BGN’000s

ASSETS Note

31.12.2024 31.12.2023

Property, plant and equipment 1 113 824 104 964

Intangible assets 2 2 326 2 503

Positive goodwill 16 489 16 489

Investments in other companies 3 47 822 41 403

Other financial assets 4 1 218 1 218

Trade and other receivables 5 11 130 13 541

Deferred tax assets

204 255

Total Non-current assets 193 013 180 373

Materials 6 50 319 57 898

Trade and other receivables 7 47 449 54 191

Financial assets - -

Cash and cash equivalents 8 27 761 35 940

Prepaid expenses 548 503

Total current assets 126 077 148 532

TOTAL ASSETS 319 090 328 905

Share capital 9 20 725 20 725

Reserves 9 52 241 48 918

Retained earnings/loss 9 63 724 66 634

Total equity 136 690 136 277

Non-controlling interest

127 219 130 997

Trade and other payables 10 6 450 12 745

Deferred tax liabilities 10 3 119 2 397

Deferred revenues 10 50 50

State financing 10 1 109 992

Total non-current liabilities 10 728 16 184

Trade and other payables 11 43 858 44 761

Deferred revenues 11 25 37

State financing 11 570 649

Total current liabilities 44 453 45 447

Total liabilities 55 181 61 631

TOTAL EQUITY AND LIABILITIES 319 090 328 905

Date: 17.04.2025

Prepared by:

Kremena Dulgerova

Katya Zlatareva

LIABILITIES

Current

Non-current

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Manager:

Vasil Velev

Registered Auditor, Diploma No 0610

STARA PLANINA HOLD PLC

Non-current assets

For the period ended 31 December 2024

Current assets

EQUITY

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2025.04.24

09:46:26 +03'00'

Vasil

Georgiev

Velev

Digitally signed

by Vasil Georgiev

Velev

Date: 2025.04.24

09:59:07 +03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2025.04.25

08:10:38 +03'00'

BGN’000s

Note

31.12.2024

31.12.2023

Net sales revenues 12 266 214 378 966

State finansing revenues 982 910

Cost of materials

(127 765) (181 510)

Cost of hired services

(23 831) (28 555)

Depreciation

(17 660) (16 965)

Salaries

(63 300) (78 419)

Social securities

(13 224) (15 800)

Changes in finished goods and work in progress

(481) (4 756)

Cost of disposals

(5 106) (3 185)

Other expenses

(3 336) (3 767)

Operational profit

12 493 46 919

Financial income 13

880 1 155

Financial expenses 14

(610) (1 131)

Profit before tax

12 763 46 943

Tax expenses, net

2 441 6 478

Net profit for the period

10 322 40 465

Profit attributable to:

Non-controlling interest

6 857 26 552

Equity holders of the parent company

3 465 13 913

Other comprehensive income

Investments in equity instruments, reported at FVOCI, net 6 556 4 578

Other comprehensive income-revaluation of a defined benefit

obligation

(21) (12)

Other comprehensive income, net of taxes 6 535 4 566

Total comprehensive income 16 857 45 031

Total comprehensive income attributable to:

Non-controlling interest 9 183 28 212

Equity holders of the parent company 7 674 16 819

Earnings per share

0,17 0,67

Date: 17.04.2025

Prepared by:

Kremena Dulgerova

Katya Zlatareva

For the period ended 31 December 2024

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: 2025.04.24

09:47:09 +03'00'

Vasil Georgiev

Velev

Digitally signed by

Vasil Georgiev Velev

Date: 2025.04.24

10:00:00 +03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2025.04.25

08:11:31 +03'00'

BGN’000s

CASH FLOWS FROM OPERATING ACTIVITIES

31.12.2024 31.12.2023

Cash receipts from customers

293 268 407 425

Cash paid to suppliers

(177 490) (249 896)

Cash paid to employees and social security institutions

(74 048) (92 088)

Taxes paid/received

3 015 (595)

Interest, fees and commissions paid/received

(119) (153)

Other payments/proceeds for operating activities

(7 416) (7 214)

Net cash flow from operating activities

37 210 57 479

CASH FLOWS FROM INVESTING ACTIVITIES

Purchase of non-current assets

(22 199) (30 032)

Proceeds from sales of non-current assets

17 22

Payments for loans granted

(128) (922)

Proceeds from loans granted and lease contracts

892 358

Interests from loans received

300 270

Revenues from sale of investments

93 560

Dividends received from investment

37 38

Other payments/proceeds for investing activities

(6 041) (15 498)

Net cash flow from investing activities

(27 029) (45 204)

CASH FLOWS FROM FINANCIAL ACTIVITIES

Proceeds from loans received

28 639 12 959

Payments for loans received

(29 356) (15 610)

Payments under to lease contracts

(84) (116)

Interest, fees and commissions paid

(144) (177)

Dividends paid

(17 386) (18 300)

Other payments/proceeds for financial activity

(29) -

Net cash flow from financial activities

(18 360) (21 244)

Net increase/decrease in cash and cash equivalents

(8 179) (8 969)

Cash and cash equivalents at a beginning of the period

35 940 44 909

Cash and cash equivalents at the end of the period

27 761 35 940

Date: 17.04.2025

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 2024

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena

Gantcheva

Dulgerova

Date: 2025.04.24

09:47:30 +03'00'

Vasil

Georgiev

Velev

Digitally signed by

Vasil Georgiev Velev

Date: 2025.04.24

10:00:28 +03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2025.04.25

08:12:03 +03'00'

BGN’000s

Capital

Premium

reserve

Revaluation

reserve

Other

reserves

Retained

earnings

Total

Non-

controlling

interest

Balance 01 January 2023 20 725 1 178 26 603 18057 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

Balance 01 January 2024 20 725 1 178 28 880 18 860 66 634 136 277 130 997

Net result for the period - - - -

3 465 3 465 6 857

Profit sharing for dividents - - - - (6 545) (6 545) (12 434)

Other profit sharing - - - - - - -

Revaluation of financial assets - - 3 333 - - 3 333 2 337

Other changes in equity - - (15) 5 170 160 (538)

Balance 31 December 2024 20 725 1 178 32 198 18 865 63 724 136 690 127 219

Date: 17.04.2025

Prepared by:

Kremena Dulgerova Vasil Velev

Registered Auditor, Diploma No 0610

Manager:

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 31 December 2024

STARA PLANINA HOLD PLC

Katya Zlatareva

Kremena

Gantchev

Dulgerova

Digitally signed

by Kremena

Gantcheva

Dulgerova

Date: 2025.04.24

09:48:17 +03'00'

Vasil

Georgiev

Velev

Digitally signed

by Vasil

Georgiev Velev

Date: 2025.04.24

10:00:52 +03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed

by KATYA

RAYKOVA

ZLATAREVA

Date: 2025.04.25

08:12:32 +03'00'

To the Annual Consolidated Financial

Statements as of 31.12.2024

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

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 31.12.2024:

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.

STARA PLANINA HOLD PLC – www.sphold.com

As "Non-controlling interest" in the consolidated financial statement for the financial year 2024 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 2024 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:

As of 31.12.2024, 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

99.40%

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%

Statement of Compliance

The consolidated financial statements of Stara Planina Hold AD have been prepared in accordance with IFRS

accounting standards as adopted by the EU. The IFRS accounting framework as adopted by the EU is

essentially the designated national accounting basis International Accounting Standards (IAS) as adopted by

the EU, regulated by the Accounting Act and defined in item 8 of its Supplementary Provisions.

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 24.04.2025.

New and amended International Financial Reporting Standards

The Group has taken into account the amendments to IAS/IFRS, adopted for application in the EU, which

come into force from 1.01.2024 and which companies must reflect in their financial statements for 2024,

including:

IAS 1 Presentation of Financial Statements - Classification of Liabilities as Current and Non-Current.

IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments:

Disclosures: Supplier Financing Arrangements.

IFRS 16 Leases: Lease Obligations under Sale and Leasebacks.

The Group has not adopted any standards, interpretations or amendments that have been published but have

not yet entered into force.

Functional currency and presentation currency

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

data for 2024 and 2023 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 and Boryana Jsc,.

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.

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.

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 no impairment of cash on hand is necessary, as they are held in financial institutions

and have 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.

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 01.07.2024 granting Fazan Jsc the amount of BGN 100 000 with maturity until

01.07.2027 at 4 % 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 in the amount of BGN 330 thousand.

2. Loan in the amount of BGN 483 thousand with a maturity until of 01.03.2027 at 2.5 % annual interest,

unpaid principal as of in the amount of BGN 77 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 in the amount of BGN 550 thousand.

Loan agreement dated 28.10.2024 with Elhim-Iskra Plc - in the amount of BGN 2 600 000 for a period until

28.10.2029 at an annual interest rate 2.5%, unpaid principal as of in the amount of BGN 2 600 thousand.

Loan agreement dated 01.07.2024 with HES Plc - in the amount of BGN 3 300 000 for a period until 01.07.2025

at an annual interest rate 4%, unpaid principal as of in the amount of BGN 3 300 thousand.

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

annual interest rate 3.5%. Fully repaid at the end of the reporting period.

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 in the amount of BGN 800

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.

No events occurred after the reporting date until the date on which the consolidated financial statement was

approved for issue, which would require additional corrections and/or disclosures in the financial statement of

Stara Planina Hold Plc for the year ending on December 31, 2024.

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 4% 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

constructions

Machinery

and

equipment

Facilities

Vehicles

Office

fittings

Expenses

for

acquisition

and

liquidation of

assets in a

business

way

Others

Total

Book value as

of 31.01.2024

8319

67612

222334

16112

5032

3752

6962

1119

331242

Received

during the

period

1476

3076

13345

235

426

22553

41218

Out of use

262

2130

14717

17322

Depreciation

accrued in the

beginning of

the period

30603

179900

7894

4019

3081

780

226277

Depreciation

accrued

during the

period

2369

13652

628

351

166

17226

Depreciation

written off

during the

period

256

1765

2189

Balance as of

31.12.2024

9774

37710

41762

7799

1089

552

14798

340

113824

Note 2

Intangible assets

Intangible

assets

Rights of ownership

Software

R&D

products

Others

Total

Book value as of

31.01.2024

603

4602

1240

1878

8323

Received during

the period

200

257

Out of use

158

600

796

Depreciation

accrued in the

beginning of the

period

489

4335

569

427

5820

Depreciation

accrued during

the period

252

124

434

Depreciation

written off during

the period

158

600

796

Balance as of

31.12.2024

118

215

640

1353

2326

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

26776

12,97

26776

ZAD Asset Insurance JSC, Sofia

11460

40,00

11460

Hydraulic elements and systems Plc,

Yambol

8125

8,28

8125

Elhim - Iskra Plc, Pazardzhik

160

0,80

160

Leasing Company JSC, Sofia

805

5,00

805

SPH Trans Ltd., Sofia

Medical Center “Center for Prevention of

the health” Ltd, Sofia

20,00

Progres JSC, Stara Zagora

335

4,00

335

VR Bank Dreieich-Offenbach AG

Elhim New Energy Technologies Ltd.

