Biofarm S A : 2024-03-31 Administrator Report - IFRS Financial Statements

2024 1st Quarter Report

Translation of the Company's report issued in the Romanian language

99 Logofătul Tăutu street, Bucharest 3, 031212, Romania

T: [phone]; F: [phone]; Email: [e-mail]; biofarm.ro

Share capital 98.537.535 lei, fully subscribed and paid-up, RO341563, J40/199/5.02.1991

Account RO26 BRDE 441 SV 28095 174410 BRD Decebal Branch

Table of Contents
DIRECTORS' REPORT	5
1.	Analysis of the Commercial Company Activity	5
	1.1. General Assessment Elements:	6
	1.2. Assessment of the Technical Level of the Commercial Company	8
	1.3. Evaluation of the Technical-Material Supply Activity (Indigenous Sources, Import Sources)	9
	1.4. Evaluation of the Sales Activity	9
	1.5. Assessing the aspects related to the employees/personnel of the commercial company	10
	1.6. Evaluation of the Research and Development Activity	16
	1.7. Evaluation of the Activity of the Commercial Company regarding Risk Management	16
	1.8. Elements of Perspective regarding the Activity of the Commercial Company	18
2.	Tangible Assets of the Commercial Company	20

2.1. Specifying the location and characteristics of the main production capacities in the property of the commercial company. Description and analysis of the degree of wear of the properties of the commercial

company

20

2.2.	Specifying the potential issues related to the property right over the tangible assets of the company .21
3.	Market of Securities Issued by the Commercial Company	21
Description of any activities of the commercial company for the purchase of own shares	22
4.	Management of the Commercial Company	22
5.	Financial - Accounting Statement	26
5.1.	Assets, Liabilities and Equity Statement	26
5.2.	Income and Expenses Statement	27
5.3.	Cash flow:	27
6.	Quarterly Report on Corporate Governance	27
6.1. Corporate Governance Structures	28
6.1.1.	General Meetings of Shareholders	28
6.1.2.	Board of Directors	28
6.2. Rights of Shareholders	35
INDIVIDUAL FINANCIAL STATEMENTS	37
for the period of 3 months concluded	37
on 31 March 2024	37
Statement of Comprehensive Income	38
Statement of Financial Position	39
Cash Flows Statement	41
Explanatory Notes to the Financial Statements:	43
1.	General Information	43
1.1.	Company Presentation	43
1.2.	Corporate Governance Structures	43
2.	Accounting Policies with significant impact	44
2.1.	Bases of Assessment	45
2.2.	Functional and Presentation Currency	45
2.3.	Significant Accounting Valuations and Estimates	45
2.4.	Presentation of Financial Statements	46

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99 Logofătul Tăutu street, Bucharest 3, 031212, Romania

T: [phone]; F: [phone]; Email: [e-mail]; biofarm.ro

Share capital 98.537.535 lei, fully subscribed and paid-up, RO341563, J40/199/5.02.1991

Account RO26 BRDE 441 SV 28095 174410 BRD Decebal Branch

2.5. Going Concern Principle	46
2.6. Intangible Assets	47
2.7. Tangible Assets	47
2.8. Investment property - IAS 40	48
2.9. Inventories	49
2.10.Financial Assets	50
2.11.Financial Liabilities	52
2.12.Recognition of Income and Expenses	52
2.12.1.	Recognition of Income	52
2.12.2.	Recognition of Expenses	53
2.13.Provisions - IAS37 "Provisions, Contingent Liabilities and Contingent Assets"	53
2.14.Employees Benefits - IAS 19 Employees Benefits	53
2.15.Deferred Tax - IAS 12	54
2.16.Dividends	54
2.17.Capital and Reserves	54
2.18.Financing Costs	55
2.19.Earnings per Share	55
2.20.Affiliated Parties	55
2.21.Segment Reporting	56
2.22.Modifications brought to the Accounting Policies	56
3.	Financial Instruments and Risks Management	59
4.	Income from Contracts with Clients	63
5.	Raw Materials and Consumable Materials	63
6.	Personnel Expenses	63
7.	Other Operating Expenses	64
8.	Net Financial Income	64
9.	Corporate Tax Expenses	64
10.	Earnings per share	65
11.	Tangible Non-current Assets	66
12.	Investment Property	68
13.	Intangible Assets	68
14.	Inventories	69
15.	Trade and Other Receivables	69
16.	Cash and Cash Equivalents and Term bank deposit	70
17.	Trade and Other Payables	71
18.	Deferred Tax	72
19.	Other provisions	72
20.	Share Capital	73
21.	Information on the Repurchase of Own Shares	73
22.	Reserves	73
23.	Retained Earnings	74
24.	Current Profit Distribution for 2023	74
25.	Contingent Liabilities	74

