BGN’000s

ASSETS	Note	31.12.2025	31.12.2024
Property, plant and equipment	1	117 807	105 544
Investment properties	2	8 694	8 280
Intangible assets	3	1 892	2 326
Positive goodwill		16 489	16 489
Investments in other companies	4	23 318	47 822
Other financial assets	5	1 218	1 218
Trade and other receivables	6	13 314	11 130
Deferred tax assets		397	204
Total Non-current assets		183 129	193 013
Materials	7	48 572	50 319
Trade and other receivables	8	51 302	47 449
Financial assets		-	-
Cash and cash equivalents	9	15 072	27 761
Prepaid expenses		634	548
Total current assets		115 580	126 077
TOTAL ASSETS		298 709	319 090
Share capital	10	20 725	20 725
Reserves	10	38 984	52 241
Retained earnings/loss	10	65 126	63 724
Total equity		124 835	136 690
Non-controlling interest		117 432	127 219
Trade and other payables	11	3 579	6 450
Deferred tax liabilities	11	1 099	3 119
Deferred revenues	11	50	50
State financing	11	937	1 109
Total non-current liabilities		5 665	10 728
Trade and other payables	12	50 622	43 858
Deferred revenues	12	103	25
State financing	12	52	570
Total current liabilities		50 777	44 453
Total liabilities		56 442	55 181
TOTAL EQUITY AND LIABILITIES		298 709	319 090

Date: 24.04.2026

Prepared by:

Kremena Dulgerova

Katya Zlatareva

Registered Auditor, Diploma No 0610

STARA PLANINA HOLD PLC

Non-current assets

For the period ended 31 December 2025

Current assets

EQUITY

LIABILITIES

Current

Non-current

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Manager:

Vasil Velev

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2026.04.28

09:42:30 +03'00'

Vasil

Georgiev

Velev

Digitally signed by

Vasil Georgiev Velev

Date: 2026.04.28

09:46:08 +03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2026.04.29

07:41:26 +03'00'

BGN’000s

	Note	31.12.2025	31.12.2024
Net sales revenues	13	276 399	266 214
State finansing revenues		808	982
Cost of materials		(132 579)	(127 765)
Cost of hired services		(24 225)	(23 831)
Depreciation		(17 282)	(17 660)
Salaries		(65 984)	(63 300)
Social securities		(14 048)	(13 224)
Changes in finished goods and work in progress		692	(481)
Cost of disposals		(4 808)	(5 106)
Other expenses		(3 394)	(3 336)
Operational profit		15 579	12 493
Financial income	14	4 731	880
Financial expenses	15	(792)	(610)
Profit before tax		19 518	12 763
Tax expenses, net		3 406	2 441
Net profit for the period		16 112	10 322
Profit attributable to:
Non-controlling interest		8 125	6 857
Equity holders of the parent company		7 987	3 465
Other comprehensive income
Investments in equity instruments, reported at FVOCI, net		(21 211)	6 556
Other comprehensive income-revaluation of a defined benefit
obligation		(3)	(21)
Other comprehensive income, net of taxes		(21 214)	6 535
Total comprehensive income		(5 102)	16 857
Total comprehensive income attributable to:
Non-controlling interest		(230)	9 183
Equity holders of the parent company		(4 872)	7 674
Earnings per share		0,39	0,17

Date: 24.04.2026

Prepared by:

Kremena Dulgerova

Katya Zlatareva

For the period ended 31 December 2025

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: 2026.04.28 09:43:01

+03'00'

Vasil

Georgiev

Velev

Digitally signed by

Vasil Georgiev

Velev

Date: 2026.04.28

09:46:41 +03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2026.04.29

07:41:50 +03'00'

BGN’000s

CASH FLOWS FROM OPERATING ACTIVITIES	31.12.2025	31.12.2024
Cash receipts from customers	288 883	293 268
Cash paid to suppliers	(186 797)	(177 490)
Cash paid to employees and social security institutions	(77 579)	(74 048)
Taxes paid/received	9 573	3 015
Interest, fees and commissions paid/received	(32)	(119)
Other payments/proceeds for operating activities	(7 544)	(7 416)
Net cash flow from operating activities	26 504	37 210
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of non-current assets	(29 612)	(22 199)
Proceeds from sales of non-current assets	37	17
Payments for loans granted	(2 930)	(128)
Proceeds from loans granted and lease contracts	1 407	892
Interests from loans received	234	300
Revenues from sale of investments	1 997	93
Dividends received from investment	43	37
Other payments/proceeds for investing activities	(2 243)	(6 041)
Net cash flow from investing activities	(31 067)	(27 029)
CASH FLOWS FROM FINANCIAL ACTIVITIES
Proceeds from loans received	6 945	28 639
Payments for loans received	(5 403)	(29 356)
Payments under to lease contracts	(26)	(84)
Interest, fees and commissions paid	(23)	(144)
Dividends paid	(13 199)	(17 386)
Other payments/proceeds for financial activity	3 580	(29)
Net cash flow from financial activities	(8 126)	(18 360)
Net increase/decrease in cash and cash equivalents	(12 689)	(8 179)
Cash and cash equivalents at a beginning of the period	27 761	35 940
Cash and cash equivalents at the end of the period	15 072	27 761

Date: 24.04.2026

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 2025

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2026.04.28

09:43:17 +03'00'

Vasil Georgiev

Velev

Digitally signed by

Vasil Georgiev Velev

Date: 2026.04.28

09:47:01 +03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed

by KATYA

RAYKOVA

ZLATAREVA

Date: 2026.04.29

07:42:13 +03'00'

BGN’000s

	Share	Premium	Revaluation	Other	Retained		Non-
	Capital	reserve	reserve	reserves	earnings	Total	controlling
							interest
Balance 01 January 2024	20 725	1 178	28 880	18860	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
Balance 01 January 2025	20 725	1 178	32 198	18 865	63 724	136 690	127 219
Net result for the period	-	-	-	-	7 987	7 987	8 125
Profit sharing for dividents	-	-	-	-	(6 545)	(6 545)	(8 810)
Other profit sharing	-	-	-	-	-	-	-
Revaluation of financial assets	-	-	(13 012)	-	-	(13 012)	(8 355)
Other changes in equity	-	(161)	(3)	(81)	(40)	(285)	(747)
Balance 31 December 2025 Date: 24.04.2026	20 725	1 017	19 183	18 784	65 126	124 835	117 432

Prepared by:

Kremena Dulgerova Vasil Velev

Registered Auditor, Diploma No 0610

Manager:

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the period ended 31 December 2025

STARA PLANINA HOLD PLC

Katya Zlatareva

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2026.04.28

09:43:37 +03'00'

Vasil

Georgiev

Velev

Digitally signed

by Vasil Georgiev

Velev

Date: 2026.04.28

09:47:24 +03'00'

KATYA

RAYKOVA

ZLATAREVA

Digitally signed by

KATYA RAYKOVA

ZLATAREVA

Date: 2026.04.29

07:42:32 +03'00'

To the Annual Consolidated Financial

Statements as of 31.12.2025

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, 26 A Latinka street;

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;

Due to his passing, as of December 31, 2025, Stefan Atanasov Nikolov no longer performs the functions of a

member of the Board of Directors.

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

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

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

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

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

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

As "Non-controlling interest" in the consolidated financial statement for the financial year 2025 is presented

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

STARA PLANINA HOLD PLC – www.sphold.com

The non-controlling interest in the consolidated financial statements for the financial year 2025 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 31.12.2025, 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

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

99.41%

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%

On August 27, 2025, Stara Planina Hold Plc sold its equity interest of 107 368 shares, with a nominal value of

BGN 2 each, representing 50.00 % of the share capital of Boryana AD, Cherven Bryag, UIC 114006352, for

the price of BGN 650 000 (six hundred and fifty thousand). As of the date of the transaction, Boryana AD,

Cherven Bryag, had repaid all liabilities under loan agreements to Stara Planina Hold Pllc. The investment in

Boryana AD, Cherven Bryag, was made by Stara Planina Hold Plc in 2012, with the 50.00 % equity interest in

the company's capital valued at BGN 429 472 at the time of acquisition

Statement of Compliance

The consolidated financial statements of Stara Planina Hold Plc 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 28.04.2026.

New and amended International Financial Reporting Standards

The Company is preparing for the introduction of the new International Financial Reporting Standards –

IFRS 18 “Presentation and Disclosure in Financial Statements” and IFRS 19 “Non-Public Subsidiaries:

Disclosure”. The two standards will enter into force on January 1, 2027.

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 2025 and 2024 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, until the date of sale.

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

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

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

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

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

transactions between companies within the Group.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

former consolidated entity and

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

controlling interest.

Financial instruments

Identification and evaluation of investments in subsidiaries

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

investments in subsidiaries are reported at acquisition cost.

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

when its right to receive the dividend is established.

Identification and evaluation of investments in associates

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

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

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

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

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

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

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

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

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

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

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

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

Management performs impairment tests regularly, at the date of the financial statements. If there are factors

and conditions, or changes in circumstances, that indicate that the carrying amount of an asset may not be

recoverable, impairment actions are taken.

An impairment loss is recognized as a current operating expense in the period in which it occurs. When,

subsequently, the recoverable amount exceeds the carrying amount of the asset, a reversal of the impairment

loss is recorded - and is recognized as operating income, in the period in which the asset recovers its value -

up to the amount of the previous impairment.

Investment properties

The investment properties consist of a building not used by SPH Invest AD, held for rental income and for

capital appreciation. The investment properties are initially recognized at acquisition cost, including transaction

costs. Subsequently, the investment properties are valued at acquisition cost less depreciation costs and any

impairment losses. The investment property is depreciated at a rate of 4% per annum and the straight-line

depreciation method is used.

As of the date of the financial statements, management has not identified any factors or circumstances that

indicate that the investment properties are impaired.

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 25.12.2027 at 2.5 % annual interest rate.

Loan agreement dated 09.01.2020 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 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%. Repaid at the end of the reporting period.

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 31.12.2025 in the amount

of BGN 1 525 thousand.

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

until 30.06.2026 at an annual interest rate 4%. Repaid at the end of the reporting period.

Loan agreement dated 01.07.2025 with HES Plc - in the amount of BGN 3 500 000 for a period

until 01.07.2026 at an annual interest rate 3,7%., unpaid principal as of 31.12.2025 in the amount of BGN

3 300 thousand.

Loan agreement dated 01.11.2023 with SPH Invest Jsc in the amount of BGN 2 000 000 (two

million) for a period until 01.11.2027 at an annual interest of 3.5 %, unpaid principal as of 31.12.2025 in

the amount of BGN 1 600 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.

According to the Law on the Introduction of the Euro in the Republic of Bulgaria, published in the State Gazette,

issue 70 of 20.08.2024, amended and supplemented, issue 25 of 25.03.2025, in force from 1 January 2025,

amended, issue 49 of 17.06.2025, amended and supplemented, issue 63 of 1.08.2025, in force from

1.08.2025, issue 65 of 8.08.2025 (the Law) and Decision (EU) 2025/1407 of the Council of 8 July 2025, in

force from 10.07.2025, on the adoption of the euro by the Republic of Bulgaria, as of 1 January 2026, the

currency conversion of the items in the financial statements of the Group for the year ending 31 December

2026 will be carried out at the fixed rate of 1 euro = 1.95583 leva, with the balances on the accounting accounts

in leva as of 1 January 2026 being recalculated in accordance with the currency conversion rules pursuant to

the provisions of Section II of the Law.

The introduction of the euro as the official currency in the Republic of Bulgaria represents a change in the

functional (reporting) currency of the Group, which will be reflected prospectively and does not represent an

event after the reporting period that requires an adjustment to the financial statements for the year ending 31

December 2025. The Group does not expect any significant effects from the translation of the opening

balances as of 1 January 2026 into euro and from the process of changing the functional (reporting) currency..

Significant events after the annual closing date are disclosed in the annual consolidated report on the activities

for the year ended 31 December 2025. No events have occurred after the reporting date until the date on

which the financial statements were authorised for issue that would require additional adjustments and/or

disclosures in the consolidated financial statements of the Group for the year ended 31 December 2025.