100

TOTAL

47822

8285

39537

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

31.12.2024

31.12.2023

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

31.12.2024

31.12.2023

Trade loans

9250

Others

1880

4291

Total

11130

13541

Note 6

Inventory

31.12.2024

31.12.2023

Materials

23876

31579

Finished goods

12019

8395

Goods for resale

1053

3929

Work in progress

13371

13995

Others

Total

50319

57898

Note 7

Current trade and other receivables

31.12.2024

31.12.2023

Trade accounts receivables

41404

49271

Advance payments

661

1769

Trade loans

500

1000

Court receivables

Recoverable taxes

4380

1640

Others

490

500

Total

47449

54191

Note 8

Cash and cash equivalents

31.12.2024

31.12.2023

Cash

121

132

Cash in banks

25794

33895

Restricted cash

1846

1913

Cash equivalents

Total

27761

35940

Note 9

Share capital and Reserves

31.12.2024

31.12.2023

Share capital

21000

Treasury shares

-275

Premium reserves when issuing securities

1178

Reserve from subsequent valuations of assets and

liabilities

32198

28880

General reserves

13279

Special reserves

Other reserves

5586

5581

Undistributed profit

60687

53149

Loss not covered

-428

Current year profit (loss)

3465

13913

Total

136690

136277

Note 10

Long-term trade and other liabilities

31.12.2024

31.12.2023

Due to related parties

288

437

Due to banks under loans received

656

871

Lease obligations

Due to staff upon leave

3042

2987

Liabilities on deferred taxes

3119

2397

State financing

1109

992

Provisions

Others

2426

8367

Total

10728

16184

Note 11

Current trade and other liabilities

31.12.2024

31.12.2023

Due for dividends

7454

7092

Due to banks under loans received

3604

3603

Trade loans

205

252

Trade accounts payables

18377

17901

Advance payments

1113

2132

Salaries payable

8502

9224

Social security payable

1825

1993

Tax liabilities

1274

1466

Others

1393

1025

Provisions

111

Deferred revenues

State financing

570

649

Total

44453

45447

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

31.12.2024

31.12.2023

Finished goods

253582

351004

Goods for sale

4148

17888

Services

1641

2882

Others

6843

7192

Total

266214

378966

Note 13

Other financial income

31.12.2024

31.12.2023

Interest revenue

270

241

Dividend income

353

539

Gains from operations with financial assets and instruments

241

Gains from foreign exchange operations

236

134

Other financial income

Total

880

1155

Note 14

Other financial expenses

31.12.2024

31.12.2023

Interest expenses

147

458

Losses from foreign exchange operations

Other financial expenses

205

319

Total

251

354

Chief Accountant: Kremena Dulgerova Executive Director: Vasil Velev

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2025.04.24

09:48:58 +03'00'

Vasil

Georgiev

Velev

Digitally signed by

Vasil Georgiev Velev

Date: 2025.04.24

10:01:30 +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 Information ................................................................................................. 16 
Information on main intangible resources .................................................................................................. 32 
III. Information Disclosure on the Key Performance Indicators (KPIs) under Art. 8 of the Taxonomy 
Regulation as of 31 December 2024 on a Consolidated Basis ................................................................. 32 
IV. Important developments occurred since the beginning of the year ................................................... 41 
V. Expected development of the group ....................................................................................................... 41 
VI. Research and Development Activity ...................................................................................................... 43 
VII. Company shares ..................................................................................................................................... 45 
1.  Own shares. Buy-back ................................................................................................................................. 45 
2. Changes in the share price of the companies ............................................................................................. 45 
3. Dividend policy .................................................................................................................................................... 47 
VІIІ. Financial instruments used by the enterprise .................................................................................... 48 
1. Accounting policy ............................................................................................................................................... 48 
2.  Financial instruments ................................................................................................................................... 49 
3.  Liquidity ........................................................................................................................................................... 49 
4. Exposure of the enterprise to price, credit, liquidity and cash flow risk .............................................. 49 
ІX. Corporate Governance Declaration ........................................................................................................ 49 
1. National Corporate Governance Code ........................................................................................................... 49 
2. Implementation of the National Corporate Governance Code ................................................................. 50 
5. Information Art. 10 of Directive 2004/25/EC .................................................................................................. 56 
6. Diversity policy .................................................................................................................................................... 57 
7. Information on the Board of Directors ........................................................................................................... 57 
Х. Additional information on Appendix 2 of Ordinance No 2 of the FSC ................................................. 58 
Media ........................................................................................................................................................................... 61 
 
 
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)

Y2022

Y2023

Y2024

Income from main business activity

375 256

378 966

266 214

Net profit from business activity

17 538

13 913

3 465

Amount of assets

303 706

328 905

319 090

Shareholders' Equity

127 676

136 277

136 690

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:

63.0

15.0

6.5

15.5

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

99.40 %

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)

Y2022

Y2023

Y2024

Sales of finished goods

357 694

351 004

253 582

Sales of trading goods and services

9 003

20 770

5 789

Other incomes

8 559

7 192

6 843

Grants

8 504

910

982

Financial income

1 404

1 155

880

Total Income

385 164

381 031

268 076

The consolidated sales of the companies in the group as of 31.12.2024 amount to BGN 266.21

million thus reporting a 29.75 % decrease compared to the sales in 2023 and a decrease by 29.06 %

compared to the reported sales in 2022.

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 2025 and given the updated forecasts of our

customers and partners from Europe and the world in a more optimistic direction, despite the escalating

geopolitical, military and trade conflicts and the continuing negative development of the European and

world economy, including the further lowered expectations of Germany's leading economic institutes,

quoted by Bloomberg, for growth in 2025 by only 0.1 % of the German economy, which is a major trading

partner of the companies in the group pf Stara Planina Hold Plc, we slightly adjust our forecast

expectations for consolidated sales in the first quarter of 2024 downwards, expecting them to reach BGN

68 million but we are increasing our forecast for the following quarters. With the result for the first quarter,

we would report a decrease by about 9.5% compared to consolidated sales in the same period of 2023

and a decrease by over 36 % compared to the record high sales levels achieved in the first quarter of

2022. At this stage, we expect consolidated revenues for the first half of 2025 to report a slight increase

by about 1 % compared to the same period of 2024 and we anticipate consolidated sales revenues of

the group for 2025 to be worth about BGN 290 million.

The net consolidated profit as of 31.12.2024 amounts to BGN 3 465 thousand and reports a

decrease by 75.10 % compared to 2023 and by 80.24 % compared to 2022.

Consolidated Net Profit (BGN’000s)

224.4

200.0

278.4

375.3

379.0

266.2

290.0

2019 2020 2021 2022 2023 2024 2025*

6747

8096

13054

17538

13913

3465

2019 2020 2021 2022 2023 2024

The 2024 consolidated EBITDA amounts to BGN 30.57 million and reports a decrease by 52.51%

compared to 2023 and by 54.86 % compared to 2022.

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

31.12.2022

31.12.2023

31.12.2024

0.137

0.102

0.025

0.058

0.042

0.011

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 2024, compared to 2023, the return on equity ratio reports a decrease due to the decrease in

the net consolidated profit by 75.10 % compared to the reported insignificant increase in the value of

equity on a consolidated basis by 0.30 %.

The return on assets ratio shows the efficiency of using the total assets and in 2024 also reported

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

75.10 % compared to the decrease in the amount of consolidated assets by 2.98 %.

Efficiency Indicator

31.12.2022

31.12.2023

31.12.2024

1.154

1.141

1.050

0.867

0.877

0.952

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 2024 shows that

BGN 1.141 revenues were received per BGN 1.05 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

37.09

34.11

38.13

48.60

67.73

64.37

30.57

2018 2019 2020 2021 2022 2023 2024

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

the Holding.

Liquidity Indicator

31.12.2022

31.12.2023

31.12.2024

3.026

3. 268

2.836

0.850

0.791

0.625

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 2024, the

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

is due to a decrease in the value of consolidated current assets by 15.12 % compared to a decrease in

the value of current liabilities by 2.19 %.

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

with its available cash. In 2024, 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 2.19 % compared

to the cash decrease by 22.76 %.

In 2024 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

31.12.2022

31.12.2023

31.12.2024

2.130

2.211

2.477

0.469

0.452

0.404

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 related to escalating trade tensions

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

globally.

According to the ECB’s December 2024 Economic Bulletin, experts now expect economic recovery

to be slower than they expected in the September 2024 forecast for the euro area. Although growth

accelerated in the third quarter of the year, ECB survey indicators indicate a slowdown in the fourth

quarter. Overall, according to the December 2024 projections, annual average real GDP growth is

projected to be 0.7% in 2024, 1.1% in 2025 and 1.4% in 2026, before moderating to 1.3% in 2027.

Compared with the September 2024 projections, the outlook for GDP growth has been revised down,

mainly owing to revisions to data on investment in the first half of 2024, expectations of weaker export

growth in 2025, and a small downward revision to the projected expansion of domestic demand in 2026.

The projected recovery is mainly based on rising real incomes, which is expected to allow households to

increase their consumption and businesses to increase investment. Surveys show that industrial

production continues to contract and growth in the services sector is slowing. Businesses are holding

back on investment amid weak demand and a very uncertain outlook. Exports are also weak, and some

European industries are struggling to maintain their competitiveness.

The euro area economy is set to continue its gradual recovery over the coming years, amid

significant geopolitical and policy uncertainty. In particular, rising real wages and employment, in a context

of robust labor markets, are expected to support a recovery in which consumption remains one of the

main drivers. Although surrounded by high uncertainty, fiscal policies are assumed to be on a

consolidation path overall. Nevertheless, funds from the Next Generation EU program should support

growth until the expiry of the program in 2027. Under the baseline assumption that the trade policies of

Europe’s key trading partners remain unchanged, foreign demand is expected to strengthen and support

euro area exports.

ECB expects that fiscal and structural policies will make the economy more productive, competitive

and resilient. It is crucial to swiftly follow up, with concrete and ambitious structural policies, on Mario

Draghi’s proposals for enhancing European competitiveness and Enrico Letta’s proposals for

empowering the Single Market.

Expectations for continued negative economic development are also expressed in the PMI index

for manufacturers, as data for December 2024 show that for the Euro area it is at 45.1 points, which is

close to the lowest level since the beginning of the year. These data report the sharpest decline in

production activity in the last three months, continuing the two-year series of contraction of the industrial

sector in Europe. New orders continued to decline at a steady pace in the last quarter, causing

manufacturers to significantly reduce production compared to the same period of the previous year. Data

for the leading European economies Germany and France continue to be of great concern, where the

PMI values for manufacturers decreased to 42.5 points for Germany and to 41.9 points for France - the

lowest values in Europe. PMI for manufacturers in the USA for December 2024 is at 49.4 points and also

down from the previous month, indicating a decline in new orders related to the reluctance of customers

to commit to new projects in view of the policy changes of the presidential administration of Donald Trump.

A decrease from the previous month was also recorded in India to a value of 56.4, remaining at a

significantly higher level than in Europe and the USA. In China, the PMI index for manufacturers for

December 2024 fell to a value of 50.5 points, where the decline in business confidence reached a three-

month low due to concerns about the growth and trade prospects, especially due to the threat of US

tariffs.

At the same time, according to NSI data, in 2024, were exported a total of goods worth BGN

84,047.2 million from Bulgaria which is 3.3 % less than in 2023. In December 2024, the total export of

goods amounted to BGN 6 209.3 million and decreased by 3.9 % compared to the same month of the

previous year. In 2024 were imported a total of goods worth BGN 97 389.1 million into the country (CIF

prices), or 0.3 % more than in 2023. In December 2024, the total import of goods increased by 1.2 %

compared to the same month of the previous year and amounted to BGN 7 883.8 million. This negative

trend in our foreign trade continues reflecting stagnation of the world's leading economies and means

problems for the growth of the Bulgarian economy this year.

