sopharma Trading AD
2023 and 2024
Sopharmacy 65 EOOD
Subsidiary company through Sopharma Trading AD
From 13 March 2024
Sopharmacy 66 EOOD
Subsidiary company through Sopharma Trading AD
From 21 February 2024
Sopharmacy 67 EOOD
Subsidiary company through Sopharma Trading AD
From 21 February 2024
Sopharmacy 68 EOOD
Subsidiary company through Sopharma Trading AD
From 21 February 2024
Brititrade SOOO
Subsidiary company through Sopharma Trading AD
From 10 July 2024
DabradzeyaPharm OOO
Subsidiary company through Sopharma Trading AD
From 10 July 2024
Ne Ska OOO
Subsidiary company through Sopharma Trading AD
From 10 July 2024
Bellerofon OOO
Subsidiary company through Sopharma Trading AD
From 10 July 2024
AlfaApteka OOO
Subsidiary company through Sopharma Trading AD
From 10 July 2024
Fitobel OOO
Subsidiary company through Sopharma Trading AD
From 10 July 2024
Tabina OOO
Subsidiary company through Sopharma Trading AD
From 10 July 2024
Salus Line OOO
Subsidiary company through Sopharma Trading AD
From 10 July 2024
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
156
SpetsAfarmacia BOOO
Subsidiary company through Sopharma Trading AD
From 31 December
2024
Great Pharmacy Au, Serbia
Subsidiary company through Sopharma Trading AD
From 09 October 2024
AU Sopharmacy, Serbia
Subsidiary company through Sopharma Trading AD
From 30 August 2024
Sopharma Properties REIT
Associate
2023 and 2024
Doverie Obedinen Holding AD
Associate
2023 and 2024
Sopharma Buildings REIT
Associate
From 8 September 2023
and 2024
Pharmanova OOD, Serbia
Associate
From 10 November
2023 to 12 August 2024
GalenaPharm OOO
Associate through Sopharma Trading AD
From 10 July 2024
Medjel ODO
Associate through Sopharma Trading AD
From 10 July 2024
Alenpharm-Plus ODO
Associate through Sopharma Trading AD
From 10 July 2024
Momina Krepost AD
Joint venture
2023 and 2024
Company Interpharm ZAO
Associate through Sopharma Trading AD
From 10 July 2024
SpetsApharmacia BOOO
Associate through Sopharma Trading AD
From 10 July 2024 to
31 December 2024
DOH Group companies
Companies controlled by an associate
2023 and 2024
Sofprint Group AD
Company related through key management personnel
2023 and 2024
Sofconsult Group AD
Company related through key management personnel
2023 and 2024
VES Electroinvest Systems EOOD
Company related through key management personnel
2023 and 2024
Eco Solar Invest OOD
Company related through key management personnel
2023 and 2024
Alpha In EOOD
Company related through key management personnel
2023 and 2024
Consumpharm OOD
Company related through key management personnel
2023 and 2024
Veterenary Diagnostics DZZD
Civil consortia (direct interest)
2023 and 2024
DZZD "Sopharma Trading Global
Medical 2024"
Civil consortia (indirect interest) through Sopharma
Trading AD
From 04 September
2024
The sales performed by Sopharma AD to the related companies at 31 December are as follows:
Sales to related parties
2024
BGN’000
2023
BGN’000
Sales of finished products to:
Subsidiaries
129,497
126,286
129,497
126,286
Sales of goods and materials:
Subsidiaries
8,973
6,132
Companies related through key management personnel
1,149
1,219
10,122
7,351
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
157
Sales to related parties
2024
BGN’000
2023
BGN’000
Sales of investments to:
Companies related through key management personnel
4,392
-
4,392
-
Sales of services to:
Subsidiaries
3,306
2,585
Associates
-
10
Companies controlled by an associate
11
-
Companies related through key management personnel
9
8
3,326
2,603
Dividend income from:
Associates
1,603
1,488
1,603
1,488
Interest on loans granted to:
Companies controlled by an associate
719
2,170
Joint ventures
90
62
Subsidiaries
-
104
Associates
-
31
809
2,367
Interest on recoverable shares to:
Subsidiaries
718
60
718
60
Fees under guarantor contracts and guarantees to:
Subsidiaries
662
799
662
799
Interest under cession agreements to:
Joint ventures
127
127
127
127
Interest on trade receivables to:
Subsidiaries
1
-
1
-
Total sales to related parties:
151,257
141,081
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
158
The supplies performed to Sopharma AD by the related companies as at 31 December are as follows:
Supplies from related parties
2024
2023
BGN '000
BGN '000
Supply of inventories from:
Companies related through key management personnel
10,699
10,319
Joint ventures
238
224
Subsidiaries
214
1,969
Associates
94
102
Companies controlled by an associate
24
33
11,269
12,647
Supply of services from:
Subsidiaries
5,168
3,789
Companies controlled by an associate
923
739
Shareholding companies with significant influence
629
581
Associates
523
417
Companies related through key managing personnel
112
190
7,355
5,716
Supplies related to right-of-use assets from:
Associates
2,097
1,929
2,097
1,929
Expenses for acquisition of investment property from:
Companies controlled by an associate
170
-
170
-
Dividends accrued to:
Shareholding companies with significant influence
16,580
130,136
Key management personnel
2,789
17,971
19,369
148,107
Other supplies from:
Companies controlled by an associate
21
20
Subsidiaries
15
19
Shareholding companies with significant influence
6
9
Associates
-
16
42
64
Total supplies from related parties
40,302
168,463
SOPHARMA AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2024
159
The total amount of stocks/shares sold and acquired in the capital of entities related to Sopharma AD as at
31 December are as follows:
Revenues from sales of investments in:
2024
BGN’000
2023
BGN’000
Subsidiaries
5,245
218
Associates
1,721
2,845
6,966
3,063
Acquired investments in:
2024
BGN’000
2023
BGN’000
Subsidiaries
9,403
7,606
Associates
685
27,933
10,088
35,539
The accounts and balances with related parties are presented in Notes 21, 24, 33 and 38.
The members of the key personnel are disclosed in Note 1.
Salaries and other short-term benefits of key managing personnel at the amount of BGN 1,928 thousand
(2023: BGN 1,913 thousand) are as follows:
• current wages and salaries – BGN 1,447 thousand (2023: BGN 1,519 thousand);
• tantieme – BGN 481 thousand (2023: BGN 394 thousand).
47. EVENTS AFTER THE REPORTING PERIOD
In November 2024, a final capital increase procedure was launched by issuing up to 623,779 ordinary,
registered, dematerialised, freely transferable shares provided that the shares from the increase are subscribed
by the holders of ISIN 9200001212 warrants, in accordance with the terms and conditions described in the
Prospectus for Public Offering of Warrants. The exercise period of the warrants ended on 13 January 2025
and the proceeds in the funds-raising account amounted to BGN 2,557 thousand.
On 27 January 2025, the increase of the Company's capital was registered in the Commercial Register by
issuing 619,138 ordinary, registered, dematerialised, voting shares with a nominal value of BGN 1 each and
an issue value of BGN 4.13 per share.
The outstanding 4,641 warrants amounting to BGN 19 thousand have been deregistered with the Central
Depository.
Sopharma AD has established a subsidiary company, SophTech Services EOOD, in which it has 100%
shareholding. On 28 February 2025 the newly established company was registered in the Commercial
Register with a share capital of BGN 100 thousand.
No other significant events have occurred after the reporting period date that would require additional
adjustments and/or disclosures in the Company's separate financial statements for the year ended 31
December 2024.
“SOPHARMA” AD
March 28, 2025
MANAGEMENT REPORT
2024
Management report – “Sopharma” AD 2024
1
Contents
1 Table of Contents
I. GENERAL INFORMATION ABOUT “SOPHARMA” AD ..................................................................................4
1. REGISTRATION AND ACTIVITY OF THE COMPANY .................................................................................................4
2. SHAREHOLDER STRUCTURE AS OF 31 DECEMBER 2024 .........................................................................................4
3. BOARD OF DIRECTORS ..................................................................................................................................4
II. RECENT DEVELOPMENTS .........................................................................................................................5
1. INDUSTRIAL ACTIVITY ...................................................................................................................................5
2. PRODUCTS ................................................................................................................................................5
III. INFORMATION UNDER ARTICLE 39 OF THE ACCOUNTANCY ACT ..............................................................6
1. AN OVERVIEW OF THE COMPANY'S PERFORMANCE AND THE MAIN RISKS IT FACES /ARTICLE 39 (1) OF THE ACCOUNTANCY
ACT/ 6
2. ANALYSIS OF FINANCIAL AND NON-FINANCIAL KEY PERFORMANCE INDICATORS OF SOPHARMA /ARTICLE 39, ITEM 2 OF THE
ACCOUNTANCY ACT/, AS WELL AS A DESCRIPTION OF THE COMPANY'S POSITION AND EXPLANATION OF THE ANNUAL FINANCIAL
STATEMENTS /ARTICLE 247 (1) OF THE COMMERCIAL LAW/ .........................................................................................8
3. SIGNIFICANT EVENTS OCCURRING AFTER THE DATE OF PREPARATION OF THE ANNUAL FINANCIAL STATEMENTS /ARTICLE 39,
PARAGRAPH 3 OF THE ACCOUNTANCY ACT/ ............................................................................................................ 20
4. FUTURE DEVELOPMENT OF “SOPHARMA” AD (ARTICLE 39, ITEM 4 OF THE ACCOUNTANCY ACT) AND STRATEGIC GOALS FOR
THE FOLLOWING YEAR (ARTICLE 247 (3) OF THE COMMERCIAL LAW) ............................................................................ 20
5. RESEARCH AND DEVELOPMENT /ARTICLE 39, ITEM 5 OF THE ACCOUNTANCY ACT/ .................................................... 21
6. INFORMATION ON THE ACQUISITION OF OWN SHARES REQUIRED BY ARTICLE 187D OF THE COMMERCIAL LAW /ARTICLE 39,
ITEM 6 OF THE ACCOUNTANCY ACT/ ..................................................................................................................... 26
7. BRANCHES OF THE COMPANY /ARTICLE 39, ITEM 7 OF THE ACCOUNTANCY ACT/ ..................................................... 27
8. USE OF FINANCIAL INSTRUMENTS /ARTICLE 39, ITEM 8 OF THE ACCOUNTANCY ACT/ ................................................. 27
IV. INFORMATION UNDER ARTICLE 247 AND ART. 240B OF THE COMMERCIAL LAW ................................... 29
1. INFORMATION UNDER ART. 247 OF THE COMMERCIAL LAW ................................................................................ 29
1. 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 WHICH SUBSTANTIALLY DEVIATE FROM MARKET CONDITIONS .................. 31
V. INFORMATION REQUIRED IN ANNEX 2 TO ART. 10, ITEM 1 OF REGULATION 2 OF LPOS .......................... 32
Management report – “Sopharma” AD 2024
2
1. INFORMATION GIVEN IN VALUE OR QUANTITATIVE TERMS CONCERNING THE MAIN CATEGORIES OF GOODS, PRODUCTS
AND/OR SERVICES PROVIDED, INCLUDING THEIR SHARE IN SALES REVENUE OF “SOPHARMA” AD IN GENERAL AND CHANGES IN THE
REPORTING YEAR .............................................................................................................................................. 32
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
PERCENT OF THE EXPENSES OR SALES REVENUE, PROVIDE INFORMATION FOR EACH PERSON FOR HIS SHARE IN SALES OR PURCHASES
AND LINKS WITH THE ISSUER................................................................................................................................ 32
3. INFORMATION ON SIGNIFICANT TRANSACTIONS CONCLUDED ................................................................................ 32
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 .................................................................................................................................... 33
5. INFORMATION ABOUT EVENTS AND INDICATORS UNUSUAL FOR THE ISSUER THAT HAVE A SIGNIFICANT IMPACT ON ITS ACTIVITY
AND REALIZED INCOME AND EXPENSES AND ASSESSMENT OF THEIR IMPACT ON THE CURRENT YEAR RESULTS ........................... 33
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 .............................. 33
7. INFORMATION ON SHAREHOLDINGS 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 ....................................... 33
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 MATURITY AS WELL AS INFORMATION
ABOUT GUARANTEES PROVIDED AND COMMITMENTS ................................................................................................ 33
9. INFORMATION ABOUT THE CONCLUDED BY THE ISSUER, ITS SUBSIDIARY OR PARENT COMPANY IN THEIR CAPACITY AS 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 ................................ 34
10. INFORMATION ON THE USE OF FUNDS FROM THE ISSUANCE OF NEW SECURITIES DURING THE REPORTING PERIOD ............ 34
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....................................................................... 34
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 ......... 35
13. ASSESSMENT OF THE FEASIBILITY OF INVESTMENT INTENTIONS, INDICATING THE AMOUNT OF AVAILABLE FUNDS AND
POSSIBLE CHANGES IN THE FINANCING STRUCTURE OF THIS ACTIVITY ............................................................................. 35
14. INFORMATION ABOUT CHANGES IN THE REPORTING PERIOD IN THE BASIC PRINCIPLES OF MANAGEMENT OF THE ISSUER AND
ITS GROUP OF COMPANIES WITHIN THE MEANING OF THE ACCOUNTANCY ACT ................................................................. 35
15. INFORMATION ABOUT THE MAIN CHARACTERISTICS APPLIED BY THE ISSUER IN THE PROCESS OF PREPARING THE FINANCIAL
STATEMENTS, INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT ............................................................................. 35
16. INFORMATION ABOUT CHANGES IN MANAGEMENT AND SUPERVISORY BOARDS DURING THE ACCOUNTING YEAR ............. 35
Management report – “Sopharma” AD 2024
3
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, WHICH IS NOT PUBLIC COMPANY AND ITS
SUBSIDIARIES, REGARDLESS OF WHETHER THEY HAVE BEEN INCLUDED IN THE EXPENSES OF THE ISSUER, OR ARISING FROM PROFIT
DISTRIBUTION, INCLUDING: ................................................................................................................................. 35
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. .............. 35
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 ........................................... 36
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 PERCENT OF ITS EQUITY, PROVIDE INFORMATION ABOUT EACH CASE SEPARATELY ........................... 36
21. INFORMATION ABOUT THE INVESTOR RELATIONS DIRECTOR, INCLUDING TELEPHONE NUMBER AND MAILING ADDRESS ..... 36
VI. INFORMATION UNDER APPENDIX 3 TO ARTICLE 10, ITEM 2 OF ORDINANCE 2 OF LPOS .......................... 37
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. .................... 37
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 ..................................................................................................................................... 37
3. INFORMATION ABOUT SHAREHOLDERS WITH SPECIAL CONTROL RIGHTS ................................................................... 37
4. AGREEMENTS BETWEEN SHAREHOLDERS WHICH ARE KNOWN TO THE COMPANY AND WHICH MAY LEAD TO RESTRICTIONS ON
THE TRANSFER OF SHARES OR VOTING RIGHT. .......................................................................................................... 38
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 .................................................. 38
VII. INFORMATION REGARDING ARTICLE 8 TRANSPARENCY OF UNDERTAKINGS IN NON-FINANCIAL STATEMENTS, REGULATION (EU)
2020/852 OF THE EUROPEAN PARLIAMENT AND OF THE COUNCIL OF 18 JUNE 2020 ESTABLISHING A FRAMEWORK TO FACILITATE
SUSTAINABLE INVESTMENT AND AMENDING REGULATION (EU) 2019/2088 .................................................................. 38
Management report – “Sopharma” AD 2024
4
I. General information about “Sopharma” AD
1. Registration and activity of the Company
“Sopharma” AD (The Company) 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 Company 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 production and trading with 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.
The Company has authorizations for use under the Law on Pharmaceutical products in Human Medicine
for all medical products of its manufacturing portfolio.
2. Shareholder structure as of 31 December 2024
3. 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: Bissera Lazarova, Alexander
Chaushev and Ivan Badinski. The Company is represented and managed by the Executive Director Ognian Donev,
PhD. The company has а procurator - Simeon Donev.
40.24%
16.03%
7.46%
21.71%
9.07%
5.49%
"Donev investments holding" AD
"Telecomplect invest" AD
"Sopharma" AD (treasury shares)
Other legal entities
Ognian Ivanov Donev
Other individuals
Management report – “Sopharma” AD 2024
5
II. Recent developments
1. Industrial activity
The production activities of the Company are realized and developed in the following areas:
• Substances and preparations based on plant raw materials (phytochemical production);
• Ready-to-use formulations, incl.:
o
Hard tablets, coated tablets, film-coated tablets, capsules;
o
Galenic - suppositories, drops, syrups, ointments;
o
Parenteral - injection solutions, lyophilic powder for injection.
• Medical and cosmetic products, incl.:
o Plasters;
o Bandages;
o Sanitary-hygiene products;
o Herbal cosmetics;
• Concentrates for hemodialysis.
• Veterinary medical products.