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 01.01.2025

9786

61341

229838

16144

5207

3687

14685

1171

341859

Received

during the

period

282

15854

189

365

31825

365

48930

Out of use

996

218

19173

20480

Depreciation

accrued in the

beginning of

the period

32043

188863

8420

4192

3147

831

237529

Depreciation

accrued

during the

period

1972

13359

491

303

158

16354

Depreciation

written off

during the

period

996

293

1381

Balance as of

31.12.2025

9766

27607

43470

7422

819

747

27337

639

117807

Note 2

Investment properties

Book value as of 01.01.2025

8582

Received during the period

756

Out of use

Depreciation accrued in the beginning of the period

302

Depreciation accrued during the period

342

Depreciation written off during the period

Balance as of 31.12.2025

8694

Note 3

Intangible assets

Intangible

assets

Rights of ownership

Software

R&D

products

Others

Total

Book value as of

01.01.2025

631

4464

1636

6731

Received during

the period

706

749

Out of use

Depreciation

accrued in the

beginning of the

period

513

4250

357

5120

Depreciation

accrued during

the period

325

117

467

Depreciation

written off during

the period

Balance as of

31.12.2025

105

594

1193

1892

Note 4

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

4548

10,00

4548

ZAD Asset Insurance JSC, Sofia

9786

40,00

9786

Hydraulic elements and systems Plc,

Yambol

7685

8,28

7685

Elhim - Iskra Plc, Pazardzhik

140

0,80

140

Leasing Company JSC, Sofia

664

5,00

664

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

23318

7825

15493

Investments in equity instruments (minority shares), according 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 5

Other financial assets

31.12.2025

31.12.2024

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 6

Long-term trade and other receivables

31.12.2025

31.12.2024

Trade loans

11680

9250

Others

1634

1880

Total

13314

11130

Note 7

Inventory

31.12.2025

31.12.2024

Materials

25307

23876

Finished goods

9742

12019

Goods for resale

902

1053

Work in progress

12621

13371

Others

Total

48572

50319

Note 8

Current trade and other receivables

31.12.2025

31.12.2024

Trade accounts receivables

46182

41404

Advance payments

698

661

Trade loans

500

Court receivables

Recoverable taxes

4379

4380

Others

490

Total

51302

47449

Note 9

Cash and cash equivalents

31.12.2025

31.12.2024

Cash

106

121

Cash in banks

13119

25794

Restricted cash

1847

1846

Cash equivalents

Total

15072

27761

Note 10

Share capital and Reserves

31.12.2025

31.12.2024

Share capital

21000

Treasury shares

-275

Premium reserves when issuing securities

1017

1178

Reserve from subsequent valuations of assets and

liabilities

19183

32198

General reserves

13267

13279

Special reserves

Other reserves

5517

5586

Undistributed profit

57921

60687

Loss not covered

-782

-428

Current year profit (loss)

7987

3465

Total

124835

136690

Note 11

Long-term trade and other liabilities

31.12.2025

31.12.2024

Due to related parties

239

288

Due to banks under loans received

150

656

Lease obligations

113

Due to staff upon leave

2503

3042

Liabilities on deferred taxes

1099

3119

State financing

937

1109

Others

624

2426

Total

5665

10728

Note 12

Current trade and other liabilities

31.12.2025

31.12.2024

Due for dividends

7858

7454

Due to banks under loans received

4426

3604

Trade loans

132

205

Trade accounts payables

20253

18377

Advance payments

985

1113

Salaries payable

8986

8502

Social security payable

2064

1825

Tax liabilities

2310

1274

Others

3352

1393

Provisions

256

111

Deferred revenues

103

State financing

570

Total

50777

44453

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 13

Net sales revenues

31.12.2025

31.12.2024

Finished goods

264257

253582

Goods for sale

3343

4148

Services

1765

1641

Others

7034

6843

Total

276399

266214

Note 14

Other financial income

31.12.2025

31.12.2024

Interest revenue

249

270

Dividend income

360

353

Gains from operations with financial assets and instruments

220

Gains from foreign exchange operations

236

Other financial income

3848

Total

4731

880

Note 15

Other financial expenses

31.12.2025

31.12.2024

Interest expenses

119

147

Losses from operations with financial assets and instruments

Losses from foreign exchange operations

446

205

Other financial expenses

227

251

Total

792

610

Chief Accountant: Kremena Dulgerova Executive Director: Vasil Velev

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2026.04.28

09:44:16 +03'00'

Vasil

Georgiev

Velev

Digitally signed

by Vasil Georgiev

Velev

Date: 2026.04.28

09:47:59 +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 ............................................ 6 
5. Risk factors for the activities of the Group of Stara Planina Hold Plc .............................................................. 7 
II. Consolidated Non-financial Information ....................................................................................................... 19 
Information on main intangible resources ........................................................................................................ 35 
III. Important developments occurred since the beginning of the year ............................................................ 35 
IV. Expected development of the group .......................................................................................................... 37 
V. Research and Development Activity ........................................................................................................... 40 
VI. Company shares ........................................................................................................................................ 42 
1.  Own shares. Buy-back .................................................................................................................................... 42 
2.  Changes in the share price of the companies ............................................................................................. 42 
3. Dividend policy ....................................................................................................................................................... 44 
VIІ. Financial instruments used by the enterprise ........................................................................................... 45 
1. Accounting policy ................................................................................................................................................... 45 
3.  Financial instruments ...................................................................................................................................... 46 
4.  Liquidity ............................................................................................................................................................. 46 
4. Exposure of the enterprise to price, credit, liquidity and cash flow risk ......................................................... 46 
VIII. Corporate Governance Declaration ......................................................................................................... 47 
1. National Corporate Governance Code ............................................................................................................... 47 
2. Implementation of the National Corporate Governance Code ........................................................................ 47 
5. Information Art. 10 of Directive 2004/25/EC ...................................................................................................... 55 
6. Diversity policy ....................................................................................................................................................... 55 
7. Information on the Board of Directors ................................................................................................................. 55 
IХ. Additional information on Appendix 2 of Ordinance No 2 of the FSC ........................................................ 56 
Media ........................................................................................................................................................................... 60 
 
 
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)

Y2023

Y2024

Y2025

Income from main business activity

378 966

266 214

276 399

Net profit from business activity

13 913

3 465

7 987

Amount of assets

328 905

319 090

298 709

Shareholders' Equity

136 277

136 690

124 835

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:

66,3

11,0

4,4

18,3

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 31.12.2025:

Investments in subsidiaries

Hydraulic Elements and Systems Plc

64.53 %

Elhim Iskra Plc

51.40 %

Fazan Jsc

92.65 %

SPH Invest Jsc

99.41 %

Investments in associates

M+C Hydraulic Plc

30.61 %

Bulgarian Rose Plc

49.99 %

Investments in other companies

Asset Insurance Jsc

20.00 %

Leasing Company Jsc

5.00 %

On August 27, 2025, Stara Planina Hold Plc sold its equity interest of 107 368 shares, with a

nominal value of BGN 2 each, representing 50.00 % of the share capital of Boryana AD, Cherven Bryag,

UIC 114006352, for the price of BGN 650 000 (six hundred and fifty thousand). As of the date of the

transaction, Boryana AD, Cherven Bryag, had repaid all liabilities under loan agreements to Stara Planina

Hold AD. The investment in Boryana AD, Cherven Bryag, was made by Stara Planina Hold Plc in 2012,

with the 50.00 % equity interest in the company's capital valued at BGN 429 472 at the time of acquisition.

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)

Y2023

Y2024

Y2025

Sales of finished goods

351 004

253 582

264 257

Sales of trading goods and services

20 770

5 789

5 108

Other incomes

7 192

6 843

7 034

Grants

910

982

808

Financial income

1 155

880

4 731

Total Income

381 031

268 076

281 938

The consolidated sales of the companies in the group as of 31.12.2025 amount to BGN 276.4

million (EUR 141.32 million) thus reporting a 3.83 % increase compared to the sales in 2024 and a

decrease by 27.06 % compared to the reported sales in 2023.

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

(million BGN)

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

(million EUR) and forecast for 2026

* forecast

Given the updated forecasts of our customers and partners from Europe and the world in a more

optimistic direction, at least until the middle of the year, we have already revised our expectations for the

projected results for the second quarter of 2026. We expect consolidated sales revenues to reach EUR

224,4

200,0

278,4

375,3

379,0

266,2

276,4

2019 2020 2021 2022 2023 2024 2025

102,3

142,3

191,9 193,8

136,1

141,3

151,1

2020 2021 2022 2023 2024 2025 2026*

38.6 million, by which we would report a growth of 2.5 % compared to the same period in 2025 and an

increase of over 12 % compared to the second quarter of 2024. We expect consolidated sales in the first

half of this year to reach EUR 76.9 million, which would represent an increase of over 6 % compared to

the first half of 2025 and of approximately 5.5 % compared to the same period in 2024.

At this stage, our projected expectations for the second half of 2026 are that consolidated revenues

will reach EUR 74.2 million, which would represent a growth of 7.74 % compared to the same period in

2025 and an increase of 17 % compared to the second half of 2024. On an annual basis, we expect

consolidated revenues for 2026 to increase by nearly 6 % compared to 2025.

The net consolidated profit as of 31.12.2025 amounts to BGN 7 987 thousand (EUR 4084

thousand) and reports an increase by 130.51 % compared to 2024 and a decrease by 42.59 % compared

to the net consolidated profit for 2023.

Consolidated Net Profit (BGN’000s)

The 2025 consolidated EBITDA amounts to BGN 36.92 million (EUR 18.876 million) and reports

an increase by 20.77 % compared to 2024 and a decrease by 42.64 % compared to 2023.

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 6 years.

8096

13054

17538

13913

3465

7987

2020 2021 2022 2023 2024 2025

34,11

38,13

48,60

67,73

64,37

30,57

36,92

2019 2020 2021 2022 2023 2024 2025

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

Profitability Indicator

31.12.2022

31.12.2023

31.12.2024

31.12.2025

0.137

0.102

0.025

0.064

0.058

0.042

0.011

0.027

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 2025, compared to 2024, the return on equity ratio reports an increase due to the increase in

the net consolidated profit by 130.51 % compared to the reported decrease in the value of equity on a

consolidated basis by 8.67 %.

The return on assets ratio shows the efficiency of using the total assets and in 2025 also reported

an increase compared to the previous year due to the increase in the net consolidated financial result by

130.51% compared to the decrease in the amount of consolidated assets by 6.39 %.

Efficiency Indicator

31.12.2022

31.12.2023

31.12.2024

31.12.2025

1.154

1.141

1.050

1.074

0.867

0.877

0.952

0.931

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 2025 shows that

BGN 1.07 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

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

31.12.2025

3.026

3. 268

2.836

2.276

0.850

0.791

0.625

0.297

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 2025, 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 8.33 % compared to an increase in

the value of current liabilities by 14.23 %.

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

with its available cash. In 2025, the value of this ratio on a consolidated basis reports a decrease

compared to the previous year which is due to an increase in the short-term liabilities by 14.23%

compared to the cash decrease by 45.71 %.

In 2025 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

31.12.2025

2.130

2.211

2.477

2.212

0.469

0.452

0.404

0.452

К7 Financial Autonomy ratio = Shareholders’ equity / Borrowed capital

К8 Debt ratio = Borrowed capital / Shareholders’ equity

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

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

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

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

pay their long-term obligations.

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

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

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

oriented - mainly to the countries of the European Union.

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

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

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

Plc and the companies in the Group 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. By the end of 2025, the

global economy is in a state of moderate but unstable growth, characterized by a high degree of

uncertainty and structural changes in global economic and trade relations. International financial

institutions such as the IMF, the World Bank, the OECD, and the UN confirm that the world economy is

entering a new stage where growth remains limited, and geopolitical and fiscal risks continue to exert a

significant influence on the business climate and international markets.

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

supplies, weak demand, geopolitical tensions and economic challenges related to escalating trade

tensions continue having a significant impact on business processes and prospects for economic

development in a global perspective.

According to the ECB Economic Bulletin from December 2025, experts expect average annual real

GDP growth in the Eurozone to be 1.4% in 2025, 1.2% in 2026, 1.4% in 2027, and 1.4% in 2028.

Compared to the September 2025 projections, GDP growth has been revised upwards for the entire

forecast horizon, reflecting better-than-expected data, reduced trade policy uncertainty, stronger external

demand, and lower energy commodity prices. Domestic demand is expected to remain the main driver

of growth in the Eurozone, stimulated by rising real wages and employment, amid stable labor markets

with record-low unemployment rates. The additional government spending on infrastructure and defense

announced in 2025, specifically in Germany, along with more favorable financing conditions due to the

reduction of key interest rates since June 2024, are also expected to support the domestic economy.

Regarding the external environment, although competitiveness challenges persist, including those of a

structural nature, exports are expected to accelerate in 2026.

The ECB Governing Council emphasizes the need for urgent measures to strengthen the Eurozone

and its economy within the current geopolitical context. It supports the European Commission's call for

governments to prioritize sustainable public finances, strategic investments, and growth-enhancing

structural reforms. It is of crucial importance to leverage the full potential of the Single Market.

Against this background, according to National Statistical Institute (NSI) data for 2025, Bulgaria's

trade turnover with its main trading partners from the EU and third countries has contracted for another

consecutive year. In 2025, Bulgaria's total exports amounted to BGN 83 894.5 million, representing a

3.2% decrease compared to 2024, when a decline of 0.2 % was reported, following a 6.5 % drop in 2023.

One of the reasons for this decline is the impact of the war in Ukraine on the markets. Concerningly, in

2025, the contraction was more pronounced in exports to EU countries, which are leading markets for

Bulgaria. At the same time, total imports into the country in 2025 reached BGN 105 605.1 million (at CIF

prices), or 6.1 % more than in 2024. The total foreign trade balance (FOB exports - CIF imports) for 2025

was negative, amounting to BGN 21 710.6 million. In December 2025, the total foreign trade balance

(FOB exports - CIF imports) was also negative, standing at BGN 2 909.1 million.

Also, according to National Statistical Institute data, in December 2025, the total business climate

indicator decreased by 3.1 points compared to the previous month (from 16.1 % to 13.0 %), with a decline

registered across all observed sectors – industry, construction, retail trade, and services. The composite

indicator 'business climate in industry' fell by 2.1 points (from 14.6 % to 12.5 %) as a result of the

unfavorable assessments and expectations of industrial entrepreneurs regarding the business condition

of their enterprises. Production activity is assessed as diminished, while activity expectations for the next

three months are more favorable. The uncertain economic environment, labor shortages, and insufficient

demand from abroad and domestically continue to be the main obstacles to business development.

Furthermore, according to Eurostat data, in December 2025, seasonally adjusted industrial

production decreased by 1.4 % in the Eurozone and by 0.8 % in the EU on a monthly basis. On an annual

basis, in December 2025, compared to the same month in 2024, industrial production in the EU increased

by 1.4 %, while in the Eurozone it rose by 1.2 %. The average annual industrial production for 2025,

compared to 2024, increased by 1.5 % in both the Eurozone and the EU.

On an annual basis, however, according to NSI data, industrial production in Bulgaria recorded a

6.7 % decline in December 2025, following a 9.0 % decrease in November; by this indicator, our country

reported the third-largest annual drop in the EU, after Slovakia and Luxembourg. This represents a

contraction of production in our country for the thirteenth consecutive month.

Change in the Industrial Production Index compared to the same month

of the previous year (calendar adjusted)

Source: NSI

According to NSI data, in December 2025, the total Producer Price Index (PPI), which measures

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

recorded an increase of 1.4 % compared to the previous month and 9.6 % compared to the level in

December 2024. In the sectors where the main companies of the Stara Planina Hold AD group operate,

as of December 2025 compared to December 2024, an increase of 7.3 % was reported in the

manufacture of fabricated metal products, while a decrease of 1.1 % was noted in the manufacture of

machinery.