Pursuant to data of the National Statistical Institute, in December 2024, the total business climate

indicator increases by 1.7 percentage points compared to the previous month (from 17.0 % to 18.7%).

An increase in the indicator is observed in industry, retail trade and the services sector. A decrease was

registered only in construction. The composite indicator "business climate in industry" increased by 1.9

points (from 15.8% to 17.7%) as a result of the more favorable expectations of industrial entrepreneurs

for the business condition of enterprises over the next six months. According to them, in the last month

there has been a certain increase in the provision of production with orders, which, however, is not

accompanied by increased expectations for production activity in the next three months. The uncertain

economic environment and the shortage of labor continue to be the main obstacles to business

development, with an intensification of the negative impact of the first factor being reported in December.

Managers' forecasts regarding sales prices in industry in the next three months are in upward direction.

In addition, according to EUROSTAT data on an annual basis, in December 2024, compared to

the same month in 2023, industrial production in the EU decreased by 1.7 percent, and in the euro area

it weakened by 2 percent. Industrial production in Bulgaria in December decreased by 1.6% compared

to the previous month, and compared to December 2023, a decrease by 3.9 % in the calendar-adjusted

index was recorded after an increase by 2.4 % in November. On an annual basis, a decline in industrial

production, calculated from calendar-adjusted data of the National Statistical Insitute, was recorded in

the production and distribution of electricity, heat and gas - by 28.8 %, as well as in the manufacturing

industry - by 1.2 %, while an increase was observed in the extractive industry - by 8.0 %. This negative

trend continues with the reported index decline by 2.0 % in January 2025 compared to the previous

month.

According to NSI data, in December 2024 the total producer price index, which measures the

average change in the prices of industrial products produced and sold by Bulgarian enterprises, reported

an increase by 3.6 % compared to the previous month and was 5.3% above the level of December 2023.

In the sectors where the main companies in the group of Stara Planina Hold Plc operate for December

2024 Compared to December 2023, an increase by 3.3 % was reported in the production of metal

products and a growth by 1.3 % - in the production of machinery.

According to the European Commission, in December 2024 the Economic Sentiment Indicator

(ESI) decreased in both the EU (-1.7 points to 94.5) and the euro area (-1.9 points to 93.7), reporting a

value below its long-term average of 100. The decline in ESI is due to lower confidence in industry,

construction and among consumers, partly offset by an increase in confidence in services. For the largest

economies in the EU, ESI decreased significantly: in France (-3.0), Germany (-2.5) and Italy (-1.1).

According to EUROFER (European Steel Association), although EU industry proved to be quite

resilient in 2023 and 2024, the outlook for the first quarter of 2025 remains dominated by a worsening

combination of energy price uncertainty, weak manufacturing activity, serious geopolitical tensions and

economic challenges, including possible future trade tensions. Despite the recent easing of monetary

policy, its effects on the economic cycle will not be visible in the short term. After a reported decline in

industrial production of 1.5% in 2023 due to continuing negative factors, in particular high production

costs, a further decline of 2% is expected in 2024, while growth of 0.8% and 2.5% is expected in 2025

and 2026, respectively. The mechanical engineering sector is expected to grow by 1% in 2023, but a

more serious decline is expected in 2024 than the initial forecast of 4.7%. A weak recovery of 0.3% is

expected in 2025 and an improvement in growth in 2026 of 2.5%.

EUROFER Forecast for the Mechanical Engineering and Metal Goods Sectors

(Е-28, % change YoY)

-4.40

-1.50

0.10

0.90

1.70

0.30

2.50

-3.90

-1.20

-0.90

0.10

1.70

-0.10

2.50

Y2024 1Q25 2Q25 3Q25 4Q25 Y2025 Y2026

Mechanical engineering Metal goods

In its most recent World Economic Outlook, released in January 2025, the IMF maintained its global

growth forecast of 3.2 percent in 2024 and raised its 2025 growth forecast by 0.1 percentage points to

3.3 percent, with the same level expected in 2026. The IMF noted that the projected growth for 2025 and

2026 is below the historical average of 3.7 percent. For the United States, the IMF raised its forecast for

the world's largest economy by 0.5 percentage points, predicting growth of 2.7 percent in 2025 and

slowing to 2.1 percent in 2026. For the eurozone, the IMF expects the currency union's economy to grow

by 1 percent in 2025 and 1.4 percent in 2026. Regarding the largest economy in the eurozone, the IMF

lowered its October 2024 forecast by 0.5 percentage points, expecting the German economy to grow by

0.3 percent in 2025 and 1.1 percent in 2026. The IMF raised its forecast for China's economic growth by

0.1 percentage points, expecting the world's second-largest economy to grow by 4.6 percent in 2025 and

4.5 percent in 2026. The international organization points out that "uncertainty related to the

implementation of economic policies" is increasing, especially in the trade and fiscal spheres, warning

that the strengthening of protectionist policies, for example in the form of a new wave of tariffs, could

exacerbate trade tensions, reduce investment, reduce market efficiency, distort trade flows and disrupt

supply chains again. Growth could suffer in both the short and medium term, but to varying degrees

across economies.

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 12 December 2024, the Governing Council of the ECB decided to cut the three

main interest rates by 25 basis points. The interest rates on the deposit facility, the main refinancing

operations and the marginal lending facility were reduced to 3.00 %, 3.15 % and 3.40 % respectively,

with effect from 18 December 2024. The decision to lower the deposit facility rate, through which the

Governing Council sets the monetary policy stance, is based on the updated assessment of the inflation

outlook, the dynamics of underlying inflation and the smooth functioning of the monetary policy

transmission mechanism. The Governing Council is committed to ensuring a sustainable stabilization of

inflation around its medium-term aim of 2 %.

According to BNB data, the key interest rate decreased from 3.79 percentage points as of

01.01.2024 to 3.04 percentage points as of 01.12.2024.

Source: BNB

At its meeting on 06.03.2025, given the assessment that the disinflation process is underway and

inflation continues to develop in line with expectations, the Governing Council of the ECB has, as

expected, again lowered the three main interest rates by 25 basis points. This will reduce the interest

rates on the deposit facility, the main refinancing operations and the marginal lending facility to 2.50 %,

2.65 % and 2.9 0%, respectively, as of 12 March 2025. This is the sixth consecutive interest rate cut by

the ECB since June last year and was widely expected by analysts who predicted fiscal easing.

The change in interest rates is reflected depending on the share of bank and commercial loans

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

previous 5 years its value was only negative. Since the beginning of 2023, a strong upward trend has

3.79 3.79

3.80

3.79

3.78 3.78

3.63

3.53

3.54

3.43

3.22

3.04

01.01.2024 01.02.2024 01.03.2024 01.04.2024 01.05.2024 01.06.2024 01.07.2024 01.08.2024 01.09.2024 01.10.2024 01.11.2024 01.12.2024

BNB Base Interest Rates

01.01.2024 г. - 01.12.2024 г.

10.

been reported, and at the end of September the highest value since 2009 was reached. In 2024, the

movement is entirely in a downward direction, reaching a value of 2.454% at the end of the year.

12-month EURIBOR (01.01.2024 - 31.12.2024)

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 2024 ECB’s staff macroeconomic forecasts for the euro area expect headline

inflation to average 2.4 % in 2024, 2.1 % in 2025, 1.9 % in 2026 and 2.1 % in 2027, when the extended

EU emissions trading scheme will come into effect. As for inflation excluding the energy and food

components, experts predict an average rate of 2.9 % in 2024, 2.3 % in 2025 and 1.9 % in 2026 and

2027. Base effects in the energy component are expected to be the main factor behind the temporary

increase in inflation at the beginning of the forecast period. Based on the assumptions of declining oil and

gas prices, energy inflation is likely to be negative until the second half of 2025, after which it is likely to

remain low, except for a slight increase in 2027. External price pressures are expected to remain subdued

overall. Compared with the September 2024 macroeconomic projections, the forecast for headline HICP

inflation has been revised slightly downwards for 2024 and 2025, mainly due to the unexpected declines

in oil and electricity prices and expectations of lower oil and electricity prices.

According to information from the ECB's economic forecast of 06.03.2025, inflation in the euro area

continues to develop as expected, with headline inflation forecast to average 2.3% in 2025, 1.9% in 2026

and 2.0% in 2027. The upward revision of headline inflation for 2025 reflects stronger dynamics in energy

prices.

According to the European Commission's autumn macroeconomic forecast, nominal inflation in the

euro area is expected to decline by over 50% in 2024 - from 5.4% in 2023 to 2.4% before gradually falling

to 2.1% in 2025 and 1.9% in 2026. The disinflation process in the EU is expected to be even sharper in

2024, with nominal inflation falling from 6.4% to 2.6% in 2023 and continuing to decline to 2.4% in 2025

and 2.0% in 2026. For Bulgaria, inflation is expected to decline to 2.3% in 2025 before accelerating

moderately in 2026 due to persistent inflation in services.

Pursuant to data of the National Statistical Institute, in December 2024, monthly inflation in

Bulgaria, measured by HICP, was 0.3 %, and annual inflation for December 2024 compared to December

2023 was 2.1 %. The average annual inflation for the period January 2024 - December 2024 compared

to the period January 2023 - December 2023 was 2.6 %.

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

11.

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 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 previous four years does

not appear to have been sustainably overcome despite the formation of a coalition government in January

2025. It continues being assessed as a major factor negatively affecting not only economic activity and

the business environment in the country but also all public systems in Bulgaria, mainly due to the seriously

undermined principle of the rule of law, giving rise to legal and economic uncertainty, including with regard

to property. The lack of real reforms has further worsened the business environment and as a result we

continue to report record low investments as a share of expenditure on fixed assets relative to GDP, a

decline in industry, a collapse in exports, and job losses. The most recent preliminary data from the

Bulgarian National Bank from February 2025 indicate that for the period January - December 2024 the

net flow of foreign direct investment is 54.4 percent lower than the previous year.

