Information on Annex 2 to art. 10, item 1 of Regulation 2 of LPOS

Information given in value or quantitative terms about the main categories of goods, products and / or services provided, including their share in sales revenue of the Group in general and changes in the reporting year

The information is included in Section III, item 2 of this document. The Group does not publish quantitative information due to the specifics of the production.

Information about the revenues allocated by separate categories of activities, domestic and foreign markets and information on sources for supply of materials needed for production of goods or the provision of services with the degree of dependence on any individual seller or buyer / user, in case their share exceeds 10 per cent of the expenses or sales revenue, provide information for each person for his share in sales or purchases and links with the issuer

Information about the revenues allocated by separate categories of activities, domestic and foreign markets are provided in Section III item 2 of this report.

For 2021, there are no customers whose relative share exceeds 10% of total sales revenue.

The raw materials used exceed 3,500 nomenclature numbers that have a dynamic structure and diverse origin (synthetic, vegetable), aggregate (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 implies 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 2021 none of the suppliers’ share exceeds 10% of the total cost of services rendered and materials.

Information on significant transactions

The Group has adopted that significant transactions are those that result or may be reasonably assumed to lead to favorable or unfavorable change in the amounts of 5 or more percent of sales revenues or net profit. There are no such transactions.

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 Notes to the Financial Statements "Related Party Transactions". At the Regular General Meeting of Shareholders, held on 4 June 2021, the following transactions were voted between the Company and related parties:

  • Conclusion of a contract for purchase and sale of electricity between "Sopharma" AD as a Buyer and "Energoinvestments" AD as a Seller, pursuant to which "Sopharma" AD will purchase electricity from the Seller "Energoinvestments" AD for a period of 3 years, as of 1 July 2021.

"Sopharma" AD has not concluded transactions outside of its usual activities or that substantially deviate from the market conditions.

Information about events and indicators unusual for the issuer that have a significant impact on its activity and realized income and expenses; assessment of their impact on the current year results

In 2021 there were no events and indicators of unusual nature for the Group.

Information on off-balance sheet transactions — nature and business purpose, the financial impact of transactions on the activity, if the risks and benefits of these transactions are material to the issuer and the disclosure of this information is essential for assessing the financial position of the issuer

The contingent obligations took by the Group as at 31 December 2021 are stated in the annual financial statements in the note "Contingent Liabilities and Commitments".

Information on shares of the issuer, its major investments in the country and abroad (in securities, financial instruments, intangible assets and real estate), as well as investments in equity securities outside its group of companies under Accountancy Act and the sources /methods of financing

The information on shareholdings and major investments, domestic and foreign, of "Sopharma" AD are listed in the Notes to the annual financial statements — "Investments in subsidiaries", "Other long-term capital investments" and "Investments in associates". Information regarding investments in intangible assets and real estate is presented in the Notes "Intangible assets", "Property, plant and equipment" and "Investment property".

Information about the concluded by the issuer, its subsidiary or parent company in their capacity as borrowers, loan contracts specifying the terms and conditions, including the deadlines for repayment as well as information about guarantees and commitments

The information on concluded by "Sopharma" AD and its subsidiaries loan agreements are listed in the notes to the annual consolidated financial statements "Long-term bank loans" and "Short-term bank loans."

Information about the concluded by the issuer, its subsidiary or parent company in their capacity of lenders, loan agreements, including the provision of guarantees of any kind, including related parties, and the specific terms, including the deadlines for payment and the purpose for which they were granted

The long-term loans granted are to a company controlled by an associate:

  • Contract amount of BGN 81,900 thousand; interest rate — 3.0%; maturity — 31 December 2025; balance as of 31 December 2021 — BGN 49,965 thousand;
  • Contractual amount of EUR 708 thousand; interest rate — 3.33%; maturity — 31 December 2022; balance as of 31 December 2021 — 0.

The long-term loans granted to related parties are intended to help finance activities for the achievement of common strategic objectives. They are secured by pledges of securities (stocks), pledges of receivables and promissory notes.

Long-term loans to third parties:

  • Contractual amount of EUR 695 thousand; interest rate — 3.05%; maturity — 12 October 2022; balance as of 31 December 2021 — 0;
  • Contractual amount of EUR 3,000 thousand; interest rate — 3.05%; maturity — 29 June 2023; Balance as of 31 December 2021 — BGN 6,308 thousand.

Commercial loans granted to related parties:

Commercial loans granted to related parties are unsecured and to companies controlled by an associate:

  • Contractual amount of BGN 190 thousand; interest rate — 3.50%; maturity −31 December 2021; balance as of 31 December 2021 — 0;
  • Contractual amount of BGN 10,997 thousand; interest rate — 3.10%; maturity — 31 December 2022; Balance as of 31 December 2021 — BGN 8,263 thousand;
  • Contractual amount of BGN 4,000 thousand; interest rate — 3.33%; maturity — 31 December 2022; Balance as of 31 December 2021 — BGN 4,011 thousand.