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99 Logofătul Tăutu street, Bucharest 3, 031212, Romania

T: [phone]; F: [phone]; Email: [e-mail]; biofarm.ro

Share capital 98.537.535 lei, fully subscribed and paid-up, RO341563, J40/199/5.02.1991

Account RO26 BRDE 441 SV 28095 174410 BRD Decebal Branch

26.	Commitments	74
27.	Information on the Audit of Financial Statements	74
28.	Affiliated Parties	74
29.	Subsequent Events	75

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99 Logofătul Tăutu street, Bucharest 3, 031212, Romania

T: [phone]; F: [phone]; Email: [e-mail]; biofarm.ro

Share capital 98.537.535 lei, fully subscribed and paid-up, RO341563, J40/199/5.02.1991

Account RO26 BRDE 441 SV 28095 174410 BRD Decebal Branch

DIRECTORS' REPORT

BIOFARM SA for Q1 2024

Report according to: F.S.A. Regulation No. 5/2018 - Annex 15

For the fiscal year: 2024

Date of the report: 31.03.2024

Name of the commercial company: Biofarm S.A.

Registered office: Bucharest, 3rd District, 99 Logofătul Tăutu street,

Telephone/fax number: 021.301.06.21/021.301.06.24

Unique registration code at the Trade Register Office: RO 341563

Order number with the Trade Register: J40/199/1991 din 05.02.1991

Regulated market on which the issued securities are traded: BSE

Subscribed and paid-up share capital: lei 98,537,535

The main characteristics of the securities issued by the commercial company: dematerialized registered shares

1. Analysis of the Commercial Company Activity

Description of the basic activity of the commercial company:

BIOFARM S.A. has its registered office in 99 Logofătul Tăutu street, Bucharest 3 and has as a main activity object the production and marketing of medicines for human use, NACE code 2120 "Manufacture of pharmaceutical preparations".

Biofarm S.A. holds the Certificate on compliance with good manufacturing practice issued by the National Agency for Medicines and Medical Devices of Romania for the manufacturing site located in 99 Logofătul Tăutu street, Bucharest 3:

• non-sterileproducts - soft capsules, liquids for external use, liquids for internal use, tablets, other solid dosage forms: sugar-coated tablets, film-coated tablets;
• herbal products;
• tests for quality control (microbiological - without sterility and physicochemical tests).

Biofarm SA holds the Certificate on compliance with good manufacturing practice issued by the National Agency for Medicines and Medical Devices of Romania for the manufacturing site located in 202-232 Drumul Gura Bădicului street, Bucharest 3:

• non-sterileproducts - soft capsules, tablets, other solid dosage forms: sugar- coated tablets, film-coated tablets;
• herbal products;
• tests for quality control (microbiological - without sterility and physicochemical tests).

Through our day-to-day activities, we ensure upon complying with the requirements of the Good Manufacturing Practice Rules in the pharmaceutical industry.

During February 2024, the first surveillance audit took place, as part of the certification in accordance with the requirements of the ISO-13485:2016 standard for medical devices. The audit ended without observations or recommendations, which proves that Biofarm has implemented and maintains a robust quality management system.

