BGN’000s

ASSETS Note

31.12.2023 31.12.2022

Property, plant and equipment 1 104 964 92 712

Intangible assets 2 2 503 1 165

Positive goodwill 16 489 -

Investments in other companies 3 41 403 36 979

Other financial assets 4 1 218 1 218

Trade and other receivables 5 13 541 11 644

Deferred tax assets

255 125

Total Non-current assets 180 373 143 843

Materials 6 57 898 64 390

Trade and other receivables 7 54 191 50 206

Financial assets - -

Cash and cash equivalents 8 35 940 44 909

Prepaid expenses 503 358

Total current assets 148 532 159 863

TOTAL ASSETS 328 905 303 706

Share capital 9 20 725 20 725

Reserves 9 48 918 45 838

Retained earnings/loss 9 66 634 61 113

Total equity 136 277 127 676

Non-controlling interest

130 997 116 101

Trade and other payables 10 12 745 4 109

Deferred tax liabilities 10 2 397 1 859

Deferred revenues 10 50 50

State financing 10 992 1 084

Total non-current liabilities 16 184 7 102

Trade and other payables 11 44 761 51 907

Deferred revenues 11 37 20

State financing 11 649 900

Total current liabilities 45 447 52 827

Total liabilities 61 631 59 929

TOTAL EQUITY AND LIABILITIES 328 905 303 706

Date: 18.04.2024

Prepared by:

Kremena Dulgerova

Katya Zlatareva

Registered Auditor, Diploma No 0610

STARA PLANINA HOLD PLC

Non-current assets

For the period ended 31 December 2023

Current assets

EQUITY

LIABILITIES

Current

Non-current

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Manager:

Vasil Velev

Kremena

Gantcheva

Dulgerova

Digitally signed by Kremena

Gantcheva Dulgerova

Date: 2024.04.25 14:59:40

+03'00'

Digitally signed by Vasil

Georgiev Velev

Date: 2024.04.25 15:05:07

+03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2024.04.26

06:38:30 +03'00'

BGN’000s

Note

31.12.2023 31.12.2022

Net sales revenues 12 378 966 375 256

State finansing revenues 910 8 504

Cost of materials

(181 510) (203 511)

Cost of hired services

(28 555) (28 357)

Depreciation

(16 965) (15 969)

Salaries

(78 419) (71 062)

Social securities

(15 800) (14 106)

Changes in finished goods and work in progress

(4 756) 6 939

Cost of disposals

(3 185) (3 900)

Other expenses

(3 767) (3 027)

Operational profit

46 919 50 767

Financial income 13

1 155 1 404

Financial expenses 14

(1 131) (787)

Profit before tax

46 943 51 384

Tax expenses, net

6 478 5 771

Net profit for the period

40 465 45 613

Profit attributable to:

Non-controlling interest

26 552 28 075

Equity holders of the parent company

13 913 17 538

Other comprehensive income

Investments in equity instruments, reported at FVOCI, net 4 578 2 687

Other comprehensive income-revaluation of a defined benefit

obligation

(12) 6

Other comprehensive income, net of taxes 4 566 2 693

Total comprehensive income 45 031 48 306

Total comprehensive income attributable to:

Non-controlling interest 28 212 28 881

Equity holders of the parent company 16 819 19 425

Earnings per share

0,67 0,85

Date: 18.04.2024

Prepared by:

Kremena Dulgerova

Katya Zlatareva

For the period ended 31 December 2023

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

STARA PLANINA HOLD PLC

Registered Auditor, Diploma No 0610

Manager:

Vasil Velev

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2024.04.25

15:00:10 +03'00'

Digitally signed by Vasil

Georgiev Velev

Date: 2024.04.25 15:05:32

+03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2024.04.26

06:39:33 +03'00'

BGN’000s

CASH FLOWS FROM OPERATING ACTIVITIES

31.12.2023 31.12.2022

Cash receipts from customers

407 425 401 751

Cash paid to suppliers

(249 896) (282 074)

Cash paid to employees and social security institutions

(92 088) (83 636)

Taxes paid/received

(595) 5 602

Interest, fees and commissions paid/received

(153) (20)

Other payments/proceeds for operating activities

(7 214) (750)

Net cash flow from operating activities

57 479 40 873

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of non-current assets

(30 032) (23 822)

Proceeds from sales of non-current assets

22 126

Payments for loans granted

(922) -

Proceeds from loans granted and lease contracts

358 140

Interests from loans received

270 125

Revenues from sale of investments

560 -

Dividends received from investment

38 31

Other payments/proceeds for investing activities

(15 498) 327

Net cash flow from investing activities

(45 204) (23 073)

CASH FLOWS FROM FINANCIAL ACTIVITIES

Proceeds from loans received

12 959 11 847

Payments for loans received

(15 610) (11 338)

Payments under to lease contracts

(116) (124)

Interest, fees and commissions paid

(177) (110)

Dividends paid

(18 300) (15 625)

Other payments/proceeds for financial activity

- (52)

Net cash flow from financial activities

(21 244) (15 402)

Net increase/decrease in cash and cash equivalents

(8 969) 2 398

Cash and cash equivalents at a beginning of the period

44 909 42 511

Cash and cash equivalents at the end of the period

35 940 44 909

Date: 18.04.2024

Prepared by: Manager:

Kremena Dulgerova Vasil Velev

Katya Zlatareva

Registered Auditor, Diploma No 0610

CONSOLIDATED CASH FLOW STATEMENT

STARA PLANINA HOLD PLC

For the period ended 31 December 2023

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2024.04.25

15:00:32 +03'00'

Digitally signed by Vasil

Georgiev Velev

Date: 2024.04.25 15:05:51

+03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2024.04.26

06:40:09 +03'00'

BGN’000s

Capital

Premium

reserve

Revaluation

reserve

Other

reserves

Retained

earnings

Total

Non-

controlling

interest

Balance 01 January 2022 20 725 1 178 24 899 18038 50 725 115 565 99 422

Net result for the period - - - -

17 538 17 538 28 075

Profit sharing for dividents - - - - (6 181) (6 181) (11 870)

Other profit sharing - - - 53 (1 009) (956) (218)

Revaluation of financial assets - - 1 708 - - 1 708 802

Other changes in equity - - (4) (34) 40 2 (110)

Balance 31 December 2022 20 725 1 178 26 603 18 057 61 113 127 676 116 101

Balance 01 January 2023 20 725 1 178 26 603 18 057 61 113 127 676 116 101

Net result for the period - - - -

13 913 13 913 26 552

Profit sharing for dividents - - - - (6 545) (6 545) (13 519)

Other profit sharing - - - - (1 125) (1 125) (268)

Revaluation of financial assets - - 2 281 - - 2 281 1 662

Other changes in equity - - (4) 803 (722) 77 469

Balance 31 December 2023 20 725 1 178 28 880 18 860 66 634 136 277 130 997

Date: 18.04.2024

Prepared by:

Kremena Dulgerova Vasil Velev

Registered Auditor, Diploma No 0610

Manager:

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 31 December 2023

STARA PLANINA HOLD PLC

Katya Zlatareva

Kremena

Gantcheva

Dulgerova

Digitally signed by Kremena

Gantcheva Dulgerova

Date: 2024.04.25 15:01:01

+03'00'

Digitally signed by Vasil

Georgiev Velev

Date: 2024.04.25 15:06:13

+03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2024.04.26

06:40:49 +03'00'

To the Annual Consolidated Financial

Statements as of 31.12.2023

Name of Reporting Entity STARA PLANINA HOLD Plc

Country of Registration Republic of Bulgaria

Legal Form Public company

Domicile and Address of Registerred Office 20, Fr. J. Curie Str., 9 floor, 1113 Sofia

Place of Business Republic of Bulgaria

Nature of Operations Holding Company

Change in name none

Parent Entity none

Ultimate Parent Entity none

GENERAL INFORMATION

STARA PLANINA HOLD Plc was incorporated in Bulgaria on 27.09.1996 for an unlimited period of time. The

Holding is a successor of Central Privatization Fund AD. On 19.12.1997 Central Privatization Fund AD was

renamed to Central Fund Hold Plc, and since 30.04.1999 the company has been operating under its current

name.

Stara Planina Hold Plc is registered in the Registry Agency under UICode 121227995.

The company is not registered under the VAT Act.

Stara Planina Hold Plc is a public company within the meaning of Art. 110 of the Public Offering of Securities

Act.

The registered seat and business address are in the city of Sofia, Izgrev district, 20 Frederic Joliot-Curie, 9th

floor; telephone/fax: 02/9634159; 9630577; 9633754; e-mail office@sphold.com, website www.sphold.com.

The scope of business activity of the holding is: acquisition, management, evaluation and sale of shareholdings

in Bulgarian and foreign companies; acquisition, management and sale of bonds, evaluation and sale of

patents, transfer of licenses for use of patents, belonging to companies where the holding company has

STARA PLANINA HOLD PLC – www.sphold.com

participations; financing companies where the holding company has participations; other commercial

operations, except those prohibited by law.

The registered capital of Stara Planina Hold Plc is BGN 21 000 000 (twenty-one million) leva divided into 21

000 000 (twenty-one million) non-preferred registered voting shares with a nominal value of BGN 1.00 each.

The management body of the company is the Board of Directors with the following members:

Evgeniy Vasilev Uzunov – Chairman of the Board of Directors and representative of the company;

Vasil Georgiev Velev – executive member of the Board of Directors and representative of the company;

Finance Invest OOD, having its registered seat and business address in the town of Plovdiv, 14, Maria Luiza

Blvd., UIC 115016144, represented for the purpose of performing its obligations as a member of the Board of

Directors by the legal representative Spas Borisov Videv;

Stefan Atanasov Nikolov – member of the Board of Directors.

Shareholders holding more than 5 % of the voting rights as of 31.12.2023:

Potbul Invest Foundation - 4655400 shares, representing 22.17 % of the capital;

Garant-5 Ltd - 2595972 shares, representing 12.36 % of the capital;

ZUPF Allianz Bulgaria AD - 1285293 shares, representing 6.12 % of the capital.

In the consolidated financial statements, the assets, liabilities, income, expenses and cash flows of the parent

company Stara Planina Hold Plc and its subsidiaries are presented as such of one business unit.

As "Non-controlling interest" in the consolidated financial statement for the financial year 2023 is presented

the equity capital of the subsidiaries which is not attributable, either directly or indirectly, to the parent company.

The non-controlling interest in the consolidated financial statements for the financial year 2023 is estimated

based on the proportional share in the recognized values of the distinguishable net assets of the subsidiaries.

Majority share of the voting rights

Control is presumed to exist when a majority of the voting rights are held unless other factors indicate that a

majority share of the voting rights does not create control. Ownership of a majority of the voting rights generally

results in control when:

Significant activities are performed by the voice of the holder of the majority share; or

The holder of a majority share of the voting rights can appoint the majority of the members of the governing

body that directs the activity.

Less majority share of the voting rights

Control could also exist where one party does not have a majority share of the voting rights, but:

Pursuant to a contractual agreement with the majority shareholder and other parties, to provide to perform

the significant activities.

Rights arising from other contractual agreements. Other decision-making rights along with voting rights

may give the party the right to direct the relevant activities.

Scope of the investor's voting rights. Although an investor may not hold a majority share of the voting

rights, the rights held may be so significant as to give that investor the power to have the practical ability

to unilaterally direct the significant activities - the presence of de facto control.

An investor may hold potential voting rights that are material. Potential voting rights are rights to receive

voting rights in the investee such as convertible instruments and options. To be material, potential voting

rights must be exercisable when decisions are to be made about the direction of material activities.

When evaluating the actual control, Stara Planina Hold Plc takes into account the size of the investor's

shareholding relative to the size and dispersion of the other investors along with the other considerations listed

above.

Information about the Group:

STARA PLANINA HOLD PLC – www.sphold.com

 As of 31.12.2023, Stara Planina Hold Plc - Group consists of:

Stara Planina Hold Plc - parent company

Hydraulic Elements and Systems Plc - subsidiary company

Elhim-Iskra Plc - subsidiary company

Fazan JSC - subsidiary company

SPH Invest JSC - subsidiary company

M+S Hydraulic Plc - associated company

Bulgarian Rose Plc - associated company

Boryana JSC - an associated company

LIST

of subsidiaries included in the consolidated financial statements

Enterprise

Location

Share capital and voting

rights

Hydraulic elements and systems Plc

Yambol

64.53%

Elhim-Iskra Plc

Pazardzhik

51.40%

Fazan Plc

Ruse

92.65%

SPH Invest Jsc

Sofia

99.39%

LIST

of associates included in the consolidated financial statements

Enterprise

Location

Share capital and voting

rights

M+C Hydraulic Plc

Kazanluk

30.61%

Bulgarian Rose Plc

Karlovo

49.99%

Boryana Jsc

Cherven Briag

50.00%

Ustrem Jsc

Svishtov

45.00%

On 18.07.2023 Stara Planina Hold Plc sold its shareholding, representing 45.00 % of the capital of Ustrem

Jsc., UIC: 206417771, Svishtov at the price of BGN 560 000. Buyer of the shares is the company "Raykov"

Ltd. UIC: 104697074. The investment in Ustrem Jsc was made by Stara Planina Hold Plc in 2017, with the

shareholding in the amount of 45.00 % of the company's capital worth BGN 319 077.

Ustrem JSC participates in the consolidation until the date of sale.

Statement of Compliance

Stara Planina Hold Plc presents its consolidated financial statements in accordance with the International

Financial Reporting Standards (IFRS) and preserves their use as an applicable basis for the preparation of the

consolidated financial statements for the current period. The company complies with the principles and

provisions of the Accounting Act.

The management is responsible for the compilation and fair presentation of the information in these

consolidated financial statements.

As of the date of preparation of these consolidated financial statements, the management has made an

assessment of the Group's ability to continue its activity as a going concern based on the available information

for the foreseeable future. After the review of the Group's activities, the Board of Directors expects that the

Group has sufficient financial resources to continue its operational activities in the near future and continues

to apply the going concern principle in the preparation of the consolidated financial statements.

The consolidated financial statements have been adopted by the Board of Directors on 25.04.2024.

New and amended International Financial Reporting Standards

The group has taken into account the amendments to IAS/IFRS, effective from 01.01.2023 that companies

must reflect in their 2023 financial statements, including:

• Changes to 3 standards:

– IAS 1 Presentation of financial statements

– IAS 8 Accounting policy, changes in the accounting estimates and errors;

– IAS 12 Income Taxes.

• New standard - IFRS 17 Insurance contracts, replacing IFRS 4

Insurance contracts.

All of them are accepted for use in the EU.

Functional currency and presentation currency

These financial statements are presented in Bulgarian levs which is the functional currency of the Group. All

data for 2023 and 2022 are presented in thousands of BGN unless otherwise stated at the respective place.

The income per share is calculated and disclosed in BGN.

Upon initial recognition, a foreign currency transaction is recorded in the functional currency and the exchange

rate at the time of the transaction or operation published by the BNB is applied to the foreign currency amount.

Cash, receivables and payables, such as monetary reporting items denominated in foreign currency, are

valued in Bulgarian levs using the final exchange rate of the BNB.

In preparing these financial statements, the management has made valuations, estimates and assumptions

that affect the application of accounting policies and the reported amounts of assets and liabilities, income and

expenses. The actual result may differ from these estimates.

Estimates and key assumptions are currently under review.

The Company presents comparative information in these financial statements for the previous year, as the

articles on the Statement of Financial Position and the Statement of Changes in Equity, as well as the notes

thereto, include comparative data as of the beginning of the earliest comparative period.

ACCOUNTING POLICY

General provisions

The significant accounting policies applied in the preparation of these consolidated financial statements are

presented below.

The consolidated financial statements have been prepared in compliance with the principles for evaluating all

assets, liabilities, income and expenses.

Accounting estimates and assumptions were used in the preparation of the consolidated financial statements.

Although they are based on information provided to the management as of the date of preparation of the

consolidated financial statements, actual results may differ from the estimates and assumptions made.

The Group presents the consolidated statement of profit or loss and other comprehensive income in a single

statement.

The consolidated statement of financial position presents two comparative periods when the Group applies an

accounting policy retrospectively, retrospectively recalculates items in the consolidated financial statements or

reclassifies items in the consolidated financial statements and this has a material effect on the information in

the consolidated statement of financial position at the beginning of the previous period.

The Group has agreed to present two comparative periods in all cases in order to ensure consistency of

presentation for each year.

The significant accounting policies presented below have been applied consistently in all periods presented.

Basis for consolidation

In the financial statement of the Group are consolidated the financial statements of the parent company Stara

Planina Hold Plc and its subsidiaries Hydraulic elements and systems Plc; Elhim Iskra Plc; Fazan Jsc and

SPH Invest Jsc, as well as its associated enterprises where control is identified: M+S Hydraulic Plc, Bulgarian

Rose Plc, Boryana Jsc, as well as Ustrem Jsc, until the date of its sale.

Consolidated enterprises are all enterprises that are under the control of the parent company. Control exists

when the parent company is exposed to, or has rights to the variable returns from its interest in the investee

and has the ability to influence those returns through its power over the entity.

The consolidated companies have an accounting period ending on December 31.

All intra-group transactions and balances are eliminated, including unrealized gains and losses on

transactions between companies within the Group.

When unrealized losses on intra-group sales of assets are eliminated, the relevant assets are tested for

impairment from the Group’s perspective. The amounts presented in the financial statements of the

consolidated entities have been adjusted where necessary to ensure compliance with the accounting policy

applied by the Group. Gains or losses and other comprehensive income from investments of a consolidated

entity that are acquired or disposed of during the year are recognized from the date of acquisition or until the

date of sale, respectively. When the Group loses control of a consolidated entity, any investment retained in

the former consolidated entity is recognized at fair value at the date of loss of control, with the change in book

value reflected in the profit or loss. The fair value of any investment held in the former consolidated entity at

the date of loss of control is considered fair value on initial recognition of a financial asset in accordance with

IFRS 9: Financial Instruments, or where appropriate, cost on initial recognition of an investment in an

associated or jointly controlled entity. In addition, any amounts recognized in other comprehensive income in

respect of that consolidated entity are accounted for on the same basis as would be required when the Group

directly disposed of the relevant assets or liabilities (e.g. reclassified to profit or loss or transferred directly in

the retained earnings according to the requirements of the relevant IFRS).

The gain or loss from the write-off of an investment in a subsidiary is the difference between:

- The sum of the fair value of the consideration received and the fair value of any retained investment in the

former consolidated entity and

- The book values of the assets (including goodwill) and liabilities of the consolidated entity and any non-

controlling interest.

Financial instruments

Identification and evaluation of investments in subsidiaries

Subsidiary enterprises are all enterprises under the control of Stara Planina Hold Plc. The control over the

subsidiaries is conditioned by the fact that the company is exposed to and has rights to the variable returns

from its participation in the subsidiaries and is able to have impact on those returns through its powers in the

enterprises where investments were made. When recognizing investments in subsidiary enterprises, all facts

and circumstances are examined and assessed in order to determine the existence of the conditions for

control, including: - authority (powers) over the enterprises where the investment was made; - exposure or

rights to returns; and – the possibility of Stara Planina Hold Plc to use the power over the enterprise it has

invested in to influence the amount of return. Facts and circumstances such as: - the purpose and objective of

the enterprise where investments were made; - what are the significant (relevant) activities; - how decisions

are made about these activities; - whether the rights of Stara Planina Hold Plc give it a current opportunity to

lead the significant activities; - whether Stara Planina Hold Plc is represented or has the right to influence the

returns from its participation in the enterprise; and - whether Stara Planina Hold Plc has the ability to use its

authority over the investee to influence the amount of return, are continuously monitored and if there are any

changes in facts or circumstances, control is reassessed. As of the date of the financial statements, there have

been no changes in facts or circumstances that require a reassessment of the control over the subsidiaries.

Stara Planina Hold Plc has power over its subsidiaries due to the existing rights that give the current opportunity

to direct the significant activities that have an essential impact on the returns of these enterprises. Stara Planina

Hold Plc can control the activities that generate income. In the company's separate financial statements,

investments in subsidiaries are reported at acquisition cost.

The Company recognizes dividends from a subsidiary in the profit or loss in its separate financial statements

when its right to receive the dividend is established.

Identification and evaluation of investments in associates

The enterprises over which the Company exercises significant influence are associated. Significant influence

is the right to participate in decision-making related to the financial and operational policy of the enterprise

where Stara Planina Hold Plc has invested but is not control or joint control over this policy. When assessing

the significant influence, Stara Planina Hold Plc evaluates all facts and circumstances, including the term of

exercise of potential voting rights and all other contractual commitments. Factors that are indicators of

significant influence were taken into account during the evaluation: - representation in the board of directors

or another equivalent governing body; - participation in policy-related decision-making processes, including

decisions on dividends and other distributions; - significant transactions between the parties; - mutual

exchange of management personnel; - provision of essential technical information. Investments in associates

are accounted for at acquisition cost. The Company recognizes dividends from an associate in the profit or

loss in its separate financial statements when its right to receive the dividend is established.

Associates are those entities over which the company is able to exercise significant influence but which are

neither subsidiaries nor jointly controlled entities. Investments in associates are accounted for using the cost

price method. The Company recognizes dividend payments from associates in its profit or loss in the separate

financial statements when the right to receive the dividend is established.

Classification and valuation of investments in equity instruments (minority interests)

The Group complies with the requirements of IFRS 9 Financial Instruments; IFRS 7 Financial instruments:

disclosure when reporting investments in equity instruments (minority interests). The Group classifies these

investments as accounted for at fair value through other comprehensive income (FVOCI). When classifying in

the category under the fair value through other comprehensive income the Group took into account the

conditions: - the financial assets are held within the framework of a business model, the purpose of which is

achieved both by reducing contractual cash flows and by selling financial assets; - the contractual terms of the

financial asset give rise to cash flows. Changes in the fair value of investments are reported through other

comprehensive income (as a reserve from subsequent valuation of financial instruments). Income from

dividends is recognized in the profit or loss for the period, only when: - the right of Stara Planina Hold Plc to

receive payment for dividends is established; - it is probable that the economic benefits related to the dividends

will be received by the companies in the Group and - the amount of the dividends can be reliably estimated.

Granted loans

The Group recognizes a financial asset – a loan receivable when it becomes a party to the contractual terms

of the instrument. Initially, the financial asset is valued at the relevant transaction price - transaction value.

Loan income is accrued in the period when it arises.

Trade and other receivables

Trade and other receivables are initially recognized when they arise and are reported at the relevant

transaction price – their nominal value, reduced by the amount of impairment for uncollectible amounts.

Cash

Cash includes cash on current accounts, bank deposits and cash on hand. They are reported at their nominal

value.

For the purposes of preparing the cash flows statements, cash receipts from customers and cash payments

to suppliers are presented gross, including VAT (20%).

The Group believes that there is no need for depreciation of available cash because it is held in a financial

institution and has a low credit risk.

Impairment of financial assets

The Group has adopted the approach to recognize financial assets impairment losses when an impairment

event has occurred. The Group recognizes an impairment loss for its financial assets, according to fair value

through other comprehensive income, contract receivables and credit commitments, and the expected credit

loss model is used for the recognition. This is the part of lifetime expected credit losses that represent expected

credit losses that result from default events on financial instruments that are possible within 12 months of the

reporting date.

The Group's management has made significant judgments and estimates, developing models covering

historical information as well as forward-looking information in order to reliably estimate expected credit losses.

The Group recognizes an adjustment for impairment losses: - for financial instruments, in respect of which

there is no significant increase in the credit risk after the date of initial recognition, the recognized adjustment

for losses must represent the expected credit losses for 12 months; - for financial instruments in respect of

which there is a significant increase in the credit risk after the date of initial recognition, an adjustment for

expected credit losses is recognized for the entire term. The Group's management makes valuations at each

reporting date whether the credit risk of the financial instrument has increased significantly since the initial

recognition. The valuation uses the change in default risk over the expected term of the financial instrument

instead of the change in the amount of expected credit losses. For the purposes of the valuation, the default

risk for the financial instrument at the reporting date is compared to the default risk for the financial instrument

as it was at the initial recognition and takes into account reasonable and hopeful information that is available

without undue cost and efforts and is indicative of the significant increase in the credit risk since the initial

recognition. Indicators that are relevant to the credit risk valuation include: - change in internal interest rates

or other valuations for instruments after the date of the initial recognition of the instrument; - change in other

conditions for the instrument, such as conditions or clauses, collateral, etc.; - change in market interest rates

and spreads for similar instruments; - internal and external credit quality assessments; - change in the

operations of the borrower, including financial results and deviation from expectations and forecasts; - changes

in economic conditions, including regulatory changes that affect the borrower; - default on other instruments

by the same borrower, etc.

At the end of the reporting period, the company's management has valuated the expected credit losses and

has assessed that the credit risk has not increased significantly since the initial recognition as a result of which

valuation no impairment has been recorded.

Derivative financial instruments

The company has not used derivative financial instruments for hedging against currency, interest rate and

cash flow risks.

Tangible fixed assets

The company has adopted a threshold of significance in the amount of BGN 700 under which tangible assets,

regardless if fixed or not, are accounted for as current expenditures upon acquisition.

Tangible fixed assets are initially recognized at acquisition price, which includes the purchase price (including

duties and non-recoverable taxes) and all direct costs. Direct costs are those necessary to turn the asset into

working condition in accordance with its intended use.

Following the initial recognition, each individual tangible fixed asset is accounted for at acquisition price less

accrued depreciation and accumulated impairment loss.

Subsequent costs related to a separate tangible fixed asset are used to adjust the book value of the asset

when it is probable for the economic benefits of the company to exceed the initially measured standard

efficiency of the existing asset. All of the other subsequent expenses are recognized as such during the period

when they have incurred.

Tangible fixed assets are written off upon their sale or when no economic benefits are expected from their use

or upon release of the asset.

When a tangible fixed asset is transformed into a commodity, no profit or loss is reported. The acquisition price

of the commodity shall be the book value of the tangible fixed asset which is written off.

When a tangible fixed asset is acquired as a result of a complete or partial exchange for another dissimilar in

nature asset or other assets, the acquisition price will be defined under the fair value of the asset received

which is equivalent to the fair value of the given asset, adjusted with all transferred cash. The difference

between the acquisition price of the asset received and the book value of the exchanged asset, along with all

transferred cash shall be reported as profit or loss.

Amortized cost of tangible fixed assets is equal to their book value. Tangible fixed assets are amortized on a

straight-line basis according to their expected useful life (service life). Service life is defined according to the

period during which it is assumed that the depreciable assets will be used by the company taking into account

their probable physical wear and obsolescence.

The terms are defined as follows:

Buildings – 25 years

Plant and equipment – 3.33 years

Motor vehicles – 4 years

Computers – 2 years

Other fixed assets – 6.66 years

Impairment of assets

Depreciable assets are regularly tested for impairment when events or changes in circumstances indicate that

the book value of the asset may not be recoverable.

The depreciation loss from an asset is recognized immediately as a current operating expense. In case that

after a depreciation of an asset its recoverable value exceeds the book value, a depreciation loss recovery

shall be reported as a current operating income up to the amount of the previous depreciation which has been

reported as a current operating expense.

Assets for which impairment loss has been recognized are subsequently tested for a possible recovery of the

impairment at each date of preparation of the financial statements.

Intangible fixed assets

The Group recognizes identifiable non-monetary assets without physical substance as intangible assets when

they meet the definition of an intangible asset and the recognition criteria set out under IAS 38.

Intangible fixed assets are initially recognized at acquisition price, which includes the purchase price (including

duties and non- recoverable taxes) and all direct costs. Direct costs are those necessary to turn the asset into

working condition in accordance with its intended use. Direct costs are the costs necessary to render the asset

operational as per its intended use.