2. Products
The Company has over 200 products in its portfolio: incl. nearly 190 medicinal products and 11 groups of
medical devices. Medicinal products mainly include generics and 15 traditional products, 12 of the products are
plant-based. The Company's traditional products (in particular Tabex, Carsil and Tempalgin) have a major share in
its export revenues, while the 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:
o Carsil - traditional plant-based product used to treat gastro-enterology diseases (liver diseases);
o Tempalgin - traditional analgesic (pain reliever);
o Tabex - traditional plant-based smoking cessation product;
o Tribestan - traditional plant-based product that stimulates the functions of the sexual system;
o Broncholitin - traditional plant-based product used to suppress cough;
o Analgin - generic analgesic (pain reliever);
o Nivalin - traditional plant-based product used for diseases of the peripheral nervous system;
o Methylprednisolone - generic medicine for cases of severe allergies and certain life-threatening
conditions;
o Vitamin C - widely used nutritional supplement;
o Valeriana - generic non-prescription herbal medicine used to reduce stress;
o Medical products - gauzes, compresses and dressings.
o Veterinary vaccines.
Management report – “Sopharma” AD 2024
6
III. Information under Article 39 of the Accountancy Act
1. An overview of the Company's performance and the main risks it faces /Article 39 (1) of the Accountancy
Act/
Key financial indicators
Indicators
2024
2023
Change
BGN '000
BGN '000
%
Revenues
237 596
253 276
-6,2%
EBITDA
47 797
70 729
-32,4%
Operating profit
28 304
49 266
-42,5%
Net profit
28 227
47 570
-40,7%
CAPEX*
187 864
16 036
1071,5%
Indicators
31.12.2024
31.12.2023
Change
BGN '000
BGN '000
%
Non-current assets
678 401
535 759
26,6%
Current assets
263 827
339 508
-22,3%
Equity
608 557
576 097
5,6%
Non-current liabilities
51 205
66 477
-23,0%
Current liabilities
282 466
232 693
21,4%
* tangible and intangible assets acquired
Indicators
1-12/2024
1-12/2023
EBITDA/ Revenues
20,1%
27,9%
Operating profit/ Revenues
11,9%
19,5%
Net profit/ Revenues
11,9%
18,8%
31.12.2024
31.12.2023
Debt/ Equity
0,55
0,52
Net debt*/ EBITDA on annual basis
3,8x
-0,1x
* the net debt comprises the sum of borrowings from banks and lease liabilities less cash and cash equivalents
Risks, related to the Company’s business and the industry the Company operates in
• The Company faces significant competition.
• The Company is dependent on regulatory approvals.
• Government regulations affecting the Company's business may change, this possibly increasing
compliance costs or otherwise affecting its operations.
• Part of the Company’s revenues, in particular in Bulgaria, depend on the inclusion of the Company’s
medicines in reimbursement lists.
Management report – “Sopharma” AD 2024
7
• The Company’s production facilities and processes are subject to strict requirements and regulatory
approvals that may delay or disrupt the Company’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.
• The Company is subject to operational risk, which is inherent to its business activities.
• The Company is subject to multiple laws and regulations on environmental protection and health and
safety work conditions and is exposed to potential environmental liabilities.
• Litigations or other out-of-court proceedings or actions may adversely affect the Company’s business,
financial position and results of operations.
Risks, related to Bulgaria and other markets in which the Company operates
•
The macroeconomic environment, particularly in Bulgaria, Russia and Ukraine, has a significant effect on
the Company’s operations;
• The political environment in Bulgaria and in the export markets, especially Russia and the Ukraine, has a
significant effect on the Company’s operations and financial position;
• Risks related to the Bulgarian legal system;
• Developing legal frameworks in some countries in which the Company sells its products, in particular
Russia and Ukraine, may negatively impact the Company’s operations in these countries;
• Risks relating to exchange rates and the Currency Board in Bulgaria;
• The interpretations of tax regulations may be unclear and tax laws and regulations applicable to the
Company may change.
Currency risk
The Company performs its activities in active exchange with foreign suppliers and customers. Therefore,
it is exposed to currency risk, mainly in respect of the USD. The Company supplies part of its main raw materials
in USD. The currency risk is related to the negative movement of the USD exchange rate against the BGN in the
future business operations, the recognized foreign currency assets and liabilities and the net investments in
foreign companies. The rest of the Company's operations are usually denominated in BGN and/or in EUR. The
Company sells some of its finished products in Russia
in EUR and thus eliminates the currency risk associated with
the depreciation of the Russian ruble. In EUR are also dominated the balances with the subsidiaries in Ukraine.
Still, in order to minimize currency risk, the Company conducts through its subsidiaries a foreign currency policy
that includes advance payments and the reduction of deferred payment terms and immediate currency
conversion of foreign currency receipts to EUR, as well as applying higher trade mark-ups to offset possible future
impairment of the hryvnia.
In order to control the foreign currency risk in the Company, a system of planning import deliveries,
foreign currency sales, as well as procedures for daily monitoring of movements in the dollar exchange rate and
control of forthcoming payments are introduced.
Management report – “Sopharma” AD 2024
8
2. Analysis of financial and non-financial key performance indicators of Sopharma /Article 39, item 2 of
the Accountancy Act/, as well as a description of the company's position and explanation of the annual financial
statements /Article 247 (1) of the Commercial Law/
Sales revenues
Revenues from contracts with customers are from sales of manufactured medicinal products and in 2024
these decreased by BGN 16,3 million, to BGN 234,7 million, compared to BGN 251 million in 2023.
• European market
Sales revenues for 2024 for European countries decreased by BGN 14 million or 11.1 % compared to 2023
due to the decrease in sales in Russia, Latvia and Poland as for the current period they decreased by 19.3%, 33.7%
and by 50.1%, respectively. On other regular markets, growth was registered in Belarus by 76.3%, in Lithuania by
24.8%, in Serbia by 9.9% and in Ukraine by 10.7%.
• Bulgarian market
Sales of “Sopharma” AD on the domestic market increased by BGN 2,4 million or 2.6% in 2024, to BGN
95,9 million, compared to BGN 93,5 million in 2023. According to IQVIA data, by the end of 2024 the company
occupies 1.92% (sixteenth position) of the total volume of the Bulgarian pharmaceutical market in terms of value
and 6.7% (second position) of sales in volume.
93 536
157 437
259,973
95 925
138 733
234,658
0
50 000
100 000
150 000
200 000
250 000
300 000
Domestic market Export sales Total
thousand BGN
Sales revenues
1-12/2023
1-12/2024
Revenues by markets
1-12/2024
1-12/2023
change
BGN '000
BGN '000
%
EUROPE
112 133
126 119
-11,1%
BULGARIA
95 925
93 536
2,6%
OTHER
26 600
31 318
-15,1%
Total
234 658
250 973
-6,5%
47.8%
40.9%
11.3%
EUROPE
BULGARIA
OTHER
Management report – “Sopharma” AD 2024
9
The positions of the company's main competitors on the territory of the country are as follows: Merck
Sharp & Dohme - 5.31% (0.16% in units), AstraZeneca - 5% (0,52% in units), Roche - 4.71% (0.18% in units), Swixx
Biopharma - 4.31% (1.57% in units), Novartis - 4.17% (1.17% in units), Abbvie - 3.84% (0.09% in units), Pfizer -
3.75% (0.72% in units), Johnson & Johnson - 3.15% (0.78% in units), Teva - 3.03% (8.67% in units), Stada – 2.72%
(4.23% in units). The products with the largest share of sales in the country are Analgin, Dimex, Carsil, Tribestan,
Famotidine and Urimax.
• Other markets
Revenues from other markets decreased by BGN 4,7 million or 15.1% compared to 2023 as a result of the
decrease of the sold production in Azerbaijan, Uzbekistan, Vietnam and Mongolia. Growth in sales was registered
in Armenia, Tunis and Turkmenistan.
Sales by therapeutic groups
Operating expenses
For the current period, the expenses for materials decreased by BGN 1 million compared to 2023 partly
due to the decrease in the costs of heating and electricity. Personnel costs increased by BGN 7,5 million as a result
of an increase in current remunerations, and in external service costs, which increased by BGN 10,1 million, the
largest change was registered in the costs of advertising and marketing services, which increased by BGN 6 million
and in the costs of consulting services, which increased by BGN 3,7 million. Other operating expenses decreased
by BGN 0,5 million compared to the previous period.
Finance income and costs
Finance income decreased by BGN 2,4 million to BGN 5,2 million in 2024, mainly due to the decrease in
interest income on loans granted and in term deposits.
Finance costs increased by BGN 2,3 million to BGN 6 million in 2024 as a result of the increase in interest
expenses on loans received and in costs for discounting of long-term receivables.
34%
24%
11%
9%
3%
3%
2%
6%
9%
N Nervous system
A Digestion and metabolism
C Cardio-vascular system
R Respiratory system
G Urinary system and sex hormones
M Musculoskeletal system
H Hormonal products, exc. sex
hormones and insulin
Other
Cosmetic products, nutritional
supplements and medical products
Management report – “Sopharma” AD 2024
10
Financial results
Profit from operating activities before depreciation (EBITDA) in 2024 decreased by BGN 22,9 million or
32.4%, to BGN 47,8 million, compared to BGN 70,7 million in 2023. The main factors for the decrease are the
decrease in sales revenue in Russia, as well as the increase in operating expenses, especially those for personnel,
advertising and consulting services.
Profit from operating activities in 2024 decreased by BGN 21 million, or 42.5%, to BGN 28,3 million,
compared to BGN 49,3 million in 2023.
Net profit in 2024 decreased by BGN 19,3 million, or 40,7%, to BGN 28,2 million compared to BGN 47,6
million in 2023.
Assets
Compared to the end of 2023, non-current assets increased by BGN 142,6 million to BGN 678,4 million,
with the most significant effect coming from the purchase of contractual rights over sales permits and trademarks
with carrying amount of BGN 165 million, the change in investments in subsidiaries due to the newly acquired
shares in the Serbian company Pharmanova D.o.o in the amount of BGN 8,6 million, as well as the increase in
other long-term capital investments, due to the newly acquired shares in Achieve Life Sciences Inc., USA in the
amount of BGN 8,7 million. Long-term receivables from related parties decreased by BGN 45,9 million as a result
of repaid loans granted by "Doverie Invest" EAD and "Industrialen Holding Doverie" AD.
Current assets decreased by BGN 75,7 million to BGN 263,8 million, the most significant being the impact
of the decrease in cash and cash equivalents amounting to BGN 93,8 million as a result of dividend paid. An
increase is recorded in inventories by BGN 7,8 million, and in trade receivables in the amount of BGN 3,2 million,
while receivables from related parties decreased by BGN 1.3 million.
Liabilities and equity
Equity increased by BGN 32,5 million, to BGN 608,5 million, as a result of the increase of retained earnings
and reserves.
Non-current liabilities decreased by BGN 15,3 million, to BGN 51,2 million, as a result of a decrease in long-
term bank loans by BGN 15,8 million.
Current liabilities increased by BGN 49,8 million, to BGN 282,5 million, being the effect of a decrease due
to the paid-off liabilities for dividend payment, and an increase in trade payables due to a liability related to the
purchase of contractual rights over sales permits and trademarks in the amount of BGN 84,1 million, which is also
the main reason for the growth of the current portion of long-term bank loans, which increased by BGN 107,7
million.
70,729
49,266
47,570
47 797
28 304
28 227
0
10,000
20,000
30,000
40,000
50,000
60,000
70,000
80,000
EBITDA Operating profit Net profit
thousand BGN
1-12/2023
1-12/2024
Management report – “Sopharma” AD 2024
11
Cash flows
1-12/2024
BGN '000
1-12/2023
BGN '000
Net cash flows from/(used in) operating activities
5 136
(2 827)
Purchases of property, plant and equipment, and intangible assets, net
(99 421)
(855)
Payments under lease contracts
(3 062)
(2 793)
Free cash flow (normalized)
(97 347)
(6 475)
The free cash flow (normalized with the payments under lease contracts), generated for 2024 amounts to
BGN 97,3 million outflow compared to BGN 6,5 million outflow for 2023.
Personnel
The average number of employees in 2024 in "Sopharma" AD is 1,758 workers and employees (compared
to 1,773 in 2023).
The company actively integrates the principles of sustainable development into its business model and
strategy.
The company strives to provide a safe and stimulating work 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 talents through internship programs, joint projects and initiatives, and providing practical training and
participation of students in real business cases.
All employees in the company are employed under an employment contract. The company's business
scope determines the areas of activity in which the employees are employed:
Number of employees as of 31 December 2024
1 763
100%
Production
610
34.60%
Quality control
218
12.37%
Regulatory compliance
104
5.90%
Technical activities
160
9.07%
Development
55
3.12%
Sales and marketing
98
5.56%
Other administrative activities
518
29.38%
The following initiatives ensure a safe and sustainable working environment:
✓ Social protection based on concluding employment contracts with employees;
✓ Adequately planned working hours and work frequency for employees working in shifts to avoid
risks related to work overload and overtime;
✓ A clearly regulated procedure for determining remuneration for all types of work (including
additional remuneration) to ensure equality and adequate salaries;
✓ Ensuring freedom of association and implemented mechanisms for social dialogue, which lead to
more attractive working conditions and reduce labor disputes;
Management report – “Sopharma” AD 2024
12
✓ The compatibility of work and private life has a positive impact on the health, productivity and
motivation of employees. The company provides conditions for a balance between work and private life based on
the social protection it provides, as well as through a policy to encourage employees to use their vacation and
leave entitlements in order to avoid chronic stress and fatigue;
✓ Commitment to the principles of equality and diversity, by promoting a work atmosphere that
accepts ethnocultural diversity, in which differences between people are valued and respected;
✓ Guaranteeing protection from discrimination/harassment in the workplace, by defining the term
“discrimination” and implementing a procedure in the internal labor regulations;
✓ Available comprehensive social program, covering sports, health and relax. 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 examinations.
The main identified risks related to the company's own workforce are:
✓ Risk related to shortage of qualified and unqualified labor
✓ Risk related to overload and overtime;
✓ Risk related to occurrence of occupational accidents and incidents;
✓ The Company defines as a significant opportunity the investments in the development of the skills
of its employees; and
✓ The Company defines as a significant opportunity the investments in equipment and technologies
to increase the efficiency of processes.
In their daily work, all employees are encouraged to be guided by the defined values – Care, Responsibility,
Continuous Improvement, Integrity and Teamwork, which are the moral compass of the organization. These
values guide all processes and interactions in the company, both internally and externally, with the aim of creating
a sustainable and supportive environment for human resource development.
The priorities of the Human Resources function are based on building high employee engagement and
addressing business risks through the lens of the workforce.
The company strives to create long-term relationships with its employees, based on mutual trust and a
safe working environment. For this purpose, it is extremely important for us to be associated as a fair employer
with proper employment practices. The hiring of personnel is in accordance with all requirements of national
legislation, with 27% of all employees hired for the reporting period being recommended by current employees
of the company. The turnover rate for 2024 is 16%.
The company is a member of the UN Global Compact and supports the implementation of the ten
principles of the Global Compact and accordingly develops policies that follow the implementation of responsible
business practices in the areas of human rights, labor standards, the environment and the fight against corruption.
In addition, the Code of Ethics of “Sopharma” AD defines the rules for professional and personal conduct
of employees, ensuring loyalty, responsibility and compliance with the law. It promotes honesty, respect between
colleagues, confidentiality and avoidance of conflicts of interest.
Management report – “Sopharma” AD 2024
13
Mandatory global standards for occupational safety and health protection are complied with. Health and
safety management includes all employees. The company complies with local standards and legislation. Regular
health and safety inspections are carried out to ensure compliance with the requirements of the Occupational
Health and Safety Act and other requirements of national legislation.
„Sopharma“ AD prepares annual programs with measures to prevent, reduce and limit risks, in accordance
with Art. 5 (1) of Ordinance No. 5 of May 11, 1999 on the procedure, manner and frequency of conducting a risk
assessment in connection with Art. 16 (1) item 2 of the Occupational Health and Safety Act, the scope of which
includes all planned actions during the calendar year for the prevention of occupational accidents, briefings and
training on compliance with safe work rules.
The company also invests in specialized training for employees to acquire legal capacity in order to safely
perform their duties.
Pursuant to Art. 11, para. 3 of Ordinance No. 5 of May 11, 1999 on the procedure, manner and periodicity
of conducting risk assessments (Promulgated, State Gazette, No. 47 of May 21, 1999, supplemented by State
Gazette No. 100 of November 24, 2020), risk assessments are carried out at all workplaces in order to prevent
occupational accidents, near miss accidents and occupational diseases.
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 trainings 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.
Sex
Number of employees
Male
635
Female
1 128
Total employees
1 763
Female
Male
Total
Number of employees
1128
635
1763
Number of permanent employees
1121
633
1754
Number of temporary employees
7
2
9
Number of full-time employees
1119
631
1750
Number of part-time employees
9
4
13
The gender distribution on the Board of Directors is 40% women and 60% men.