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99 Logofătul Tăutu street, Bucharest 3, 031212, Romania

T: [phone]; F: [phone]; Email: [e-mail]; biofarm.ro

Share capital 98.537.535 lei, fully subscribed and paid-up, RO341563, J40/199/5.02.1991

Account RO26 BRDE 441 SV 28095 174410 BRD Decebal Branch

The subscribed share capital of the company on March 31st of 2024 amounted lei 98,537,535, the nominal value of a share being of lei 0.1/share.

The shareholding structure on 31.03.2024 was the following:

Shareholder	Shares	Percentage
(%)
S.I.F. MUNTENIA S.A., BUCHAREST	508.231.323	51,5774
S.I.F. BANAT- CRISANA S.A., ARAD	362.096.587	36,7471
Natural persons	101.485.145	10,2991
Legal persons	13.562.295	1,3764
Total	985.375.350	100

Specification of the date of establishment of the commercial company;

BIOFARM S.A. was established by the G.D. 1224 of 23.11.1990.

Description of any significant merger or reorganization of the commercial company, of its branches or controlled companies, during the fiscal year;

On 31.03.2024, the company had the following working points:

• Bucharest 3rd District, 99 Logofatu Tautu street, Headquarters;
• Bucharest 1st District, 42-44 Iancu de Hunedoara boulevard, tax identification number 14008268;
• Bucharest 3rd District, 202-232 Drumul Gura Bădicului street, tax identification number 30037915.

1.1. General Assessment Elements:

Market share held:

Biofarm S.A. is one of the first manufacturers of drugs and food supplements.

By an uninterrupted activity of over 100 years, with experience in research and development, Biofarm S.A. enables itself to innovate and launch new and improved products at a rapid pace to meet the needs of its customers and stay at the top of the market.

Currently, BIOFARM S.A. is one of the top 10 manufacturers on the pharmaceutical market in Romania, a dynamic and very competitive market. Thus, the company is now dedicated to constantly improving the quality of its products and meeting international quality and safety standards, which gives it a long-term competitive advantage.

Biofarm S.A. owns two drug factories in Bucharest and one product testing and development unit, and its portfolio of over 100 products covers the most important therapeutic areas in the Consumer Healthcare division (digestive & metabolic, respiratory & ENT, cardiovascular & circulatory, nervous system, vitamins).

During the 1st Quarter of 2024, Biofarm S.A. placed the 3rd on the Consumer Healthcare (CHC) segment, in terms of the number of units sold and the 7th in value, at pharmacy acquisition reported price.

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99 Logofătul Tăutu street, Bucharest 3, 031212, Romania

T: [phone]; F: [phone]; Email: [e-mail]; biofarm.ro

Share capital 98.537.535 lei, fully subscribed and paid-up, RO341563, J40/199/5.02.1991

Account RO26 BRDE 441 SV 28095 174410 BRD Decebal Branch

Biofarm is the market leader in terms of volumes in the reference categories of eight of its brands: Bixtonim, Colebil, Triferment, Sennalax, Extravalerianic, Carmol, Carbocit and Nervocalmin.

Furthermore, during the 1st quarter of 2024, an important contribution to Biofarm's performance was generated by the increase in sales of active brands in the most important CHC categories from a potential point of view - cold & flu and pain management. The continuous development of new products, constantly adapted to the continuous diversifying needs of consumers, is one of the growth pillars of Biofarm company.

During 1st quarter of 2024, 6 new products were launched on the market, Biofen kids, cold & flu, Bioflu Hot Drink, Bioflu Hot Drink Max and Bioflu Sinus in cold & flu and pain management and Biofen Gel in rheumatic category.

The results obtained by Biofarm S.A. during the 1st quarter of 2024 are reflected by the sustained efforts of the company towards innovation, quality, and client satisfaction.

Investments in research and development stays the main priority at Biofarm, in order to be able to continuously meet the ever-changing consumer's needs.

