GRADUS AD
INDIVIDUAL ANNUAL FINANCIAL STATEMENTS
31 DECEMBER 2023
CONTENTS
Page
Separate annual financial statements
Separate statement of financial position 3
Separate statement of comprehensive income 4
Separate statement of changes in equity 5
Separate statement of cash flows 6
Notes to the separate financial statements 7- 37
Independent Auditor's Report
Separate Management Report
Corporate Governance Statement
Report on implementation of the remuneration policy
GRADUS AD
INDIVIDUAL STATEMENT OF FINANCIAL POSITION
AS OF DECEMBER 31, 2023
ASSETS
Non-current assets
Property, plant and equipment
4
90
Intangible assets
5
18
Investments in subsidiaries
6
269 418
269 412
Deferred tax assets
7
8
Total non-current assets
269 534
269 528
Current assets
Related party receivables
-
7
Trade receivables
21
95
219
Loans granted
21
38 027
34 683
Dividends receivable
21
8 300
15 397
Other current receivables and prepayments
8
248
Cash and cash equivalents
9
302
2 570
Total current assets
46 972
52 919
TOTAL ASSETS 316 506 322 447
EQUITY AND LIABILITIES
EQUITY
Capital attributable to the equity owners of the parent company
Share capital
10
243 609
243 609
Treasury ordinary shares
10
(4 135)
-
Issue premium
10
60 354
62 287
Retained earnings
10
16 572
16 473
316 400
322 369
LIABILITIES
Non-current liabilities
Leasing liabilities
12
13
-
Total non-current liabilities
13
-
Current liabilities
Payables to related parties
21
-
1
Trade payables
11.1
14
Tax liabilities
11.2
4
3
Payables to personnel and social security
11.3
14
7
Leasing liabilities
12
59
Other current liabilities
2
2
Total current liabilities 93 78
TOTAL LIABILITIES 106 78
TOTAL EQUITY AND LIABILITIES 316 506 322 447
Prepared by:
Executive Director:
/Antoaneta Boeva/
/Georgi Babev/
Chairman of the BD:
/Angel Angelov/
The notes on pages 7 to 37 form an integral part of these individual financial statements.
The individual financial statements have been approved for issue by the Board of Directors of Gradus plc and signed on
22.03.2024 year
Auditing Firm No. 129 Baker Tilly Clitu & Partners Ltd.
Ivaylo Yanchev Galina Lokmadjieva - Nedkova
Registered Auditor responsible for the audit Manager
Baker Tilly Clitu & Partners Ltd.
Note
31 December
2023
BGN'000
31 December
2022
BGN'000
3
GRADUS AD
INDIVIDUAL STATEMENT OF COMPREHENSIVE INCOME
FOR THE PERIOD ENDING DECEMBER 31, 2023
Dividend income
13.1
4 999 15 997
Revenue
13.2
13 11
Costs of materials (17) (22)
Costs of hired services
14
(184) (186)
Depreciation / amortization expenses
4,5
(66) (72)
Personnel expenses
15
(824) (559)
Other operating expenses 16
(37) (15)
Operating profit
3 884 15 154
Finance income 17 1 269 443
Finance costs
17
(4) (4)
Finance income /(costs), net 1 265 439
Profit before income tax 5 149 15 593
Income tax expense 18 (50) (1)
Profit for the period after taxes 5 099 15 592
Other components of comprehensive income
-
-
Total comprehensive income for the period
5 099 15 592
Profit per share in BGN
10
0,02
0,06
Prepared by:
Executive Director:
/Antoaneta Boeva/
/Georgi Babev/
Chairman of the BD:
/Angel Angelov/
The notes on pages 7 to 37 form an integral part of the interim financial statements.
Auditing Firm No. 129 Baker Tilly Clitu & Partners Ltd.
Ivaylo Yanchev Galina Lokmadjieva - Nedkova
Registered Auditor responsible for the audit Manager
Baker Tilly Clitu & Partners Ltd.
Note
2023
BGN'000
2022 BGN'000
4
GRADUS AD
INTERIM INDIVIDUAL STATEMENT OF CHANGES IN EQUITY
FOR THE PERIOD ENDING DECEMBER 31, 2023
BGN'000
BGN'000
BGN'000
BGN'000
BGN'000
Balance at 31 December 2021
243 609 - 62 287 11 843 317 739
Total comprehensive income for the
period:
Net profit for the period
- - - 15 592
15 592
Changes in equity for the period
Distributed profit for dividends
- - - (10 962)
(10 962)
Balance at 31 December 2022
243 609 - 62 287 16 473 322 369
Total comprehensive income for the
period:
Net profit for the period
- - - 5 099
5 099
Changes in equity for the period
Distributed profit for dividends
- - - (5 000)
(5 000)
Own shares repurchased
- (4 135) (1 933) -
(6 068)
Balance at 31 December 2023
243 609 (4 135) 60 354 16 572 316 400
Prepared by: Executive Director:
/Antoaneta Boeva/ /Georgi Babev/
/Angel Angelov/
The notes on pages 7 to 37 form an integral part of the interim financial statements.
Auditing Firm No. 129 Baker Tilly Clitu & Partners Ltd.
Ivaylo Yanchev
Galina Lokmadjieva - Nedkova
Registered Auditor responsible for the audit
Manager
Baker Tilly Clitu & Partners Ltd.
Chairman of the BD:
Total
share
capital
Share capital
Issue premium
Retained
earnings
Own shares
repurchased
5
GRADUS AD
INDIVIDUAL CASH FLOW STATEMENT
FOR THE PERIOD ENDING DECEMBER 31, 2023
2023 2022
BGN'000 BGN'000
Cash flows from operating activity
Proceeds from customers 1 163 495
Payments to suppliers (1 281) (800)
Payments to personnel and social security (695) (540)
Taxes paid/ refunded, other than income tax, net (82) (51)
Other proceeds, net (79) (57)
Net cash flows from operating activity (974) (953)
Cash flows from investing activity
Assets purchase - (2)
Loans to related parties (6) -
Proceeds from loans (15 300) (2 000)
Interest received on granted loans 12 000 1 900
Purchase of investments 1 225 403
Dividents received 12 095 7 598
Net cash flows used in investing activity 10 014 7 899
Cash flows from financing activity
Payments on securities buy-back
(6 068) -
Dividents paid
(4 787) (10 501)
Taxes paid on dividends paid
(213) (728)
Payments on leasing contracts
(59) (60)
Other proceeds on financing activities
(181) (3)
Net cash flows used in financing activity
(11 308) (11 292)
Net increase / decrease in cash
(2 268) (4 346)
Cash and cash equivalents on 01 January 2 570 6 916
Cash and cash equivalents on 31 December
302 2 570
Prepared by: Executive Director:
/Antoaneta Boeva/ /Georgi Babev/
Chairman of the BD:
/Angel Angelov/
The notes on pages 7 to 37 form an integral part of the interim financial statements.
Auditing Firm No. 129 Baker Tilly Clitu & Partners Ltd.
Ivaylo Yanchev Galina Lokmadjieva - Nedkova
Registered Auditor responsible for the audit Manager
Baker Tilly Clitu & Partners Ltd.
Note
6
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
7
1. Status and subject of activity
Gradus AD, Stara Zagora, was established on 28 November 2017.
Management address: Stara Zagora, Industrialen quarter, Gradus Poultry Slaughterhouse
BULSTAT: 204882907
Gradus AD is a public company registered on 30 July 2018 by the Financial Supervision Commission.
The shares of the company are listed on the Bulgarian Stock Exchange.
The capital of the company consists of 243,608,710 (two hundred forty-three million, six hundred and eight thousand,
seven hundred and ten) non-preferential registered voting shares with nominal amount of BGN 1 each.
Object of activity of the company: Investments in stocks and shares of companies, acquisition and management of
shares in Bulgarian and foreign companies; activity as a holding company; acquisition, assessment and sale of patents,
concession of licenses for the use of patents of companies, in which the company has shares; financing of companies,
in which the company has shares, as well as any other activity not prohibited by law, provided that if a permit or a
license is required, or registration for the purpose of carrying out any activity, then such activity shall take place
following the obtaining of such permit or license, respectively following the completion of such registration.
Ownership and management
Shareholders of the company as at 31 December 2023:
Gradus AD - 1,70% of the capital
Luka Angelov Angelov – 40.77% of the capital,
Ivan Angelov Angelov – 20.68% of the capital
Angel Ivanov Angelov - 20.68% of the capital
Legal entities – 14.35% of the capital
Individual shareholders – 1.82% of the capital.
Management bodies of the company
General Meeting of Shareholders
Board of Directors
Board of Directors
The Board of Directors consists of three (3) members who are as follows as at 31 December 2023:
Angel IvanovAngelov – Chairman of the Board of Directors
Georgi Aleksandrov Babev - Member of the Board of Directors of Gradus AD and Executive Director of Gradus
AD
Bistra Stoyanova Kotseva – Member of the Board of Directors and Deputy Chairman of the Board of Directors
Audit Committee:
The Audit Committee supports the work of the Board of Directors; it has the role of those in charge of governance
who monitor and supervise the internal control system, risk management and financial reporting system of the
company.
Members of the Audit Committee are:
Hristina Atanasova Filipova – Chair of the Audit Committee;
Ivaylo Nikolaev Nikolov – Member of the Audit Committee;
Radka Dimcheva Peneva – Member of the Audit Committee.
The average number of staff of Gradus AD as at 31 December 2023 was 5 hired under employment contracts (2022:
4).
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
8
1. Status and subject of activity (Continued)
Macroeconomic situation
The parent company and the subsidiaries operate in conditions of rising inflation. The management managed to
maintain a good financial position of the Group by indexing its income and expenses within reasonable limits. A
direct effect of the changed macroeconomic environment is the increase in the discount rate by which the Company
tests its investments for impairment. (see Note 6).
War in Ukraine – Impact and Effects
On 24.02.2022, a military conflict arose between Ukraine and Russia. Subsequently, a number of countries imposed
sanctions against certain individuals and legal entities in Russia. The Russia-Ukraine conflict and related economic
sanctions and other measures taken by governments around the world have a significant effect on both the local
economies of individual countries and the global economy.
Gradus AD and its subsidiaries do not own investments in the territory of the countries involved in the military
conflict. The Company and its subsidiaries do not have commercial relations with counterparties that have been
sanctioned. Gradus AD and its subsidiaries do not have suppliers of goods or services from the parties to the conflict.
Sales to customers from the affected countries are not significant for the activities of the Company and its subsidiaries
and are redirected to other markets under the same or more favorable conditions.
Climate related issues
The Company perceives the protection of the environment and the reduction of the rate of occurrence of climate
change as part of its corporate social responsibility policy and develops its activity in compliance with the
requirements for environmental protection. The Group implements measures for: separate collection of waste,
minimization, utilization and recycling of industrial and household waste; ensures appropriate training of personnel
on issues related to environmental protection and pollution prevention. The Group actively invests in renewable
sources of electricity for its own consumption.
2. Basis of preparation of the separate financial statements
These separate financial statements have been prepared based on the principles of going concern and historical cost
convention, with the exception of property, plant and equipment, which are accounted for by using the revaluation
model in IAS 16 "Property, Plant and Equipment".
These financial statements are the separate financial statements of Gradus AD.
The company will prepare consolidated financial statements in accordance with IFRS, endorsed by the European
Union, until 29 April 2024.
Functional currency and currency of presentation
Pursuant to the requirements of the Bulgarian legislation, the company keeps its accounting books and records and
prepares its financial statements in the national currency of the Republic of Bulgaria – the Bulgarian lev. Since 1
January 1999 the exchange rate of the Bulgarian lev has been pegged to the exchange rate of the Euro in a ratio of
EUR 1 = BGN 1.95583.
These financial statements have been prepated in BGN'000 (BGN thousand), unless stated otherwise.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
9
3. Significant accounting policies
(a) Foreign currency transactions
Foreign currency transactions are translated into the functional currency using the exchange rate prevailing on the
date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the
functional currency using the closing exchange rate prevailing on the date of preparation of the statement of financial
position.
Foreign exchange gain or loss originating from monetary items is the difference between the amortised cost in the
functional currency at the beginning of the period adjusted by the effective interest and the payments over the period
and the amortised cost in foreign currency translated at the exchange rate at end of the period.
Non-monetary assets and liabilities that are measured in terms of fair value in a foreign currency are translated using
the exchange rate at the date of measurement of the fair value. Non-monetary assets and liabilities that are measured
in terms of historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.
Any foreign exchange differences, which occur upon translation into the functional currency, are reported as profits
and losses, except for differences arising on the translation into the functional currency of available-for-sale equity
instruments or eligible cash flow hedges that are recognised in other comprehensive income (if any).
b) Property, plant and equipment
(i) Recognition and measurement
Initial recognition
Items of property, plant and equipment are measured initially at cost, which comprises all directly attributable costs
of acquisition of the asset.
The cost comprises the asset's purchase price, including any import duties and non-refundable purchase taxes, and
any costs directly incurred in bringing the asset to its location and working condition necessary to prepare the asset
for its intended use.
The cost of self-constructed assets includes the cost of materials, direct labour and the appropriate proportion of
indirect production overheads; costs directly incurred in bringing the asset to its location and working condition
necessary to prepare the asset for its intended use; initial estimate of the costs of dismantling and removing the assets,
and restoring the site on which they are located, and capitalised interest expenses. Software acquired without which
it is impossible to operate equipment purchased is capitalised as part of the equipment.
When items of property, plant and equipment contain components with different useful lives, they are reported
separately.
Subsequent measurement
Subsequent to initial acquisition, fixed tangible assets (property, plant and equipment) are carried under the
revaluation model of IAS 16.
The fair value of fixed tangible assets (property, plant and equipment) is determined on the basis of market evidence
presented in a report prepared by an approved licensed valuer. Revaluation is scheduled to take place every 3 years.
When the fair value changes significantly over a shorter period of time, the revaluation may be made more often to
ensure that their carrying amount at the relevant reporting date does not materially differ from their fair value.
Gains and losses on derecognition of property, plant and equipment are determined by comparing the proceeds with
the carrying amount of the asset and are recognised net in other income / other expenses in profit or loss. When the
revalued assets are sold or derecognised on other grounds, the amounts included in the revaluation reserve are
reclassified to retained earnings or accumulated losses.
The other fixed tangible assets (motor vehicles, hardware, fixtures and fittings, etc) are presented under the cost
model of IAS 16.
(i)
Subsequent costs
Subsequent costs of replacing part of the property, plant and equipment are capitalised to the carrying amount of the
relevant asset only to the extent that it is probable that economic benefits originating from that part of the asset will
flow to the company and the expenditure can be measured reliably. Current repairs and maintenance are recognised
as an expense when incurred.
(ii)
Depreciation
An item of property, plant and equipment is depreciated from the date on which it is installed and ready for use, or
for the self-constructed assets, from the date on which the asset is completed and ready for use. Depreciation charges
are recognised up to the amount of the asset's original value minus the estimated residual value of the asset based on
the straight-line method over the estimated useful life of each component of property, plant and equipment.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
10
3. Significant accounting policies (continued)
(b) Property, plant and equipment (continued)
Depreciation charges are recognised in profit or loss unless they are included in the carrying amount of another asset.
Assets acquired under leases are depreciated over the shorter of the estimated useful life of the asset and the lease
term, unless it is virtually certain that the ownership of the asset will be acquired by the end of the lease term. Land
is not depreciated.
Depreciation rates are defined as follows:
Annual
depreciation rate,
%
Buildings and facilities
1.5
Plant and equipment
8
Motor vehicles
10
Hardware
33.3
Fixtures and fittings
10
Other fixed assets
4
–
10
Depreciation methods, useful lives and residual values (if not insignificant) are reviewed at each date of preparation
of the financial statements.
(c) Intangible assets
Intangible assets are carried at cost less accumulated amortisation and any impairment losses.
The carrying amount of intangible assets is tested for impairment when events or changes in circumstances indicate
that the carrying amount could exceed their recoverable amount. Intangible assets are derecognised from the statement
of financial position when they are permanently retired and no future economic benefit is expected from their disposal,
or when they are sold.
Gains and losses on sale of individual assets from the group of intangible assets are determined by comparing the
consideration to which the company expects to be entitled (sales proceeds) with the asset's carrying amount at the
date on which the recipient obtains control of the asset. They are stated net, as part of "Other operating
income/(losses), net" on the statement of comprehensive income.
Subsequent costs
Subsequent costs are capitalised only when they increase the future economic benefit from the specific asset to which
they relate. Any other costs, including costs of internally generated goodwill and trademarks, are recognised as an
expense when incurred.
Amortisation
Intangible assets are amortised on a straight-line basis in profits and losses over the estimated useful economic life
from the date on which they are ready for use.
Annual
amortisation rate, %
Software
33.33
Intellectual property rights
15
The methods of amortisation, useful lives and assets residual values are reviewed at each year-end.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
11
3. Significant accounting policies (continued)
(d) Investments
The long-term investments representing stocks and shares in subsidiaries are presented in the financial statements at
acquisition price (cost), which is:
- the fair value of the consideration paid for the acquisition of stocks and shares and / or
- the value of the paid-up monetary shareholding and / or
- the value of the shares contributed in-kind against the shares issued, which value is determined by appraisers
appointed by the court, incl. the direct costs of acquiring the investment, less any impairment losses.
These investments are not traded on stock exchanges. This circumstance does not make it possible to provide market
price quotations in an active market that adequately reflect the fair value of those shares.
Investments held by the company are subject to impairment testing. When there are conditions and indications of
impairment, it is calculated as the difference between the investment's carrying amount and its recoverable amount
and is recognised in the statement of comprehensive income (in profit or loss for the year). In case of subsequent
reversal of impairment, it is recognised in the statement of comprehensive income.
Investments are derecognised when the entity transfers the rights originating from the asset to other persons when
the legal grounds for that arise and thus control on the economic benefits from the respective specific type of
investment is lost.