The distribution of employees by age
groups
Number
Employees under 30 years old
106
Employees aged 30 to 50 years old
762
Employees over 50 years old
895
Management report – “Sopharma” AD 2024
14
All company personnel are covered by social protection, based on a concluded employment contract,
which is a fundamental principle in our labor legislation. By paying the relevant insurance contributions into the
national funds, the employer guarantees its workers and employees insurance for:
• Pension Fund
• Mandatory Supplementary Pension Insurance Fund – for those born after December 31, 1959
• General Illness and Maternity Fund
• Unemployment Fund
• Occupational Accident and Occupational Disease Fund
All company personnel have additional insurance for "Occupational Accident", as well as additional health
insurance and annual extended preventive examinations - entirely at the expense of the employer.
The company meets the quotas set by the Law on People with Disabilities and exceeds the legally required
2% of its own workforce.
100% of the employees in its own workforce are covered by social protection, through public programs or
through benefits offered, against loss of income due to a workplace accident.
Ecology and environmental protection
I. Air, water and soil pollution
1. Company’s politics
The company is committed to implementing environmental protection regulations, including the control
of air and water pollution and substances of concern and very high concern. The policies are aimed at monitoring
emissions and the use of substances of concern, in accordance with applicable legislation.
The Company has developed and is implementing a Standard Operating Procedure (SOP) for
environmental protection (EP). 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 Regulatory
Framework, Permits for the Discharge of Production Wastewater and Permits for Water Absorption.
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
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
Executive Environment Agency for the site in Kazanlak and by the relevant Regional Inspectorates for Environment
and Water for the remaining sites.
In order to minimize risks to human health and the environment, the company has the following
measures:
• Prepared emergency plans (EP) for the sites in Sofia, Sandanski, Kazanlak and Vrabevo.
• Internal rules, instructions and emergency simulations.
• Emergency briefings in case of accidents.
• Risk assessment for the emergency plans for Sofia and Kazanlak.
• Specialized reports for the prevention of major accidents for plants with low risk potential.
2. Aims and measures
Management report – “Sopharma” AD 2024
15
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. For this
purpose, 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 dust), 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 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. In 2024, the
monitoring results show compliance with the permissible emission standards (PES) according to
Regulation No. 1 of 2005 for these sites.
• Emissions of organic compounds, defined as total carbon, from stationary sources at the plant in Sofia
are being monitored. In 2024, the monitoring results show compliance with the emission limit values
(ELVs) according to Regulation No. 1 of 2005 for this site.
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 and Kazanlak has
been submitted to the relevant Regional Inspectorate for Environment and Water Resources. The company has
prepared a Solvent Management Plan (SMP) for Veliko Tarnovo.
For the calendar year 2024, the plants in Sofia, Sandanski and Vrabevo operate at a solvent consumption
that does not exceed the annual lower threshold value for solvent consumption (LTVSC) for the Production of
Pharmaceutical Products (LTVSC 50 tons/year), according to Regulation No. 7/2003, and the plant in Kazanlak
operates at a solvent consumption that exceeds this limit and has 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 unorganized emission standards (UES).
2.1.2 Air emissions from steam boilers
Emissions of CO, SO2 and Nx 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 and Water and Ordinance No. 6 of March 26, 1999. The company organizes and
conducts control through measurements by an accredited laboratory of indicators in accordance with the
requirements of Ordinance No. 6 of March 26, 1999 on the procedure and method for measuring emissions of
harmful substances emitted into the atmospheric air from sites with stationary sources. In 2024, the results of the
monitoring and measurements carried out by accredited laboratories show compliance with the permissible
emission standards (PES) according to Ordinance No. 1 of 2005 for these sites.
Management report – “Sopharma” AD 2024
16
All technological facilities of the company have purification systems for capturing and purifying emissions
into the air. The results of the measurements are reported and submitted to the Regional Inspectorate for
Environment and Water in accordance with the requirements of the legislation.
3. Water emissions
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 sewer
networks of the relevant settlements for the following sites:
• Solid dosage forms plant - 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 "Sopharma" AD, Sandanski, under a contract with
"UVEX" EOOD;
• Plant for solid dosage forms, phytochemical and synthetic products "Sopharma" AD, Kazanlak, under
a contract with VIK "Stara Zagora";
• Plant for humane and veterinary medical products in Sliven, under a contract with VIK "Sliven"
• Plant "Sopharma" AD - Veliko Tarnovo in Veliko Tarnovo, under a contract with VIK “Yovkovtsi” OOD.
3.1.2 Discharge into surface water bodies
The company has permits for discharge into surface waters for the following sites:
• Warehouse base – 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 – Vrabevo village, 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 а Wastewater treatment facility.
3.1.3 Control and monitoring of emissions in wastewater
The emissions into the water that are released from the company's production sites and are subject to
monitoring are as follows:
• The plants at site "B" - Sofia: Plant for solid dosage forms and Plant for ampoule dosage forms
Indicators for pH, undissolved substances, BOD5, COD trivalent chromium, hexavalent chromium,
ammonium ions, ammonia nitrogen, sulfates, phosphates, phosphorus in phosphates, suspended substances,
EOV-DE, phenols, arsenic are monitored. The waters are purified by "Sofiiska Voda" AD.
"Sofiiska Voda" AD carries out three to five annual measurements of emissions into wastewater for site
"B", and for 2024 no deviations from the standards set in Regulation No. 7 on the conditions and procedure for
discharging industrial wastewater into the sewer systems of settlements have been identified.
• Warehouse base at site "B" – Sofia
For site "B", wastewater monitoring is carried out twice a year by accredited laboratories, according to
the wastewater discharge permit, and the analyses performed from own monitoring in 2024 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 – Vrabevo village
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 2024, an incidental excess of petroleum products, oils
and fats was established once, and the results of the additional monitoring carried out after the established
deviations show compliance with the norms.
Management report – “Sopharma” AD 2024
17
• Plant for Medical Products, Liquid and Solid Forms "Sopharma" AD – 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 and Water - Blagoevgrad, samples are
taken in the presence of representatives of the company and tested in an independent laboratory. The results for
2024 show that no deviations from the standards set in Regulation No. 7 on the conditions and procedure for
discharging industrial wastewater into the sewer systems of settlements have been identified.
• Plant for Phytochemical and Synthetic Products (PPSP) "Sopharma" AD – Kazanlak
pH, COD, BOD5, and suspended solids are controlled. 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. The results for 2024 show that no deviations from the
standards set in Regulation No. 7 on the conditions and procedure for discharging industrial wastewater into the
sewer systems of settlements have been identified.
• Plant for Humane and Veterinary Medical Products (PHVMP) – 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, own monitoring and control
monitoring are carried out by the Regional Inspectorate for Water and Environment - Stara Zagora, samples are
taken in the presence of representatives of the company and tested in an independent laboratory. The results for
2024 show that no deviations from the standards set in Regulation No. 7 on the conditions and procedure for
discharging industrial wastewater into the sewer systems of settlements have been identified.
• “Sopharma” AD plant – 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
2024 show that no deviations from the standards set in Regulation No. 7 on the conditions and procedure for
discharging industrial wastewater into the sewer systems of settlements have been identified.
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 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 of which are PH, electrical conductivity, dissolved oxygen,
ammonium ions, nitrites, nitrates, chlorides, phosphates, manganese, iron, etc.
The results of the analysis of drinking water provided for analysis by an accredited laboratory in 2024
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 2024
showing that the indicators are in line with the regulatory requirements for drinking water, irrigation and
environmental protection of water resources.
Management report – “Sopharma” AD 2024
18
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. For sites of "Sopharma" AD in the city of
Sofia and the city of Sandanski, monitoring was not carried out in 2024, as such should be carried out in 2025. The
results of the monitoring in 2023 for these sites were published in our report from the previous reporting year. In
2024, control monitoring was carried out for the sites in the village of Vrabevo and the city of Kazanlak, with noise
levels meeting the permissible standards, and the next control monitoring for these sites 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 such as solvents, disinfectants, excipients and active pharmaceutical
ingredients and excipients in various manufacturing processes.
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 legislation, by
maintaining relevant records, including emissions and flows leaving the manufacturing 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 implemented processes aimed at ensuring the safe handling, storage and use of
regulated chemicals at all production sites, which are constantly updated in the event of 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
manufacturers/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
Management report – “Sopharma” AD 2024
19
Also, packaging waste is generated as a result of the delivery of raw materials and their transportation
between the company's warehouses and plants, which are necessary for the production of “Sopharma” AD’s
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.
Wastes generated as a result of manufacturing activities and the sale of finished products are:
• Waste from the production of pharmaceutical dosage forms;
• Waste from oils
• Waste from packaging, absorbents, wiping cloths, filter materials and protective clothing;
• Organic and inorganic hazardous waste;
• Waste from laboratory activities;
• Textile waste;
• Waste from humane or veterinary healthcare and related research activities;
Wastes generated from transport, administrative and other activities are:
• End-of-life tires;
• End-of-life equipment containing hazardous components;
• Accumulators and batteries;
• End-of-life 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 and Sandanski:
• 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;
• Pharmaceuticals;
• Waste from processed textile fibres;
• Absorbents, filter materials, wiping cloths and protective clothing;
• Metals (cast iron and steel) and
• Waste electronic and electrical equipment
The quantities of waste generated by type and the methods for their management are shown in the table
below:
Waste generated (in tons)
Not hazardous
Hazardous
Total
Total quantity of waste generated
590.00
103.01
693.01
Present as of 31.12.2024
0.23
0.92
1.15
Provided for recycling
442.69
-
442.69
Other recovery operations
(excluding energy recovery through incineration)
-
6.38
6.38
Incineration without energy recovery
-
95.71
95.71
Landfilling
147.08
-
147.08
Total non-recyclable waste delivered
147.08
102.09
249.17
Percentage of non-recyclable waste delivered
21.22%
14.73%
35.95%
Management report – “Sopharma” AD 2024
20
In 2024, the following types and quantities of packaging were released on the market:
Type
Unit of measurement
Released on the market
Plastics
Kg.
42 581.992
Paper and cardboard
267 844.348
Aluminum
3 162.515
Glass
72 755.695
Composite
51 519.304
3. Significant events occurring after the date of preparation of the annual financial statements /Article 39,
paragraph 3 of the Accountancy Act/
• In November 2024, the last procedure for increasing the share capital by issuing up to 623,779
ordinary, registered, dematerialized, freely transferable shares was launched, provided that the
shares from the increase are subscribed by the holders of warrants issue ISIN 9200001212, in
accordance with the terms and conditions described in the Prospectus for the public offering of
warrants. The term for exercising the warrants ended on January 13, 2025, and the proceeds in the
funds-raising account amounted to BGN 2,557 thousand. On January 27, 2025, the increase in the
capital of the Company by issuing 619,138 ordinary, registered, dematerialized, voting shares, with a
nominal value of BGN 1 each and an issue value of BGN 4.13 per share, was entered in the Commercial
Register. The 4,641 unexercised warrants in the amount of BGN 19 thousand were deregistered with
the Central Depository.
• “Sopharma” AD established a subsidiary “SophTech Services” EOOD. On 28.02.2025, the newly
established company was entered in the Commercial Register with a share capital of BGN 100
thousand.
4. Future development of “Sopharma” AD (article 39, item 4 of the Accountancy Act) and strategic goals
for the following year (Article 247 (3) of the Commercial Law)
Key moments of the Company's strategy plan for "Sopharma" AD:
• 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 company 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 new business segments to develop, such as potential contract manufacturing;
• continued operation of the production in full compliance with the good manufacturing practices
adopted in the EU;
Management report – “Sopharma” AD 2024
21
• to implement new technologies to support the automation of business processes;
• to develop its staff through training aimed at increasing qualifications and competences 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 staff;
• 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;
• to 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.
Except Bulgaria, the main markets for finished products continue to be Russia and Ukraine. The
Company's plans are to increase its presence on the Russian market through increased investments in marketing
and advertising activities and human resources. In addition, expansion of the portfolio and relations with various
counterparties is planned. 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 Company 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 company will continue to look for opportunities for
an even more active presence in a highly developing market such as that of Vietnam.
5. Research and development /article 39, item 5 of the Accountancy Act/
“Sopharma” AD 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 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.
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 from own-produced
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 its existence “Sopharma” AD has generated and defended its industrial property. As a
result, the Company owns a large number of industrial property sites 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
development, and in particular innovation.
Management report – “Sopharma” AD 2024
22
New developments and products
During the reporting period January - December 2024 in the Division "Development and Regulatory
Compliance" the following activities were performed:
• New medicinal products
During the reporting period, authorizations for use of 4 new medicinal products were obtained:
- Sophamet XR 500 mg prolonged-release tablets (Bulgaria);
- Sophamet XR 750 mg prolonged-release tablets (Bulgaria);
- Sophamet XR 1000 mg prolonged-release tablets (Bulgaria);
- Ketorolac-Sopharma 30 mg/ml solution for injection (Ukraine).
• New ASMF
- Valeriana extract/Maltodextrin ASMF for producer Sopharma-Kazanlak – approved for Valeriana
30 mg tablets and Valeriana 200 mg tablets, Bulgaria
- Milk Thistle dry extract ASMF for producer Sopharma-Kazanlak – approved for Carsil 22,5 mg
film-coated tablets.; Carsil 22,5 mg tablets.; Carsil 90 mg caps.; Carsil 110 mg caps. – Bulgaria;
- Tribulus Terrestris dry extract ASMF for producer Sopharma-Kazanlak – approved for Tribestan
250 mg film-coated tablets.
