Sopharma : Notes to the consolidated financial report as at 30 June 2021

SOPHARMA GROUP

CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDING ON 30 June 2021

CONSOLIDATED INTERIM STATEMENT OF COMPREHENSIVE INCOME	1
CONSOLIDATED INTERIM STATEMENT OF FINANCIAL POSITION	2
CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS	3
CONSOLIDATED INTERIM STATEMENT OF CHANGES IN EQUITY	4
NOTES TO THE CONSOLIDATED INTERIM FINANCIAL STATEMENTS
1. BACKGROUND INFORMATION ON THE GROUP	5
2. SUMMARY OF THE SIGNIFICANT ACCOUNTING POLICIES OF THE GROUP	24
3. REVENUE FROM CONTRACTS WITH CUSTOMERS	75
4. OTHER OPERATING INCOME AND LOSSES	76
5. MATERIALS AND CONSUMABLES USED	76
6. HIRED SERVICES EXPENSE	77
7. EMPLOYEE BENEFITS EXPENSE	78
8. OTHER OPERATING EXPENSES	78
9. IMPAIRMENT OF ASSETS	78
10. FINANCE INCOME	79
11. FINANCE COSTS	79
12. GAINS/LOSSES FROM ASSOCIATES AND JOINT VENTURES	79
13. OTHER COMPREHENSIVE INCOME	80
14. PROPERTY, PLANT AND EQUIPMENT	81
15. INTANGIBLE ASSETS	84
16. INVESTMENT PROPERTY	86
17. INVESTMENTS IN ASSOCIATES AND JOINT VENTURES	87
18. OTHER LONG-TERM EQUITY INVESTMENTS	88
19. LONG-TERM RECEIVABLES FROM RELATED PARTIES	90
20. OTHER LONG-TERM RECEIVABLES	91
21. INVENTORIES	92
22. TRADE RECEIVABLES	93
23. RECEIVABLES FROM RELATED PARTIES	96
24. OTHER SHORT-TERM RECEIVABLES AND ASSETS	98
25. CASH AND CASH EQUIVALENTS	99
26. EQUITY	100
27. LONG-TERM BANK LOANS	101
28. NON-CURRENT PAYABLES TO RELATED PARTIES	102
29. LONG-TERM EMPLOYEE BENEFIT OBLIGATIONS	102
30. LEASE LIABILITIES	103
31. GOVERNMENT GRANTS	104
32. OTHER NON-CURRENT LIABILITIES	105
33. SHORT-TERM BANK LOANS	105
34. TRADE PAYABLES	106
35. PAYABLES TO RELATED PARTIES	107
36. PAYABLES UNDER FACTORING AGREEMENT	107
37. PAYABLES TO PERSONNEL AND FOR SOCIAL SECURITY	108
38. TAX PAYABLES	108
39. OTHER CURRENT LIABILITIES	111
40. CONTINGENT LIABILITIES AND COMMITMENTS	111
41. FINANCIAL RISK MANAGEMENT	114
42. RELATED PARTY TRANSACTIONS	126
43. EVENTS AFTER THE REPORTING PERIOD	129

This is a translation from Bulgarian of the consolidated financial statements of Sopharma Group for the period ending 30 June 2021.

SOPHARMA GROUP

CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDING ON 30 June 2021

1. BACKGROUND INFORMATION ON THE GROUP

Sopharma Group (the Group) is comprised of the parent company and its ninety-three (31 December

2020: ninety-four) subsidiaries. In addition, the Group has investments in one associate and one joint venture

(31 December 2020: in one associate).

Parent company

Sopharma AD (the parent company) is a business entity registered in Bulgaria with a seat and registered management address: Sofia, 16, Iliensko Shousse St.

The Company was registered with court on 15 November 1991 by Decision No 1/1991 of Sofia City Court.

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Subsidiaries

The Group subsidiaries as at 30 June 2021 are as follows:

Sopharma Trading AD - a business entity registered in Bulgaria by Decision No. 3594/16.10.1998 of Varna District Court, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12;

Pharmalogistica AD - a business entity registered in Bulgaria by Decision of Sofia City Court dated 12 August 2002, with a seat and management address: Sofia, 16, Rozhen Blvd.; Electroncommerce EOOD - a business entity registered in Bulgaria by Decision of Sofia City Court under Company File No. 24456 of 1991, with a seat and management address: Sofia, 1, Samokovsko Shousse St.;

Biopharm Engineering AD - a business entity registered in Bulgaria by Decision No. 524/1997 of Sliven District Court, with a seat and management address: Sliven, 75, Trakiya Blvd.;

Phyto Palauzovo AD - a business entity registered in Bulgaria by Decision No. 20120924105551/24.09.2012 of the Registry Agency, with a seat and management address: Kazanluk, 110, 23rd Pehoten Shipchenski Polk Blvd.;

Sopharmacy EOOD - a business entity registered in Bulgaria by Decision No. 201501191300026/19.01.2015 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 2 EOOD - a business entity registered in Bulgaria by Decision No. 20150617110324/17.06.2015 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 3 EOOD - a business entity registered in Bulgaria by Decision No. 20151202165822/02.12.2015 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 4 EOOD - a business entity registered in Bulgaria by Decision No. 20160229093338/29.02.2016 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 5 EOOD - a business entity registered in Bulgaria by Decision No. 20160301155620/01.03.2016 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12;

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This is a translation from Bulgarian of the consolidated financial statements for the period ending on 30 June

2021.