Intangible assets subject to amortization are amortized on a straight-line basis during their expected useful

life.

Inventory

Inventories are initially measured at their delivery cost which is the sum of all purchase and processing costs,

as well as other expenditures incurred in relation to the delivery to their current location and condition.

The valuation method of inventories when they are written off is "weighted average price".

Inventories are valued at the lower of the delivery cost and net realizable value and the difference shall be

accounted for as other current operating expenses. At the end of the reporting period, the net realizable value

of inventories will be assessed. The net realizable value is the estimated selling price within the course of

normal business operations less the approximately measured sales costs.

Retirement benefits and other liabilities

The employer provides compulsory insurance of the employed personnel for retirement, healthcare and

unemployment.

Social security and retirement plans offered by the company in its capacity of an employer are based on the

Bulgarian legislation and constitute predetermined fixed instalments.

Short term employee benefits (due within 12 months following the end of the period when earned) are

recognized as expenses in the income statement during the period wherein the work has been performed and

as a current liability (less all amounts paid out and any due deductions) in an undiscounted amount. As of the

date of the annual financial statements the company makes an estimate of the expected costs for the leave

subject to compensation to be accumulated which is expected to be paid as a result of the unused right to

accumulated leave. The assessment includes the costs for remunerations and the amounts for the compulsory

social insurance, due by the employer, in an undiscounted amount.

Provisions

Provisions are recognized when the company has a current legal or constructive obligation resulting from a

past event the repayment of which will require expenditure of economically-beneficial resources and it is

possible to make a reliable estimate of the amount for repayment of the obligation. When a discount is used,

the reported amount of the provision will be increased in each period in order to reflect the expired time. Such

an increase will be recognized as a financial expenditure.

A contingent liability is disclosed in the statement unless the probable need for cash outflows, including

economic benefits to repay the obligation, is deferred.

Temporary tax differences

Temporary tax differences are accrued using the balance sheet method for all temporary differences between

the tax base of the assets and the liabilities and their book value, measured for accounting purposes. When

calculating temporary tax differences, the applicable tax rates for the periods of reverse occurrence are used.

When calculating temporary tax differences, tax rates are used which refer to the periods of reverse occurrence

of the temporary tax differences.

The main temporary differences result from impairment of receivables, revaluations under fair value and

accrued provision expenses.

Recoverable temporary tax differences arising from the transfer of unused tax losses from previous periods

are recognized only when it is probable that future taxable profits will be available against which the losses

can be utilized.

Recognizing income and expenses

Accounting policy applicable to revenue is based on IFRS 15 Revenue from Contracts with Customers. The

usual revenue of the Group is from the sale of its own production. The revenue in the Group is recognized

when the control over the goods and/or services subject to the contract with the customer are transferred to

the customer. The control is transferred to the customer upon satisfaction of the performance obligations under

the contract by transferring the promised goods and/or providing the promised services. Evaluation of a

contract with a customer is present only when, upon its entry into force, it:

1. Нas a commercial nature and motive;

2. The parties have approved it (orally, in writing or on the basis of "established and generally accepted

business practice") and have committed to fulfill it;

3. The rights of each party are respected;

4. Payment terms can be identified;

5. There is a probability that the remuneration to which the group is entitled when fulfilling its

performance obligations will be received.

When evaluating collectability, all relevant facts and circumstances in relation to the transaction are taken into

account, incl. past experience, usual business practices, published policies and representations made by the

group, guarantees and opportunities for remedies. A contract for which any of the above criteria has not yet

been met is subject to a new assessment each reporting period.

The remuneration received under such a contract is recognized as a liability (contract liability) in the

statement of financial position, while:

1. All five criteria for recognition of a contract with a customer are met;

2. The Group has fulfilled its performance obligations and has received all or substantially all of the

remuneration (which is non-refundable); and/or

3. When the contract is terminated and the remuneration received is non-refundable.

When initially evaluating its contracts with customers, the group makes an analysis and a judgment whether

two or more contracts should be considered in their combination and accounted for as one, and resp. whether

the promised goods and/or services in each separate and/or combined contract should be accounted for as

one and/or more performance obligations. Any promise to transfer goods and/or services that are

distinguishable (by themselves and in the context of the contract) is counted as a single performance

obligation. The Group recognizes revenue for each separate performance obligation at the level of a separate

contract with a customer by analyzing the type, duration and terms of each specific contract.

Revenue is measured based on the transaction price set up for each contract. The transaction price is the

remuneration amount to which the Group expects to be entitled, excluding amounts collected on behalf of third

parties.

When defining the transaction price, the Group takes into account the terms of the contract and its usual

commercial practices.

The revenues generated in the Group are mainly from the sale of own production. Revenues from sales of

goods and services have an insignificant share. In its arrangements with customers, the Group acts as a

principal because it usually controls the output and/or goods and/or services before transferring them to the

customer.

Upon a sale, the control over the production/goods is transferred to the customer at a precise point in time

which is usually when the goods are handed over to the customer/carrier at an agreed location, and the

customer can dispose of the sold produce/goods by managing the use and receiving essentially all remaining

benefits.

Control over services is transferred in the period of time when they are provided. Sales revenue is recognized

over time by measuring the degree of fulfillment of the Group's obligations (stage of completion).

The transaction price usually includes a fixed selling price according to the price list, with reduced trade

discounts. Variable consideration is included in the transaction price only to the extent that it is highly probable

that no material adjustment will occur in the amount of cumulative revenue recognized.

The companies in the Group currently report the costs for the activities by economic elements and then refer

them by functional purpose in order to form the amount of costs by directions and activities. Recognition of

expenses for the current period is carried out upon accrual of their corresponding revenues.

Expenses are reported on an accrual basis. They are evaluated according to the fair value paid or payable.

General and administrative expenses

This expense category includes all expenses of a general and administrative nature.

Financial income and expenses

Financial income includes income from interest on invested funds (incl. investments available for sale),

dividend income, profit from sale of financial assets available for sale, changes in the fair value of financial

assets reported at fair value in the profit or loss, profit from operations in foreign currency recognized as profits

and losses. Interest income is recognized at the time of its accrual using the effective interest method. Dividend

income is recognized on the date when the Company's right to receive the payment is established.

Costs for the activity also include financial costs that are related to the usual activity.

The accrual principle applies to financial costs as it applies to all other components of the income statement.

They also include all impairments of financial assets.

Financial expenses include interest expenses on loans, losses from foreign currency operations, changes in

the fair value of financial assets reported at fair value in the profit or loss, impairment of financial assets that

are recognized in the profit or loss. All interest expense on borrowings is recognized in the profit or loss using

the effective interest method.

Profits or losses for the period

All income and expense items recognized for the period are included in the profit or loss unless an IFRS

standard or interpretation requires otherwise.

Profit or loss is the total amount of revenue minus expenses, excluding the components of other

comprehensive income.

Related parties

For the purpose of preparing these financial statements, members of the Board of Directors have presented

in the annual report the legal entities related to them and controlled by them. Related parties to the company

are the subsidiaries and associates.

Changes in the related parties to Stara Planina Hold Plc are being followed for the entire reporting period and

for the previous reporting period, as far as this information concerns reporting of transactions and events in

the financial statements.

The Board of Directors of Stara Planina Hold Plc has adopted procedures to avoid and disclose conflicts of

interest. They impose obligations for the members to avoid and not to admit actual or potential conflicts of

interest and, if necessary, to immediately disclose conflicts of interest and provide shareholders with access

to information on transactions between them and the company or any related party.

During the reporting period members of the Board of directors and parties related to them have not entered

into agreements with the company under terms beyond the regular business operations or deviating

significantly from the market conditions.

There are no transactions beyond the regular business operations of the issuer or deviating significantly from

the market conditions.

Transactions between Stara Planina Hold Plc and related parties during the reporting period include mostly

the loans provided to subsidiaries and associates.

Loan agreement dated 25.04.2019 granting Fazan Jsc the amount of BGN 407 000 with maturity until

25.12.2025 at 2.5 % annual interest rate.

Loan agreement dated 09.01.2022 granting Fazan Jsc the amount of BGN 550 000 with maturity until

08.01.2026 at 2.5 % annual interest rate.

Loan agreement dated 01.07.2022 with Boryana Jsc, – associated company, including loand under the

following conditions:

1. Loan in the amount of BGN 470 thousand with maturity until 16.09.2027 at 2.5% annual interest,

unpaid principal as of 31.12.2023 in the amount of BGN 430 thousand.

2. Loan to finance the purchase of machines in the amount of BGN 483 thousand with a maturity until

of 01.03.2027 at 2.5 % annual interest, unpaid principal as of 31.12.2023 in the amount of BGN 112

thousand.

Loan agreement dated 15.11.2022 with Elhim-Iskra Plc - in the amount of BGN 1 200 000 for a period until

30.11.2027 at an annual interest rate 2.5%, unpaid principal as of 31.12.2023 in the amount of BGN 1 150

thousand.

Loan agreement dated 12.07.2023 with HES Plc - in the amount of BGN 4 000 000 for a period until 30.06.2024

at an annual interest rate 3.5%.

Loan agreement dated 01.11.2023 with SPH Invest Jsc - in the amount of up to BGN 1 000 000 (one million)

for a period until 01.11.2025 at an annual interest rate 3.5%, unpaid principal as of 31.12.2023 in the amount

of BGN 700 thousand.

Events after the balance sheet date

Events, both favorable or unfavorable, that occur between the end of the reporting period and the date that the

financial statements are approved for issuance, may be: (a) adjusting events – events that provide further

evidence on conditions that existed on the date of the annual financial statements, and (b) non-adjusting events

– events that are indicative of conditions after the date of the annual financial statements.

The Group adjusts recognized amounts or recognizes amounts which have not been recognized, in case of

reported adjusting events.

The Group does not adjust recognized amounts or does not recognize amounts which have not been

recognized in case of reported non-adjusting events. They are only disclosed in the Notes to the annual

financial statements.

Financial risk management

The Management monitors the overall risk and finds ways to neutralize potential negative effects on the

company’s financial indicators.

Market risk includes three types of risk:

Currency risk - the risk that the value of a financial instrument will vary due to changes in exchange rates.

Interest rate risk - the risk that the value of a financial instrument will vary due to changes in market interest

rates.

Price risk - this is the risk that the value of a financial instrument will vary as a result of changes in market

prices.

The main sales in the Group are realized in the European Union and from exports to third countries. Payments

are in euros and US dollars. The management monitors exchange rate movements and takes measures to

avoid the negative consequences as a result of their variance.

The interest-bearing financial instruments of Stara Planina Hold Plc are mainly the loans granted. The majority

of them have a fixed interest rate from 2.5% to 3.5% annual interest.

Investments in subsidiaries and associates are accounted for and presented under the acquisition price

method.

The risk of changes in the market price of equity instruments arises from equity stocks classified as reported

under fair value in other comprehensive income (FVOCI) held for long-term investments.

Credit risk - Stara Planina Hold Plc has granted loans to companies in its portfolio which have a longstanding

and unblemished credit reputation which minimizes the credit risk.

Due to the nature of the financial instruments used by Stara Planina Hold Plc, the liquidity risk and the interest

rate risk of the cash flow are also minimized.

All risk factors for the operations of the company are described in detail in the Activity Report.

Approximate accounting estimates, fundamental errors and amendments to the accounting policy

The accounting policy has been developed in accordance with the hierarchy of IAS 8 Accounting Policy,

Changes in Accounting Estimates and Errors.

Accounting estimates are the monetary amounts in the financial statements, the estimation of which has an

element of uncertainty.

The Group prepares accounting estimates when the accounting policy requires the items in the financial

statements to be valued in a way that includes uncertainty in the valuation, i.e. be valued at monetary amounts

that cannot be directly observed but must instead be estimated.

The Group prepares accounting estimates to achieve the objective stated in the accounting policy. Preparing

accounting estimates involves the use of judgments or assumptions based on the most current, reliable

information available.

Accounting estimates have been applied to assess: - the fair value of financial assets and; - the costs of

depreciation of an asset of property, machinery and equipment.

Preparation of an accounting estimate includes the selection and simultaneous use of: - valuation methods;

- input data for evaluation. Valuation methods include: - estimation methods (used to estimate the loss

allowance for expected credit losses under IFRS 9 Financial Instruments.

Estimates are subject to revision in case of changes in the circumstances they are based on or resulting from

further experience or subsequent developments. The effects of changes in the accounting estimates are taken

into account when defining the profit or loss, as follows:

a) For the period of the change - if the change affects only that period;

b) For the period of the change and future periods - if the change affects these periods as well.

The effect of the changes in the accounting estimate is included in the same entry of the comprehensive

income statement as previously used for the estimated value. The error related to prior periods is reported

during the current period by increasing or decreasing the retained profit balance from previous years. The

comparative information from the previous reporting period is recalculated. When the decrease in retained

earnings is greater than the balance of retained earnings before the decrease, the difference is reported as an

uncovered loss from previous years.

Changes in the accounting policy are to be made only when required by law, accounting standards, or if the

change will lead to a more adequate representation of the events or transactions reported in the financial

statements.

Changes in the accounting policy are to be applied retrospectively. Any adjustment due to the change is

recorded as an adjustment to the balance of the retained earnings from previous years. The comparative

information is recalculated. The difference resulting from the recalculation of tax expenses in the income

statement for the previous period are reported as an adjustment to the retained earnings (uncovered loss).

The change in the accounting policy is applied retroactively when the adjustment to the balance of retained

earnings from previous years cannot be reliably determined. A change in the accounting policy occurs when a

new or amended accounting standard is adopted, and is accounted for in accordance with the requirements

specified in the new or amended accounting standard, if any. When the respective accounting standard does

not stipulate specific requirements for reporting changes in the accounting policy, they are to be reported in

accordance with IAS 8.

During the reporting period, the accounting policy has not been changed.

No errors were identified, both for the current and for previous reporting periods, which required the reflection

of corrections.

    

NOTES UNDER THE STATEMENT OF FINANCIAL STANDING

(In all applications amounts are shown in thousands BGN unless otherwise stated)

Note 1

Property, plant and equipment

Property,

plant and

equipment

Land

Buildings

and

construction

Machinery

and

equipment

Facilitie

Vehicles

Office

fittings

Expenses

for

acquisition

and

liquidation

of assets in

a business

way

Others

Total

Book value

as of

31.01.2023

8107

56850

208424

14852

4719

3429

6397

1286

304064

Received

during the

period

235

11049

15166

1318

199

348

17948

46321

Out of use

289

1351

17383

19204

Depreciation

accrued in

the

beginning of

the period

28509

167957

7464

3589

2941

864

211324

Depreciation

accrued

during the

period

2074

13240

554

311

165

144

16488

Depreciation

written off

during the

period

1399

1595

Balance as

31.12.2023

8322

37043

42441

8170

1018

671

6962

337

104964

Note 2

Intangible assets

Intangible

assets

Rights of

ownership

Software

R&D

products

Others

Total

Book value as

of 31.01.2023

1281

4695

1240

2000

9216

Received

during the

period

321

351

Out of use

695

416

1187

Depreciation

accrued in the

beginning of

the period

1161

4425

538

463

6587

Depreciation

accrued during

the period

324

477

Depreciation

written off

during the

period

695

416

1187

Balance as of

31.12.2023

114

267

671

1451

2503

Note 3

Investments in Other Companies

Company name and registered seat of

the companies where the investments

were made

Fair

value

Percentage

of the

capital of

the other

company

Investment

securities

admitted to

trading on

a stock

exchange

Investment in

securities not

admitted to trading

on a stock

exchange

International Asst Bank JSC, Sofia

21467

12,97

21467

ZAD Asset Insurance JSC, Sofia

9388

40,00

9388

Hydraulic elements and systems Plc,

Yambol

8964

8,28

8964

Elhim - Iskra Plc, Pazardzhik

190

0,80

190

Leasing Company JSC, Sofia

900

5,00

900

SPH Trans Ltd., Sofia

Medical Center “Center for Prevention of

the health” Ltd, Sofia

25,00

Progres JSC, Stara Zagora

335

4,00

335

Dionisii Jsc, Nikopol

68,99

VR Bank Dreieich-Offenbach AG

TOTAL

41403

9154

32249

Investments in equity instruments (minority shares), pursuant to IFRS 9 are classified as reported at fair value

through the statement of other comprehensive income (FVOCI). Market valuation of the shares is prepared at

the end of the year.

Note 4

Other financial assets

31.12.2023

31.12.2022

Additional cash contribution in accordance with

art. 246, para 2, item 4 of Commercial Act

1218

In 2016 an additional monetary contribution was made by Stara Planina Hold Plc in accordance with art. 246,

para 2, item 4 of Commercial Act in the amount of BGN 609 thousand in the Reserve fund of Asset Insurance

AD - a minority interest company in the portfolio of Stara Planina Hold Plc portfolio.

In 2016 an additional monetary contribution was made by HES Plc in accordance with art. 246, para 2, item 4

of Commercial Act in the amount of BGN 609 thousand in the Reserve fund of Asset Insurance AD - a minority

interest company in the portfolio of Stara Planina Hold Plc portfolio.

Note 5

Long-term trade and other receivables

31.12.2023

31.12.2022

Trade loans

9250

9400

Others

4291

2244

Total

13541

11644

Note 6

Inventory

31.12.2022

31.12.2021

Materials

38605

26996

Finished goods

9064

6490

Goods for resale

2481

1483

Work in progress

14240

11521

Others

Total

64390

46492

Note 7

Current trade and other receivables

31.12.2023

31.12.2022

Trade accounts receivables

49271

44516

Advance payments

1769

2452

Trade loans

1000

Court receivables

Recoverable taxes

1640

2686

Others

500

551

Total

54191

50206

Note 8

Cash and cash equivalents

31.12.2023

31.12.2022

Cash

132

Cash in banks

33895

43080

Restricted cash

1913

1748

Cash equivalents

Total

35940

44909

Note 9

Share capital and Reserves

31.12.2023

31.12.2022

Share capital

21000

Treasury shares

-275

Premium reserves when issuing securities

1178

Reserve from subsequent valuations of assets and

liabilities

28880

26603

General reserves

13279

13394

Special reserves

Other reserves

5581

4663

Undistributed profit

53149

44003

Loss not covered

-428

Current year profit (loss)

13913

17538

Total

136277

127676

Note 10

Long-term trade and other liabilities

31.12.2023

31.12.2022

Due to related parties

437

347

Due to banks under loans received

871

944

Lease obligations

107

Due to staff upon leave

2987

2523

Liabilities on deferred taxes

2397

1859

State financing

992

1084

Provisions

150

Others

8367

Total

16184

7102

Note 11

Current trade and other liabilities

31.12.2023

31.12.2022

Due for dividends

7092

7324

Due to banks under loans received

3603

768

Trade loans

252

245

Trade accounts payables

17901

26572

Advance payments

2132

2495

Salaries payable

9224

9158

Social security payable

1993

2006

Tax liabilities

1466

1555

Others

1025

1715

Provisions

Deferred revenues

State financing

649

900

Total

45447

52827

Off-balance sheet liabilities

An agreement for undertaking a subordinated contingent liability has been concluded between Stara Planina

Hold Plc and ZAD Asset Insurance AD. Pursuant to this agreement, Stara Planina Hold Plc shall provide ZAD

Asset Insurance AD, upon request and upon occurrence of an activating event, the amount of up to BGN 294

thousand.

An agreement for undertaking a subordinated contingent liability has been concluded between HES Plc and

ZAD Asset Insurance AD. Pursuant to this agreement, HES Plc shall provide ZAD Asset Insurance AD, upon

request and upon occurrence of an activating event the amount of up to BGN 294 thousand.

NOTES UNDER THE COMPREHENSIVE INCOME STATEMENT

(In all applications amounts are shown in thousands BGN unless otherwise stated)

Note 12

Net sales revenues

31.12.2023

31.12.2022

Finished goods

351004

357694

Goods for sale

17888

5173

Services

2882

3830

Others

7192

8559

Total

378966

375256

Note 13

Other financial income

31.12.2023

31.12.2022

Interest revenue

241

227

Dividend income

539

501

Gains from operations with financial assets and instruments

241

Gains from foreign exchange operations

134

676

Other financial income

Total

1155

1404

Note 14

Other financial expenses

31.12.2023

31.12.2022

Interest expenses

458

202

Losses from foreign exchange operations

319

389

Other financial expenses

354

196

Total

1131

787

Chief Accountant: Kremena Dulgerova Executive Director: Vasil Velev

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2024.04.25

15:01:54 +03'00'

Digitally signed by Vasil

Georgiev Velev

Date: 2024.04.25 15:07:06

+03'00'

 
 
CONTENTS 
 
Introduction ........................................................................................................................................................ 2 
I. Activity overview ............................................................................................................................................. 2 
1. Indicators characterizing the main operational results ............................................................................... 2 
2. Investment portfolio .................................................................................................................................... 3 
3. Operational results ..................................................................................................................................... 3 
4. Major indicators for financial and accounting analysis on a consolidated basis ........................................ 5 
5. Risk factors for the activities of the Group of Stara Planina Hold Plc ........................................................ 6 
II. Consolidated Non-financial Declaration ...................................................................................................... 13 
III. Information Disclosure on the Key Performance Indicators (KPIs) under Art. 8 of the Taxonomy 
Regulation as of 31 December 2023 on a Consolidated Basis ....................................................................... 28 
IV. Important developments occurred since the beginning of the year ........................................................... 37 
V. Expected development of the group ........................................................................................................... 37 
VI. Research and Development Activity .......................................................................................................... 39 
VII. Company shares ....................................................................................................................................... 40 
1. Own shares. Buy-back ............................................................................................................................. 40 
2. Changes in the share price of the companies ......................................................................................... 41 
3. Dividend policy ......................................................................................................................................... 43 
VІIІ. Financial instruments used by the enterprise .......................................................................................... 44 
1. Accounting policy ..................................................................................................................................... 44 
2. Financial instruments ............................................................................................................................... 44 
3. Liquidity .................................................................................................................................................... 45 
4. Exposure of the enterprise to price, credit, liquidity and cash flow risk ................................................... 45 
ІX. Corporate Governance Declaration ........................................................................................................... 45 
1. National Corporate Governance Code..................................................................................................... 45 
2. Implementation of the National Corporate Governance Code ................................................................. 46 
5. Information Art. 10 of Directive 2004/25/EC ............................................................................................ 51 
6. Diversity policy ......................................................................................................................................... 52 
7. Information on the Board of Directors ...................................................................................................... 52 
Х. Additional information on Appendix 2 of Ordinance No 2 of the FSC ......................................................... 53 
Media............................................................................................................................................................ 56 
 
 
 
This document contains information regarding the published estimates feasibility, future period forecasts, as well as data, 
which constitutes proprietary information pursuant to Art. 7 Regulation (EU) No 596/2017 on market abuse. This 
information could have significant impact on the price of shares issued by the company. 

Introduction

The annual consolidated report on the activities of Stara Planina Hold Plc provides comments and

analysis of the financial statements and other material information on the financial standing and

operational results of the company, included in the consolidation as a whole. The report contains an

objective overview presenting faithfully and honestly the development and results of the activities of the

companies in the group of Stara Planina Group Hold Plc, together with a description of the main risks

they face. The Report includes the information required under Art. 45 of the Accountancy Act, Art. 100n,

para. 5 of the Public Offering of Securities Act (POSA), as well as Art. 11 of Ordinance № 2 of the

Financial Supervision Commission.

STARA PLANINA HOLD PLC is a public company within the meaning of art. 110 of the Public

Offering of Securities Act. The company is successor of Central Privatization Fund AD incorporated on

27 September 1996.

The holding is a parent company within the meaning of §1, item 18 of the Additional Provisions of

the Accountancy Act and holds shareholdings in the capital of industrial enterprises in various fields of

production. The company actively participates in the development of the Bulgarian industry by achieving

European and world level of quality and profitability.

I. Activity overview

1. Indicators characterizing the main operational results

Indicator (BGN’000s)

Y2021

Y2022

Y2023

Income from main business activity

278 366

375 256

378 966

Net profit from business activity

13 054

17 538

13 913

Amount of assets

268 645

303 706

328 905

Shareholders' Equity

115 565

127 676

136 277

Structure of the investment portfolio

The economic group of Stara Planina Hold Plc consists of the parent company and its subsidiaries

and associates. The investment portfolio of the holding is distributed mainly in the following industries:

62.8

15.4

6.6

15.2

Machine Building

Electrical Engineering

Light Industry

Financial

2. Investment portfolio

The participation of Stara Planina Hold Plc in subsidiaries and associates is reported in

accordance with the provisions and requirements of IFRS 10: Consolidated financial statements and IAS

28: Investments in Associates.

The Company recognizes dividends from a subsidiary or associate company in the profit or loss

account in its separate financial statements when its right to receive the dividend is established.

Subsidiaries are all enterprises under the control of the company. The control over the subsidiaries

of the company is expressed in its ability to manage and define the financial and operational policy of the

subsidiaries so as to derive benefits as a result of their operations. In the separate financial statements

of the company, investments in subsidiaries are accounted for at their cost value.

Associates are those enterprises over which the company is able to exercise significant influence

but are neither subsidiaries, nor jointly controlled entities. Investments in associates are accounted for at

their cost value.

Major investments in the portfolio of Stara Planina Hold Plc as of 31.12.2023:

Investments in subsidiaries

Hydraulic Elements and Systems Plc

64.53 %

Elhim Iskra Plc

51.40 %

Fazan Jsc

92.65 %

SPH Invest Jsc

99.39 %

Investments in associates

M+C Hydraulic Plc

30.61 %

Bulgarian Rose Plc

49.99 %

Boryana Jsc

50.00 %

Investments in other companies

Asset Insurance Jsc

20.00 %

Leasing Company Jsc

5.00 %

The subsidiary of Stara Planina Hold Plc SPH Invest Jsc holds 8.28 % of the capital of Hydraulic

Elements and Systems Plc and 0.8 % of the capital of Elhim-Iskra Plc.

Taking into account the influence of the holding on the decision-making process with regard to

the associates and the need to provide more comprehensive and correct information to the shareholders,

investors and all interested parties, as of 01.01.2011 Stara Planina Hold Plc applies an accounting policy

aimed at further facilitating investors in making a well-grounded investment decision.

3. Operational results

As a holding company, Stara Planina Hold Plc does not perform independent commercial

operations and has only financial income. The consolidated activity results are formed mainly from the

results of the entities within the group which participate in the consolidated statements.

The structure of income within the last three years is summarized in the table below:

INCOME (BGN’000s)

Y2021

Y2022

Y2023

Sales of finished goods

266 064

357 694

351 004

Sales of trading goods and services

5 154

9 003

20 770

Other incomes

7 148

8 559

7 192

Grants

4 633

8 504

910

Financial income

1 541

1 404

1 155

Total Income

284 540

385 164

381 031

The consolidated sales of the companies in the group as of 31.12.2022 reached BGN 378.97

million thus reporting a 1 % increase compared to the sales in 2022 and an increase by 36.14 % compared

to the reported sales in 2021.

Annual sales of all companies in the group of Stara Planina Hold group

(million BGN)

* forecast

Based on the results achieved in the first months of 2024 and the updated forecast for the first

half of the year, given the escalating geopolitical military conflicts, the new political instability in the country

as well as taking into account the continued negative development of the European and world economy,

including the seriously lowered expectations of the German government for growth in 2024 by only 0.2%

of the economy of Germany, we confirm our forecast expectations that consolidated sales in the first

quarter of 2024 will reach BGN 77.4 million but we are adjusting downward our forecast for the next

quarters. With the results for the first quarter, we would report a decrease by about 28 % compared to

the record high levels of sales achieved in the same period of 2023 and a decrease by about 11 %

compared to the first quarter of 2022. At this stage, we expect with the consolidated revenues for the first

half of 2024 to report a decrease by about 30 % compared to the same period of 2023 and presume that

the group's consolidated sales revenue for 2024 will be worth around BGN 258.4 million.