According to data of the European Commission, in December 2025, the Economic Sentiment

Indicator (ESI) decreased both in the EU (-0.1 points to 96.8) and in the Eurozone (-0.4 points to 96.7),

after reaching a 31-month high of 97.1 points for the Eurozone in November. The result remains slightly

below market expectations (97.0) and below the long-term average of 100 points. The decline in the ESI

is due to lower confidence in the services and retail trade sectors, as well as among consumers. Among

the largest economies in the Eurozone, confidence fell in Germany (-1.1), France (-0.9), Italy (-0.6), and

Spain (-0.5), while the Netherlands was the only major economy to record an improvement (+0.5).

According to data from EUROFER (the European Steel Association), although the EU's mechanical

engineering industry demonstrated resilience throughout 2023 and 2024, sector growth remains exposed

to persistent downside risks. These include the prolonged impact of the war in Ukraine, escalating global

geopolitical tensions, and the ongoing deterioration of the industrial outlook observed to date. Despite

these challenges, mechanical engineering output recorded a growth of +1.6% in 2023, followed by a

pronounced contraction of -5.2% in 2024. EUROFER anticipates another recession in 2025, albeit a more

moderate one (-1%, revised upward from -1.7%), with a modest recovery projected only in 2026 (+1%,

revised from +1.4%).

According to the EUROFER Economic and Steel Market Outlook – Q4 2025 (data was published

prior to the escalation of the military conflict between the US/Israel and Iran), EU industrial production

exhibited signs of weakness throughout 2024 and into the latest monthly data for 2025. This trend

persisted across most individual European economies nearly until the end of 2025. The latest available

monthly figures indicate that industrial production in Spain and France has returned to pre-pandemic

levels, whereas Germany and Italy have yet to reach this benchmark. Industrial output is expected to

remain impacted by a combination of factors, including uncertainty arising from escalating trade tensions

related to US tariff policy, ongoing conflicts and geopolitical risks, inflation, interest rates, and energy

prices, which remain volatile. Following a further decline in 2024 (-2.2 %), EUROFER projects near-flat

growth for 2025 (+0.3 %, revised upward from +0.1 %), before achieving modest growth in 2026 (+1.4%).

EUROFER Forecast for the Mechanical Engineering and Mechanical Components Sectors

(EU-28, Year-on-Year)

In its latest World Economic Outlook update from January 2026, the IMF forecasts global economic

growth to remain resilient at 3.3% in 2026 and 3.2% in 2027. For the past year, 2025, global growth is

expected to have reached 2.9%, while growth in the Eurozone is estimated at 0.9%. The IMF notes that

the United States and China are the primary contributors to the upward revision of the 2026 estimate,

while warning that an escalation of the tariff war and new geopolitical shocks could rapidly deteriorate the

outlook and unsettle financial markets. Regarding the United States, the IMF has raised its forecast by

0.3 percentage points, projecting growth of 2.4% in 2026 and a slowdown to 2.0% in 2027. For the

Eurozone, which Bulgaria joined on January 1st, the outlook remains more moderate due to unresolved

structural issues, weak domestic demand, and ongoing pressure from higher energy prices following the

Russian invasion of Ukraine. The IMF projects a growth rate of 1.7% for the current year (an increase of

0.1 percentage points compared to October) and 1.3% for 2027 (unchanged from the October forecasts).

-1,00

0,00

0,60

2,00

1,40

1,00

-0,60

1,40

2,50

3,40

2,80

2,50

Y2025 1Q26 2Q26 3Q26 4Q26 Y2026

Mechanical engineering Metal goods

10.

As for the Eurozone's largest economy, the IMF expects the German economy to grow by 1.0% in 2026

and 1.5% in 2027. Among the forecasts for other major economies, the IMF expects China's growth to

reach 4.5% in 2026 - lower than the 5.0% expected in 2025, but 0.3 percentage points higher than the

October estimates. The IMF emphasizes that the outlook remains tilted to the downside. A continuing

trade war could increase uncertainty and weigh on economic activity. Furthermore, an escalation of

geopolitical tensions could disrupt supply chains and lead to higher volatility in financial markets. At the

same time, larger budget deficits and high levels of public debt could put upward pressure on interest

rates. Policies to promote stability and sustainably improve medium-term growth prospects require a

strong emphasis on rebuilding fiscal buffers, maintaining price and financial stability, reducing uncertainty,

and implementing structural reforms without further delay, the IMF highlights.

In the beginning of 2026, the manufacturing sector in Europe shows signs of recovery, but growth

is too fragile due to structural economic and geopolitical difficulties on the one hand, and due to intense

competition, high energy regulatory costs, and heavy global pressure on the other. Overall, the main risks

remain the dependence on energy imports, as high energy prices increase production costs and inflation,

especially in industry. The new military conflict in the Middle East intensifies concerns regarding the

accessibility and pricing of energy commodities and other material resources. Potential logistics and

supply chain disruptions, alongside rising transportation and freight costs, are expected to have a direct

impact on production costs (cost of sales). Consequently, these factors pose a significant risk to the

competitiveness of the Bulgarian industry and may lead to a potential loss of market share. The US -

China trade relations, and especially the customs tariffs on Chinese goods in the US, intensify the

Chinese supply in Europe, which in turn reduces the competitiveness of European manufacturers.

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.

In the first half of the year, the ECB reduced interest rates by a total of 100 basis points (1.00 %)

through four consecutive steps of 0.25 % each, in January, March, April, and June 2025, respectively.

At its monetary policy meetings on September 11, 2025, and October 30, 2025, the Governing

Council decided to keep the three key ECB interest rates unchanged, as inflation remains close to the

medium-term target of 2% and its assessment of the inflation outlook remains broadly unchanged, while

noting that the outlook remains uncertain, particularly due to ongoing global trade disputes and

geopolitical tensions.

Following the ECB Governing Council meeting in October 2025, market interest rates rose. Bank

lending rates for firms have remained generally stable since the summer, after falling in response to the

Council's key rate cuts in the previous year. In October, they stood at 3.5%, unchanged from September.

Bank lending to firms grew by 2.9 % year-on-year in October, unchanged from September. Mortgage

lending strengthened, rising by 2.8 % after 2.6 % in September.

At its meeting on December 18, 2025, the Governing Council again decided to keep the three key

ECB interest rates unchanged. As of December 31, 2025, the interest rates on the deposit facility, the

main refinancing operations, and the marginal lending facility remain at 2.00%, 2.15%, and 2.40%,

respectively.

The ECB's decisions are based on the expectation that inflation will settle durably around the 2%

target in the medium term. The Governing Council emphasized that it is not committing to a pre-defined

rate path but rather making decisions meeting-by-meeting based on economic indicators.

At its first meeting of 2026 in February - in which Bulgaria participated for the first time as a full

member of the currency union - the ECB decided to keep these interest rate levels unchanged.

According to BNB data, the base interest rate recorded a decrease from 2.95 percentage points as

of January 1, 2025, to 1.81 percentage points as of December 1, 2025.

11.

Source: BNB

Changes in interest rate levels have an impact depending on the share of attracted bank and

commercial loans. In 2025, the 12-month EURIBOR went through a period of gradual decline and

stabilization, reflecting the shift in the European Central Bank's monetary policy from fighting inflation

toward supporting economic growth. The highest value of 2.576 % was recorded in January 2025, while

the lowest (2.024 %) was in May 2025. As of December 31, 2025, the 12-month EURIBOR reached a

value of 2.243%.

The reduction in interest payments on existing floating-rate loans increased consumers' disposable

income, which was a primary driver of economic growth in 2025. The Eurozone economy grew by 1.4 %

– 1.5% for 2025, supported by domestic demand and stabilized financial conditions. The decline in

EURIBOR did not lead to a new surge in inflation, which ended 2025 at levels of 1.9% in the Eurozone -

just below the ECB's target. Despite lower interest rates, banks remained cautious in lending due to risks

in the economic environment. Trade conflicts with the US and China continue to weigh on export-oriented

companies, limiting the positive effect of cheaper money.

12-month EURIBOR

(01.01.2025 - 31.12.2025)

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.

In 2025, inflationary pressure gradually decreased but remains above the target levels of central

banks. Average inflation in OECD countries is expected to be around 4.2 %, with significant regional

disparities persisting. The World Trade Organization reports a moderate recovery in international trade

in goods, forecasting growth of approximately 2.4 % for 2025, with emerging markets in Asia and Africa

serving as the primary drivers, while transatlantic flows between Europe and North America remain

volatile.

2,95

2,82

2,59

2,39

2,24

2,07

1,91

1,82 1,82

1,81

1,80

1,81

01.01.2025 01.02.2025 01.03.2025 01.04.2025 01.05.2025 01.06.2025 01.07.2025 01.08.2025 01.09.2025 01.10.2025 01.11.2025 01.12.2025

BNB Base Interest Rate

01.01.2025 г. - 01.12.2025 г.

12.

According to the ECB macroeconomic projections of December 2025, annual inflation in the

Eurozone, measured by the Harmonized Index of Consumer Prices (HICP), has fluctuated within a narrow

range since the spring of 2025 and remained at 2.1 % in November. Energy prices were 0.5 % lower

compared to November 2025, following a more significant decline recorded in October. According to ECB

staff, most indicators of long-term inflation expectations remain at around 2%, supporting the stabilization

of inflation around the target level set by the Governing Council. Inflation is projected to slow from 2.1 %

in 2025 to 1.9 % in 2026, and further to 1.8 % in 2027, before rising to the Governing Council’s medium-

term target of 2 % in 2028. The expected decline in headline inflation in early 2026 reflects downward

base effects related to energy prices, while inflation for non-energy components is expected to continue

slowing throughout 2026. The contribution of energy inflation to headline inflation is expected to remain

low until the end of 2027, before increasing significantly in 2028 as a result of the anticipated introduction

of the EU Emissions Trading System 2 (ETS2), which is expected to accelerate headline inflation by 0.2

percentage points. HICP inflation excluding energy is projected to slow from 2.5 % in 2025 to 2.2 % in

2026 and to 2.0 % in both 2027 and 2028.

According to the European Commission’s Autumn 2025 Economic Forecast, inflation in the

Eurozone is expected to continue decreasing to 2.1% in 2025 and to remain around 2% throughout the

forecast period. Inflation in the EU is expected to stay slightly higher, falling to 2.2% in 2027. The inflation

forecast for Bulgaria is 3.5 % for 2025, 2.9 % for 2026, and 3.7 % for 2027, respectively.

According to the IMF World Economic Outlook update from January 2026, global inflation is

projected to decelerate from an estimated 4.1% in 2025 to 3.8% in 2026 and further to 3.4% in 2027. In

the Eurozone, headline inflation is expected to stabilize around 2%, with core inflation projected to

converge to this target level by 2027. These inflation forecasts remain broadly unchanged compared to

the October projections and suggest that inflation will return to target more gradually in the United States

than in other major economies.

According to Eurostat data, annual inflation in the European Union slowed to 2.3 % in December

2025, down from 2.4% in November. In the Eurozone, annual inflation in December stood at 1.9 %,

following 2.1 % in November. According to preliminary data, Eurostat had initially estimated December's

inflation at 2 %. In Bulgaria, based on the Harmonized Index of Consumer Prices (HICP), the annual

inflation rate slowed to 3.5 % in December compared to 3.7 % in November, a level that ranks the country

sixth in the EU.

According to National Statistical Institute (NSI) data, monthly inflation in December 2025, measured

by the Consumer Price Index (CPI), was 0.1%, while annual inflation for December 2025 compared to

December 2024 was 5.0%. The average annual inflation for the period January 2025 – December 2025,

compared to the period January 2024 – December 2024, was 4.6%. In December 2025, monthly inflation

in Bulgaria measured by the HICP was 0.1%, and annual inflation for December 2025 compared to

December 2024 was 3.5%. The average annual inflation measured by the HICP for the period January

2025 – December 2025, compared to the period January 2024 – December 2024, was 3.5%.

In connection with the conflict in the Middle East and its duration, it is possible that global inflation

may rise to levels that currently cannot be predicted.

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.

On 8 July 2025, Bulgaria received the final necessary approval for its accession to the Eurozone

from 1 January 2026. Following the European Parliament's vote in favor of our country’s transition to the

Eurozone, the Economic and Financial Affairs Council (ECOFIN) adopted three legal acts finalizing the

approval process: regarding the adoption of the euro by Bulgaria from 1 January 2026 pursuant to Article

140(2) of the TFEU; regarding the introduction of the euro in Bulgaria pursuant to Council Regulation

(EC) No 974/98; and regarding the exchange rate of 1 euro = 1.95583 BGN for Bulgaria pursuant to

Council Regulation (EC) No 2866/98. This successfully concluded the approval process for our

membership application, and our country officially joined the Eurozone from 1 January 2026.

13.

Currency conversion is carried out at the fixed rate of 1 euro = 1.95583 BGN; therefore, there is no

risk of devaluation of the lev against the European currency. However, there is a risk of unfavorable

changes in the euro's exchange rate against other major currencies, such as the US dollar, Swiss franc,

British pound, etc.

According to an analysis by the Fiscal Council regarding the introduction of the single currency in

Bulgaria, as of the date of this notification, available facts and indicators confirm that the transition to the

euro from January 1, 2026, is proceeding smoothly and in an organized manner, with a high degree of

institutional readiness and effective process management. The exchange of banknotes and coins is

progressing according to plan, and as of mid-March 2026, approximately 89 % of the leva in circulation

have been withdrawn.