Our country ended 2024 without an approved 2025 budget and a public finance framework for the

period 2025-2028, and the new government withdrew the draft budget prepared by the interim cabinet,

which envisaged a huge increase in expenditures for 2025 and unrealistically high levels of revenue,

since such a budget framework would put the sustainability of state finances at risk. At the same time,

the new budget proposed by the coalition government with a deficit of 3% of GDP maintains record high

levels of both expenditure (almost BGN 97 billion), a significant part of which is intended for personnel

costs in unreformed systems in the budget sphere, and revenue (over BGN 90 billion), which assumes

an unrealistic growth in VAT collection (33.68% for 2025). Despite the stagnation in European countries,

which are Bulgaria's main trading partners and the lack of significant economic recovery therein, the

macroeconomic forecast prepared by the Ministry of Finance optimistically forecasts economic growth to

increase to 2.8 % in 2025 and to 3 % in 2026. Average annual inflation for the next year is expected to

be 2.6%. The state debt is expected to reach BGN 61.7 billion (26.6 % of GDP) in 2025, of which new

debt – BGN 18.9 billion and up to BGN 89.0 billion in 2028 which raises serious concerns about long-

term fiscal sustainability. For the period 2025-2028, the trend of increasing interest expenses is expected

to continue, with interest expenses amounting to BGN 1.6 billion only for 2025 and expecting them to

reach BGN 3.5 billion in 2028. In the context of excessive deficit and the need for stability of public

finances, in the context of the upcoming European verification of our country's compliance with the

eurozone criteria, this budget receives serious criticism that it does not express an intention for

investments in reforms, that continues to increase personnel costs in unreformed and relatively

overfunded systems in an untargeted manner, without regard to achieving certain goals such as the

quality of the services provided, and also for containing a significant risk of excessive deficit. In 2024

again, Bulgaria has paid the most as a share of GDP for salaries in the "Public Order and Security" sector

in the entire European Union, and with the adopted budget, they increase by 50 % at the expense of

income seized from those working in the private sector and with a significant increase in the state debt,

the cost of servicing which increases significantly every year. The budget lacks objectives and

performance indicators, which makes it difficult to track the effectiveness of public expenses, ensure

12.

targeted reforms, and evaluate the results achieved. The weaknesses in the budget emphasize the need

for strategic planning and reforms in various areas to ensure long-term fiscal sustainability and economic

growth. Instead of seeking opportunities for more tangible fiscal consolidation, the policy continues of

increasing budget expenditures, new budget deficits financed with new government debt, thus not

increasing the competitiveness of the economy and not creating preconditions for increasing economic

growth and thereby permanently increasing people's incomes and living standards. The Fiscal Council

also expressed a position that the expenditure part of the budget should be optimized and automatic

wage indexations in some sectors, which lead to budget imbalances, should be removed, as well as the

approach to budget preparation should be changed, emphasizing the efficiency and quality of public

finances.

Following the Eurostat data on inflation in EU countries published on February 24, 2025, according

to which the reference value of the price stability criterion with data for January 2025 is calculated at

2.6%, the Council of Ministers requested the European Commission and the European Central Bank to

prepare extraordinary convergence reports on Bulgaria, as our country also meets the last criterion for

membership in the eurozone.

At the same time, Bulgaria continues to be in the so-called "grey" list of jurisdictions placed under

increased monitoring of the anti-money laundering framework of the Financial Action Task Force (FATF).

According to information from the acting Minister of Finance from mid-January 2025, at a meeting of the

Financial Action Task Force on removing Bulgaria from the "grey list", it was found that our country has

made significant progress, but there are still commitments that have been made and unfulfilled. The

expectations are that Bulgaria will be removed from the "grey list" this year. In the convergent report,

published in June, 2024, the ECB pays special attention to Bulgaria's entry into the list, encouraging our

country to "accelerate its efforts to implement the elements of the action plan", indicating that Bulgaria's

participation in this list could become in an informal obstacle to the admission of our country into the

Eurozone, even after fulfilling the formal criteria.

In the next place, political volatility in the recent years is also at the root of the slowdown in private

sector investment, while at the same time delaying the practical implementation of the structural

measures needed to accelerate the absorption of funds from the Recovery and Resilience Plan. The

second payment of BGN 1.2 billion under the Plan, which should be released after the completion of a

list of necessary reforms at the national level, has been delayed for a second year. According to

information from the Ministry of Finance, Bulgaria can no longer postpone making a political decision on

the amendments to the Recovery and Resilience Plan and it is possible that Bulgaria not only will not

receive a second payment, but even will have to return money from the already received first tranche.

Against this background, the price of electricity in Bulgaria continues to be among the highest in all

of Europe, according to the actual data of electricity trading on the energy exchanges in the European

Union. For the last two months of 2024, the price in Bulgaria on the day-ahead market is 50 percent

higher than that in France, Germany, the Netherlands and many times higher than in Northern Europe.

In Eastern Europe, the price of electricity in December and January is about EUR 180-190 per MWh, in

Western Europe it is about EUR 90-100 per MWh, and in Northern Europe - about EUR 5 per MWh. The

disconnection of markets in Europe currently leads to the fact that we have a three-speed Europe in terms

of electricity prices, while at the same time producers from different parts of Europe compete in the same

markets. Under these conditions, the Program for Compensation of Non-Household Consumers Due to

High Electricity Prices, approved by the Council of Ministers on January 23, 2025, is assessed by

business as an effective short-term solution, which at this stage will support the competitiveness of the

industry and income growth, but a medium-term solution (within the next 5 years) is imperative, which will

ensure predictability, sustainability and competitiveness of electricity prices, thus encouraging

investments in Bulgarian industry and ensuring the ability of Bulgarian business to plan its activities,

including its own investments. Guaranteeing the compensatory mechanism for high electricity prices in

the medium term, adopting a mechanism and procedures for signing long-term contracts for energy-

intensive enterprises, achieving a structured and balanced approach in forming national policies on the

so-called green transition in all its elements and recalibrating the European Green Deal should be key

priorities in the field of energy and green transition.

13.

In 2024, our country received unsatisfactory ratings from prestigious studies in the areas of

competitiveness and economic freedom. According to the 36th edition of the World Competitiveness

Ranking for 2024 of the Institute for Management Development - Switzerland (IMD), published on June

18, in 2024 Bulgaria occupies 58th place from a total of 67 countries. The country shows a lack of

progress since 2021, declining 10 positions from 2020 and 20 positions from 2009. Political instability

remains a major concern, with the country ranking 66th under this indicator. Legislation in the field of

competition and public procurement also needs improvement, and according to these criteria, Bulgaria is

in 64th and 63rd place, respectively. In addition, according to information from the Institute for Market

Economics, according to the latest study by the Canadian Fraser Institute, Bulgaria is ranked 52nd in

economic freedom in the world for 2024. For another year, our country received the lowest result in terms

of the legal system and supremacy of law, and in this category, we lag behind all other EU member states

from Central and Eastern Europe.

An unsatisfactory level of the rule of law in our country is also found in the annual report of the

European Commission on the rule of law in the EU, presented on 24.07.2024, where it is noted that in

Bulgaria, along with Croatia and Poland, trust in the judiciary system is below 30 percent. The report

states that no progress has been made in the expectation of improving investigations and reaching final

verdicts in high-level corruption cases, as well as regarding the integrity requirements of senior executive

functions with the introduction of clear rules and penalties.

According to the 2024 Corruption Perceptions Index, published by Transparency International on

February 11, 2025, global corruption levels in Bulgaria remain alarmingly high, and the efforts for its

limitation appear to be unsuccessful. In this year's edition of the index, Bulgaria received 43 points, which

is below the critical threshold of 50 points and "signals serious challenges in the fight against corruption

in the country". With this number of points, Bulgaria remains among the countries with high levels of

corruption in the public sector, according to the index. It measures the levels of political corruption and

shows that it is a barrier to good governance, incompatible with the functioning of democratic institutions

and sustainable economic development, the non-governmental organization explained. Bulgaria is only

ahead of Hungary among the countries in the European Union (EU), the results show. Bulgaria continues

to lag behind compared to the average level for the European Union, which remains around 62.33 points,

the data also show.

All these findings are a consequence of the political situation in Bulgaria and testify for a sustainable

lack of principled, adequate and continuous policies and regulatory environment, which along with the

numerous bureaucratic obstacles for businesses and citizens, 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.

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. Negative consequences of the military conflict in Ukraine and the uncertainty in the Middle

East, continue to be a serious risk for our country and the world, given the inevitable negative economic

and financial impact.

At the same time the worsening of business environment in the European Union, caused by the

military conflicts in Ukraine and the Middle East, high energy prices, over-regulation and the lack of

qualified labor resources, continues to discourage entrepreneurial activity and lead to capital outflows

and a decrease in competitiveness. Europe significantly lags behind its main competitors, the USA and

China, in economic growth, innovation, high technologies, and demographics. This is also found in the

report "The Future of European Competitiveness", prepared by the former President of the European

Central Bank Mario Draghi. The report highlights the need for a new industrial policy for Europe that

combines massive investments in strategic areas of technological breakthrough, a pragmatic and flexible

trade policy, a foreign economic policy to guarantee a supply chain of raw materials and materials. Among

the key priorities is finding a balance between Europe's ambitious climate goals (very strong compared

to the US and China's commitments) and competitiveness. Similar findings are made in the EPP

declaration entitled "Europe needs more growth and jobs, increasing competitiveness by reducing

14.

overregulation and bureaucracy cost", published in mid-January 2025. With this declaration, the largest

political force in the European Parliament appeals for a "decisive, ambitious and comprehensive program

of deregulation and simplification", insisting on suspending EU rules on corporate sustainability reporting

for at least two years and limiting their scope to companies with over 1 000 employees, while "eliminating"

the indirect effect on small and medium-sized companies, postponing the introduction of carbon tariffs

(CBAM), abolishing mandatory quotas for the share of renewable energy in energy, introducing real

impact assessments for any new legislation, and ending the practice of further complicating

environmental and other regulations at the national level.

Against this backdrop, upon taking office, newly elected US President Donald Trump has also made

a serious request for changes to the policy pursued so far by the world's largest economy, including the

repeal of a number of diversity, equality and inclusion policies that were imposed by President Biden's

State Department. In the area of trade policy, as early as February 2025, the new US president imposed

additional tariffs of 10% on all imports from China and 25% on steel and aluminum imports, while

eliminating exemptions and duty-free quotas for major suppliers such as Canada, Mexico, Brazil and

other countries. Intentions have been announced to introduce general tariffs in the range of 10-20% on

all imports from the EU and Japan, as well as to impose tariffs on car imports “in the order of 25%” and

similar tariffs on imports of semiconductors and pharmaceuticals. This policy could lead to a trade war

that could cause serious turbulence in supply chains and even their disruption. The costs of importing,

exporting and transporting goods around the world could increase which in turn would lead to higher

costs for consumers. Manufacturers may be forced to find new suppliers and customers, as well as be

restricted to trading only within certain geopolitical blocs.

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 the

intensive strengthening of European and national regulation in many areas, including an increasing focus

on sustainability issues. It is not uncommon for new regulations to come into force faster than they can

be implemented in the related systems and processes, which potentially leads to disruptions in normal

business processes. In addition, the trend of continuously increasing administrative burden on

businesses in the absence of reasonable and adequate reliefs greatly increases the costs necessary to

comply with new regulation and the related reporting requirements.

Reducing 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 the grey

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

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

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

supplies at minimum prices, simplification and acceleration of procedures for admitting employers 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 Eurozone and the

OECD, which will ensure the acceleration of economic growth and improvement of the quality of life in

our country.

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.

Impact of the main risks and uncertainties

According to the December 2024 ECB Economic Bulletin, the risks to economic growth remain

tilted to the downside. The risk of greater friction in global trade could weigh on euro area growth by

dampening exports and weakening the global economy. Lower confidence could prevent consumption

and investment from recovering as fast as expected. This could be amplified by geopolitical risks, such

15.

as Russia’s unjustified war against Ukraine and the tragic conflict in the Middle East, which could disrupt

energy supplies and global trade. Growth could also be lower if the lagged effects of monetary policy

tightening last longer than expected.

Inflation could turn out higher if wages increase by more than expected. Upside risks to inflation

also stem from the heightened geopolitical tensions, which could push energy prices and freight costs

higher in the near term and disrupt global trade. Moreover, extreme weather events, and the unfolding

climate crisis more broadly, could drive up food prices by more than expected. By contrast, inflation may

surprise on the downside if low confidence and concerns about geopolitical events prevent consumption

and investment from recovering as fast as expected, if monetary policy dampens demand more than

expected, or if the economic environment in the rest of the world worsens unexpectedly. Greater friction

in global trade would make the euro area inflation outlook more uncertain.