The net consolidated profit as of 31.12.2023 amounts to BGN 13 913 thousand and reports a

decrease by 20.67 % compared to 2022 and an increase by 6.58 % compared to 2021.

Consolidated Net Profit (BGN’000s)

218.1

242.7

224.4

200.0

278.4

375.3

379.0

258.4

2017 2018 2019 2020 2021 2022 2023 2024*

7861

7556

6747

8096

13054

17538

13913

2017 2018 2019 2020 2021 2022 2023

The 2023 consolidated EBITDA amounts to BGN 64.4 million and reports a 4.87 % decrease

compared to 2022 and an increase by 32.51 % compared to 2021.

Consolidated EBITDA (million BGN)

EBITDA is very important benchmark for any business group. The graph provides data on the

consolidated EBITDA of the Group of Stara Planina Hold Plc for the last 7 years.

4. Major indicators for financial and accounting analysis on a consolidated basis

Profitability Indicator

31.12.2021

31.12.2022

31.12.2023

0.113

0.137

0.102

0.049

0.058

0.042

К1 Profitability of Shareholders’ equity ratio = Net profit / Shareholders’ equity

К2 Asset capitalization ratio = Net profit / Total assets

Profitability (yield) is the ability of the company to provide economic profit to its owners through

the skillful management of the assets, the shareholders’ equity and the borrowed capital and the other

liabilities. It is the most important indicator for the efficiency of the activity carried out by us.

The return on equity ratio is calculated by expressing net profit as a percentage of equity. This

ratio measures the absolute return to shareholders in terms of their absolute investment.

In 2023, compared to 2022, the return on equity ratio reports a decrease due to the decrease in

the net consolidated profit by 20.67 % compared to the reported increase in the value of equity on a

consolidated basis by 6.74 %.

The return on assets ratio shows the efficiency of using the total assets and in 2023 also reported

a decrease compared to the previous year due to the decrease in the net consolidated financial result by

20.67 % compared to the increase in the amount of consolidated assets by 8.30 %.

Efficiency Indicator

31.12.2021

31.12.2022

31.12.2023

1.131

1.154

1.141

0.884

0.867

0.877

К3 Expenses efficiency ratio = Total income / Total expenses

К4 Income efficiency ratio = Total expenses / Total income

The analysis of the efficiency of the consolidated revenues and expenses for 2023 shows that

BGN 1.141 revenues were received per BGN 1.00 of the expenses. Revenues fully cover the expenses

on a consolidated basis which is a pre-condition for a positive cash flow from operational activity, meeting

35.3

37.1

34.1

38.1

48.6

67.7

64.4

2017 2018 2019 2020 2021 2022 2023

the undertaken dividend commitments as well as for partial financing of the companies in the portfolio of

the Holding.

Liquidity Indicator

31.12.2021

31.12.2022

31.12.2023

2.900

3.026

3. 268

0.908

0.850

0.791

К5 Total liquidity ratio = Current assets / Current liabilities

К6 Absolute liquidity ratio = Cash / Current liabilities

It is assumed that the optimal values of the total liquidity indicator are above 1-1.5. In 2023, the

value of this indicator on a consolidated basis reports an increase compared to the previous year which

is due to a decrease in the value of consolidated current assets by 7.09 % compared to a decrease in

the value of current liabilities by 13.97 %.

The absolute liquidity ratio expresses the ability of the Group to meet its short-term obligations

with its available cash. In 2023, the value of this ratio on a consolidated basis reports a slight decrease

compared to the previous year which is due to a decrease in the short-term liabilities by 13.97 %

compared to the cash decrease by 19.97 %.

In 2023 again the Group of Stara Planina Hold Plc has been covering its current liabilities on time

with the available current assets. The liquid structure of current assets and liabilities allows part of the

funds to be directed to long-term financing of the companies under control.

Financial Autonomy Indicators

31.12.2021

31.12.2022

31.12.2023

2.154

2.130

2.211

0.464

0.469

0.452

К7 Financial Autonomy ratio = Shareholders’ equity / Borrowed capital

К8 Debt ratio = Borrowed capital / Shareholders’ equity

Through the financial autonomy indicator and debt ratio, the proportion between shareholders’

equity and borrowed funds in the capital structure of the group is taken into account. The high level of the

financial autonomy ratio, respectively the low level of the debt ratio is a guarantee, both for the investors

/creditors/ and for the owners themselves, regarding the ability of the companies in the group to regularly

pay their long-term obligations.

5. Risk factors for the activities of the Group of Stara Planina Hold Plc

A significant effect on the financial standing of Stara Planina Hold Plc has the direct dependence

on the financial condition of the subsidiaries and associates as far as their operations are primarily export-

oriented - mainly to the countries of the European Union.

Major risks and uncertainties for Stara Planina Hold Plc are related to the possibility for the actual

income from a given investment not to correspond to the expected one which is conditioned by the

successful activities of the companies in the Group. In this sense, the main risks for Stara Planina Hold

Plc and the companies in the Group for 2023 are:

Overall macroeconomic risk: Macroeconomic conditions and trends for the development of the

market and the macro environment where the companies operate represent a systematic risk that cannot

be managed and controlled by the corporate board of the holding and those of the companies in the

Group but has a significant impact on the activities and results of the enterprises.

Macroeconomic indicators such as inflation, uncertainty about the price and security of energy

supply, weak demand, geopolitical tensions and economic challenges driven by high interest rates

continue to have a significant impact on business processes and prospects for economic development in

global aspect.

According to data from the December, 2023 Economic Bulletin of the ECB, the economy of the

euro area contracted in the second half of 2023 under the adverse impact of tight financing conditions,

weakened confidence and loss of competitiveness. The current expectations of the ECB’s experts are

that its recovery will be slightly slower than predicted in the September 2023 forecasts. Short-term

indicators point to weak economic activity in the fourth quarter of 2023 as well. However, growth is

expected to strengthen from the beginning of 2024 onward with real disposable income rising, supported

by falling inflation, solid wage growth and sustained employment, and with export growth picking up to

catch up with stronger foreign demand. Overall, average annual real GDP growth is expected to slow

from 3.4% in 2022 to 0.6% in 2023, then pick up to 0.8 % in 2024 and stabilize at 1.5% in 2025 and 2026.

Compared to the September 2023 forecast, the GDP growth outlook has been revised slightly downwards

for 2023-2024 based on the latest published data and weak business survey results but has not been

revised for 2025.

Business investments are expected to grow weakly in 2024 due to the tight financing conditions,

lagging behind rising demand. A recovery is expected in 2025-2026, reflecting weakening of the negative

impact of financing conditions and the support under the New Generation EU (NGEU) program.

Global trade growth is expected to regain momentum and increase broadly in line with the

economic activity. ECB’s experts forecast world trade to grow by 3.0 % in 2024 and 2025 and by 3.2 %

in 2026. External demand for the euro area is forecast to grow by 2.6 % in 2024, 2.9 % in 2025 and 3.1%

in 2026 which is also at lower level than the September forecasts.

In the 2024 Winter Economic Forecast, published on 15.02.2024, the European Commission again

lowered its economic growth expectations for both the European Union and the Eurozone to 0.5 % in

2023, compared to the expectations for a 0.6 % growth in the autumn forecast. For 2024, the deterioration

of the EC's forecasts is more pronounced and while the autumn forecast predicted an increase in EU

GDP by 1.3%, the current expectations are for an increase of 0.9%. The Eurozone economy is projected

to grow by 0.8% in 2024, compared to the 1.2% predicted in the previous economic forecast. For Bulgaria,

the expectations for economic growth in 2023 remain unchanged (2%), and for 2024 GDP is expected to

increase by 1.9% compared to the expectation of growth of 1.8% in the autumn forecast.

According to the assessment of the European Commission, after almost reaching a technical

recession in the second half of 2023, the prospects for the EU economy in the first quarter of 2024 remain

weak. The growth rate is expected to stabilize from the second half of 2024 to the end of 2025.

In addition, according to EUROSTAT data on an annual basis, in December 2023 compared to

December 2022, industrial production increased by 1.2 % in both the euro area and the European Union

but the annual average industrial production for 2023 compared to 2022 decreased by 2.4 % in the euro

area and by 2.0 % in the EU. In Bulgaria, in December compared to November 2023, production in the

industrial sector increased by 3.3 percent, reversing its direction from the previous month, when it

decreased by 3.9 percent. In December 2023, compared to December 2022, Bulgarian industrial

production weakened by 6.9 percent after a decline of 12.3 percent in November and 5.9 percent in

October. Thus, Bulgaria continues being third among the EU countries in terms of the most significant

decline in industrial production in December.

At the same time, according to preliminary data of the NSI for 2023, Bulgaria's trade with its main

trading partners from the EU and third countries shrank for another month in a row in December. A

decline was reported both in terms of the export of Bulgarian goods and the import in our country. In

2023, the total export of goods from Bulgaria worth BGN 86 562.7 million decreased by 6.8 % compared

to 2022 and the reported decrease in the total import of goods on an annual basis is 10.2%. In December

2023, the total export of goods decreased by 3.5% and the total import of goods decreased by 6.9 %

compared to the same month of the previous year. This negative trend in our foreign trade continues

reflecting the stagnation of the world's leading economies and indicates problems for the growth of the

Bulgarian economy this year.

Pursuant to data of the National Statistical Institute, in December 2023, the total business climate

indicator decreases by 1.8 percentage points compared to the previous month (from 21.6% to 19.8%)

which is due to the unfavorable business climate in the construction, retail trade and service sector. The

composite indicator "business climate in industry" preserves approximately its November level (from

20.6% to 20.7%). The expectations of the industrial entrepreneurs about the activity over the next 3

months are worsened. The uncertain economic environment and shortage of labor continue to be the

most serious obstacles for the business development. Concerning selling prices in industry, the

managers’ forecasts are for certain increase, although the prevailing part of them foresee preservation of

their level over the next 3 months.

According to preliminary seasonally adjusted data of the NSI, in December 2023 the Industrial

Production Index, which measures changes in the output of Bulgarian industrial enterprises and evaluates

the average change in production between two time periods, increased by 3.3 % compared to the

previous month and reports a decrease by 6.9% compared to December 2022. On an annual basis, a

decline in industrial production was recorded in the processing industry - by 8.9 % and in the mining

industry - by 8.8 %, while an increase was registered in the production and distribution of electricity and

heat energy and gas - by 4.6 %. This negative trend continues with the reported decline of the index by

2.5% in January 2024 compared to the previous month. Compared to January 2023, a decrease of 7.5%

was registered in the calendar-adjusted index of industrial production.

According to data of the NSI, in December 2023 the Total Producer Price Index in Industry, which

measures the average change in the prices of industrial products produced and sold by Bulgarian

enterprises, recorded a decrease by 0.6 % compared to previous month and a decrease by 14.6 %

compared to the same month of 2022. In the sectors where the main companies in the group of the Stara

Planina Hold Plc operate, for December 2023, compared to December 2022, was recorded a decrease

by 1.7 % in the production of metal products and a growth by 6.2 % in the production of machines.

According to data from the European Commission in December 2023, the Economic Sentiment

Indicator (ESI) rose both in the EU (+1.8 points to 95.6) and the euro area (+2.4 points to 96.4). In the

European Union, the improvement in ESI was driven by higher confidence among consumers and

managers in retail, services and construction.

According to EUROFER (European Steel Association), the worsening of the economy and industry

outlook in 2023 in the European Union, especially due to high inflation and the subsequent increase in

the interest rates by the European Central Bank, has had a limited impact on the output of the steel-using

sectors. The construction sector, which accounts for 35 % of EU steel consumption, is the only significant

exception. Economic uncertainty is expected to continue affecting the steel market growth in 2024.

Although the EU industry proved to be quite resilient until the end of the first half of 2023, the second half

of 2023 was characterized by predominantly negative trends, driven by uncertainty in energy prices, weak

demand, inflation, geopolitical tensions and economic challenges caused by high interest rates. While in

2022 production grew more than expected (+3%) as of 31.12.2023, EUROFER predicts a slowdown in

growth (+0.7%) on an annual basis with large differences between the individual economies of European

countries and their industrial sectors. Growth in steel-using sectors is forecast to slow further in 2024

(+0.2%), mainly due to another recession in the construction sector, with growth expected to pick up

moderately in 2025 (+1.5%).

EUROFER Forecast for the Mechanical Engineering and Metal Goods Sectors

(Е-28, % change YoY)

1.6

-2.0

-1.6

0.1

1.4

-0.5

2.4

-3.3

-1.9

-0.4

1.4

1.3

0.1

1.3

Y2023 1Q24 2Q24 3Q24 4Q24 Y2024 Y2025

Mechanical engineering Metal goods

In the third quarter of 2023, production in the mechanical engineering sector experienced a slight

decline (-0.1%), after ten consecutive quarterly increases (+1.8% in the previous quarter). Led by the

overall industrial recovery after COVID, the mechanical engineering sector reported strong production

levels, even above those prior to 2019. However, the growth of the sector remains exposed to continued

downside risks, including due to the impact of the war in Ukraine and the continued deterioration of the

economic and industrial outlook. The mechanical engineering sector is expected to report only moderate

growth in 2023 (+1.6%, revised upwards from +0.5%). This sluggish performance is due to continued

weakness across the industrial sector, the impact of high interest rates and inflation-driven economic

uncertainty. Despite expected growth in the economy and industry in the first half of 2024, the sector is

projected to report a decline in production in 2024 (-0.5%) before recovering in 2025 (+2.4%).

After a reported decline by 3.3% for 2023, EUROFER's expectations for the metal goods sector in

2024 are for further declines until mid-year, followed by a growth in the third and fourth quarters and

nominal growth of 0.1 % on an annual basis. For 2025, expectations are for a more substantial growth of

(1.3%).

The interest rate risk is related to changes in the levels of the market interest rates, which could

lead to an increase in the interest expenses and a corresponding decrease in the financial result of the

companies in the Group.

At its meeting on 14 December 2023, the Governing Council of the ECB decided that the interest

rate on the main refinancing operations and the interest rates on the marginal credit facility and the

deposit facility would remain unchanged – 4.50 %, 4.75 % and 4.00 %, respectively. Based on its current

assessments, the Governing Council considers that the ECB's key interest rates are at a level which, if

sustained long enough, will make a significant contribution to achieving this objective. The main interest

rate of the BNB for the nine months of 2023 is presented in the following graph:

Source: BNB

The change in interest rates reflects depending on the share of attracted bank and commercial

loans. At the beginning of 2022, Euribor started its movement from a negative position, and for 5 years

its value was only negative, and from September 2011 to the beginning of 2022, the direction of the

annual trend was only downward. Since the beginning of 2023, a strong upward trend has been reported,

with the highest value since 2009 being reached at the end of September. In the last quarter of the year,

the movement is again in a downward direction.

12-month EURIBOR (01.01.2023 - 31.12.2023)

1.42

1.82

2.17

2.47

2.77

2.96

3.12

3.29

3.53

3.64

3.79

3.80

01.01.2023 01.02.2023 01.03.2023 01.04.2023 01.05.2023 01.06.2023 01.07.2023 01.08.2023 01.09.2023 01.10.2023 01.11.2023 01.12.2023

BNB Base Interest Rates

01.01.2023 - 01.12.2023

10.

Stara Planina Hold Plc uses optimally the available resource in order to reduce the impact of the

interest rate levels.

Inflation risk is related to the probability for the purchase prices of goods and services to increase

significantly which leads to lower incomes, shrinking consumers’ demand and limiting the country's

economy growth. Inflation can directly affect the real return on a given investment since with high inflation,

even high nominal incomes can appear to have a negative nominal return.

The December 2023 ECB’s staff macroeconomic forecasts for the euro area expect HICP inflation

to fall from an average of 5.4 % in 2023 to 2.7 % in 2024 and 2.1 % in 2025, reaching a level of 1.9 % in

2026. After the sharp drop in HIPC inflation to 2.4 % in November, a temporary rise is expected in the

shortest term, mainly related to rising base effects in the energy component and the withdrawal of some

fiscal support measures. As a result, energy inflation should increase in 2024, partially neutralizing further

declines in food inflation and HICP inflation excluding energy and food. This means that headline inflation

will gradually decline not until 2024. As from the end of 2024, all core components of inflation are expected

to continue weakening, contributing to headline HICP inflation reaching the target level in the second half

of 2025.

Pursuant to data of the National Statistical Institute, in December 2023, the monthly inflation rate

in Bulgaria was 0.3 % compared to the previous month, and the annual inflation rate in December 2023

compared to December 2022 was 5.0 %. The annual average inflation rate for the period January -

December 2023 compared to the period January - December 2022 was 8.6%.

The World Bank and other institutions have recently warned that precisely the high inflation may

prove to be an obstacle for Bulgaria on its way to adopting the euro. Although the indicator is gradually

decreasing, it is happening more slowly than necessary.

According to the macroeconomic forecast of the Bulgarian National Bank for the annual inflation,

measured by the harmonized index of consumer prices (HIPC), it is to slow down to 3.1% at the end of

2024 and to remain at the same level at the end of 2025. The expected downward dynamics of inflation

is mainly due to the assumed decrease in the prices of oil and agricultural raw materials on the

international markets in 2024. At the same time, in the short and medium term, the BNB predicts the

pressure to increase the production costs of companies resulting from the continued high growth of the

costs of labor per unit of output and the labor shortage in the country, to remain strong and continue to

exert a pro-inflationary influence on consumer prices.

The systematic currency risk is the probability of a possible change in the currency regime of the

country (currency board) which would lead either to the devaluation of the lev or to the appreciation of

the lev against foreign currencies. According to the current legislation in the country, the Bulgarian lev is

fixed to the common European currency - euro in the ratio EUR 1 = BGN 1.95583 and the risk of

depreciation of the lev against the European currency is minimal, but there is a risk of adverse changes

in the euro against other major currencies, such as the US dollar, the Swiss franc, the British pound and

others.

Given the export orientation of most of the companies in the group of Stara Planina Hold Plc,

changes in the values of currencies have a certain effect and are a risk factor for their activities. Exchange

rates affect revenues from sales abroad and the cost of deliveries of imported raw materials as they

largely compensate each other. Due to the fact that these companies make their main payments in BGN

and EUR and realize the main part of their sales revenues in EUR, the impact of this risk on their activity

is significantly reduced. The management of the holding observes the movement of the exchange rates

and takes measures to avoid the negative consequences of their change.

Changes in the values of currencies have a certain effect and are a risk factor for the activity.

Exchange rates affect revenues from sales abroad and the cost of supplies of imported raw materials.

The annual growth of the average monthly US dollar/BGN exchange rate by the end of 2022 is 6.8 % in

favor of the BGN. At the same time, the end of the third quarter of the year, the common European

currency reached its lowest level against the US dollar in 20 years - 0.9538 US dollars for 1 euro, and at

11.

the end of January 2023, the euro rose to 1.0929 US dollars which is its highest level since April 2022

and represents an increase by more than 14 % from the lowest value in September.

The political risk is the probability of occurrence of serious domestic political upheavals that will

lead to a negative change in the government's economic program and its priorities for economic

development, as a result of which the environment where companies operate will change in a negative

direction, and investors will suffer losses.

As of the date of this report, the political instability in the country from the last three years does not

appear to have been resolved. It continues being assessed as one of the main reasons negatively

affecting economic activity and business environment in the country, mainly due to the seriously damaged

principle of the rule of law, giving rise to legal uncertainty, including property security. According to the

assessment of the World Bank, expressed in the spring report on the development of the economies of

Europe and Central Asia of April 11, 2024, the political risks for Bulgaria are increasing again after the

failed government rotation between the two governing coalition parties, which led to the fall of the last

regular government in March 2024. The country is heading for another early election – the sixth in a row

in three years – that threatens to slow reform momentum and jeopardize progress on key policy goals

such as joining the eurozone in the near future.

In addition, at the beginning of October 2023, with almost a year delay, Bulgaria officially submitted

a request to the European Commission for the receipt of the second tranche under the National Recovery

and Resilience Plan, intended to provide the member states of the Union with funds under the European

recovery and resilience mechanism to support economic recovery. According to the schedule, Bulgaria

was supposed to receive the second payment at the end of 2022, and the third and the fourth one - in

the past year 2023. As of the date of this report, Bulgaria has not yet received payment under the second

tranche, due to a delay in the necessary reforms at the national level, which, along with the financial-

economic and geopolitical negative trends, further hinders the possibility of making the necessary

investments, for the competitive functioning of the Bulgarian economy and to accelerate the pace of

recovery of our country.

Along with these factors, the lack of a principled, adequate and sustainable regulatory environment,

numerous bureaucratic obstacles for businesses and citizens, high energy cost, the lack of human

resources, as well as delayed and relatively insufficient direct support for investments lead to an outflow

of capitals from the country and are major obstacles to attracting new ones in the medium and longer

term. This hinders the reform program and Bulgaria's ability to fully invest EU funds and could also delay

the country's accession to the euro area and significantly weaken the growth potential of the Bulgarian

economy.

The reduction of regulatory and other administrative burdens, especially for small and medium-

sized businesses, including through the introduction of e-government in all areas, the real fight against

gray economy, corruption, monopolization and cartelization, the implementation of a structured and

balanced approach in the formation and implementation of national policies for a green transition,

sustainable energy development of the country taking into account national priorities and guaranteeing

energy supplies at minimum prices, easing and speeding up of the procedures for admitting workers from

third countries and promoting their sustainable employment in Bulgaria should become real state policies

with a view to achieving Bulgaria's strategic priorities for equal membership in the Schengen, the

Eurozone and the OECD, thus ensuring acceleration of economic growth and improvement of the quality

of life in our country.

Internationally, the political risks for Bulgaria stem from the failure to achieve sustainable results in

connection with our country's commitments to implement serious structural reforms in accordance with

EU policies. Along with the ongoing negative consequences of the military conflict in Ukraine, the

escalation of the military conflict in the Middle East appears to be an additional serious risk for our country

and the world, given the inevitable negative economic and financial impact it is expected to have, both in

line with the prices of oil, its availability and the resulting effects, as well as in terms of intensifying the

pressure of refugee waves from the countries of this region. In the baseline scenario of the ECB's

December 2023 macroeconomic forecast, this conflict is assumed to be geographically limited and

12.

therefore not expected to have a significant economic impact on the euro area economy beyond what

has already been observed. In the event of a hypothetical escalation of the conflict, however, ECB experts

believe that around a third of the transit of oil and natural gas through the Strait of Hormuz could be

disrupted, leading to a tightening of global energy markets. As a result, in the second quarter of 2024, oil

prices would rise to nearly $130/barrel and natural gas prices would jump to EUR 83/megawatt hour.

According to the European Commission's Winter Economic Forecast, attacks by Houthi rebels in

the Red Sea are disrupting one of the main shipping routes for the global economy, which could have a

significant negative impact on the EU economy given the fact that in 2022, around 23% of all imports of

goods into the EU come by ships from Asia, most of which travel through the Red Sea. From the start of

the attacks (October 19, 2023) to the end of January 2024, the average volume of transit trade through

the Red Sea decreased by 70%, delivery times between Asia and Europe increased by 10-15 days, and

the cost of container transport on several routes from China to Europe have increased by around 400%.

Regulatory risk, including increased focus on sustainability: Regulatory risk is related to the impact of the

existing regulatory framework at national and European level or its change, as well as the potential

possibility of sanctions due to non-compliance with this framework.

In recent years, Bulgarian and European businesses have been increasingly affected by

intensively strengthening European and national regulation in many directions, including increasing focus

on sustainability related issues o. Not infrequently, new requirements take effect faster than they can be

implemented into related systems and processes, potentially disrupting normal business processes. In

addition, the tendency to continually increase the administrative burden on businesses in the absence of

reasonable and adequate relief greatly increases the costs required to comply with the new regulation

and related reporting requirements.

In addition to the indicated systematic risks, the activities of the companies in the group of Stara

Planina Hold Plc are related to non-systematic risks such as industry risk, concerning the state and trends

for development of a given industry as a whole and a company risk arising from the specifics of the

company.

Influence of the main risks and uncertainties

According to the December 2023 ECB Economic Bulletin, risks to economic growth are on the

downside. Growth may be weaker if the effect of monetary policy turns out to be stronger than expected.

A weaker global economy or a further slowdown in global trade could also dampen growth in the

eurozone. The war in Ukraine and the military conflict in the Middle East are major sources of geopolitical

risk.

Risks to higher inflation include increased geopolitical tensions that could push up energy prices in

the short term, and extreme weather events, that could cause food prices rise. Inflation may also turn out

to be higher than expected if inflation expectations rise above the target level or if wages and the rate of

profit rise more than expected. The ECB's December 2023 non-energy commodity price assumptions

have been revised upwards for 2024 and downwards for 2025 following the September 2023 projections

amid mixed trends in international metal and commodity prices. Metal prices rose mainly due to favorable

economic news coming out of China.

The World Bank's assessment of Bulgaria, reflected in the autumn forecast for 2023 for the Europe

and Central Asia region, indicates that our country needs new policies and ambitious reforms to stimulate

economic growth in order to reach middle income levels in the EU in the next 15 years. Bulgaria needs

to address its institutional and governance weaknesses and ensure fair competition to increase business

efficiency and expand the private sector.

The results from a survey as from the end of the year 2023 among the members of the Bulgarian

Industrial Capital Association of (BICA) - a nationally representative employer organization uniting the

majority of public companies in the country, show rather pessimism regarding growth in the coming year.

The data shows that 4/5 of the respondents expect sales to decrease or remain at the 2023 level and

regarding the financial result 43 % of the respondents believe that in 2024 it will decrease compared to

13.

the financial result in 2023, 33 % believe that it will remain at the same level and only 24% are optimistic

that the 2024 financial result will be better. 4 out of 5 of the surveyed entrepreneurs expect that exports

will decrease or remain unchanged in 2024 compared to 2023. The expectations related to domestic

investment activity are also indicative – 43 % of the members - respondents are considering to keep

investments at the 2023 level and 29 % of them believe that the amount of investments in 2024 will

decrease compared to 2023.

An additional serious factor that will continue having a negative impact on the competitiveness of

the Bulgarian business compared to that of other European countries is the decision to partially accept

Bulgaria and Romania in the Schengen area. On 30 December 2023 – 12 years after the European

Commission first confirmed that the two countries met the criteria, the Council of the European Union

adopted a decision that will lead to the abolition of air and sea border controls with the remaining

Schengen countries from the end of March 2024 but not to the opportunity to use the economic benefits

from the abolition of land borders, through which the main volume of goods passes - about 97% of the

parcels. This will continue depriving our country of opportunities to improve the business climate and

attract investments, with a value of lost benefits due to the lack of free movement of goods of around

BGN 1 billion per year.

Factors that will continue influencing the activities in 2024 are the market prices of raw materials

and materials for production, the transport of supplies, the regional market price of labor, the prices of

energy resources and the security of their supplies. Given the ongoing military conflicts in Ukraine, the

Middle East and the obstruction of the transport route through the Red Sea, as of the date of this report,

we assess the risks associated with securing the supply of materials, as well as the sale of finished

products to partners related to the affected regions as highly elevated. Along with the threat to European

and regional stability, the geopolitical situation puts at additional risk the supply of energy resources and

the possibilities for sustainable growth of the economy. The effect of the measures taken at the European

and national level, as well as the countermeasures imposed accordingly, will have an impact on the

activities of the enterprises of the group and may lead to an adjustment of the expected business results.

The deteriorating business environment in the European Union, expressed in high energy price levels,

the continuous imposition of numerous complicated regulations that significantly increase the

administrative burden for business, demotivates entrepreneurial activity and leads to an outflow of capital

from Europe, lowering competitiveness and hindering economic growth.