Given the export orientation of a significant number of the companies within the group of Stara

Planina Hold Plc, changes in currency values have a certain effect and are a risk factor for their

operations. Exchange rates influence revenues from foreign sales and costs for raw material imports; the

main part of sales and imports are agreed upon in euros, which significantly reduces the impact of this

risk on operations. Since these companies conduct their primary settlements in BGN and EUR and realize

the bulk of their sales revenue in EUR, the impact of this risk on their operations is significantly reduced.

The management of the holding company monitors exchange rate fluctuations and takes measures to

mitigate their negative consequences.

Political risk is the probability of serious domestic political turmoil occurring, leading to a negative

shift in the government’s economic program and its priorities for economic development; as a result, the

environment in which the companies operate may change for the worse, and investors may incur losses.

The degree of political risk is determined by the likelihood of unfavorable changes in the government’s

long-term economic policy, which could have a negative impact on investment decisions.

As of the date of this report, the political instability in the country in recent years continues to be

assessed as a major factor negatively affecting not only economic activity and the business environment,

but also all public systems in the country. The lack of real reforms has further worsened the business

environment and as a result we continue to report a deepening decline in the industry, a collapse in

exports, and job losses. The results of the eighth early parliamentary elections in Bulgaria since 2021,

held on 19.04.2026, give reason to expect the formation of a government with a perspective for

sustainable governance, which would lead to the end of the political instability in the country. It remains

imperative for Bulgaria 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. In the context of a continuing decline in industrial production and a deepening crisis

in the real sector in the EU and Bulgaria, it is particularly important for public finances to stop the practice

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

payments, including pensions, which many times exceed inflation levels.

The country ended 2025 without an adopted 2026 Budget or a public finance framework for the

2026-2029 period, characterized by higher-than-projected GDP but coupled with high inflation, weak

revenues, inflated current expenditures, and unfulfilled investments. According to a summary of the

analysis on the 2025 Budget execution published by the Fiscal Council of Bulgaria on February 13, 2026,

this is viewed as a signal of lacking discipline, with the Council urging for serious reforms rather than

'innovations' that merely postpone problems. The Council states that the 2025 Budget projections were

unrealistic and overly optimistic, while 'fiscal tricks' - such as 100 % dividends from state-owned

enterprises, advance taxes from banks, and the capitalization of the Bulgarian Development Bank in lieu

of budget expenditures - circumvent rules and create long-term issues. Furthermore, the Council points

out that current expenditures (specifically wages) undermine sustainability; they argue that given the

healthy growth, the deficit should have been capped at 0.8 % of GDP. The Fiscal Council once again

appeals for structural reforms, including the limitation of current spending and administrative reform, to

manage pressures from defense, pensions, healthcare, and demographics, adding that failure to do so

risks higher taxes or increased debt.

According to the state budget for 2026 and the medium-term budgetary framework initially

presented by the Ministry of Finance, public debt was projected to reach EUR 37.6 billion (31.3 % of

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GDP) in 2026, EUR 43.5 billion (34.2 % of GDP) in 2027, and EUR 49.0 billion (36.6 % of GDP) in 2028.

For 2026, new borrowings of BGN 20.5 billion (approximately EUR 10.5 billion) were planned, which

would triple the interest expenses for debt servicing. The draft budget proposed a two-fold increase in the

dividend tax and a 2-percentage-point hike in social security contributions for the 'Pensions' fund

(resulting in a more than 10 % increase in pension contribution costs). As a result, BGN 1.4 billion would

be extracted annually from those employed in the real sector starting as early as 2026, with this amount

growing progressively to finance inefficient spending in the public sector, including new double-digit wage

increases in the 'Security and Defense' and 'Higher Education' sectors. Leading economists and the

business community expressed firm disagreement with this fiscal policy and concern that it deepens the

risk of an unsustainable fiscal spiral, threatening macroeconomic stability and the country’s medium- and

long-term economic growth. The Governor of the BNB, Dimitar Radev, also expressed concern that the

2026 budget faces serious difficulties, highlighting that debt accumulation should be offset by investments

and economic growth, and wage increases should be matched by reforms. He noted that in systems

where personnel costs account for 70-80 %, or even over 90 % of total expenditures, efficiency cannot

be achieved.

In this regard, the Association of Bulgarian Employers’ Organizations (ABEO) presented a

reasoned proposal for a specific package of measures with a positive fiscal effect exceeding BGN 6

billion. These measures would allow for the preservation of the tax and social security model, even with

public sector wage growth aligned with inflation, provided that automatic wage-setting mechanisms are

abolished, the increase in maintenance costs is limited to 5 %, the capital program is reduced by 3%, and

vacant positions in the administration are cut. Escalating public discontent nationwide led to the

withdrawal of the initially proposed budget and prevented the adoption of a revised new budget that

partially incorporated the measures proposed by the business sector; consequently, in early December,

the Government submitted its resignation.

Against this background, the European Commission’s assessments - part of the autumn package

released on November 25, 2025, within the framework of the European Semester, which analyzes key

economic and social challenges in the EU and provides policy guidance to Member States - identified

Bulgaria among the countries deemed at risk of non-compliance with the EU fiscal framework based on

the 2026 Draft Budgetary Plan. This indicates the Commission's concern that the national fiscal policy for

2026 may not fully align with the current European fiscal requirements. Furthermore, in the social

dimension of the analysis, Bulgaria was included among the nine countries subject to an in-depth review

in the spring of 2026. This analysis addresses risks to social convergence with other Member States,

including challenges such as low productivity, labor and skills shortages, and higher levels of poverty or

other social disparities.

In 2025, the country once again received unsatisfactory ratings from prestigious studies in the areas

of competitiveness and economic freedom. According to the 37th edition of the 2025 World

Competitiveness Ranking by the Institute for Management Development (IMD) – Switzerland, published

on June 17, in 2025 Bulgaria ranks 57th out of 69 countries, marking an improvement of only one position

compared to last year, when it was ranked 58th but out of 67 economies. Compared to the previous year

2024, our country marks a decline in terms of economic performance (from 45th to 50th place) and

business efficiency (from 65th to 67th place). For comparison, since 2020 Bulgaria has seen a

deterioration of a total of 9 positions, and since 2009 – by 19, which places it among the most

uncompetitive economies in Europe. Furthermore, according to information from the Institute for Market

Economics, based on the latest study by the Canadian Fraser Institute, Bulgaria ranks 56th in economic

freedom globally among 165 countries, dropping 4 positions compared to the previous year's ranking.

For another consecutive year, Bulgaria receives its lowest score regarding the legal system and property

rights; in this category, which measures the rule of law, judicial independence, the work of law

enforcement agencies, and the protection of property rights, our country lags behind all other EU member

states. According to the report, Bulgaria also sees a decline in the size of government category, which

includes indicators such as the share of redistribution through the budget, transfers and subsidies, the

size of state assets, and taxes. Bulgaria receives a maximum score only for its flat tax. The two categories

where Bulgaria receives its highest scores in the index are sound money and freedom to trade

15.

internationally, which are predetermined by the currency board and Bulgaria's EU membership,

respectively. Meanwhile, in the remaining categories concerning current policies and the implementation

of reforms, the scores remain low and freedom remains restricted.

An unsatisfactory level of the rule of law in our country was also noted in the European

Commission's annual Rule of Law Report, presented on 8 July 2025. The European Commission reported

that Bulgaria has made 'limited progress' in fulfilling its commitments. The Commission expressed serious

concern regarding the state of the rule of law in Bulgaria in 2025, reminding that reforms have stalled

since 2023, which calls into question the sustainability of key changes in the judicial system and the fight

against corruption. One of the most serious problems outlined in the report is the exceptionally low level

of trust in the judiciary among both citizens and businesses. According to the Commission's data, only

27 % of citizens and companies rate the independence of the courts as 'good,' which is a slight increase

compared to 2024 but represents a significant decline compared to 2021, when 32 % of citizens and 43

% of companies held such an opinion.

Furthermore, according to data published on February 10, 2026, in the 2025 Corruption

Perceptions Index (CPI) by the international organization Transparency International, Bulgaria recorded

its worst performance since 2012. Ranking 84th out of 182 countries with a score of just 40 out of 100

points, Bulgaria stands as the worst-performing EU member state alongside Hungary. According to the

Transparency International report, Bulgaria’s score has deteriorated by five points over the last two years

alone. The lack of progress on key reforms, unfulfilled international recommendations, and the ineffective

enforcement of anti-corruption legislation place the country in an unfavorable position both within the EU

and in its accession process to the Organization for Economic Co-operation and Development (OECD).

Furthermore, according to information from the website of the global supervisory body, the

Financial Action Task Force (FATF), as of the end of 2025, Bulgaria remains on the “grey list” for money

laundering and continues to be subject to increased monitoring. In June 2025, Croatia, Mali, and Tanzania

were removed from the FATF “grey list”, leaving Bulgaria as the only European country on it, alongside

nations such as Burkina Faso, Cameroon, the Democratic Republic of the Congo, Haiti, Kenya, Nepal,

etc.

At the same time, political volatility in recent years has led to delays in the practical implementation

of the structural measures necessary to accelerate the absorption of funds under the Recovery and

Resilience Plan. The severely compromised principle of the rule of law and the failure to meet reform

commitments in this area led to a decision by the European Commission on October 6, 2025, to delay

the transfer of EUR 214.5 million, representing part of the second payment for Bulgaria under the

Recovery and Resilience Plan, due to the non-fulfillment of a key objective - the reform of the Anti-

Corruption Commission. In early November, Bulgaria received a new tranche of EUR 438.6 million,

bringing the total utilization to 29.5 % of the agreed EUR 6.17 billion under the Recovery and Resilience

Facility. At the end of the year, Bulgaria received EUR 1.47 billion under the third payment of the NRRP,

while the European Commission again 'frozen' the transfer of EUR 152 million due to the stalled anti-

corruption reform, clearly stating that the final release of the full amount will depend on the actual

implementation of the remaining reforms.

Last but not least, electricity prices in Bulgaria continue to be among the highest in all of Europe,

according to real-time data from electricity exchanges across the European Union, while electricity prices

in Europe remain significantly higher compared to Asia and North America. This places European, and

consequently Bulgarian business, in an unfavorable competitive position. This places European - and

consequently Bulgarian businesses in a more disadvantaged competitive position. At the European level,

historical divisions between Eastern, Central-Western, and Northern Europe still impact networking

opportunities. Therefore, efforts to improve connectivity by integrating national energy grids into a broader

European context must be significantly accelerated. A key challenge remains the 'Green Deal,' which

urgently and promptly requires a serious review to ensure it does not act as a bottleneck for industrial

development.

Internationally, in the context of the current geopolitical situation, the risks for Bulgaria are

increasingly tied to European policies. On one hand, they stem from the failure to achieve sustainable

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

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EU policies. On the other hand, the effectiveness of common European policies in the area of trade

relations with the USA and other trade partners, reindustrialization through the reduction of over-

regulation and bureaucratic costs, the recalibration of the 'Green Deal,' and the rapid creation of effective

mechanisms for the equitable provision of energy resources at competitive prices for all participants in

the European energy market, are fundamental to the possibility of preserving and increasing the

competitiveness of the European and, specifically, the Bulgarian economy.

The deterioration of the business environment in the European Union, driven by the military

conflicts in Ukraine and the Middle East, high energy prices, over-regulation, and the shortage of skilled

labor, continues to demotivate entrepreneurial activity, leading to capital flight and declining

competitiveness. Europe continues to lag significantly behind its primary competitors, the US and China,

in terms of economic growth, innovation, high technology, and demographics. Overcoming these

multifaceted challenges requires a comprehensive reform of EU governance: accelerating strategic

decision-making, a profound shift in EU budget expenditure management, action plans for every leading

sector, and 'self-restraint' through the simplification of EU rules and regulations, which are currently

viewed as the most significant obstacle to business, particularly for small and medium-sized enterprises.

Against this background, President Donald Trump has decisively altered US trade policy. Under

his pressure, NATO allies have agreed to increase defense spending to 5 % of GDP by 2035, forcing

European governments to reallocate massive budgets toward rearmament. Relations between Europe

and the US remain strained, and ongoing global trade tensions pose a serious risk to supply chains,

import/export costs, and the global transport of goods, which could lead to a further loss of

competitiveness for the European economy.

Regulatory risk - 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 imposing sanctions as a

result of non-compliance with this framework.

In recent years, Bulgarian and European businesses continue to be increasingly affected by the

intensifying European and national regulation in many directions, including an increased focus on

sustainability issues. The trend of continuing growth in the administrative burden on business, in the

absence of reasonable and adequate relief, significantly increases the costs required to comply with new

regulations and their associated reporting requirements. The ongoing deterioration of the business

environment in the European Union - manifested in high energy price levels and the imposition of

numerous regulations that significantly increase the administrative burden on business, alongside new

geopolitical challenges - continues to demotivate entrepreneurial activity and leads to capital outflows

from Europe, reduced competitiveness, and hindered economic growth. In recent years, the EU economy

has lagged behind those of the US and China. The EU's share of the global economy decreased from

25.8 % in 2004 to 17.6% in 2024. During the same period, the EU's share of global exports fell from

18.9% to 14 %.

At the national level, the lack of serious structural reforms aimed at introducing strict fiscal

consolidation measures could lead to an increase in the tax and social security burden on businesses

and private sector employees. This would have an additional negative impact on economic activity,

alongside the expected effects of global geopolitical shifts. According to business analyses, the tax and

social security burden in Bulgaria is currently already higher than the European average, characterized

by a broad tax base to which low rates are applied. A tax hike would not guarantee an increase in budget

revenues; instead, it would lead to a decrease in economic growth and investment.

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 ECB Economic Bulletin of December 2025, although trade tensions are easing,

the still volatile international environment could cause supply chain disruptions, dampen exports, and

weigh on consumption and investment. A deterioration in global financial market sentiment could lead to

17.

tighter financing conditions, increased risk aversion, and weaker growth. Geopolitical tensions remain a

significant source of uncertainty. Conversely, planned defense and infrastructure spending, alongside

productivity-enhancing reforms, could result in higher-than-expected growth. A strengthening of

confidence could further stimulate private spending.