(e) Financial instruments
A financial instrument is each contract that gives rise to both a financial asset of one enterprise and a financial liability
or equity instrument of another enterprise.
Financial assets
Initial recognition, classification and measurement
On initial recognition, financial assets are classified in three groups according to which they are subsequently
measured at amortised cost, at fair value through other comprehensive income and at fair value through profit or loss.
The company initially measures financial assets at fair value and, in the case of financial assets which are not carried
at fair value through profit or loss, plus the direct transaction costs. Trade receivables that do not contain a significant
financing component are an exception - they are measured on the basis of the transaction price determined in
accordance with IFRS 15.
Purchases or sales of financial assets that require delivery of assets within a time frame established by regulation or
convention in the market place (regular way trades) are recognised on the trade (transaction) date, i.e., the date that
the company commits to purchase or sell the asset.
The classification of financial assets at initial recognition depends on the financial asset's contractual cash flow
characteristics and the company's business model for managing them. In order for a financial asset to be classified
and measured at amortised cost or fair value through OCI, it needs to give rise to cash flows that are 'solely payments
of principal and interest (SPPI)' on the principal amount outstanding. This assessment is referred to as the SPPI test
and is performed at an instrument level.
The company's business model for managing financial assets refers to how it manages its financial assets in order to
generate cash flows. The business model determines whether cash flows will result from collecting contractual cash
flows, selling the financial assets, or both.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
12
3. Significant accounting policies (continued)
(e) Financial instruments (continued)
Subsequent measurement
For purposes of subsequent measurement, financial assets are classified in four categories:
Financial assets at amortised cost (debt instruments)
Financial assets at fair value through other comprehensive income with recycling of cumulative gains and
losses (debt instruments)
Financial assets designated at fair value through other comprehensive income with no recycling of
cumulative gains and losses upon derecognition (equity instruments)
Financial assets at fair value through profit or loss (debt and equity instruments).
Classification groups
Financial assets at amortised cost (debt instruments)
The company measures financial assets at amortised cost if both of the following conditions are met:
The financial asset is held and used within a business model with the objective to hold financial assets in
order to collect contractual cash flows; and
The contractual terms of the financial asset give rise on specified dates to cash flows that are solely payments
of principal and interest on the principal amount outstanding
Financial assets at amortised cost are subsequently measured using the effective interest method. They are subject to
impairment. Gains and losses are recognised in the statement of comprehensive income.
The company's financial assets at amortised cost include cash and cash equivalents, trade receivables, and loans to
related parties.
Financial assets at fair value through other comprehensive income (debt and equity instruments)
The company has no such assets.
Financial assets at fair value through profit or loss
The company has no such assets.
Derecognition
A financial asset (or, where applicable, a part of a financial asset or part of a group of similar financial assets) is
primarily derecognised (i.e., removed from the company's statement of financial position) when:
The rights to receive cash flows from the asset have expired; or
The company has transferred its rights to receive cash flows from the asset or has assumed an obligation to
pay the received cash flows in full without material delay to a third party under a 'pass-through' arrangement; and
either (a) the company has transferred substantially all the risks and rewards of the asset, or (b) the company has
neither transferred nor retained substantially all the risks and rewards of the asset, but has transferred control of the
asset.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
13
3.
Significant accounting policies (continued)
(e) Financial instruments (continued)
When the company has transferred its rights to receive cash flows from an asset or has entered into a pass-through
arrangement, it evaluates if, and to what extent, it has retained the risks and rewards of ownership.
When it has neither transferred nor retained substantially all of the risks and rewards of the asset, nor transferred
control of the asset, the company continues to recognise the transferred asset to the extent of its continuing
involvement. In that case, the company also recognises an associated liability. The transferred asset and the associated
liability are measured on a basis that reflects the rights and obligations that the company has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset is measured at the lower of the
original carrying amount of the asset and the maximum amount of consideration that the company could be required
to repay.
Expected credit loss on financial assets
The company recognises an allowance (impairment provision) for expected credit losses for all debt instruments not
held at fair value through profit or loss. Expected credit losses are based on the difference between the contractual
cash flows due in accordance with the contract and all the cash flows that the company expects to receive, discounted
at an approximation of the original effective interest rate. The expected cash flows will include cash flows from the
sale of collateral held or other credit enhancements that are integral to the contractual terms.
For the purposes of calculation of expected credit losses on loans to related and third parties, and cash and cash
equivalents with banks, the company has adopted the general approach to impairment as set by IFRS 9. According
to this approach, the company applies a three-stage impairment model based on changes compared to the initial
recognition of the financial instrument's credit quality.
Expected credit losses are recognised in two stages.
a. A financial asset that has not been credit impaired at its initial origination/acquisition is classified in phase
1. Since its initial recognition, its credit risk and qualities are subject to continuous monitoring and analyses. The
expected credit losses on financial assets classified in Phase 1 are determined on the basis of expected credit losses
resulting from possible default events which could occur within the next 12 months of the life of the asset concerned
(12-month expected credit losses for the instrument).
b. In cases where, after initial recognition of a financial asset, its credit risk increases significantly and as a
result its qualities deteriorate, it is classified in phase 2.
Expected credit losses on financial assets classified in phase 2 are determined over the remaining life (term) of the
relevant asset (lifetime expected credit losses for the instrument).
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
14
3. Significant accounting policies (continued)
(e) Financial instruments (continued)
The company's management has developed a policy and a set of criteria for analysis, identification and evaluation of
the occurrence of a status of a "significant increase in credit risk".
In cases where the credit risk of a financial asset increases to a level indicating that an event of default has occurred,
the financial asset is considered to be impaired and it is classified in phase 3. At this stage, losses incurred by the
relevant asset for its entire remaining lifetime (term) are established and calculated.
The company adjusts expected credit losses based on historical data using forecast macroeconomic indicators that are
found to be correlated and are expected to affect the amount of the expected credit losses in the future.
In calculating expected credit losses on trade receivables, assets under contracts with customers and lease receivables,
the company applies a simplified approach to calculate expected credit losses and does not follow subsequent changes
in their credit risk. According to this approach, the company recognises an allowance (impairment provision) based
on the expected credit loss over the entire period of the receivables at each reporting date.
Financial liabilities
Initial recognition, classification and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value through profit or loss, loans
and borrowings, trade and other payables, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and borrowings and payables, net
of directly attributable transaction costs.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification.
Classification groups
Financial liabilities at fair value through profit or loss
The Group has no such liabilities.
Loans and other borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently measured by the company at
amortised cost using the effective interest rate method. Gains and losses are recognised in the statement of
comprehensive income when the relevant financial liability is derecognised as well as through the effective interest
rate amortisation process.
Amortised cost is calculated by taking into account any discount or premium on acquisition, and fees or costs that are
an integral part of the effective interest rate. The effective interest rate amortisation is included as finance costs in the
statement of comprehensive income (in the profit or loss for the year).
Derecognition
Financial liabilities are derecognised when the obligation under the liability is discharged or cancelled or expires.
When an existing financial liability is replaced by another from the same lender on substantially different terms, or
the terms of an existing liability are substantially modified, such an exchange or modification is treated as a
derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying
amounts is recognised in the statement of comprehensive income.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
15
3. Significant accounting policies (continued)
(e) Financial instruments (continued)
Offsetting of financial instruments
Financial assets and financial liabilities are offset and the net amount reported in the statement of financial position
if, and only if, there is a currently enforceable legal right to offset the recognised amounts and there is an intention to
settle on a net basis, or to realise the assets and settle the liabilities simultaneously. This requirement derives from the
idea of the real business nature of the company's relationship with a counterparty that, in the simultaneous existence
of these two requirements, the expected actual cash flow and benefits from these estimates to the enterprise is the net
flow, i.e. the net amount reflects the actual right or liability of the company originating from these financial
instruments – in any case, its right to receive or pay only the net amount. If both conditions are not met simultaneously,
it is assumed that the rights and obligations of the company in respect of these counter-balances (financial instruments)
are not covered only and solely by the receipt or payment of the net amount.
The netting policy is also linked to the assessment, presentation and management of the actual credit and liquidity
risks associated with these counter-balances.
Criteria applicable to establishing the existence of a current and legally enforceable netting right are as follows:
the right should not depend on a future event, i.e. it shall be enforceable not only if a particular future event occurs;
it should be possible to exercise the right and to defend it by employing legal means in the course of (taken
cumulatively):
- the ordinary activity,
- in case of default/delay, and
- in case of bankruptcy and insolvency.
The applicability of criteria shall be assessed against the requirements of Bulgarian legislation and the established
arrangements between the parties. The condition for the existence of a current and legally enforceable netting right is
always and mandatorily assessed together with a second condition: for the existence of obligatory intention to settle
these balances on a net basis.
(f) Trade and other receivables
Trade receivables are an unconditional right of an entity to receive remuneration under contracts with customers and
other contractors.
Initial recognition
Initially, trade receivables are presented and measured at fair value based on the transaction price, which value is
usually equal to the invoice amount, unless they contain a significant financing component that is not charged
additionally. If this is the case, they are recognised at their present value calculated at a discount rate equal to the
interest rate that is considered inherent to the debtor.
Subsequent measurement
The company holds trade receivables solely for the purpose of collecting contractual cash flows and measures them
subsequently at amortised cost less the accumulated impairment for expected credit losses.
Impairment
The company applies the lifetime expected credit losses model for its trade receivables using the simplified approach
required by IFRS 9. The expected credit loss from receivables is stated as Impairment of assets in the statement of
comprehensive income.
(g) Cash and cash equivalents
Cash comprises cash on hand and cash in current accounts, and cash equivalents comprises deposits with banks with
an original maturity of three months or less, and deposits with longer maturity that are freely disposable by the
company in accordance with the arrangement with bankers during the term of the deposit.
Subsequent measurement
Cash and cash equivalents in banks are measured subsequently at amortised cost, less any accumulated impairment
for expected credit losses.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
16
3.
Significant accounting policies (continued)
(g) Cash and cash equivalents (continued)
For the purposes of the preparation of the cash-flow statement:
cash equivalents from customers and cash payments to suppliers are presented gross, VAT inclusive (20%);
interest received on current accounts are presented as operating activity;
VAT paid under purchases of long-term assets is specified on the "payments to suppliers" line to the cash-
flows from operating activity, as long as it is included into and recovered together with the operating flows
of the company for the respective period;
proceeds from and payments from and on overdrafts are reported net by the company in cash flows from
financing activity.
(h) Trade and other payables
Trade and other current liabilities in the statement of financial position are stated at cost of acquisition, which is
deemed to be the fair value of the transaction and will be paid in future against the goods and services received. In
cases of deferred payments beyond the usual credit term on which no additional payment of interest is envisaged or
interest is quite different from the usual market interest rate, the liabilities are initially assessed at their fair value at
the discount rate inherent to the company, and subsequently, at amortised cost.
(i) Interest-bearing loans and other financial resources provided
Loans and other financial resources are presented initially at an acquisition price which is considered fair value of
consideration given in a transaction, net of direct costs associated with these loans and resources. Subsequent to initial
recognition, interest-bearing loans and borrowings, and other resources given, are measured subsequently and
presented in the statement of financial position at amortised cost determined by applying the effective interest rate
method. The amortised cost has been calculated by taking into account of all types of charges, commissions and other
amounts relating to these loans.
Gains and losses are recognized in the statement of comprehensive income as finance income or finance costs during
the amortisation period.
Interest income is presented depending on the phase in which the relevant loan or other receivable on financial
resource granted, as the case may be, has been classified using the effective interest rate method.
(j) Income
The company's usual income consists of dividends and interest on loans granted.
Dividend income is recognized in the current profit or loss on the date the company acquires the right to receive the
payment as a result of a decision taken for the allocation of the accumulated profits of the subsidiaries.
Measurement of contracts with customers
A contract with customer exists when:
-
The parties have approved the contract;
-
The rights of each party can be identified;
-
The payments terms can be identified.
A contract for which any of the above criteria has not yet been met shall be re-measured each reporting period.
Remuneration received under such a contract is recognized as a liability (a contract liability) in the statement of
financial position until all criteria for recognizing a contract with customer are complied with and the company fulfils
its performance obligations. Upon initial recognition of its contracts with customers, the company makes an additional
analysis and assessment of whether two or more contracts should be considered together and accounted for as only
one contract. The company recognises revenue for each single performance obligation at the level of an individual
contract with a customer by analysing the type, terms and conditions of each specific contract.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
17
3. Significant accounting policies (continued)
(j) Income (continued)
Measurement of revenue under contracts with customers
Revenue is measured on the basis of the transaction price set under each contract. The transaction price is the amount
of the consideration to which the company expects to be entitled, with the exception of amounts collected on behalf
of third parties. In determining the transaction price, the company takes into account the terms and conditions of the
contract and its usual commercial practices, including the impact of the variable remuneration, the existence of a
significant financing component, the non-monetary consideration, and the consideration due to the customer.
(k) Finance income and finance costs
Finance income is reported in the statement of comprehensive income (in the profit or loss for the year), when occurs,
and comprises of: interest income on loans granted and term bank deposits, interest income on receivables, and net
foreign exchange gains.
Finance income is presented separately from finance costs on the face of the statement of comprehensive income.
Interest income is calculated by applying the effective interest rate to the gross carrying amount of financial assets in
phases 1 and 2. Interest income on financial assets in phase 3 is calculated by applying the effective interest rate to
their amortised cost (i.e. the gross carrying amount adjusted by expected credit losses).
Foreign currency gains and losses are reported net as either finance income or finance costs depending on whether
the foreign currency differences represent a net gain or a net loss.
(l) Provisions
Provisions are recognised when the company has a present legal or constructive liability as a result of past event and
it is probable that an outflow of resources embodying economic benefits will be required to settle the liability.
Provisions are determined by discounting the estimated future cash flows with a pre-tax interest rate that reflects the
time value of money and the risks specific to the liability. Interest accrued on the discounted value is recognised as
finance costs.
(m) Income tax
Income tax for the reporting period consists of current and deferred taxes. Income tax is recognised in profit and loss,
except to the extent that it relates to business combinations or items recognised directly in equity or in other
comprehensive income.
Current income tax is the expected tax payable on the taxable profit or loss for the year, using the tax rates that are
enacted or substantially enacted by the reporting date, and any adjustments to tax payable in respect of previous years.
Current income tax includes also any tax effects of dividends.
Deferred income tax is provided on temporary differences between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes. Deferred tax is recognised for all temporary differences that arise
from the initial recognition of an asset or liability in a transaction that is not a business combination and affects neither
the accounting nor taxable profit nor loss.
Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply in the year when the
asset is realised or the liability is settled, based on tax rates and tax laws that have been enacted or substantively
enacted at the reporting date.
Deferred income tax assets and deferred income tax liabilities are offset only if a legally enforceable right exists to
set off current tax assets against current income tax liabilities and the deferred income taxes relate to the same taxation
authority.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
18
3. Significant accounting policies (continued)
(m) Income tax (continued)
Deferred income tax assets are recognised for all unused tax losses, credits and deductible temporary differences to
the extent that it is probable that taxable profit will be available against which they can be utilised. Deferred income
tax assets are reviewed at each reporting date and reduced to the extent that it is no longer probable that future benefits
will be realised.
In assessing its current and deferred taxes the company takes into account the effect of uncertain tax items and whether
additional taxes or interest might be due. The company is of the opinion that the tax liability accruals are adequate for
all open tax years based on an assessment of lots of factors, including interpretation of tax laws and previous
experience. The assessment is based on estimates and assumptions and may include judgements for future events.
New information may appear as well, according to which the company may change its judgements on the adequacy
of the existing tax liabilities; any such changes in the tax liabilities would affect the tax expense for the period in
which such assessment is made.
(n) Leases
The Company as a lessee
Assessment for lease recognition
A contract constitutes or contains elements of a lease if the contract transfers for consideration the right to control the
use of an asset for a specified period of time.
Initial recognition and assessment
On the lease inception date (the date the underlying asset is available for use), the Company recognizes a "right-of-
use" asset and a lease liability.
The acquisition price of the right-of-use asset includes:
- the amount of the initial assessment of the lease liability;
- lease payments made on or before the start date, reduced by incentives received under the lease contract;
- the initial direct costs of the lessee;
- provisions for costs related to dismantling and moving the asset.
The Company depreciates right-of-use assets on a straight-line basis over the shorter of their useful lives and the term
of the lease.
Right-of-use assets are presented under "Property, plant and equipment" in the Statement of Financial Position and
their depreciation under "Depreciation costs" in the Statement of Comprehensive Income.
The lease liability includes the net present value of the following lease payments:
- fixed payments reduced by lease incentives payable;
- variable lease payments depending on indexes or percentages;
- the price for exercising the purchase option, if it is sufficiently certain that the Company will exercise this
option;
- payments of penalties for termination of the lease contract;
- residual value guarantees.
Lease payments are discounted with the interest rate stipulated in the contract, if it can be directly determined, or with
the Company's differential interest rate, reflecting the interest rate that would be applicable when borrowing funds for
a similar period of time, with similar collateral, and in a similar economic environment.
Lease payments contain, in a certain ratio, the financial expense (interest) and the deductible part of the lease
obligation (principal). Finance costs are charged to the Statement of Comprehensive Income over the term of the lease
on a periodic basis so as to achieve a constant interest rate on the remaining outstanding principal of the lease
obligation.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
19
3. Significant accounting policies (continued)
(x) Leases (continued)
Subsequent assessment
The Company has chosen to apply the acquisition cost model to all of its right-of-use assets. They are presented at
acquisition cost less accumulated depreciation, impairment losses and adjustments resulting from revaluations and
adjustments of the lease liability.
The Company subsequently assesses the lease liability as:
- increases the book value to reflect the accrued interest;
- reduces the balance sheet value to reflect the lease payments made;
- revalues the carrying amount of liabilities to reflect revaluations or lease amendments.