Under these conditions ECB considers that fiscal and structural policies should make the economy

more productive, competitive and resilient. It is crucial to swiftly follow up, with concrete and ambitious

structural policies, on Mario Draghi’s proposals for enhancing European competitiveness and Enrico

Letta’s proposals for empowering the Single Market. The Governing Council welcomes the European

Commission’s assessment of governments’ medium-term plans for fiscal and structural policies, as part

of the EU’s revised economic governance framework. The full, transparent and immediate

implementation of the revised EU economic governance framework will help governments to sustainably

reduce budget deficits and debt ratios. They should take decisive steps in this direction in their medium-

term fiscal and structural policy plans.

On a European level, a comprehensive review of the Union's policies in all key aspects is needed

with a view to achieving conditions that facilitate economic development and promote competitiveness.

More than half of small and medium-sized enterprises (SMEs) in Europe cite regulatory barriers and

administrative burdens as the biggest challenge, and excessive regulation and bureaucracy have become

a major cause of the decline in productivity in the EU compared to its main competitors the USA and

China. Reviewing the Union's climate objectives and implementing policies that do not hinder

competitiveness and growth and do not lead to deindustrialization should become a leading priority.

On a national level, it remains imperative to undertake serious structural reforms and introduce

strict fiscal consolidation measures in order to prevent a potential financial and economic crisis with

severe consequences for business and society. Of particular concern is the fact that the large,

disproportionate increases in the cost of public sector remuneration and social and health insurance

payments, including pensions, which many times exceed inflation rates, are taking place in a context of

relatively moderate inflation, but with a continued decline in industrial production and with a deepening

crisis in the real sector in the EU and Bulgaria.

A major risk, with a growing negative impact, both for the machine-building industry and for any

other business in Bulgaria, remains the lack of personnel and the training of personnel - there is a lack of

specialists with high and medium qualifications, as well as personnel with low qualifications. Only in the

last 4-5 years, the graduates of vocational schools have decreased by 1/3 and the total number of

secondary education graduates has decreased by 20% for the same period. Along with the negative

demographic trend in the country, the lack of a state policy to ease labor immigration and a business-

aligned methodology for personnel planning and training, the shortage of human resources continues

being a key problem for the business and part of the reasons for the withdrawal of international companies

from our country. In addition to these problems, the policy of unmeasured and promiscuous redirecting

huge financial resources for remuneration to unreformed sectors of the state administration, including the

defense and security sectors, as well as to the prosecution and courts, formalized with the adopted state

budget for 2025, leads to strong demotivation of those working in the real sector, especially in production.

Under these conditions, the companies in the Group of the Stara Planina Hold Plc make serious

efforts to guarantee their security with orders also for 2025, as well to maintain and expand their market

positions. The companies continue their investment policies aimed at technological renewal, digitization

of processes and expansion of production capabilities with a view to increasing productivity variety and

quality of the manufactured products in parallel with their policies on optimizing the production process

and stimulating the persons employed in the Group.

16.

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.

Factors that will continue influencing the activities in 2025 as well are the market price of raw

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

prices of energy resources and the security of their supplies. Given the ongoing military conflict in Ukraine

and the uncertainty in the Middle East, despite the recently reached ceasefire agreement, as of the date

of preparation of this report, we assess the risks associated with ensuring the supply of materials, as well

as the sale of finished products to partners related to the affected regions as high.

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

uncertainty regarding the global economic and geopolitical prospects, which deteriorated significantly

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

II. Consolidated Non-financial Information

The consolidated non-financial information 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.

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.

17.

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.

Important task for 2025 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 2071 employees work for the enterprises in the Group of Stara Planina Hold Plc. 1859

of them or 89.76 % work in the three largest companies.

In 2024 the number of employees in the group of Stara Planina Hold Plc reported a decrease by

almost 12 % compared to the previous year.

18.

Number of people employed by all enterprises of the Group of Stara Planina Hold Plc

* forecast

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

2024, labor productivity reported a decrease by 20.2 % compared to the previous 2023 year and by

16.06% compared to 2022. With the expected decrease of sales revenues in 2025 by approximately 9%,

at this stage we anticipate a decrease in the number of employees by approximately 7 % with an expected

increase in labor productivity by about 10 % and an increase in the average monthly salary in the

companies of the group of Stara Planina Hold Plc by over 7 % on an annual basis.

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.

1943

2004

2164

2124

1859

1711

2276

2318

2450

2353

2071

1921

2020 2021 2022 2023 2024 2025*

88.0

119.6

153.1

161.1

128.5

142.4

2020 2021 2022 2023 2024 2025*

Total

Three the largest

enterprises

19.

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

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

20.

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

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 2024, the company's expenses for the transfer of hazardous waste are BGN 65.33 thousand,

and the income from the industrial waste transferred for recovery is BGN 671.7 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 2024 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

2024 are in the total amount of BGN 16 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,

21.

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

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.

Every year, HES Plc adopts and implements a specific internal environmental monitoring program,

covering all units and processes. The Personnel Training Program includes training on the environment

and on safe storage and handling of hazardous chemical substances and mixtures.

Every year, the business plan of HES Plc includes and implements specific programs for

technological renewal, introduction of new machines, equipment and technologies, reducing the harmful

impact on the environment.

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 installation for applying varnish and paint

coatings and the installation for galvanic coatings.

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.

The waste generated by the activity is stored and transferred to a licensed company for

subsequent treatment.

The company carries out a risk assessment by examining all aspects of the work to determine

what could cause injury, illness or harm, as well as assessing whether the hazard can be eliminated, and

if not - what precautions should be taken to eliminate, reduce and control the risk. An occupational risk

assessment of each workplace is carried out regularly by the company.

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;

22.

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.

In 2024, six 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 2024 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 20% 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. Bulgarian Rose Plc develops its activities in compliance with the environmental protection

requirements, as it has a wastewater treatment plant. The company has developed and consistently

implements an environmental policy related to compliance with the regulatory levels of the parameters of

the treated water, subject to control.

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.

The policy of Bulgarian Rose Plc requires a periodic review of the environmental impact of energy

use, mainly aimed at:

• reducing energy consumption from conventional sources;

• increasing energy efficiency;

• using less polluting fuels;

• implementing renewable energy technologies.

The company in Karlovo operates its own wastewater treatment plant which is maintained in good

technical condition. The quality of the company's wastewater is periodically monitored by an accredited

laboratory. The chemical analysis of the controlled parameters is within the permissible standards.

The generated waste is stored at the place of generation until it is handed over to a licensed

company holding a document under Art. 35 of the Waste Management Act for subsequent treatment of

the relevant waste.

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

23.

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 2024, 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 2024

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.

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 electricity produced

by the installations and consumed in 2024 amounts to 1 780 MWh.

In 2023, M+S Hydraulic Plc concluded an agreement under the Project "Improving the energy

efficiency of the company through implementation of energy efficiency measures", implemented under

the "Renewable Energy, Energy Efficiency, Energy Security" Program. The maximum total value of the

project is BGN 980 860 of which the grant provided by the Financial Mechanism of the European

24.

Economic Area is BGN 383 025. The main objective of the project is to achieve better energy efficiency

and reduce CO2 emissions as a result of the thermal treatment processes in the company.

The following three energy saving measures have been implemented:

1. ECM 1 - Replacement of old energy-intensive equipment with modern energy-efficient ones.

2. ECM2 - Implementation of an Energy Consumption Monitoring System.

3. ECM 3 - Utilization of waste heat from ECM-1.

The implementation of the project in the company supported the optimization and implementation

of energy-efficient solutions and technologies related to better management and reduction of energy

consumption in the company.

In 2024 M+S Hydraulic Plc concluded a Grant Agreement under the Project "Support for the

Transition to a Circular Economy" under the Economic Transformation Program of the National Recovery

and Sustainability Plan. In implementation of the project, in 2024, a laser cutting machine for sheet

material was purchased and put into operation. A furnace for thermal and chemical-thermal treatment in

vacuum is to be purchased and put into operation in 2025.

With the technological renewal programs prepared and implemented in 2024, new machines,

equipment and technologies are being introduced that reduce the harmful impact on the environment.

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. In order to increase the share of clean and renewable energy generated for the company's own

needs, as well as to further reduce dependence on conventional energy carriers, a second photovoltaic

system with a capacity of 999 kWp was built in 2022 - 2023, which was put into operation in November

2023. In 2024, the two photovoltaic systems met a total of over 21% of the company's energy needs, and

this share is expected to be maintained in 2025.

In 2024, a requalification of Hydraulic Elements and Systems Plc was carried out under Art. 103

of the Environmental Protection Act, as the qualification was changed from an enterprise with low risk

potential to an enterprise without risk potential.

In 2023, the company started the modernization of the galvanic section, and by the end of 2024,

a new aspiration was completed and put into operation, including a facility for purifying the discharged

air, in accordance with the national and regional standards of the Republic of Bulgaria for permissible

emissions of pollutants into the atmosphere with a concentration of dust particles less than or equal to

0.05 mg/m3. In 2025, more activities related to improvements in this section are planned in order to

minimize its impact on the environment.

In 2024, an aspiration installation was built and put into operation, which is a facility for ventilation

and disposal of waste polluted air from gas emissions in a galvanic shop for hard chrome plating, in

accordance with the national and regional standards of the Republic of Bulgaria for permissible emissions

of harmful substances/pollutants/ into the atmosphere with a concentration of dust particles less than or

equal to 0.05 mg/m3, including an electric control panel and a protective capsule for the scrubbers and

the electric control panel.

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 in 2024

covers 13.3 % of the annual electricity consumption for own needs.

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. In 2024, the project was terminated due to the

company's deteriorating performance.

In 2023, Bulgarian Rose Plc concluded a financing agreement under the Smart Industry Program

of the National Recovery and Resilience Plan for the "Construction of new RES for own consumption in

combination with local energy storage facilities in enterprises". According to the project proposal, a

photovoltaic system with a total installed capacity of 94kWp and an energy storage system with a capacity

of 90kWh was built in 2024.

25.

The environmental management system is part of the general management system of each

company and for 2024 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.

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 2024, 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 49.2 % 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 2025 the costs without

the planned investments in this area will be worth BGN 1534 thousand which will account for a decrease

by about 14 % compared to 2024.

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.

358

509

699

1194

1782

1534

2020 2021 2022 2023 2024 2025*

26.

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

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.

In 2024 The Board of Directors of the company adopted a new Code of Ethics and Professional Conduct,

which is part of the company's overall policy for sustainable development, and is based on the principles

and recommendations of the following leading global agreements:

• The United Nations Global Compact (UN GC)

• The United Nations Sustainable Development Goals (UN SDG)

• The United Nations Guiding Principles on Business and Human Rights

• The Organization for Economic Co-operation and Development (OECD) Guidelines for

Multinational Enterprises

• The International Labor Organization (ILO) Core Conventions, which include the principles of

good corporate and socially responsible governance as a means of contributing to sustainable

development.

The rules of conduct set out in the new Code of Ethics and Professional Conduct are subject to the

following basic principles:

• Professionalism – performing official duties and functions in a manner that is in full compliance

with the rules and professional requirements for the position held, possessing specialized competence in

a specific area and maintaining and updating it with the acquisition of new knowledge and skills;

demonstrating responsibility for actions and decisions in the performance of official duties in accordance

with ethical standards and values.