The continuous development of new and revolutionary products is one of the key growth pillars of Biofarm S.A., which will strengthen the company's leading position in the pharmaceutical industry.

The net sales revenues during the 1st quarter of 2024 amounted lei 71.523.744, a decrease of 25% as compared to the same period of 2023.

Analyzed in their structure, the main operating expenses are presented as follows:

Operating expenses

Raw materials and consumables Personnel expenses Depreciation

Other operating expenses

Total

For the period end on

31 March 24

31 March 23

12,596,800 14,213,233

12,949,609 12,817,355

4,162,316 4,125,333

19,800,863 22,889,857

49,509,588 54,045,778

The net operating result for the 1st quarter of 2024 decreased by approximately 41%, as compared to the same period last year, while the net profit of the company registered a decrease of approximately 35% due to net sales decrease.

The result of 2024 is strongly altered by the situation of "one-off" sales of paracetamol- based medicines made in Q1 2023 by Biofarm SA as a result of the shortage of paracetamol-based medicines imported by third parties from external sources.

The profit tax expense in Q1 2024 amounted lei 2,615,687 as compared to lei 10,333,145 recorded during the similar period of 2023.

Liquidity and money available in the account

On 31 March 2024, the general liquidity rate was 5.41, increasing as compared to the previous year mainly due to the increase of current assets. Cash availability on 31 March

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99 Logofătul Tăutu street, Bucharest 3, 031212, Romania

T: [phone]; F: [phone]; Email: [e-mail]; biofarm.ro

Share capital 98.537.535 lei, fully subscribed and paid-up, RO341563, J40/199/5.02.1991

Account RO26 BRDE 441 SV 28095 174410 BRD Decebal Branch

2024, according to the balance sheet, represents money deposited into current bank accounts or in deposit accounts with Romanian banks.

1.2.Assessment of the Technical Level of the Commercial CompanyDescription of the main products realized and/or services provided:

a) main markets for each product or service and distribution methods

The sales of Biofarm S.A. products are mostly made to 6 internal distributors, this segment representing approximately 97% of the total Biofarm sales both in volume and in value.

The extremely varied products portfolio held by BIOFARM company requires a complex approach from the point of view of media strategy, promotion and distribution.

Thus, Biofarm S.A. has a team specialized in the promotion of own products in the most important pharmaceutical chains and a promotion team specialized in supporting visits to medical doctors through integrated marketing, media and commercial campaigns for the purpose of increasing the degree of recognition of Biofarm products portfolio among specialists and consumers.

1. share of each category of products or services I n the revenues and in the total turnover of the commercial company

The share, in (RON) value, of the three categories of products manufactured by Biofarm S.A. over-the-counter drugs ("OTC"), food supplements ("SN") and prescription drugs ("RX") is the following: over-the-counter drugs (OTC) have a share of 57%, food supplements (SN) have a share of 38% from the company portfolio, and the share of prescription drugs (RX) is of 5%.

8 / 76

99 Logofătul Tăutu street, Bucharest 3, 031212, Romania

T: [phone]; F: [phone]; Email: [e-mail]; biofarm.ro

Share capital 98.537.535 lei, fully subscribed and paid-up, RO341563, J40/199/5.02.1991

Account RO26 BRDE 441 SV 28095 174410 BRD Decebal Branch

1. new products envisaged for which a substantial volume of assets will be affected in the next fiscal year, as well as the stage of development of these products.

The main focus consists of supporting the strategic brands of Biofarm S.A., as well as in the development of new products that meet the most diverse health needs.

Investments will consider the stage of development of each brand and the potential of the category in which it operates.

Biofarm's development strategy includes internally developed products such as Biofen Extra, a combination of ibuprofen and paracetamol. The new product development center becomes very important, as the company plans for the next 5-7 years include a series of new product formulas that will be launched on the market.

The development of new products will be one of the future growth engines.