Given the negative demographic trend in the country, the lack of a state policy that eases labor

immigration and a business-aligned methodology for personnel planning and training, the shortage of

human resources continues being one of the main risks that every business in Bulgaria faces with a

growing negative impact.

Against the background of the described risks, the company's management recognizes high

uncertainty regarding the global economic and geopolitical outlook that has deteriorated significantly in

the past year due to numerous factors, all of which may continue to intensify.

Possible changes in the demand for the manufactured products are also risky due to changes in

the price levels, quality, reliability and solvency of the consumers, the technologies used and the

organization of the production.

No asset sales are anticipated in the near future.

II. Consolidated Non-financial Declaration

The consolidated non-financial declaration of Stara Planina Hold Plc and the companies in the

group has been prepared on the basis of the provision of art. 51 and according to the requirements of art.

48 of the Accountancy Act. The declaration provides description of the policies applied by the group with

respect to activities conducted in in the field of ecology, social issues and those related to employees,

respect for human rights, fight against corruption and bribery. All companies in the group strive to

introduce and apply practices of good corporate governance and social responsibility, applied by Stara

Planina Hold Plc as a parent company.

14.

Good corporate governance and social responsibility policy

The corporate policy of Stara Planina Hold Plc is based on responsible, sustainable and transparent

management in accordance with the recognized standards and principles of good corporate governance,

changes in the regulatory, financial and economic environment where the companies in the group operate

and the principles of corporate social responsibility, reflecting the responsibility of enterprises for their

impact on society, environment and the economy as a whole.

Stara Planina Hold Plc and the public companies in the group have their own long-term good

corporate governance programs, subject to the principles of:

• responsibility and independence of the corporate Boards;

• shareholders’ rights protection and ensuring equal treatment of all shareholders;

• ensuring the recognition of the rights of persons interested in the management and

sustainable development of the company and promoting cooperation with them;

• ensuring timely and accurate information disclosure about the financial standing,

operational results, ownership and management of the company;

• effective control over the activities of the board of directors and its accountability to all

stakeholders.

The activities of the non-public companies in the group are in compliance with the main priorities

and directions of the corporate program of Stara Planina Hold Plc.

The corporate governance of the group is carried out in accordance with the constitution, laws, by-

laws and applicable regulations of the Republic of Bulgaria and the jurisdictions where they operate. In

all their actions the companies in the group of Stara Planina Hold Plc comply with the relevant provisions

of the current legislation and monitor the renewal and strict application of the requirements concerning

their operations.

Business model

Our mission

Stara Planina Hold Plc unites industrial enterprises dedicated to manufacturing of products

intended to meet various consumer and business needs. Our investment portfolio includes companies

operating in the machine building, electrochemical industry, in the field of finance and in the field of

perfumery, cosmetics and textile.

We participate in the development of the Bulgarian industry by achieving European and global level

of quality, productivity and profitability of our business. Our success is being shared among all parties

involved in its achievement.

Our values

We believe that the world will always need a modern and productive industry that in at the core of

wealth throughout the world.

We believe that the Bulgarian industry can rise to the challenge of accelerated development

imposed by the global economy by focusing on people's knowledge, the resultant innovations and the

investments that make them happen and we sustainably implement these policies in all companies in the

group.

We believe that achieving high goals is a reward for the work and collaboration of all parties

involved in our development and that it is possible to share our success on a large scale.

Our future

Stara Planina Hold Plc will continue managing its subsidiary companies setting high goals in terms

of quality, safety, productivity and profitability.

Our leading priority is to increase productivity along with increasing the satisfaction of our

employees and customers, as well as the quality of the products manufactured.

We will continue investing annually in technological renewal, innovation and infrastructure

improvements, as well as in the development and training of our employees by providing opportunities

for their professional realization.

15.

Important task for 2024 again will be to achieve high quality, productivity and profitability of our

activities, in order to maintain our market positions. This will require us to continue to offer good prices,

high quality and short delivery times.

Under these conditions, achieving good financial results with the expected volume of production is

the main priority for the companies in the Group, thus guaranteeing the investments of shareholders and

increasing their well-being.

Organizational structure

The corporate governance of Stara Planina Hold Plc is a system with clearly defined functions,

rights and responsibilities at all levels - General Meeting of Shareholders, Board of Directors, Audit

Committee, employees. Each of the companies in the group of the holding has an operating

organizational structure compliant with the legal and organizational form of the company and the nature

of the respective business processes. All companies in the group follow the policies of corporate

governance and social responsibility of the parent company Stara Planina Hold Plc.

General Meeting of Shareholders - the main governing body, enabling shareholders in making

decisions on fundamental issues regarding the activities of Stara Planina Hold Plc and the joint stock

companies in the group.

Board of Directors - defines the strategy for development and management of the holding and the

companies in the group by resolving all issues within the scope of activities, except for those that are the

exclusive competence of the General Meeting of Shareholders. The Board of Directors is elected by the

General Meeting of Shareholders with two of the members being independent directors.

In its capacity of a company of public interest and in accordance with the requirements of the

Independent Financial Audit Act, an audit committee has been established and operates in Stara Planina

Hold Plc.

Employees - Stara Planina Hold Plc has an average number of 7 employees under employment

contracts. The company has outsourced the legal services to a law firm. All company employees have

university degrees and adequate qualifications for the positions occupied.

A total of 2353 employees work for the enterprises in the Group of Stara Planina Hold Plc. 2124

of them or 90.27 % work in the three largest companies.

In 2023 the number of employees in the group of Stara Planina Hold Plc reported a decrease by

3.96 % compared to the previous year.

Number of people employed by all enterprises of the Group of Stara Planina Hold Plc

* forecast

2082

1943

2004

2164

2124

1885

2477

2276

2318

2450

2353

2115

2019 2020 2021 2022 2023 2024*

Total

Three the largest

enterprises

16.

Labor productivity per employee in the Group (thousand BGN)

* forecast

Against the background of the indicated increase in the number of employees in the group in

2023, labor productivity reported an increase by 5.2 % compared to the previous 2022 year and a 34.65%

growth compared to 2021. With the expected decrease of sales revenues in 2024 by approximately 12%,

at this stage we anticipate a decrease in the number of employees by approximately 10 % compared to

2023 with an expected decrease of labor productivity by approximately 24 %.

Infrastructure

The production and administrative facilities of the enterprises are located on their own territory.

The infrastructure of the enterprises of the group consists primarily of:

• Technical infrastructure – includes equipment and machinery, storage facilities and transport

network on the territory of the enterprises

• Social infrastructure – includes activities on the physical working conditions, social interactions,

breaks and healthcare.

• Information structure – includes reliably built information bases.

• Sales infrastructure – The companies in the Group operate in the domestic market, in the

European Union and in third countries. The products of our companies are sold in more than 100

countries and are appreciated by customers such as Palfinger, Pinguely, Terex handlers.

Production

Low-speed, high-torque orbital hydraulic motors

Hydrostatic power steering systems

Hydraulic valves, breaks and accessories for them

Hydraulic piston cylinders

Hydraulic telescopic cylinders

Hydraulic plunger cylinders

Hydraulic rack cylinders

Starter batteries

Traction batteries

Stationary batteries

Essential oils - rose oil; lavender oil

Natural flower waters

Concretes

Absolutes

Sauces and compositions

Perfumery cosmetics

Perfume compositions

Men's, women's and kid's socks

Sport socks

Children's tights

Women's top knitwear

Men's top knitwear

Raw materials used

Machine building - ferrous metals (steel and cast iron), sintered items, gaskets, springs, sealing

elements and other parts made primarily of polyurethane, fitting kits, packaging and auxiliary materials.

In very limited cases, non-ferrous metals are used. Sheet metal, rails, pipes, powder coating, fixing

90.6

88.0

119.6

153.1

161.1

122.2

2019 2020 2021 2022 2023 2024*

17.

elements and plastic elements.

Batteries - lead and lead alloys. The raw material is delivered in the form of blocks and is stored

on a designated site. Polypropylene and polyethylene are also used in the production of rechargeable

batteries for which there are no special transport and storage requirements, nor any special requirements

towards their suppliers.

Light industry - The main raw materials used in the production of rose oil and the perfume industry

are plants and herbs. In the production of vinegar are used quality wine material, apples supplied from

farmers, sugar, alcohol and yeast. The packages are made of PET.

Textile - Cotton and bamboo yarn, small percentages of lycra, polyamide and elastomer. Wool

and combined wool-acryl, wool-polyamide, cotton-acryl, cotton-viscose yarns.

Production inputs are accompanied by the necessary quality certificates.

The companies work primarily with suppliers and contractors that adhere to high environmental

standards and apply the best environmental management practices, including energy efficiency and

effective resource utilization, waste reduction and management.

Transport used for the delivery of raw materials and chemicals and for the sale of production

For delivery of raw materials and chemicals and shipment of finished products is used road and

railroad, sea and air transport. The main criterion when choosing a forwarding company is the transit time

of transport and delivery, as well as strict compliance with safety standards and relevant regulatory

requirements.

A sustainable policy of the companies in the group is to partner with companies that have a license

for international and domestic transport, disposing with the necessary equipment and reliable certificates

to transport dangerous and specialized consignments.

Fuel and chemicals used

Natural gas - Mainly used for heating. Supplied to the production facilities over gas pipes that are

subjected to checks by the State Technical Supervision.

Fuels (petrol, diesel, propane-butane) fuels and lubricants. They are used mainly for the purposes

of in-house transport.

Hydraulic oils - Used as a production input for finished hydraulic products.

Concentrated sulfuric acid - Used for the production of batteries. Delivered by a specialized

transport and stored in specially constructed tanks.

Paints and coatings - Used in painting and galvanization processes. This includes varnished

polyurethanes, solvents, hardeners, epoxy primer, specific salts, sodium compounds, acids, etc.

Liquefied oxygen and carbon dioxide - Delivered by a specialized transport – tank trucks operated

by licensed companies holding special permits (ADR). They are stored in specialized containers which

are subjected to checks by the State Technical Supervision.

The STIO checks conducted throughout the year did not find any deviations.

Cleaning chemicals and detergents for textile items – perchlorethylene and silicone softener.

Environmental protection

Description of policies and their objectives

Stara Planina Hold Plc pays special attention to the impact on the environment that the

productions of the enterprises in the group have. They annually report on the assessment of the

environmental impact and the measures taken in this direction and annually make investments in the

implementation of the common corporate policy for transition to a cleaner and green economy.

The main policies of the companies in the group are focused on compliance with the

environmental norms and standards for the production activities, reduction of harmful emissions from

electricity consumption through construction and commissioning of photovoltaic systems for generating

energy for their own needs and implementing other energy efficiency measures.

With regard to all new projects and investments of Stara Planina Hold Plc and the companies in

the group, including the purchase of new technical equipment, a preliminary assessment is made on the

18.

environmental impact.

The policies of the production companies in the group require a periodic review of the

environmental impact of the energy use and are mainly aimed at:

• reducing energy consumption from conventional sources;

• increasing energy efficiency;

• use of less polluting fuels;

• implementation of renewable energy technologies.

М+S Hydraulic Plc - The policy of the company on the environmental protection and reduction of

harmful environmental effects is an integral part of its Development Program.

Integral parts of the Environmental Program are the Environmental Management Action Plan, the

Waste Management Program and the Waste Management Action Plan. Activities, measures and tasks

are identified in the action plans, and respectively funds are provided, deadlines and responsible persons

for their implementation are specified.

The management of hazardous waste: oils, lubricating and cooling fluids, filtering elements,

rechargeable batteries, residues from lapping and grinding, etc. is at the necessary level: the built sites

for the temporary storage of hazardous waste in Kazanlak and the three branches are maintained in good

condition, contracts have been concluded with companies certified by the respective Regional

Environmental and Water Inspectorates for the handling of such waste, other companies with permits are

being sought with the aim of alternative options and/or expanding the range of waste delivered.

For 2023, the company's expenses for the transfer of hazardous waste are BGN 94.1 thousand,

and the income from the industrial waste transferred for recovery is BGN 983 thousand.

A contract is in place with an organization for utilization of packaging waste and thus the

requirements arising from the Ordinance on packaging waste are being fulfilled. For 2023 the fees paid

to this organization amount to BGN 23.6 thousand.

Every year, the company adopts and implements a Plan-program for its own environmental

monitoring, covering all structural units and processes.

The company has its own wastewater treatment plant, maintained in good technical condition.

The company carries out its own monitoring of water purity. The quality control of the company’s waste

waters is periodically conducted by the laboratory of the Wastewater Treatment Plant, Kazanlak, located

in the village of Ovoshtnik. The funds spent on chemicals in the industrial waste water treatment plant in

2023 are in the total amount of BGN 9.7 thousand.

In order to preserve the purity of the atmospheric air, every year an accredited laboratory performs

measurements of the concentration of organic carbon released into the atmosphere from organized

sources /chimneys / in the areas for painting the products. Based on the results of these measurements,

the ecologist prepares a Solvent Management Plan /RMP/, approved by the Regional Environmental and

Water Inspectorates - St. Zagora.

In order to control the quality of the groundwater used by the company for industrial purposes, an

analysis of its quality is carried out regularly on an annual basis by an accredited laboratory. The results

of the analysis are presented in the Basin Directorate "Eastern White Sea Region", Plovdiv.

The noise emitted by the company along the boundary of the property is regularly measured in

order to prepare a noise map and assess the impact of noise in the environment.

All environment related activities are defined and conducted in accordance with the publicly

disclosed Environmental Policy and the procedures provided for in the Environment Protection

Management System (EPMS) operating in the company thus contributing to the systematization and

improvement of the environment related activities. The Environment Protection Management System

(EPMS) was successfully certified for compliance with the new standard ISO 14001:2015. The

Environment Protection Management System which has been developed and implemented in

accordance with the requirements of both ISO 14001:2004 and OHSAS 18001:2007 (Occupational

Health and Safety Management System) are part of the Integrated Management System which also

includes the existing Quality Management System under ISO 9001:2015.

Hydraulic Elements and Systems Plc – Since 2005 the company has been maintaining and

developing the implemented management system according to the requirements of the international

19.

standard ISO 9001-2008 by TÜV Rheinland in all its activities and units, in order to increase the efficiency

and quality of work while ensuring healthy and safe working conditions and environmental protection.

An audit is performed annually /pursuant to order № 254 /16.11.2021/ analyzing the overall

activities of HES Plc for the implementation of the Safety measures management system. The main

organization and coordination activities related to risk management, achievement of healthy, safe and

environmentally friendly working conditions and compliance with the applicable environmental protection

standards related to air, water and waste are reviewed and evaluated.

In order to prevent and limit the impact of the activity on the atmospheric air, a solvent

management plan has been developed and approved by the Regional Environmental and Water

Inspectorates - St. Zagora. The air filters are periodically changed and the technological equipment -

checked. An accredited laboratory regularly monitors the metal surfaces coating installation and the

installation for deposition of metal coatings - galvanization section. An installation has been built for safe

firing and cleaning the painting devices. The paint installation has been replaced with new primer and

paint chambers with automated processes with a minimum of human participation.

Water consumption is carried out with a permit - № 31530045 /07.07.2008, amended and

extended by a decision № RR - 3988 /13.10.2020 for groundwater abstraction. The company has its own

plant for galvanic wastewater treatment, maintained in good technical condition. The company carries out

its own monitoring of water purity. Control over the quality of the company's wastewater is periodically

performed by an accredited laboratory. The chemical analysis of the controlled parameters is within the

permissible norms.

In 2023, the galvanic section was modernized. A new aspiration was built and a reverse osmosis

system was introduced. Software has been introduced to manage the galvanizing, dechroming and

washing processes.

Chemical pumps and waste water vessels have been replaced at the treatment plant. The

premises are air-conditioned.

Generated waste is being stored at the place of formation until their transfer to a licensed company

holding a document under Art. 35 of the Waste Management Act for subsequent treatment. Periodic

inspection of warehouses for storage of hazardous waste is carried out.

Elhim-Iskra Plc - The company has a long-term policy in terms of human health and

environmental protection. Activities on preventing air, water and soil pollution are one of the major

priorities of the company. The company has introduced an Environmental Management System. The

system covers implementation of the activities in a way that guarantees protection of the environment;

permanent monitoring, inspection, control and management of the processes and activities affecting the

environment; analysis and assessment of the impact of the used raw materials and inputs used on the

environment; preventive actions so as to avoid environmental pollution; compliance with all laws and

regulations, as well as the internal regulations adopted by the Company, including the internal

environmental protection company rules; constant research and implementation of new environmental

technologies.

The environmental system of Elhim-Iskra Plc has been developed in accordance with the

requirements of the issued Complex Permit, regulating the emission standards and requiring adoption of

good environmental management practices and ensuring a systematic and thorough approach to

environmental issues.

The company monitors periodically all of the identified aspects of environment: air, water, soil,

noise, water use, waste management.

Elhim-Iskra Plc has a Waste Management Company Program approved by the Regional

Environmental and Water Inspectorates - Pazardzhik. According to the Waste Management Act, the

company, as an entity that places products on the market, after the use of which widespread waste is

generated, fulfills its obligations through collective systems, represented by waste recovery organizations.

For all generated industrial and hazardous waste, the company has concluded contracts with

companies that have a permit for their utilization or disposal.

During the annual control measurements conducted by accredited laboratories and the company

itself, no violations of the emission norms prescribed in the Complex Permit have been found.

20.

In 2023, eight inspections of the company were carried out by the Regional Environmental and

Water Inspectorates and the Basin Directorate. No sanctions have been imposed for violating the

conditions of the permit or non-compliance with the regulations. During the complex inspections of the

company in 2023 for the fulfillment of the conditions of the complex permit, no inconsistencies in the

fulfillment of the conditions were found. On this basis, the company has paid 30% less water abstraction

fee, according to the Law on the Waters.

Bulgarian Rose Plc - The company has adopted a Policy on the reduction of the cost of natural

resources related both to reducing environmental pollution and reducing the financial costs of energy

consumption.

The company has an approved Waste Management Program. Special sites have been set up for

storing household, industrial and hazardous waste which are collected separately and controlled by the

Regional Environmental and Water Inspectorate. For the purpose of recycling packaging waste, the

company has a contract with ECOBULPACK - a national-level organization for recycling packaging

waste.

There is also a permanently operational Industrial and Household Wastewater Treatment Plant.

Waste water is regularly subjected to monitoring of physical and chemical indicators by submitting

samples for analyses at a licensed laboratory.

In order to preserve the air pure, the company conducts regular preventive maintenance and

technical activities on its steam plants. Gas emissions released during boiler operation are subjected to

technical inspections and monitoring.

In order to preserve the purity of the air, the necessary prophylaxis and technical measures of the

boilers in the steam power plants of the company are regularly carried out, which are put into operation

only during the rese picking campaign. Technical supervision and monitoring of the emissions of gases

released during the operation of the boilers is performed.

Textile industry - The companies follow a policy on environmental issues which is part of the

Program for management of the processes and operations in the company aimed at ensuring

environmental protection. The companies comply with the requirements of the current legislation

governing the acceptable norms and emissions of substances in accordance with the regulation on

industrial wastewater discharge. They have their own treatment plants, the use of which is mandatory is

mandatory in dyeing operations. All sensitive processes are subject to continuous assessment: materials,

inputs, energy, water, emissions, waste and their alternatives which makes it possible to find ways to

reduce the impact of these processes on the environment and reduce them to the necessary and required

limits.

In 2023, no sanctions have been imposed on any of the companies in the Group for environmental

pollution. All industrial enterprises in the Group have waste management programs approved by the

Regional Environmental and Water Inspectorates and fulfill the requirements provided in the regulations.

The companies have their own policies on the reduction of natural resources costs which costs are related

both to the environmental pollution reduction as well as to reduction in the financial costs of energy

consumption.

The companies in the Group of Stara Planina Hold Plc conduct a responsible policy on

environmental protection and reduction of adverse environmental impact of their operations as part of the

development strategy.

Main activities completed in 2023

The companies report on and update their environmental protection programs on an annual basis.

The conducted monitoring covers all structural units and processes. The staff training programs include

environmental training at different levels - managers and specialists. There are also practical classes on

simulations of environmental emergencies, such as prevention of contamination in case of large-scale

spillages, etc.

Licensed companies are assigned with measurements of air purity, taking into account the level

of concentration of organic carbon in the atmosphere from organized sources (smoke stacks). Accredited

laboratories periodically monitor specific processes such as the solvent management system, metal

coating installations which falls in the OS consumption category with threshold values above 15 t/y.

21.

Accredited laboratories make analysis of the water sources used thereby controlling the chemical

parameters in order to achieve compliance with the acceptable limits.

Special waste is being stored under control until handed over to licensed companies certified

under Art. 35 of the Waste Management Act for further treatment. Planned periodic inspections of facilities

and warehouses for storage of hazardous chemicals are carried out.

The larger companies have employed an environmental specialist responsible for the control of

the activities on the management of waste generated by the companies, compliance with prescriptions

and maintenance of relations with the respective state and municipal bodies. The specialist is also

responsible for maintaining the internal regulations updated in compliance with the current environmental

regulatory framework.

The results from the completed activities in the field of environmental protection have been

achieved through the implementation of various projects. Energy efficiency improvement leads to

reduction in the use of natural raw materials and reduction of the generated waste, rational redistribution

of products, separate collection and disposal of waste.

In order to reduce the consumption of purchased electricity and for the purpose of efficient use of

inexhaustible natural resources, in 2022 and 2023 two "Photovoltaic plants for own needs" with a capacity

of 0.800 and 0.998 MW were built and put into operation by M+S Hydraulic Plc. The main investments of

the company in this direction in 2023 are:

- Construction of a photovoltaic power plant (PPP) for own consumption, with an installed capacity

of 999.00 kWp on a metal structure for sun protection above a parking lot in the amount of BGN 936.8

thousand;

- Utilization of waste heat by implementing a ventilation system to remove hot air from the furnaces

in the amount of BGN 12.5 thousand;

- Improving energy efficiency by implementing the energy consumption monitoring system in the

amount of BGN 18.7 thousand.

In 2021, as part of the investment program of HES Plc, the construction of the first own

photovoltaic system with a capacity of 997 kW was completed, which was put into operation in March

2022. The total amount of the investment is BGN 1071 thousand. Through this system, the consumption

of purchased electricity from conventional sources has been reduced. In 2022 8.95 % of the company's

energy needs were met through its own production of energy from renewable natural sources and in 2023

– 9.17 %.

As another step of the company's sustainable development strategy, with the aim of increasing

the share of clean and renewable energy generated for the company's own needs, and also with the aim

of further reducing dependence on conventional energy carriers, a second photovoltaic plant was built in

2022 - 2023 a 999 kWp system located on the roofs of production buildings and on the structure of the

car park. The value of the investment is BGN 1 406 thousand, and commissioning took place in November

2023.

In 2021 Elhim-Iskra Plc invested over BGN 680 thousand for the construction of a photovoltaic

system with a capacity of 997 kWp that was completed, connected and put into operation and covers

12.2 % of annual electricity consumption for own needs. In 2022, the company made investments in the

amount of BGN 2 499 thousand for maintenance and purchase of new assets.

At the end of 2023, Elhim-Iskra Plc concluded a contract with the Ministry of Innovation and

Growth for the implementation of a project "Construction of new photovoltaic systems for self-

consumption in combination with batteries" under the National Recovery and Resilience Plan with the

purpose of increasing energy independence, achieving sustainable development and increasing the

environmental friendliness of the company's production. The total value of the project is BGN 2 740 102,

and the amount of the grant, provided by the European Union under the Recovery and Sustainability

Mechanism is BGN 989 898. The investment program of the company includes the construction of a

photovoltaic park with a capacity of 1 MWh and an energy storage system for it.

The environmental management system is part of the general management system of each

company and for 2023 it functioned integrated with the quality management system and the system for

health and safety at work at the level of processes, activities and functions.

22.

A positive result of the implemented environmental policy is ensuring and simultaneously

achieving efficient business, effective cost control, energy saving and reduction of harmful emissions.

In accordance with its environmental protection policy, companies make efforts to reduce CO2

emissions by implementing consumption efficiency measures, generating energy by building and

commissioning photovoltaic systems to produce energy from renewable sources for own needs.

Environmental protection costs (BGN’000s)

* forecast

In 2023, the total amount of costs of the companies in the group of Stara Planina Hold Plc in the

implementation of the environmental protection policies reports an increase by 70.82 % compared to the

previous year. The stated costs do not include the investments for construction and commissioning of the

photovoltaic systems in order to increase the share of clean and renewable energy, generated for own

needs and represent all the costs of the companies in the group, regardless of the requirements of the

Taxonomy Regulation and the delegated regulations thereto. We anticipate that in 2024 the costs without

the planned investments in this area will be worth BGN 924 thousand which will account for a decrease

by about 22 % compared to 2023.

Future objectives and upcoming tasks

In the field of environmental protection, the Group of Stara Planina Hold Plc is committed to

conduct a policy aimed at effective protection and prevention of pollution; effective and efficient utilization

of natural resources, including energy, in order to preserve it. The companies will operate in compliance

with the regulatory framework in the field of environmental protection. Annually they plan funds for

training, awareness and motivation of employees to perform their duties in a high quality, in a safe and

environmentally friendly manner and in accordance with the adopted policies and regulatory framework.

The companies continue the practical steps on the reduction of natural resources costs which

costs are related both to the environmental pollution reduction as well as to reduction in the financial

costs of energy resources. The investment programs for technological update adopted with the business

plans for the companies will introduce new machinery, equipment and technologies that reduce the

adverse impact on the environment, including activities on the streamlining of recirculated use of treated

water and closed cooling water cycle.

The next step in the implementation of the energy efficiency policy of the companies in the group

is the development and implementation of an energy storage system generated from renewable sources,

which allows for its intelligent use by connecting the photovoltaic system with storage batteries.

Ecological risks

Climate change related risk

Climate change could adversely affect the activities of the group companies directly and indirectly.

Direct risks are associated with natural disasters or permanent changes to the business environment

caused by climate change which could lead to endangering the health and lives of people employed in

382

358

509

699

1194

924

2019 2020 2021 2022 2023 2024*

23.

companies and consumers of manufactured products, as well as to the destruction of infrastructure

related to their activity. Such an adverse impact from climate change could require additional costs to

address the issues, in addition to sustainable investments in energy efficiency.

The indirect effects of climate change can include sudden changes in the prices of energy carriers

and other raw materials which will lead to difficulties in supply and demand or to a change in the standards

to which products produced by the companies in the group should meet. Climate change may also lead

to a shift in the regulatory framework towards imposing excessive and inadequate requirements on

production processes, leading to increased operating costs or loss if companies are unable to meet the

new requirements .

At this stage, the impact of climate change on the activities of the group companies is estimated

to be weak in the short term, but in the medium and long term it could increase.

Environmental risks arising from the activity

The adoption of an environmental management system ensures a continuous process of

minimizing the risk of pollution and other adverse effects on the environment, efficient use of resources

and higher efficiency of companies’ operations.

Risks that could lead to adverse effects on the environment as a result of the companies’

operations are related to water pollution from the wastewater used in the production process in case of

an accidental spillage of chemicals or air pollution due to accidental release of harmful emissions.

Such risks are minimal but nevertheless the companies have developed early warning

mechanisms and environmental incident response plans. The readiness to react immediately in case of

events with potentially adverse effects on the environment is subject to an ongoing monitoring.

Social issues those related to employees

Description of policies and their objectives

Stara Planina Hold AD and the companies in the group apply a corporate policy in the social field.

The rules of conduct set out in the Code of Ethics of Stara Planina Hold Plc and the companies in the

Group are subject to the following basic principles:

• Competence – using the knowledge and experience that managers and employees have in

performing their functions and continuous improvement of their professional skills.

• Confidentiality - protection of the facts and circumstances that have become known to managers

and employees during or on the occasion of performance of their duties.