• Competence - use and application of the knowledge, skills, abilities and experience that managers

and employees possess in the performance of their official duties and the performance of their

professional functions and continuous improvement of their professional qualifications.

27.

• Objectivity - true, accurate and impartial collection, analysis and assessment of all facts and

circumstances in or on the occasion of the performance of official duties and functions based solely on

sound professional judgment.

• Good faith - demonstrating integrity, correctness and ethics in all official and professional matters,

in accordance with generally established rules and norms for personal and professional conduct, honest

reflection and responsible use of the facts and circumstances established in the performance of official

duties and functions.

• Impartiality and independence - preventing managers or employees from being influenced by

persons related to them in relation to the official duties and professional functions performed by them and

the obligation to disclose potential or real conflicts of interest.

• Confidentiality - protecting and not disclosing data, facts and circumstances that have become

known to managers and employees during or in connection with the performance of their official duties

and professional functions.

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

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.

28.

• 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

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 2024

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

29.

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.

The holding company owns 20% of the capital of the Medical Center for Health Prevention, which

provides early diagnosis, treatment, rehabilitation and prevention for employees in the group's

enterprises.

Social activities costs (BGN’000)

* forecast

In 2024, 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,

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 2025 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.

2978

3795

5809

6651

5014

4837

2020 2021 2022 2023 2024 2025*

30.

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.

• 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 and observance of human rights. The companies support the principles of the UN

Universal Declaration of Human Rights, the International Labour 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 and apply them in the established labor and legal relations. In

Stara Planina Hold Plc and the companies in the group, any direct or indirect discrimination based on

gender, race, nationality, ethnicity, citizenship, origin, religion, education, beliefs, political affiliation,

personal or social status, disability, age, sexual orientation, marital status, property status or any other

characteristics established in the Constitution of the Republic of Bulgaria and the Law on Protection

against Discrimination is prohibited.

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.

31.

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.

In 2024, there were no reported signals or complaints due to discrimination in the workplace or

violation of human rights in Stara Planina Hold Plc and the companies in the group.

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. In 2024, the Board of Directors adopted an Anti-

Corruption Policy of Stara Planina Hold Plc and the companies in the group. The Policy is part of the

Group’s overall policy for sustainable development and is based on the principles and recommendations

of the following leading global agreements:

• The United Nations Global Compact (“Global Compact”) (UN GC)

• The United Nations Sustainable Development Goals (UN SDG)

• The Organization for Economic Cooperation and Development (OECD) Guidelines for

Multinational Enterprises, which include the principles of good corporate and socially responsible

governance as a means of contributing to sustainable development.

The Policy is applied in addition to and in accordance with the Code of Ethics and Professional

Conduct, the Whistleblowing Rules and all other internal corporate rules and policies of Stara Planina

Hold Plc and the companies in the Group and based on the current Bulgarian anti-corruption legislation.

Stara Planina Hold Plc and the companies in the group do not allow or tolerate any form of

corruption, unethical and illegal business and professional behavior by employees and management, as

well as by all third parties related to the company's activities. Persons falling within the scope of the Policy

are not entitled to offer, give, request or accept a personal payment, gift or service in exchange for more

favorable treatment or for the purpose of obtaining a business advantage in an illegal manner, as well as

to engage in any other form of corrupt behavior.

Stara Planina Hold Plc and the companies in the group are committed to actively fighting all forms

of corruption and other manifestations of unethical and/or illegal business and professional behavior in

the environment in which it operates and reserves the right to refrain from relations with third parties when

there are reasonable suspicions of a potential manifestation of such behavior.

Stara Planina Hold Plc and the companies in the group consider all signals of corruption, including

anonymous ones, unless the signal lacks sufficient information regarding the nature of the alleged form

of corrupt behavior, which provides an objective opportunity to determine it as such within the meaning

of the Policy, or when the signals received contain obviously false or misleading statements of fact.

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 2024, no signals of violation of policy rules or other cases of corrupt behavior were reported in

Stara Planina Hold Plc and the companies in the Group.

The companies do not apply a diversity policy with respect to their management bodies in relation

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.

32.

Information on main intangible resources

The main intangible resources of Stara Planina Hold Plc and the companies in the group are the

employees and the social activities related to them, including working conditions, continuing education,

improving qualifications and experience, which the companies annually stimulate and encourage, as well

as the introduced high-tech processes for the implementation of production operations and the annual

investments in technological renewal, modernization and improvement of production processes. In

addition, the companies in the Group have implemented software systems for resource planning (ERP),

which help the companies to rationalize their main business processes - including finance, human

resources, production, supply chain, sales and deliveries. All this contributes to higher productivity and

the creation of high-quality products that strengthens the reputation of the companies among customers

and competitors. Stara Planina Hold Plc and the companies in the group find human capital and high

technologies as key resources, contributing to the development of the holding.

Directive 2013/34/EU does not require the disclosure of information on intangible resources other

than intangible assets recognized in the balance sheet. The management of Stara Planina Hold Plc

announces that on a consolidated basis as of December 31, 2024, the Group's intangible assets consist

of software products and trademarks.

More information on the intangible resources of the group companies can be found in their

individual activity reports and will be presented in the annual consolidated activity report.

III. Information Disclosure on the Key Performance Indicators (KPIs) under Art. 8 of the

Taxonomy Regulation as of 31 December 2024 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.

33.

Currently, Stara Planina Hold AD falls within the scope of Article 8 of the Taxonomy Regulation on

a consolidated basis. At the time of preparation of this document, the Corporate Sustainability Reporting

Directive - 2022/2464 has been transposed into the national legislation of Bulgaria, but with the

amendments to the Accountancy Act, the mandatory preparation of a sustainability report has been

postponed by one year and will be applicable for the reporting year 2025. For this reason, Stara Planina

Hold AD presents non-financial information in accordance with Article 39 of the Accountancy Act on a

consolidated basis.

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).

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:

34.

- 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.

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.

35.

• “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.

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 as a holding company does not perform independent commercial activities.

The company has focused its activities primarily on the management of subsidiaries and associated

companies. The main investments in the portfolio of Stara Planina Hold Plc as of 31.12.2024 are

presented undersection I, item 2 of the Report - Investment portfolio.

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.

4. Accounting Policy

The company prepares and adopts an accounting policy that fully complies with the applicable

International Financial Reporting Standards - accounting standards (IFRS accounting standards) adopted

by the European Union (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 31.12.2024.

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

36.

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.

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 and 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).

37.

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

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 and Elhim-Iskra Plc.),

- Activity CCM 4.10./CCA 4.10. – Storage of electricity (Elhim-Iskra Plc),

- Activity NACE H49.32/N77.11 – Transport by motorcycles, passenger cars and light commercial

vehicles (M+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, Boryana Jsc),

- Activity CCM 4.16./CCA 4.16. – Installation and operation of electric heat pumps (M+S Hydraulic

Plc, Hydraulic Elements and Systems Plc and Bulgarian Rose Plc),

- Activity CCM 7.1/CCA 7.1/KI 3.2 – Construction of new buildings (M+S Hydraulic Plc),

- Activity CCM 4.1./CCA 4.1. - Construction and operation of photovoltaic power plants (PVPP)

(Bulgarian Rose Plc),

- Activity NACE C26, C27 and C28 – Manufacture of other low-carbon technological products (M+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;

- Electricity production through solar photovoltaic energy technology in the companies Hydraulic

Elements and Systems Plc and Elhim-Iskra Plc - under Activity CCM 4.1./CCA 4.1;

38.

- Construction and operation of photovoltaic power plants (PVPP) in the company Bulgarian Rose

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 companies M+S Hydraulic Plc, Hydraulic

Elements and Systems Plc and Bulgarian Rose Plc – under Activity CCM 4.16./CCA 4.16.

- Manufacture of other low-carbon technological products in the company M+S Hydraulic Plc –

under Activity NACE C26, C27 and C28.

- Transport by motorcycles, passenger cars and light commercial vehicles in the company M+S

Hydraulic Plc – under Activity NACE H49.32/N77.11.

The activities of repair and renovation of existing buildings (in the companies Hydraulic Elements

and Systems Plc, Elhim-Iskra Plc and Boryana Jsc) and Construction of new buildings (M+S Hydraulic

Plc) 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 3.2. – Construction of new buildings.

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 for 2024 is 38.66% of the holding's total consolidated capital expenditures compared to

6.52% of the holding's total consolidated capital expenditures for 2023 which is due to investment in

modern smart solutions aimed at 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

39.

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

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. 2024 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: 13.55 %

CapEx—based: 38.66 %

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 15 965.501 thousand

CapEx-based: BGN 2 945.611 thousand

The percentage of assets covered by the KPI relative to

total investments (total AuM). Excluding investments in

sovereign entities, Coverage ratio: 55.68 %

The monetary value of assets covered by the KPI.

Excluding investments in sovereign entities.

Coverage: BGN 4 242.448 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

40.

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:

For non-financial undertakings: NOT APPLICABLE

For financial undertakings: NOT APPLICABLE

Value of exposures to financial and non-financial

undertakings 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 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: 13.55 %

CapEx: 38.66 %

Transitional activities: A

(Turnover: 0 %; CapEx: 0.68%)

Enabling activities: B 14.05%

(Turnover: 13.55 %;CapEx: 37.98%)

(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)

41.

IV. Important developments occurred since the beginning of the year

After the date of the annual accounting closure, the management of Stara Planina Hold AD is not

aware of any important and significant events that could affect investor interest, with the exception of the

threats of escalating a trade war globally, the continuing military conflict in Ukraine and the rising tension

again in the Middle East, despite the recently reached agreement to end military actions, which increases

the risks associated with ensuring the supply of materials, as well as the sale of finished products to

partners related to the affected regions.

V. Expected development of the group

In 2024, our country, Europe and the world continued being strongly influenced by dynamic global

changes and deepening crises. The economic and geopolitical situation globally can now be

characterized by a very high degree of uncertainty. The EU business environment worsening, caused by

the military conflicts in Ukraine and the Middle East, high energy price levels, over-regulation and lack of

qualified labor resources continued to demotivate entrepreneurial activity and lead to an outflow of capital

and a decrease in competitiveness. Europe significantly runs behind its main competitors - the USA and

China, in terms of economic growth, innovation, high technologies and demographics. Nationally, political

instability in 2024 deepened its negative impact not only on the economy, but also on all social systems

in Bulgaria.

Against this background, the consolidated sales revenues of the group of Stara Planina Hold Plc

as of 31.12.2024 reached BGN 266.214 million, reporting a decrease by 29.75 % compared to the 2023

sales and by 29.06 % compared to the reported sales in 2022. Due to the influence of the negative factors

that determined the activities of the companies in the group of Stara Planina Hold Plc during the reporting

year, the group's gross profit for 2024 amounted to BGN 12.76 million which represents a decrease by

72.81 % compared to the reported gross consolidated profit for the previous year and by 75.16%

compared to the gross consolidated profit for 2022.

The level of our exports is directly dependent on the markets where the companies in the group

operate - mainly in the European Union. In 2024, 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 with

a high degree of uncertainty at this stage, which, together with the negative trends in industry, gives us

reason to expect results for the current financial year with values close to those reported in 2024. Of

particular concern remains the state of the economy of Germany - the largest in Europe, which in 2024

recorded a decline for the second consecutive year due to various factors applicable to all European

manufacturers, including foreign competition, high energy prices, higher interest rates and uncertain

business conditions. At this stage, forecasts indicate that it will continue to be one of the worst performing

countries within the eurozone, with its industrial sector, which is usually an important driver of growth,

continuing to hold back 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

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.