• New registrations and re-registrations / changes
New registrations of medicinal products
• Documentation for registration of 62 medicinal products has been submitted:
- Manitol 10% solution for infusion МАН transfer from "Biopharm Engineering”, Bulgaria
- Manitol 15% solution for infusion МАН transfer from "Biopharm Engineering”, Bulgaria
- Ringer solution for infusion МАН transfer from "Biopharm Engineering”, Bulgaria
- NaCl 0.9% solution for infusion МАН transfer from "Biopharm Engineering”, Bulgaria
- Metronidazole 500mg/100ml solution for infusion МАН transfer from "Biopharm Engineering”,
Bulgaria
- Glucose 5% + NaCl 0.9% solution for infusion МАН transfer from "Biopharm Engineering”, Bulgaria
- Glucose 5% solution for infusion МАН transfer from "Biopharm Engineering” Bulgaria
- Paracetamol Siromed 500 mg tablets – Lithuania
- Vitamin C Zentiva 100 mg/ml solution for injection/infusion – Poland
- Tempaforte 500 mg/ml solution for injection – Peru
- Dexamethasone Sopharma 4 mg/ml solution for injection – Albania
- Analgin 500 mg/ml solution for injection – Albania
- Norepinephrine Sopharma 1 mg/ml concentrate for solution for infusion – Albania
- Zondaron 2 mg/ml solution for injection/infusion – Albania
Management report – “Sopharma” AD 2024
23
- Paracetamol Sopharma 500 mg tb. – Albania
- Atropine 1 mg/ml sfi – Albania
- Ambrolytin 30 mg tb. – Vietnam
- Ambrolytin 30 mg tb. – Kazakhstan (EAEU)
- Ambrolytin 30 mg tb. – Moldova
- Ambrolytin 15 mg/5 ml syrup – Moldova
- Ambrolytin 15 mg/5 ml syrup – Vietnam
- Ambrolytin 30 mg/5 ml syrup – Vietnam
- Ambrolytin 30 mg/5 ml syrup – Moldova
- Ambrolytin 30 mg/5 ml syrup – Kazakhstan (EAEU)
- Valeriana Max 250 mg film-coated tb. – Ukraine
- Dexketoprofen Sopharma 50 mg/2 ml solution for injection/infusion – Georgia (MRP)
- Dexketoprofen Sopharma 50 mg/2 ml solution for injection/infusion – Vietnam
- Dexketoprofen Sopharma 50 mg/2 ml solution for injection/infusion – Moldova
- Dexketoprofen Sopharma 50 mg/2 ml solution for injection/infusion – Azerbaijian
- Dexketoprofen Sopharma 50 mg/2 ml solution for injection/infusion – Armenia (EAEU)
- Suxamethonium sfi, Pharmachim – Serbia
- Carsil Max 110 mg caps. – Azerbaijian
- Morphin sfi – Albania
- Vitamin C sfi – Albania
- Revelio 25 mg tb. – Bulgaria
- Antitussin oral drops solution - Bulgaria
- Pethidine Sopharma sfi – Vietnam
- Ondansetron Sopharma sfi – Vietnam
- Verapamil Sopharma sfi – Vietnam
- Otofix ear drops solution – Vietnam
- Amboxol hydrochloride 15 mg/5 ml syrup – Vietnam
- Sydnopharm 4 mg tablets -Ukraine
- Revelio 25 mg film-coated tablet -Ukraine
Licensing
- Sophtica 60 mg film-coated tablets – Bulgaria
- Sophtica 90mg film-coated tablets – Bulgaria
- Telmitan Duo 80 mg/5 mg tablets – Bulgaria
- Telmitan Duo 80 mg/10 mg tablets – Bulgaria
- Syafen oral powder – Bulgaria
- Urimax 0,4 mg caps. – Bulgaria
Management report – “Sopharma” AD 2024
24
- Nebivolol Sopharma 5 mg tb. – Bulgaria
- Nexopral 20 mg; 40 mg gastro-resistant tb. – Ukraine
- Pallem 24 mg/ml oral suspension – Lithuania
- Pixanel 2.5mg film-coat. tb. – Bulgaria
- Pixanel 5 mg film-coated tb. – Bulgaria
- Valdipin 160 film-coated tb. – Bulgaria
- Valdipin 320 film-coated tb. – Bulgaria
- Valdipin Duo 5/160 mg film-coated tb. – Bulgaria
- Valdipin Duo 10/160 mg film-coated tb. – Bulgaria
- Valdipin HCT 5/160/12.5 mg film-coated tb. – Bulgaria
- Valdipin HCT 10/160/12.5 mg film-coated tb. – Bulgaria
- Valdipin HCT 10/160/25 mg film-coated tb. – Bulgaria
• Medicinal products have been registered for 22 new directions:
- Aminophylline Sveikuva 24 mg/ml solution for injection/infusion - Lithuania
- Amolytin 30 mg tablets – Lithuania
- Vitamin D3 Sopharma oral drops, solution – Czech Republic
- Carsil 22.5 mg film- coated tablets – Georgia (MRP)
- Ambrolytin 30 mg/ 5 ml syrup – Georgia (MRP)
- Vipalgin 500 mg/ml solution for injection – Columbia
- Papaverine 20 mg/ml solution for injection – Iran for 1-year temporary import
- Digoxin Sopharma 0,25 mg/ml – Lithuania
- Otofix drops – Ukraine
- Paracetamol Sopharma 500 mg tb. – Moldova
- Vipalgin 500 mg tb. – Columbia
- Tonzirin lozenges – Ukraine
- Sophalor 0.5 mg/ml oral solution – EAEU – (Kazakhstan)
- Carsil Max 110 mg caps – Belarus
- Ambrolytin 15 mg/5 ml syrup – Peru
- Pethidine HCl Sveikuva 50 mg/ml sfi – Lithuania
- Ambrolytin 30 mg tb. – Kyrgyzstan
- Deavit Neo oral drops solution – Kyrgyzstan
- Felogel 2,32% gel – Kyrgyzstan
- Dexketoprofen Sopharma 50 mg/2 ml solution for injection/infusion – Georgia (MRP)
- Dexketoprofen Sopharma 50 mg/ 2 ml solution for injection/infusion – Moldova
- Picosulfate-Sopharma 7,5 mg/ml oral drops solution - Ukraine
Management report – “Sopharma” AD 2024
25
МАН transfers – Bulgaria
• Submitted – 12
- Vetapharm Veliko Tarnovo: Anestezol, Antimyco-acid, Antimyco-beta, Iodine solution, Castor oil,
Hydrogen peroxide, Rivanol, Liquid paraffin, Ethyl alcohol 70%, 90%, 95%, Yodaderm
• Approved – 22
- 10, МАН transfers Biopharm-Sliven
- 12 МАН transfers Vetapharm-Veliko Tarnovo
Re-registrations/changes
- Renewed Marketing Authorizations for 38 medicinal products.
- Submission of documentation for the renewal of the Marketing Authorizations for 71 medicinal
products.
- 546 changes for medicinal products submitted to agencies;
- 534 changes for medicinal products approved by agencies;
Food additives
- 36 food supplements have been notified – 25 for Bulgaria; 5 for Georgia; 2 for Moldova; 1 for
Poland; 1 for Ukraine; 1 for Azerbaidjan, 1 for Kazakhstan;
- 30 food additives have been added for notification – 22 for Bulgaria, 3 for Georgia; 2 for Ukraine;
2 for Moldova; 1 for Poland.
Medical products
- 2 Medical products have been uploaded on the EUDAMED system
Developments
• Pharmaceutical development of 27 new medicinal products/projects and a series of 3 food
supplements is underway:
- Cytisine 3.0 mg tab. – Project with Achieve Life Sciencies Inc.
- Dexketoprofen 25 mg tab.;
- Xylmetazoline/Dexpanthenol 0.05% nasal spray;
- Xylmetazoline/Dexpanthenol 0.1% nasal spray;
- Molsidomine 4 mg tab.;
- Ketorolac 10 mg tab.;
- Vitamin C 200 mg/mL inj. solution;
- Vitamin C 100 mg/mL inj. solution;
- Butamirate Citrate oral drops;
- Ibuprofen 200; 400 and 600 mg film-coated tab.;
- Ibuprofen 100 and 200 mg/5 ml oral suspension;
- Ibuprofen/Paracetamol 200/500 mg tab.;
- Ibuprofen/Pseudoephedrine 200/30 mg film-coated tab.;
- Artichoke/Silymarin/Vitamin E/Lecithin caps. (3 FS);
- Milgamma tablets – Project with KRKA;
- Metamizole sodium/Pitofenin/Fenpiverin bromide 500/5/0.1 mg tab.;
Management report – “Sopharma” AD 2024
26
- Metamizole sodium 500 and 1000 mg oblong tab.;
- Buscolysin 20 mg tab.;
- Tuspan syrup;
- Paracetamol 500 mg tab.;
- Torazemide 5 and 10 mg tab.;
- Erdosteine 300 mg caps.;
- Ursodeoxycholic acid 500 mg tab.;
API - 4
- Valeriana extract/ Maltodextrin;
- Glaucine hydrobromide;
- Dry extract of milk thistle fruits;
- Dry extract of Granny's teeth;
• Transfer and validation of technological processes
- 9 new medicinal products were transferred - Cytisine 3 mg tab. (containing L-Cysteine);
Molsidomine 4 mg tab; Sulfamethoxazole 400 mg and Trimethoprim 80 mg solution for injection – 5 ml; Ibuprofen
200; 400; 600 mg tab.; Xylmetazoline/Dexpanthenol spray (2 concentrations); Ketorolac 50 mg/ 2 ml inject.
solution.;
- 17 production processes/technologies have been validated/optimized.
• Prepared documentation for qualification / production
- Documentation for qualification of raw materials for production - 186;
- Production regulations - 129;
- Documentation for qualification of finished forms - 269.
6. Information on the acquisition of own shares required by Article 187d of the Commercial Law /Article
39, Item 6 of the Accountancy Act/
In the current year 1 200 treasury shares were purchased, and 972 308 shares were sold.
Shares
Share capital, net of
treasury shares
number
BGN '000
Balance at 1 January 2023
121 318 711
82 595
Issue of capital
37 792 679
37 793
Effects of Subsidiary Merger
852
3
Treasury shares purchased
(850 000)
(5 226)
Expenses for treasury shares purchased
-
(26)
Balance at 31 December 2023
158 262 242
115 139
Issue of capital
6 509 485
6 509
Treasury shares sold
972 308
3 899
Effects of Subsidiary Merger
232
1
Treasury shares purchased
(1 200)
(7)
Balance at 31 December 2024
165 743 067
125 541
Management report – “Sopharma” AD 2024
27
The Board of Directors is authorized to buy treasury shares under certain conditions, according to the
decisions of the GMS, held on June 23, 2010 of the EGMS from November 30, 2011, of the EGMS from November
1, 2012, of the EGMS from February 28, 2013, of the EGMS from February 23, 2018, of the EGMS from August 04,
2023 and October 25, 2024.
Number and nominal value of the treasury shares held and the proportion of the capital they represent
“Sopharma” AD holds 13 356 996 treasury shares, representing 7.46% of the Company's capital.
7. 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 Company. Financial risks
are currently identified, measured and monitored by various control mechanisms introduced to determine
adequate prices for the company's products and services and borrowed capital and to adequately assess the
market circumstances of the company investments and forms of maintenance of the free liquid assets, without
allowing undue concentration of risk.
Risk management is currently conducted by the management of the company in accordance with the
policy defined by the Board of Directors.
The latter 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.
Credit risk
The credit risk is the risk that the clients of the company will not be able to pay fully and within the usual
time limits the amounts due. Trade receivables are presented in the statement of financial position at net amount
after deducting the accrued impairment for expected credit losses.
In its commercial practice, the company has applied different distribution schemes until it achieved the
current effective approach tailored to the market situation of business, the various forms of payment, and the
inclusion of commercial rebates. The company works with contractors with a history of relationships in its core
markets, partnering with more than 70 Bulgarian and foreign licensed drug dealers.
Work with NHIF and state hospitals also requires a policy of deferred payments. In this sense, although
there is a concentration of credit risk, it is controlled through selection, ongoing monitoring of liquidity and
financial stability of the trading partners as well as direct communication with them and the search for rapid
measures at first indicators of problems.
Liquidity risk
The liquidity risk is expressed in the negative situation that the company will not be able to meet
unconditionally all its obligations according to their maturity. The Company generates and maintains a sufficient
volume of liquidity. An internal source of liquidity for the company is its core business generating sufficient
operational flows. External sources of funding are banks and other permanent partners. In order to isolate
potential liquidity risk, the company operates a system of alternative mechanisms of action and forecasts, the
ultimate effect of which is the maintenance of good liquidity, respectively the ability to finance its business
activity. This is complemented by ongoing monitoring of the maturity of assets and liabilities and control of
outgoing cash flows.
Management report – “Sopharma” AD 2024
28
Risk of interest-bearing cash flows
In the structure of the Company's assets, interest-bearing assets are represented by the cash at floating
rate and the loans granted at a fixed interest rate. On the other hand, the borrowed funds of the company in the
form of long-term and short-term loans are usually with variable interest rates.
This circumstance partly puts the cash flows of the company at interest rate risk. The coverage of this risk
is achieved in two ways:
(a) optimizing sources 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 company. 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 with a
possible update of the variable component. This also minimizes the probability of a change in the unfavorable
direction of cash flows.
The management of the Company is 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 financial result and equity is measured when changing with certain points
or percentages. For each simulation, the same assumption of interest rate change applies to all major currencies.
Calculations are made for 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
In terms of the main intangible resources that management considers critical for the successful
implementation of the Company'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 Company;
• 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 Company's strategy.
In terms of customers and suppliers
• Establishment of long-term contractual relationships based on reliability of quality and rhythm of
deliveries, and in terms of 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.
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.
Management report – “Sopharma” AD 2024
29
IV. Information under Article 247 and Art. 240b of the Commercial Law
1.
Information under Art. 247 of the Commercial Law
Information concerning the course of activity and the condition of the Company and explanations
regarding the annual financial statements
Section II and III, describe the operations and the position of the Company and explain the annual financial
statements.
Remunerations received in total during the year by the members of the councils and procurators
The remuneration and other short-term income of the Board of Directors and procurators for 2024
amounted to BGN
1 786 thousand and are as follows:
• Current - BGN 1 383 thousand;
• Tantieme - BGN 403 thousand.
Acquired, held and transferred by the members of the board during the year shares and bonds of the
company
The shares of the Company acquired, owned and transferred in 2024 by the members of the Board of
Directors and the procurator of the company are as follows:
31.12.2024
31.12.2023
Change
Members of the Board
of directors and
Procurator
Shares
Relative
share of the
capital %
Shares
Relative
share of the
capital %
Acquired
shares in
2024
Transferred
shares in
2024
Shares
Ognian Donev
16 244 050
9.07%
14 441 613
8.37%
1 842 441
40 004
1 802 437
Vessela Stoeva
150
0.00%
150
0.00%
-
-
-
Alexandar Chaushev
458 042
0.26%
390 442
0.23%
67 600
-
67 600
Bissera Lazarova
34 200
0.02%
30 000
0.02%
4 200
-
4 200
Ivan Badinski
2 030
0.00%
2 030
0.00%
-
-
-
Simeon Donev
195 450
0.11%
195 450
0.11%
-
-
-
The Company has no issued 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
Management report – “Sopharma” AD 2024
30
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.;
• “Sofprint Group” AD, UIC 175413277 with seat and headquarters: Sofia, 12 Pozitano Str.;
• “Sofconsult Group” AD, UIC 175413245, with seat and headquarters: Sofia, 12 Pozitano Str.;
• “Sopharma” AD, UIC 831902088, with seat and headquarters: 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 seat and headquarters in Sofia, 16 Iliensko
Shose Str. – in liquidation.
• “Selso” EOOD, UIC: 206522151, with seat and headquarters in Sofia, 12 Pozitano Str.
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. Slaveikov Square.
Alexandar Viktorov Chaushev 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.
• "Assa Asset Management" OOD, UIC 131156297, with seat and headquarters in Sofia, 1B Dimcho
Debelyanov Str, Entr. A; Fl. 3; App. 8.
• “Pomorie vineyard” AD, UIC: 102819348, with headquarters: Pomorie, 19 Otets Paisii 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. –
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 address management in Sofia, 5 Lachezar Stanchev Str.,
Building A – Chairman of the Supervisory Board.
Management report – “Sopharma” AD 2024
31
• “Doverie Capital” AD, UIC 130362127, with headquarters in Sofia, 5 Lachezar Stanchev Str. – Member
of the Supervisory Board.
• “Sopharma” AD, UIC 831902088, with seat and headquarters in Sofia, 16 Iliensko Shose Str. –
Chairman of the Board of Directors and Executive Director.
Vessela Lyubenova Stoeva participates in the management/supervisory body for the following companies:
• “VLS” AD, UIC 175082980, with headquarters in Sofia, 9 P. R. Slaveikov 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.
Alexandar Victorov Chaushev 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 Commercial Law)
The information is reflected in Section III, paragraph 4 of this Report - Future development of the Company
(Article 39, paragraph 4, of the Accountancy Act).
1. 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 which substantially deviate from market
conditions
In
2024 there are no contracts that are outside the ordinary business of the Company or significantly
deviate from market conditions.
Management report – “Sopharma” AD 2024
32
V. Information required in Annex 2 to art. 10, item 1 of Regulation 2 of LPOS
1. Information given in value or quantitative terms concerning the main categories of goods, products
and/or services provided, including their share in sales revenue of “Sopharma” AD in general and changes in
the reporting year
The
information is included in Section III, item 2 of this document. The Company 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
percent of the expenses or sales revenue, provide information for each person for his share in sales or purchases
and links with the issuer
Information about the revenues allocated by separate categories of activities, domestic and foreign
markets are provided in Section III item 2 of this report.
Main clients of the Company with a share over 10% in sales revenues for 2024 are:
• “Sopharma Trading” AD with a relative share of 40 %, with headquarters in Sofia, Nadezhda district,
16 Rozhen Blvd., its main activity is wholesale and retail of medicines and sanitary products.
“Sopharma Trading” AD is a subsidiary of “Sopharma” AD, acting as a "pre-wholesaler" in the process
of realization of its production.
• Sopharma Ukraine with a relative share of 10%. Sopharma Ukraine is a commercial enterprise
registered in Ukraine with decision No. 10691020000029051 dated 07.08.2012 of the Unified State
Register of Legal Entities and Individuals - Entrepreneurs and with its registered office and
management address - Ukraine, Kiev, Obolonsky district, Moskovsky Avenue No. 9, building 4, floor
2, office 4-203e. Sopharma Ukraine is a subsidiary of “Sopharma” AD and is responsible for the trade
in Sopharma AD products in Ukraine.
Raw materials used exceed 3 500 items which have a dynamic structure and diverse origin (synthetic,
vegetable), physical state (liquid, solid, gaseous).
The main share of raw materials is secured by imports. Sources of supply are validated
manufacturers,
which is in line with regulatory requirements and aims to maintain consistency and traceability in terms of quality.
The respective counterparty companies operate according to the requirements of GMP, GDP and other
industry standards. “Sopharma” AD is working with a number of Bulgarian and foreign suppliers as their
selection
is done according to procedure developed in-house and aims to provide an alternative security in the supply and
competitive flexibility in trade relations. Non-negotiable conditions that “Sopharma” AD implements in the
negotiation process are: consistent quality, competitive prices and attractive payment terms, rhythmic and timely
deliveries which prevent the accumulation of inventories on the one hand, while guaranteeing the regularity of
the production process. In 2024 none of the suppliers’ share exceeds 10% of the total cost of services and
materials.
3. Information on significant transactions concluded
The Company has adopted that significant transactions are those that result or may be reasonably
assumed to lead to favorable or unfavorable changes in the amount of 5 or more percent of sales revenues or net
profit. In 2024, the Company successfully completed the first stage of the implementation of a deal to acquire
contractual rights over sales permits and trademarks related to
a portfolio of pharmaceutical products. The
Management report – “Sopharma” AD 2024
33
acquisition includes a total of 68 marketing authorizations for 14 well-known brands in 10 of the company's
traditional markets. The payment for this stage of the deal is EUR 40 million and was made with own funds and
through an already secured investment loan from a financial institution. The phased transfer of marketing
authorizations and trademarks, as well as the organization of activities related to the relevant products by market,
is pending.