The inflation outlook remains more uncertain than usual due to the persistently unstable

international environment. Inflation could turn out lower if U.S. tariff hikes weaken demand for euro area

exports or if countries with overcapacity increase their exports to the region. Furthermore, an appreciation

of the euro could lead to a larger-than-expected decline in inflation. Heightened volatility and risk aversion

in financial markets could reduce demand, thereby slowing down inflation. Conversely, inflation could be

higher if greater fragmentation of global supply chains leads to rising import prices, supply constraints for

critical raw materials, and additional capacity constraints within the euro area economy.

Under these conditions, the ECB maintains that fiscal and structural policies should be aimed at

making the economy more productive and competitive, which would help raise potential growth and

reduce price pressures in the medium term.

Against this background, and in complete contradiction to the intentions for active deregulation

announced in February 2025 to support and promote the competitiveness of European business, on July

16, 2025, the European Commission presented a record draft EU budget for the 2028-2034 period

amounting to nearly €2 trillion. According to the proposal, while Member State contributions remain

steady, Brussels is relying on five new sources of revenue to cover rising costs - particularly those related

to security, the green transition, and post-pandemic recovery. These include a new annual corporate tax

on mid-sized companies with a net annual turnover exceeding €100 million within the EU. Two other

sources of additional revenue are expected from the redirection of a portion of Emissions Trading System

(ETS) revenues, which currently flow into national budgets, with an anticipated €9.6 billion annually for

the EU budget. Furthermore, revenue from a new 'Carbon Border Adjustment Mechanism' (CBAM),

designed to tax imports from countries with weaker environmental regulations, is expected to contribute

approximately €1.4 billion annually to the EU budget. Germany, the Netherlands, and Hungary have

already issued sharp criticisms, warning that 'a general increase in the EU budget is unacceptable at a

time when all Member States are making significant efforts toward national budget consolidation' and that

the Commission's proposed 2028-2034 budget “lacks clear strategic foundations and could ruin the

European Union.”

In this context, a study by the consulting firm EY on Europe's attractiveness to investors in 2024,

published on July 17, 2025, indicates a 5% decline in foreign direct investment (FDI) in Europe and a

16% contraction in job creation. According to the report, 45% of surveyed companies stated that Europe’s

approach to rules and requirements is diminishing its appeal as an investment destination, and that

optimizing regulations and harmonizing approaches across Member States could be essential to

bolstering Europe’s investment attractiveness. The study also found that 37% of companies have

postponed, cancelled, or scaled back their investment plans due to high energy prices, complex

regulatory requirements, and geopolitical tensions. Based on the views of business leaders from 45

countries, EY proposes a 12-step collective action plan to regain investor interest in Europe including

reducing energy prices and increasing energy independence as a top priority; optimizing regulations and

harmonizing approaches among Member States; reducing corporate tax rates and ensuring a predictable

tax environment; a new trade strategy and the protection of critical industries; accelerating the transition

to low-carbon energy and simplifying access to decarbonization programs; stimulating investment in

innovation, including Artificial Intelligence and clean energy, etc.

At the European level, a comprehensive review of the Union's policies across all key aspects is

necessary to establish conditions that facilitate economic development and foster competitiveness. This

conclusion is further supported by data from the first monitoring report on the implementation of the 2024

Antwerp Declaration, which outlines severe structural issues in Europe: 83% of competitiveness

indicators show stagnation or decline, while energy prices remain significantly higher than those in other

leading economies. Over the past three years, the share of companies identifying regulation as a primary

obstacle to investment has increased by 42%. The EU remains fully dependent on imports for more than

half of its critical raw materials, while internal barriers within the Single Market create costs equivalent to

18.

tariffs of approximately 65% for goods and up to 100% for services. Furthermore, innovation lags behind

China by 20 percentage points and the US by 15 points. Revising the Union's climate targets and

implementing policies that do not hinder competitiveness or growth, nor lead to deindustrialization, must

become a core priority.

At the national level, an urgent revision of our country’s budgetary priorities and the implementation

of strict fiscal consolidation measures are imperative to prevent a potential financial and economic crisis

with severe consequences for both business and society. Reducing regulatory and other administrative

burdens, particularly for small and medium-sized enterprises, including through the comprehensive rollout

of e-government across all sectors, as well as a genuine fight against the shadow economy, corruption,

monopolization, and cartelization, must become actual state policies. Furthermore, a structured and

balanced approach to forming and implementing national green transition policies, ensuring the

sustainable energy development of the country while considering national priorities and guaranteeing

energy supplies at minimal prices, is essential. Facilitating and accelerating procedures for the admission

of third-country workers and promoting their sustainable employment in Bulgaria should also be prioritized

to achieve Bulgaria's strategic goal of OECD membership. This will ensure accelerated economic growth

and an improved quality of life in our country.

At the same time, the negative effects of price imbalances in the European electricity market and

prolonged periods of excessively high prices in Southeast Europe, consistently lead to increased inflation

and production costs. These factors further result in the deterioration of industrial competitiveness and

the business environment for developing supply chains. The price disparities in Southeast Europe have

proven to be of a persistent nature. This situation continues at present, and the war in Ukraine, along with

its destroyed energy infrastructure and the limited interconnectivity at the borders of Hungary and Croatia,

are factors suggesting that these imbalances will persist for a long time. Overcoming these imbalances

requires the introduction of additional national regulations to adequately protect domestic consumers,

applicable at least until the development and implementation of EU-wide mechanisms to compensate for

significant price deviations. In response to this need, the Electricity Cost Compensation Program

proposed by the Council of Ministers is intended to apply to non-household end customers only when the

weighted average base load price on the 'Day Ahead' segment of the 'Independent Bulgarian Energy

Exchange' EAD for the respective six-month period (from 01.07.2025 to 31.12.2025 and from 01.01.2026

to 30.06.2026) exceeds BGN 240/MWh. According to calculations by the Bulgarian Industrial Capital

Association, this effectively means that the program does not actually provide compensation for non-

household electricity consumers, as the weighted average six-month price for the first period is below

BGN 206/MWh, and for the following six-month period of January-June 2026, it is expected to be below

BGN 200/MWh.

Against this background, the Bulgarian Branch Chamber of Machine Building reports a 30 %

reduction in orders within Bulgaria’s machine-building sector as a result of the industrial crisis in the

country over the last three years. Bulgarian machine building continues to record significant turnover

declines from the beginning of the year to date, with expectations that the negative trend will persist

beyond the end of 2025. The data showing a continuous decline in production are highly concerning for

Bulgaria's economic growth prospects, as machine building is a cornerstone of the national industry, with

its output accounting for over 10 % of the Gross Domestic Product in recent years.

A primary risk with a growing negative impact on every business in Bulgaria remains the shortage

and quality of labor - there is a lack of high-skilled and mid-skilled specialists, as well as low-skilled

workers. Coupled with the country's negative demographic trend, the absence of a state policy facilitating

labor immigration and a business-aligned methodology for workforce planning and training ensures that

the human resource deficit remains a critical issue. This shortage is among the reasons for the withdrawal

of international companies from the country. At the same time, the implementation of an inadequate

income policy, specifically, increasing the minimum wage at a rate entirely disproportionate to productivity

growth and inflation, exacerbates this problem. It further degrades the business environment and leads

to wage leveling (egalitarianism), which demotivates employees and staff alike.

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 2026, as well to maintain their market positions.

19.

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.

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 2026 as well are the market price of raw

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

The country’s macroeconomic development, the unstable political climate, fiscal policy, and

geopolitical factors continue to be the most concerning circumstances impacting business operations.

Alongside the threat to European and regional stability, the geopolitical situation places energy resource

supplies and the prospects for sustainable economic growth at further risk. The effect of measures taken

at both European and national levels, as well as any corresponding countermeasures, will impact the

activities of the group’s enterprises and may lead to adjustments in expected business results.

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

20.

of the current legislation and monitor the renewal and strict application of the requirements concerning

their operations.

Business model

Our mission

Stara Planina Hold Plc unites industrial enterprises dedicated to manufacturing of products

intended to meet various consumer and business needs. Our investment portfolio includes companies

operating in the machine building, electrochemical industry, in the field of finance and in the field of

perfumery, cosmetics and textile.

We participate in the development of the Bulgarian industry by achieving European and global level

of quality, productivity and profitability of our business. Our success is being shared among all parties

involved in its achievement.

Our values

We believe that the world will always need a modern and productive industry that in at the core of

wealth throughout the world.

We believe that the Bulgarian industry can rise to the challenge of accelerated development

imposed by the global economy by focusing on people's knowledge, the resultant innovations and the

investments that make them happen and we sustainably implement these policies in all companies in the

group.

We believe that achieving high goals is a reward for the work and collaboration of all parties

involved in our development and that it is possible to share our success on a large scale.

Our future

Stara Planina Hold Plc will continue managing its subsidiary companies setting high goals in terms

of quality, safety, productivity and profitability.

Our leading priority is to increase productivity along with increasing the satisfaction of our

employees and customers, as well as the quality of the products manufactured.

We will continue investing annually in technological renewal, innovation and infrastructure

improvements, as well as in the development and training of our employees by providing opportunities

for their professional realization.

Important task for 2026 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.

21.

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 8 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.

As of December 31, 2025, the companies within the group of Stara Planina Hold Plc employ a

total of 1 946 people. Out of them, 1 751 or 89.98 % work in the three largest enterprises of the group. In

2025, the number of employees in the group of Stara Planina Hold Plc recorded a decrease of 6.04%

compared to the previous year, and in 2026 we expect a decrease in the total number of employees by

8.84 %.

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

* forecast

The forecasts regarding the number of employees within the Stara Planina Hold PLC group and

labor productivity for 2026 have been prepared based on the business plans of the subsidiary and

associate enterprises, including the new business plan of Elhim-Iskra Plc, developed in accordance with

the company's adopted operating strategy.

Labor productivity per employee in the Group (thousand EUR)

* forecast

Against the background of the indicated increase in the number of employees in the group in

2025, labor productivity reported an increase by 10.8 % compared to the previous 2024 year and a

1943

2004

2164

2124

1859

1751

1699

2276

2318

2450

2353

2071

1946

1774

2020 2021 2022 2023 2024 2025 2026*

45,01

61,15

78,28

82,34

65,71

72,77

85,17

2020 2021 2022 2023 2024 2025 2026*

Total

Three the largest

enterprises

22.

decrease by 11.63 % compared to 2023. With an estimated increase in sales revenues of approximately

6% in 2026, at this stage we plan to reduce the number of employees by nearly 9%, with an expected

increase in labor productivity of around 17% and an increase in the average monthly salary in the

companies within the Stara Planina Hold AD group of nearly 9% 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.

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. The packages are made of PET.

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

23.

for international and domestic transport, disposing with the necessary equipment and reliable certificates

to transport dangerous and specialized consignments.

Fuel and chemicals used

Natural gas - Mainly used for heating. Supplied to the production facilities over gas pipes that are

subjected to checks by the State Technical Supervision.

Fuels (petrol, diesel, propane-butane) fuels and lubricants. They are used mainly for the purposes

of in-house transport.

Hydraulic oils - Used as a production input for finished hydraulic products.

Concentrated sulfuric acid - Used for the production of batteries. Delivered by a specialized

transport and stored in specially constructed tanks.

Paints and coatings - Used in painting and galvanization processes. This includes varnished

polyurethanes, solvents, hardeners, epoxy primer, specific salts, sodium compounds, acids, etc.

Liquefied oxygen and carbon dioxide - Delivered by a specialized transport – tank trucks operated

by licensed companies holding special permits (ADR). They are stored in specialized containers which

are subjected to checks by the State Technical Supervision.

The STIO checks conducted throughout the year did not find any deviations.

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 2025, the company's expenses for the transfer of hazardous waste are BGN 54.86 thousand,

and the income from the industrial waste transferred for recovery is BGN 622.33 thousand.

A contract is in place with an organization for utilization of packaging waste and thus the

24.

requirements arising from the Ordinance on packaging waste are being fulfilled. For 2025 the fees paid

to this organization amount to BGN 10.42 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

2025 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,

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

25.

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;

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 2025, 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 2025 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 approximately 7 % 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

26.

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 air purity, the necessary prophylaxis and technical measures of the boilers

in the steam power plants of the company are regularly carried out, which are put into operation only

during the rese picking campaign. Technical supervision and monitoring of the emissions of gases

released during the operation of the boilers is performed.

In 2025, 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 2025

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

27.

by the installations and consumed in 2025 amounts to 1 782 MWh.

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. In 2025, a vacuum furnace for thermal and thermo-

chemical treatment was purchased and commissioned. The project duration was 18 months, concluding

in December 2025. The maximum total value of the project is BGN 2 857 000. It is being implemented

with financial support amounting to BGN 999 950 provided by the European Union – Next Generation

EU. The co-financing by M+S Hydraulic Plc amounts to BGN 1 857 050.

In 2025, M+S Hydraulic Plc applied for a grant under the Selection of Project Proposals Procedure

BG16FFPR003-4.006 "Support for Production Investments in Large Enterprises in the Stara Zagora

Region" under the "Development of Regions" Program 2021-2027.

With the technological renewal programs prepared and implemented in 2025, 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

in 2025, this share exceeded 24 %. It is expected this share to be maintained through 2026.

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 order to reduce groundwater abstraction, a circulating water installation for cooling the

central hydro-station was constructed in 2025. In 2026, the construction of a similar installation for cooling

the galvanic baths (electroplating tanks) is planned.