Reporting of lease revaluations and amendments
As a result of a revaluation, the lessee recognizes the amount of the revaluation of the lease liability as an adjustment
to the right-of-use asset. If the asset's carrying amount is lower, the remaining amount of the revaluation is recognized
in profit or loss.
The lessee accounts for an amendment to the lease as a separate lease if:
- the amendment increases the scope of the lease by adding a new "right to use" for one or more additional
underlying assets; and
- the remuneration under the lease contract is increased by an amount commensurate with the individual price
for the increase in scope and possible adjustments reflecting circumstances under the specific contract.
Payments related to short-term leases and contracts where the underlying asset is of low value, as well as variable
lease payments that are not included in the measurement of the lease liability, are recognized directly as current
expenses in the Statement of Comprehensive Income on a straight-line basis for the lease period.
(n) Key estimates and assumptions
Calculation of expected credit losses on loans granted trade receivables and assets under contracts with
customers
The measurement of the expected credit loss for financial assets carried at amortised cost (loans granted, receivables
and assets under contracts with customers) is an area, which requires the use of significant assumptions about future
economic conditions and credit behaviour of customers and debtors (for example, the likelihood of counterparties not
fulfilling their obligations and the resulting losses).
Aiming at achieving compliance with these requirements, the company's management makes a number of important
judgments, such as:
(a) defines criteria for identifying and evaluating a significant increase in credit risk;
(b) selecting appropriate models and assumptions for measuring expected credit losses;
(c) formation of groups of similar financial assets (portfolios) for the purpose of measuring expected credit losses,
(d) establishing and evaluating the correlation between historical default rates and behaviour of certain
macroeconomic indicators to reflect the effects of forecasts in future when calculating expected credit losses.
Estimates when recognising revenue from contracts with customers
When recognising revenue and preparing the annual financial statements, management makes different judgements,
estimates and assumptions, which influence the reported income, expenses, assets and liabilities under contracts, and
their corresponding disclosures. Despite the uncertainty regarding these assumptions and estimates, the company does
not expect substantial adjustments to the carrying amount of the assets and liabilities in the future, and respectively,
the reported costs and revenue.
Useful life of fixed assets - The company examines the estimated useful lives of the depreciable fixed assets at each
year-end.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
20
3.
Significant accounting policies (continued)
(n) Key estimates and assumptions (continued)
Recognition of tax assets - When recognising deferred tax assets, it is assessed the probability that individual
deductible temporary differences will reverse in the future and the ability of the company to generate sufficient tax
profits to offset them against those profits.
Impairment of investments – Investments in subsidiaries are measured at cost. At the end of each year, management
assesses whether there are any indications of impairment of its investments in shares and subsidiaries. Management
found no indications of impairment of its investments in subsidiaries as at 31 December 2023.
(o) New standards and interpretations
Initial application of new standards and amendments to existing standards effective during the current reporting
period
The following standards and amendments to existing standards issued by the International Accounting Standards
Board (IASB) and adopted by the EU have entered into force for 2023:
Amendments to IAS 12 Income Taxes: International Taxation – Pillar 2 Model Rules – adopted by the EU on
8 November 2023 (effective immediately and for annual periods beginning on or after 1 January 2023); Not applicable
to companies of the Gradus group.
Amendments to IFRS 17 Insurance Contracts: Initial Application of IFRS 17 and IFRS 9 – Comparative
Information – adopted by the EU on 8 September 2022 (effective for annual periods beginning on or after 1 January
2023);
Amendments to IAS 12 Income Taxes: Deferred tax relating to assets and liabilities arising from a single
transaction – adopted by the EU on 11 August 2022 (effective for annual periods beginning on or after 1 January
2023);
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practical Statement 2: Disclosure of
Accounting Policies – adopted by the EU on 2 March 2022 (effective for annual periods beginning on or after 1
January 2023);
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates and Errors – adopted by the EU
on 2 March 2022 (effective for annual periods beginning on or after 1 January 2023);
IFRS 17 Insurance Contracts, including Amendments to IFRS 17 – adopted by the EU on 19 November 2021
(effective for annual periods beginning on or after 1 January 2023).
The adoption of these Standards and amendments to existing Standards did not result in material changes in the
Company's financial statements.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
21
3.
Significant accounting policies (continued)
(o) New standards and interpretations (continued)
Published standards, interpretations and amendments not yet in force and not adopted earlier
Published standards and amendments to existing standards issued by the IASB/IFRIC and approved by the EU, which
have not yet entered into force and have not been applied earlier
At the date of approval of this financial statement, the following amendments to existing standards have been issued
by the IASB and adopted by the EU, but have not yet entered into force:
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-
Current, Classification of Liabilities as Current or Non-Current – Postponement of the Effective Date and Non-
current Liabilities with Events (effective for annual periods beginning on or after 1 January 2024);
Amendments to IFRS 16 Leases: Lease obligations on sale and leaseback (effective for annual periods
beginning on or after 1 January 2024).
New standards and amendments issued by the IASB not yet adopted by the EU
Currently, IFRSs adopted by the EU do not differ materially from those adopted by the IASB, except for the following
amendments to existing standards that have not yet been approved by the EU (the effective dates given below are for
full IFRSs):
Amendments to IAS 21 The Effects of Changes in Foreign Exchange Rates: Lack of Exchangeability (effective
for annual periods beginning on or after 1 January 2025);
Amendments to IAS 7 Cash Flow Statement and IFRS 7 Financial Instruments: Disclosures: Supplier Financing
Arrangements (effective for annual periods beginning on or after 1 January 2024).
The Company is in the process of assessing the potential effect of applying these Standards and amendments to
existing Standards on the Company's financial statements during the period of their initial application.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
22
4. Property, plant, and equipment
In BGN'000 Buildings
Cars
Hardware
Total
Book value
Balance on 31 December 202
1
117
2
7
10
154
Acquire
d
-
-
2
2
Balance on 31 December 202
2
117
27
1
2
15
6
Acquired
Written off
113
(117)
3
-
-
-
116
(117)
Balance on 31 December 202
3
11
3
30
12
15
5
Depreciation
Balance on 31 December 202
1
(44)
(
5
)
(
6
)
(
5
5)
Depreciation charge for the period
(
58
)
(3)
(
4
)
(
65
)
Balance on 31 December 202
2
(
102
)
(
8
)
(
10
)
(
120
)
Depreciation charge for the period
(5
7
)
(
4
)
(
1
)
(6
2
)
Written off depreciation
117
-
-
117
Balance on 31 December 202
3
(
4
2)
(
1
2
)
(1
1
)
(
6
5
)
Net book value
Net book value on 31 December 202
2
15
19
2
36
Net book value on 31 December 2023
71
18
1
90
Further information on right-of-use assets included in the Property, Plant and Equipment note is presented in the table
below:
In BGN'000
Carrying
amount at
01.01.202
2
Acquired in
2022
Accrued
depreciation
for the period
202
2
Carrying
amount as at
31.12.2022
Buildings
-
office
73
-
(
58
)
15
Total 73
-
(58)
15
In BGN'000
Carrying
amount at
01.01.202
3
Acquired in
2023
Accrued
depreciation
for the period
202
3
Carrying
amount as at
31.12.2023
Buildings
-
office
15
113
(5
7
)
71
Total 15
113
(57)
71
5. Intangible assets
In BGN'000
Software
Licences
In process of
acquisition
and
development
Total
Book value
Balance on 31 December 202
1
16
15
7
38
Balance on 31 December 202
2
16
15
7
38
Balance on 31 December 202
3
16
15
7
38
Amortisation
Balance on 31 December 202
1
(
6
)
(3)
-
(
9
)
Amortisation charge for the period
(2)
(
5
)
-
(
7
)
Balance on 31 December 202
2
(
8
)
(
8
)
-
(
16
)
Amortisation charge for the period
(
1
)
(
3
)
-
(
4
)
Balance on 31 December 202
3
(
9
)
(
11
)
-
(
20
)
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
23
5. Intangible assets (continue)
Net book value
Net book value on 31 December 202
2
8
7
7
22
Net book value on 31 December 2023
7
4
7
18
6. Investments in subsidiaries
As at 31 December 2023 and 31 December 2022, the company held shares in the following companies:
31.12.2023
BGN '000
31.12.2022
BGN '000
Company Country
Share -
BGN
Equity share
%
Share -
BGN
Equity share
%
Lora
-
2004 EOOD
Bulgaria
-
-
11 100
100
Zhyuliv EOOD
Bulgaria
-
-
16 200
100
Milenium 2000 EOOD
Bulgaria
67 052
100
35 700
100
Gradus-1 EOOD
Bulgaria
149 760
100
149 760
100
Gradus
-
98 AD
Bulgaria
52 206
99,94
52 200
99,94
Gold Farm 91 EOOD
Bulgaria
-
-
4 052
100
Gradus Logistics EOOD
Bulgaria
400
100
400
100
Total:
269 418
269 412
On 30.06.2023 the subsidiaries Lora-2004 EOOD, Zhyuliv EOOD and Gold Farm 91 EOOD merged into the subsidiary
Milenium 2000 EOOD.
Gradus-1 EOOD holds 96% of the capital of Gradus-3 AD, which is the effective participation of Gradus AD in Gradus-
3 AD.
Impairment of investments in subsidiaries
At the end of each year, management analyses and evaluates whether there are any indicators of impairment of its
investments in subsidiaries.
The main indicators for impairment are: a significant reduction in the volume and / or discontinuance of the activity of
the investee; loss of markets, customers or technological problems, reporting of losses over a longer period (more than
three years), reporting of negative net assets or assets below the registered share capital, trends of deterioration of key
financial indicators, and reduction of market capitalization.
As of 31.12.2023 management has reviewed for impairment to determine the fair value of the use of investments in
subsidiaries. The calculations were made by the management with the assistance of independent licensed appraisers. The
financial budgets developed by the respective companies, covering a five-year period, as well as other medium- and long-
term plans and intentions for their development, including forecasts for key economic indicators at national and EU level,
were used as a basis for the pre-tax cash flow forecasts / The Balkans.
Tests and judgments of management about investments impairment have been made in the light of management's forecasts
and intentions regarding the future economic benefits that are expected to be received from the subsidiaries, including
commercial and industrial experience, gaining share on the Bulgarian and foreign markets, expectations for future sales,
etc. The calculations have been made with the assistance of an independent licensed appraiser. The key assumptions used
in the calculations of the recoverable amnount as of 31 December 2023 are as follows:
31.12.2023
31.12.2022
Discount rate (based on WACC)
from
7.66 to
%
9.77
%
from 6.23
%
to 7.41
%
Interest rate (debt price) 4.4%
3%
As a result of the calculations made, no need to recognise impairment of certain investments in subdiaries was found in
2023 (2022: BGN 0).
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
24
7. Deferred tax assets
The recognised deferred tax assets relate to the following:
Assets
Liabilities
Net
In BGN'000
31.12.202
3
31.12.202
2
31.12.202
3
31.12.202
2
31.12.202
3
31.12.202
2
Tax loss 7
57
-
-
77
57
Income of individuals 1
1
-
-
1
1
Net tax assets 8
58
-
-
8
58
Movements in temporary differences during the period 01.01.2023 – 31.12.2023
In BGN'000
Balance Sheet
Profit and loss
Balance Sheet
31.12.2022
31.12.2023
Tax loss
57
(50)
7
Income of individuals 1
-
1
Total:
58
(50)
8
Movements in temporary differences during the period 01.01.2021 – 31.12.2022
In BGN'000
Balance Sheet
Profit and loss
Balance Sheet
31.12.2021
31.12.2022
Tax loss
57
-
57
Income of individuals 2
(1)
1
Total:
59
(1)
58
8. Other current receivables and prepayments
In BGN'000
31 December
2023
31 December
2022
Taxes refundable
18 4
Prepaid expenses
13 11
Others
217 28
Total
248 43
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
25
9. Cash and cash equivalents
In BGN'000 31 December
2023
31 December
2022
Cash on hand
1
2
Cash in current accounts
301
2 568
Total
302 2 570
The company assesses the expected credit losses on cash and cash equivalents as immaterial and therefore, expected
credit losses on cash and cash equivalents were not accrued.
10. Equity
Share capital
The share capital consists of:
Number of
voting
shares
Number of
non-voting
shares
Total
number of
shares
Amount in
BGN'000
At 31 December 2021
243 608 710 - 243 608 710 243 609
At 31 December 2022
243 608 710 - 243 608 710 243 609
At 31 December 2023
239 473 416 4 135 294 243 608 710 243 609
The total number of shares at 31 December 2023 is 243,608,710 with nominal value of BGN 1 each. The share
capital is paid in full.
Number of
shares
Share capital,
net of
repurchased
shares
At 01 January 2023
243
608 710
243 609
Repurchased own shares
(
4
135
294
)
(6 050)
Expenses on repurchased shares
-
(18)
At 31 December 2023
239 473 416 237 541
The shareholders of Gradus AD at 31 December 2023 are as follows:
Number of
voting shares
Number of
non-
voting
shares
Total number
of shares
Shareholding
%
Gradus AD
-
4
135 294
4
135 294
1,70
Luka
Angelov Angelov
99
316 945
-
99
316 945
40,77
Ivan Angelov Angelov
50
373 165
-
50
373 165
20,68
Angel Ivanov Angelov
50
372 417
-
50
372 417
20,68
Legal entities
34
961 310
-
34
961 310
14,35
Individual shareholders
4
449 579
-
4
449 579
1,82
Total:
239 473 416
4 135 294
243 608 710 100,00
10. Equity (continued)
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
26
The shareholders of Gradus AD at 31 December 2022 are as follows:
Number of
voting
shares
Shareholding
, %
Luka Angelov Angelov
99
316 945
40,77
Ivan Angelov Angelov
50
373 165
20,68
Angel Ivanov Angelov
50
372 417
20,68
Legal entities
38
628
449
15,86
Individual shareholders
4
917 734
2,01
Total:
243 608 710 100,00
Equity
In BGN'000 31 December
2023
31 December
2022
Share capital
243 609
243 609
Repurchased own shares
(
4
135
)
-
Issue premium
60 354
62 287
Retained earnings
16 57
2
16 473
Total
316 400 322 369
The share capital is presented at the nominal value of the shares issued and paid. Receipts above their nominal
value are reported as issue premium.
Earnings per share 31 December
2023
31 December
2022
Net profit for the year, BGN'000
5
099
15 592
Average
-
weighed number of shares
239 473 416
243 608 710
Earnings per share in BGN, net 0.02 0.06
11.1. Trade payables
As of 31/12/2023, the Company reported trade payables to third parties in the amount of BGN 14 thousand.
(31/12/2022: BGN 49 thousand)
11.2 Tax liabilities
In BGN'000
31 December
2023
31 December
2022
Personal income tax liabilities
1
-
VAT
-
2
Other taxes
3
1
Total:
4
3
11.3 Payables to personnel and for social security
In BGN'000
31 December
2023
31 December
2022
Social security payable
7
-
Obligations under unused leave and social security contributions for them
7
7
Total: 14
7
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
27
12. Lease payables
The leasing obligations included in the statement of financial position are in BGN and have arisen in connection with
contracts for the rental of buildings. The liabilities are presented net of the interest due in the future and are as follows:
13. Income
13.1 Dividend income
In BGN'000
2023
2022
Gradus
-
98
AD
D
1 999
4 997
Gradus
-
1
EOO
D
1 000
7 500
Millennium 2000 EOOD
1 000
3 000
Zhyuliv EOOD
-
300
Lora
-
2004 EOOD
1 000
200
Total:
4 999
15 997
See note 21"Related party transactions"
13.2. Other income
In BGN'000
2023
2022
Rentals
11
8
Income from reversed impairment
1
-
Income from compensation for electricity
-
3
Other
1
-
Total:
13
11
14. Costs of hired services
In BGN'000
2023
2022
Consulting activities and commissions
51
8
Audit costs
46
42
Advertising, marketing and PR expenses
25
-
Subsciption fees
22
18
Legal service, including and subscription service
12
45
Expenses for consumables of
leased assets
9
13
Fees for servicing current back accounts
3
36
Insurances
2
2
FTA's repair and maintenance
1
2
Short term rentals
-
1
Translation/interpretation services
1
-
Other expenses
12
19
Total:
184
186
Statutory fees accrued during the year amount to BGN 46 thousand (2022: BGN 42 thousand).
Minimum lease payments
Present value of the
minimum lease payments
As at
31.12.202
3
As at
31.12.202
2
As at
31.12.202
3
As at
31.12.202
2
Liabilities under lease with maturity :
Up to 1 year
60
16
5
9
16
Between 2 and 5 years
15
-
1
3
-
Total 75
16
72
16
Reduced by: future financial charges
(
3
)
-
-
-
Present value of liabilities 72
16
72
16
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
28
15. Personnel costs
In BGN'000
2023
2022
Current remuneration
780
527
Social security contributions
44
30
Cost of compensated leave
-
2
Total: 824
559
16. Other operating expenses
In BGN'000
2023
2022
Donations
19
10
Entertainment costs
9
1
Business trips expenses
5
3
Impairment of receivables
2
-
Other expenses
2
1
Total:
37
15
17. Finance income/costs
In BGN'000
2023
2022
Interest
income on loans granted
1 269
443
Lease interest expense
(3)
(1)
Other finance expenses
(1)
(3)
Total 1 265
439
18. Tax expenses
In BGN'000
2023
2022
Tax profit for the year as per the tax return
-
-
Current income tax expense for the year – 10% (2022: 10%)
-
-
Deferred income taxes relating to:
Unrecognised temporary differences
(
50
)
(1)
Total income tax benefit recognized in the separate statement of
comprehensive income
(50)
(1)
Reconciliation of income tax expense with the accounting result
2023
2022
Accounting profit for the year
5 1
49
15 593
Income taxes – 10% (2022: 10%)
(515)
(1 559)
Tax effect of revenue unrecognized for tax purposes
465
1 558
Total income tax benefit recognized in the separate statement of
comprehensive income
(50)
(1)
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
29
19. Financial instruments
Categories of financial instruments:
Financial assets at amortised cost
In BGN'000
31.12.2023
31.12.2022
Trade receivables
-
7
Related party receivables
8 395
15 616
Receivables on loans to related parties
38 027
34 683
Cash and cash equivalents
302
2 570
Total:
46 724
52 876
In the course of its ordinary activity the company is exposed to various financial risks, the most significant of which
are the following: market risk (including currency risk, risk of changes in fair value and price risk), credit risk, liquidity
risk and risk of interest-bearing cash flows.