1.3. Evaluation of the Technical-MaterialSupply Activity (Indigenous Sources, Import Sources)

The main objectives of the supply activity were:

• keeping acquisition costs under control;
• due to global price increases, it was decided to create safety stocks for raw materials and primary packaging materials;
• identification of new potential partners;
• reanalysis and renegotiation of contracts/commercial conditions offered by suppliers to reduce prices in some raw materials and materials;
• increasing the payment terms of internal and external suppliers to obtain longer

credit periods.

The main suppliers of raw materials and packaging were re-evaluated to ensure the best possible added value for the company, a quality-price ratio being thus obtained, but also the optimal payment conditions for the company. Additionally, Biofarm identified a series of new alternative manufacturers with whom we will start the collaboration after the necessary approvals from relevant authorities.

1. 1.4. Evaluation of the Sales Activity

2. Description of the evolution of sales on the internal market and/or external market and of medium- and long-term sales prospects

The turnover achieved by Biofarm S.A. in the Q1 2024 from the sale of finished products and goods was worth lei 71,523,744. This turnover is generated mainly from sales of end products directly to the main pharmaceutical distributors (for internal payment) by the outlet of Bucharest, str. Drumul Gura Bădicului nr. 202-232, sector 3, Bucharest.

During Q1 2024, the share of export sales represented approximately 3% of Biofarm S.A.'s total net sales. The company's products were exported to 4 countries: Azerbaijan, Ukraine, Malta, and Republic of Moldova.

b) Description of the competitive situation in the activity field of the commercial company, of the share on the market of products or services of the commercial company and of the main competitors;

During recent years, the pharmaceutical industry, but not only, faced multiple challenges. From the sanitary crisis caused by the pandemics to the rising costs of energy, raw materials, packaging, supply chain problems in terms of raw materials and

9 / 76

99 Logofătul Tăutu street, Bucharest 3, 031212, Romania

T: [phone]; F: [phone]; Email: [e-mail]; biofarm.ro

Share capital 98.537.535 lei, fully subscribed and paid-up, RO341563, J40/199/5.02.1991

Account RO26 BRDE 441 SV 28095 174410 BRD Decebal Branch

packaging, as well as the lack of products to treat cold and flu symptoms. In this context, Biofarm S.A. achieved great results and was able to secure the necessary stocks and help cover the shortfall of cold and flu products by efficiently managing production and distribution.

Increasing competition and the entry of international players into the market is also a challenge. To cope, Biofarm S.A. has invested over 44 million euros, to date, in one of the most modern pharmaceutical factories in Romania, which covers an impressive area of over 10,000 square meters and has four production streams - tablets / film-coated tablets / dragees, soft capsules, solutions and syrups. This state-of-the-art factory is a key element in achieving the company's strategic goals, which include portfolio development through line extensions, new product launches and expansion into foreign markets.

Biofarm is dedicated to providing high-quality products, and this production facility allows it to strengthen its market position and expand its activity into new territories.

Care and respect for consumers and Biofarm S.A. team are values we believe in and every time we have shown that these principles are confirmed by tangible facts.

1. Description of any significant dependence of the commercial company on a single customer or on a group of customers whose loss would have a negative impact on company's revenues

Biofarm S.A. company has sales contracts concluded with the main distributors on the pharmaceutical market, who have a good sales power in pharmacies.

During Q1 2024, Biofarm S.A. had contracts concluded with the main distributors on the drugs and food supplements market, which generated a total of approximately 97% of turnover.

1.5. Assessing the aspects related to the employees/personnel of the commercial company

During Q1 2024, Biofarm S.A. had an average number of 380 employees.

General Information

Personnel demographic indicators:

Employee number evolution during 2024

383

382

381

380

379

378

377

376

IAN

FEB

MAR

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99 Logofătul Tăutu street, Bucharest 3, 031212, Romania

T: [phone]; F: [phone]; Email: [e-mail]; biofarm.ro

Share capital 98.537.535 lei, fully subscribed and paid-up, RO341563, J40/199/5.02.1991

Account RO26 BRDE 441 SV 28095 174410 BRD Decebal Branch