According to the ECB's macroeconomic forecast for the euro area of 06.03.2025, uncertainty in

both domestic and trade policies is high. Although the baseline forecast includes only the impact of new

tariffs on trade between the United States and China, it is assumed that the negative effects of uncertainty

regarding the possibility of further changes in global trade policies, especially with regard to the European

Union, will weigh on exports and investment in the euro area. This, combined with persistent

competitiveness challenges, is seen as leading to a further decline in the euro area's export market share.

The ECB's expectations as of March 2025 are for the average annual real GDP growth to be 0.9 % in

2025 and to strengthen to 1.2 % in 2026 and 1.3 % in 2027. Compared to the December 2024

42.

macroeconomic forecasts, the GDP growth outlook has been revised downwards by 0.2 percentage

points for both 2025 and 2026, but is unchanged for 2027.

In the context of the decision at an extraordinary summit in Brussels on 06.03.2025 to activate the

€ 800 billion rearmament plan for Europe, following the expressed intention to reduce the US commitment

to Europe, according to the Governor of the European Central Bank, risks to economic growth in the euro

area remain present, mainly due to tensions in global trade, and “an escalation of trade tensions would

dampen eurozone growth by reducing exports and weakening the global economy.” A report by Fitch

Ratings, published on 07.04.2025, states that the tariffs imposed by the Trump administration will weaken

the revenue and profitability growth of many corporate sectors in Europe. The chemicals, automotive and

hardware sectors are expected to be hit the hardest. The direct effects on the sectors will be mainly due

to trade exposure and increasing competition, while the weakening of economic growth will lead to

broader consequences. Even with the 90-day reprieve on the so-called reciprocal tariffs, the combination

of 10% base tariffs and 25% tariffs on steel, aluminum and car exports will have a significant impact on

business.

The Ministry of Economy and Industry indicates that the introduced US tariffs will have negative

effects for Bulgaria in terms of trade with the US, such as reducing the competitiveness of Bulgarian

companies exporting to the US, and a negative impact on supply chains in cases where Bulgarian

companies are subcontractors of large European manufacturers exporting to the US. It is expected that

supplies of Bulgarian manufacturers to EU partners will also be affected, given the even stronger growth

of supply on the EU market and the expectation that Chinese goods with far more competitive prices will

be massively directed to the European market as a result of the impossibility of exporting to the US.

The ongoing uncertainty regarding global trade policies may lead to a decline in investments and

is already causing serious difficulties in planning production costs, deliveries and overall production

activity of Bulgarian manufacturers, given the greatly reduced deadlines for the execution of orders that

are submitted at the last minute. Geopolitical tensions also remain a major source of uncertainty.

Based on the results of the first months of 2025 and given the updated forecasts of our customers

and partners from Europe and the world in a more optimistic direction, despite the escalating uncertainty

in trade, geopolitical and political aspects globally, leading to strong unpredictability for the business, we

anticipate that sales in the first quarter of 2025 will reach BGN 68 million which would represent a

decrease by about 9.5 % compared to the same period of 2024 and by over 36 % compared to the first

quarter of 2023. We expect that with the revenues for the first half of 2025, we will report an increase by

about 1 % compared to the same period of 2024, and with the estimated revenues for the second half of

2025, we expect to achieve a growth by about 18 % compared to revenues for the same period of 2024.

At this stage, Stara Planina Hold Plc anticipates that consolidated sales revenues in 2025 will reach BGN

290 million which means an increase by about 9% on an annual basis compared to 2024.

Net sales revenue

(Quarterly, BGN’000s)

* forecast

-10000

10000

30000

50000

70000

90000

110000

1Q 2Q 3Q 4Q

2023 2024 2025*

43.

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, negatively affected by factors such as the escalating global

trade war, new difficulties in supply chains, energy prices and security, the increasing shortage of human

resources, as well as geopolitical factors related to military conflicts in Ukraine and the Middle East. In

this context, in 2025 again we will continue being led by the purpose of achieving high quality, productivity

and profitability of our activities, thereby maintaining and expanding our market positions. We will continue

offering competitive prices, tailored customer approach, high quality and operational delivery times.

In 2024, the investments of our enterprises reached 25.09 million. BGN with a growth of 24.06%

on an annual basis, intended mainly for continued technological innovation, introduction of highly

profitable products and production, acquisition of assets, innovations for green and digital transition,

increasing labor productivity and, accordingly, increasing employee remuneration.

Investments

(Quarterly, BGN’000s)

* forecast

In 2025, despite the continuing great uncertainty nationally and globally, our updated plans foresee

an increase in investments by about 40 % to BGN 34.9 million. The main part of the planned investments

is intended for new technological equipment and reconstruction, new technologies for automation,

robotization, and digitalization of processes, green transition and expansion of production possibilities

with a view to increase the productivity and quality of the manufactured products and reduce the cost

price, optimization of the production process and stimulating employees.

The companies plan to participate in procedures under existing and new European operational

programs aimed at developing human resources and increasing competitiveness.

Sustainable achievement of good financial results with expected sales will continue to be a key

task in order to guarantee shareholders' investments 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 2024 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

2000

4000

6000

8000

10000

12000

2023 2024 2025

44.

M+S Hydraulic Plc

In 2024, the company completed the development of the two-speed orbital motor M2S, which for

the first time implemented a two-speed orbital motor with electromagnetic control of the geometric

volume. The motor is already on sale and is expected to be a sought-after product.

Work has begun on compact but powerful wheeled motors, which will allow the company to enter

new market niches. The design of the two-speed orbital motors has been refined.

In 2024, a serious increase in the maximum geometric volume of HW motors from 600 to 750 cc

and MV motors from 800 to 1000cc was introduced for the first time. The company has made a

breakthrough in the development of radial piston motors, as prototypes of RBM motors have been

manufactured and tested by customers.

Axial piston motors and pumps continue to develop and their design is improved. New motor brakes

have been developed, with the aim of increasing market share.

The company continues to develop and master variable displacement power steering systems,

type HKUSU.

In 2024, the company also worked on technological renewal and optimization of production

processes. Sunnen honing technology for diameters ф16, ф20 and ф25 has been mastered; new hot

forged blanks together with technological processing to the next stage of processing - drawing and tooth

carving; "carbonitriding" process, through which higher hardness and smaller deformations are achieved.

Cryogenic processing equipment has been purchased and the introduction of screw-driving devices into

the assemblies has continued in order to improve quality and reduce heavy physical labor.

Hydraulic Elements and Systems Plc

The company has respective departments and units that develop activities to improve production,

develop and adopt new products.

In 2024 again, the main objectives of the units carrying out research and 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; 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 2024, HES Plc developed and produced over 45 new models of hydraulic cylinders and as

many modifications of existing ones, and the majority of them are expected to enter regular production in

2025.

Regarding the development activity from a technological point of view, in 2024, HES Plc continued

the implementation of new, modern machines for turning and machining centers, including with

automated loading and unloading of processed parts

Elhim-Iskra Plc

In 2024, the activities of the development team were aimed at:

• Development of new technologies and related implementation of new production capacities with

the main goal of increasing productivity and optimizing each stage of the technological process.

• Active work continues on the project for the development of new special-purpose batteries and

their certification and introduction into the Ukrainian market (STV, ABN, CH).

• Types of stationary batteries of the OPzS type monoblock type for small, medium and large

capacities, which are used in providing emergency power in Bulgaria and Europe, were mastered and

implemented in production.

Bulgarian Rose Plc

In 2024, 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

45.

products, optimization of production technology and quality of manufactured products, compliance with

the needs and requirements of distributors in the country and abroad.

In 2024, 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 October.

The team of specialists in the "Innovations" department will also face new challenges in 2025. 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

In 2024 Stara Planina Hold Plc has not acquired or sold its own shares.

As of 31.12.2024 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 2024 no joint stock company in the Group has acquired or transferred own shares.

2. Changes in the share price of the companies

The shares of Stara Planina Hold Plc are traded on BSE Main Market, Standard segment on the

Bulgarian Stock Exchange AD. Exchange code: SPH.

In 2024, the movement of the share price was variable between BGN 9.00 and BGN 10.66. The

graph shows the movement of the price of the shares of Stara Planina Hold Plc on the BSE for the period

01.01.2024 - 31.12.2024.

Share price over Y2024

Source: BSE-Sofia AD

------- closing price

------ weighted-average price

• Start price: BGN 9.8847 (01.01.2024)

• Last price: BGN 9.0000 (31.12.2024)

• Max price: BGN 10.666 (14.05.2024)

• Min price: BGN 9.0000 (27.12.2024)

• Value change: BGN -0.9872

• Percentage change: -9.8847 %.

The market capitalization of the holding as of 31.12.2024 is BGN 189 million compared to BGN

216.3 million as of 31.12.2023.

46.

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

2024

6.49

8.01

6.55

4.76

5.45

10.10

9.30

10.30

9.00

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

2018

2019

2020

2021

2022

2023

2024

7.65

6.00

6.25

9.15

8.95

11.50

9.70

Market capitalization (BGN million)

Hydraulic Elements and Systems Plc

Price (at closing) per one share of the company at the

end of the year

2018

2019

2020

2021

2022

2023

2024

4.80

4.26

3.84

6.50

6.40

5.95

5.35

100

150

200

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

100

150

200

250

300

350

400

450

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

100

120

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

47.

Market capitalization (BGN million)

Elhim Iskra Plc

Price (at closing) per one share of the company at the

end of the year

2018

2019

2020

2021

2022

2023

2024

0.98

0.88

0.78

0.80

0.87

0.95

0.80

Market capitalization (BGN million)

Bulgarian Rose Plc

Price (at closing) per one share of the company at the

end of the year

2018

2019

2020

2021

2022

2023

2024

2.20

1.89

1.02

1.50

1.70

1.85

1.99

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.

Distributed dividends from Stara Planina Hold Plc (BGN million)

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

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

5.16 5.16

6.18

6.54 6.54

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 20 18 2019 2020 2020 2021 2022 2023

48.

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 2023 incl. is BGN 55.61 million. The initial investment in the

holding has a dividend coverage of 31.8 times.

For the completed financial years of their existence the companies in the group of Stara Planina

Hold Plc have distributed dividends totaling BGN 2714.19 million.

Distributed dividends Total for the Whole Group (BGN million)

4. Branches

Stara Planina hold Plc and the companies in the group do not have any registerred branches in

the country and abroad.

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 31.12.2024 have been

prepared in compliance with the International Financial Reporting Standards – accounting standards

(IFRS accounting standards) adopted by the European Union (EU).

The whole accounting policy of the Company is described in the Explanatory Notes presented

together with the Annual Consolidated Financial Statements as of 31.12.2024.

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 2024 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.

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

19.16

21.7221.72

26.21

29.23

26.41

1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2020 2021 2022 2023

49.

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.

Financial instruments of the company are detailed in the Explanatory Notes presented together

with the Annual Consolidated Financial Statements as of 31.12.2024.

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);

STARA PLANINA HOLD PLC – sphold.com

50.

• 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;

• 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

(https://nkku.bg/pdf/NKKU2024-25062024final.pdf). 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 Commission, Stara Planina Hold Plc participates

through its representative in the process of discussion and adoption of amendments to the National Code,

in 2024.