• Honesty - honest and ethical behavior in accordance with generally accepted rules.

• Independence - not allowing a manager or employee to be influenced by related parties with

regard to his work.

• Objectivity - true, accurate and impartial collection, analysis and evaluation by the manager and

the employee of all facts and circumstances in performance of his duties.

The success of enterprises is based on social responsibility that requires consideration of the

impact that the company's activities have on the local community, society, environment and the economy

as a whole. This approach contributes to achieving the group's long-term goals and sustainable growth,

as well as to establishing transparent and honest relationships with all stakeholders.

Each company identifies the stakeholders in relation to its activities based on their level and

sphere of influence as well as their role and effect on the company’s sustainable development and those

which in turn may have an impact on company's operations including shareholders, stakeholders,

customers, suppliers, employees, creditors, public groups, and state and local government bodies, etc.

In compliance with the requirements of the Law on the Protection of Whistleblowers or Persons

Publicly Disclosing Information on Violations (Whistleblower Protection Act), in 2023 the Board of

Directors of Stara Planina Hold Plc and the Board of the companies in the Group approved

Whistleblowing Rules relevant for the respective company and for the subsequent actions thereto. The

companies have created internal channelя through which a signal can be submitted - in writing or verbally.

A form for registering a signal for submitting information on violations according to the Whistleblower

Protection Act can be found on the companies’ websites, on the website of the Commission for Protection

of Personal Data or can be provided in the office of the respective company. Signals are to be submitted

24.

to the responsible employee, designated by a decision of the company's Board of Directors. Stara Planina

Hold Plc and the companies in the group maintain on their websites up-to-date information under Art. 12,

para. 4 of Whistleblower Protection Act which is also available at the companies’ offices.

The companies in the group of Stara Planina Hold Plc have approved human resources

management policies, aimed mainly at improving working conditions, raising qualifications, raising

incomes, social support while respecting basic human rights and carrying out other activities, that

contribute to maintaining the health and working capacity of employees.

The following policies are applied to the persons employed in the companies in the group of Stara

Planina Hold Plc:

• The requirements and standards for safe and healthy working conditions have been introduced

and applied. All companies in the group undergo a mandatory audit of the provided working conditions in

accordance with the requirements of the Bulgarian legislation. Periodically repairs and renovations of the

working premises are carried out in order to improve working conditions.

• Periodic risk assessments are carried out to identify remaining risks of accidents or illness in the

workplace and to reduce the impact of these risks on employees by taking the necessary measures in a

timely manner.

• The management bodies of the companies in the group maintain effective social dialogue with

the trade unions, which, along with the existing collective labor agreements in force, supports the

implementation and improvement of good practices for corporate social responsibility, both for the

employees themselves and for their families.

• All companies adopt and implement annual occupational health and safety programs.

• Free medical examinations and care for all employees of the companies are provided and

regularly performed.

• Equal rights and opportunities for work and career development of employees are provided,

based solely on the qualification, personal qualities and results achieved in the work process. Direct or

indirect discrimination in employment or at work is not allowed.

• The remuneration setting system is based on uniform, objective criteria, and the system for

applying bonuses to the payment of employees is based only on the achieved good results at work.

• A policy for providing social allowances to the remuneration of employees has been introduced

and is being implemented - food vouchers are provided on a monthly basis; travel expenses for distance

from the place of work to the permanent address of the employees are paid; treatment aids are provided,

as well as for personal occasions; bonuses are provided for the Easter and Christmas holidays.

• On the territory of all companies in the group are separated rest areas, conditions for sports

activities are provided, which are financed by the companies. In some of the companies, sport teams

have been formed in various team sports where each employee has the opportunity to join.

• For the employees of the companies in the group, insurances are concluded, such as life

insurance, “Accident at work” and “Accident and general illness”.

• A policy for continuous promotion of training and qualification is in place - all of the companies in

the group organize and conduct introductory trainings, courses for acquiring professional qualification

and /or trainings for raising the qualification.

• For employees willing to increase their education and qualification in a profession in the

company’s scope of activity, the larger enterprises in the Group pay 50% of the semester fees for the

respective higher education.

• Larger companies work in partnership with vocational secondary technical schools in the

respective city, providing conditions for conducting a dual form of education (work-based learning) with

students from 11th and 12th grade and provide scholarships for student education from 8th to 10th grade.

• Issues related to quality, environment, health and safety are of primary importance and therefore

the major companies maintain and develop integrated management systems in compliance with the

requirements of leading international standards for quality management (ISO 9001: 2015), environment

ISO 14001: 2004), health and safety (OHSAS 18001: 2007), with the active participation of highly qualified

specialists and engineers.

Stara Planina Hold Plc and the companies in the group annually support the development of the

25.

local community by financing various sports and social organizations, cultural events, construction of

infrastructure facilities in partnership with the relevant municipal authorities and participate in socially

significant donations.

Main activities completed in 2023

In 2018 Stara Planina Hold Plc contributed 25% of the capital for the incorporation of a Medical

Center for Health Prevention which provides early diagnosis, treatment, rehabilitation and prevention

services to the employees of the companies in the Group.

The actives during the reporting period are being completed on an annual basis. They include

assessment and re-assessment of workplace risk, monitoring staff health, analysis of and

recommendations for action and risk-free behavior at the work place in order to prevent risk and reduce

morbidity; training and professional qualification as well as incentives and bonuses provided for in the

policies.

The machine building companies invest additional funds to provide specialists for the production.

For workers and employees wishing to increase their education and qualification in a profession in the

field of mechanical engineering, the managements of these companies offer the conclusion of a contract

for the improvement of qualification. Scholarships are paid to students and pupils in vocational schools,

50% of the higher education fee is covered for employees in specialized universities, internships and

practices are organized on the territory of enterprises.

The companies traditionally support local structures in financing various social, sport and cultural

events.

Every year Stara Planina Hold Plc participates in charity events of public importance. Since 2003

the holding has been regularly taking part in all editions of the charity campaign Bulgarian Christmas

carried out under the auspices of the President of the Republic of Bulgaria. Every year Stara Planina Hold

Plc makes a monetary donation for the Support a Dream initiative launched by the President of the

Republic of Bulgaria aimed at organizing a prom night for disadvantaged young people. Every year Stara

Planina Hold Plc participates in the charity campaign Easter for Everyone conducted by the Bulgarian

Red Cross under the auspices of the Ombudsman of the Republic of Bulgaria. Stara Planina Hold Plc is

regularly involved as a major sponsor of the national exhibition Inventions. Transfer. Innovations.

Social activities costs (BGN’000)

* forecast

In 2023, the total value of the costs for social activities of Stara Planina Hold Plc and the

companies in the group reported a growth by 14.5 % compared to the previous year. At this stage, we

expect that in 2024 the costs of social activities will increase by 3.3% compared to 2023, with an expected

decrease in the total number of persons employed in the group by nearly 10%.

The active implementation of policies related to the sustainable development of the companies

leads to creation of a more favorable social environment and a better quality of life for employees,

3022

2978

3795

5809

6651

6873

2019 2020 2021 2022 2023 2024*

26.

providing the necessary conditions and prerequisites for performance of employees’ professional duties,

mastering good manufacturing practices, motivation and satisfaction with working and payment

conditions.

Future objectives and upcoming tasks

Stara Planina Hold AD and the companies in the group will continue conducting a socially

responsible policy to regulate labor and employment issues with a priority attention to its social aspects.

In pursuance of the long-term human resources policies, the companies will continue adhering to

the corporate social responsibility and applying their long-established traditions in the social sphere as

well as the good practices in order to achieve the social objectives.

Following the approved policy and business programs, a large part of the activities in the social

sphere will thus be aimed at retaining highly qualified specialists and qualified workers and thus generally

achieving high efficiency at each workplace.

In 2024 we will continue the activities on monitoring the health status of the employees, promoting

safe behavior at work; training, qualification upgrade and acquisition of new skills and capacity; improving

working conditions and constant monitoring and control on the working environment factors.

Increasing corporate culture aims to create and maintain strong motivation, creative environment

within the team, high moral and integrity, and confidence in the future.

Risks with a potential negative effect on employees’ development

The management of the companies in the Group of Stara Planina Hold Plc strives to achieve

maximum employee satisfaction. Any worsening of the current economic situation in the country and

fluctuations in the markets where our business operates would lead to destabilization of the companies

and thus to a decrease in the efficiency of the conducted social policy.

We take measures to ensure the health and working capacity of employees, the continuity of our

business and activities related to regulatory obligations.

Policies with regard to the products and the counterparties of the companies in the group of Stara

Planina Hold Plc

• The companies in the group of Stara Planina Hold Plc consistently apply a policy aimed at

increasing the level of quality and ensuring the safety of manufactured products to meet the growing

needs of customers. Joint analyzes are regularly carried out between the product planning, design,

engineering and quality assurance departments, on the one hand, and the sales and marketing

departments, in order to improve product development, functionality and quality.

• The companies in the group of Stara Planina Hold Plc apply quality management systems and

carry out their production activities in accordance with the highest standards applicable to the respective

production field.

• The companies in the group of Stara Planina Hold Plc apply rules for confidentiality and protection

of commercial information and personal data in order to protect customers, business partners and other

stakeholders.

• The companies in the group of Stara Planina Hold Plc group provide their partners with correct

and timely information on the basic business rules, products, services and technologies and promote

loyal business practices in accordance with the adopted rules for ethical business conduct and the current

regulations.

• The companies in the group of Stara Planina Hold Plc require their customers to comply with

basic internationally recognized anti-corruption standards and those in the field of corporate ethics,

environmental protection, human rights protection in order to establish a sustainable partnership.

27.

• The companies in the group of Stara Planina Hold Plc operate only with suppliers that fulfill their

social responsibilities in the areas: clean supplies, compliance with regulatory requirements and social

norms, information security and respect for human rights, labor and safety and health conditions.

Human rights issues

The corporate policy of Stara Planina Hold Plc and the companies in the group is subject to the

principle of respect for and observance of human rights, without any differences based on gender, race,

nationality, ethnicity, citizenship, origin, religion, beliefs, political affiliation, personal or social status, age,

sexual orientation, marital status, property, social or other status.

We support the principles of the UN Universal Declaration of Human Rights, the International

Labor Organization (ILO) Declaration on Fundamental Rights and Rights at Work, the UN Guiding

Principles on Business and Human Rights, adopted by the UN Human Rights Council. In June 2011 and

we apply them in the established labor relations with our employees.

Stara Planina Hold Plc and the companies in the group implement policies to promote the equality

of women and men by ensuring their equal treatment and preventing gender-based discrimination and

violence; equal opportunities for women and men in all company activities; equal access to all resources;

balanced representation of women and men in decision-making departments.

Stara Planina Hold Plc and the companies in the group do not use or support the use of child

labor or any form of forced labor, as well as any form of human trafficking. The companies do not employ

children, and young workers are hired only for the purpose of conducting production practices in pre-

approved specialties, such as practical training under a dual system of education for the acquisition of

professional experience or in short-term internships approved by the companies. The methods of

discipline and control in the workplace categorically exclude and do not allow the use of any form of

physical, psychological or verbal violence.

The group of Stara Planina Hold Plc does not allow discrimination in the workplace, in relations

with business contractors - suppliers and customers, as well as in relations with all groups of stakeholders

based on discrimination on any grounds.

Issues related to fight with corruption and bribery

The corporate policy of Stara Planina Hold Plc and the companies in the group is based on the

principle of compliance with high ethical standards in all aspects and directions of corporate activities and

consistent implementation of transparency policy. No forms of corruption, including bribery, are allowed

or tolerated. In accordance with applicable anti-corruption and anti-bribery laws in the countries where

the companies operate, any form of bribery between employees, business partners or any other

professional practice that could create the appearance of undue influence is not permitted.

The management and employees of Stara Planina Hold Plc and the companies in the group

consistently apply the rules of conduct set out in the adopted Codes of Ethics and responsible work and

business practices in accordance with the adopted rules for ethical business conduct and the current

regulations. The standards adopted in the codes of ethics apply equally to all parties the companies have

or may have relations with, such as shareholders, potential investors, financial analysts and other

stakeholders.

Strict accounting is performed in Stara Planina Hold Plc and the companies in the group, subject

to annual internal and external independent audit control. All transactions are evaluated in advance and

are subject to approval by the relevant corporate Board.

Stara Planina Hold Plc has adopted a Policy on Transactions with Interested and Related Parties

and a Procedure for Avoidance and Disclosure of Conflicts of Interests as well as a Policy on the

Information Provision and Disclosure. They are applied in accordance with our business model and in the

interest of the employees’ rights and those of all stakeholder groups. All processes and procedures are

conducted in a way that excludes all forms of corruption in the companies in the group.

In 2023, no restrictions of the above stated rights were found related to decisions and actions of

companies in the Group of Stara Planina Hold Plc.

The companies do not apply a diversity policy with respect to their management bodies in relation

28.

to aspects such as age, gender or education and professional experience. The management structure is

defined in the Articles of the companies. Election of members of the Board of Directors is a right and

prerogative of the shareholders.

III. Information Disclosure on the Key Performance Indicators (KPIs) under Art. 8 of the

Taxonomy Regulation as of 31 December 2023 on a Consolidated Basis

1. Basis For Producing the Information

The Paris Agreement adopted under the United Nations Framework Convention on Climate

Change (the "Paris Agreement") was approved by the European Union on 5 October 2016. Article 2(1)(c)

of the Paris Agreement sets out the goal of more decisive action in response to climate change by aligning

capital flows with the goal of achieving low greenhouse gas emissions and climate-resilient development,

among other means. In this regard, on 12 December 2019, the European Council adopted conclusions

on climate change. In view of this, Regulation (EU) 2020/852 (the Taxonomy Regulation) represents a

key step towards achieving the objective of a climate-neutral Union by 2050.

Sustainability and the transition to a safe, climate-neutral and climate-resilient circular economy

with efficient use of resources are crucial to ensure the long-term competitiveness of the economy of the

European Union countries.

To promote sustainable investment The Taxonomy Regulation (Regulation (EU) 2020/852) has

established a classification system across the whole European Union to identify economic activities that

are considered sustainable.

According to Article 8 of this regulation, companies are required to publish sustainability indicators

from January 1, 2022. Additionally, a Delegated Regulation published by the European Commission on

July 6, 2021, specifies the content, calculation methodology and presentation of these indicators

(Commission Delegated Regulation (EU) 2021/2178 of 6 July 2021 supplementing Regulation (EU)

2020/852 of the European Parliament and of the Council by specifying the content and presentation of

information to be disclosed by undertakings subject to Articles 19a or 29a of Directive 2013/34/EU

concerning environmentally sustainable economic activities, and specifying the methodology to comply

with that disclosure obligation, amended by Delegated Regulation (EU) 2023/2486).

The requirement to provide sustainability indicators under Article 8 of the Taxonomy Regulation

applies to companies that are required to publish non-financial statements in accordance with Article 19a

or Article 29a of the Accounting Directive 2013/34/EU. This requirement also applies to enterprises of

public interest within the meaning of Directive 2013/34/EU, provided that their average number of

employees in the financial year exceeds 500 regardless of the size of the book value of the assets and

the net value of sales.

Currently Stara Planina Hold Plc falls within the scope of Article 8 of the Taxonomy Regulation on

a consolidated basis and prepares a non-financial statement in accordance with the Accounting Directive

2013/34/EU and the Accounting Act transposing Directive 2014/95/EU. At the time of preparation of this

document, the Corporate Sustainability Reporting Directive - 2022/2464 has not yet been transposed into

the national legislation of the Republic of Bulgaria.

The information in this document has been prepared in accordance with Annex III of Delegated

Regulation (EU) 2021/2178 - "KPI of Asset Managers". Voluntary disclosure is also included as part of

the document in accordance with item 1.2 of Annex I of Delegated Regulation (EU) 2021/2178 - "Definition

of the information disclosed together with the KPIs of non-financial enterprises"

2. Definitions, Explanations and Management Statements

2.1. Definitions

• “taxonomy-eligible economic activity” - any economic activity included in the regularly

updated list of activities covered by the delegated acts of the Taxonomy Regulation (Regulation (EU)

2020/852).

29.

In accordance with Article 1, item 5 of Delegated Regulation (EU) 2021/2178, an economic activity is

taxonomy-eligible irrespective of whether that economic activity meets any or all of the technical

screening criteria laid down in in Delegated Regulation (EU) 2021/2139. At the same time, the fact that a

certain economic activity is taxonomy-eligible does not in any way guarantee its sustainability and its

compliance with the requirements of Article 3 of the Taxonomy Regulation (Regulation (EU) 2020/852).

In principle, if an economic operator generates revenue or invests in capital expenditure (CapEx) or in

operating expenditure (OpEx) corresponding to an economic activity described in Delegated Regulation

(EU) 2021/2139, the same economic activity can be considered eligible regarding taxonomy eligibility

disclosure. Conversely, if an activity is not yet included in the Delegated Act, it should not be considered

eligible.

• An economic activity is considered a "taxonomy compliant economic activity" if:

- contributes significantly to one or more of the six environmental objectives;

- does not significantly harm any of the six environmental objectives;

- is carried out in accordance with the minimum safeguards ensuring compliance with the OECD

Guidelines for Multinational Enterprises and the UN Guiding Principles on Business and Human Rights,

including the principles and rights established in the eight core conventions set out in the International

Labor Organization's Declaration on fundamental principles and rights at work and in the International

Charter of Human Rights; and

- meets the technical screening criteria - defined in the Climate Delegated Act and its applications

(Delegated Regulation (EU) 2021/2139).

• "transitional economic activity" is any economic activity for which there is no technologically

and economically feasible low-carbon alternative, qualifying as contributing substantially to climate

change mitigation where it supports the transition to a climate-neutral economy consistent with a pathway

to limit the temperature increase to 1,5ºC above pre-industrial levels, including by phasing out

greenhouse gas emissions, in particular emissions from solid fossil fuels, and where that activity:

- has greenhouse gas emission levels that correspond to the best performance in the sector or

industry;

- does not hamper the development and deployment of low-carbon alternatives; and

- does not lead to a lock-in of carbon-intensive assets, considering the economic lifetime of those

assets.

Transitional economic activities can play a key role in mitigating climate change by significantly

reducing their current high ecological footprint, including helping to phase out reliance on fossil fuels.

• "enabling economic activity" is any economic activity that directly enables other activities to

make a substantial contribution to one or more of those objectives, provided that such economic activity:

- does not lead to a lock-in of assets that undermine long-term environmental goals, considering

the economic life-cycle of those assets; and

- has a substantial positive environmental impact, on the basis of life-cycle considerations.

Enabling economic activities do not by themselves contribute substantially to climate change

mitigation. They play a key role in the decarbonization of the economy by directly enabling other activities

with low carbon environmental performance.

• The environmental objectives under Article 9 of the Taxonomy Regulation (Regulation (EU)

2020/852) are as follows:

- climate change mitigation;

- climate change adaptation;

- the sustainable use and protection of water and marine resources;

- the transition to a circular economy;

- pollution prevention and control;

- the protection and restoration of biodiversity and ecosystems.

• "climate change mitigation" - keeping the rise in global average temperature well below 2°C

and continuing efforts to limit it to 1.5°C compared with the pre-industrial levels, as set out in the Paris

Agreement.

30.

An economic activity that pursues the environmental objective of climate change mitigation should

contribute substantially to the stabilization of greenhouse gas emissions through the avoidance or

reduction of greenhouse gas emissions or the increase of greenhouse gas removals. Economic activity

should be consistent with the long-term temperature targets set out in the Paris Agreement. This

environmental objective should be interpreted in accordance with applicable EU legislation, including

Directive 2009/31/EC of the European Parliament and of the Council of Europe.

• „climate change adaptation“ – the process of adaptation to actual or expected climate change

and its effects;

An economic activity that pursues the environmental objective of climate change adaptation should

contribute substantially to reducing or preventing the adverse impact of current or expected climate

trends, or the risks of such an adverse impact on the activity itself or on people, nature or assets. This

environmental objective should be interpreted in accordance with applicable EU legislation and the

Sendai Framework for Disaster Risk Reduction 2015-2030.

• “sustainable use and protection of water and marine resources” - should be interpreted in

accordance with applicable EU legislation, including Regulation (EU) No 1380/2013 of the European

Parliament and of the Council and Directives 2000/60/EC, 2006/7/EC, 2006/118/EC, 2008/56 /EC and

2008/105/EC of the European Parliament and of the Council, Directives 91/271/EEC, 91/676/EEC and

98/83/EC of the Council and Decision (EU) 2017/848 of the Commission, as well as with the following

communications of the Commission: "Meeting the challenges of water scarcity and droughts in the

European Union" of 18 July 2007, "Plan for the protection of Europe's water resources" of 14 November

2012 and "Strategic approach of the European Union to pharmaceutical products in the environment" of

March 11, 2019.

• “ transition to a circular economy ” - should be interpreted in accordance with applicable Union

legislation in the areas of circular economy, waste and chemicals, including Regulations (EC) No

1013/2006, (EC) No 1907/2006 and (EU) 2019/1021 of the European Parliament and of Council, and

Directives 94/62/EC, 2000/53/EC, 2006/66/EC, 2008/98/EC, 2010/75/EU, 2011/65/EU, 2012/19/EU,

(EU) 2019 /883 and (EU) 2019/904 of the European Parliament and of the Council, Council Directive

1999/31/EC, Commission Regulation (EU) No. 1357/2014, Commission Decisions 2000/532/EC and

2014/955/EU and with the communications of the Commission of December 2, 2015 "Closing the Loop -

Closing the loop - An EU action plan for the Circular Economy" and "European Strategy for Plastics in

the Circular Economy”.

• “pollution prevention and control” - should be interpreted in accordance with applicable Union

legislation, including Directives 2000/60/EC, 2004/35/EC, 2004/107/EC, 2006/118/EC, 2008/50/EC,

2008/105/EC, 2010/75/EU, (EU) 2016/802 and (EU) 2016/2284/ of the European Parliament and of the

Council.

• “protection and restoration of biodiversity and ecosystems” – should be interpreted in

accordance with applicable Union legislation, including Regulations (EU) No 995/2010, (EU) No 511/2014

and (EU) No 1143/2014 of the European Parliament and of the Council, Directive 2009/147/EC of the

European Parliament and of the Council, Council Regulation (EC) No 338/97, Council Directives

91/676/EEC and 92/43/EEC, as well as in accordance with the Commission's communications of May

21, 2003. "Forest Law Enforcement, Governance and Trade (FLEGT)", dated 3 May 2011. "Our life

insurance, our natural capital: EU biodiversity strategy to 2020" and from 6 May 2013. "Green

infrastructure (EE) - increasing Europe's natural capital", dated February 26, 2016. "EU action plan

against wildlife trafficking" and from 23 July 2019 "Strengthening EU action to protect and restore forests

worldwide".

2.2. Management explanations and statements

The information presented may contain statements that reflect the current view of the members of

the Management of Stara Planina Hold Plc regarding the achievement of future non-financial results, the

implementation of the business strategy, plans and objectives of the company and the enterprises in the

group.

31.

These forecasts refer to Stara Planina Hold Plc, as well as to the sector where the companies in

the group of the holding operate. Statements that include the words "expects", "intends", "plans",

"anticipates", "assumes", "will", "aims", "aims", "may", "could", "continues" and other similar statements

related to the future performance of Stara Planina Hold Plc and the companies in the group are forecasts

for the purposes of Bulgarian and European legislation or for other purposes.

In the event that forecasts are presented, they concern the future performance and results of Stara

Planina Hold Plc and the companies in the group, in relation to which there are risks and uncertainties. It

is possible that factors and events may arise that could cause a significant difference in the actual results

of Stara Planina Hold Plc and the companies in the group from those indicated in the forecast statements.

These factors include, but are not limited to, the factors described in the section Risk factors for the

activities of the Group of Stara Planina Hold Plc of this Report and should be considered in relation to

each other, as well as in relation with all the financial and economic information presented in the Report.

3. Main activities of Stara Planina Hold PLC

Stara Planina Hold Plc is a public company within the meaning of Art. 110 of the Public Offering of

Securities Act. The company is the legal successor of the Central Privatization Fund Jsc, established on

September 27, 1996. The holding company holds shares in the capital of industrial enterprises in various

fields of production. It actively participates in the development of Bulgarian industry, achieving European

and world level quality and profitability.

The economic group of Stara Planina Hold Plc consists of the parent company and its subsidiaries

and associated enterprises. The investment portfolio of the holding is distributed mainly in the following

branches of industry: mechanical engineering, electrical engineering, light industry, finance.

Stara Planina Hold Plc, as a holding company, does not carry out independent commercial

activities. The company has focused its activity primarily on the management of subsidiaries and

associated enterprises. The main investments in the portfolio of Stara planina hold Plc as of 31.12.2023

are presented in section I, item 2 of the Report - Investment portfolio.

4. Accounting Policy

The company prepares and adopts an accounting policy that fully complies with the applicable

IFRS adopted in the EU. The current accounting policy includes disclosures regarding IAS 16, IAS 38,

IAS 40 and IFRS 16, in relation to the requirements of Delegated Regulation (EU) 2021/2178 and the

impact it places on them. The disclosure of the essential accounting policies of the company is presented

in more detail in the explanatory notes to the Annual Consolidated Financial Statement as of 31.12.2023.

5. Assessment for Compliance with the Taxonomy Regulation (Regulation (Eu) 2020/852)

In accordance with the Taxonomy Regulation (Regulation (EU) 2020/852) and the additional

delegated acts thereto, as part of the non-financial declaration, for the first time, the reporting of

taxonomy-compliant turnover, capital expenditure and operating expenditure for 2023 of the companies

in the group of Stara Planina Hold Plc is included. This Eligibility Disclosure applies to all environmental

objectives currently considered in the European Taxonomy under Article 27(2)(a) and (b) of the

Taxonomy Regulation (Regulation (EU) 2020/852).

The Paris Agreement adopted under the United Nations Framework Convention on Climate

Change ("Paris Agreement") was approved by the EU on 5 October 2016. Article 2(1)(c) of the Paris

Agreement sets out the goal of stronger action in response to climate change by aligning capital flows

with the goal of achieving low greenhouse gas emissions and climate-resilient development, among other

means. In this regard, on 12 December 2019, the European Council adopted conclusions on climate

change. With this in mind, this regulation represents a key step towards achieving the goal of a climate-

neutral European Union by 2050.

Sustainability and the transition to a safe, climate-neutral and climate-resilient circular economy

with efficient use of resources are crucial to ensure the long-term competitiveness of the EU economy.

32.

Sustainability has long been central to the European Union project, and the Treaty on European Union

and the Treaty on the Functioning of the European Union (TFEU) reflect its social and environmental

dimensions.

According to the Taxonomy Regulation (Regulation (EU) 2020/852), an economic activity that

pursues the environmental objective of climate change mitigation should contribute substantially to the

stabilization of greenhouse gas emissions through the avoidance or reduction of greenhouse gas

emissions or the increase of greenhouse gas removals. Economic activity should be consistent with the

long-term temperature targets set out in the Paris Agreement. This environmental objective should be

interpreted in accordance with applicable EU legislation, including Directive 2009/31/EC of the European

Parliament and of the Council of Europe.

An economic activity that pursues the environmental objective of climate change adaptation should

contribute substantially to reducing or preventing the adverse impact of current or expected climate

trends, or the risks of such an adverse impact on the activity itself or on people, nature or assets. This

environmental objective should be interpreted in accordance with applicable EU legislation and the

Sendai Framework for Disaster Risk Reduction 2015-2030.

An economic activity shall qualify as contributing substantially to the sustainable use and protection

of water and marine resources where that activity contributes substantially to achieving the good status

of bodies of water, including bodies of surface water and groundwater or to preventing the deterioration

of bodies of water that already have good status, or contributes substantially to achieving the good

environmental status of marine waters or to preventing the deterioration of marine waters that are already

in good environmental status.