In 2023, as a further step in the company's sustainable development strategy, HES Plc applied

and was approved by the Ministry of Innovation and Growth to enter into a financing agreement under

the Economic Transformation Program of the National Recovery and Resilience Plan (NRRP), selection

procedure BG-RRP-3.006 "Construction of new RES for self-consumption in combination with local

energy storage facilities in enterprises." According to the project proposal, a third photovoltaic system

with a total installed capacity of 599 kWp, combined with energy storage facilities with a capacity of 645

kWh, was to be constructed on the roofs of the company's production facilities. After concluding contracts

with the Ministry of Innovation and Growth and an approved project contractor, it emerged that the

implementation procedure for projects under the NRRP Economic Transformation Program contains

significant bureaucratic obstacles. This, combined with the opposition from electricity distribution

companies to cooperate on such projects, makes their documentary support nearly impossible.

Consequently, the contracts with the Ministry of Innovation and Growth and the approved contractor had

to be terminated prematurely, and HES PLC plans to complete the project entirely with its own funds.

In 2025, HES Plc applied for a grant under the Selection of Project Proposals Procedure

BG16FFPR003-4.006 "Support for Production Investments in Large Enterprises in the Stara Zagora

Region" under the "Development of Regions" Program 2021-2027.

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.

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

28.

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.

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

company and for 2025 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’000)

In 2025, 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 a decrease by 33.4 % 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. The chart does not reflect the

environmental costs of the company Boryana AD, which as of December 31, 2025, is not part of the group

of Stara Planina Hold Plc.

Environmental Protection Costs (EUR000) and 2026 Forecast

* forecast

We anticipate that in 2026, costs - excluding planned investments in this area - will amount to

EUR 617 thousand, which represents a decrease of approximately 1.65 % compared to 2025.

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

358

509

699

1194

1782

1186

2020 2021 2022 2023 2024 20 25

260

357

611

911

607

617

2021 2022 2023 2024 2025 2026*

29.

training, awareness and motivation of employees to perform their duties in a high quality, in a safe and

environmentally friendly manner and in accordance with the adopted policies and regulatory framework.

The companies continue the practical steps on the reduction of natural resources costs which

costs are related both to the environmental pollution reduction as well as to reduction in the financial

costs of energy resources. The investment programs for technological update adopted with the business

plans for the companies will introduce new machinery, equipment and technologies that reduce the

adverse impact on the environment, including activities on the streamlining of recirculated use of treated

water and closed cooling water cycle.

The next step in the implementation of the energy efficiency policy of the companies in the group

is the development and implementation of an energy storage system generated from renewable sources,

which allows for its intelligent use by connecting the photovoltaic system with storage batteries.

Ecological risks

Climate change related risk

Climate change could adversely affect the activities of the group companies directly and indirectly.

Direct risks are associated with natural disasters or permanent changes to the business environment

caused by climate change which could lead to endangering the health and lives of people employed in

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 Plc 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.

30.

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.

• 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 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 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.

31.

• Periodic risk assessments are carried out to identify remaining risks of accidents or illness in the

workplace and to reduce the impact of these risks on employees by taking the necessary measures in a

timely manner.

• The management bodies of the companies in the group maintain effective social dialogue with

the trade unions, which, along with the existing collective labor agreements in force, supports the

implementation and improvement of good practices for corporate social responsibility, both for the

employees themselves and for their families.

• All companies adopt and implement annual occupational health and safety programs.

• Free medical examinations and care for all employees of the companies are provided and

regularly performed.

• Equal rights and opportunities for work and career development of employees are provided,

based solely on the qualification, personal qualities and results achieved in the work process. Direct or

indirect discrimination in employment or at work is not allowed.

• The remuneration setting system is based on uniform, objective criteria, and the system for

applying bonuses to the payment of employees is based only on the achieved good results at work.

• A policy for providing social allowances to the remuneration of employees has been introduced

and is being implemented - food vouchers are provided on a monthly basis; travel expenses for distance

from the place of work to the permanent address of the employees are paid; treatment aids are provided,

as well as for personal occasions; bonuses are provided for the Easter and Christmas holidays.

• On the territory of all companies in the group are separated rest areas, conditions for sports

activities are provided, which are financed by the companies. In some of the companies, sport teams

have been formed in various team sports where each employee has the opportunity to join.

• For the employees of the companies in the group, insurances are concluded, such as life

insurance, “Accident at work” and “Accident and general illness”.

• A policy for continuous promotion of training and qualification is in place - all of the companies in

the group organize and conduct introductory trainings, courses for acquiring professional qualification

and /or trainings for raising the qualification.

• For employees willing to increase their education and qualification in a profession in the

company’s scope of activity, the larger enterprises in the Group pay 50% of the semester fees for the

respective higher education.

• Larger companies work in partnership with vocational secondary technical schools in the

respective city, providing conditions for conducting a dual form of education (work-based learning) with

students from 11th and 12th grade and provide scholarships for student education from 8th to 10th grade.

• Issues related to quality, environment, health and safety are of primary importance and therefore

the major companies maintain and develop integrated management systems in compliance with the

requirements of leading international standards for quality management (ISO 9001: 2015), environment

ISO 14001: 2004), health and safety (OHSAS 18001: 2007), with the active participation of highly qualified

specialists and engineers.

Stara Planina Hold Plc and the companies in the group annually support the development of the

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 2025

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,

32.

50% of the higher education fee is covered for employees in specialized universities, internships and

practices are organized on the territory of enterprises.

The companies traditionally support local structures in financing various social, sport and cultural

events.

Every year Stara Planina Hold Plc participates in charity events of public importance. Since 2003

the holding has been regularly taking part in all editions of the charity campaign Bulgarian Christmas

carried out under the auspices of the President of the Republic of Bulgaria. Every year Stara Planina Hold

Plc makes a monetary donation for the Support a Dream initiative launched by the President of the

Republic of Bulgaria aimed at organizing a prom night for disadvantaged young people. Every year Stara

Planina Hold Plc participates in the charity campaign Easter for Everyone conducted by the Bulgarian

Red Cross under the auspices of the Ombudsman of the Republic of Bulgaria. Stara Planina Hold Plc is

regularly involved as a major sponsor of the national exhibition Inventions. Transfer. Innovations.

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)

In 2025, the total value of social activity costs of Stara Planina Hold AD and the companies in the

group reported a decrease of 3.87 % compared to the previous year, with a reported decrease in the

number of employees in the group of Stara Planina Hold Plc of 6.04 %. The chart does not reflect the

social costs of the company Boryana AD, which as of December 31, 2025, is not part of the group off

Stara Planina Hold Plc.

Social Activities Costs (EUR’000) and 2026 Forecast

* forecast

At this stage, we forecast that in 2026, social activity expenses will increase by 4.54 % compared

2978

3795

5809

6651

5014

4827

2020 2021 2022 2023 2024 2025

1940

2970

3401

2564

2468

2803

2021 2022 2023 2024 2025 2026*

33.

to 2025, with an expected decrease in the total number of employees in the group of almost 9 %.

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 2026 we will continue the activities on monitoring the health status of the employees, promoting

safe behavior at work; training, qualification upgrade and acquisition of new skills and capacity; improving

working conditions and constant monitoring and control on the working environment factors.

Increasing corporate culture aims to create and maintain strong motivation, creative environment

within the team, high moral and integrity, and confidence in the future.

Risks with a potential negative effect on employees’ development

The management of the companies in the Group of Stara Planina Hold Plc strives to achieve

maximum employee satisfaction. Any worsening of the current economic situation in the country and

fluctuations in the markets where our business operates would lead to destabilization of the companies

and thus to a decrease in the efficiency of the conducted social policy.

We take measures to ensure the health and working capacity of employees, the continuity of our

business and activities related to regulatory obligations.

Policies with regard to the products and the counterparties of the companies in the group of Stara

Planina Hold Plc

• The companies in the group of Stara Planina Hold Plc consistently apply a policy aimed at

increasing the level of quality and ensuring the safety of manufactured products to meet the growing

needs of customers. Joint analyzes are regularly carried out between the product planning, design,

engineering and quality assurance departments, on the one hand, and the sales and marketing

departments, in order to improve product development, functionality and quality.

• The companies in the group of Stara Planina Hold Plc apply quality management systems and

carry out their production activities in accordance with the highest standards applicable to the respective

production field.

• The companies in the group of Stara Planina Hold Plc apply rules for confidentiality and protection

of commercial information and personal data in order to protect customers, business partners and other

stakeholders.

• The companies in the group of Stara Planina Hold Plc group provide their partners with correct

and timely information on the basic business rules, products, services and technologies and promote

loyal business practices in accordance with the adopted rules for ethical business conduct and the current

regulations.

34.

• 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.

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 2025, 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

35.

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 2025, 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.

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, 2025, the Group's intangible assets consist

of software products and trademarks.

III. Important developments occurred since the beginning of the year

Pursuant to the Law on the Introduction of the Euro in the Republic of Bulgaria, as of January 1,

2026, the official monetary unit and legal tender in the Republic of Bulgaria is the euro. The fixed

exchange rate is BGN 1.95583 per EUR 1. The introduction of the euro as the official currency in the

36.

Republic of Bulgaria constitutes a change in the functional currency, which does not represent an

adjusting event after the reporting date.

On March 4, 2026, the Board of Directors of the subsidiary Elhim-Iskra Plc resolved to suspend the

enterprise's operations effective March 23, 2026. Following the expiration of 19 working days from the

commencement of the suspension, and effective from the 20th working day of the layoff period,

procedures shall be initiated to terminate the employment contracts of workers and employees pursuant

to Art. 328, Para. 1, Item 4 of the Labor Code. As of the date of this report, the company's management

has concentrated its efforts on developing a strategy and a plan for more decisive restructuring of Elhim-

Iskra Plc’s operations. This initiative aims to mitigate and ultimately eliminate the production-related

losses that have persisted for a third consecutive year. The primary factor necessitating this decision is

the erosion of market share in Western Europe, driven by a prolonged downturn in industrial production

and the emergence of alternative manufacturers from Turkey, China, and India. These competitors

benefit from significantly lower energy and labor costs, enabling more competitive pricing. Furthermore,

the company has lost its most profitable markets in the CIS countries due to the military conflict in Ukraine

and the subsequent sanctions imposed by the EU.

On April 16, 2026, the Board of Directors of the company adopted a restructuring plan for the

company's activities, aimed at limiting and terminating the losses from manufacturing operations, which

have been ongoing for a third consecutive year, as well as an updated business plan for 2026. The

objective of the developed restructuring plan is to transform Elhim-Iskra Plc into a compact and flexible

enterprise with high-tech manufacturing that guarantees a positive cash flow even in an aggressive

market environment.

In the period since March 4, 2026, when the Board of Directors of the company adopted the

resolution to suspend the operation of the company, a detailed analysis and a plan to discontinue all

inefficient manufacturing activities and processes have been prepared. Under conditions of market

uncertainty, the company is temporarily suspending high-budget investment projects with long payback

periods and is focusing on immediate cost-of-sales optimization.

Manufacturing operations shall be limited to the production of the following product types: semi-

traction batteries, cells for traction batteries, and traction batteries, restricting the volume to 100%

capacity utilization only on the automated high-tech lines with no technological risk. Priority is given to

orders with a guaranteed margin and low technological risk, which will enable the production team to

achieve rhythmicity and eliminate losses resulting from frequent machine changeovers.

As part of the business restructuring plan, the Board of Directors of Elhim-Iskra Plc approved a

personnel optimization plan to reduce the workforce to 135 employees (compared to 197 in 2025),

maintaining an optimal ratio between production and support staff.

With a view to implementing the manufacturing program of Elhim-Iskra Plc, the Board of Directors

of the company has approved an updated investment program for 2026, aimed at reducing technological

losses along the workflow and increasing the productivity of the main restructured sections. The Board

of Directors of Elhim-Iskra Plc shall exercise ongoing control over the implementation of the restructuring

plan and will take appropriate corrective measures and actions if necessary. Management expects that

the production flow and deliveries to customers will be resumed by mid-May 2026.

After the date of the annual accounting closing, the management of Stara Planina Hold Plc is not

aware of any significant or material events that could impact investor interest, with the exception of global

trade tensions, the ongoing military conflict in Ukraine, and the new conflict in the Middle East. These

factors heighten risks associated with securing material supplies and the realization of finished goods.

The conflict involving the US/Israel and Iran has already triggered an increase in oil and gas prices,

which is expected to further drive up electricity costs - which in Bulgaria were already above the EU

average prior to the escalation. Military actions have effectively led to the closure of the Strait of Hormuz,

disrupting over one-third of global oil and liquefied natural gas (LNG) exports. Tanker transits have been

halted for over a month, forcing several Persian Gulf producers to suspend operations. Furthermore,

metal prices are rising due to supply constraints and higher energy-related extraction and processing

costs. The rerouting of vessels and increased marine insurance premiums are extending lead times and

37.

increasing logistics costs, impacting not only Bulgarian exporters to Asia and the Middle East but global

trade at large.

Escalating energy prices, rising raw material costs, and increased transportation and logistics

expenses resulting from the new military conflict in the Middle East directly impact the competitiveness

of the Bulgarian industry and may lead to a loss of market share.

In addition to threatening European and regional stability, the geopolitical situation places energy

and raw material supply chains at further risk. The impact of the deepening conflict, along with measures

taken at both European and national levels, will continue to influence the operations of the Group’s entities

and may necessitate adjustments to projected business results.

IV. Expected development of the group

In 2025, the operations of the companies within the Stara Planina Hold PLC Group continued to be

shaped by the impact of negative factors exerting a strong influence on global trade and economic

relations. The world economy remained heavily affected by the complex geopolitical situation, which

continues to generate uncertainty and volatility in international markets. Among the primary factors

impacting business are U.S. trade policy, tensions between leading economic powers, and regional

conflicts that directly affect global supply chains, raw material prices, and demand dynamics. Tariffs

introduced by the Trump administration, covering a wide range of goods, continued to create uncertainty

for long-term contracts, particularly in the machine-building sector. Concurrently, the military conflict in

Ukraine and the escalation of tensions in the Middle East exerted additional pressure on energy markets,

leading to periodic increases in fuel and metal prices.