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 and stakeholders. 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. In 2024, the

Board of Directors adopted a new Code of Ethical and Professional Conduct of Stara Planina Hold Plc

and the companies in the Group, as well as an Anti-Corruption Policy, which are part of the overall

sustainable development policy and are prepared based on the principles and recommendations of the

United Nations Global Compact ("Global Compact") (UN GC), the United Nations Sustainable

Development Goals (UN SDG), the United Nations Guiding Principles on Business and Human Rights,

and the Organization for Economic Co-operation and Development (OECD) Guidelines for Multinational

Enterprises.

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 including risks related to information

security, environmental risks, risks along the value chain; ensures and controls the integrated functioning

of the accounting, financial reporting and risk management systems; gives guidelines, approves and

STARA PLANINA HOLD PLC – sphold.com

51.

controls the business stategy 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 Articles of Association of the companies. 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. Election of board members takes place through a transparent

procedure that provides timely and sufficient information on the personal and professional qualities of the

nominees. The members of the Board of Directors are elected by the general meeting of shareholders,

and information regarding their education, professional qualifications and experience is presented

together with the written materials for the meeting and published on the websites of the companies. The

independent directors control the executive management and participate effectively in the company's

performance in accordance with the shareholders’ interests and rights. The Chairperson of the Board of

Directors is an independent director. The members of the Board of Directors have appropriate knowledge,

experience and are regularly informed about new trends in the field of corporate governance and

sustainable development. 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. In the Remuneration Policy,

variable remuneration and performance are linked to pre-specified performance-related criteria and

include measurable standards that highlight the long-term interests of the company and shareholders.

None of the members of the Board of Directors has been granted variable remuneration in the form of

shares, stock options or other financial instruments. 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 part of the Annual Financial Statements of the company.

Shareholders and stakeholders have easy access to the adopted policies for defining the remuneration

STARA PLANINA HOLD PLC – sphold.com

52.

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 Hold 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

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 websites of the companies.

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. A database is maintained with contacts of shareholders holding 5

% or more than 5 % of the company's capital.

STARA PLANINA HOLD PLC – sphold.com

53.

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. Stara Planina Hold Plc and the

large public companies in the group provide the opportunity to exercise the right to vote also through

correspondence. 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 and for Stara Planina Hold Plc and the large

public companies in the group a sample form for voting through correspondence and the Rules for voting

through correspondence are also presented.

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

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. Proxy Voting Rules and

Rules for Voting through Correspondence have been adopted and are published on the websites of Stara

Planina Hold Plc and the large public companies in the group. 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. All shareholders of Stara Planina Hold Plc and the companies in

the group are treated equally.

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 information related to sustainable development, financial reporting and other

corporate 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

STARA PLANINA HOLD PLC – sphold.com

54.

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 financial and non-financial information disclosure procedures. With regard to any information

that Stara Planina Hold Plc and the companies in the group disclose, there is a connection between its

various components. The holding annually publishes a non-financial information 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, management bodies, organizational acts and adopted policies

related to the activities and functioning of the company, 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 and whistleblowing 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.

Any regulated information regarding Stara Planina Hold Plc and the companies in the group, their

management, corporate boards, operational activities, shareholder structure is disclosed in a timely

manner and published on the websites.

The annual consolidated report of Stara Planina Hold Plc presents information pursuant to Article

8 of the Taxonomy Regulation, including the part of turnover resulting from products and services related

to economic activities qualified as environmentally sustainable, the part of capital expenditure for such

activities and the part of operating expenses related to assets or processes related to economic activities

that qualify as environmentally sustainable.

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

STARA PLANINA HOLD PLC – sphold.com

55.

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.

The Board of Directors of Stara Planina Hold Plc and the Boards 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 channels 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 websites of the companies, on the website of the

Commission for Protection of Personal Data or can be provided in the company's office. Signals are

submitted 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 company's office.

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 2024 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

STARA PLANINA HOLD PLC – sphold.com

56.

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 and non-financial information; adherence to international financial

reporting standards and compliance with the going concern principle as well as with the applicable non-

financial reporting requirements.

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.

STARA PLANINA HOLD PLC – sphold.com

57.

Resolutions for buy-back procedures or issuance of shares are to be adopted by the shareholders

in accordance with the legislation in force.

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 and the public companies in the group 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

terms and procedures for their convocation and holding.

As of 31.12.2024 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.

By decision of the regular annual general meeting of shareholders, held on 06.06.2024, all members of

the Board of Directors were re-elected for new 5-year terms of office. 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

STARA PLANINA HOLD PLC – sphold.com

58.

companies or cooperatives is presented in the annual individual activity report as of 31.12.2024

(https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20241231-EN-SEP.xhtml).

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 2024, 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.

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.

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

STARA PLANINA HOLD PLC – sphold.com

59.

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 2024, the activities of the companies in the group were determined by the impact of the ongoing

crisis in the European and American economies, the contraction of business, low consumer confidence

and the strong rate of decline in demand and the military conflicts in Ukraine and the Middle East. The

process of imposing mutual sanctions between the US and the EU, on the one hand, and Russia, on the

other, which continued throughout the year, objectively affected the economy not only in Europe but also

on a global scale. The conflict in the Middle East also continued to expose the global economy and our

country to additional risk, both in terms of prices and security of supplies of oil and oil products, and due

to the expected refugee flow. On a national level, the industry's activities throughout 2024 were strongly

affected by the ongoing political instability. Our country continues to need new policies and ambitious

reforms to stimulate economic growth in order to reach the average income levels in the EU over the next

15 years.

There are no 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 2024 Separate Annual Financial

Statements (https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20241231-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 2024 Separate Annual Financial

Statements (https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20241231-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.

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 – sphold.com

60.

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 deferred 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 2025 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.

Detailed information on the internal control and risk management systems is presented under

Section VIII, item 4 of this Report.

STARA PLANINA HOLD PLC – sphold.com

61.

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 2024 Separate Annual Financial

Statements (https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20241231-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

2024 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

Vasil

Georgiev

Velev

Digitally signed by

Vasil Georgiev Velev

Date: 2025.04.24

10:02:05 +03'00'

STARA PLANINA HOLD PLC – sphold.com

62.

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 31.12.2024,

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 31.12.2024,

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: 2025.04.24

09:49:24 +03'00'

Vasil

Georgiev

Velev

Digitally signed by

Vasil Georgiev Velev

Date: 2025.04.24

10:02:29 +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),

containing the consolidated financial position statements as of 31.12.2021 and the consolidated profit and

loss, and other consolidated comprehensive income statements, the consolidated statements of changes in

equity and the consolidated cash flows statements for the year then ended, as well as the consolidated

explanatory notes to the financial statements, including a material accounting policy information.

In our opinion, the enclosed consolidated financial statements present fairly, in all material aspects the

financial standing of the Group as of 31.12.2024 and its financial results from business operations, as well

as its cash flows for the year then ended, in accordance with the International Financial Reporting

Standards – accounting standards (IFRS – accounting standards) adopted by the European Union (EU).

Basis for the opinion

We plan and perform the audit of the Group to obtain sufficient appropriate audit evidence about the

financial information of the entities or business units within the Group as a basis for forming an opinion

on the financial statements of the Group. We bear the sole responsibility for our audit 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 (including International Independence Standards) of the

International Ethic Standards for Accountants Council (the Code of IESAC), together with the ethical

requirements of the Independent Financial Audit and Assurance on Sustainability Act (IFAASA),

applicable to our audit of the financial statements in Bulgaria, while we have also fulfilled our other

ethical responsibilities in accordance with the IFAASA 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 that we received prior to

the date of our auditor's report, includes an activity report (incl.) a corporate governance declaration,

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.

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 consolidated 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.

Additional reporting matters under the Accounting Act and the Public Offering of Securities Act

In addition to our responsibilities and reporting under the IAS, with respect to the activity report and the

corporate governance declaration, we also performed the procedures added to the requirements under

IAS, in accordance with the “Guidelines on New and Extended Audit Reports and Auditor

Communication” of the professional organization of statutory auditors in Bulgaria, the Institute of

Certified Public Accountants (ICEP)”. These procedures concern checks for the existence, as well as

checks on the form and content of this other information in order to assist us in forming an opinion on

whether the other information includes the disclosures and reporting required by Chapter Seven of the

Accounting Act and the Public Offering of Securities Act (Article 100n, paragraph 10 of the Public

Offering of Securities Act in relation to Article 100n, paragraph 8, items 3 and 4 of the POSA), 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 consolidated

financial statements are prepared is consistent with the consolidated 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 consolidated 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.

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.

Responsibility of the management and the persons engaged with general management in terms of

the financial statements

The management is responsible for the preparation and the fair presentation of these financial statements

in accordance with the IFRS accounting standards, adopted by 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's 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

process of the companies in the Group.

The management is responsible for the fact that the electronic format of the consolidated financial

statements of the Company for the year ending on December 31, 2024, comprised in the attached

electronic file „8945006HQ7VN30FUR531-20241231-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, separately 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 of the 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 ability of the

companies in the Group 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 consolidated 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 consolidated financial statements,

including the disclosures and whether the financial statements present material transactions and events in

a manner that achieves fair presentation.

We communicate with the persons, engaged with general management, among other matters, the

planned scope and timing of the audit and significant audit findings, including any significant deficiencies

in internal control that we identify during our audit.

We also provide the persons, engaged with general management with a statement that we have

complied with relevant ethical requirements regarding independence and that we will communicate with

them all relationships and other matters that may reasonably be considered relevant to our independence,

and, where applicable, the actions taken to eliminate threats or safeguards applied.

Among the matters communicated with the persons, engaged with general management, we

determine those matters that were of most significance in the audit of the financial statements of the

current period and are therefore the key audit matters. We describe these matters in our auditor report

except when the law or regulation precludes public disclosure of information about the matter or when, in

extremely rare circumstances, we determine that a matter should not be communicated in our report

because the adverse consequences of doing so would reasonably be expected to outweigh the public

interest benefits of such communication.

Additional reporting on the financial statements audit in relation to 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 consolidated 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 31.12.2024 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 consolidated 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 31.12.2024, 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 accounting standards

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 2024 attached in the electronic file

„8945006HQ7VN30FUR531-20241231-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.

5 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, 2024, contained in the attached

electronic file „8945006HQ7VN30FUR531-20241231-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 and Assurance on Sustainability Act

Pursuant to the requirements of the Independent Financial Audit and Assurance on Sustainability

Act in relation to Art. 10 of Regulation (EC) No 537/2014, we further report the following information.

- Katya Raikova Zlatareva is a key auditor, appointed as a statutory auditor of the consolidated

financial statements for the year ended on 31.12.2024 of Stara Planina Hold Plc ("the Company") at the

General Meeting of Shareholders held on 06.06.2024 for a period of one year.

- The audit of the consolidated financial statements for the year ended on 31.12.2024 of the

Company represents a fifth 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 and Assurance on Sustainability 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 and Assurance on Sustainability Act.

- We confirm that we have preserved our independence in relation to the Company when

conducting the audit.

- For the period covered by our statutory audit, apart from the audit, we have not provided any

other services to the Company and the entities under the control of the Company.

25.04.2025, Sofia city

52, Simeon Radev Str.

Responsible auditor:

/Katya Zlatareva, registered auditor, diploma No. 0610/

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2025.04.25

08:14:51 +03'00'