An economic activity that pursues the environmental objective of transition to a circular economy

should contribute substantially to prevention of waste generation, to waste reuse and to its recycling.

An economic activity shall qualify as contributing substantially to pollution prevention and control

where that activity contributes substantially to environmental protection from pollution by preventing or,

where that is not practicable, reducing pollutant emissions into air, water or land, other than greenhouse

gasses.

An economic activity shall qualify as contributing substantially to the protection and restoration of

biodiversity and ecosystems where that activity contributes substantially to protecting, conserving or

restoring biodiversity or to achieving the good condition of ecosystems, or to protecting ecosystems that

are already in good condition.

In order to derive the key performance indicators (KPIs) against the objectives of the Taxonomy

Regulation in relation to the six environmental objectives of the Taxonomy Regulation, the analysis of the

product portfolio of Stara Planina Hold Plc identified a turnover of eligible activities in the sense of the EU

taxonomy and in particular of Delegated Regulation (EU) 2021/2139 (amended and supplemented by

Delegated Regulation (EU) 2022/1214 and Delegated Regulation (EU) 2023/2485) and Delegated

Regulation (EU) 2023/2486 for the companies Hydraulic Elements and Systems Plc (from electricity

produced by a photovoltaic plant) and Elhim-Iskra Plc. (from production of storage batteries and from

electricity produced by a photovoltaic plant).

However, the Management of Stara Planina Hold Plc is aware that the Taxonomy and the

Delegated Act on Climate, including its annexes, require non-financial enterprises with economic

activities that do not meet the eligibility conditions in the sense of the Taxonomy Regulation and the

delegated acts thereto, to report on the part of capital expenditure (CapEx) and operating expenditure

(OpEx) related to the purchase of output from taxonomy-compliant economic activities and individual

measures helping to make the targeted activities low-carbon or lead to a reduction in greenhouse gases

(item 1.1.2.2 letter c) and item 1.1.3.2 letter c) of the Disclosure Regulation (Delegated Regulation (EU)

2021/2178)).

Thus, for the purposes of deriving those eligible for the taxonomy and the subsequent assessment

of compliance with the six environmental objectives of the key result indicators (KPIs) on capital

expenditure (CapEx) and operating expenditure (OpEx) of the companies in the group of the holding,

several enabling activities represented by the taxonomy were identified, which are inextricably linked to

33.

the main activity and could have an impact on the performance of the Company. The identified activities

are:

- Activity CCM 3.4./CCA 3.4. - Manufacture of batteries (Elhim-Iskra Plc),

- Activity CCM 4.1./CCA 4.1. - Electricity generation using solar photovoltaic technology (Hydraulic

Elements and Systems Plc, Elhim-Iskra Plc. and М+S Hydraulic Plc),

- Activity CCM 4.10./CCA 4.10. – Storage of electricity (Elhim-Iskra Plc),

- Activity CCM 4.16./CCA 4.16. – Installation and operation of electric heat pumps (Bulgarian Rose

Plc),

- Activity CCM 4.21./CCA 4.21. - Production of heat/cool from solar thermal heating (Bulgarian

Rose Plc),

- Activity CCM 4.25./CCA 4.25. - Production of heat/cool using waste heat (М+S Hydraulic Plc),

- Activity CCM 6.6./CCA 6.6. - Freight transport services by road (Elhim-Iskra Plc and М+S

Hydraulic Plc),

- Activity CCM 7.2/CCA 7.2/CE 3.2 - Renovation of existing buildings (Hydraulic Elements and

Systems Plc, Elhim-Iskra Plc and М+S Hydraulic Plc),

- Activity CCM 7.5/CCA 7.5 Installation, maintenance and repair of instruments and devices for

measuring, regulation and controlling energy performance of buildings (М+S Hydraulic Plc),

- Activity CCM 7.7/CCA 7.7 - Acquisition and ownership of buildings (SPH Invest Jsc),

- Activity CE 3.3. – Demolition and clearing of buildings and other structures (М+S Hydraulic Plc).

With regard to the reference of capital expenditure (CapEx) and operating expenditure (OpEx)

regarding environmentally sustainable activities (in line with the taxonomy), the compliance of the

inextricably linked to the main activity for each of the companies in the group of the holding, eligible

enabling activities, specified above, meeting the requirements of item 1.1.2.2 and 1.1.3.2 of Annex I to

Delegated Regulation (EU) 2021/2178 were assessed.

For each taxonomy-eligible activity, its individual compliance with the technical screening criteria

regarding its substantial contribution to climate change mitigation and compliance with the “do no

significant harm” principle was analyzed and assessed. When assessing whether each identified activity

complies with the “do no significant harm” principle (NSH) in relation to the remaining five environmental

objectives under Art. 9 of the Taxonomy Regulation (Regulation (EU) 2020/852), it was found that the

activities do not cause significant harm, as the principle of legality in the company's operations is observed

and all the requirements of the legislation in the production sector and the environmental protection sector

are applied, thereby ensuring that the technical screening criteria are met.

In order to avoid double counting of taxonomy-eligible economic activities already counted under

the climate change mitigation objective in accordance with point 2, letter c) of Annex I to Delegated

Regulation (EU) 2021/2178, the companies in the group of the holding do not consider taxonomy-eligible

economic activities in relation to the objective of climate change adaptation.

As taxonomy- compliant (environmentally sustainable) capital expenditures (CapEx) were

identified:

- Manufacture of batteries in the company Elhim-Iskra Plc that meets the technical screenin g

criterion as fully rechargeable batteries are manufactured – under Activity CCM 3.4./CCA 3.4;

- Construction and exploitation of solar photovoltaic technologies in the companies Hydraulic

Elements and Systems Plc, Elhim-Iskra Plc. and М+S Hydraulic Plc – under Activity CCM 4.1./CCA 4.1;

- Storage of electricity in the company Elhim-Iskra Plc – under Activity CCM 4.10./CCA 4.10;

- Installation and operation of electric heat pumps in the company Bulgarian Rose Plc – under

Activity CCM 4.16./CCA 4.16;

- Production of heat/cool from solar thermal heating in the company Bulgarian Rose Plc – under

Activity CCM 4.21/CCA 4.21;

- Production of heat/cool using waste heat in the company М+S Hydraulic Plc – under Activity CCM

4.25/CCA 4.25;

- Improving energy efficiency through implementation of an energy consumption monitoring system

in the company М+S Hydraulic Plc – under Activity CCM 7.5/CCA 7.5;

34.

The activities of freight transport services by road (in the companies Elhim-Iskra Plc and М+S

Hydraulic Plc), repair and renovation of existing buildings (in the companies Hydraulic Elements and

Systems Plc, Elhim-Iskra Plc. and М+S Hydraulic Plc), the removal of legally owned buildings, unsuitable

for use, and the clearing of the terrain in connection with future investment intentions in the property: UPI

I-7836, quarter 30 - Industrial zone according to the plan of the city of Kazanlak (in the company М+S

Hydraulic Plc), acquisition and ownership of buildings (in the company SPH InvestJsc) refer to the

taxonomy- eligible, environmentally unsustainable activities, since they do not correspond both to the

technical screening criteria regarding the substantial contribution to any of the environmental objectives,

and the “do no significant harm” criteria, especially in relation to the transition to a circular economy.

In order to avoid double counting of taxonomy-eligible economic activities already counted under

the climate change mitigation objective in accordance with point 2, letter c) of Annex I to Delegated

Regulation (EU) 2021/2178, the companies in the group of Stara Planina Hold Plc do not consider

taxonomy-eligible economic activities in relation to the other environmental objectives with the exception

of Activity CE 3.3. – Demolition and clearing of buildings and other structures.

Finally, Stara Planina Hold Plc declares as part of the consolidated non-financial declaration, an

integral part of this activity report, that all minimum social guarantees in the field of respect for human

rights, anti-corruption, obligations for safe and healthy working conditions, the right to association of

workers and employees, compliance with the collective labor agreement have been observed. Given the

above, it can be concluded that the principle of compliance with the minimum guarantees has been

fulfilled. More information regarding compliance with the minimum social guarantees is included in the

consolidated non-financial declaration under Article 48 of the Accounting Act, presented under chapter II

of this Report.

The conclusions of the analysis of the key performance indicators show that Stara Planina Hold

Plc accounts for turnover and capital expenditure (CapEx) eligible for the taxonomy, defined according

to Annex III to Delegated Regulation (EU) 2021/2178. Disclosure of Key Performance Indicators (KPIs)

is presented item 8 below, in accordance with Annex IV to Delegated Regulation (EU) 2021/2178.

The analysis of the key performance indicators regarding the capital expenditure (CapEx) of the

company on a consolidated basis shows that Stara Planina Hold Plc and the companies in the group

have committed their efforts towards investing in environmentally sustainable assets. The capital

expenditure from taxonomy-eligible activities refers to assets and processes related to the purchase of

output from taxonomy-compliant economic activities and individual measures that help the targeted

activities become low-carbon or lead to a reduction in greenhouse gases. The share of taxonomy-

compliant CapEx is 6.52 % of the holding's consolidated total capital expenditure, which is due to

investment in modern smart solutions directed towards a low-carbon economy.

6. Contextual Information

Delegated Regulation (EU) 2021/2178 defines the key performance indicators (KPIS) for turnover,

capital expenditure (CapEx) and operating expenditure (OpEx) for the companies, respectively specified

under sections 1.1.1, 1.1.2 and 1.1.3 of the Annex I to this Regulation.

The companies in the group of Stara Planina Hold Plc should disclose the part of their net turnover

(defined in accordance with 1.1.1. of Annex I to the Delegated Regulation (EU) 2021/2178) that

corresponds to their taxonomy-eligible economic activities.

The information on the eligible capital expenditure (CapEx) prepared in accordance with section

1.1.2. of Annex I to Delegated Regulation (EU) 2021/2178, covers the following: capital expenditure

related to assets and processes related to the purchase of output from taxonomy-compliant economic

activities and individual measures helping the targeted activities to become low-carbon or lead to a

reduction in greenhouse gases.

The information on the eligible operating expenditure (OpEx) prepared in accordance with section

1.1.3. from Annex I to the Delegated Regulation (EU) 2021/2178, including the direct non-capitalized

expenditure according to the Business Programs of the companies for the period 2022-2026 and in

particular the 2023 repair activities related to the maintenance and current repair of assets serving the

35.

main activities of the companies, as well as all other direct expenditure related to the current service of

these assets from the category of property, machinery and equipment.

Pursuant to Article 10, paragraph 2 of the Delegated Regulation (EU) 2021/2178, in order to ensure

reliability and consistency in the reporting of the three key performance indicators (KPIs), the companies

eliminate the double reporting of the same amounts when relating them to turnover, capital expenditure

and operating expenditure through the created detailed analytical accounting for the purposes of

preparing its financial statements.

The disclosure regarding the key performance indicators (KPIs) for Stara Planina Hold Plc on a

consolidated basis is presented in accordance with items 1.1 and 1.2 of Annex III to Delegated Regulation

(EU) 2021/2178, taking into account the weighted average values of turnover and capital expenditure of

each from the companies included in the consolidation, according to the shares of the holding company

in each of the companies.

7. Methodology for Calculating the Key Performance Indicators Under art. 8 of the Taxonomy

The methodology used by the company to calculate the key performance indicators (KPIs) for

turnover and capital expenditure (CapEx) is in accordance with item 2 of Annex III to Delegated regulation

(EU) 2021/2178.

8. 2023 Key Performance Indicators (KPIs)

The weighted average value of all the investments

that are directed at funding, or are associated with

taxonomy-aligned economic activities relative to the

value of total assets covered by the KPI, with following

weights for investments in undertakings per below:

Turnover-based: 35.93 %

CapEx—based: 3.86 %

The weighted average value of all the investments

that are directed at funding, or are associated with

taxonomy-aligned economic activities, with

following weights for investments in undertakings

per below:

Turnover-based: BGN 7 727.73 thousand

CapEx-based: BGN 830.41 thousand

The percentage of assets covered by the KPI relative to

total investments (total AuM). Excluding investments in

sovereign entities, Coverage ratio: 71.51 %

The monetary value of assets covered by the KPI.

Excluding investments in sovereign entities.

Coverage: BGN 21 508 thousand

Additional, complementary disclosures: breakdown of denominator of the KPI

The percentage of derivatives relative to total assets

covered by the KPI – NOT APPLICABLE.

The value in monetary amounts of derivatives: NOT

APPLICABLE.

The proportion of exposures to EU financial and non-

financial undertakings not subject to Articles 19a and

29a of Directive 2013/34/EU over total assets covered

by the KPI:

For non-financial undertakings: NOT APPLICABLE

For financial undertakings: NOT APPLICABLE

Value of exposures to EU financial and non-financial

undertakings not subject to Articles 19a and 29a of

Directive 2013/34/EU:

For non-financial undertakings: NOT APPLICABLE

For financial undertakings: NOT APPLICABLE

The proportion of exposures to financial and non-

financial undertakings from non-EU countries not

subject to Articles 19a and 29a of Directive 2013/34/EU

over total assets covered by the KPI:

For non-financial undertakings: NOT APPLICABLE

For financial undertakings: NOT APPLICABLE

Value of exposures to financial and non-financial

undertakings from non-EU countries not subject to

Articles 19a and 29a of Directive 2013/34/EU:

For non-financial undertakings: NOT APPLICABLE

For financial undertakings: NOT APPLICABLE

The proportion of exposures to financial and non-

financial undertakings subject to Articles 19a and 29a

of Directive 2013/34/EU over total assets covered by

the KPI:

Value of exposures to financial and non-financial

undertakings subject to Articles 19a and 29a of

Directive 2013/34/EU:

36.

For non-financial undertakings: NOT APPLICABLE

For financial undertakings: NOT APPLICABLE

For non-financial undertakings: NOT APPLICABLE

For financial undertakings: NOT APPLICABLE

The proportion of exposures to other counterparties

and assets over total assets covered by the KPI:

NOT APPLICABLE

Value of exposures to other counterparties and assets:

NOT APPLICABLE

The value of all the investments that are funding

economic activities that are not taxonomy-eligible

relative to the value of total assets covered by the KPI:

100.00 %.

Value of all the investments that are funding economic

activities that are not taxonomy-eligible: BGN 21 508

thousand

The value of all the investments that are funding

taxonomy-eligible economic activities, but not

taxonomy-aligned relative to the value of total assets

covered by the KPI: 80.31 %.

Value of all the investments that are funding Taxonomy-

eligible economic activities, but not taxonomy-aligned:

BGN 17 274 thousand.

Additional, complementary disclosures: breakdown of numerator of the KPI

The proportion of Taxonomy-aligned exposures to

financial and non-financial undertakings subject to

Articles 19a and 29a of Directive 2013/34/EU over total

assets covered by the KPI:

For non-financial undertakings:

Turnover-based: NOT APPLICABLE

Capital expenditures-based: NOT APPLICABLE

For financial undertakings:

Turnover-based: NOT APPLICABLE

Capital expenditures-based: NOT APPLICABLE

Value of Taxonomy-aligned exposures to financial and

non-financial undertakings subject to Articles 19a and

29a of Directive 2013/34/EU:

For non-financial undertakings:

Turnover-based: NOT APPLICABLE

Capital expenditures-based: NOT APPLICABLE

For financial undertakings:

Turnover-based: NOT APPLICABLE

Capital expenditures-based: NOT APPLICABLE

The proportion of Taxonomy-aligned exposures to other

counterparties and assets over total assets covered by

the KPI:

Turnover-based: NOT APPLICABLE

Capital expenditures-based: NOT APPLICABLE

Value of Taxonomy-aligned exposures to other

counterparties and assets:

Turnover-based: NOT APPLICABLE

Capital expenditures-based: NOT APPLICABLE

Breakdown of the numerator of the KPI per environmental objective

Taxonomy-aligned activities :

(1) Climate change mitigation

Turnover: 23.96 %

CapEx: 19.94 %

Transitional activities: A 0 %

(Turnover; CapEx)

Enabling activities: B

Turnover: 23.94 %,

CapEx : 6.52%

(2) Climate change adaptation

Turnover: 0%

CapEx:0%

Enabling activities: B 0 % (Turnover;

CapEx)

(3) The sustainable use and

protection of water and marine

resources

Turnover: 0%

CapEx:0%

Enabling activities: B 0 % (Turnover;

CapEx)

(4) The transition to a circular

economy

Turnover: 0%

CapEx:0%

Enabling activities: B 0 % (Turnover;

CapEx)

(5) Pollution prevention and control

Turnover: 0%

CapEx:0%

Enabling activities: B 0 % (Turnover;

CapEx)

(6) The protection and restoration of

biodiversity and ecosystems

Turnover: 0%

CapEx:0%

Enabling activities: B 0 % (Turnover;

CapEx)

37.

IV. Important developments occurred since the beginning of the year

After the date of the annual accounting closing, the management of Stara Planina Hold Plc is not

aware of any important and material events which may influence the investors’ interest with the exception

of the fall of Bulgaria's last regular government in March 2024, leading to a further escalation of political

instability as well as the ongoing military conflicts in Ukraine, the Middle East and the obstruction of the

transport route through the Red Sea, which increase the risks associated with ensuring the supply of

materials and sale of finished products to partners related to the affected region.

V. Expected development of the group

In the year 2023, our country, Europe and the world were strongly influenced by the effects of

dynamic global changes and overlapping crises one after another. Military conflicts in Ukraine and the

Middle East, weakening global demand amid tight monetary policy in many countries and worsening

terms of trade led to the sharpest contraction in industrial production in about three years and continue

to affect the economy with a trend for a negative development and even decline. On a national level, the

business activity during the year was conditioned by the unceasing political instability, which continues

being assessed as the main cause negatively affecting economic activity and the business environment

in Bulgaria. Our country continues to need consistent state policies, ambitious reforms and a clear

strategic vision to stimulate economic growth.

Against this background, the consolidated sales revenues of the Group for the first half of 2023

reached BGN 211.61 million and reported a 15.4 % growth compared to the sales for the same period of

2022 and almost a 61 % increase compared to the sales for the first half of 2021. In the second half of

2023 we recorded sales revenues in the amount of BGN 167.355 million thus reporting a 12.78 %

decrease compared to the second half of the previous year and an increase by 14.09 % compared to the

second half of 2021. The consolidated net sales revenues for 2023 reached BGN 378.97 million, reporting

a growth by 1 % compared to the sales in 2022 (with a reported decline in industrial production in the EU

of 2 % for the same period) and an increase by over 36% compared to consolidated sales in 2021.

Regardless of the impact of the negative factors that determined the operations of the companies

in the group of Stara Planina Hold Plc in the reporting year, the gross profit of the group for the year 2023

is in the amount of 46.94 million, which represents a decrease by 8.6 % compared to the reported gross

consolidated profit for the previous year year and an increase by over 42 % compared to the gross

consolidated profit for the year 2021.

The level of our exports is directly dependent on the markets where the companies in the group

sell - mainly in the European Union. In 2023, we managed to keep our main markets but the expectations

and forecasts of our partners in the country, Europe and the world remain reserved and even pessimistic,

at least until the middle of 2024, which, together with the negative trends in the industry, gives us reason

to expect results with lower values for the current financial year. The state of the German economy, which

is the main trading partner of the companies in the group of Stara Planina Hold Plc, continues being

particularly worrying. According to the forecast data of the Germany's Federal Statistical Office "Destatis",

the country's GDP decreased by 0.3% in the fourth quarter of 2023 compared to the previous quarter,

and the forecast of the Bundesbank indicates that the weak performance of the German economy will

continue in the first months of 2024. This is likely to make Germany one of the worst performers within

the eurozone, with its huge industrial sector, normally an important driver of growth, proving a stumbling

block for the entire European economy.

The reported results in the first months of 2024, together with the continuing negative impact of

the financial-economic and geopolitical factors determining the prospects for the development of the

European and world economy, give us reason to lower our forecast for sales in the first quarter of 2024.

At this stage, we expect with the consolidated revenues for the first half of 2024 to report a decrease by

about 30 % compared to the same period of 2023, and we predict that the consolidated sales revenues

38.

of the group for 2024 will be worth about BGN 258.4 million, which means a decrease by about 30 % on

an annual basis compared to 2023.

Net sales revenue

(Quarterly, BGN’000s)

* forecast

It is possible that our estimates will not be reached due to the influence of external factors. The EU

economy continues being exposed to risks, as negative impact have factors such as new difficulties in

supply chains, prices of and security of energy resources, weaker demand on external markets, a

possible additional tightening of monetary policy, as well as geopolitical factors, related to the military

conflicts in Ukraine and the Middle East.

In this context in the year 2024 again, we will continue being led by the purpose of achieving high

quality, productivity and profitability of our activities, in order to maintain our market positions and at the

same time preserve the persons employed in the companies. We will continue offering competitive prices,

tailored customer approach, high quality and operational delivery times.

In 2023, the investments of our enterprises reached BGN 35.5 million with a 37 % growth on an

annual basis, mainly intended for continuous technological renewal, introduction of highly profitable

products and productions, acquisition of enterprises and assets, innovations for green and digital

transition, increase of labor productivity and a corresponding increase in the remuneration of employed

persons.

Investments

(Quarterly, BGN’000s)

* forecast

-10000

10000

30000

50000

70000

90000

110000

1Q 2Q 3Q 4Q

2022 2023 2024*

2000

4000

6000

8000

10000

12000

14000

16000

18000

20000

22000

2022 2023 2024*

39.

In 2024, in the context of the continuing great uncertainty in national and global terms, we have

planned a decrease in investments by 23 % to BGN 27.3 million. The main part of the planned

investments is intended for new technological equipment and reconstruction, new technologies for

digitization of the processes, for a green transition and expansion of production possibilities with a view

to increasing the productivity and quality of the manufactured products and reducing the cost price,

optimization of the production process and stimulation of the employed persons.

The companies plan to participate in procedures under existing and new European operational

programs aimed at developing human resources and increasing competitiveness.

The sustainable achievement of good financial results with the expected sales will continue being

the main task in order to guarantee the investments of the shareholders and their profitability.

VI. Research and Development Activity

Stara Planina Hold Plc does not perform independent research and development activity. The

holding company provides support to the companies in the Group in their research and development

activities since it views these activities as an integral part of the annual business plans of the companies.

The main enterprises in the group have separate divisions, directorates, departments and

laboratories which consistently develop activities to improve production, develop and introduce new

products in mass production, as well as new production methods and technologies.

In 2023 again the main objectives of the units engaged in development activities in the companies

of the group were aimed at meeting the increased requirements and growing expectations of customers

in terms of quality, price and variety of products offered.

Main achievements of companies from the group of Stara Planina Hold Plc in 2021 in the research

and development field

M+S Hydraulic Plc

In 2023, the company was devoted to technological renewal and optimization of production

processes. New blanks, new types of tools and fixtures have been adopted, leading to a reduction in the

cost of production. Screwdriving devices were introduced into the assemblies to improve quality and

reduce hard physical labor.

Main developments of the company for 2023:

• developed documentation and test samples for M2V two-speed motors with original casting;

• designed motor type HWM motor with increased characteristics, which should successfully

replace the wheel motors of the White and Parker companies;

• together with the German company Lupold (manufacturers of regulators), the development of new

adjustable axial-piston pumps for open hydraulic systems with a geometric volume from 22 cm3 to 28

cm3 has been started;

• the development and assimilation of HKUSU and HKUQUS type variable volume hydraulic

steering systems has begun and is currently continuing, thus following the pattern of the two main world

trends:

- with a small working couple for emergency mode of operation and with an additional increase in

the working volume of the output of the steering control in normal mode of operation;

- with a standard working pair for normal control mode and with a reduction of the geometric

volume by shortening the working chambers in emergency mode of operation;

• in addition to expanding the range of standard safety valves for hydraulic motors, the development

of a new type of valve, type KBC, which is designed to work in the braking systems of motor vehicles,

has begun.

Hydraulic Elements and Systems Plc

The company has respective departments and units that develop activities to improve production,

develop and adopt new products.

In 2023 again, the main goals of the units carrying out development activities were aimed at

satisfying the increased demands of customers with the development of new types of products;

improvement of the production technology in order to increase the quality of the range produced so far;

40.

optimization of the technological and production process with the aim of reducing the cost of products

and competitive price presence on the market. All directions of research and development activities

carried out by the enterprise are in accordance with the strategy for sustainable development of the

company.

In 2023, HES Plc developed and produced over 40 new models of hydraulic cylinders and as

many modifications of existing ones, and the majority of them are expected to enter regular production in

2024.

Regarding the development activity from a technological point of view, in 2022, HES Plc

introduced a high-tech process for super-finish processing of spherical surfaces, which is borrowed from

the production of artificial joints for medicine.

Elhim-Iskra Plc

In 2023, the activities of the development team were aimed at:

• Development of new technologies and related implementation of new production capacities with

the main purpose of increasing productivity and optimization at each stage of the technological process.

• A new range of ELT series semi-traction batteries with armored plates used for autonomous

vehicle propulsion were put into production.

• New types of OPzS monobloc stationary batteries for small, medium and large capacities, used

in providing emergency power supply in Bulgaria and Europe, were developed and put into production.

• New types of solar batteries of the ES OPzS type were developed and put into production, for

small, medium and large capacities, which are used in the construction of photovoltaic parks for the

production of electricity in Bulgaria and Europe and the Middle East.

The elements in the modular solutions of Elhim-Iskra Plc type ES OPzS will be manufactured in

the company's production facilities, certified according to ISO 9001; compliant with the requirements of

IEC 61427 for photovoltaic energy systems; "Long Life" according to the Eurobat classification; fully

compliant with the safety requirements of EN 50272-2 for stationary batteries. The company's

infrastructure and test base allow full testing of solutions, resulting in quick and efficient installation and

launch.

Bulgarian Rose Plc

In 2023, the objectives of the development unit were aimed at renewing formulations and bringing

them into line, according to the new regulatory requirements regarding prohibited substances in cosmetic

products, optimization of production technology and quality of manufactured products, compliance with

the needs and requirements of distributors in the country and abroad.

In 2022, the Company took part in the national stand organized by IANSMP, within the framework

of the Beauty World Middle East International Exhibition of Perfumery and Cosmetics, which was held in

Dubai in November.

The team of specialists in the "Innovations" department will also face new challenges in 2024. The

tasks set in the company's business program envisage development of a new cosmetic series in a low-

price range; expansion of the existing cosmetic series with new products conditioned by the needs and

demands of our customers; development of products under own brand according to a specific assignment

of a client.

VII. Company shares

1. Own shares. Buy-back

The General Meeting of Shareholders of Stara Planina Hold Plc, held on 16.05.2019, adopted a

resolution to buy back up to 3 % of the total number of shares issued by the company for a period not

longer than 5 years and appointed the Board of Directors to define the specific parameters.

During 2023 Stara Planina Hold Plc has not acquired or sold its own shares.

As of 31.12.2023 Stara Planina Hold Plc owns 225 337 own shares, representing 1.07 % of the

capital of the holding company. 50 000 shares are also hold by the subsidiary company SPH Invest Jsc.

Pursuant to the provision of Art. 187a, Para. 3 of the Commercial Act, the exercise of any rights,

including the right to vote, on these 275 337 shares shall cease until their transfer.

In 2023 no joint stock company in the Group has acquired or transferred own shares.

41.

2. Changes in the share price of the companies

The shares of Stara Planina Hold AD are traded on BSE Main Market, Standard segment on the

Bulgarian Stock Exchange AD. Exchange code: SPH.

In 2023, the movement of the share price was variable between BGN 8.60 and BGN 10.70. The

graph shows the movement of the price of the shares of Stara Planina Hold Plc on the BSE for the period

01.01.2023 - 31.12.2023.