The overall risk management is focused on difficulties in forecasting financial markets aimed at minimising the
potential negative effects that might impact the financial results and performance of the company.
Currently, financial risks are identified, measured and monitored currently, using different control mechanisms, in
order to determine adequate prices of company's goods and to assess adequately the forms of maintenance of free
liquidity without permitting unjustified concentration of a particular risk.
Risks faced by the company are managed on an ongoing basis in accordance with a policy elaborated by the company's
management. Main principles of the overall financial risk management have been set, on the basis of which specific
procedures for management of particular risks, such as credit risk, currency risk, liquidity risk, and interest rate risk.
Credit risk
The main financial assets of the company comprise cash on hand and cash in bank accounts, and receivables on loans
granted.
Credit risk is the risk that the company's counterparties might not be able to repay fully and within the usual time
limits the amounts they owe on credit receivables.
Receivables
To calculate the expected credit losses on trade receivables, the company applies a simplified approach to calculating
expected credit losses and does not track subsequent changes in their credit risk. By applying this approach, the
company recognises an adjustment (impairment allowance) on the basis of the expected credit loss over the entire
period of the receivables at each reporting date.
The Company has not segmented receivables into different groups as it believes that they have similar characteristics,
and for each type of financial asset it has conducted a collectability analysis in the different ranges of aging analysis.
Provision rates applied are based on days past due according to aging analysis. Initially, these rates were determined
on the basis of historical data monitored by the company over a 2-year period.
The company has analysed the effects on the estimated default rates based on historical forecast data for certain
macroeconomic parameters, such as GDP and unemployment rate. Management has analysed future information on
these parameters and determined that the effects are immaterial, so historical loss rates have not been adjusted for
2023.
The expected credit losses are calculated on the date of each reporting period.
Monetary, including payment transactions are limited to banks with good credit rating. Moreover, the company seeks
to limit its exposure to a bank.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
30
19. Financial instruments (continued)
Loans granted and financial guarantees
The Company measures the credit risk of loans to related parties by using the probability of default (PD), exposure at
default (EAD) and loss given default (LGD). To determine the credit risk, the company's management uses internal
estimates that reflect the probability of default for individual counterparties. The activity, financial performance of
the borrower and the value of the collateral received is included in the risk assessment.
The Company considers that a financial instrument has undergone a significant increase in credit risk (migration from
phase 1 to phase 2) when one or more of the following quantitative or qualitative criteria are met:
• the borrower is past due by more than 60 days;
• significant adverse changes in business, financial and economic conditions in which the borrower operates;
• actual or expected significant adverse changes in the operating results of the borrower;
Criteria used to determine whether there is a significant increase in credit risk are monitored and reviewed
periodically.
The company considers a financial instrument as being in default and exposed to a credit loss (migration from phase
1 or phase 2 to phase 3) when one or more of the following quantitative or qualitative criteria are met:
• the borrower is past due by more than 90 days;
• the borrower experiences significant financial difficulties;
• the borrower is in an insolvency / liquidation procedure.
Calculation of expected credit losses
Expected credit losses are calculated by discounting the resulting value of the product of: the probability of default
(PD), exposure at default (EAD) and loss given default (LGD), determined as follows:
• PD the probability of that the borrower would fail to perform its financial obligation either in the next 12 months
or for the entire lifetime of the financial asset;
• EAD is the amount due by the company at the time of default;
• LGD is the expectation of the company for the amount of the loss in case of exposure at default. The LGD
amount has been reduced by the insured portion of the financial asset.
The discount rate used to calculate the expected credit loss (ECL) is the instrument's original effective interest rate.
When determining the 12-month and lifetime PD, EAD and LGD for the instrument, forecast information has been
employed as well. The company's management has conducted an historical analysis and has identified the main
economic variables affecting credit risk and expected credit losses.
The expected credit losses on certain loans classified in Phase 1 are determined on the basis of expected credit losses
resulting from possible default events which could occur within the next 12 months of the lifetime of the relevant
asset (12-month expected credit losses for the instrument).
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
31
19. Financial instruments (continued)
Analysis of expected credit losses on loans granted:
In BGN'000
Loan granted
at 31.12.2023
Interest
rate
Probability of
non-
performance,
%
Loss in case of
non-
performance
Expected
credit
losses
Loan
granted, net
Gradus
-
1 EOOD
13 745
3.80%
0.02%
13 745
(3)
13 742
Gradus
-
3 AD
11 637
3.80%
0.02%
11 637
(2)
11 635
Gradus Logistics
EOOD
501 3.80% 0.02% 501 - 501
Milenium 2000
EOOD
11 638 3.80% 0.02% 11 638 (2) 11 636
Gradus
-
98 AD
513
3.80%
0.02% 513 - 513
Total: 38 034
38 034 (7) 38 027
Loan
granted at
31.12.2022
Interest
rate
Probability of
non-
performance,
%
Loss in
case of non-
performance
Expected
credit
losses
Loan
granted,
net
In BGN'000
Gradus
-
1 EOOD
17 443
2.90%
0.02%
17 443
(3)
17 440
Gradus
-
3 AD
4 415
2.90%
0.02%
4 415
(1)
4 414
Lora
-
2004 EOOD
11 127 2.90% 0.02%
11 127 (2) 11 125
Gradus Logistics
EOOD
401 2.90% 0.02%
401 - 401
Milenium 2000
EOOD
1 303 2.90% 0.02%
1 303 - 1 303
Total:
34 689
34 689 (6) 34 683
Currency risk
At the moment, this risk is immaterial for the Company has no transactions in currencies other than the Bulgarian lev.
Liquidity risk
Liquidity risk is reflected in the adverse situation of the Company not being able to meet unconditionally all of its
liabilities as they fall due. The Company applies conservative liquidity management policy through which it constantly
maintains optimal cash levels. The company does not experience a shortage of cash.
Interest rate risk
The company did not hold interest-bearing financial liabilities at 31 December 2023 and 31 December 2022.
Fair values
Fair value is the amount for which an asset could be exchanged, or a liability settled, between knowledgeable, willing
parties in an arm's length transaction. The policy of the company is to disclose in its separate financial statements the
fair value of financial assets and liabilities, primarily for which there are quoted market prices. The fair value of
financial instruments not traded on active markets is determined using valuation techniques based on various valuation
methods and management's assumptions made on the basis of market conditions prevailing at the balance sheet date.
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
32
19. Financial instruments (continued)
Fair values (continued)
The concept of fair value implies the realization of financial instruments through sale. In most cases, especially in
respect of trade receivables and payables, loans and deposits, the Company expects to realize these financial assets
through their full repayment or, respectively, repayment over time. That is why they are stated at their amortised cost.
The Company's financial assets and liabilities are mainly short-term in nature (trade receivables and payables, short-
term loans) and therefore, it is assumed that their carrying amount approximates their fair value. The Company's
management considers that, under the existing circumstances, the estimates of financial assets and liabilities included
on the balance sheet are the most reliable, adequate and trustworthy as possible for the purposes of financial reporting.
The fair value of financial instruments is determined in accordance with the valuation methodology corresponding
to Level 3 in the fair value hierarchy.
Fair values compared to carrying amounts
The fair values of financial assets and liabilities, together with their carrying amounts included on the separate
statement of financial position are as follows:
31.12.202
3
31.12.202
2
In BGN'000
Carrying
amount
Fair value
Carrying
amount
Fair value
Trade receivables - - 7 7
Related party receivables
8 395 8 395 15 616 15 616
Receivables on loans to related parties
38 027 38 027 34 683 34 683
Cash and cash equivalents
302
302
2 570
2 570
Total assets at amortised
cost
46 724 46 724 52 876 52 876
20. Segment reporting
At 31 December 2023, the Company identified one operating segment – management of companies.
Segment income, expenses and results include:
In BGN'000
Management
of companies
Total 202
3
Management
of companies
Total 2022
2023
2022
Segment income
5 012
5 012
16 008
16
008
Segment expenses (1 128)
(1 128
)
(854)
(854)
Segment result :
3 884
3 88
4
15 154
15 154
Finance income, net
1 265
1 26
5
439
439
Pre-tax profit 5 149
5 149
15 593
15 593
Tax benefit (50)
(50
)
(1)
(1)
Net profit for the year 5 099
5
099
15 592
15 592
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
33
20.
Segment reporting (continued)
Segment assets include:
In BGN'000
Management
of companies
Total 2023
Management
of companies
Total 2022
202
3
202
2
Fixed tangible assets
90
90
36
36
Intangible assets 18 18 22 22
Investments in subsidiaries 269 418
269 418
269 412 269 412
Deferred tax assets 8 8 58 58
Trade receivables
-
-
7
7
Trade receivables from related parties
95
95
219
219
Receivables on loans to related parties
38 027 38 027 34 683 34 683
Dividends receivable 8 300 8 300 15 397 15 397
Other current receivables 248
248
43 43
Cash and cash equivalents
302
302
2 570
2 570
Segment assets 316 506 316 506 322 447 322 447
Total assets: 316 506 316 506 322 447 322 447
Segment liabilities include:
In BGN'000
Management
of companies
Total 2023
Management
of companies
Total 2022
202
3
202
2
Non
-
current lease liabilities
13
13
-
-
Payables to suppliers
14
14
49
49
Liabilities to related parties
-
-
1
1
Payables to personnel and for social security 14
14
7
7
Lease liabilities 59
59
16
16
Tax liabilities 4
4
3
3
Other liabilities 2
2
2
2
Segment liabilities 106
10
6
78
78
Total liabilities: 106
10
6
78
78
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
21.
Related party transactions
Identification of related parties
For the purposes of preparing these separate financial statements, the owners, the companies under their control,
the senior management (key management staff) and close family members, including companies controlled by
them, are treated as related parties.
Related parties: Relation Period
Luka Angelov Angelov
Equity owner
2022 and 2023
Ivan Angelov Angelov
Equity owner
2022 and 2023
Angel Ivanov Angelov
Equity owner
2022 and 2023
Georgi Aleksandrov Babev
Member of the Board of Directors and Executive Director
2022 and 2023
Bistra Stoyanova Kotseva
Member of the Board of Directors
as of 04.01.2022
Gradus
-
1 EOOD
Subsidiary company
2022 and 2023
Gradus
-
3 AD
Subsidiary company
2022 and 2023
Millennium 2000 EOOD
Subsidiary company
2022 and 2023
Gradus
-
98 AD
Subsidiary company
2022 and 2023
Zhyuliv EOOD
Subsidiary company
up to 30.06.2023
Lora
-
2004 EOOD
Subsidiary company
up to 30.06.2023
Gold Farm 91 EOOD
Subsidiary company
up to 30.06.2023
Gradus Logistics EOOD
Subsidiary company
2022 and 2023
Energy
-
2 OOD
Relationship through a person exercising significant influence
2022 and 2023
Agro
Invest
-
7 OOD
Relationship through a person exercising significant influence
2022 and 2023
Ayazmo AD
Relationship through a person exercising significant influence
2022 and 2023
"Ralitsa 2004" OOD
Relationship through a person exercising
significant influence
2022 and 2023
"Biser Oliva" AD
Relationship through a person exercising significant influence
2022 and 2023
"Equity Invest
-
1"AD
Relationship through a person exercising significant influence
2022 and 2023
"Equity
Invest
-
2"OOD
Relationship through a person exercising significant influence
2022 and 2023
"M.O. Stara Zagora" OOD
Relationship through a person exercising significant influence
2022 and 2023
"Biser Distribution" OOD
Relationship through a person exercising significant influence
2022 and 2023
"LG Auto" OOD
Relationship through a person exercising significant influence
2022 and 2023
"Next capital" OOD
Relationship through a person exercising significant influence
2022 and 2023
"LG Auto 2" OOD
Relationship through a person exercising significant influence
2022 and 2023
"AA Invest 1" EAOD
Relationship through a person exercising significant influence
as of 04.01.2022
"AP INVESTMENTS" AD
Relationship through a person exercising
significant influence
as of 04.01.2022
"AP CAPITAL" AD
Relationship through a person exercising significant influence
as of 04.01.2022
"Angels Estate" AD
Relationship through a person exercising significant influence
as of 04.01.2022
"ACIBADEM CITY CLINIC" EAD
Relationship through a person exercising significant influence
as of 04.01.2022
"Gallery Varna" AD
Relationship through a person exercising significant influence
as of 04.01.2022
"West MOL" AD
Relationship through a
person exercising significant influence
as of 04.01.2022
”Farmpro” OOD
Relationship through a person exercising significant influence
as of 04.01.2022
"ACIBADEM CITY CLINIC
MLADOST” EOOD
Relationship through a person exercising significant influence as of 04.01.2022
"ACIBADEM CITY CLINIC UMBAL
TOKUDA” EAD
Relationship through a person exercising significant influence as of 04.01.2022
“
Mirena” OOD
–
in liquidation
Relationship through a person exercising significant influence
as of
04.01.2022
"
APL Capitl” AD
Relationship through a person exercising significant influence
as of 04.01.2022
"
BGK
" А
D
Relationship through a person exercising significant influence
as of 04.01.2022
“
Vladista“ EOOD
Relationship through a person
exercising significant influence
up to 04.01.2023
“
Auto Spa Centre“ OOD
Relationship through a person exercising significant influence
up to 04.01.2023
“
Wolf“
Relationship through a person exercising significant influence
up to 04.01.2023
“
Marieta“ EOOD
Relationship through a person exercising significant influence
up to 04.01.2023
“Trade home
“ ЕОО
D
Relationship through a person exercising significant influence
up to 04.01.2023
“Gold Agro
-
2005“ОО
D
Relationship through a person
exercising significant influence
up to 04.01.2023
Transactions with key management personnel
The remuneration of the Directors and Board members amounts to BGN 596 thousand (2022: BGN 383 thousand).
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
21. Related party transactions (continued)
Loans granted to related parties:
In BGN'000
Interest
rate
Maturity
Collateral
Loan granted
at 31.12.2023
Loan granted
at 31.12.2022
Gradus
-
1 EOOD
3.80%
02.2024
-
13 742
17 440
Gradus
-
3 AD
3.80%
12.2024
-
11 635
4 414
Lora
-
2004 EOOD
3.80%
10
-
11.2023
-
- 11 125
Gradus
Logistics EOO
D
3.80%
04
-
12.2024
-
501 401
Milenium 2000 EOOD
3.80%
05
-
11.2024
11 636
Gradus-98 AD
3.80%
05.2024
-
513
-
Total:
38 027 34 683
The transactions between Gradus AD and the related companies at 31 December 2023 were as follows:
In BGN'000 Type of transaction
Transaction
value in 2023
Total liabilities
31 December
2023
Gradus-1 EOOD Service 1 -
Total liabilities -
In BGN'000 Type of transaction
Transaction
value in
2023
Total liabilities
31 December
2023
Gradus
-
1 EOOD
Service
635
85
Gradus
-
1 EOOD
Loans granted
-
13 697
Gradus
-
1 EOOD
Interest accrued
524
4
5
Gradus
-
3 AD
Service
64
3
Gradus
-
3 AD
Loans granted
8 200
11 598
Gradus
-
3 AD
Interest accrued
300
37
Millennium 2000 EOOD
Service
112
6
Millennium 2000 EOOD
Loans granted
-
11 598
Millennium 2000 EOOD
Interest accrued
248
3
8
Lora
-
2004 EOOD
Service
8
-
Lora
-
2004 EOOD
Loans granted
-
-
Lora
-
2004 EOOD
Interest accrued
1
56
-
Gradus
-
98 AD
Service
22
1
Gradus
-
98 AD
Loans granted
1500
500
Gradus
-
98 AD
Interest accrued
1
3
13
Zhyuliv EOOD
Service
5
-
Zhyuliv EOOD
Loans granted
5 500
-
Zhyuliv EOOD
Interest accrued
16
-
Gold Farm
91 EOOD
Service
4
-
Gradus Logistics EOOD
Service
8
-
Gradus Logistics EOOD
Loans granted
100
5
00
Gradus Logistics EOOD
Interest accrued
1
4
1
Millennium 2000 EOOD
Dividends
1
000
1 000
Gradus
-
98 AD
Dividends
1
99
9
-
Gradus
-
1 EOOD
Dividends
1
0
00
7 300
Lora
-
2004 EOOD
Dividends
1 0
00
-
Total: 46 422
Including dividends receivable:
8 300
Including receivables on loans
38 027
Including trade receivables
95
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
21. Related party transactions (continued)
The transactions between Gradus AD and the related companies at 31 December 2022 were as follows:
In BGN'000 Type of transaction
Transaction
value in 2022
Total liabilities
31 December
2022
Gradus-1 EOOD Service 1 1
Total liabilities 1
In BGN'000 Type of transaction
Transaction
value in 2022
Total liabilities
31 December
2022
Gradus
-
1 EOOD
Service
365
189
Gradus
-
1 EOOD
Loans granted
-
17 397
Gradus
-
1 EOOD
Interest accrued
228
43
Gradus
-
3 AD
Service
38
6
Gradus
-
3 AD
Loans granted
-
4 399
Gradus
-
3 AD
Interest accrued
58
15
Millennium 2000 EOOD
Service
63
5
Millennium 2000 EOOD
Loans granted
-
1 300
Millennium 2000 EOOD
Interest accrued
18
3
Lora
-
2004 EOOD
Service
20
4
Lora
-
2004 EOOD
Loans granted
2 000
11 098
Lora
-
2004 EOOD
Interest accrued
128
27
Gradus
-
98 AD
Service
39
4
Gradus
-
98 AD
Loans granted
1
-
Zhyuliv EOOD
Interest accrued
24
4
Gold Farm 91 EOOD
Service
16
3
Gradus Logistics EOOD
Service
9
2
Gradus
Logistics EOOD
Loans granted
-
400
Gradus Logistics EOOD
Interest accrued
11
1
Equity Invest
-
1 AD
Loans granted
1
1
Equity Invest
-
2 OOD
Interest accrued
1
1
Millennium 2000 EOOD
Dividends
3 000
2 900
Gradus
-
98 AD
Dividends
4 997
4 997
Gradus
-
1 EOOD
Dividends
7 500
7 300
Lora
-
2004 EOOD
Dividends
200
100
Zhyuliv EOOD
Dividends
300
100
Total: 50 299
Including dividends receivable:
15 397
Including receivables on loans
34
683
Including trade receivables
219
GRADUS AD
NOTES TO THE SEPARATE FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2023
22. Events after the reporting date
On 02.01.2024, the Company renegotiates all loans granted by adjusting their interest rate from 3.80% to 4.40%.