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 Financial Statements.
“Sopharma” AD has not concluded transactions outside of its usual activities or that substantially deviate
from the 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 and assessment of their impact on the current year results
In 2024 there are no events and indicators of unusual nature for Sopharma AD.
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 liabilities of the Company as at 31 December 2024 are disclosed in the annual financial
statements in note "Contingent Liabilities and Commitments".
7. Information on shareholdings 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
The information on shareholdings and major investments, domestic and foreign, of “Sopharma” AD is
provided in the Notes to the annual financial statement - "Investments in subsidiaries", "Other long -term capital
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 maturity as well as information
about guarantees provided and commitments
The information on concluded by “Sopharma” AD loan agreements, guarantees provided and
commitments are disclosed in the Notes to the annual financial statements “Long-term bank loans”, “Short-term
bank loans”, and "Contingent Liabilities and Commitments". The Information about the loans of subsidiaries will
be available in the consolidated financial statements of the Group.
Management report – “Sopharma” AD 2024
34
9. Information about the concluded by the issuer, its subsidiary or parent company in their capacity as
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 loans to related parties:
• Recipient - "Industrial Holding Doverie" AD; Contract amount – BGN 3 000 thousand; interest rate –
4.93%; maturity – 31.12.2026; balance as of 31.12.2024 – BGN 3 016 thousand;
Long-term loans granted to related parties were granted to assist in financing the activities of these
companies for common strategic objectives. They are secured by pledges of securities (shares).
L
ong-term commercial loans provided by "Sopharma" AD to third parties:
• Recipient - “Pharmaplant” AD; Contract amount - BGN 2 847 thousand; interest rate – 6.05%; maturity
– 31.12.2027; balance as of 31.12.2024 – BGN 2 865 thousand.
Long-term loans granted to third parties are to help finance the activities of these companies for achieving
their strategic purposes. They are secured by pledges of shares.
Information on the loans concluded by the subsidiaries of “Sopharma” AD will be available in the
consolidated financial statements of the Group.
The short-term commercial loans provided by “Sopharma” AD to third parties are as follows:
• Recipient – Sopharmacy MC; Contract amount - EUR 695 thousand; interest rate – 3.05%; maturity –
31.12.2025; balance as at 31.12.2024 – BGN 1 651 thousand;
• Recipient – Sopharmacy MC; Contract amount - EUR 3 000 thousand; interest rate – 3.05%; maturity –
31.12.2025; balance as at 31.12.2024 – BGN 6 845 thousand;
• Recipient – "Alliance Energy Companies" AD; Contract amount – BGN 2 740 thousand; interest rate –
6 %; maturity – 31.12.2025; balance as of 31.12.2024 – BGN 2 752 thousand;
• Recipient – SIA BAH; Contract amount – EUR 152 thousand; interest rate – 4.40%; maturity –
31.12.2025; balance as of 31.12.2024 – BGN 304 thousand.
The loans granted to third parties are for the purpose of supporting the financing of activities of these
enterprises for common strategic goals. Some of them are secured by pledges of securities (shares).
10. Information on the use of funds from the issuance of new securities during the reporting period
On March 5, 2024, an increase in the company's share capital was recorded in the Commercial Register
by issuing 6 509 485 ordinary, registered, non-present, voting shares, with a nominal value of BGN 1 each and an
issue value of BGN 4,13 per share. Shares from the capital increase were subscribed by warrant holders. The funds
received from the new issue are in the amount of BGN 26 884 thousand.
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.
Management report – “Sopharma” AD 2024
35
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 Company's management currently controls the collection of receivables, the maintenance of financial
ratios under bank agreements and ensures regular servicing of its obligations. Financial risk management is fully
disclosed in the note "Financial Risk Management" to the separate 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 planned investment program for 2025 includes investments of BGN 30 million for the acquisition of
lands, buildings, machinery, equipment and software.
Sources of funding are the Company’s own funds from regular business activities. The Company is not
experiencing difficulties in carrying out its investment intentions and payments for operating activity thanks to
the generated positive cash flow and good liquidity.
14. Information about changes in the reporting period in the basic principles of management of the issuer
and its group of companies within the meaning of 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 applied by the issuer in the process of preparing the financial
statements, internal control system and risk management
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 Board of directors 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, which is not public company 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.
Management report – “Sopharma” AD 2024
36
Information on the shares of “Sopharma” AD held by members of the Board of Directors and the
procurators is listed in section IV of this report – information in accordance with Art. 247 paragraph 2 of the
Commercial Law.
Members of the Audit Committee
31.12.2024
31.12.2023
Number of
shares
Rel. share
of the
capital %
Number of
shares
Rel. share
of the
capital %
Change
Tzvetanka Zlateva
-
-
-
-
-
Vasil Naidenov
386
0.00%
386
0.00%
-
Kristina Atanasova - Eliot
-
-
-
-
-
By Decision № 804 - Е of November 4, 2021, the Financial Supervision Commission entered 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 to 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 December 31, 2024 no member of the Board of Directors and of 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 percent of its equity, provide information about each case separately
There are no pending legal, administrative or arbitration proceedings relating to liabilities or receivables.
21. Information about the Investor Relations Director, including telephone number and mailing address
Director of Investor Relations is Pelagia Viatcheva, tel. +359 2 8134 319, correspondence address - Sofia,
5 Lachezar Stanchev Str., Building A, fl. 11.
Management report – “Sopharma” AD 2024
37
VI.Information under Appendix 3 to Article 10, item 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.
The total number of shares issued by “Sopharma” AD as at December 31, 2024 is 179 100 063 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 December 31, 2024:
• Individuals: 6 491 – 26 081 635 shares – 14.56%
• Legal entities: 142 – 153 018 428 shares – 85.44%
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 2024 are as
follows:
SHAREHOLDERS
Number of shares
% of the capital
“Donev Investment Holding” AD, UIC: 831915121, Sofia, 12
Positano, Str.
72 074 464
40.24%
“Telecomplect invest” AD, UIC: 201653294, Sofia, 9 Slaveykov
Square
28 709 275
16.03%
Ognian Donev
16 244 050
9.07%
“Sopharma” AD, UIC: 831902088, Sofia, 16 Iliensko Shose, Str.
13 356 996
7.46%
3. Information about shareholders with special control rights
The Articles of Association of “Sopharma” AD do not provide special control rights.
Management report – “Sopharma” AD 2024
38
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.
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.
VII. Information regarding Article 8 Transparency of undertakings in non-financial statements, Regulation (EU)
2020/852 of the European Parliament and of the Council of 18 June 2020 establishing a framework to
facilitate sustainable investment and amending Regulation (EU) 2019/2088
In connection with the requirements of Art. 8 Transparency of undertakings in non-financial statements,
Regulation (EU) 2020/852 of The European Parliament and The Council of June 18, 2020 on the establishment of
a framework to facilitate sustainable investments, and amending Regulation (EU) 2019/2088, the Company should
disclose whether its activity is eligible under the current Taxonomy, as a qualification system for ecologically
sustainable economic activities. The Taxonomy Regulation is a key component of the European Commission's
action plan to redirect capital flows towards a more sustainable economy.
A detailed analysis was carried out of all economic activities meeting the taxonomy listed in the Climate
Delegated Regulation based on our activities as a pharmaceutical company. The Climate Delegated Regulation
focuses on those economic activities and sectors that have the greatest potential to achieve the climate change
mitigation objective – i.e. the need to avoid creating greenhouse gas (GHG) emissions, to reduce these emissions
or to increase GHG sinks and long-term carbon storage. Sectors covered include energy, selected manufacturing
activities, transport and buildings.
The analysis includes:
1. Assessment of the eligibility of economic activities under the delegated acts of the Taxonomy;
2. Classification of the eligible values of turnover, capital expenditure and operating expenditure;
3. Assessment of compliance with the substantial contribution and the criteria for “no significant harm
(NSH) and minimum safeguards”.
In 2024, we identified eligible economic activities based on the six published environmental objectives.
Each of the economic activities was assessed in terms of its taxonomy eligibility percentage.
Taxonomy Eligibility
Our approach to EU Taxonomy disclosure involves a two-step process. We initially reviewed the economic
activities listed in the Taxonomy delegated acts for all environmental purposes to identify those that are relevant
to “Sopharma” AD’s business model.
As a result of this review, the following eligible economic activities were identified for 2024:
For environmental purposes “Pollution prevention and control”
1.1 Production of active pharmaceutical ingredients (API) or active substances;
1.2 Production of medicinal products within the environmental objective;
For environmental purposes “Climate change mitigation and adaptation”
4.1. Electricity generation through solar photovoltaic technology
Management report – “Sopharma” AD 2024
39
5.3 Construction, expansion and operation of wastewater collection and treatment systems
7.1. Construction of new buildings
7.2. Repair (renovation) of existing buildings
The EU Taxonomy Regulation distinguishes between three categories of capital expenditure:
• Capital expenditures related to assets or processes associated with Taxonomy-compliant economic
activities (category A);
• Capital expenditures that are part of a plan to expand Taxonomy-compliant activities or transform
eligible activities into compliant ones (category B);
• Capital expenditures related to the acquisition of products from eligible economic activities or individual
actions that allow the activities to be carried out in a low-carbon manner or to reduce greenhouse gas emissions
(category C).
In accordance with its business model, the company carries out eligible economic activities for the
Taxonomy, mainly related to the production of active pharmaceutical ingredients and medicinal products, as well
as all construction, maintenance, renovation, servicing and modernization of assets necessary for the production.
Therefore, there is currently no capital expenditure in category A.
No capital expenditure is currently planned that falls under category B, as no plans are being developed
for the transformation of eligible economic activities in accordance with the Taxonomy.
At the same time, the company is making capital expenditure related to the acquisition of products from
eligible economic activities or eligible individual actions (category C). In order to be eligible under the Taxonomy,
these capital expenditures must correspond to the economic activities specified in the Delegated Acts and be put
into operation within 18 months.
In “Sopharma” AD, such capital expenditure is mainly related to the environmental objective of climate
change mitigation and covers the following areas:
Electricity production through photovoltaic technology (Activity 4.1 of the Delegated Act on the
environmental objective "climate change mitigation");
Renovation of existing buildings (Activity 7.2 of the Delegated Act on the environmental objective "climate
change mitigation" and Activity 3.2 of the Delegated Act on the environmental objective "circular economy").
In the previous year: Construction of new buildings (Activity 7.1 of the Delegated Act on the environmental
objective "climate change mitigation" and Activity 3.1 of the Delegated Act on the environmental objective
"circular economy").
Taxonomy alignment
In order to fully assess the alignment of eligible economic activities under the Taxonomy, a systematic and
multi-step process needs to be applied. It involves a review of a number of applicable regulatory requirements,
including technical screening criteria and project documentation for each criterion, which determine:
• whether the economic activity contributes significantly to the achievement of at least one of the six EU
environmental objectives;
• and at the same time does not cause significant harm to the other objectives (the DNSH principle);
• minimum safeguards.
Due to the high level of complexity of the production processes, the regulatory framework in the
pharmaceutical industry sector and the need to involve multiple internal resources (R&D, production,
environmental control, legal and regulatory expertise), the Company currently does not have sufficient evidence
to unequivocally confirm compliance of the eligible economic activities with the technical verification criteria.
Therefore, for the reporting period, no taxonomy alignment was declared for any of the eligible economic
activities, pursuant to Article 3 of Regulation (EU) 2020/852.
Management report – “Sopharma” AD 2024
40
Following the adoption of the amendments to the delegated acts in the Taxonomy proposed within the
Omnibus, which aim to provide greater clarity and simplification of the technical criteria, we will plan actions to
develop internal processes that will allow for the assessment of compliance with the criteria for substantial
contribution and the DNSH principle. The company will use these future amendments as a basis for developing a
methodology and internal control mechanism, in order to disclose the results of the assessment of the compliance
of activities with the requirements of the EU Taxonomy in future reporting periods.
Minimum safeguards
“Sopharma” AD implements a number of policies and practices related to ethics and integrity in business,
which ensure compliance with the minimum guarantees set out in the EU Taxonomy, but due diligence processes
have not yet been structured and established. Standards such as the Organisation for Economic Co-operation and
Development Guidelines for Multinational Enterprises, the UN Principles on Business and Human Rights and the
ILO international labor standards are not part of the assessment framework.
Accounting policy
As defined in the Taxonomy Delegated Regulation, the key performance indicators (KPIs) turnover, capital
expenditure (CapEx) and operating expenses (OpEx) are determined in accordance with the International Financial
Reporting Standards (IFRS) applied to the activities of „Sopharma“ AD, and in accordance with the company's
financial statements.
KPI calculations were performed based on available accounting information for 2024, using a preliminary
internal classification of eligible economic activities.
Contextual information
Contextual information on the key performance indicators. We perceive the main part of the activity of
“Sopharma” AD related to the production of medicinal products, namely revenues from sales of medicinal
products, services and revenues from leasing contracts, see Notes 3 and 4 of the Notes to the separate annual
financial statements.
The eligible capital expenditure for 2024 relates mainly to acquired fixed and intangible assets, see Notes
15, 16 and 17 of the Notes to the separate annual financial statements.
The eligible operating expenditure relates to maintenance of buildings and equipment, rents and related
overheads, repairs of leased assets, vehicle repairs, royalties and fees, drug registration services, clinical trials and
patent fees, see Notes 6 and 8 to the separate annual financial statements.
When allocating CapEx and OpEx by economic activity, we prioritize those that directly contribute to our
core economic activity. Second, we allocate to other environmental objectives for which there are specific
screening criteria. This avoids double counting when activities contribute to multiple environmental objectives.
The following tables contain the calculations of the relevant key performance indicators:
Management report – “Sopharma” AD 2024
Code (2)
Absolute turnover (3)
Proportion of turnover (4)
Climate change mitigation (5)
Climate change adaption (6)
Water and marine resources (7)
Circular economy (8)
Polution (9)
Biodiversity and econsystems (10)
Climate change mitigation (11)
Climate change adaption(12)
Water and marine resources (13)
Circular economy (14)
Polution (15)
Biodiversity and econsystems (16)
Minimum safeguards (17)
Taxonomy aligned
proportion of
turnover for 2024
(18)
Taxonomy aligned
proportion of
turnover for 2024
(19)
Category
(enabling
activity)
(20)
Category
(transitional
activity)
(21)
'000 BGN % % % % % % % Yes/No Yes/No
Yes/No
Yes/No
Yes/No
Yes/No
Yes/No % % E T
А.TAXONOMY ELIGIBLE ACTIVITIES
А.1. Environmentally sustainable
activities (Taxonomy-aligned)
None 0 0% - - - - - - - - - - - - - - - - -
Turnover of Environmentally sustainable
activities (Taxonomy-aligned) (А.1)
0 0% - - - - - - - - - - - - - - - - -
А.2. Taxonomy eligible, but not
environmentally sustainable activities
(not Taxonomy-aligned activities)
Production of active pharmaceutical
ingredients (API) or active substances
NACE 1.1 0 0%
Production of medicinal products within
the environmental objective
NACE 1.2 221,067 86.14%
Construction of new buildings NACE 7.1 2,938
Turnover from activities which are
Taxonomy-eligible, but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (А.2.)
224,005 86.14%
Total (А.1.) + (А.2)
224,005 87.28%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover from Taxonomy-non-eligible
activities (B)
32,640 12.72%
TOTAL (А)+(B)
256,645 100%
Proportion of turnover from products or services associated with
Taxonomy-aligned economic activities – disclosure covering year 2024
Substantial contribution criteria
DNSH criteria
("Do not Significantly Harm)
Economic activities (1)
Management report – “Sopharma” AD 2024
Code (2)
Absolute turnover (3)
Proportion of turnover (4)
Climate change mitigation (5)
Climate change adaption (6)
Water and marine resources (7)
Circular economy (8)
Polution (9)
Biodiversity and econsystems (10)
Climate change mitigation (11)
Climate change adaption(12)
Water and marine resources (13)
Circular economy (14)
Polution (15)
Biodiversity and econsystems (16)
Minimum safeguards (17)
Taxonomy aligned
proportion of
turnover for 2024
(18)
Taxonomy aligned
proportion of
turnover for 2024
(19)
Category
(enabling
activity)
(20)
Category
(transitional
activity)
(21)
'000 BGN % % % % % % % Yes/No Yes/No
Yes/No
Yes/No
Yes/No
Yes/No
Yes/No % % E T
А.TAXONOMY ELIGIBLE ACTIVITIES %
А.1. Environmentally sustainable
activities (Taxonomy-aligned)
None 0 0% - - - - - - - - - - - - - - - - -
Turnover of Environmentally sustainable
activities (Taxonomy-aligned) (А.1)
0 0% - - - - - - - - - - - - - - - - -
А.2. Taxonomy eligible, but not
environmentally sustainable activities
(not Taxonomy-aligned activities)
Production of active pharmaceutical
ingredients (API) or active substances
NACE 1.1 2,525 1.34%
Production of medicinal products within
the environmental objective
NACE 1.2 9,051 4.81%
Electricity generation through solar
photovoltaic technology
NACE 4.1 0 0.00%
Construction, expansion and operation
of wastewater collection and treatment
systems
NACE 5.3 0 0.00%
Construction of new buildings
NACE 7.1 3,980 2.11%
Repair (renovation) of existing buildings
NACE 7.2 234 0.12%
Turnover from activities which are
Taxonomy-eligible, but not
environmentally sustainable activities
(not Taxonomy-aligned activities) (А.2.)