Share price over Y2023

Source: BSE-Sofia AD

------- closing price

------ weighted-average price

The graph shows the price movement of the shares of Stara Planina Hold Plc on the Bulgarian

Stock Exchange for the period 01.09.2023 – 31.12.2023.

• Start price: BGN 9.6676 (01.09.2023)

• Last price: BGN 10.30 (31.12.2023)

• Max price: BGN 10.70 (11.08.2023)

• Min price: BGN 8.6042 (24.04.2023)

• Value change: BGN 0.6324

• Percentage change: 6.5414 %.

The market capitalization of the holding as of 31.12.2023 is BGN 216.3 million compared to BGN

195.3 million as of 31.12.2022.

Stara Planina hold Plc

Market capitalization (BGN million)

Price (at closing) per one share of the company at the end of the year

2016

2017

2018

2019

2020

2021

2022

2023

100

150

200

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

42.

6.49

8.01

6.55

4.76

5.45

10.10

9.30

10.30

Four of the companies in the investment portfolio of the holding company are public companies

and their market capitalization is being set by the stock exchange. This allows for the ratio between the

market capitalization of the holding company and the market capitalization of its holdings to be calculated.

Traditionally the price of the holding is lower than the total price of its holdings.

Market capitalization (BGN million)

M+S Hydraulic Plc

Price (at closing) per one share of the company at the

end of the year

2017

2018

2019

2020

2021

2022

2023

8.08

7.65

6.00

6.25

9.15

8.95

11.50

Market capitalization (BGN million)

Hydraulic Elements and Systems Plc

Price (at closing) per one share of the company at the

end of the year

2017

2018

2019

2020

2021

2022

2023

5.19

4.80

4.26

3.84

6.50

6.40

5.95

Market capitalization (BGN million)

Elhim Iskra Plc

Price (at closing) per one share of the company at the

end of the year

2017

2018

2019

2020

2021

2022

2023

1.30

0.98

0.88

0.78

0.80

0.87

0.95

100

150

200

250

300

350

400

450

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

100

120

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

43.

Market capitalization (BGN million)

Bulgarian Rose Plc

Price (at closing) per one share of the company at the

end of the year

2017

2018

2019

2020

2021

2022

2023

2.00

2.20

1.89

1.02

1.50

1.70

1.85

3. Dividend policy

Stara Planina Hold Plc applies a policy of annual dividend distribution. The Board of Directors

assumes that at the regular annual general meeting the shareholders will continue the tradition of

distributing part of the financial profit for dividend.

For each year of its existence Stara Planina Hold Plc has paid a dividend. The total amount of the

distributed dividend until the financial year 2022 incl. is BGN 49.07 million. The initial investment in the

holding has a dividend coverage of 28 times.

Distributed dividends from Stara Planina Hold Plc (BGN million)

For the completed financial years of their existence the companies in the group of Stara

Planina Hold Plc have distributed dividends totaling BGN 244.78 million.

2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

0.82

0.16

0.19

0.21

0.23

0.24

0.25

0.26

0.18

0.25

0.27

0.29

0.32

1.02

2.10

4.27

4.53

4.75

5.04

5.09 5.09

5.16

6.18

6.54

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019 2020 2021 2022

44.

Distributed dividends Total for the Whole Group (BGN million)

4. Branches. Employees

Stara Planina hold Plc and the companies in the group do not have any registerred branches in

the country and abroad.

Information on the employees is presented in Section II of this report - Non-financial declaration.

VІIІ. Financial instruments used by the enterprise

1. Accounting policy

In compliance with the accounting legislation in force in Bulgaria, since the beginning of 2003

Stara Planina Hold Plc has been applying the International Financial Reporting Standards.

The Consolidated Financial Statements of Stara Planina Hold Plc as of 31.12.2023 have been

prepared in compliance with the International Financial Reporting Standards adopted by the European

Union.

The whole accounting policy of the Company is described in the Explanatory Notes presented

together with the Annual Consolidated Financial Statements as of 31.12.2023.

Investments in subsidiaries and associates are reported and presented under the acquisition cost

method in the separate statements of Stara Planina Hold Plc.

Major business operations of the company are sale, purchase and management of shareholdings

in companies. Main part of the 2023 revenues is formed by dividend revenues. These current incomes

are mainly used for financing the companies in the holding's portfolio, meeting the commitments under

the adopted dividend policy, as well as for administrative needs.

In the reporting year, the accounting policy of the company has not been changed compared to

the previous reporting period. No errors have been found for both the current and previous reporting

periods. Therefore, there are no adjustments due to errors.

2. Financial instruments

The most essential part of the financial instruments used by the company is taken by the holdings

of Stara Planina Hold Plc in the subsidiaries and associates.

1.57

1.35

1.52

1.67

1.77

1.78

1.60

1.54

1.97

2.40

2.50

1.56

2.20

3.88

6.94

9.42

9.74

15.10

17.64

18.86

20.97

22.43

19.1619.16

21.72

26.21

29.23

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2019 2020 2021 2022

45.

Financial instruments of the company are detailed in the Explanatory Notes presented together

with the Annual Consolidated Financial Statements as of 31.12.2023.

Typical for the investments of Stara Planina Hold Plc (BSE code SPH) in subsidiaries and

associates is that four of them are public companies with their shared being admitted to trading on the

Bulgarian Stock Exchange: M+S Hydraulic Plc (MSH), Hydraulic Elements and Systems Plc (HES), Elhim

Iskra Plc (ELHM) and Bulgarian Rose Plc (ROZA).

Next, in terms of significance, come the loans granted to the companies in the portfolio of Stara

Planina Hold Plc. They are filed as per their nominal value as of the date of occurrence. At the end of the

reporting period there is no data on the existence of circumstances for impairment of receivables on them

and such has not been made.

The Financial Resources Management Policy of Stara Planina Hold Plc is focused mainly on the

management of the companies in the portfolio. The free cash amounts are directed towards financing the

companies.

3. Liquidity

Given the specifics of the activity, the major part of the incoming cash flows is generally formed

by dividends received and the outgoing cash flows are used for payment of dividends to the shareholders

and for covering administrative expenses related to its maintenance.

It is a long-term corporate governance policy of Stara Planina Hold Plc to use the available cash

resource to fund projects of its portfolio companies.

The company has not undertaken any obligations to incur capital expenses at the end of the

reporting period.

4. Exposure of the enterprise to price, credit, liquidity and cash flow risk

The management monitors the overall risk and provides ways to minimize potential adverse

effects on the financial indicators of the company.

The nature of the financial instruments used by the company indicates that the market risk does

not have a significant effect on the financial results.

The risk of changes in the market price of equity instruments arises from equity securities

classified as reported at fair value through other comprehensive income (FVOCI) held for long-term

investment.

Stara Planina Hold Plc has granted loans to companies included in its portfolio which have a long-

term unblemished credit reputation which minimizes the credit risk.

Due to the nature of the financial instruments used by Stara Planina Hold Plc, the liquidity risk,

the interest rate risk and the cash flow risk are also minimal.

Detailed information on the risk factors to which Stara Planina Hold Plc and the companies in the

group are exposed is presented under Section I, item 4 of this Report.

ІX. Corporate Governance Declaration

1. National Corporate Governance Code

Stara Planina Hold Plc implements a long-term Good Corporate Governance Program. The

Program provides for the completion of a number of initiatives in several main areas, the implementation

of which is subordinated to its priority objectives:

• responsibility and independence of the corporate Board,

• shareholders' rights protection;

• ensuring equal treatment of each shareholder (including minority and foreign

shareholders);

• ensuring recognition of the rights of the parties interested in the management and

sustainable development of the company and promoting the co-operation with them;

• ensuring prompt and accurate disclosure of the statutory required information related to

Stara Planina Hold Plc regarding important issues of the financial standing, activity results, ownership

and management of the company;

STARA PLANINA HOLD PLC – sphold.com

46.

• supporting the strategic management of Stara Planina Hold Plc, the efficient control over

the activity of the Board of Directors and its accountability to all stakeholders.

The public companies in the group have also developed and implement their own long-term

corporate governance programs and the activity of the non-public companies is in compliance with the

main priorities and guidelines of the corporate program of Stara Planina Hold Plc.

On 30.10.2007 the Board of Directors of Stara Planina Hold Plc, considering the important role of

modern corporate governance to support sustainable development of the national economy of the

Republic of Bulgaria, and lead by its willingness to continue implementing the internationally recognized

good corporate governance standard, resolved that the holding company will carry out its activity in

compliance with the principles and provisions of the National Corporate Governance Code

(CGCode_July2021_BG.pdf (nkku.bg). The public companies in the group have also joined the Code.

2. Implementation of the National Corporate Governance Code

The management of Stara Planina Hold Plc and the management bodies of the public companies

in the group apply the National Code based on the “comply or explain” principle. The application of this

principle is based on the Recommendation of the EU Commission on the quality of reporting in corporate

governance.

The main direction when executing the commitments of the code was to bring the internal acts of

the company and its overall activity in accordance with the changing legal regulations. All of the internal

regulations listed below may be found in the Corporate Governance section on the company website.

Stara Planina Hold Plc participates in discussions of draft amendments and supplements or

projects for new acts in the field of public offering of securities presented by the competent authorities.

As a member of the National Corporate Governance Committee, Stara Planina Hold Plc participates

through its representative in the process of discussion and adoption of amendments to the National Code,

effective as of July 1, 2021.

Chapter One.

Corporate Boards

The Board of Directors of Stara Planina Holc Plc and the Boards of the companies in the group

direct and control the company in a responsible and independent manner according to the vision,

objectives and strategies of the company and in the best interest of all shareholders. It monitors the

results of the company's performance and initiates changes in the management of its operations, when

necessary. The Board of Directors treats all shareholders equally, acts in their best interest and in a

diligent manner. The members of the Board of Directors are guided in their activities by the generally

accepted principles of integrity and managerial and professional competence. The company has adopted

and adheres to a Code of Ethics.

The Board of Directors promotes the implementation and monitors the observance of the adopted

principles for sustainable development by the companies in the group; provides and controls the

establishment and proper functioning of a risk management system; ensures and controls the integrated

functioning of the accounting and financial reporting systems; gives guidelines, approves and controls

the business plans implementation of the companies in the Group, the material transactions as well as

other activities, required by the company's Rules of Procedure.

The Board of Directors reports on its activities to the General Meeting of Shareholders. In case of

proposals for election of new members of the Board of Directors, the principles of compliance of the

competence of the nominees with the nature of the company’s activities are observed. The contracts for

assignment of the management, concluded with the members of the Board of Directors, define their

responsibilities and tasks, the criteria for the amount of their remuneration, their obligations for loyalty to

the company and the grounds for dismissal.

The number of Board members of Stara Planina Hold Plc and those of the Board of the companies

in the group is defined by the company’s Articles of Association. The composition of the Boards is

structured in a way that guarantees the professionalism, impartiality and independence of its decisions

related to the management of the company. The Boards of Directors have allocated the tasks and

responsibilities between their members. The independent directors control the executive management

STARA PLANINA HOLD PLC – sphold.com

47.

and participate effectively in the company's performance in accordance with the shareholders’ interests

and rights. The Chairman of the Board of Directors is an independent director. The members of the Board

of Directors have appropriate knowledge and experience and after their election the new members are

acquainted with the main legal and financial issues related to the company's performance. Enhancing the

competence and qualification of the Board members is a constant practice and their training is

encouraged. The succession of mandates ensures efficient operation of the company and compliance

with the legal requirements.

The members of the Board of Directors have sufficient time to perform their tasks and duties. The

Rules of Procedure of the Board of Directors define the maximum number of companies outside the

portfolio of Stara Planina Hold Plc where Board members may hold management positions, as well as

the number of consecutive mandates of the independent members. Such a practice has been adopted

and applied by the public companies in the group.

The amount and the structure of the remuneration to the members of the Board of Directors are

defined by the General Meeting of the Shareholders. They take into account the responsibilities and

contribution of each member, the possibility of selection and retention of qualified and loyal members, the

need to align the interests of members with the long-term interests of the company. The remuneration of

the independent members of the Board of Directors is permanent (fixed). Pursuant to a decision of the

Shareholders, it may also have a variable part.

The regular annual general meetings of the shareholders of the holding and the public companies

of the group, held in 2021, adopted new Remuneration Policies for the members of the Board of Directors,

in line with the amendments to the regulations and aimed at contributing to the long-term business goals

and promoting behavior that supports value creation for the shareholders, while providing a competitive

remuneration sufficient to attract and retain directors with the qualities necessary for the successful

management and development of the company.

The Remuneration Policies define the principles for setting the amount and the structure of the

remuneration and specifies the particular additional incentives which are based on clear criteria and

indicators related to the results of the company and the economic group. Information on the

remunerations of the members of the Board of Directions of the holding company and those of the public

companies in the group is disclosed in an annual report which is a separate document to the Annual

Financial Statements of the company. Shareholders and stakeholders have easy access to the adopted

policies for defining the remuneration of the board members and the reports on their implementation

which are published on the company's website. The companies in the group have adopted general rules

for the members of the board of directors where the functions and obligations of the board, the procedure

for election and dismissal of members are defined.

The Board of Directors of Stara Planina Hold Plc and the Boards of the public companies in the

group have adopted procedures to avoid and disclose conflicts of interest. They impose obligations for

the members to avoid and not to admit actual or potential conflicts of interest and, if necessary, to

immediately disclose conflicts of interest and provide shareholders with access to information on

transactions between them and the company or any related party. On the other hand, each conflict of

interests in the company should be disclosed to the Board of Directors. Stara Planina Hold Plc and the

public companies in the group do not and will not allow transactions between the company and members

of the Board of Directors and any related parties thereto. The rules of Stara Planina Hold Plc on the

avoidance and disclosure of conflicts of interest are also applied by the non-public companies in the

group.

Chapter Two.

Audit and Internal Control

In accordance with the requirements of the current legislation and based on the criteria defined

thereof Stara Planina Holc Plc and the public companies in the group have established and operating

audit committees with members that meets the legal requirements and specific needs of the company.

The audit committee supervises the internal audit activities and monitors the overall relations with

the external auditor, including the nature of non-audit services provided by the latter. Its activities are

STARA PLANINA HOLD PLC – sphold.com

48.

aimed at increasing the efficiency of the financial reporting processes, the internal control and risk

management systems.

The Audit Committee prepares a written recommendation, based on which the corporate board of

the respective public company proposes to the General Meeting the election of an independent auditor

to verify and certify the annual financial statements. In the proposals for election of an external auditor,

the rotation principle is applied in accordance with the requirements of the relevant regulation.

The Audit Committee operates in accordance with its own rules of procedure and work schedule.

It supervises the internal audit activities and monitors the overall relationship with the external auditor,

including the nature of non-audit services provided by the company's auditor.

The Board of Directors of Stara Planina Hold Plc and the boards of the public companies of the

group, with the assistance of the audit committees, ensure compliance with the applicable law regarding

the independent financial audit. An internal control system has been built and functions in the companies,

which guarantees the effective functioning of the reporting and information disclosure systems with a view

to identifying the risks accompanying the activities of the companies and supporting their effective

management.

Chapter Three.

Shareholders' Rights Protection

The corporate Boards of Stara Planina Hold Plc and the public companies in the group ensure

the equal treatment of all shareholders, including minority and foreign shareholders and is responsible

for the protection of their rights. They facilitate the exercising of these rights within the limits permitted by

the applicable legislation and in accordance with the company's internal rules. The corporate Boards

have provided information to all shareholders about their rights, the financial results of the company and

corporate events through the information disclosure system and the company's website.

All shareholders of the holding company and the public companies in the group have access to

information about the rules under which General meetings are convened and held, including voting

procedures. The companies provide sufficient and timely information on the date and venue of the

General meeting, as well as detailed information on the issues to be discussed and decided on at the

meeting. The corporate Boards ensure the right of all shareholders to express their opinion, as well as to

ask questions at the general meeting.

The invitations for the general meetings of shareholders of Stara Planina Hold Plc and the public

companies in the group include the information required under the Commercial Act and the Public

Offering of Securities Act, as well as additional information on exercising the right to vote and the

possibility to add new items to the agenda under Art. 223a of the Commercial Act.

The invitations and the materials for the general meetings of the shareholders of Stara Planina

Hold Plc and the public companies in the group are announced through the X3 News media to the public,

the Financial Supervision Commission and the regulated securities market. Pursuant to the legal

requirements the companies announce a notice for holding a general meeting of the shareholders and

for dividend payment, upon a decision adopted by the GMS, also through the corporate actions

announcement system of the Central Depository. After presenting the invitation and the materials for the

general meeting of shareholders, they are available on the websites of the companies. The texts of the

written materials related to the agenda of the General Meeting are particular and clear and do not mislead

shareholders. All proposals regarding major corporate events are presented as separate items on the

agenda of the General Meeting, including the profit distribution proposal.

Shareholders with voting rights have the opportunity to exercise their voting rights at the General

Meeting of the company in person or through representatives/proxies. As part of the materials for the

General Meeting of Shareholders, the Board of Directors presents a sample power of attorney and Proxy

Voting Rules.

Rules for Organization and Holding Regular and Extraordinary Sessions of the General Meetings

of Shareholders of the holding company and the public companies in the group have been adopter in

order to guarantee equal treatment of all shareholders and the right of each shareholder to express

opinion on the items in the agenda of the meeting. The rules and procedures for holding a general meeting

of shareholders do not complicate or increase the cost of voting unnecessarily. These procedures

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49.

encourage the participation of shareholders in the general meeting but do not provide the possibility of

remote attendance by technical means, insofar as this would make holding of the meeting more

expensive. Proxy Voting Rules have been adopted. Following the adopted amendments to the Articles of

Association of the company in 2021, the right to vote at the General Meeting of Shareholders may be

exercised by correspondence based on a decision of the Board of Directors. All members of the corporate

Boards attend the general meetings of the shareholders. When necessary, they assist shareholders with

the inclusion of additional items in the agenda of the General Meeting and guarantee the right of the

shareholders to be informed on the adopted resolutions.

The Rules for Organizing and Holding General Meetings provide a mechanism for assisting the

shareholders who have exercised the right to include additional items and propose resolutions on issues

already included in the agenda of the meeting. The resolutions of the General Meeting are published on

the company’s website for a period of 10 years. The companies have not issued shares of a different

class. The companies do not have shareholders with control rights.

Increasing the trust of shareholders, investors and stakeholders has been one of the major

commitments of the corporate Board. In this regard, the company is continually strengthening its position

of a stable institution. In 2022, we continued endorsing and applying various ways to disclose current

information on the financial and economic standing of the company and important corporate events as

well as their promotion.

Chapter Four.

Disclosure of Financial and Non-financial Information

Stara Planina Hold Plc and the public companies in the group have approved policies and

information disclosure systems in accordance with legal requirements. They guarantee equal access to

information to all addressees (shareholders, stakeholders, investment community) and do not allow inside

information abuse. The information disclosure systems provide complete, timely, accurate and

understandable information that allows for objective and informed decisions and assessments. The

holding and the public companies in the group have internal rules for preparation of annual and interim

reports and information disclosure procedures. The holding annually publishes a non-financial statement

on a consolidated basis where detailed information on the activities and initiatives of all companies in the

holding's portfolio in the field of non-financial reporting is provided.

Stara Planina Hold Plc and the public companies in the group maintain their own websites

providing information about the company, the management bodies, shareholder structure and the

companies in the portfolio. The corporate governance section on the website of the holding company

includes internal regulatory documents, information on the shareholders' rights and their participation in

the general meeting, financial statements for the last 10 years, information for dividend payments as well

as personal data protection information.

Special sections include materials on forthcoming general meetings of the shareholders,

information on the resolutions adopted at the general meetings. Data on the initiatives of the companies,

auditors and media publishing news about the holding company and the public companies in the group

are publicly available.

The news section of the holding's website is particularly rich, providing information on the

company's periodic publications, upcoming events, as well as any important information related to the

holding's activities. The system for asking questions from shareholders and stakeholders and receiving

answers electronically proves its effectiveness. There is an order for shareholders to receive dividends

for previous years electronically. The practice of sending timely responses to letters and inquiries to

shareholders of the holding company and the public companies of the group, including those received by

e-mail, and storing them in a register duly maintained by the investor relations director, continues. The

practice has been introduced that regardless of the nature of the question asked, the answer should

contain a detailed explanation of the rights of the shareholders of the holding company.

The procedure for shares inheritance is described in detail. Each shareholder who addresses the

holding on a different occasion is being provided with comprehensive information about his rights and

receives information on various issues regarding the business activities and the current standing of the

company, including the historical prices of the shares of Stara Planina Hold Plc on the stock exchange.

STARA PLANINA HOLD PLC – sphold.com

50.

Stara Planina Hold Plc and the public companies in the group use the X3 News media that

provides equal and timely access to the relevant information to all users.

Chapter Five.

Stakeholders. Sustainable Development

The corporate governance of Stara Planina Hold Plc and the companies in the group ensure

effective interaction with the stakeholders, identified by the respective company as such. The

stakeholders’ policy complies with the legal requirements in accordance with the principles of

transparency, accountability and business ethics. Policies have been developed taking into account the

stakeholders’ interests that guarantee the balance between the development of the companies and the

environment where they operate. Effective relations are maintained with the stakeholders. The

companies periodically inform shareholders, stakeholders and the investment community about various

important issues.

The shares of Stara Planina Hold Plc and the public companies in the group are not admitted to

trading in a different jurisdiction.

Stara Planina Hold Plc and the companies in the group take active part in various forms of joint

collaboration with state institutions and non-government organizations engaged with corporate

governance in the country. Throughout the reporting year we, once again, recognize the benefit from our

co-operation and membership in the Bulgarian Industrial Capital Association. The Investor Relations

Directors of the holding and the public subsidiaries are members of the Association of Bulgarian Investor

Relations Directors. The holding has nominated a representative to the National Corporate Governance

Commission.

The control related to the information disclosure process on the part of Stara Planina Hold Plc and

the public companies in the group is multidirectional. No violations of the provisions and deadlines for

disclosure have been found so far. The financial reports are published on the websites immediately after

they are presented to the regulating authority and the public which provides a possibility for control by the

shareholders, investors and all stakeholders. Another form of control in terms of the information disclosure

process is exercised by the members of the Board of Directors over the Investor Relations Directors.

The overall policy of the Board of Directors of Stara Planina Hold Plc regarding the management

of the companies in the economic group is in accordance with the principles of socially justified and

environmentally friendly economic development. The corporate Boards of the companies in the group

annually develop and approve business plans of the enterprises which envisage the specific actions and

policies regarding the sustainable development of each company. In their investment programs, projects

aimed at the environmentally friendly development of the respective company are set and implemented

annually, as well as social projects aimed mainly at employees.

3. Assessment of the Implementation of the Code

Applying the National Corporate Governance Code by Stara Planina Hold Plc and the public

companies in the group is a process to continue throughout the current year as well.

The review of the Code in relation to the implementation of the underlying “comply or explain”

principle leads to the conclusion that Stara Planina Hold Plc and the public companies in the group comply

with the Code as a whole.

Implementation of the recommendations in the Code is responsibility of the corporate Boards. In

this sense, applying particular texts of the Code does not depend on the corporate Board, insofar as the

appointment of members of the Board of Directors is a right and prerogative of the shareholders.

In conclusion we can summarize that the activities of the corporate Board of Stara Planina Hold

Plc and the public companies in the group throughout 2023 have been in accordance with the National

Corporate Governance Code, and the activities of the non-public companies in the group are in

accordance with the main priorities and guidelines of the corporate program of Stara Planina Hold Plc.

4. Description of the Internal Control and Risk Management Systems

The internal control and risk management systems of the holding company and the companies in

the group ensure effective reporting and information disclosure, identification of the risks accompanying

the activity of the company and their effective management. Their purpose is to ensure compliance

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51.

between legal and regulatory requirements and the proper functioning of internal processes. These

systems are established in accordance with the specifics of the company - its activities, financial

characteristics, industry, needs and resources.

The Board of Directors has the primary responsibility for the internal control and risk management

systems. The Board performs both a management and guidance function as well as ongoing monitoring,

assessing whether the systems are suitable for the company in a changed environment, whether they

operate as well as expected and whether they are being adapted periodically to the changed conditions.

The management’s responsibility includes implementing an internal control system to prevent,

detect and correct errors and misstatements resulting from the actions of the accounting system. In this

regard, the management observes the following basic principles in its activity:

• adherence to a specific management and accounting policy, disclosed in the financial statements;

• performance of all operations in accordance with the laws and statutory regulations;

• recording all events and transactions in a timely manner, with the exact amount in the relevant

accounts and for the relevant reporting period, so as to allow the financial statements to be prepared in

accordance with the specified accounting framework;

• observing the principle of prudence in valuation of assets, liabilities, income and expenses;

detection and termination of fraud and errors;

• completeness and correctness of the accounting information;

• preparation of reliable financial information; adherence to international financial reporting

standards and compliance with the going concern principle.

The respective company's Board of Directors is responsible for the risk management which

includes identifying, assessing and controlling potential events or situations that may adversely affect the

achievement of the organization's objectives, and is designed to give reasonable assurance that the

company's business objectives will be achieved.

The corporate Boards of the holding company and the companies in the group prepare annual

activity reports as well as financial statements for every financial year that give an accurate and honest

estimate of the financial standing of the company at the end of the year, its operational financial results,

and the cash flows in compliance with the applicable accounting framework. In order to ensure an

independent and objective assessment of the financial statements the annual audit of the holding

company and the companies in the group is performed by an independent statutory auditor. All financial

statements are prepared in accordance with the International Accounting Standards. The current financial

and accounting activities of the companies is subject to periodic control and analysis by the management

body. There is an established practice for periodic discussion at meetings of the Board of Directors of the

current financial results of the companies' activities, including the implementation of the investment

programs.

5. Information Art. 10 of Directive 2004/25/EC

The companies in the group do not have significant direct or indirect shareholdings (including

indirect shareholdings through pyramid structures and cross-shareholding) within the meaning of Art. 85

of Directive 2001/34/EC.

There are no holders of securities with special control rights.

There are no restrictions on the voting right.

The rules that regulate the appointment and replacement of members of the Board of Directors

and the introduction of amendments to the memorandum of association are specified in the published

Articles of Association of the company and are not regulated by the corporate Board. According to the

Articles of Association of Stara Planina Hold Plc and the companies in the group, only the General

Meeting of Shareholders has the right to elect and dismiss members of the Board of Directors of the

company and decisions are taken by a majority of 2/3 of the shares represented. Only the General

Meeting of Shareholders has the right to make amendments and supplements to the Articles of

Association of the company. Decisions are taken by a majority of 2/3 of the shares represented.

Resolutions for buy-back procedures or issuance of shares are to be adopted by the shareholders

in accordance with the legislation in force.

STARA PLANINA HOLD PLC – sphold.com

52.

The powers of the Board of Directors are regulated in detail in the Articles of Association of the

companies in the group. The Board of Directors of the public company, without being expressly authorized

to do so by the General Meeting, may not carry out transactions specified under Art. 114 of the Public

Offering of Securities Act. Transactions of the public companies with the participation of interested parties,

other than those mentioned above, are subject to prior approval by the Board of Directors.

The Articles of Association of Stara Planina Hold Plc also provide for the powers of the Board of

Directors to increase the capital of the company by issuing shares.

6. Diversity policy

The management structure of Stara Planina Hold Plc is defined in the company's Articles of

Association. The Board of Directors consists of three individuals and one legal entity, which has

respectively appointed a physical person as its representative. The members of the Board of Directors

have the education, qualification, knowledge and professional experience necessary for the responsible

and competent performance of their functions and responsibilities. The company does not apply a

diversity policy regarding the management body in relation to aspects such as age and gender.