On 23.02.2024, the Company signed an annex with Gradus – 1 EOOD to extend the loan period until 26.02.2025.
There are no other material events that occurred after December 31, 2023 that would require additional adjustments
and/or disclosures in this financial statement as of December 31, 2023.
Baker Tilly Klitou and Partners EOOD
5 Stara planina str, floor 5
Sofia 1000
Bulgaria
T: +359 2 9580980
F: +359 2 8592139
info@bakertillyklitou.bg
www.bakertillyklitou.bg
ADVISORY ASSURANCE TAX
Baker Tilly Klitou and Partners EOOD trading as Baker Tilly is a member of the global network of Baker Tilly International Ltd., the
members of which are individual and independent legal entities.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of Gradus AD
REPORT ON THE AUDIT OF THE SEPARATE FINANCIAL STATEMENTS
Opinion
We have audited the accompanying separate financial statements of Gradus AD (“the Company”), which comprise
of separate statement of financial position as of December 31, 2023 and separate statement of comprehensive
income, separate statement of changes in equity and separate statement of cash flows for the year then ended, and
notes to the separate financial statements, including significant information for the accounting policies and other
information.
In our opinion, the accompanying separate financial statements present fairly, in all material respects, the financial
position of the Company as of December 31, 2023, and its financial performance and its cash flows for the year then
ended in accordance with International Financial Reporting Standards ("IFRS"), as adopted by the European Union
(“EU”).
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our responsibilities under
those standards are further described in the Auditors’ Responsibilities for the Audit of the separate financial
statements section of our report. We are independent of the Company in accordance with the International Code of
Ethics for Professional Accountants (including International Independence Standards) issued by International Ethics
Standards Board for Accountants (IESBA Code) together with the ethical requirements of the Independent Financial
Audit Act (IFAA) that are relevant to our audit of the separate financial statements in Bulgaria, and we have fulfilled
our other ethical responsibilities in accordance with the IESBA Code and the requirements of IFAA. We believe that
the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Emphasis of Matter
We draw attention to Note 2 to the separate financial statements disclosing that at the date of their issuance, the
consolidated financial statements of the Company for the same period have not yet been issued. The management
plans to issue the consolidated financial statements not later than 29 April 2024. Our opinion is not qualified in
respect of this matter.
Key audit matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of the
separate financial statements of the current period. These matters were addressed in the context of our audit of the
separate financial statements as a whole and in forming our opinion thereon, and we do not provide a separate
opinion on these matters.
2
Key audit matter
How our audit addressed the key audit matter
Valuation of Investments
The Company has investments in subsidiaries with a
carrying amount totaling BGN 269,418 thousand –
included in the disclosures in Note 6 to the separate
financial statements.
The review of the indicators and the tests of the
management for the necessity of impairment of the
exposures to these subsidiaries is a complex process
which requires from the management to apply
significant assumptions, various judgments and
estimates with regard to the future return on the
investments. For the purposes of measuring the
recoverable amount the management uses the method of
discounted future cash flows. The latter are determined
specifically for each subsidiary, which is treated as an
separate cash generating unit, and taking into account a
number of factors, such as: specific activities and
location, business environment, past experience with the
company, expected growth in the volume of sales for
subsequent reporting periods, appropriate discount rate,
other risks, etc. Therefore, there is inherent uncertainty
in these assessments of the management.
The calculations have been performed by the
management with the assistance of independent certified
appraisers – external experts.
Due to the circumstances that
(a) the process of estimating and testing of possible
impairment losses on the exposures to subsidiaries
assumes number of judgments, higher degree of
subjectivity and uncertainty in the projection
assumptions, including revenue projections, cash flow
projections and growth rate; and
(b) the significance of the reporting item itself, as
disclosed above, we have determined this matter as a
key audit matter.
In this area our audit procedures are:
• Consideration and evaluation of Company’s
analyses on its investment in each of these
subsidiaries and its potential of return by
applying the discounted future cash flows
method;
• Analysis and assessment of the relevance of
Company’s budgets and projections as of 31
December 2023;
• Assessment of the objectivity, independence
and competency of the external certified
appraisers.
• Analyses and assessment of the
appropriateness of the key judgments and
assumptions, used by Company’s management,
including the discount rate used in the
application of the discounted cash flows model.
• Testing and assessment of the completeness,
appropriateness and adequacy of the
disclosures in Company’s separate financial
statements with regard to the measurement of
investments in subsidiaries.
Information other than the separate financial statements and Auditors’ Report thereon
The Management Board of the Company (“the Management”) is responsible for the other information. The other
information comprises the annual report on activities, the corporate governance statement and a report on the
implementation of the remuneration policy prepared by the management in accordance with Chapter Seven of the
Accountancy Act, but does not include the separate financial statements and our auditors’ report thereon.
Our opinion on the separate financial statements does not cover the other information and we do not express any
form of assurance conclusion thereon, unless it is not specifically stated in our auditors’ report and to the extent it is
specifically stated.
3
In connection with our audit of the separate financial statements, our responsibility is to read the other information
and, in doing so, consider whether the other information is materially inconsistent with the separate financial
statements or our knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other information,
we are required to report that fact.
We have nothing to report in this regard.
Responsibilities of Management and Those Charged with Governance for the separate financial statements
Management is responsible for the preparation and fair presentation of the separate financial statements in
accordance with IFRS, as adopted by the EU, and for such internal control as management determines is necessary to
enable the preparation of separate financial statements that are free from material misstatement, whether due to fraud
or error.
In preparing the separate financial statements, management is responsible for assessing the Company’s ability to
continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern
basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no
realistic alternative but to do so.
Those charged with governance are responsible for overseeing the Company’s financial reporting process.
Auditors’ Responsibilities for the Audit of the separate financial statements
Our objectives are to obtain reasonable assurance about whether the separate financial statements as a whole are free
from material misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with
ISAs will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic
decisions of users taken on the basis of these separate financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism
throughout the audit. We also:
• Identify and assess the risks of material misstatement of the separate financial statements, whether due to
fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that
is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve
collusion, forgery, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of
the Company's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates
and related disclosures made by management.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and, based
on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that
may cast significant doubt on the Company’s ability to continue as a going concern. If we conclude that a
material uncertainty exists, we are required to draw attention in our auditors’ report to the related
disclosures in the separate financial statements or, if such disclosures are inadequate, to modify our opinion.
Our conclusions are based on the audit evidence obtained up to the date of our auditors’ report. However,
future events or conditions may cause the Company to cease to continue as a going concern.
4
• Evaluate the overall presentation, structure and content of the separate financial statements, including the
disclosures, and whether the separate financial statements represent the underlying transactions and events
in a manner that achieves fair presentation.
We communicate with those charged with governance regarding, 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 those charged with governance with a statement that we have complied with relevant ethical
requirements regarding independence, and will communicate with them all relationships and other matters that may
reasonably be thought to bear on our independence, and where applicable, related safeguards.
From the matters communicated with those charged with governance, we determine those matters that were of most
significance in the audit of the separate financial statements of the current period and are therefore the key audit
matters. We describe these matters in our auditor’s report unless law or regulation precludes public disclosure 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.
REPORT ON OTHER LEGAL AND REGULATORY REQUIREMENTS
Additional matters, required to be reported by the Accountancy Act and Public Offering of Securities Act
In addition to our reporting responsibilities according to ISAs described in section “Information Other than the
separate financial statements and Auditors’ Report Thereon”, with respect to the annual report on activities,
corporate governance statement and the report on the implementation of the remuneration policy, we have also
performed the procedures required by the Guidelines related to new extended audit reports and communication from
the auditors of the Professional Organization of Registered Auditors in Bulgaria - Institute of Certified Public
Accountants. These procedures include tests over the existence, form and content of the other information in order to
assist us in forming an opinion as to whether the other information includes the disclosures and reporting as required
by Chapter Seven of the Accountancy Act and the Public Offering of Securities Act (art. 100m, para 10 of POSA in
relation to art. 100m, para 8, p. 3 and 4 of POSA, as well as art. 100m, para 13 of POSA in relation with art. 116c,
para 1 of POSA), applicable in Bulgaria.
Opinion under Article 37, paragraph 6 of the Accountancy Act
Based on the procedures performed, in our opinion:
a) The information included in the annual report on the activities for the financial year for which the separate
financial statements have been prepared, is consistent with the separate financial statements.
b) The annual report on the activities has been prepared in accordance with the requirements of Chapter Seven
of the Accountancy Act and of Art. 100m, paragraph 7 of the Public Offering of Securities Act.
c) The information required by Chapter Seven of the Accountancy Act and Art. 100m, para 8 of the Public
Offering of Securities Act is presented in the corporate governance statement covering the financial year for
which the separate financial statements have been prepared.
d) The report on the implementation of the remuneration policy for the financial year, related to the financial
statement, has been submitted and meets the requirements, set out in the ordinance under Art. 116c, para. 1
of the Public Offering of Securities Act.
5
Opinion under Art. 100m, para 10 in relation to art. 100m, para 8, p. 3 and 4 of the Public Offering of
Securities Act
Based on the procedures performed and as a result of the acquired knowledge and understanding of the Company
and the environment in which it operates, acquired during our audit, in our opinion, the description of the main
features of the Company’s internal control and risk management systems in relation to the financial reporting process
as part of the annual report on activities (as element of the content of the corporate governance statement) and the
information under Article 10, paragraph 1, letter "c", "d", "f", "h" and "i" of the Directive 2004/25/EC of the
European Parliament and of the EU Council of April 21, 2004 related to takeover bids, included in the corporate
governance statement do not contain cases of material misrepresentations.
Additional Reporting on the audit of the separate financial statements under Art. 100m, para 4, p.3 of the
Public Offering of Securities Act
Reporting under Art. 100m, para 4, p.3 b) “b” of the Public Offering of Securities Act
The information on transactions with related parties is disclosed in Note 21 to the separate financial statements.
Based on the audit procedures performed on the transactions with related parties, we have not identified any facts or
other information, based on which we could conclude that the transactions with related parties are not disclosed in
the attached financial statements, in all material aspects, in accordance with the requirements of IAS 24 Disclosure of
related parties. The results of our audit procedures regarding transactions with related parties are considered in the
context of forming our audit report on the separate financial statements taken as a whole, and not with the purpose of
expressing the audit opinion on transactions with related parties.
Reporting under Art. 100m, para 4, p.3 b) “c” of the Public Offering of Securities Act
Our responsibilities for the audit of the separate financial statements as a whole, described in the section Auditors’
Responsibilities for the Audit of the separate financial statements include assessment whether the separate financial
statements present true and fair view of material transactions and events. Based on the audit procedures performed
on the material transactions, underlying the separate financial statements for the year ended 31 December 2023, no
facts, circumstances or other information have come to our attention, based on which we can conclude that there are
cases of material misstatements and disclosures in the separate financial statements in accordance with the
requirements of IFRS, adopted by EU. The results of our audit procedures on the material transactions and events
related to the Company are considered in the context of forming our audit report on the separate financial statements
taken as a whole, and not with the purpose of expressing the audit opinion on these material transactions.
Reporting for compliance of the electronic format of the separate financial statements, included in the annual
separate financial statements according to art. 100m, para 4 of the Public Offering of Securities Act in relation
to the requirements of the ESEF Regulation
In addition to our reporting responsibilities according to ISAs described in section “Auditors’ Responsibilities for the
Audit of the separate financial statements”, we have also performed the procedures required by the „Guidelines
related to issuing of audit opinion in relation to the application of the European single electronic format (ESEF) for
the financial statements of entities, which shares are traded on a regulated market in the European union (EU)” of the
Professional Organization of Registered Auditors in Bulgaria - Institute of Certified Public Accountants.
These procedures are related to inspection of the format and whether human readable part of this electronic format
complies with the audited separate financial statements and issuing an opinion in relation to compliance of the
electronic format of separate financial statements of “Gradus AD” for the year ended 31 December 2023, included in
electronic file “485100VMOUDWWCUDJ690-20231231-BG-SEP.xhtml”, with the requirements of Commission
Delegated Regulation (EU) 2018/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European
Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic
reporting format (“Regulation ESEF”).
6
In relation to these requirements, the electronic format of the separate financial statements, included in the annual
separate financial statements according to art. 100m, para 4 of the Public Offering of Securities Act, should be
presented in XHTML format.
Management of the Company is responsible for the implementation of the requirements of the Regulation ESEF
when preparing the electronic format of the separate financial statements in XHTML.
Our opinion is related to the electronic format of the separate financial statements, included in electronic file
“485100VMOUDWWCUDJ690-20231231-BG-SEP.xhtml” and does not include other information, included in the
annual separate financial statements according to art. 100m, para 4 of the Public Offering of Securities Act.
Based on the procedures performed, our opinion is that electronic format of the separate financial statements of the
Company for the year ended 31 December 2023, included in the attached electronic file
“485100VMOUDWWCUDJ690-20231231-BG-SEP.xhtml” is prepared in all material respects in compliance with
the Regulation ESEF.
Reporting in accordance with Art. 10 of Regulation (EU) No 537/2014 in connection with the requirements of
Art. 59 of the Independent Financial Audit Act
In accordance with the requirements of the Independent Financial Audit Act in connection with Art. 10 of Regulation
(EU) No 537/2014, we hereby additionally report the information stated below.
• Baker Tilly Klitou and Partners EOOD were appointed as statutory auditors of the separate financial
statements of the Company for the year ended December 31, 2023 by the general meeting of shareholders
held on June 30th, 2023 for a period of one year.
• The audit of the separate financial statements of the Company for the year ended December 31, 2023
represents seventh statutory audit engagement for that entity carried out by Baker Tilly Klitou and Partners
EOOD.
• We hereby confirm that the audit opinion expressed by us is consistent with the additional report provided
to the Company’s audit committee, in compliance with the requirements of Art. 60 of the Independent
Financial Audit Act.
• No prohibited non-audit services referred to in Art. 64 of the Independent Financial Audit Act were
provided.
• We hereby confirm that in conducting the audit we have remained independent of the Company.
• For the period for which is related our statutory annual audit, we have not delivered other services to the
Company.
Audit company №129 Baker Tilly Klitou and Partners EOOD
Ivaylo Yanchev
Registered auditor, responsible for the audit
March 22, 2024
Galina Lokmadjieva - Nedkova - Director
Baker Tilly Klitou and Partners EOOD
5, Stara Planina Str., 5th floor
1000 Sofia, Bulgaria
1
Translation from Bulgarian
REPORT ON THE ACTIVITY OF GRADUS AD
IN 2023
2
Contents
I. Introduction. General information about Gradus AD .................................................................................. 3
1.1. Registration and object of activity ................................................................................................. 3
1.2. Share capital ................................................................................................................................. 3
1.3. Board of Directors ......................................................................................................................... 4
1.4. Audit Committee ............................................................................................................................ 4
II. An objective review of the development and operating performance of the Company, as well as its
status, together with a description of the main risks faced by it.................................................................... 4
2.1. Indicators characterizing the operating performance .................................................................... 4
2.2. Operating results ........................................................................................................................... 5
2.2.1. Revenue of the Company: .................................................................................................... 5
2.2.2. Expenses on the company: ................................................................................................... 6
2.3. Risk factors for the activity ............................................................................................................ 6
III. Analysis of financial and non-financial key performance indicators related to business activity,
including information on environmental and personnel-related matters ....................................................... 8
3.1. Key financial indicators ....................................................................................................................... 8
3.2. Non-financial Statement ..................................................................................................................... 9
3.3. Personnel ........................................................................................................................................... 9
IV. Important events, which have occurred after the date of preparation of the annual separate financial
statements ..................................................................................................................................................... 9
V. Future perspectives of the company ........................................................................................................ 9
VI. Research and development activities ...................................................................................................... 9
VII. Information on the acquisition of treasury shares required by Article 187e of the Commercial Act ..... 10
VIII. Branches of the Company ................................................................................................................... 10
IX. Financial instruments used by the Company......................................................................................... 10
X. Additional information pursuant to Appendix 2 of Ordinance 2 of FSC of 9 November 2021 ................ 10
XI. Additional information pursuant to Appendix 3 of Ordinance 2 of FSC of 9 November 2021 ............... 14
3
I. Introduction. General information about Gradus AD
Gradus AD closed the financial year 2023 reporting a positive result of BGN 5,133 thousand, which was formed
primarily from dividends paid by the subsidiaries and interest on loans granted.
1.1. Registration and object of activity
GRADUS AD (the „Company”) is a company registered in Bulgaria with the Commercial Register of the
Registry Agency under UIC: 204882907 on 28 November 2017.