To joint ventures:

  • Contractual amount of BGN 3,050 thousand; interest rate — 3.50%; maturity — 31 December 2022; Balance as of 31 December 2021 — BGN 1,347 thousand.

Information on the use of funds from the issuance of new issue of securities during the reporting period

Pursuant to Article 25 of the Articles of Association of the company on 21 May 2021, the Board of Directors determines the parameters and decides on the issuance of warrants for the initial public offering. By Decision № 804 — Е of 4 November 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 for one share of a future issue. Holders of warrants may exercise their right to subscribe for the respective number of shares from a future increase in the company’s capital within 3 years at a fixed price of BGN 4.13 per share.

The funds raised from the issue of warrants in the amount of BGN 12,512 thousand are presented as other capital components in the statement of financial position, net of the costs of the issue. At the end of the reporting period, the funds have not yet been used for the purposes disclosed in the prospectus for the issue, namely:

  • BGN 2,300,000 for investment on a production site in the town of Sandanski. For this investment the Company has made a firm commitment;
  • BGN 3,940,043.31 for repayment of short-term bank loans;
  • BGN 6,320,310.37 for potential future acquisitions of new products or new companies (at the date of the prospectus, the Company has no firm commitment to such transactions or negotiates such transactions).

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.

Analysis and evaluation of the policy on the management of financial resources, including the ability to meet its obligations, possible threats and measures that the issuer has taken or will take to resolve them

The management of the parent company and respectively the managements of the subsidiaries currently control the collection of receivables, the implementation of financial ratios of banking contracts and ensure regular servicing of their obligations.

Financial risk management is fully disclosed in the "Financial Risk Management" as part of the consolidated financial statements of the Company.

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 2022 includes investments of BGN 11,7 million for the acquisition of lands, buildings, machinery, equipment and software.

Sources of funding are its own funds from regular business. The Company is not experiencing difficulties in carrying out its investment intentions and payments for operating activity thanks to the generated positive to cash flow and good liquidity.

Information about changes in the reporting period in the basic principles of management of the issuer and its group of companies under the Accounting Law

During the reporting period there were no changes in the main management principles of "Sopharma" AD and its economic group.

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. 100n para 8 of LPOS, which is a separate report, published together with the management report.

Information about changes in management and supervisory boards during the accounting year

At the regular general meeting of the shareholders of the Company held on 4 June 2021, a decision was made to dismiss the members of the Board of directors due to the expiration of their term and to elect a new Board of directors with a five-year term consisting of: Ognian Donev, Vessela Stoeva, Alexander Tchaushev, Ivan Badinski and Bissera Lazarova.

Information on the amount of remuneration, rewards and / or benefits of each of the members of the management and supervisory bodies for the financial year, paid by the issuer and its subsidiaries, regardless of whether they have been included in the expenses of the issuer, or arising from profit distribution, including:

Sopharma AD prepares a Report on the implementation of the Remuneration Policy of the members of the Board of Directors as part of the Annual Individual Financial Statements. The latter was disclosed on March 29, 2022.

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.

Information about the shares held by the members of the Board of directors of "Sopharma" AD is indicated in Section IV of this report — information under Art 247 par. 2 from Commerce Act.

Members of the Audit Committee 31.12.2021 31.12.2020
Rel. share of capital % Number of shares Rel. share of capital % Number of shares Rel. share of capital %
Tzvetanka Zlateva - - - - -
Vasil Naidenov 386 0.000003% 186 0.000001% 200
Kristina Atanasova — Eliot - - - - -

By Decision № 804 — Е of 4 November 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 for one share of a future issue. Holders of warrants may exercise their right to subscribe for the respective number of shares from a future increase in the company’s capital within 3 years at a fixed price of BGN 4.13 per share.

Member of the Board of Directors 31.12.2021
Number of warrants Rel. share of total number of subscribed warrants %
Ognian Ivanov Donev 11 907 394 26.5%
Vessela Lyubenova Stoeva - -
Ognian Kirilov Palaveev - -
Alexander Victorov Tchaushev - -
Bissera Nikolaeva Lazarova - -
Ivan Venetskov Badinski - -
Simeon Ognianov Donev - -

As of 31 December 2021 no member of the Audit Committee has warrants.

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.

Information about pending legal, administrative or arbitration proceedings relating to liabilities or receivables of the issuer of at least 10 percent of its equity; if total liabilities or receivables of the issuer in all proceedings exceeds 10 per cent of its equity, provide information about each case separately

There are no pending legal, administrative or arbitration proceedings relating to liabilities or receivables.

Information about the Investor Relations Director, including telephone number and correspondence address:

Director of Investor Relations of "Sopharma" AD is Pelagia Viatcheva, tel. +359 2 8134 523, correspondence address — Sofia, 5 Lachezar Stanchev Str., Building A, fl. 11.