15,790 8.39%
Total (А.1.) + (А.2)
15,790 8.39%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover from Taxonomy-non-eligible
activities (B)
172,404 91.61%
TOTAL (А)+(B)
188,194 100.00%
Proportion of CapEx from products or services associated with Taxonomy-
aligned economic activities – disclosure covering year 2024
Substantial contribution criteria
DNSH criteria
("Do not Significantly Harm)
Economic activities (1)
Management report – “Sopharma” AD 2024
Code (2)
Absolute turnover (3)
Proportion of turnover (4)
Climate change mitigation (5)
Climate change adaption (6)
Water and marine resources (7)
Circular economy (8)
Polution (9)
Biodiversity and econsystems (10)
Climate change mitigation (11)
Climate change adaption(12)
Water and marine resources (13)
Circular economy (14)
Polution (15)
Biodiversity and econsystems (16)
Minimum safeguards (17)
Taxonomy aligned
proportion of
turnover for 2024
(18)
Taxonomy aligned
proportion of
turnover for 2024
(19)
Category
(enabling
activity)
(20)
Category
(transitional
activity)
(21)
'000 BGN % % % % % % % Yes/No Yes/No
Yes/No
Yes/No
Yes/No
Yes/No
Yes/No % % E T
А.TAXONOMY ELIGIBLE ACTIVITIES %
А.1. Environmentally sustainable activities
(Taxonomy-aligned)
None 0 0% - - - - - - - - - - - - - - - - -
Turnover of Environmentally sustainable
activities (Taxonomy-aligned) (А.1)
0 0% - - - - - - - - - - - - - - - - -
А.2. Taxonomy eligible, but not
environmentally sustainable activities (not
Taxonomy-aligned activities)
Production of active pharmaceutical
ingredients (API) or active substances
NACE 1.1 106 1.81%
Production of medicinal products within
the environmental objective
NACE 1.2 1,222 20.90%
Electricity generation through solar
photovoltaic technology
NACE 4.1 0 0.00%
Construction, expansion and operation of
wastewater collection and treatment
systems
NACE 5.3 0 0.00%
Construction of new buildings NACE 7.1 645 11.03%
Repair (renovation) of existing buildings NACE 7.2 2,113 36.14%
Turnover from activities which are
Taxonomy-eligible, but not
environmentally sustainable activities (not
Taxonomy-aligned activities) (А.2.)
4,086 69.88%
Total (А.1.) + (А.2)
4,086 69.88%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES
Turnover from Taxonomy-non-eligible
activities (B)
1,761 30.12%
TOTAL (А)+(B)
5,847 100.00%
Proportion of OpEx from products or services associated with Taxonomy-
aligned economic activities – disclosure covering year 2024
Substantial contribution criteria
DNSH criteria
("Do not Significantly Harm)
Economic activities (1)
Management report – “Sopharma” AD 2024
28.03.2025 Ognian Donev, PhD
Executive Director
Ognian
Ivanov
Donev
Digitally signed by
Ognian Ivanov Donev
Date: 2025.03.28
17:05:10 +02'00'
.
1
DECLARATION
for corporate governance
according to art. 40 of the Accounting Act and art. 100m, para 8 of LPOS
of “SOPHARMA” AD
The undersigned Ognian Ivanov Donev, in my 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” AD (the Company) in addition to the Code
“Sopharma” AD adopted with a Decision of the Board of Directors and continues to
comply with the established in October 2007, with subsequent amendments in 2012, 2016 and
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 Company, its shareholders and all stakeholders - employees, business partners,
creditors of the Company, potential and future investors and society as a whole.
The Board of Directors of “Sopharma” AD adheres to the Good Corporate Governance
Program, which is in line with effective regulation, internationally recognized standards for good
corporate governance and the Bulgarian National Code of Corporate Governance.
Along with the principles of recommendatory nature, “Sopharma” AD establishes a
certain set of requirements for corporate governance, compliance with which is mandatory for
the management bodies of the Company, 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 Company and the interested parties;
• Ensuring timely and accurate disclosure of information on all matters related to
the Company, including the financial condition, results, ownership and management of the
Company;
• Supporting the strategic management of the Company, control over the activities
of the Board of Directors 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 doing so. Companies publish information on the implementation of the Code in
their annual reports and on their web pages.
.
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The actions of the management of “Sopharma” AD 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 Company.
The Board of Directors approves the Disclosure Policy in accordance with the legal
requirements and the Articles of Association.
“Sopharma AD” participates in the establishment of the National Corporate Governance
Commission.
1. MANAGEMENT OF THE COMPANY - 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, determined by the
General Meeting of Shareholders. 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 Ethics of the Company's employees, adopted by the Board of Directors on March 26, 2007.
The management of “Sopharma” AD, represented by the Board of Directors, also:
• monitors the results of the Company's activities and, if necessary, initiates changes
in management;
• treats all shareholders equally, acts in their interest and with the care of a good
trader;
• researches and builds knowledge about the impact of climate on the company's
development and affirms the company's priorities in the field of sustainability and climate
change;
• strives to follow the economic, social and environmental priorities of the
Company;
• 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 Company;
• gives the guidelines, approves and controls the implementation of: the business
plan of the Company, essential transactions, as well as other activities, as established in the
Articles of Association of the Company;
• reports on its activities to the General Meeting of Shareholders, preparing an
annual report and submitting it for approval to the GMS.
.
3
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
Company are observed.
The Management Agreement with the Executive Director is in accordance with the
Articles of Association and the Policy developed by the Board of Directors to determine the
remuneration of the members of the Board of Directors, approved by the General Meeting of
Shareholders on June 28, 2024. The contract contains clauses that determine the obligations and
tasks of the person, the criteria for the amount of his remuneration, his obligations for loyalty to
the Company and the grounds for dismissal.
The performance of the members of the Board of Directors is subject to annual
evaluation.
1.3. Structure and competence
The number of 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 Art. 234 of the CA
and Art. 116a, paragraph 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 Company.
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 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.
The members of the Board of Directors of “Sopharma” AD have appropriate knowledge
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 Company. 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.
.
4
The election of the members of the Board of Directors of the Company is made 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 Company and compliance with legal requirements. According to the Articles of
Association of the Company, the members of the Board of Directors may be re-elected without
restriction.
The selection of members of the Board of Directors is carried out in compliance with a
procedure containing objective criteria guaranteeing gender equality.
1.4. Remuneration of the members of the Board of Directors
The Board of Directors of “Sopharma” AD has prepared and implements a Remuneration
Policy, adopted by the General Meeting of Shareholders on September 25, 2020. 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 the Company.
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 the Board of Directors in
the activity and the results of the Company. The members of the Board of Directors 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
Board of Directors of “Sopharma” AD. These requirements are applied through the Remuneration
Policy of the members of the Board of Directors, adopted by the General Meeting of Shareholders
on September 25, 2020.
• The need for compliance of the interests of the members of the Board of Directors,
the long-term interests and the sustainable development of the Company. The remuneration of
the members of the Board of Directors is 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 Company.
• 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. According to the Articles of Association of the 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 remuneration and bonuses of the members of the Board of Directors 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.
.
5
So far, the executive member of the Board of Directors has not been granted shares, stock
options or other financial instruments.
By qualified majority, the Board of Directors may decide to determine the range of
employees, among which an amount of up to 2% of the value of the Company's profit for each
financial year shall be distributed as a bonus. 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 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 website: www.sopharmagroup.com
1.5. Conflict of interests
The members of the Board of Directors 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 “Sopharma” AD, in the Code of Ethics of the Company, as well as in the
Policy for Disclosure of Information of “Sopharma” AD in connection with the requirements of
MFPA and Regulation 596/2014. of the EU.
The members of the Board of Directors have an obligation to immediately disclose
conflicts of interest and to provide the shareholders with access to information on transactions
between the Company and its subsidiaries and members of the Board of Directors or related
persons.
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 Board of Directors 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.
Art. 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 Board of Directors is supported by committees, as the Board of Directors
determines the need for their establishment in accordance with the specifics of the Company.
In accordance with the requirements of the current legislation and on the basis of the
criteria determined by it, the Board of Directors proposes to the General Meeting of Shareholders
of the Company to elect an audit committee that meets the legal requirements and specific needs
of the Company.
.
6
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 Company'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.
The management of “Sopharma” AD 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.
“Sopharma” AD has 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 “Sopharma” AD, represented by the Board of Directors, 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 company. The management provides
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
management of “Sopharma” AD provides 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 “Sopharma” AD 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 Company in person or through representatives, as well as by
correspondence or electronically. The procedure for the participation of the shareholders in the
General Meeting is announced in the Invitation.
• 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
specific person.
.
7
• 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.
• 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 Board shall determine the procedures and the procedure 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.
All members of the Management try to attend the General Meetings of the shareholders
of the Company.
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: www.sopharmagroup.com
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 Company maintains on its website a special section on the rights of shareholders and
their participation in the General Meeting of Shareholders.
The management of the Company assists 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 management of the Company guarantees 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 2024, Sopharma AD held three General Meetings of shareholders and two General
Meeting of warrant holders. At the Extraordinary General Meetings of shareholders, issues such
as transformation through merger of the subsidiary “Veta Pharma” AD, distribution of a 6-month
dividend for 2024, conditions for the repurchase of own shares and election of a registered
auditor of the Company were voted on.
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8
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 “Sopharma” AD guarantees the provision of sufficient
information to investors regarding the rights granted by all shares of each class before their
acquisition.
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 Company, the corporate management does not prevent the
shareholders, including the institutional ones, from consulting each other on issues related to
their basic shareholder rights. committing abuses.
3.7. Shareholder transactions with controlling rights and abusive transactions
The management of “Sopharma” AD does 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 Board of Directors of “Sopharma” AD prepares a Report on the implementation of
the remuneration policy of the members of the Board of Directors in 2024. 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 Company.
4 . DISCLOSURE OF INFORMATION
The management of the Company approves 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, Management establishes
and maintains 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 management of the Company also:
• ensures that the disclosure system provides complete, timely, accurate and
comprehensible information that allows for objective and informed decisions and assessments;
• promptly discloses the capital structure of the Company and agreements that lead
to the exercise of control in accordance with its rules for disclosure of information;
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9
• within the limits of the current legislation and in accordance with the provisions
of the Articles of Association of the Company ensures 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;
• approves and controls the observance of internal rules for preparation of the
annual and interim reports and the procedure for disclosure of information;
• has adopted a Disclosure Policy, which ensures the timely disclosure of any
material periodic and incidental information about the Company, its management, its corporate
management, its operational activities, its shareholder structure;
• discloses 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” AD maintains a website of the Company
with approved content, scope and periodicity of the disclosed information. The Company's
website is: www.sopharmagroup.com
The information disclosed through the Company's website includes:
➢ basic commercial and corporate information identifying the Company;
➢ up-to-date information on the shareholder structure;
➢ The Articles of Association of the Company and the adopted policies related to the
activities and functioning of the Company;
➢ information on the structure and composition of the management and control
bodies of the 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 the
Company, 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 Company 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 Company;
➢ 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 Art. 223a of the Commerce Act;
➢ contact information with the Investor Relations Director of the Company.
The company also maintains foreign language versions of the corporate website with
similar content in the following languages: English, Russian and Polish.
The company periodically discloses information about corporate governance. Disclosure
of corporate governance information is in accordance with the "comply or explain" principle.
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The management ensures the disclosure of any material periodic and incidental
information about the Company, through channels that provide equal and timely access to
relevant information by users.
In 2024 the Management of “Sopharma” AD discloses 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 information system, the Investor.bg information system, 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 Management is committed to establishing specific actions and policies
regarding the sustainable development of the company, including the disclosure of information
related to climate and social aspects of their activities.
The Corporate Management ensures effective interaction with stakeholders. This
category includes certain groups of persons who are directly affected by the Company and who
in turn can influence its activities, incl. suppliers, customers, employees, creditors, public
pressure groups and other employees. The company identifies 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, management complies with legal requirements and the principles
of transparency, accountability and business ethics.
The management of the Company guarantees sufficient information to all interested
parties about their legally established rights.
In accordance with this policy, the management of “Sopharma” AD has developed 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 Company and the economic, social and environmentally friendly
development of the environment in which it operates.
Corporate management maintains effective relationships with stakeholders. Periodically,
in accordance with the legal norms and the good international practice for disclosure of non-
financial information, the Company 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 Company; environmental protection and
human rights violations.
Management guarantees the right to timely and regular access to relevant, sufficient and
reliable information about the Company when stakeholders participate in the corporate
governance process.
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6. INSTITUTIONAL INVESTORS, FINANCIAL INSTRUMENTS MARKETS AND OTHER
INTERMEDIARIES
The corporate management ensures effective interaction of the Company with its
shareholders - institutional investors, as well as with the regulated markets of financial
instruments and investment intermediaries in these markets.
The management of the Company uses the services of investment intermediaries, whose
recommendations or actions are based on market information and principles. The same applies
respectively to the operators on the markets where 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.
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 “m ” 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
“Sopharma” AD complies with all parts of the Corporate Governance Code that are
applicable to the 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 accounting of “Sopharma” AD
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 accounting of “Sopharma” AD
is a set of behavioral and technical principles, rules, means, procedures and control actions,
which are specially developed and adapted to the specifics of the Company, 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
• 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 Company complies 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 Company follows the instructions and guidelines of the top management
regarding the reporting and documentation;
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• 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
company's assets, 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
accounting include:
a) adoption and observance of the ethical principles and rules of conduct, which
are adopted by the Code of Ethics of the employees of “Sopharma” AD 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 accounting,
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 management of the various levels of “Sopharma” AD has introduced and constantly
monitors the observance of ethical values such as integrity, integrity, care, responsibility,
teamwork and continuous improvement as foundations of the professional conduct of all persons
involved in the processes related to accounting and financial reporting in the company. 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 company. They
are clearly communicated with all financial and accounting and control staff, and they are
constantly validated in practice.
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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 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. Their functions and responsibilities
can be summarized as follows:
• The Board of Directors accepts and confirms: 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 the Sopharma Group;
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• 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.
Policy and practice related to human resources in the financial and accounting
departments
The Company has 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. In the selection leading are 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 Company for risk assessment related to financial reporting
The Board of Directors, the Audit Committee, the Chief Financial Officer and the Chief
Accountant 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 accounting 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 Company as main:
a) external risks are defined as: change in the business environment and the market
environment of the company 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 company, 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, who proposes management solutions
and properly reflects their effects in the financial statements. The new risk factors are identified
by the CFO 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.
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Company information system. Accounting Department of the company - organization of
the accounting function in the company 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. 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 them 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 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 transactions and related disclosures in the financial
statements in accordance with the requirements of the reporting framework.
Information Technology Department is responsible for the good and risk-free functioning
of the information system in the company.
Accounting Department - fulfillment of the accounting function and key role in the
financial reporting process
The Accounting Department of the 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. 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.
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The accounting policy of the Company is subject to annual approval at two levels - by the
Chief Financial Officer and the Board of Directors. 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 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, 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.
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 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.
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The physical controls applied 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. 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 company is in the process of constantly expanding the formalized control procedures
and activities.
Ongoing monitoring of controls
An important priority goal of the management, 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 Company 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.
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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 Art. 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 Art. 85 of Directive 2001/34/EC;
During the year there is no reaching, exceeding or falling below one of the following limits
of 10%, 20%, 1/3, 50% and 2/3 of the share capital of the Company.
2. Holders of all securities with special control rights and description of these rights;
There are no securities with special rights. According to the Articles of Association of
“Sopharma” AD, all shares issued by the Company 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.
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 voting rights.
4. The rules governing the appointment or replacement of members of the board and the
amendment of the Articles of Association;
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 Art. 234 of the CA and Art. 116a, paragraph 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.
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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 Statute
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 are entered in the Commercial Register under
number №20250127153202.
5. The powers of the members of the board, and in particular the right to issue or
repurchase shares.