The Company is a parent entity.
Its existence is not limited by time.
Management address:
Stara Zagora 6000, Industrialen quarter, Gradus Poultry Slaughterhouse
On 30 July 2018, by decision N 770 – ПД of 30 July 2018, the Financial Supervision Commission registered
GRADUS AD as a public company with the Public Companies and Other Issuers of Securities Register, kept by the
Financial Supervision Commission, pursuant to Article 30, paragraph 1, item 3 of the Financial Supervision
Commission Act.
The company shares are admitted to trading on the BSE Main Market, Standard Segment. Stock Exchange Code GR6.
OBJECT OF ACTIVITY OF THE COMPANY
The object of activity of the Company is: Investments in stocks and shares of companies, acquisition and
management of shares in Bulgarian and foreign companies; activity as a holding company; acquisition, assessment
and sale of patents, concession of licenses for the use of patents of companies, in which the Company has shares;
financing of companies, in which the Company has shares, as well as any other activity not prohibited by law, provided
that if a permit or a license is required, or registration for the purpose of carrying out any activity, then such activity
shall take place following the obtaining of such permit or license, respectively following the completion of such
registration.
1.2. Share capital
The registered capital of the company as at 31 December 2023 amounts to BGN 243,609 thousand, split into
243,608,710 shares with nominal amount of BGN 1 (one) each.
The shares of GRADUS AD are ordinary, registered, dematerialized voting shares.
Shareholding structure of the Company as at 31 December 2023
1.70%
40.77%
20.68%
20.68%
14.35%
1.82%
Gradus AD
Luka Angelov Angelov
Ivan Angelov Angelov
Angel Ivanov Angelov
Legal entities
Individuals
4
1.3. Board of Directors
Gradus AD has a one-tier management system - Board of Directors.
The Board of Directors consists of three (3) members who are as follows as at 31 December 2023:
• Angel Ivanov Angelov –Chairman of the Board of Directors of Gradus AD
• Georgi Aleksandrov Babev –Memberof the Board of Directors and Executive Director of Gradus AD
• Bistra Stoyanova Kotseva - Member of the Board of Directors of Gradus AD
Participation of the members of the Board of Directors in commercial companies as general partners, holding of
more than 25 percent of the capital of another entity, as well as participation in governing bodies of other companies
or cooperatives as procurators, general managers or board members:
Angel Ivanov Angelov
1.1. As a general partner - NO
1.2. Owns directly more than 25% of the capital of:
„Equity Invest -2” OOD (UIC 204746138), „Energy-2“ OOD (UIC 123655788), ,,Agro Invest-7“ OOD (UIC
123654743), „Ralitsa 2004“ OOD (UIC 123658631), „Biser Distribution“ OOD (UIC 200090633), „AP Investments“
AD (UIC 203580119), “AA Invest 1“ EOOD (UIC 206791146), „AP Capital“ AD (UIC 206420290), „BGK“ AD
(UIC 207064349)
1.3. Participates in the governing bodies of:
„Ayazmo” AD (UIC 201974859), „Equity Invest 1“ АД (UIC 204750154), „Biser Distribution“ OOD (UIC
200090633), „Gallery Varna" AD (UIC 204702565), „Farmpro“ OOD (UIC 123761581), „М.О. Stara Zagora“ ООD
(UIC 123753969), „Gradus-98“ АD (UIC 123120561), „Biser Oliva“ АD (UIC 123036597), „Gradus” АD (UIC
204882907), "ACIBADEM CITY CLINIC MLADOST" ЕООD (UIC 206222487), „ACIBADEM CITY CLINIC”
ЕАD (UIC 203279315), „ACIBADEM CITY CLINIC UMBAL TOKUDA" ЕАD (UIC 175077093), „AP
Investments“ АD (UIC 203580119), “АА Invest 1“ ЕООD (UIC 206791146), „AP Capital“ АD (UIC 206420290),
„APL Capital" АD (UIC 206726483), „Angels Estate" АD (UIC 201009171), „West Mall“ АD (UIC 207366073),
„БГК“ АД (ЕИК 207064349), „Gradus-3“ АD (UIC 123152751)
Georgi Aleksandrov Babev
1.1. As a general partner - NO
1.2. Owns directly more than 25% of the capital of
LG Auto OOD (UIC 205395076), Next Capital LTD (UIC 206378635), LG Auto 2“ OOD (UIC: 206928367).
1.3. Participates in the governing bodies of:
LG Auto OOD (UIC 205395076) , Next Capital LTD (UIC 206378635), LG Auto 2“ OOD (UIC: 206928367), „Gradus” АD (UIC
204882907), Milenium 2000 EOOD (UIC 119591422)
Bistra Stoyanova Kotseva
1.1. As a general partner - NO
1.2. Owns directly more than 25% of the capital of - NO
1.3. Participates in the governing bodies of:
„Gradus” АD (UIC 204882907)
1.4. Audit Committee
Members of the Audit Committee are:
• Hristina Atanasova Filipova- Chairman of the Audit Committee;
• Ivaylo Nikolaev Nikolov – Member of the Audit Committee;
• Radka Dimcheva Peneva – Member of the Audit Committee.
II. An objective review of the development and operating performance of the Company, as well as its
status, together with a description of the main risks faced by it
2.1. Indicators characterizing the operating performance
Being a holding company, Gradus AD carries out no independent commercial activity. The Company’s activity is
focused on management of subsidiaries and allocating financial resources among them.
5
On 30.06.2023 three of the subsidiaries of Gradus AD (“Lora-2004” EOOD, “Gold Farm 91” EOOD and “Zhuliv”
EOOD) merged into the subsidiary “Milenium 2000” EOOD.
Group subsidiaries as at 31 December 2023:
% participation
Millennium 2000 EOOD
effective shareholding
100.00
Gradus-1 EOOD
effective shareholding
100.00
Gradus-3 АD
effective shareholding through Gradus-1 ЕООD
96.00
Gradus-98 АD
effective shareholding
99.94
Gradus Logistics EOOD
effective shareholding
100.00
The main object of activity of the group of Gradus AD is concentrated in Poultry-farming Sector, except for the
companies with object of activity „manufacture of and trading in compound feeding stuff“.
At present, there are no trends and events that have a significant impact on the company's future activity and operating
performance.
2.2. Operating results
The net profit of the Company for the period 01 January 2023 – 31 December 2023 amounts to BGN 5,099
thousand (for the period 01 January 2022 – 31 December 2022 - a net profit of BGN 15,592 thousand).
The results of the Company reported in its financial statements depend directly on the performance of its subsidiaries.
2.2.1. Revenue of the Company:
REVENUE
2023
BGN’000
2022
BGN’000
Relative share
for 2023,
%
Operating income
Revenue from services
11
8
-
Dividend income
4 999
15 997
80%
Other income
2
3
-
Finance income
Interest income
1 269
443
20%
Total
6 281
16 451
100%
• Interest income relates to loans granted to subsidiaries.
The main income, which has the greatest impact on the current financial result of the Company, originates from
distribution of dividends by the subsidiaries, which are as a result of their commercial activity.
Dividend income by companies:
Subsidiary
2023
BGN’000
2022
BGN’000
Relative share
for 2023,
%
Gradus-98 АD
1 999
4 997
40%
Gradus-1 EOOD
1 000
7 500
20%
Millennium 2000 EOOD
1 000
3 000
20%
Zhyuliv EOOD
-
300
0%
Lora-2004 EOOD
1 000
200
20%
Total
4 999
15 997
100%
6
Terms and conditions of loans to subsidiaries:
Subsidiary
Currency
Agreed
principal
BGN’000
Maturity
Interest
%
Balance as at
31 December
2023
BGN’000
Incl.
interest
Balance as at
31 December
2022
BGN’000
Incl.
interest
„Gradus-3“ AD
BGN
2 000
31.12.2024
3,80%
401
1
1 405
5
BGN
3 000
31.12.2024
3,80%
3 010
10
3 010
10
BGN
4 500
31.12.2024
3,80%
4 514
15
-
-
BGN
1 000
31.12.2024
3,80%
1 003
3
-
-
BGN
1 000
31.12.2024
3,80%
1 003
3
-
-
BGN
1 700
31.12.2024
3,80%
1 704
5
-
-
„Gradus-1“ EOOD
BGN
26 100
26.02.2023
3,80%
13 742
45
17 443
43
„Lora-2004“ EOOD
BGN
6 600
25.02.2024
3,80%
-
-
4 110
10
BGN
5 000
27.10.2023
3,80%
-
-
5 012
12
BGN
2 000
01.11.2023
3,80%
-
-
2 005
5
„Gradus-98“ AD
BGN
1 500
02.10.2023
3,80%
513
13
-
-
„Gradus Logistics“
EOOD
BGN
800
30.05.2024
3,80%
401
1
401
1
BGN
100
07.04.2024
3,80%
100
-
-
-
„Millennium 2000“
EOOD
BGN
2 000
13.12.2024
3,80%
-
-
1 303
3
BGN
6 600
17.11.2023
3,80%
3 861
12
-
-
BGN
5 000
27.10.2024
3,80%
4 514
15
-
-
BGN
2 000
01.11.2024
3,80%
1 756
6
-
-
BGN
5 500
02.10.2024
3,80%
1 505
5
-
-
Total
38 027
134
34 689
89
The loans granted to subsidiaries are current. The purpose of the loans is to support the development of existing and
new business lines, and to finance their operational activity.
2.2.2. Expenses on the company:
EXPENSES
2023
BGN’000
2022
BGN’000
Relative share,
for 2023,
%
Operating expenses
Expenses by nature
Expenses on materials
17
22
2%
Hired service expenses
184
186
16%
Depreciation / amortization expenses
66
72
6%
Expenses on wages and social security payments
824
559
73%
Other expenses
37
15
3%
Total:
1 128
854
Finance costs
Bank charges
1
3
-
Interest expense on right-of-use contracts
2
1
-
Other
1
-
-
Total:
4
4
Total operating expenses
1 132
858
100%
During the reporting period, the remuneration expenses held the highest share of costs.
A detailed breakdown of expenditure can be found in the Notes to the separate financial statement.
2.3. Risk factors for the activity
At present, management of Gradus AD is not aware of any specific trends and events, which would directly influence
the Company's future activity.
7
The Company’s risk management identifies and analyses potential risks, to which the Company might be exposed.
Different levels of control have been implemented with the aim to ensure effective monitoring of those risks.
Credit risk
Credit risk exists if a loss is generated when a counterparty to a financial instrument is not able to meet its obligations
under a contractual term.
The exposure to a credit risk depends on the individual characteristics of each customer. The Company measure the
credit risk of loans to related parties using internal valuations that reflect the probability of default. In 2023, the
Company granted loans only to related parties – subsidiaries, which reduces the credit risk to a minimum.
Liquidity risk
Liquidity risk is the risk that the Company will have difficulties in fulfilling its obligations related to financial
liabilities. The liquidity management approach of the Company aims at ensuring, as far as possible, that there will
always be sufficient liquidity to meet its obligations, both under normal and stressful conditions, and without incurring
unacceptable losses or harming the reputation of the Company.
Market risk
Market risk is the risk that in case of changes in market prices, such as foreign exchange rates, interest rates or prices
of equity instruments, the Company’s income or the value of its investments may be affected. At present, this risk is
immaterial.
Financial risk management
The overall capital management goal of the Company is to ensure its ability to continue as a going concern and to
ensure adequate return to its shareholders.
There were no changes in the capital management goals, policies or processes in the year ending 31 December 2023.
The war in Ukraine
On 24.02.2022 a military conflict between Ukraine and Russia occurred. Subsequently, a number of countries imposed
sanctions against certain individuals and entities in Russia. The Russia-Ukraine conflict and related economic
sanctions and other measures taken by governments around the world are expected to have a significant effect on the
local economies of individual countries as well as on the global economy.
Gradus AD and its subsidiaries have no investments in the territory of the countries involved in the military conflict.
The Company and its subsidiaries do not have commercial relationships with any sanctioned counterparties. Gradus
AD and its subsidiaries have no suppliers of goods or services from the parties to the conflict. Sales to customers in
the affected countries are not material to the Company's and its subsidiaries' operations and may be redirected to other
markets on the same or more favourable terms. Indirect economic effects on the operations of the Company, through
its subsidiaries, arising from the conflict are identified and consist mainly of volatility in the prices of raw materials
that the Group purchases for feed production.
8
Environment
The Company views the protection of the environment and the reduction of the rate of climate change as part of its
corporate social responsibility policy and conducts its business in compliance with environmental protection
requirements. The Group implements measures to: separate waste collection; minimise, recover and recycle
production and household waste; and provide appropriate training to staff on environmental protection and pollution
prevention issues. The Group invests actively in renewable sources of electricity for its own consumption.
III. Analysis of financial and non-financial key performance indicators related to business activity, including
information on environmental and personnel-related matters
3.1. Key financial indicators
Aiming at achieving greater efficiency and control on the Company's performance, management monitors certain
key performance indicators. These indicators are mainly directed towards the amount of profit, the debt level and
efficiency.
Main indicators related to profit, which the Company monitors, are as follows:
• EBITDA margin (EBITDA/sales)
31.12.2023
31.12.2022
EBITDA (earnings before interest, taxes,
depreciation and amortisation)
3 950
15 226
Revenue
5 012
16 008
EBITDA margin
78.81%
95.11%
EFFECTIVENESS
• Cost effectiveness ratio (total expenses /total income)
Total expenses
31.12.2023
1 132
31.12.2022
858
Total income
6 281
16 451
Cost effectiveness
0.18
0.05
• Revenue effectiveness ratio (total income /total expenses)
Total income
31.12.2023
6 281
31.12.2022
16 451
Total expenses
1 132
858
Revenue effectiveness
5.55
19.17
The analysis of the revenue and costs effectiveness for 2023 reveals that revenue covers fully the company's expenses
and thus, the company is able to meet the dividend commitments undertaken and to finance the companies included
in the Group's portfolio.
The Company had no financial liabilities a sat 31 December 2023. The Company timely pays its current liabilities.
9
3.2. Non-financial Statement
Gradus AD is a holding company and does not carry out its own production and trading activity, nor it produces or
markets its own goods or services. The company’s activities are focused on management of subsidiaries and
distribution of finance resources among them.
Being a parent entity in a large Group, the Company will draw up and include also a consolidated Non-financial
Statement in its consolidated management report.
3.3. Personnel
The average number of staff of Gradus AD at 2023 year-end is 5 employees hired under employment agreements
(2022: 4 employees).
All employees of the Company have a higher education degree and qualification that is in conformity with the post
occupied.
During the reporting period, the company did not hire temporary workers.
Posts within the Company as of 31 December 2023:
• Investors Relations Director
• Finance Director
• Head of Finance Department
• Risk Manager
• Chief Accountant
• Legal Advisor
• Human Resources Manager
The Company provides additional qualification possibilities to improve the professional qualification of its employees.
IV. Important events, which have occurred after the date of preparation of the annual separate financial
statements
On 02.01.2024, the Company renegotiated all the loans provided by adjusting their interest rate from 3.80% to 4.40%.
On 23.02.2024, the Company signed an annex with Gradus - 1 EOOD to extend the term of the granted loan until
26.02.2025.
There are no other material events that occurred after December 31, 2023 that would require additional adjustments
and/or disclosures in this financial statement as of December 31, 2023.
V. Future perspectives of the company
Gradus AD intends to continue to finance its subsidiaries aiming at extending their production capacity and optimising
activities. Investments are planned in all segments in which the entities operate. Business software to manage activities
is to be implemented.
VI. Research and development activities
The Company was not involved in research and development activities in 2023.
10
VII. Information on the acquisition of treasury shares required by Article 187e of the Commercial Act
With regard to a decision of the Regular Annual General Meeting of the shareholders, held on 06.05.2020 and based
on the provision of art. 111, para. 6 of the Law on the Public Offering of Securities, "Gradus" AD has launched a
buyback procedure for up to 7,308,261 own shares, representing up to 3% of the Company's capital, which is within
the limit of Art. 111, para. 5 of the Civil Procedure Code.
In 2023 Gradus AD acquired 4,135,294 own shares at an average price of BGN 1.46 per share.
As of 31.12.2023 Gradus AD owns 1.70% of the company's voting rights. Pursuant to the provisions of Article 187a
paragraph 3 of the Commercial Law, the exercise of rights, including the right to vote, shall be suspended for the
repurchased own shares in the amount of 4,135,294 until the moment of their transfer.
During the reporting year, the company did not sell its own shares.
VIII. Branches of the Company
The Company has no branches.
IX. Financial instruments used by the Company
Financial instruments used by the Company as of 31 December 2023:
Financial assets at amortised cost
31.12.2023
31.12.2022
In BGN’000
Trade receivables
-
7
Related party receivables
8 395
15 616
Receivables on loans to related parties
38 027
34 683
Cash and cash equivalents
302
2 570
Total:
46 724
52 876
Management of the company assesses the estimated credit risk on financial instruments at each period-end. Parameters
affecting the amount of expected credit losses are defined collectively or individually depending on the type and nature
of the financial instruments concerned. For further details on the write down of receivables on loans granted and
financial instruments, see the accounting policies and notes to the separate financial statements.
X. Additional information pursuant to Appendix 2 of Ordinance 2 of FSC of 9 November 2021
1. Information, in terms of value and quantity, of the basic categories of goods, products and/or services
provided, with an indication of their share in sales revenue of the issuer, respectively the entity under § 1e from
the additional regulations of POSA, as a whole and the changes, which have occurred during the reporting
financial year
Information, in terms of value, of the sales revenue, with an indication of their share, is disclosed in section II, item
2.2.1. Revenue of the Company hereof.
2. Information on revenue, broken down by category of activity, domestic and foreign markets, as well as
information on the sources of supply of materials necessary for the production of goods or the provision of
services with an indication of the degree of dependency in respect of each individual seller or buyer/user, and
if the relative share of any of them exceeds 10 per cent of the sales expenses or revenue, information on each
person separately, its share in sales or purchases, and its relationships with the issuer, respectively the entity
under § 1e from the additional regulations of POSA
The company does not carry out its production and trade activities or manufacture or market its goods or services. The
company's activity is focused primarily on the corporate governance of its subsidiaries and the distribution of funds
among them.