The election of the members of the board of directors is the right and prerogative of the

shareholders in accordance with the requirements of the law and the Articles of Association.

7. Information on the Board of Directors

Stara Planina Hold Plc has a one-tier management system. The Board of Directors is the

managing body, responsible for the planning and coordination of the company’s overall performance, as

laid down in the scope of its business activity, by means of undertaking all actions for organization,

management and control, provided by law and the Articles of Association. The organization of work, as

well as all duties, responsibilities and competences are regulated and specified by the Rules of Regulation

of the of the Board of Directors of Stara Planina Hold Plc. The Board of Directors takes its decisions at

meetings, held at least once every three months, in accordance with the statutory requirements of the

terma and procedures for their convocation and holding.

As of 31.12.2023 the Board of Directors of Stara Planina Hold Plc includes the following members:

• Evgeniy Vasilev Uzunov – Chairman of the Board of Directors

• Vasil Georgiev Velev – Member of the Board of Directors and Executive Director

• Finance Invest LTD, Plovdiv, UIC 115016144; represented in the Board of Directors by

Spas Borisov Videv

• Stefan Atanasov Nikolov – Member of the Board of Directors

During the reporting year no changes in the members of the Board of Directors have been made.

The composition of the Board of Directors elected by the General Meeting guarantees the

independence and objectiveness of the assessments and actions of its members in terms of the

company’s operation.

During the reporting year, members of the Board of Directors or parties related to them have not

entered into transactions with the company which are beyond its usual business activity or significantly

deviate from the market conditions.

The statutory requirement for at least one third of the members of the Board of Directors to be

independent persons is observed. There are no changes in the special criteria for election of Board

members. In its practice so far, the Board of Directors has not encountered a situation of direct or indirect

conflict of interest between a member of the management body and a shareholder. There has not been

found any instance of direct or indirect conflicts between the interest of a Board member and the

company’s interest.

Information about the companies in which the members of the Board of Directors own more than

25% of the capital and about their participation as procurators, managers or board members in other

companies or cooperatives is presented in the annual individual activity report as of 31.12.2023

(https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20231231-EN-SEP.xhtml).

STARA PLANINA HOLD PLC – sphold.com

53.

Х. Additional information on Appendix 2 of Ordinance No 2 of the FSC

1. Information given in value or quantitative terms about the main categories of commodities,

products and/or provided services, with indication of their share in the sales revenues of the issuer as a

whole and the changes that occurred during the reporting fiscal year

As a holding company, Stara Planina Hold Plc does not perform independent commercial

operations and has only financial income.

2. Information about the revenues allocated by separate categories of activities, domestic and

external markets as well as information about the sources for supply of materials required for the

manufacture of commodities or the provision of services with indication of the degree of dependence in

relation to any individual seller or buyer/user, where if the share of any of them exceeds 10 per cent of

the expenses or revenues from sales, information shall be provided about every person separately about

such person’s share in the sales or purchases and his relations with the company

As a holding company, Stara Planina Hold Plc does not perform independent commercial

operations and has only financial income.The revenues of the companies in the group are formed mainly

from sales of production as follows:

M+S hydraulic Plc – orbital and hydraulic motors, hydrostatic servo controls and accessories for

them axial-piston motors and pumps;

HES Plc – piston, plunger, telescopic and rail hydraulic cylinders, hydraulic pumps, precision

rotary parts, axial-piston motors and pumps;

Elhim Iskra Plc – starter accumulators, traction, semi-traction and stationary batteries and

elements therefor;

Bulgarian Rose Plc – natural aromatic products, sauces and compositions, perfumery cosmetics,

essences and aromas for the food industry;

Boryana Jsc – fashion ladies' and man's knitwear;

Fazan Jsc – socks and socks items;

3. Information on concluded material transactions

In 2023, no transactions of significant importance for the activities of Stara Planina Hold Plc were

concluded, with the exception of lending to companies in the Group. Information regarding loans granted

to subsidiaries and associated enterprises is presented under item 9 of this section of the report.

On 18.07.2023 Stara Planina Hold Plc sold its shareholding, representing 45.00 % of the capital of

Ustrem Jsc., UIC: 206417771, Svishtov at the price of BGN 560 000. Buyer of the shares is the company

"Raykov" Ltd. UIC: 104697074. The investment in Ustrem Jsc was made by Stara Planina Hold Plc in

2017, with the shareholding in the amount of 45.00 % of the company's capital worth BGN 319 077. After

excluding Ustrem Jsc from the consolidation, we expect the consolidated net sales revenues of the

holding to fall by about BGN 1.8 million on an annual basis.

4. Information about the transactions concluded between the company and related parties during

the reporting period, proposals for conclusion of such transactions as well as transactions which are

outside its usual activity or substantially deviate from the market conditions, to which the issuer or its

subsidiary is a party, indicating the amount of the transactions, the nature of relatedness and any

information necessary for an estimate of the influence over the issuer’s financial status

Transactions concluded between Stara Planina Hold Plc and related parties during the reporting

period are only the loans granted to subsidiaries and associates, specified under item 9 of this section of

the Report.

There are no transactions beyond the scope of issuer's usual business activity or transactions

which significantly deviate from the market conditions.

STARA PLANINA HOLD PLC – sphold.com

54.

5. Information on events and indicators of unusual nature for the issuer which have significant

influence on its activity, the realized incomes and accrued expenses; assessment of their impact on the

results throughout the current year

As a holding company Stara Planina Hold Plc does not perform independent commercial

operations and the company has focused its activities primarily on the management of the subsidiaries

and associates in the Group. Therefore, a significant effect on the financial standing of Stara Planina

Hold Plc has the direct dependence on the financial standing of the subsidiaries and associates whose

operations are primarily export-oriented - mainly to the countries of the European Union.

In 2023, the operations of the companies in the group were conditioned by serious challenges

caused by the ongoing military conflicts in Ukraine and the Middle East, as well as the obstruction of the

transport route through the Red Sea, and the resulting negative consequences on the national, European

and world economy. Along with difficulties and the possibility of disruption of supply chains, the conflicts

have already caused a significant increase in the prices of basic raw materials, appreciably lower growth

and even recession, mainly in European economies, strong inflationary pressures and a widespread

reduction in investment in most of the economic sectors.

On a national level, the business activity during the year was conditioned by the unceasing political

instability, which continues to be assessed as the main cause negatively affecting economic activity and

the business environment in Bulgaria.

There are no other events and indicators of an unusual nature that had a significant impact on the

issuer's activity.

6. Information on off-balance kept transactions – nature and business objective, indication of the

financial impact of the transactions on the operation, if the risk and benefits of these transactions are

substantial for the assessment of the issuer’s financial status

There are no such transactions.

7. Information about holdings of the issuer, about its main investments in the country and abroad

(in securities, financial instruments, intangible assets and real estate), as well as the investments in equity

securities outside its economic group and the sources/ways of financing

The investments of Stara Planina Hold Plc are in securities and shareholdings in Bulgarian

companies and were made with own funds.The company does not have any real estate property.

Information on the shareholdings of Stara Planina Hold Plc is provided under Section І of this Report -

Investment Portfolio.

8. Information about the concluded by the issuer, by its subsidiary, in their capacity of borrowers,

loan contracts with indication of the terms and conditions thereof, including the deadlines for repayment

as well as information on the provided guarantees and assuming of liabilities

This information is presented in the Annual activity report to the 2023 Separate Annual Financial

Statements (https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20231231-EN-SEP.xhtml).

9. Information on the loans granted by the issuer or its subsidiaries, provision of guarantees or

assuming of liabilities in total to one person or its subsidiary, including to related parties, indicating the

name or title and UIC of the person, the nature of relationship between the issuer or their subsidiaries

and the borrower, the amount of outstanding principal, interest rate, date of conclusion of the contract,

repayment period, amount of commitment, specific conditions other than those specified in this provision,

and the purpose for which they were granted, in case they are concluded as targets

This information is presented in the Annual activity report to the 2022 Separate Annual Financial

Statements (https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20231231-EN-SEP.xhtml).

10. Information on the use of the funds from a new issue of securities during the reporting period

During the reporting period has not been issued a new issue of securities.

STARA PLANINA HOLD PLC – sphold.com

55.

11. Analysis of the ratio between the achieved financial results, reflected in the financial statement

for the fiscal year, and previously published forecasts for these results

Stara Planina Hold Plc publishes monthly forecasts for the sales of the companies in the Group,

the gross profit and accordingly reports the real results compared to the forecasts. In the public notices

on the financial standing, as well as in the half-year and annual reports on the activity of the company,

information is also presented about the development trends and, if necessary, previously published

forecasts are updated on the basis of current data. The analysis shows that the published forecasts

correctly reflect the later achieved financial results, including in the company's annual financial report.

The public companies in the group of Stara Planina Hold Plc also publish monthly forecasts for

their sales and gross profit and accordingly report the real results compared to the forecasts made. The

achieved financial results reflected in the financial statements for 202s do not differ from the published

forecast results.

12. Analysis and assessment of the policy concerning the management of the financial resources

with indication of the possibilities for servicing of the liabilities, eventual jeopardizes and measures which

the issuer has undertaken or is to undertake with a view to their elimination

The policy of Stara Planina Hold is focused mainly on the management of the companies in its

portfolio. Free funds are used for financing the companies. Indicative of this policy are the loans granted

to companies from the holding's portfolio. The loans are specified under item 9 of this section of the

Report. An expression of this policy is also the deferre dividend payment to Stara Planina Hold Plc in its

capacity of a majority or major shareholder on the part of the respective companies.

Stara Planina Hold Plc services all of its liabilities in a timely manner hence there are no possible

threats necessitating measures for their elimination.

13. Assessment of the possibilities for realization of the investment intentions, indicating the

amount of the available funds and stating the possible changes in the structure of the financing of this

activity

The activity of Stara Planina Hold is focused mainly on the management of its current investments.

There are no close plans for new investments to be made by the company. The holding gives priority to

the development of the companies in the portfolio.

Information on the planned investments of the companies in the group for 2024 is presented under

section IV Planned development of the group of this Report.

The management of Stara Planina Hold Plc finds the possibilities for realization of these

investment intentions as realistic.

14. Information on changes in the major principles for management of the issuer and its economic

group occurred during the reporting period

Stara Planina Hold manages its investments by setting high but achievable goals in the terms of

quality, output and profitability. Particular attention is being paid to the aspect of environmental protection,

human resources development and corporate and social responsibility. During the reporting period there

are no changes in the basic principles of management of Stara Planina Hold Plc and the companies of

the economic group.

15. Information on the main characteristics of the internal control and risk management system

applied by issuer in the process of preparation of the financial statements

In order to ensure an independent and objective assessment of the financial statements the

annual audit of the holding is performed by an independent statutory auditor. All financial statements are

prepared in accordance with the International Accounting Standards. The current financial and

accounting activity of the company is subject to periodic control and analysis on the part of the

management body. The holding has an established practice to periodically discuss the current financial

results of the companies included in its strategic investment portfolio in order to ensure implementation

of their business programs and accurate analysis of the opportunities for future investment projects.

STARA PLANINA HOLD PLC – sphold.com

56.

Detailed information on the internal control and risk management systems is presented under

Section VIII, item 4 of this Report.

16. Information on the changes in the management and supervision bodies during the reporting

fiscal year

Stara Planina Hold Plc has a one-tier management system. The Board of Directors includes 4

persons. During the reporting financial year were not made changes in the members of the Board of

Directors and the representation of the holding company.

Detailed information on the Board of Directors is specified under Section VIII, item 6 of the Report.

17. Information about the owned by the members of the management and of the control bodies,

procurators and the senior management shares of the issuer, including the shares held by anyone of

them separately or as a percent from the shares of each class, as well as provided to them options on

securities of the issuer by the latter – type and amount of the securities over which the options have been

set up, price of exercising of the options, purchase price, if any, and term of the options

This information is presented in the Annual activity report to the 2023 Separate Annual Financial

Statements (https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20231231-EN-SEP.xhtml).

18. Information on the arrangements known to the company (including also after the closure of

the fiscal year), as a result of which in future periods may occur changes in the relative portion of shares

or debentures owned by shareholders or debenture holders

The company is not aware of such arrangements.

19. Information on pending court, administrative or arbitrary proceedings related to obligations or

receivables of the issuer amounting to at least 10 percent of its own capital

Stara Planina Hold Plc is not involved in any pending court, administrative or arbitrary proceedings

as well as in any judgments or requests for dissolution or declaration of liquidation.

20. Information on the Investor Relations Director, including telephone and mailing address

Investor Relations Director is Sofia Kirilova Argirova-Atanasova, tel. 02/9634161, 0879899469,

address for correspondence: 20, Frederic Joliot Curie Str. 9th floor, 1113 Sofia, Bulgaria,

investor@sphold.com.

Other information at the discretion of the company

The company considers that there is no other information that has not been publicly disclosed by

the company and which would be important for shareholders and investors in making an informed

investment decision.

Media

Stara Planina Hold Plc discloses statutory information to the public through information media X3

News.

The inside information for Stara Planina Hold Plc under Art. 7 of Regulation (EU) № 596/2014 of

the European Parliament and of the Council of 16 April 2014 concerning the circumstances occurred in

2023 is published on the company's website in the News section - https://www.sphold.com/novini, as well as in

the X3News media -

http://www.x3news.com/?page=Company&target=InsiderInformation&BULSTAT=121227995&MESSAGE_TYPE=2

through which the company publicly discloses inside information.

Executive Director: Vasil Velev

Digitally signed by Vasil

Georgiev Velev

Date: 2024.04.25 15:07:51

+03'00'

STARA PLANINA HOLD PLC – sphold.com

57.

DECLARATION

under Art. 100n, para. 4, item 4 of the POSA

The undersigned Vasil Georgiev Velev - Executive Director of Stara Planina Hold Plc certify that:

a) the annual consolidated financial statements of Stara Planina Hold Plc as of 31.12.2023,

prepared in accordance with the applicable accounting standards, accurately and fairly reflect the

information on assets and liabilities, financial standing and profit or loss of the issuer and the companies

included in the consolidation as a whole;

(b) the annual consolidated activity report provides a reliable overview of the development and

results of the activities and condition of the companies included in the consolidation as a whole, together

with a description of the main risks and uncertainties they face.

Declarer:

Vasil Velev

DECLARATION

under Art. 100n, para. 4, item 4 of the POSA

The undersigned Kremena Gancheva Dulgerova - Chief Accountant of Stara Planina Hold Plc

certify that:

a) the annual consolidated financial statements of Stara Planina Hold Plc as of 31.12.2023,

prepared in accordance with the applicable accounting standards, accurately and fairly reflect the

information on assets and liabilities, financial standing and profit or loss of the issuer and the companies

included in the consolidation as a whole;

b) the annual consolidated activity report provides a reliable overview of the development and

results of the activities and condition of the companies included in the consolidation as a whole, together

with a description of the main risks and uncertainties they face.

Declarer:

Kremena Dulgerova

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2024.04.25

15:02:23 +03'00'

Digitally signed by Vasil

Georgiev Velev

Date: 2024.04.25 15:08:10

+03'00'

Attn.

The shareholders

of STARA PLANINA HOLD PLC

REPORT ON THE CONSOLIDATED AUDIT OF THE FINANCIAL STATEMENTS

Opinion

We have audited the consolidated financial statements of Stara Planina Hold PLC (the Company),

including the statement of financial position as of 31.12.2023 and the profit and loss, and other

comprehensive income statements, the statements on changes in equity and the cash flows statements for the

year then ended and the explanatory notes to the financial statements including summary of the significant

accounting policies.

In our opinion, the enclosed consolidated financial statements present fairly, in all material aspects, the

financial position of the Company as of 31.12.2023 and its financial results from business operations and its

cash flows for the year then ended, in accordance with the International Financial Reporting Standards

(IFRS) adopted for use in the European Union (EU).

Basis for the opinion

We conducted our audit in accordance with the International Audit Standards (IAS). Our

responsibilities under these standards are further described in the section of our report "Responsibilities of

the auditor for the audit of the financial statements". We are independent from the Company in accordance

with the Code of Ethics for Professional Accountants of the International Ethic Standards for Accountants

Council (the Code of IESAC), together with the ethical requirements of the Independent Financial Audit Act

(IFAA), applicable to our audit of the financial statements in Bulgaria, while we have also fulfilled our other

ethical responsibilities in accordance with the IFAA and the Code of IESAC. We consider that the audit

evidence we obtained as sufficient and appropriate to provide a basis for our opinion.

Key audit issues

The key audit issues are those which as per our professional judgment were of the greatest significance

in the audit of the financial statements for the current period. These issues are reviewed as part of our audit

of the financial statements as a whole and the formation of our opinion thereof, as we do not provide a

separate opinion on these issues. Key issues are indicated in the "Responsibilities of the auditor for the audit

of the financial statements" section of this report.

Other information different from the financial statements and the auditor report thereon

The management is responsible for this other information. The other information includes an activity

report (incl.) and a corporate governance declaration and a Report on the implementation of the

Remuneration Policy, prepared by the management in accordance with Chapter seven of the Accountancy

Act but does not include the financial statements and our auditor report thereon which we received prior to

the date of our auditor report.

Our opinion on the financial statements does not include the other information and we do not express

any conclusion of certainty related thereto, unless explicitly specified in our report and to the extent stated.

With regard to our audit of the financial statements, our responsibility is to read this other information

and thus to consider whether this other information is materially inconsistent with the financial statements or

with our knowledge, gained during the audit, or otherwise it seems to contain substantially incorrect

reporting. If based on the work we have performed, we conclude that there is materially incorrect reporting

in this other information, we are required to report on this fact.

We have nothing to report with this regard.

Responsibility of the management and the persons engaged with general management in terms

of the consolidated financial statements

The management is responsible for the preparation and the fair presentation of these financial

statements in accordance with the IFRS applicable in the EU and for such an internal control system as the

management has considered being necessary to ensure the preparation of financial statements that are free

from material misstatements, whether due to fraud or error.

When preparing the consolidated financial statements, the management is responsible for the

assessment of the group ability to continue operating as a going concern, disclosing, when applicable, any

issues related to the going concern assumption and using the accounting basis on the grounds of the going

concern assumption unless the management intends to liquidate the Company or to cease its operations, or if

the management does not actually have any alternative but to do so.

The persons engaged with general management are responsible for supervising the financial reporting

processes of the Companies in the Group.

The management is responsible for the fact that the electronic format of the separate financial

statements of the Company for the year ending on December 31, 2023, comprised in the attached electronic

file „8945006HQ7VN30FUR531-20231231-EN-CON.zip“ has been prepared in all material aspects in

accordance with the requirements of the Commission Delegated Regulation (EU) 2019/815 of 17 December

2018 supplementing Directive 2004/109 / EC of the European Parliament and of the Council ("EEEF

Regulation").

Responsibilities of the auditor for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance on whether the consolidated financial statements as

a whole are free from material misstatements, whether due to fraud or error, and to issue an auditor report

that includes our audit opinion. Reasonable assurance is a high level of assurance but it does not guarantee

that an audit conducted in accordance with the IAS will always reveal materially incorrect reporting

whenever such reporting exists. Incorrect reporting may occur as a result of fraud or error and are considered

to be material if it could reasonably be expected that they, individually or in the aggregate, could influence

the economic decisions of users based on these financial statements.

As part of the audit in accordance with the IAS, we apply professional judgment and maintain

professional skepticism during the entire audit. We also:

- identify and assess risks from material misstatements in the consolidated financial statements,

whether due to fraud or error, develop and implement audit procedures in response to these risks and obtain

sufficient and appropriate audit evidence to provide a basis for our opinion. The risk for a given significant

misstatement, resulting from fraud, not to be revealed is higher than the risk of material misstatements

resulting from error due to the fact that fraud may involve secret collusions, falsification, deliberate

omissions, statements intended to mislead the auditor as well as disregard or circumvention of the internal

control.

- obtain understanding of the internal control related to the audit in order to develop audit procedures

that are appropriate under the particular circumstances but not for the purpose of expressing an opinion on

the effectiveness internal control of the Companies in the Group.

- evaluate the appropriateness of accounting policies used and the reasonableness of the accounting

estimates and related disclosures made by the management.

- reach a conclusion on the appropriateness of the accounting basis, used by the management, based on

the going concern assumption, and, based on the audit evidence obtained as to whether there is a material

uncertainty related to events or conditions that might provoke significant doubts on the Companies in the

Group ability to continue functioning as a going concern. If we reach the conclusion that there is a significant

uncertainty, we are required to draw attention in our audit report to the disclosures related to this uncertainty

in the financial statements or in the event that these disclosures are inadequate to modify our opinion. Our

conclusions are based on audit evidence obtained before the date of our auditor report. Future events or

conditions may, however, cause the Company to suspend its operations as a going concern.

- evaluate the overall performance, structure and contents of the financial statements, including the

disclosures and whether the financial statements present material transactions and events in a manner that

achieves fair presentation.

REPORT RELATED TO OTHER LEGAL AND REGULATORY REQUIREMENTS

Additional issues subject to reporting pursuant to the Accountancy Act and the Public Offering

of Securities Act

In addition to our responsibilities and reporting under the International Audit Standards described

above under the section "Information other than the financial statements and the auditor report thereon" in

terms of the activity report and the corporate governance declaration, we have also implemented procedures,

added to those required under the International Audit Standards as per the Guidelines of the professional

organization for all Certified Public Accountants and Registered Auditors in Bulgaria – Institute of Certified

Public Accountants (ICPA), issued on 29.11.2016 (approved by its Managing Board on 29.11.2016). These

procedures concern verifications on the availability as well as verifications on the form and contents of such

other information with the objective to assist us in forming our opinion on whether the other information

includes disclosures and reports provided for under Chapter Seven of the Accountancy Act and the Public

Offering of Securities Act (Art. 100n, para. 10 of the Public Offering of Securities Act in relation to Art.

100n, para. 8, item. 3 and 4 of the Public Offering of Securities Act) as well as art. 100n, para 13 in relation

to Art.116c, para.1 of the Public Offering of Securities Act, applicable in Bulgaria.

Opinion with regard to Art. 37, Para. 6 of the Accountancy Act

Based on the procedures performed, our opinion is that:

a) The information included in the activity report for the financial year for which the financial

statements are prepared is consistent with the financial statements.

b) The activity report is prepared in accordance with the requirements of Chapter seven of the

Accountancy Act and Art. 100n, Para. 7 of the Public Offering of Securities Act.

c) The corporate governance declaration for the financial year for which the financial statements are

prepared presents the information as required by Chapter seven of the Accountancy Act and Art. 100n, Para.

8 of the Public Offering of Securities Act.

d) The non-financial declaration for the financial year for which the consolidated financial statements

have been prepared is presented and prepared in accordance with the requirements of Chapter seven of the

Accountancy Act.

Opinion with regard to Art. 100n, Para. 10 and in relation to Art. 100n, Para 8, Items 3 and 4 of the

Public Offering of Securities Act

Based on the audit procedures performed and the acquired knowledge and understanding of the

company's activities and the environment it operates in, our opinion is that the description of the main

characteristics of the internal control and risk management systems of the company in relation to the

financial reporting process, which is part of the activity report (as part of the contents of the corporate

governance declaration) and the information under Article 10, Paragraph 1, Letters "c", "d", "f", "h" and "i"

of Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 regarding take-

over offers, does not contain materially incorrect reporting.

Additional reporting on the financial statements audit in connection with Art. 100n, Para. 4,

Item 3 of the Public Offering of Securities Act

Statement with regard to Art. 100n, Para. 4, Item 3, letter "b" of the Public Offering of Securities Act

Information on related parties’ transactions is disclosed under Enclosure to the financial statements.

Based on the audit procedures that we conducted in terms of the related parties’ transactions as part of our

audit of the financial statements as a whole, no facts, circumstances or other information has become known

to us, based on which to conclude that the related parties’ transactions are not disclosed in the accompanying

financial statements for the year ended on 31.12.2023 in all material aspects, in accordance with IAS 24

"Related Party Disclosures". The results from our audit procedures on related parties’ transactions have been

reviewed in the context of forming our opinion on the financial statements as a whole, but not to express a

separate opinion on related parties’ transactions.

Statement with regard to Art. 100n, Para. 4, Item 3, letter "c" of the Public Offering of Securities Act

Our responsibilities for the audit of the consolidated financial statements as a whole, described in the

section of our report "Responsibilities of the auditor for the audit of the consolited financial statements"

include an assessment on whether the financial statements present material transactions and events in a

manner that achieves fair presentation. Based on the audit procedures performed on essential transactions

underlying the financial statements for the year ended on 31.12.2023, no facts, circumstances or other

information has become known to us, based on which to conclude that there are cases of materially incorrect

reporting and disclosure in accordance with the requirements of IFRS adopted by the European Union. The

results from our audit procedures on the material to the financial statements transactions and events of the

Company are reviewed by us in the context of forming our opinion on the financial statements as a whole,

but not to express a separate opinion on these material transactions.

Statement with regard to Commission Delegated Regulation (EU) 2019/815 of 17 December 2018

supplementing Directive 2004/109/EC of the European Parliament and of the Council ("EEEF Regulation")

In addition to our responsibilities and our reporting under IAS, described above in the section

"Responsibilities of the auditor for the audit of the financial statements", we have followed the procedures in

accordance with the "Guidelines on the expression of the Audit Opinion with regard to the implementation

of the Single European Electronic Format (EEEF) for the financial statements of companies whose securities

are admitted to trading on a regulated market in the European Union (EU)" of the professional organization

of registered auditors in Bulgaria, the Institute of the Certified Public Accountants (ICPA)". These

procedures concern verification of the format and whether the readable part of this electronic format

corresponds to the audited separate financial statements and expressing an opinion regarding the compliance

of the electronic format of the separate financial statements of Stara Planina Hold Plc for the year ended on

31 December 2023 attached in the electronic file „8945006HQ7VN30FUR531-20231231-EN-CON.zip“ with

the requirements of Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing

Directive 2004/109 / EC of the European Parliament and of the Council by means of regulatory technical

standards to define the uniform electronic format for reporting ("EEEF Regulation"). Based on these

requirements, the electronic format of the separate financial statements included in the annual separate report

on the activities under Art. 100n, para. 4 of the Public Offering of Securities Act must be provided in

XHTML format.

Based on the performed procedures, our opinion is that the electronic format of the individual financial

statements of Stara Planina Hold AD for the year ending December 31, 2023, contained in the attached

electronic file „8945006HQ7VN30FUR531-20231231-EN-CON.zip“, has been prepared in all material aspects

in accordance with the requirements of the EEEF Regulation.

Reporting under Art. 10 of Regulation (EC) No 537/2014 in relation to the requirements of Art.

59 of the Independent Financial Audit Act

Pursuant to the requirements of the Independent Financial Audit Act in relation to Art. 10 of

Regulation (EC) No 537/2014, we further report the following information.

- Katya Zlatareva as a key auditor was appointed as a statutory auditor of the consolidated financial

statement for the year ended on 31.12.2023 of Stara Planina Hold Plc ("the Company") at the General

Meeting of Shareholders held on 8.06.2023 for a period of one year.

- The audit of the consolidated financial statements for the year ended on 31.12.2023 of the Company

represents a third full continuous commitment to a statutory audit of this enterprise, performed by us.

- We confirm that our audit opinion is consistent with the additional report provided to the Audit

Committee of the Company in accordance with the requirements of Art. 60 of the Independent Financial

Audit Act.

- We confirm that we have not provided the banned services except for the audit as specified under

Art. 64 of the Independent Financial Audit Act.

- We confirm that we have preserved our independence in relation to the Company when conducting

the audit.

Responsible auditor:

/Katya Zlatareva, registered auditor, diploma No. 0610/

Sofia, 52, Simeon Radev Str.

Date: 26.04.2024

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2024.04.26

07:00:35 +03'00'