SOPHARMA GROUP

CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDING ON 30 June 2021

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Sopharmacy 6 EOOD - a business entity registered in Bulgaria by Decision No. 20140127170842/27.01.2014 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 7 EOOD - a business entity registered in Bulgaria by Decision No 20170315161212/15.03.2017 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 8 EOOD - a business entity registered in Bulgaria by Decision No 20170627142803/27.06.2017 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12'; Sopharmacy 9 EOOD - a business entity registered in Bulgaria by Decision No 20170911100706/11.09.2017 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 10 EOOD - a business entity registered in Bulgaria by Decision No 20170911101412/11.09.2017 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 11 EOOD - a business entity registered in Bulgaria by Decision No 20170302125338 /02.03.2017 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12;

Sopharmacy 12 EOOD - a business entity registered in Bulgaria by Decision No 20170306085236/06.03.2017 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 13 EOOD - a business entity registered in Bulgaria by Decision No 20170306080850/06.03.2017 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 14 EOOD - a business entity registered in Bulgaria by Decision No 20170306081205/06.03.2017 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 15 EOOD - a business entity registered in Bulgaria by Decision No 20170302134305/02.03.2017 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 16 EOOD - a business entity registered in Bulgaria by Decision No 20180515105543/15.05.2018 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 17 EOOD - a business entity registered in Bulgaria by Decision No 20180515105543/15.05.2018 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Sopharmacy 18 EOOD - a business entity registered in Bulgaria by Decision No 20190228133836/28.02.2019 of the Registry Agency, with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 12; Veta Pharma AD - a business entity registered in Bulgaria with registration in a company case № 581 of 05.04.1999 of the Veliko Tarnovo District Court with a seat and management address - Veliko Tarnovo, 32 Dalga Laka Str.

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This is a translation from Bulgarian of the consolidated financial statements for the period ending on 30 June

2021.

SOPHARMA GROUP

CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDING ON 30 June 2021

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Sanita Franchising AD - a business entity registered in Bulgaria by Decision of the Registry Agency, No 20080411103252 dated 11.04.2008; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 19 EOOD ( Until 27 January 2021, the name of the company was Valentina Vasileva- Lyulin EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090319152459 dated 19.03.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 20 EOOD (until 16.02.2021 the name of the company is Vasilka Lilovska EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090114162615 dated 14.01.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 21 EOOD (Until 04.02.2021 the name of the company is Venera Mutashka EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20080422121447 dated 22.04.2008; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 22 EOOD - (Until February 17, 2021, the name of the company is Veselka Vasileva EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090114170550 dated 14.01.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 23 EOOD (Until February 17, 2021, the name of the company is Victoria Angelova EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20080512090050 dated 12.05.2008; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 24 EOOD (Until 04.02.2021 the name of the company is Desislava Yordanova EOOD) a business entity registered in Bulgaria by Decision of the Registry Agency, No 20081220153409 dated 20.12.2008; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 25 EOOD - (Until 08.02.2021 the name of the company is Dimka Vladeva EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090226110235 dated 26.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 26 EOOD - (Until February 4, 2021, the name of the company was Donka Chivganova EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090518182226 dated 18.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 27 EOOD - (Until February 18, 2021, the name of the company was Ekaterina Mihailova Shumen 1 EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090519084124 dated 19.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 28 EOOD - (Until January 27, 2021, the name of the company is Elka Neykova EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No

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This is a translation from Bulgarian of the consolidated financial statements for the period ending on 30 June

2021.

SOPHARMA GROUP

CONSOLIDATED FINANCIAL STATEMENTS FOR THE PERIOD ENDING ON 30 June 2021

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20090320091825 dated 20.03.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 29 EOOD - (Until February 17, 2021, the name of the company is Emilia Angelova EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090604184353 dated 04.06.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 30 EOOD - (Until January 27, 2021, the name of the company is Juliana Kotova EOOD) a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090604170149 dated 04.06.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 31 EOOD - (Until January 27, 2021, the name of the company was Ivan Ivanov 1 EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090519080611 dated 19.05.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 32 EOOD - (Until February 2, 2021, the name of the company is Iliana Kalushkova EOOD) a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090226120647 dated 26.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 33 EOOD - (Until 04.02.2021 the name of the company is Irina Toncheva EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090604181926 dated 04.06.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

Sopharmacy 34 EOOD - (Until February 17, 2021, the name of the company was Kapka Nikolova

• Voenna Bolnitsa EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090227145039 dated 27.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.
  Sopharmacy 35 EOOD - (Until February 16, 2021, the name of the company is Kostadin Gorchev EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090605085738 dated 05.06.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.
  Sopharmacy 36 EOOD (Until February 4, 2021, the name of the company was Krassimira Shunina EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090227160338 dated 27.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.
  Sopharmacy 37 EOOD (Until 04.02.2021 the name of the company is Lora Doncheva EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20080630143914 dated 30.06.2008; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.
  Sopharmacy 38 EOOD - (Until 04.02.2021 the name of the company is Lyudmila Zlatkova EOOD), a business entity registered in Bulgaria by Decision of the Registry Agency, No 20090226112827 dated 26.02.2009; with a seat and management address: Sofia, Izgrev Region, 5 Lachezar Stanchev St., Sopharma Business Towers, Building A, floor 13.

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This is a translation from Bulgarian of the consolidated financial statements for the period ending on 30 June

2021.