The powers of the Board of Directors are regulated in the Articles of Association of the
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,
according to Chapter Three, Art. 11a of the Articles of Association of the company, as well as in
connection with the decisions taken by the GMS, held on 23.06.2010, of EGMS of 30.11.2011, of
EGMS of 01.11.2012, of EGMS of 28.02.2013, of EGMS of 23.02.2018, and to EGMS from
04.08.2023, of EGM of 25.10.2024.
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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 company is managed and represented by a Board of Directors, which consists of five
individuals meeting the requirements of Art. 234 of the CA and Art. 116a, paragraph 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 Activity Report.
According to Art. 116a, paragraph 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 Chaushev
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.
.
21
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
Company, except for those which, according to the current legislation and the Articles of
Association, are within the exclusive competence of the General Meeting.
Assigns the implementation of its decisions and the implementation of functions for the
operational management 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 submit a declaration to the Financial Supervision
Commission /FSC/, to “BSE-Sofia” 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;
.
22
• 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:
• 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: Tsvetanka
Zlateva, Vasil Piralkov and Vasil Naidenov with a 3-year term , who was re-elected 3 consecutive
times. With a decision of the GMS from 02.06.2017 Vasil Piralkov was replaced by Kristina
Atanasova.
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” AD 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, 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 Company 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.
.
23
• 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 company's reputation and overall performance to external
stakeholders and society.
• Creating opportunities for disadvantaged groups and building the unity of society.
“Sopharma” AD 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 company. “Sopharma” AD 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.
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” AD. They meet the high standards
applied by the Company in order to achieve its goals and strategies.
The composition of the Board of Directors and the number of persons included in it is
consistent with the size, complexity and scope of the Company's activities and ensures a sufficient
level of general expertise.
The members of the Board of Directors of “Sopharma” AD 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 Board of Directors of the Company includes economists, financiers and individuals
with higher education in the field of international relations and other areas of business.
The principle of gender equality has been observed, as evidenced by the many women
holding senior management positions in the Society, such as Ms. Vessela Stoeva and Ms. Bisera
Lazarova, members of the Board of Directors, Ms. Tsvetanka Zlateva and Ms. Kristina Atanasova,
members of the Audit Committee, are just examples.
The policy of diversity with regard to governing bodies does not allow for age restrictions.
The Society has 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.
The male-female ratio is 35% to 65% in favor of women and is imposed by the nature of
the production process.
The diversity policy with regard to staff (directors of directorates, heads of structural units,
employees) does not allow for age restrictions.
There are no cases of discrimination in the Company 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.
.
24
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.
28.03.2025 Ognian Donev, PhD
Executive Director
Ognian
Ivanov Donev
Digitally signed by
Ognian Ivanov Donev
Date: 2025.03.28
17:06:24 +02'00'
1
REPORT
REGARDING
THE APPLICATION OF THE REMUNERATION POLICY FOR
THE MEMBERS OF THE BOARD OF DIRECTORS OF
“SOPHARMA” AD FOR 2024
The present report has been prepared in accordance with art. 12, par. 1 of
Ordinance №48 of the Financial Supervision Commission from 20 March 2013 and art. 8
(2) of the Remuneration policy for the members of the Board of Directors of “Sopharma”
AD, prepared by the Board of Directors and approved by the Annual General Meeting of
shareholders on 25 September 2020.
In the present report the Company discloses the details of the application of the
Remuneration policy for the members of the Board of Directors and the Executive Director,
emphasising on the avoidance of creating incentives for taking excessive risk, conflict of
interest or other behavior, leading to adverse consequences.
1. Information about the decision process in preparing the Remuneration policy,
including, if applicable, information about the term and composition of the Remuneration
committee, the name of the external consultants, whose services have been used in
preparing the Remuneration policy
The Remuneration policy has been adopted in accordance with Ordinance № 48
from 20 March 2013 and in compliance with the provisions of the Law on Public Offering of
Securities regulating the remuneration of the members of the managing and controlling
bodies of public companies. The latest changes in the remuneration policy were adopted by
the General Meeting of Shareholders on 25 September 2020.
The remunerations of the members of the Board of Directors are based on the
operational results of the Company and are in accordance with the business strategy, goals,
values and long-term interests of the Company, as well as the avoidance of discrimination,
conflict of interest and unequal treatment of persons in determining their remuneration.
The Company has not formed a Remuneration committee. No external consultants
have taken part in preparing the Remuneration policy.
In 2024 “Sopharma” AD applied the Remuneration policy of the Board of Directors in
accordance with the legal requirements and the recommendations of the National
Corporate Governance Code.
2. Information about the relative weight of the variable and fixed components of the
remuneration of the members of management and controlling bodies
According to the Remuneration policy the members of the Board of Directors and
the Executive Director are entitled to remuneration, the type, size and due period of which
are determined with a decision of the Annual General Meeting and which is paid out under
the terms and conditions of the management contracts between them and the Company.
2
On the basis of art. 24, par. 3, letter A of the Company's Articles of Association and a
decision of the Annual General Meeting of 28 June 2024 the permanent monthly
remuneration of a member of the Board of Directors is BGN 10 000 / ten thousand / or BGN
120 000 / one hundred and twenty thousand / annually, and of the Executive Director the
permanent monthly remuneration is BGN 30 000 / thirty thousand / or BGN 360 000 / three
hundred and sixty thousand/ annually.
The Executive Director of the Company was awarded an additional remuneration of
1% of the profit for 2023 per Separate Annual Financial Statements for 2023 approved by
the General Meeting of Shareholders, namely BGN 481 220 /four hundred eighty-one
thousand two hundred twenty/, with 40% being deferred by the GMS for a period of three
years.
The ratio between fixed and variable remuneration of the executive director in 2024
is 0,75.
3. Information about the criteria for achieved targets, based on which stock options,
stocks of the Company or other types of variable payment are provided and an
explanation how the criteria under art. 14, par. 2 and 3 from Ordinance 48 contribute to
the long-term interests of the company
The current Remuneration policy for the members of the Board of Directors does not
foresee the granting of stocks, stock options or other rights for acquisition of stocks of the
Company as a remuneration of the members of the Board of Directors. No part of the
remuneration is based on changes in the price of the shares of the Company.
The criteria for the variable remuneration of the Executive Director are objective and
measurable and are based on the results achieved from activity, previously determined by
the company in the remuneration policy, which promote the long-term stability of the
company and include non-financial indicators, such as compliance with applicable rules and
procedures.
4. Clarifications regarding the methods applied for determining the successful
reaching of targets
The financial criteria for achieved results, which are set in the Policy for determining
the remuneration and are used in the assessment for determining the variable
remuneration of the Executive Director in 2024 are the realization of revenues from the
operations of “Sopharma” AD and the realization of positive gross financial result.
The specific parameters of the financial criteria were determined by a decision of the
Board of Directors based on an analysis of the results achieved under the financial criteria
set for the previous year, as well as the approved budget and strategy for the next calendar
year. The assessment of the fulfillment of the financial criteria for achieved results is
performed annually, based on the audited by the auditor annual financial statements of the
company.
3
The non-financial criteria for achieved results for 2024 are determined by the Board
of Directors of “Sopharma” AD, according to the immediate need for change and a flexible
approach to adjusting the work environment, processes and relationships with third parties
in order to maintain the normal pace of work in the period of the crisis caused by Russia's
hostile invasion in Ukraine and the subsequent military actions on the territory of Ukraine,
the economic sanctions imposed on Russia, as well as their consequences that affected
logistics, price agreements and led to an increase in inflation and a change in almost all
business practices in Europe. In addition, in compliance with the requirements of Directive
(EU) 2022/2464 of the European Parliament and of the Council of 14 December 2022
amending Regulation (EU) No 537/2014, Directive 2004/109/EC, Directive 2006/43/EC and
Directive 2013/34/EU, with regard to sustainability reporting by companies, a compliance
project was launched, the aim of which in the first two years of reporting is to establish
relevant practices in the Company, which will ultimately lead to the incorporation of the
sustainability strategy into the Company's business strategy.
In addition, Art. 12 of the Policy for formation of the remuneration of the members
of the Board of Directors contains a clause, allowing the Company to request the returning
of the paid variable remuneration, determined on the basis of the principles of art. 9.3 of
the same. Remuneration based on data, which subsequently proves to be false, shall be
subject to return. The decision for requesting the return shall be taken by the General
Meeting of Shareholders of the Company.
5. Clarification regarding the correlation between the remuneration and the achieved
results
Chapter II and III of the Remuneration policy contain the main guidelines applied in
determining the remuneration of the members of the Board of Directors.
6. Base remuneration and justification of the annual scheme for bonus payments
and/or all other non-monetary additional remunerations
On the basis of art. 24, par. 3, letter B of the Articles of Association the Executive
Director of the company will receive an additional payment of 1% of the profit for 2023
recorded in the approved Annual Financial Statements by the General Meeting of
shareholders, namely BGN 481 220 /four hundred eighty-one thousand two hundred
twenty/.
In 2024 in favour of the Executive Director have been accrued tantiems for BGN 481
220 and BGN 403 391 haже been paid.
According to Article 9.3, para. 4 of the Remuneration Policy 40% of the Executive
Director's additional remuneration is deferred for a period of three years. As of 31
December 2024, the deferred variable remuneration of the Executive Director amounts to
BGN 412 624,16 and shall be distributed as follows:
- BGN 93 878,71 has a maturity in 2025;
- BGN 137 286,99 has a maturity in 2026;
- BGN 181 458,46 has a maturity in 2027.
4
7. Description of the main features of the scheme for additional voluntary retirement
insurance and information about the paid and/or due contributions by the Company in
favor of the relevant member of the management or supervisory body for the respective
financial year, when applicable
The Company has no obligations regarding additional voluntary retirement insurance
of the members of the Board of Directors and the Company has no liabilities related to
retirement benefits for the members during the reporting financial year.
8. Information regarding the deferment period for the payment of the variable
remuneration
According to the Articles of Association, 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 bonus of up to one percent of the net profit of the Company.
The payment of 40% of variable remuneration shall be deferred for a period of 3
years. Repayment of the deferred portion of the variable remuneration is made once a year
at maturity.
9. Information about the compensation policy after contract termination
In case of early termination of Management contract with a member of the Board of
Directors, respectively with the Executive Director, the total amount of the compensations,
due in relation to the early termination, as well as the payments, related to the notification
period or provisioned in the clause, prohibiting the conduct of competing activities, cannot
exceed the amount of the annual fixed remuneration of the person paid for the last two
years. The above-mentioned compensations shall not be payable when the contract is
terminated due to unsatisfactory results and/or faulty behavior of the member of the Board
of Directors, respectively of the Executive Director.
10. Information about the period, in which the shares cannot be transferred and the
options on shares cannot be exercised, concerning variable remuneration, based on shares
The current Remuneration policy for the members of the Board of Directors does not
provision for this type of remuneration.
11. Information about the policy for retaining a certain amount of stock until the end
of the term of the members of the management and controlling bodies after expiration of
the period under item 10 in which the shares cannot be transferred and the options on
shares cannot be exercised
The Remuneration policy for the members of the Board of Directors does not
provide for such an opportunity.
12. Information about the contracts of the members of the management and
controlling bodies, including the term of each contract, the notification period for
termination and details regarding the compensations and/or other due payments in the
event of early termination
5
The members of the Board of Directors were elected by decision of the General
Meeting held on 4 June 2021 for a period of 5 years.
13. Full amount of the remuneration and other incentives of the members of the
management and controlling bodies for the respective financial year
Total accrued remuneration of the members of the management and controlling
bodies for the current financial year amounts to BGN 1 927 707.
14. Information about the remuneration of each person, who has been member of a
management or controlling body of a public company for a certain period in the respective
financial year
a) the full amount of the paid and/or accrued remuneration of the person for the
respective financial year
BGN
Paid
remuneration
Accrued
remuneration
Ognian Ivanov Donev
763 391
841 220
Vessela Lyubenova Stoeva
182 102
195 155
Bissera Nikolaeva Lazarova
120 000
120 000
Alexandar Viktorov Chaushev
120 000
120 000
Ivan Venetskov Badinski
120 000
120 000
Procurator - Simeon Donev
348 865
387 114
Violeta Petrova Tsacheva *
43 200*
43 200*
Stoyan Valchinov Garov*
13 600*
13 600*
Boris Anchev Borisov*
74 572*
87 418*
*Board of Directors of “Veta Pharma” AD – from 1 January 2024 to 2 September
2024.
b) the remuneration and other tangible and intangible incentives received by the
person from companies of the same group
Total remuneration received from other companies in the same group
amounted to BGN 24 000 for Ognian Donev.
c) remuneration received by the person in the form of profit sharing and/or bonuses
and the reasons for its provision
In 2024 at the Annual General meeting held on 28 June 2024 is voted (on the
basis of art. 24, par. 3, letter "B" of the Company’s Articles of Association) that
Ognian Ivanov Donev, in his capacity as Executive Director of the Company and
member of the Board of Directors, is to be paid an additional remuneration of 1%
(one percent) of the amount of profit realized in 2023 according to the adopted
Annual Financial statements.
None of the other members of the Board of Directors of “Sopharma” AD
received any remuneration from the Company in the form of profit sharing and/or
other bonuses.
6
d) any additional payments for services provided by the person outside of their
normal functions when such payments are allowed under the contract signed with
him/her
Vessela Lyubenova Stoeva – Deputy Chairman of the Board of Directors of
“Sopharma” AD was paid BGN 62 102 and BGN 75 155 were accrued under a
contract of employment as an "Adviser on Economic Affairs to the Executive
Director".
Simeon Ognianov Donev - in his capacity as procurator of the Company, was
paid BGN 60 000 and BGN 288 865 and BGN 60 000 and BGN 327 114 were accrued
under an employment contract for the position of "Deputy Executive Director".
Violeta Petrova Tsacheva – member of the Board of Directors of “Veta Pharma”
AD was paid BGN 31 200 and BGN 31 200 were accrued under an employment
contract for the position of "Executive Director" of “Veta Pharma” AD.
Boris Anchev Borisov – member of the Board of Directors of “Veta Pharma” AD
was paid BGN 62 572 and BGN 75 418 were accrued under an employment contract
for the position of "Financial Director" in Sopharma AD.
The contracts with the other members of the Board of Directors of “Sopharma”
AD do not provide for additional payments for services provided by them outside of
their normal functions and no other service agreements have been concluded with
them.
e) paid and / or accrued compensation for the termination of their contract during
the last financial year
None.
f) an overall assessment of all non-monetary benefits, expressed as a remuneration,
outside of those specified in letters a) – e)
In 2024 no member of the Board of Directors of “Sopharma” AD has received
non-monetary benefits, expressed as remuneration, outside of those specified in
letters a) – e).
g) information regarding all loans, payments of welfare cost and guarantees by the
Company or its subsidiaries or other companies subject to consolidation in its
annual financial statements, including data on the remaining outstanding part and
interests.
In 2024 no member of the Board of Directors of “Sopharma” AD has received
loans, guarantees by the Company or its subsidiaries or other companies subject to
consolidation in its annual financial statements. Social securities for the members of
the Board of Directors in the amount of BGN 26 217 have been accrued.
15. Information about shares and/or share options and/or other incentive schemes
based on shares
a) number of offered stock options or the provided shares by the Company during the
financial year and the conditions under which they were proposed, respectively
provided;
7
b) the number of exercised shares options during the financial year and for each of
them, the number of shares and the exercise price of the options or the interest
amount under the share incentive scheme at the end of the financial year;
c) the number of unexercised share options at the end of the financial year, including
data on their price and date of exercise and the essential conditions for the
exercise of rights;
d) any changes in the terms and conditions of existing share options adopted during
the financial year.
The current remuneration policy of members of the Board of Directors of
“Sopharma” AD does not provide for granting stock options, shares of the Company or other
incentive schemes based on shares to the members of the corporate management and such
were not paid or provided.
16. Information about the annual change in remuneration, the company's performance
and the average full-time remuneration of non-directors in the previous at least five
financial years, presented together in a way that allows comparison
17. Information on exercising the possibility to demand a refund of the variable
remuneration
The return of paid variable remuneration is regulated in Chapter IV, item 12 of the
Policy for formation of the remuneration of the members of the Board of Directors of
Sopharma AD, adopted by EGM on 28 June 2024.
Year
2016
2017
2018
2019
2020
2021
2022
2023
2024
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Gross
remuneration of
all members of
the Board of
Directors for the
year (incl.
tantieme)
1,157
1,120
1,190
1,141
1,233
1,122
1,250
1,361
1,390
Average amount
of remuneration
per member of
the Board of
Directors per
year
231
224
198
228
247
187
156
124
174
Results of the
company (net
profit)
38,347
44,228
33,298
40,382
28,664
24,271
36,581
47,570
28,227
Gross
remuneration
based on full-
time employees
of the company
(excl. BoD)
24,367
30,273
34,671
34,879
36,397
33,256
36,767
46,851
53,561
Average amount
of remuneration
based on full-
time employees
of the company
(excl. BD)
13
15
15
16
18
19
22
28
31
8
18. Information about all deviations from the procedure for the implementation of the
remuneration policy in connection with extraordinary circumstances under Art. 11, para.