On a global scale, the Manufacturing PMI towards the end of 2025 showed a continued but

weakening global economic expansion, reaching a six-month low in December with diminished business

confidence despite some regional resilience. A further expansion of the global economy was indicated by

S&P Global Market Intelligence's PMI surveys in December, albeit with the rate of growth slowing to the

weakest since June. Historical comparisons indicate that the latest PMI is broadly consistent with global

GDP growing at an annualized rate of 2.4 % in December, with a 2.8 % expansion signaled for the fourth

quarter as a whole.

Prior to the escalation of the Middle East conflict in February 2026, the Eurozone Manufacturing

PMI reached 50.8 points - its highest level since June 2022 - signaling the sector's first expansion in

nearly two years. The index recorded growth, surpassing the 50.0 threshold for several leading European

economies, including Germany. However, by mid-March 2026, the deepening conflict has exerted

significant downward pressure on the European manufacturing sector, stalling the recovery observed at

the beginning of the year. Economists are now expressing growing concerns regarding a potential

recession.

The state of the German economy, which is a major trading partner of the companies in the group

of Stara Planina Hold Plc, remains a cause for concern. According to preliminary data from the German

Federal Statistical Office, Destatis, after two consecutive years of recession, the German economy

returned to growth in 2025, with the country's GDP increasing by 0.2 %. In 2023, Germany's GDP

decreased by 0.9% and in 2024 - by 0.5 %. Despite the reported minimal growth in 2025, the challenges

facing the country remain historic in scale. German industrial production contracted for the third

consecutive year, with the automotive and mechanical engineering sectors suffering significant declines.

Contributing to the poor results are higher US tariffs and the appreciation of the Euro, which makes

exports less competitive. German exports to the US fell by 7.8 %, and car sales plummeted last year. For

2026, forecasts are more optimistic, though growth is unlikely to return to significantly higher levels yet.

The German central bank, the Bundesbank, forecasts a growth rate of 0.6 % in 2026.

Despite the more optimistic expectations for 2026, the German Ministry for Economic Affairs

warned on March 8, 2026, that the risk of a severe industrial downturn has increased significantly due to

the war in the Middle East - a development not yet fully reflected in current economic indicators. According

to data released by the Federal Statistical Office (Destatis) on March 8, 2026, industrial orders in January

fell by 11.1% month-on-month on a seasonally and calendar-adjusted basis, breaking a trend of four

38.

consecutive monthly increases. Industrial production also declined, unexpectedly dropping by 0.5 % in

January compared to the previous month, diverging from analyst forecasts of a modest 1.0 % increase.

In the World Economic Outlook report presented on January 19, 2026, the IMF forecasts global

GDP growth of 3.3 % in 2026 (an upward revision of 0.2 percentage points from the previous October

estimate) and 3.2 % in 2027 (unchanged from the October forecast). The Fund expects growth of 3.3%

for 2025, which also exceeds the October estimate by 0.1 percentage points. For the Eurozone, which

Bulgaria joined on January 1, the IMF projects a growth rate of 1.7% for the current year (a 0.1 percentage

point increase from October) and 1.3% next year (unchanged from the October forecasts).

Meanwhile, earlier in December 2025, the international credit rating agency Fitch Ratings

announced that it is maintaining Bulgaria's credit rating unchanged at 'BBB+'. However, it noted that

“Bulgaria's fiscal position has deteriorated in recent years due to increased social spending, significant

public sector wage hikes, and delays in implementing reforms.” Fitch forecasts the country’s budget deficit

to rise to 3.2% in 2026 and to 4.3% in 2027 (factoring in Bulgaria’s commitment to higher defense

spending). “More broadly, institutional constraints and political instability have slowed progress on

structural reforms relative to peers, despite the successful completion of the Eurozone accession

process. Bulgaria is lagging in the absorption of EU funds under the Recovery and Resilience Facility

(RRF), as well as regular cohesion funds. Delays could create challenges for disbursements, as the

implementation deadline is the end of August 2026.”

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

as of 31.12.2025 reached BGN 276.4 million (EUR 141.32 million), reporting an increase by 3.83 %

compared to the 2024 sales and a decrease by 27.06 % compared to the reported sales in 2023. The

group's gross profit for 2025 amounted to BGN 19.52 million (EUR 9.98 million) which represents a

52.93% growth compared to the reported gross consolidated profit for the previous year and a decrease

by 58.42 % compared to the gross consolidated profit for 2023.

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

operate - mainly in the European Union. In 2025, 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.

According to the ECB macroeconomic projections for the euro area from March 2026, the war in

the Middle East is causing disruptions in commodity markets and deteriorating real incomes and

confidence. This has led to a downward revision of consumption and investment in the baseline staff

projections, particularly for 2026. According to the baseline projections, annual real GDP growth for the

euro area is projected at 0.9% in 2026, 1.3% in 2027, and 1.4% in 2028. Compared to the December

2025 projections, GDP growth has been revised downward by 0.3 percentage points for 2026 and by 0.1

percentage points for 2027 due to the escalating war in the Middle East, while remaining unchanged for

2028. The impact would be even more pronounced under alternative scenarios involving a stronger and

more prolonged energy shock. Accordingly, the baseline projections foresee an increase in inflation,

which will reduce purchasing power, consumer spending, and consequently, GDP growth, especially in

the short term. Externally, while export growth is expected to strengthen due to higher foreign demand,

ECB experts believe the euro area is likely to lose further export market share given unresolved

competitiveness issues, including those of a structural nature, and regardless of the fact that export tariffs

to the United States are slightly lower than at the time of the December 2025 projection.

According to the Spring Macroeconomic Forecast of the Ministry of Finance, the impact of the

crisis in the Middle East on the Bulgarian economy will result in higher inflation and lower real GDP growth

in 2026 compared to the figures from the Autumn Macroeconomic Forecast. The specific parameters of

the key macroeconomic indicators depend on the assumptions regarding the duration of the conflict,

including the impact on the EU economy, which is Bulgaria's primary trading partner. The Ministry of

Finance expects average annual inflation in 2026 to rise to 4.3% based on the HICP, and to slow down

to 3.8% in 2027. Despite the significant contribution of energy goods, core inflation - and services in

particular - continues to be the leading contributor to inflation. The current account is expected to reach

a deficit of 6.2% of GDP, representing an increase in the negative balance compared to 2025, driven by

39.

expectations that the military conflict in the Middle East will have a restrictive effect on economic activity,

including within the EU. For 2026, the Ministry of Finance forecasts GDP growth of 2.6%, compared to

3.1% in 2025. The ongoing weak economic activity in the EU and the negative effects on international

trade resulting from the conflict in the Middle East will limit the growth rate of goods exports to 3.1%.

Consequently, the contribution of net exports to GDP will remain negative, although it is expected to

improve slightly compared to 2025.

The trend of a continuing decline in Bulgarian industry is confirmed by data from the National

Statistical Institute, which indicate that the industrial production index in February 2026 increased by 0.9%

compared to the previous month, but registered a decrease of 8.1% compared to February 2025. After

more than two years of the index showing negative values on an annual basis - with growth reported only

in September and November 2024 - the industrial production index in Bulgaria has now continued its

downward trend for fifteen consecutive months, and for the 36th out of the last 38 months.

Against this backdrop and based on the results from the first months of the year, we are raising

our forecast expectations, projecting that in the first quarter of 2026, consolidated sales will reach EUR

38.3 million. This would represent an increase of approximately 10 % compared to the same period in

2025, and a negligible decrease of approximately 0.45 % compared to the first quarter of 2024.

Given the updated forecasts of our clients and partners from Europe and the world in a more

optimistic direction at least until the middle of the year, and in accordance with the restructuring and

optimization of the operations of the subsidiary Elhim-Iskra Plc and the corresponding newly adopted

business plan for 2026, we now have revised expectations for the projected results for the second quarter

of 2026. We anticipate consolidated sales revenues to reach 38.6 million euros, by which we would

record a growth of 2.5% compared to the same period of 2025 and an increase of over 12% compared

to the second quarter of 2024. We expect consolidated sales in the first half of this year to reach 76.9

million euros, by which they would record an increase of over 6% compared to the first half of 2025 and

approximately 5.5% compared to the same period of 2024.

Net sales revenue

(Quarterly, EUR’000)

* forecast

It is possible that our forecasts may not be achieved due to the influence of external factors. The

EU economy remains exposed to risks, with negative impacts stemming from factors such as new trade

policy challenges with the US, energy resource prices and security, weaker demand on external markets,

and geopolitical factors related to the military conflicts in Ukraine and the Middle East. The effect of the

deepening military conflict between the US/Israel and Iran, as well as measures taken at the European

and national levels, will impact operations and may lead to adjustments in expected business results.

In 2025, the investments of our enterprises reached BGN 23.8 million (EUR 12.17 million),

representing a year-on-year growth of 35.86 %. These funds were primarily allocated to ongoing

5000

10000

15000

20000

25000

30000

35000

40000

45000

1Q 2Q 3Q 4Q

2024 2025 2026*

40.

technological modernization, the introduction of high-margin products and manufacturing processes,

asset acquisition, and innovations for the green and digital transition, as well as to enhancing labor

productivity and the corresponding increase in employee compensation.

Investments

(QuarterlyEUR’000)

* forecast

For 2026, in view of the ongoing high level of national and global uncertainty, we plan a significant

reduction in investments of over 50%. The planned investments are primarily intended for new

technological equipment and reconstruction, as well as for new technologies, automation, robotics, and

the digitalization of processes. Furthermore, they will support the continued green transition and the

expansion of production capabilities aimed at enhancing productivity and product quality, reducing unit

costs, optimizing the production process, and incentivizing 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.

V. 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 2025 again the main objectives of the units engaged in development activities in the companies

of the group were aimed at meeting the increased requirements and growing expectations of customers

in terms of quality, price and variety of products offered.

Main achievements of companies from the group of Stara Planina Hold Plc in 2021 in the research

and development field

M+S Hydraulic Plc

In 2025, the company completed a comprehensive development of orbital motors with disk valve

axial distribution has been completed.

Orbital hydraulic motor variants with integrated valves have been designed and manufactured or

are currently in the production phase. This allows for highly compact dimensions, enabling their

installation and use in small-scale machinery. Such models include MHV, RKV, MT-SAR, among others.

1000

2000

3000

4000

5000

1Q 2Q 3Q 4Q

2024 г. 2025 г. 2026 г.

41.

Development of two-speed orbital motors is ongoing. A version of the M2TM motor (a two-speed

MTM motor) is currently being developed. The designs for the M2S, MVMD, and M2T motors have been

optimized, and an optimized design for the M2V type motor is currently in production. Overall, an

increasing number of customers are seeking such motor solutions.

New options were developed, such as an additional radial piston group, which expanded the range

of geometric displacements. Speed sensors for the motors have been developed and put into operation.

New designs for integrated valves, as well as new flanges and shafts, have been completed. The

engineering of new radial piston motor series, analogous to the MS03 and MS05, is ongoing.

During the past year, new axial piston groups were developed for the MAP71 and MAP130 motor

types. This enabled us to expand the range of MAP motors and PAP series pumps. We have initiated

experiments with high-pressure seals, which will allow us to enter new niche markets. The development

of compact brake-motor sets with integrated valves is ongoing.

In 2025 a new manufacturing technology for the HKU hinge shaft was successfully implemented

using Takisawa machinery. This resulted in a reduction of the production process from 7 operations to 2,

thereby optimizing the required headcount.

Hydraulic Elements and Systems Plc

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

develop and adopt new products.

In 2025 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 2025, HES Plc developed and manufactured over 60 new models of hydraulic cylinders and

nearly as many modifications of existing ones, with some of them expected to enter regular production in

2026.

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 2025, the Research and Development team were aimed at:

• Developing new technologies and the associated implementation of new production capacities,

with the primary goal of increasing productivity and optimizing every stage of the technological process.

• Continuing active work on the project for developing special-purpose batteries, including their

certification and market entry into the Ukrainian market (STV, ABN, SN).

Bulgarian Rose Plc

In 2025, the Company participated in the national stand organized by BSMEPA within the

BeautyEurasia International Exhibition under project BG16RFPR001-1.002-0001 "Implementation of

measures for the internationalization of Bulgarian SMEs by supporting the activities of the Bulgarian Small

and Medium Enterprises Promotion Agency" under the "Competitiveness and Innovation in Enterprises"

Program 2021-2027. It also presented its products at the Balkan – China Beauty Expo 2025, an event

aimed at building a bridge between the Balkans and China, carried out with the strategic partnership of

BICA, the "Made in Bulgaria" Union, and the support of the Embassy of the PRC and the Chinese Cultural

Center in Sofia.

BULGARSKA ROSA PLC received a special invitation from APACCCEEC, with whom we have

been cooperating since 2024, and a company representative shared experiences, challenges, and

42.

successes on the Chinese market during the international conference marking the Center's 10th

anniversary.

In 2026, the team of specialists in the Innovation Department will continue to face new challenges.

The tasks outlined in the company's business program include the development of a new budget-friendly

cosmetic line; expanding existing cosmetic series with new products driven by customer needs and

demand; and developing private label products based on specific client specifications.

VI. Company shares

1. Own shares. Buy-back

In 2025 Stara Planina Hold Plc has not acquired or sold its own shares.

As of 31.12.2025 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 2025 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 the main market, “Standard” segment of the

Bulgarian Stock Exchange. BSE code: SPH. Stara Planina Hold Plc has a free float of 59.35 % and its

shares are among the most actively traded on the BSE-Sofia where liquidity continues being a major

issue.

Share price over Y2025

Source: BSE-Sofia AD

------- closing price in EUR

The graph shows the price movement of the shares of Stara Planina Hold Plc on the Bulgarian

Stock Exchange for the period 01.01.2025 – 31.12.2025.

• Start price: EUR 4.4365 (01.01.2025)

• Last price: EUR 5.1129 (31.12.2025)

• Max price: EUR 5.1640 (23.09.2025)

• Min price: EUR 3.9435 (11.04.2025)

• Value change: EUR +0.6764

• Percentage change: +15.2463 %.