11
3. Information on significant transactions.
Large transactions or such of significant importance to the activity of Gradus AD were not concluded in 2023.
4. Information on transactions concluded between the issuer, respectively the entity under § 1e from the
additional regulations of POSA, and related parties over the reporting period, proposals for concluding such
transactions, as well as transactions that are outside its normal business or substantially deviate from the
market conditions to which the issuer or its subsidiary is a party, with an indication of the value of the
transactions, the nature of the relationship, and any other information necessary to assess the impact on the
financial position of the issuer, respectively the entity under § 1e from the additional regulations of POSA
Large transactions of significant importance to the activity of Gradus AD were not concluded in 2023, except for the
provision of loans to subsidiaries, as disclosed in section II, item 2.2.1. „Revenue of the Company, Terms and
Conditions of the Loans to Subsidiaries“ hereof. There are no transactions that fall outside the ordinary activity of
the issuer, or such that deviate significantly from market conditions.
5. Information on events and indicators of unusual nature for the issuer, respectively the entity under § 1e from
the additional regulations of POSA, having a significant impact on its activity, and revenue and expenses
incurred; an assessment of their impact on the current year results
There are no events and indicators of unusual nature for the issuer having a significant impact on its activity.
6. Information on off-balance sheet transactions – nature and business goals; an indication of the financial
impact of these transactions on the activity, if the risks and rewards of these transactions are material to the
issuer, respectively the entity under § 1e from the additional regulations of POSA, and if the disclosure of that
information is essential for the assessment of the financial position of the issuer, respectively the entity under §
1e from the additional regulations of POSA
There were no such transactions.
7. Information on the shareholdings of the issuer, respectively the entity under § 1e from the additional
regulations of POSA, with respect to its major investments in the country and abroad (in securities, financial
instruments, intangible assets and real estate), as well as investments in equity securities outside its group of
companies within the meaning of the Accountancy Act and the sources/methods of financing
Gradus AD invests only in shares of its subsidiaries.
The Company owns no real estate.
The investment interests of the Company as of 31 December 2023 are only in its group of entities, as disclosed in
section II, item 2.1.
8. Information on loan contracts concluded by the issuer, respectively the entity under § 1e from the additional
regulations of POSA, its subsidiary or a parent company in their capacity as borrowers; loan contracts with an
indication of their terms and conditions, including maturities, and information on guarantees provided and
liabilities assumed
Gradus AD had no loan liabilities and was not a party to guarantees and commitments as of 31 December 2023.
9. Information on loans granted by the issuer, respectively the entity under § 1e from the additional regulations
of POSA, or by their subsidiaries, provision of guarantees or assumption of obligations to one person or to its
subsidiary, including related parties, with an indication of the name and UIC of the person, the nature of the
relationship between the issuer, the entity under § 1e from the additional regulations of POSA, or their
subsidiaries, and the borrower, the amount of outstanding principal, interest rate, contract date, repayment
deadline, amount of the commitment, specific terms and conditions, other than those provided for in this
provision, as well as the purpose for which they were granted, in case they were concluded as target ones.
12
Information on loans granted by the issuer is disclosed in detail in section II, item 2.2.1. „Terms and Conditions of
the Loans to Subsidiaries“ hereof. The loans were granted to the Group subsidiaries for the purpose of facilitating
the development of existing and new business lines, as well as financing the operating activities of the subsidiaries.
10. Information on the use of the funds from a new issue of securities during the reporting period
There has been no new issue of securities by the Company during the reporting financial year.
11. Analysis of the ratio between the financial results achieved, as reported in the financial statements for the
financial year, and the estimates of such results published earlier.
The Company has not published estimates of the relevant period.
12. Analysis and evaluation of the financial resource management policy with an indication of the ability to
service the liabilities; potential threats and measures the issuer, respectively the entity under § 1e from the
additional regulations of POSA, has taken or is about to take with a view to their elimination
The policy of Gradus AD is focused primarily on the corporate governance of its portfolio companies. The free funds
are used to finance its subsidiaries. The company had no borrowings as of 31 December 2023.
13. Feasibility study of investment intentions with an indication of the amount of available funds and reporting
of any possible changes to the structure of financing of this activity.
The activity of Gradus AD is focused primarily on the development of its portfolio companies. To monitor the
development of its subsidiaries and to finance their activities by providing loans is a priority goal of Gradus AD.
14. Information on changes, which have occurred during the reporting period, in the basic principles of
governance of the issuer, respectively the entity under § 1e from the additional regulations of POSA, and its
group of entities within the meaning of the Accountancy Act
No changes occurred during the reporting period in the basic principles of governance of the issuer, respectively the
entity under § 1e from the additional regulations of POSA, and its group of entities.
15. Information on the key characteristics of both the internal control system and the risk management system,
implemented by the issuer, respectively the entity under § 1e from the additional regulations of POSA, in the
process of preparation of its financial statements
The company has in place an internal control system and a risk management system. In connection with the financial
reporting process, the financial statements are prepared in accordance with International Financial Reporting
Standards. The current financial and accounting activity of the Company is subject to periodic control and analysis by
management. The company has a well-established practice for periodic discussion of the current financial results from
the operations of the companies included in its strategic investment portfolio, aiming at ensuring the implementation
of their business programs and accurate analysis of their ability to pursue future investment projects.
16. Information on changes in the management and supervisory bodies during the reporting financial year
During the reporting financial year, there were changes in the management and supervisory bodies as follows:
On 19.12.2022 an extraordinary General Meeting of Shareholders was held, where the following decisions were taken,
in connection with the dismissal of members of the Board of Directors of Gradus AD and the election of new members
of the Board of Directors of Gradus AD.
The following are exempted:
- Luka Angelov Angelov - "Deputy Chairman of the Board of Directors" of Gradus AD;
- Ivan Angelov Angelov - "Chairman of the Board of Directors" and "Executive Director" of Gradus AD
The elected new members of the Board of Directors are:
- Angel Ivanov Angelov - "Chairman of the Board of Directors" of Gradus AD;
- Bistra Stoyanova Kotseva - "Deputy Chairman of the Board of Directors" of Gradus AD.
13
The change was entered on the Company's account in the Commercial register and register of non-profit legal
entities on 01.04.2023. with entry No. 20230104143850.
Detailed information about the members of the Board of Directors is presented in section I, item 1.3. from the report.
In 2023, a Management Board / Board was also established as a corporate management structure of the Gradus
Group.
The following are elected as its members:
1. Stoyka Stanilova Dencheva
2. Krasimira Stanilova Kirkova
3. Radka Dimcheva Peneva
4. Martin Vladimirov Dimitrov
5. Georgi Ganchev Dyulgiarov
The Board of Managers was established on the basis of Art. 32, item 19 of the Articles of Association of Gradus AD,
in order to assist the Board of Directors in achieving the company's goals with its expertise.
The Management Board aims to contribute to the efficient and quality management of the Gradus Group.
The work of the Management Board is based on the effective interaction between its members and the Board of
Directors of Gradus AD in order for the strategic goals of the Group to be achieved.
17. Information on the amount of remuneration, rewards and / or benefits paid by the issuer, respectively the
entity under § 1e from the additional regulations of POSA, to each member of management and control bodies
during the reporting financial year, regardless of whether they have been included in the expenses of the issuer,
respectively the entity under § 1e from the additional regulations of POSA, or originate from profit
distributions, including: a) amounts and non-cash remuneration received; b) conditional or deferred
remuneration occurred over the year, even if the remuneration is due on a later date; c) amount due by the
issuer or its subsidiaries for payment of pensions, retirement benefits or other similar compensation.
Gradus AD draws up a separate “Report on Implementation of the Remuneration Policy for the Members of the Board
of Directors“ in compliance with the requirements of Ordinance 48 of FSC of 20 March 2013.
18. For public companies - information on the issuer’s shares held by members of its management and control
bodies, procurators and top management staff, including shares held by each one of them separately and as a
percentage of the shares of each class, as well as options on securities provided to them by the issuer – type and
amount of securities on which options are established, exercise price of the options, purchase price, if any, and
term of the options.
As at 31.12.2023 shares held by the members of the Board of Directors are as follows:
Name, father’s name, family
name
Number of shares
%
Angel Ivanov Angelov
50 372 417
20,68
Georgi Aleksandrov Babev
0
0
Bistra Stoyanova Kotseva
3 500
0,001
19. Information on agreements, the company is aware of (including after the end of the financial year), as a
result of which changes could occur in future in the relative share of shares or bonds held by the existing
shareholders or bond holders
No such agreements are known.
20. Information on pending court, administrative or arbitration proceedings concerning liabilities or
receivables of the issuer, respectively the entity under § 1e from the additional regulations of POSA, amounting
to at least 10 of its equity; if the total amount of the liabilities of the issuer, respectively the entity under § 1e
from the additional regulations of POSA, or receivables on all constituted proceedings exceeds 10 of its equity,
information of each proceeding shall be provided separately
Gradus AD is not a party to pending court, administrative or arbitration proceedings, nor are there any decisions or
applications to discontinue the activity of the Company or announce it in liquidation.
14
21. Names of the Investors Relation Director, including telephone number, email and correspondence address
Investor Relations Director:
Marieta Babeva,
0883 773 993
ir@gradusbg.com
110B Simeonovsko Shosse Boulevard, floor 1, office 4/B
22. Non-financial declaration pursuant to the requirements of Article 41 of the Accountancy Act – for separate
financial statements, and respectively pursuant to Article 51 of the Accountancy Act – for consolidated financial
statements, if applicable
Information on the Non-financial declaration of Gradus AD is disclosed in section III, item 3.2. hereof.
23. Other information at discretion of the Company
None.
XI. Additional information pursuant to Appendix 3 of Ordinance 2 of FSC of 9 November 2021
1. Information on securities not admitted to trading on a regulated market in the Republic of Bulgaria or
another EU Member State
At 31 December 2023 Gradus AD had no securities that were not admitted to trading on a regulated market in the
Republic of Bulgaria or another EU Member State.
2. Information on the direct and indirect holding of 5 or more percent of the voting rights in the company’s
General Meeting of Shareholders, including information about the shareholders, the amount of their holding
and the manner of holding the shares.
As of 31.12.2023 according to data from the Central Depository AD, the shares of Gradus AD are owned by 854
natural persons (83.95 %) and 43 legal entities (16.05%)
Shareholders with more than 5% shareholding:
Shareholders
31.12.2023
Number of shares
%
1
Luka Angelov Angelov
99 316 945
40,77
2
Ivan Angelov Angelov
50 373 165
20,68
3
Angel Ivanov Angelov
50 372 417
20,68
4
POK Doverie - indirectly
12 833 303
5,27
3. Information about the shareholders with special control rights and description of these rights
In compliance with the Articles of Association of Gradus AD, the Company has no holders of securities with special
control rights.
4. Agreements among the shareholders, which are known to the company and which may result in restrictions
on the transfer of shares or voting rights.
The Company is not aware of any agreements that may result in restrictions on the transfer of shares or voting rights.
15
5. Significant contracts of the company that give rise to action or that have been amended or terminated due to
a change in control of the company upon carrying out mandatory bidding, and consequences thereof, save for
the cases when the disclosure of such information may cause serious damage to the company; the exception
under the previous sentence shall not apply in cases where the company is legally obliged to disclose information
In 2023, no significant contracts had been concluded by the company, which could give rise to action, or that had been
changed or terminated due to a change in control of the company upon carrying out mandatory bidding and
consequences thereof.
22 March 2024
EXECUTIVE DIRECTOR:
/Georgi Babev/
CHAIRMAN OF BD:
/Angel Angelov/
TO
SHAREHOLDERS OF
GRADUS AD
DECLARATION
Art. 100m, para 4, item 3 from
Public Offering of Securities Act
The undersigned:
Ivaylo Yanchev, in the capacity of registered auditor from Baker Tilly Klitou and Partners EOOD, with
UIC 131349346, with headquarters and management address: 5 Stara Planina Str., floor 5, Sofia, 1000 and
address for correspondence: Sofia, 1000, 5 Stara Planina Str., floor 5
Baker Tilly Klitou and Partners EOOD was engaged to carry out a mandatory financial audit of the separate
financial statements of Gradus AD for the year 2023, prepared in accordance with the International Financial
Reporting Standards, as adopted by the EU, a generally accepted name of the accounting base defined in
paragraph 8 of the Supplementary part of the Accounting Act under the name "International Accounting
Standards". As a result of our audit, we issued an audit report on March 22, 2024.
We hereby certify that as reported in our audit report on the annual separate financial statements of
Gradus AD for 2023 issued on March 22, 2024:
1. Art. 100m, para. 4, item 3, letter "a" Audit opinion: In our opinion, the accompanying separate
financial statements give a true and fair view of the financial position of the Company as of 31 December
2023 and of its financial performance and its cash flows for the year ending on that date in accordance with
the International Financial Reporting Standards (IFRS), as adopted by the European Union (EU).
2. Art. 100m, para. 4, item 3, letter "b" Information related to the transactions of GRADUS AD with
related parties. Information about related party transactions is duly disclosed in Note 21 to the separate
financial statements. Based on the audit procedures we performed on related party transactions as part of
our audit of the separate financial statements as a whole, we have not become aware of any facts,
circumstances or other information on the basis of which we may conclude that related party transactions
are not disclosed in the accompanying separate financial statements for the year ended 31 December 2023
in all material respects in accordance with IAS 24 Related Party Disclosures. The results of our audit
procedures on related party transactions have been reviewed by us in the context of forming our opinion on
the separate financial statements as a whole, rather than in order to express a separate opinion on related
party transactions.
3. Art. 100m, para. 4, item 3, letter "c" Information relating to material transactions. Our audit
responsibilities for the financial statements as a whole described in the section of our report "Auditor's
Responsibilities for the Auditing of the Separate Financial Statements" include assessing whether the
separate financial statements present the material transactions and events in a manner that delivers credible
performance. Based on the audit procedures we performed on the material transactions underlying the
separate financial statements for the year ended 31 December 2023, no facts, circumstances or other
information have been disclosed to us in order to conclude that there are cases of material misrepresentation
and disclosure in accordance with the applicable IFRS requirements adopted by the European Union.
The results of our audit procedures on the Company's transactions and events that are material to the
Company's financial statements are reviewed by us in the context of our opinion on the separate financial
statements as a whole and not for the purpose of obtaining a separate opinion on these material transactions.
The representations made by this declaration should be considered only in the context of our audit
report as a result of the independent financial audit of the separate annual financial statements of
GRADUS AD for the reporting period ending 31 December 2023, dated 22 March 2024. This declaration
is intended solely for the above-mentioned addressee and has been prepared solely and solely in
compliance with the requirements set forth in Art. 100m, para. 4 item 3 of the Public Offering of
Securities Act (POSA) and should not be accepted as a substitute for our opinion expressed in the audit
report issued by us on 22 March 2024 regarding the issues covered by Art. 100m, para. 4, item 3 of POSA.
____________________________
22 March 2024 Ivaylo Yanchev
Sofia Registered auditor, responsible for the
audit
DECLARATION
in accordance to Article 100н, Para 4, Item 4 of the Public Offering of Securities Act
The undersigned,
Georgi Aleksandrov Babev – Executive Director of Gradus AD
Angel Ivanov Angelov – Chairman of the Board of Directors
and
Antoaneta Nikiforova Boeva – Chief Accountant of Gradus AD
DECLARE HEREBY, that to the best of our knowledge:
(a) The financial statement for the 2023 prepared in accordance with the applicable accounting standards
give a true and fair view of the assets and liabilities, financial performance, and of the profit or loss of Gradus
AD;
(b) The activity report contains a true and fair view of the development and operating performance of
Gradus AD, as well as of the status of the issuer and the consolidated companies, together with a description of
the main risks and uncertainties faced by the company.
22 March 2024
A. Boeva G. Babev
/Chief Accountant/ /Executive Director/
A. Angelov
/Chairman of the Board of Directors/
1
Translation from Bulgarian
REPORT
ON IMPLEMENTATION OF THE REMUNERATION POLICY FOR THE MEMBERS OF THE BOARD
OF DIRECTORS OF GRADUS AD FOR 2023
This Report has been prepared in accordance with Article 12, paragraph 1 of Ordinance No 48 dated 20 March
2013, issued by the Financial Supervision Commission, and Article 3, paragraph 1 of the 2013 Remuneration
Policy for the members of the Board of Directors of Gradus AD, elaborated by the Board of Directors
The Report presents the implementation of the Remuneration Policy for the members of the Board of
Directors and the Executive Director, the main goal of which is to establish principles and rules for determining and
paying their remuneration in carrying out their duties.
I. Information about the implementation of the Remuneration Policy for the period from its approval to
the 2023 year-end
1. Information about the decision-making process concerning the Remuneration Policy, including, if applicable,
information about the mandate and composition of the Remuneration Committee, the name of external
consultants, whose services have been used in determining the Remuneration Policy
The Remuneration Policy for the members of the Board of Directors has been elaborated in accordance with
the requirements of Ordinance No 48 and also takes into account the recommendations of the National Corporate
Governance Code.
Pursuant to the effective Remuneration Policy for the members of the Board of Directors, they have not set
up a Remuneration Committee. The services of external consultants have not been used in the elaboration of the
Remuneration Policy.
2. Information about the weight of the variable and fixed remuneration of the members of the managing and
control bodies
The company may pay the members of the Board of Directors both permanent (fixed) and variable
remuneration.