13, including an explanation of the nature of the exceptional circumstances and an
indication of the specific components not implemented
During the current period there are no deviations from the procedure for the
implementation of the remuneration policy.
Program for the application of the Remuneration policy for the next financial year.
The current Policy adopts as guiding principles Recommendation 2009/386/EC in
addition to Recommendation 2004/913/ЕC and Recommendation 2005/162/ЕC regarding
the remuneration of directors of companies, the shares of which are admitted to trading on
a regulated market, implemented through Ordinance №48 from 20 March 2013 by the
Financial Supervision Commission.
The Board of Directors believes that the principles for determining the remuneration,
underlying the Policy, are effective as of the present moment with regard to the
accomplished financial results for the reporting period.
As at the date of preparation of the report the Board of Directors has not proposed any
changes or amendments in the Remuneration policy, approved by the General Meeting of
shareholders.
The Board of Directors is responsible for the timely announcement of the
Remuneration policy, approved by the General Meeting of Shareholders, and its subsequent
amendments, in a clear and accessible manner.
The Company prepares an annual Report on the remuneration of the members of the
Board of Directors, which is a separate document to the annual financial statements. The
Report contains the necessary information described in art. 13 of Ordinance №48 of the
Financial Supervision Commission and after its adoption by the General Meeting of
shareholders it is published on the website of the Company -
www.sopharmagroup.com
Date: 28.03.2025 Ognian Donev, PhD
/ Executive Director/
Ognian
Ivanov
Donev
Digitally signed by
Ognian Ivanov
Donev
Date: 2025.03.28
17:06:54 +02'00'
DECLARATION
under art. 100n, par. 4, item. 4 of the Law on Public Offering of Securities
We, the undersigned Ognian Ivanov Donev, in the capacity of representative
“Sopharma” AD, Boris Anchev Borisov, in the capacity of Financial Director and Yordanka
Nikolova Petkova in the capacity of Chief Accountant of “Sopharma” AD, entered in the
Commercial register of Sofia City Court under company file № 9359/1991, with seat and
address of management: Sofia, Nadezhda district, 16 “Iliensko shoes” Str.
DECLARE that to our knowledge:
1. The set of financial statements, prepared in accordance with the applicable accounting
standards, reflects a true and fair view of the assets and liabilities, financial position and profit
of “Sopharma” AD;
2. The management report includes a fair review of the development and the performance of
“Sopharma” AD, together with a description of the principal risks and uncertainties facing the
Company.
28 March 2025
Ognian
Ivanov
Donev
Digitally signed by
Ognian Ivanov
Donev
Date: 2025.03.28
17:08:58 +02'00'
Boris
Anchev
Borisov
Digitally signed by
Boris Anchev
Borisov
Date: 2025.03.28
17:13:10 +02'00'
Yordanka
Nikolova
Petkova
Digitally signed by
Yordanka Nikolova
Petkova
Date: 2025.03.28
17:16:39 +02'00'
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 separate and independent legal entities.
INDEPENDENT AUDITORS’ REPORT
To the Shareholders of Sopharma AD
REPORT ON THE AUDIT OF THE SEPARATE FINANCIAL STATEMENTS
Opinion
We have audited the accompanying separate financial statements of Sopharma AD (“the Company”), which
comprise the separate statement of financial position as at December 31, 2024, and the separate statement of
comprehensive income, the separate statement of changes in equity and the separate statement of cash flows for
the year then ended, and notes to the separate financial statements, including material accounting policies.
In our opinion, the accompanying separate financial statements present fairly, in all material respects, the financial
position of the Company as at December 31, 2024, and its financial performance and its 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 separate financial
statements section of our report. We are independent of the Company within the meaning of the International
Code of Ethics for Professional Accountants (including International Independence Standards) issued by
International Ethics Standards Board for Accountants (IESBA Code), together with the ethical requirements of
the Independent Financial Audit and Assurance of Sustainability Reporting Act (IFAASRA) that are relevant to
our audit of the separate financial statements in Bulgaria, and we have fulfilled our other ethical responsibilities
in accordance with the IESBA Code and the requirements of IFAASRA. We believe that the audit evidence we
have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to Note 2.2. to the separate financial statements disclosing that at the date of their issuance, the
consolidated financial statements of the Company for the same period have not yet been issued. The management
plans to issue the consolidated financial statements not later than 30 April 2025. Our opinion is not qualified in
respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the separate financial statements of the current period. These matters were addressed in the context of our audit
of the separate financial statements as a whole, and in forming our opinion thereon, and we do not provide a
separate opinion on these matters.
Key audit matter
How our audit addressed the key audit matter
1. Existence of intangible assets
On 29 November 2024 the Company acquired
contractual rights over sales permits and trademarks
in traditional export markets for the Company in the
amount of BGN 165,039 thousand as disclosed in
Note 16 to the separate financial statements.
As of the end of the reporting period, the trademarks
have not been legally transferred to Sopharma and
the sales permits are still in the name of the seller.
According to the agreement with the seller, the legal
ownership of the trademarks and the replacement of
the seller with Sopharma in the sales permits will
occur in stages according to a plan determined by
the parties. According to the agreement, until the
legal transfer of ownership and the replacement of
the seller's name in the sales permits, Sopharma will
be authorized by the seller to exercise the rights
under the sales permits and trademarks on the
markets for which the transaction was made.
The complexity of the transaction for acquisition of
contractual rights over sales permits and trademarks
itself and its unusual nature for the Company require
Management to make complex judgments in
recognizing this deal in the separate financial
statements.
Due to the circumstances that: a) the transaction is
complex and unusual for the Company, and b) the
materiality of the reporting item itself, as stated
above, we have determined this matter as a key audit
matter.
In this area our audit procedures performed are:
• Review of primary accounting documents
related to the transaction - contracts,
invoices and payment documents.
• Analysis and evaluation of the contractual
clauses in order to conclude whether the
purchase of these assets meets the
requirements for recognition of intangible
assets in accordance with IAS 38 Intangible
assets.
• Review and evaluation of the completeness,
relevance and adequacy of the disclosures
in the separate financial statements.
Key audit matter
How our audit addressed the key audit matter
2. Valuation of trade receivables, receivables
from related parties and loans granted to
third parties
As disclosed in Notes № 21, 22, 24, 25 and 26(A)
to the separate financial statements, the Company
has gross trade receivables, receivables from related
parties and loans granted to third parties amounting
to BGN 151,039 thousand and expected credit loss
allowances amounting to BGN 8,800 thousand.
In 2024 the Company 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 Company
applies model based on significant estimates and
judgements on :
• Application of the requirements for
determination of impairment loss allowance
in accordance with IFRS 9, on which the
Company`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”;
• 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 the Management in
the review of individually
significant exposures, related to recent
losses, number of probable scenarios for
future cash flows
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 Company`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 test 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 Company for the purposes
of identification of credit losses and calculation of
impairment loss allowance in accordance with the
the requirements of IFRS 9.
Analysis and assessment of the justification and
appropriateness of calculations for the parameters 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.
Assessment of the completeness, appropriateness
and adequacy of the disclosures in the Company’s
separate 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.
Key audit matter
How our audit addressed the key audit matter
and the results of these scenarios and 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
separate financial statements of the Company and,
b) inherent level of uncertainty in the use of multiple
estimates and judgements by the management of the
Company 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.
Information Other than the separate financial statements and Auditors’ Report Thereon
The Management Board of the Company (“the Management”) is responsible for the other information. The other
information, which we have received prior to the audit report date, comprises the separate annual report on
activities, the corporate governance statement, and the report on the implementation of the remuneration polcicy
prepared by the management in accordance with Chapter Seven of the Accountancy Act, but does not include the
separate financial statements and our auditors’ report thereon.
Our opinion on the separate 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 separate financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the separate 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 separate financial statements
Management is responsible for the preparation and fair presentation of the separate 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 separate financial statements that are
free from material misstatement, whether due to fraud or error.
In preparing the separate financial statements, management is responsible for assessing the Company’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 Company or to cease operations,
or has no realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditors’ Responsibilities for the Audit of the separate financial statements
Our objectives are to obtain reasonable assurance about whether the separate 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 separate 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 separate 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 Company'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 Company’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 separate 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 Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the separate financial statements, including the
disclosures, and whether the separate financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
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 separate 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
separate financial statements and Auditors’ Report Thereon”, with respect to the separate annual report on
activities, the corporate governance statement, and the report on the implementation of the remuneration policy,
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, as well as art. 100m, para 15 in relation to art. 116c para.
1 of POSA), applicable in Bulgaria.
Opinion under Article 37, paragraph 6 of the Accountancy Act
Based on the procedures performed, in our opinion:
• The information included in the annual report on the activities for the financial year for which the separate
financial statements have been prepared, is consistent with the separate financial statements.
• The 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.
• 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 separate financial statements have been prepared.
• The report on the implementation of the remuneration policy for the financial year for which the financial
statements have been prepared has been submitted and meets the requirements set out in the ordinance
under Art. 116c, para. 1 of the Public Offering of Securities Act.
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 Company
and the environment in which it operates, acquired during our audit, in our opinion, the description of the main
features of the Company’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.
Additional Reporting on the audit of the separate financial statements under Art. 100m, para 4, p.3 b) “b”
of the Public Offering of Securities Act
Reporting under Art. 100m, para 4, p.3 “c” of the Public Offering of Securities Act
The information on transactions with related parties is disclosed in Note 46 to the separate financial statements.
Based on the audit procedures performed on the transactions with related parties, we have not identified any facts
or other information, based on which we could conclude that the transactions with related parties are not disclosed
in the attached financial statements for the year ended 31 December 2024, in all material aspects, in accordance
with the requirements of IAS 24 Disclosure of related parties. The results of our audit procedures regarding
transactions with related parties are considered in the context of forming our audit report on the separate financial
statements taken as a whole, and not with the purpose of expressing the audit opinion on transactions with related
parties.
Reporting under Art. 100m, para 4, p.3 “c” of the Public Offering of Securities Act
Our responsibilities for the audit of the separate financial statements as a whole, described in the section Auditors’
Responsibilities for the Audit of the separate financial statements include assessment whether the separate
financial statements present true and fair view of material transactions and events. Based on the audit procedures
performed on the material transactions, underlying the separate financial statements for the year ended 31
December 2024, no facts circumstances or other information have come to our attention, based on which we can
conclude that there are cases of material misstatements and disclosures in the separate financial statements in
accordance with the requirements of International Financial Reporting Standards, as adopted by EU.
The results of our audit procedures on the material transactions and events related to the Company are considered
in the context of forming our audit report on the separate financial statements taken as a whole, and not with the
purpose of expressing the audit opinion on these material transactions.
Reporting for compliance of the electronic format of the separate financial statements, included in the
annual separate financial statements according to art. 100m, para 4 of the Public Offering of Securities Act
in relation to the requirements of the ESEF Regulation
In addition to our reporting responsibilities according to ISAs described in section “Auditors’ Responsibilities for
the Audit of the separate financial statements”, we have also performed the procedures required by 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.
These procedures are related to inspection of the format and whether human readable part of this electronic format
complies with the audited separate financial statements and issuing an opinion in relation to compliance of the
electronic format of separate financial statements of “Sopharma AD” for the year ended 31 December 2024,
included in electronic file “097900BGGW0000048796-20241231-EN-SEP.xhtml”, 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”).
In relation to these requirements, the electronic format of the separate financial statements, included in the annual
separate financial statements according to art. 100m, para 4 of the Public Offering of Securities Act, should be
presented in XHTML format.
Management of the Company is responsible for the implementation of the requirements of the Regulation ESEF
when preparing the electronic format of the separate financial statements in XHTML.
Our opinion is related to the electronic format of the separate financial statements, included in electronic file
“097900BGGW0000048796-20241231-EN-SEP.xhtml”and does not include other information, included in the
annual separate financial statements according to art. 100m, para 4 of the Public Offering of Securities Act.
Based on the procedures performed, our opinion is that electronic format of the separate financial statements of
the Company for the year ended 31 December 2024, included in the attached electronic file
“097900BGGW0000048796-20241231-EN-SEP.xhtml”is prepared in all material respects in compliance with
the Regulation ESEF.
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 separate financial
statements of the Company for the year ended December 31, 2024 by the general meeting of shareholders
held on October 25th, 2024 for a period of one year.
• The audit of the separate financial statements of the Company for the year ended December 31, 2024
represents eight statutory audit engagement for that entity 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 Company’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 Company.
• We hereby confirm that for 2024 we have not provided services other that the audit services.
Audit company № 129 Baker Tilly Klitou and Partners EOOD
Ivaylo Yanchev
Galina Lokmadjieva - Nedkova
Registered auditor, responsible for the audit
Managing Director
March 28, 2025
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: 2025.03.28
20:30:15 +02'00'
Galina Dimitrova
Lokmadjieva-
Nedkova
Digitally signed by
Galina Dimitrova
Lokmadjieva-Nedkova
Date: 2025.03.28
20:31:54 +02'00'
TO
SHAREHOLDERS OF
SOPHARMA AD
DECLARATION
Art. 100m, para 4, item 3 from
Public Offering of Securities Act
The undersigned:
Ivaylo Yanchev Yanchev, in the capacity of registered auditor at Baker Tilly Klitou and Partners EOOD,
with UIC 131349346, with headquarters and management address: 5, Stara Planina Str.,5, floor 5, Sofia,
1000 and address for correspondence: Sofia, 1000, 5, Stara Planina Str., 5, floor 5, declare that:
Baker Tilly Klitou and Partners EOOD was engaged to carry out a mandatory financial audit of the separate
financial statements of Sopharma AD for the year 2024, prepared in accordance with the International
Financial Reporting Standards (IFRS) as adopted by the European Union (EU), a generally accepted name
of the accounting base defined in paragraph 8 of the Supplementary part of the Accounting Act under the
name "International Accounting Standards". As a result of our audit, we issued an audit report on March 28,
2025.
We hereby certify that as reported in our audit report on the annual separate financial statements of
Sopharma AD for 2024 issued on March 28, 2025:
1. Art. 100m, para. 4, item 3, letter "a" Audit opinion: In our opinion, the accompanying separate
financial statements give a true and fair view of the financial position of the Company as at 31 December
2024 and of its financial performance and its cash flows for the year, ending on that date in accordance with
the International Financial Reporting Standard (IFRS) adopted by the European Union (EU).
2. Art. 100m, para. 4, item 3, letter "b" Information related to the transactions of SOPHARMA AD
with related parties. Information about related party transactions is duly disclosed in Note 46 to the
separate financial statements. Based on the audit procedures we performed on related party transactions as
part of our audit of the separate financial statements as a whole, we have not become aware of the fact,
circumstances or other information on the basis of which we may conclude that related party transactions
are not disclosed in the accompanying separate financial statements for the year ended 31 December 2024
in all material respects in accordance with IAS 24 Related Party Disclosures. The results of our audit
procedures on related party transactions have been reviewed by us in the context of forming our opinion on
the separate financial statements as a whole, rather than in order to express a separate opinion on related
party transactions.
3. Art. 100m, para. 4, item 3, letter "c" Information relating to material transactions. Our audit
responsibilities for the financial statements as a whole described in the section of our report "Auditor's
Responsibilities for the Auditing of the Separate Financial Statements" include assessing whether the
separate financial statements present the material transactions and events in a manner that delivers credible
performance. Based on the audit procedures we performed on the material transactions underlying the
separate financial statements for the year ended 31 December 2024, no facts, circumstances or other
information have been disclosed to us in order to conclude that there are cases of material misrepresentation
and disclosure in accordance with the applicable IFRS requirements adopted by the European Union.
The results of our audit procedures on the Company's transactions and events that are material to the
Company's financial statements are reviewed by us in the context of our opinion on the separate financial
statements as a whole and not for the purpose of issuing a separate opinion on these material transactions.
The representations made by this declaration should be considered only in the context of our audit
report as a result of the independent financial audit of the separate annual financial statements of
SOPHARMA AD for the reporting period ending 31 December 2024, dated 28 March 2025. This
declaration is intended solely for the above-mentioned addressee and has been prepared solely and solely
in compliance with the requirements set forth in Art. 100m, para. 4 (3) of the Public Offering of Securities
Act (POSA) and should not be accepted as a substitute for our opinion expressed in the audit report
issued by us on 28 March 2025 regarding the issues covered by Art. 100m, para. 4, item 3 of POSA.
Baker Tilly Klitou and Partners EOOD:
____________________________
28 March 2025 Ivaylo Yanchev
Sofia Registered auditor
IVAYLO
YANCHEV
YANCHEV
Digitally signed by
IVAYLO YANCHEV
YANCHEV
Date: 2025.03.28
20:33:08 +02'00'