The market capitalization of the holding as of 31.12.2025 is EUR 107 370 900.

43.

Market capitalization (BGN million)

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

2015

2016

2017

2018

2019

2020

2021

2022

2023

2024

2025

3.95

6.49

8.01

6.55

4.76

5.45

10.10

9.30

10.30

9.00

9.99

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

2019

2020

2021

2022

2023

2024

2025

6.00

6.25

9.15

8.95

11.50

9.70

10.20

Market capitalization (BGN million)

Hydraulic Elements and Systems Plc

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

end of the year

2019

2020

2021

2022

2023

2024

2025

4.26

3.84

6.50

6.40

5.95

5.35

5.10

100

150

200

20152016201720182019202020212022202320242025

100

150

200

250

300

350

400

450

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

100

120

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

44.

Market capitalization (BGN million)

Elhim Iskra Plc

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

end of the year

2019

2020

2021

2022

2023

2024

2025

0.88

0.78

0.80

0.87

0.95

0.80

0.70

Market capitalization (BGN million)

Bulgarian Rose Plc

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

end of the year

2019

2020

2021

2022

2023

2024

2025

1.89

1.02

1.50

1.70

1.85

1.99

1.30

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)

2016 2017 2018 2019 2020 2021 2022 2023 2024 2025

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 6,54

1997 1998 1999 20002001200220032004200520062007200820092010 2011 2012 2013 2014 2015 2016 2017 2018 2019202020202021202220232024

45.

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 2024 incl. is BGN 62.15 million. The initial investment in the

holding has a dividend coverage of 35.5 times.

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

Hold Plc have distributed dividends totaling BGN 293.63 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.

VIІ. 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 31.12.2025 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 31.12.2025.

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 2025 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

22,46

19971998 199920002001 20022003 2004 200520062007 200820092010 20112012 2013 201420152016 20172018 2019 202020202021 2022 20232024

46.

3. 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 31.12.2025.

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.

4. 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.

Market risk comprises three types of risk:

Currency risk – the risk that the value of a financial instrument will fluctuate due to changes in the

currency exchange rates

Interest risk – the risk that the value of a financial instrument will fluctuate due to changes in the

market interest rates

Price risk – the risk that the value of a financial instrument will fluctuate as a result of changes in

the market prices.

As of 31.12.2025 Stara Planina Hold Plc does not have any financial instruments in foreign

currency. Interest bearing financial instruments of Stara Planina Hold Plc are primarily the granted loans.

All of them are with fixed annual interest rate of 2.5 – 4 %.

Investments in subsidiary and associated enterprises are reported and presented as per the

acquisition price method. The nature of the financial instruments used by the company indicates that

market risk does not have a significant effect on the financial results.

The risk of changes in the market prices of equity instruments arises from equity stocks classified

as reported at fair value through other comprehensive income (FVOCI), held for long-term investment.

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

longstanding and unblemished credit reputation which minimizes the credit risk.

47.

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

the interest risk of the cash flow are also kept at a minimum.

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.

VIII. Corporate Governance Declaration

1. National Corporate Governance Code

Stara Planina Hold Plc implements a long-term Good Corporate Governance Program. The

Program provides for the completion of a number of initiatives in several main areas, the implementation

of which is subordinated to its priority objectives:

• responsibility and independence of the corporate Board,

• shareholders' rights protection;

• ensuring equal treatment of each shareholder (including minority and foreign

shareholders);

• ensuring recognition of the rights of the parties interested in the management and

sustainable development of the company and promoting the co-operation with them;

• ensuring prompt and accurate disclosure of the statutory required information related to

Stara Planina Hold Plc regarding important issues of the financial standing, activity results, ownership

and management of the company;

• 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. 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 Hold 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

STARA PLANINA HOLD PLC – sphold.com

48.

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

controls the business strategy 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. The Companies have adopted general rules for the members of

the Board of Directors, which define the Board's functions and duties, the procedures for election and

dismissal of members, as well as the requirements for adequate knowledge and experience. Annually,

Stara Planina Hold Plc organizes and conducts training sessions in various areas related to the business

activities and competitive positions of the group companies, with the participation of members of the

Board of Directors.

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 of Stara Planina Hold Plc are male and one legal entity,

which is also represented by a male. The Company applies a selection procedure for Board candidates

based on a comparative assessment of each candidate's qualifications, utilizing clear and objective

criteria applied in a non-discriminatory manner throughout the entire process. As of the end of the

reporting year, no female candidacies for elective positions within the management body were received

by Stara Planina Hold Plc. The Board of Directors of Stara Planina Hold Plc regularly reviews the

composition and structure of the Company’s management body. Management’s analysis concludes that

the current composition results from the core business activities of the majority of the group companies,

STARA PLANINA HOLD PLC – sphold.com

49.

the requirement for corporate management to possess specialized knowledge, qualifications, and

experience in the mechanical engineering industry alongside finance and economics, and the traditionally

low representation of women in engineering and technical sciences, coupled with a domestic shortage of

such human resources. Through its recruitment policies, the Company’s management strives to attract

qualified, competent, and responsible individuals to all positions, including elective roles within the

management body, regardless of gender.

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. Variable remuneration is linked to clear criteria and

measurable indicators regarding the company's performance, as defined in the Remuneration Policy for

the members of the Board of Directors. The total amount of variable remuneration is based on a

combination of performance evaluations of the individual Board member, the Board of Directors as a

whole, and the company's overall operational results.

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.

In accordance with the requirements of Art. 11, Para. 3 and Para. 4 of Ordinance No. 48 of the

Financial Supervision Commission (FSC), the Company’s Board of Directors reviewed the Remuneration

Policy for the members of the Board of Directors in 2025. The Board decided that the policy complies

with the requirements of FSC Ordinance No. 48 and is built upon principles that ensure alignment with

the Company’s size, internal organization, and the nature, scope, and complexity of its activities;

therefore, no grounds or necessity for amendments were identified. The agenda of the Regular Annual

General Meeting of Shareholders, held on June 5, 2025, included a separate item for the review of the

Remuneration Policy for the members of the Board of Directors, and the General Meeting of Shareholders

adopted no changes to the Policy.

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

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

STARA PLANINA HOLD PLC – sphold.com

50.

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 specific areas in which the Audit Committee supports the activities of the

Board of Directors are regulated in the Rules of Procedure of the Audit Committee, published on the

website of each public company in the Group. In 2025, were adopted new Rules of Procedure for the

committees, updated and aligned with the requirements of the current regulations and best corporate

practices.

The Board of Directors provides the necessary resources for the Audit Committee to perform its

functions, as well as access to the company's documents and assets; it approves the Audit Committee

Charter, which clearly defines its functions, rights, and relationships with the management bodies; it is

responsible for the establishment and functioning of the internal control and risk management systems,

while the Audit Committee monitors their effectiveness and reports any identified weaknesses to the

Board of Directors. The Board of Directors and the Audit Committee collaborate in the preparation of

internal acts and procedures.

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

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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.

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.

Stara Planina Hold Plc and the public companies in the Group have an appointed Investor Relations

Director (IRD). The Board of Directors consults with the IRD and provides guidance on the long-term

investor relations strategy, approving specific operational goals and initiatives; coordinates with the IRD

to define the communication policy, the policy for protecting shareholder rights, and the assurance of

equitable treatment for all shareholders; ensures an appropriate administrative and organizational

structure is in place to facilitate the effective performance of the IRD’s duties; oversees the integrated

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52.

functioning of financial reporting and disclosure systems; reviews proposals for amendments to internal

corporate instruments submitted by the IRD and may commission motivated reports on specific cases or

to clarify new regulatory requirements or National Corporate Governance Code (NCGC)

recommendations; discusses with the Investor Relations Director and provides guidance regarding the

publication of specific information for shareholders, investors, and stakeholders on the corporate website,

including standard forms, document templates, and other materials.

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 2025, 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

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.

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53.

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

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.

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54.

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. The companies discloses information regarding their current financial and

economic standing, as well as their overall activities, including the work of the Board of Directors; this

serves as an objective prerequisite for increasing the confidence of shareholders and stakeholders in the

company's management.

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 2025 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

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

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55.

statements are prepared in accordance with the International Accounting Standards. The current financial

and accounting activities of the companies is subject to periodic control and analysis by the management

body. There is an established practice for periodic discussion at meetings of the Board of Directors of the

current financial results of the companies' activities, including the implementation of the investment

programs.

5. Information Art. 10 of Directive 2004/25/EC

The companies in the group do not have significant direct or indirect shareholdings (including

indirect shareholdings through pyramid structures and cross-shareholding) within the meaning of Art. 85

of Directive 2001/34/EC.

There are no holders of securities with special control rights.

There are no restrictions on the voting right.

The rules that regulate the appointment and replacement of members of the Board of Directors

and the introduction of amendments to the memorandum of association are specified in the published

Articles of Association of the company and are not regulated by the corporate Board. According to the

Articles of Association of Stara Planina Hold Plc and the companies in the group, only the General

Meeting of Shareholders has the right to elect and dismiss members of the Board of Directors of the

company and decisions are taken by a majority of 2/3 of the shares represented. Only the General

Meeting of Shareholders has the right to make amendments and supplements to the Articles of

Association of the company. Decisions are taken by a majority of 2/3 of the shares represented.

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

in accordance with the legislation in force.

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

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56.

• Finance Invest LTD, Plovdiv, UIC 115016144; represented in the Board of Directors by Spas

Borisov Videv – Member of the Board of Directors

Due to his passing, as of December 31, 2025, Stefan Atanasov Nikolov no longer performs the

functions of a 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

companies or cooperatives is presented in the annual individual activity report as of 31.12.2025

(https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20251231-EN-SEP.xhtml).

IХ. 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. Revenues on a consolidated basis are primarily formed by the

sales revenues from the production of the enterprises within the holding group.

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;

Fazan Jsc – socks and socks items;

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5. Information on concluded material transactions

In 2025, 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

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 2025, the activities of the companies in the group continued to be shaped by adverse factors

exerting a strong influence on global trade and economic relations. The global economy remained heavily

affected by a complex geopolitical landscape, which continues to generate uncertainty and volatility in

international markets. Key factors impacting the business include U.S. trade policy, tensions between

leading economic powers, and regional conflicts that directly affect global supply chains, commodity

prices, and demand dynamics. The tariffs introduced by the Trump administration, covering a wide range

of goods, continued to create uncertainty regarding long-term contracts, particularly in the machinery

sector. Concurrently, the military conflict between Russia and Ukraine and the escalation of tensions in

the Middle East placed additional pressure on energy markets, leading to periodic spikes in fuel and metal

prices.

There are no other events or indicators of an unusual nature that have had a significant impact on

the Issuer's activities, other than the military conflicts in Ukraine and the Middle East and the resulting

negative effects on economic activity, trade relations, the cost of key raw materials, including energy

resources, and inflation.

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.

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58.

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 2025 Separate Annual Financial

Statements (https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20251231-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 2025 Separate Annual Financial

Statements (https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20251231-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 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.

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 2026 is presented under

section 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.

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Euro in the Republic of Bulgaria, the Company performs all accounting entries and ongoing reporting in

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 Plc manages its investments by setting high but achievable goals in 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, no changes were made to the core management principles within the

meaning of the Accountancy Act, which guarantee the reliability and transparency of business operations,

the assessment and reporting of potential risks and eventual losses to achieve an accurate financial

result, and the consistency and fair presentation of information.

Detailed information regarding the Company’s accounting policy is provided in the explanatory

notes to the annual consolidated financial statements in accordance with IFRS.

Effective January 1, 2026, in accordance with the requirements of the Act on the Introduction of the

Euro. All interim reports and public notifications of financial position, as well as all forecasts after the Euro

adoption date of January 1, 2026, will be prepared and submitted to the Financial Supervision

Commission (FSC), the regulated securities market, and investors in Euro.

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.

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 presented in the Annual activity report to the

2025 Separate Annual Financial Statements (https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-

20251231-EN-SEP.xhtml).

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 2025 Separate Annual Financial

Statements (https://www.sphold.com/FILES/FO/8945006HQ7VN30FUR531-20251231-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.

STARA PLANINA HOLD PLC – sphold.com

60.

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: 26A, Latinka Str., 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

2025 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: 2026.04.28

09:48:38 +03'00'

STARA PLANINA HOLD PLC – sphold.com

61.

a) the annual consolidated financial statements of Stara Planina Hold Plc as of 31.12.2025,

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;

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:

(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:

with a description of the main risks and uncertainties they face.

a) the annual consolidated financial statements of Stara Planina Hold Plc as of 31.12.2025,

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;

Declarer:

Kremena Dulgerova

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

Kremena

Gantcheva

Dulgerova

Digitally signed by

Kremena Gantcheva

Dulgerova

Date: 2026.04.28

09:44:37 +03'00'

Vasil

Georgiev

Velev

Digitally signed by

Vasil Georgiev Velev

Date: 2026.04.28

09:49:07 +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 31.12.2025 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 31.12.2025 and its financial results from business operations, as well

as its cash flows for the year then ended, in accordance with the 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, 2025, comprised in the attached

electronic file „8945006HQ7VN30FUR531-20251231-EN-CON“ 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 31.12.2025 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 31.12.2025, 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 2025 attached in the electronic file

„8945006HQ7VN30FUR531-20251231-EN-CON“ 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, 2025, contained in the attached

electronic file „8945006HQ7VN30FUR531-20251231-EN-CON“, 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 Raykova Zlatareva is a key auditor, appointed as a statutory auditor of the consolidated

financial statements for the year ended on 31.12.2025 of Stara Planina Hold Plc ("the Company") at the

General Meeting of Shareholders held on 5.06.2025 for a period of one year.

- The audit of the consolidated financial statements for the year ended on 31.12.2025 of the

Company represents a sixth 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.

29.04.2026, 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: 2026.04.29

07:44:03 +03'00'