The remuneration and tantiemmes of the members of the Board of Directors shall be determined by decision
of the General Meeting of Shareholders and shall be paid in accordance with the terms and conditions of the
management contracts concluded between them and the Company.
At the time of adoption of this Policy, the members of the Board of Directors are paid only fixed
remuneration.
In the past 2023, the members of the Board of Directors received only permanent remuneration.
2
3. Information about the assessment criteria, on the basis of which share options, company shares or other types
of variable remuneration are granted; and explanation on how the criteria under Article 14, paragraphs 2 and
3 contribute to the achievement of the long-term goals of the Company
No remuneration was paid to the members of the Board of Directors in the form of company shares, share
options or rights to acquire shares.
4. Explanation of the method applied and assessment whether the criteria reflecting the results achieved have
been met
According to the Remuneration Policy, the members of the Board of Directors are entitled to receive
additional variable remuneration in case of a positive financial result (objectives achieved) for the previous year.
5. Explanation of the interrelation between the remuneration and the results achieved
Variable remuneration, if voted on, depends on the achievement of certain objectives and is linked to the
following criteria:
1. Financial indicators, namely operating results, as follows:
1.1. amount and dynamics of EBITDA (the earnings of the company and its subsidiaries before interest,
taxes, depreciation and amortisation);
1.2. amount and dynamics of the sales of the subsidiaries;
1.3. amount and dynamics of the receivables of the subsidiaries.
2. Non-financial indicators, as follows:
1.1. compliance with the principles of the National Corporate Governance Code;
1.2. implementation of observance of the approved Code of Ethical Conduct and other internal rules and
policies of the Company.
6. Basic payments and reasons underlying the annual scheme for payment of bonuses and/or other non-
monetary consideration
The remuneration of the members of the Board of Directors shall be paid on a monthly basis to a bank account
up to the 25
th
day following the month for which it is due.
Bonuses and other non-cash supplementary remuneration were not paid to the members of the Board of
Directors in 2023.
7. Description of the key features of the additional voluntary pension insurance plan and information about
contributions paid and/or due by the company in favour of a director for the respective financial year, where
applicable
Additional voluntary pension insurance is not envisaged for the members of the Board of Directors.
8. Information about the period of deferral of variable remuneration
The payment of 40% of the variable remuneration determined in the decision of the General Meeting of
Shareholders, when voted, is rescheduled for a period of 3 years, and the payment of the rescheduled part of the
variable remuneration is made proportionally during the rescheduling period.
3
9. Information about the compensation policy to an early termination of a contract
The contract with a member of the Board of Directors shall regulate the terms and conditions, and the
maximum amount of benefits in case of its early termination, as well as payments relating to the period of notice or
provided for in the clause prohibiting the pursuit of a competitive activity.
Upon termination of the contract, compensation shall be paid corresponding to his unpaid remuneration in
the amount according to the contract.
Benefits from the Company shall not be due if the termination of the contract is due to unsatisfactory results
and/or guilty behaviour of a member of the Board of Directors.
10. Information about the period in which shares cannot be transferred and share options cannot be exercised in
the case of share-based variable remuneration
No such period is set.
11. Information about the policy for preserving a certain number of shares until the end of the mandate of the
members of the managing and control bodies after the expiry of the period under item 10
No such a policy is pursued by the Company.
12. Information about the contracts of the members of the managing and control bodies, including the term of
each contract, the term of the notice of termination and details about the compensations and/or other
payments due in case of early termination
The General Meeting of Shareholders held on 05 June 2020 extended the mandate of the members of the
Board of Directors with five years, until 17 November 2025
On General Meeting of Shareholders held on 19.12.2022, pursuant to Article 221, item 4 of the Commercial
Law, a decision on the early release of the following members of the Board of Directors of Gradus AD has been
adopted:
• Ivan Angelov Angelov
• Luka Angelov Angelov
Compensation and/or other payments due in case of early termination – in accordance with item 9 of this report, the
Company pays compensation corresponding to their unpaid remuneration in the amount, according to the contract.
On 19.12.2022, the General Meeting of Shareholders elected new members of the Board of Directors:
• Angel Ivanov Angelov;
• Bistra Stoyanova Kotseva
The new members of the Board of Directors have been elected with a mandate until 17.11.2025.
The change comes into force as of 04.01.2023
13. Full amount of the remuneration and other incentives paid to the members of the managing and control bodies
for the respective financial year
• The full remuneration of the members of the Board of Directors for the financial year 2023 amounts to BGN
515 thousand. Remuneration is current and no other incentives or deferred remuneration have been paid.
4
• Remuneration of the BD members paid by companies from the same group;
Angel Ivanov Angelov
– Gradus 1 EOOD – none;
- Millennium 2000 EOOD – none
- Gradus 98 AD - BGN 309 thousand
- Gradus 3 AD – none
- Gradus Logistics EOOD – none;
Georgi Aleksandrov Babev
– Gradus 1 EOOD – none;
- Millennium 2000 EOOD – BGN 61 thousand
- Gradus 98 AD - none;
- Gradus 3 AD – none;
- Gradus Logistics EOOD – none;
Bistra Stoyanova Kotseva
– Gradus 1 EOOD – none;
- Millennium 2000 EOOD – none
- Gradus 98 AD - none;
- Gradus 3 AD – none;
- Gradus Logistics EOOD – none;
14. Information about the remuneration of everyone who has been a member of a managing or control body
of a public company for a certain period of time during the respective financial year
Angel Ivanov Angelov – BGN 203 thousand
Georgi Aleksandrov Babev – BGN 204 thousand
Bistra Stoyanova Kotseva – BGN 108 thousand
Other income provided to the person outside of their usual functions, when such payments are permissible,
according to the contract concluded with them:
BGN 96,000 was paid to Angel Ivanov Angelov - "Chairman of the Board of Directors" of Gradus AD. under
a contract for the position "Representative" of the company;
Georgi Alexandrov Babev - "Member of the Board of Directors" and "Executive Director" of "Gradus" AD
was paid BGN 96,000. under contract for the position of "Executive Director".
Rewards are current. They were charged and paid during the reporting period.
No other material incentives or deferred remuneration has been accrued and paid.
15. Information about the shares and/or share options and/or other share-based incentive schemes
There is no such information
5
16. Annual movement of remuneration, the company’s results and the average amount of remuneration on a
full-time basis of the company employees who are not directors, during the previous five fiscal years at least,
presented together in a way that allows comparison:
Information
pursuant to Article
13, item 16
2019
BGN’000
2020
BGN’000
Change
2020
compared
to 2019
%
2021
BGN’000
Change
2021
compared
to 2020,
%
2022
BGN’000
Change
2022
compared
to 2021,
%
2023
BGN’000
Change
2023
compared
to 2022,
%
Gross
remuneration of all
BD members for
one year
324
324
0%
324
0%
324
0%
324
0%
Average
remuneration of a
BD member for
one year
108
108
0%
108
0%
108
0%
108
0%
Results of the
company -
EBITDA
11 415
11 326
-1%
13 310
18%
15 226
14%
3 950
-74%
Gross
remuneration
based on full-time
basis of the
company
employees who
are not directors
for one year
53
135
155%
135
0%
163
21%
207
27%
Average
remuneration
based on full-time
basis of the
company
employees who
are not directors
for one year
18
45
150%
45
0%
54
20%
52
-4%
17. Information about the possibility to demand a refund of the variable remuneration;
Variable remuneration is not paid.
18. Information about any deviations from the procedure for the implementation of the remuneration policy
in connection with extraordinary circumstances under Article 11, paragraph 13, including an explanation of
the nature of the extraordinary circumstances and an indication of the specific components that have not been
implemented
In 2023, there were no deviations from the procedure for implementation of the remuneration policy.
II. Program on the application of the Remuneration Policy during the subsequent year
The Remuneration Policy aims to support the long-term business goals of the Company and promote
behaviour, which supports the creation of value for the shareholders while ensuring a competitive remuneration that
is sufficient to attract and retain directors with qualities necessary for the successful management and development of
the company.
This Policy has been developed for a long period of time, unless the shareholders of the company request its
update and revision. Amendments to the Policy approved by the General Meeting of Shareholders shall be adopted in
accordance with the procedure followed in its preparation and approval.
6
At present, the company does not plan to change the program for implementation of the remuneration policy for the
next financial year or for a longer period.
The Board of Directors believes that the principles for determining remuneration at present, underlying this
Policy, are effective in view of the financial results achieved during the reporting period. Their implementation will
continue to be a priority of the Board of Directors.
The Board of Directors shall be responsible for the timely disclosure of the Remuneration Policy approved
by the General Meeting of Shareholders and any subsequent amendments thereto.
22 March 2024
Executive Director:
Georgi Babev
Chairman of Board of Directors:
Angel Angelov
1
Translation from Bulgarian
CORPORATE GOVERNANCE STATEMENT
PURSUANT TO ARTICLE 100n, PARAGRAPH 8 OF POSA
1. Information whether the issuer complies as appropriate:
• Corporate Governance Code approved by the Deputy Chairperson of the Financial
Supervision Commission, or
• Another Corporate Governance Code;
• Information regarding the corporate governance practices, which are applied by Gradus
AD in addition to the code under Letter "a" or Letter "b";
Gradus AD complies with the National Corporate Governance Code /NCMC/ elaborated in October
2007 and approved by the National Corporate Governance Committee, as subsequently amended in
February 2012, April 2016 and July 2021 year. It was approved by the Deputy Chairperson of the Financial
Supervision Commission.
The basis for corporate governance is the interaction between the Board of Directors of the
company, the management bodies of subsidiaries, shareholders, potential investors and trading partners.
Good corporate governance means loyal and responsible corporate management bodies,
transparency and independence, as well as the responsibility of the company to society.
The code should be applied on the basis of the “comply or explain” principle. This means that the
company complies with the Code and, in the event of a deviation, the management should clarify the reasons
thereof.
According to the Company, the adoption and implementation of a “Program for Implementation of
Internationally Recognised Good Corporate Governance Standards” will facilitate investment decisions by
shareholders and enhance the confidence of potential investors, given the Company's willingness to
improve and optimise the information disclosure processes.
Considering the Program, the main goals of the company are:
• introduction and implementation by the company of good corporate governance principles;
• facilitating and supporting communication, and raising the level of awareness of the company’s
shareholders, regulatory authorities, financial media and analysts;
• improving the information disclosure processes of the company, including the quality and
relevance of information;
• enhancing the confidence of shareholders, investors and any other interested parties in the
management of the company and its development;
2
2. Explanation by the issuer as to which parts of the corporate governance code under Item
1, Letter "a" or Letter "b" the issuer does not comply with and as to what the ground for this non-
compliance are, and when the issuer has opted not to refer to any of the rules of the corporate
governance code - the grounds for that:
While performing its activity, the company complies with all sections of the National Corporate
Governance Code.
3. Description of the main characteristics of the internal control system and of the risk
management system of the issuer in connection with the financial reporting process:
The internal financial reporting and accounting control system of Gradus AD is developed on the
basis of good reporting and control practices in the country and in compliance with the Bulgarian
legislation. For the purpose of maximum improvement, it is subject to continuous monitoring by the
management and represents a set of rules, procedures and control actions, which are developed according
to the specific features of the Company, its activity and reporting system. It is directed towards:
• ongoing monitoring and distribution of reporting activities against their objectives;
• adequate and timely localisation of identified business risks affecting financial, management
and operational reporting.
Using the system, the management is able to assure itself that:
• the Company applies the requirements of the accounting and reporting legislation, and in
particular, the requirements of the Accounting Act and International Financial Reporting
Standards;
• the Company observes the instructions and recommendations of senior management with
regard to reporting and documentation;
• the necessary efficiency and efficiency in the financial and accounting process exist;
• there is reliable, qualitative and timely financial and operational information to be provided to
internal and external users;
• there is a high degree of security for the protection and maintenance of the assets of the
company, including prevention of fraud and errors.
The main components of the internal financial reporting control system are:
1) adoption and observance of ethical principles and rules of conduct adopted by the Ethics Code of Conduct
of the employees of Gradus AD and with regard to financial reporting;
2) development of and setting an optimal structure of units involved in financial reporting processes with
clearly defined responsibilities and powers;
3) implementation and maintenance of control procedures and rules for each stage of accounting and
financial reporting processes;
4) development of policies for selecting, training and developing staff employed in accounting and financial
reporting processes;
5) development of procedures for identifying, monitoring and managing risks relating to accounting,
financial reporting and reporting, including development of adequate measures and actions to minimise
those risks;
3
6) development of and maintaining the information system organisation, including access controls,
commissioning, data processing, system changes, allocation of responsibilities of persons employed to
operate it, and preserving of data integrity in the system.
4. 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:
4.1. Significant direct and indirect shareholdings (including indirect shareholdings through
pyramid structures and cross-shareholdings) within the meaning of Article 85 of
Directive 2001/34/EC.
No proposals for takeover and/or merger with another company were made to the Company as of
31 December 2023.
4.2. Holders of any securities with special control rights and a description of those rights
There are no shareholders enjoying special control rights in the Company. Pursuant to the Articles
of Association of Gradus AD, all shares issued by the Company are of one class, ordinary, registered,
dematerialised. All shares give the right to one vote at the General Meeting of Shareholders, right to
dividend and right to liquidation share proportionate to the share’s nominal value.
4.3. Restrictions on voting rights, such as limitations of the voting rights of holders of a given
percentage or number of votes, deadlines for exercising voting rights, or systems whereby, with the
company’s cooperation, the financial rights attaching to securities are separated from the holding of
securities.
There are no restrictions on the voting rights attached to shares.
4.4. Rules governing the appointment and replacement of board members and the
amendment of the articles of association.
According to the applicable legal framework and Articles of Association of Gradus AD, the election
and discharge of the members of the Board of Directors, as well as the determination of their remuneration
and the guarantee of their management, are part of the competence of the General Meeting of Shareholders
of the Company.
The Board of Directors of the Company is elected and exercises its powers in accordance with the
decisions of the General Meeting, the Articles of Association of the Company, and the applicable law. The
term of office of the members of the Board of Directors is five (five) years, without limitation of re-election.
Upon termination of the term of office of a member of the Board of Directors, regardless of the grounds
therefor, he/she shall continue to perform his/her functions and duties as a member of the Board of Directors
until the election of a new member by the General Meeting.
4.5. Powers of board members, and in particular, the power to issue or buy back shares
According to the Articles of Association of Gradus AD, the Company's Board of Directors decides
on all matters relating to the activities of the Company, with the exception of those which are of exclusive
competence of the General Meeting.
4
The Company is managed and represented by the Board of Directors in accordance with the law
and the Company’s Articles of Association. The Board of Directors of the Company takes decisions on the
following:
✓ organizes the implementation of the decisions taken at the General Meeting and controls this
implementation;
✓ elects the Executive Director / representative(s), defines the limits of his / her / their competence
and controls his / her / their activity;
✓ decides on long-term cooperation essential to the Company or terminates such cooperation;
✓ takes decisions on the establishing and / or closing a branch;
✓ takes decisions to increase the Company's capital, in cases where it is expressly authorized to do so
by the General Meeting;
✓ approves disposition (including, but not limited to, transfer, encumbrance, burden, etc.) to the
Company's business or parts thereof;
✓ approves the conclusion of transactions with shareholders, members of the Board of Directors or
employees of the Company (or members of their families);
✓ approves borrowing or otherwise forming a Company's financial debt to a third party at a value
above BGN 50,000 as a result of a single transaction or a series of transactions;
✓ decides on the participation and / or termination of the Company's participation in other companies
in the Republic of Bulgaria and abroad;
✓ decides to exercise rights as a shareholder / partner in subsidiaries;
✓ decides to grant a loan or other form of financing the companies in which the Company owns and
/ or exercises control;
✓ decides to dispose of intellectual property of the Company as well as to grant intellectual property
rights on assets of the Company;
✓ prepares, accepts and signs a prospectus for public offering of securities issued by the Company;
✓ elects and releases investment intermediaries to take and/or administer a securities issue issued by
the Company, which will be subject to public offering;
✓ approves the conclusion of transactions other than those specified in Art.114, para.1 of the Public
Offering of Securities Act (POSA) with the participation of interested persons within the meaning
of Art.114, para.7 of POSA;
✓ approves the conclusion of transactions under Art.114, para.3 of the POSA by the subsidiaries of
the Company,
✓ resolves on all matters that are not within the exclusive competence of a General Meeting.
5
5. Composition and functioning of the administrative, managerial and supervisory bodies and
their committees
Members of the Board of Directors at the date of preparation of this report are:
• Angel Ivanov Angelov – Chairman of the Board of Directors
• Georgi Aleksandrov Babev - Member of the Board of Directors and Executive Director
• Bistra Stoyanova Kotseva – Member of the Board of Directors
The company is represented by the Chairman of the Board of Directors, Angel Angelov, and by
Georgi Babev, Member of the Board of Directors and Executive Director, jointly.
The company has a one-tier management system.
Management bodies of Gradus AD:
• General Meeting of Shareholders
• Board of Directors
General Meeting, Participation in a General Meeting
• The General Meeting comprises all shareholders with voting rights.
• The shareholders with voting rights are able to exercise their vote at a General Meeting of
the parent company by a proxy;
• The members of the Board of Directors who are not shareholders participate in the General
Meetings without a right to vote.
Competence of the General Meeting:
• Amends and supplements the Articles of Association of the Company;
• Increases and decreases the capital of the Company;
• Transforms and terminates the Company;
• Elects and dismisses the members of the Board of Directors;
• Determines the remuneration of the members of the Board of Directors, to whom corporate
governance functions will not be entrusted, including their right to receive a portion of the
Company’s profit, as well as the right to acquire shares and bonds of the Company;
• Appoints and dismisses registered auditors, when the audit is mandatory in the cases
provided for in a law or when a decision has been taken that an independent financial audit
shall be carried out;
• Approves the annual financial statements after they have been certified by the appointed
registered auditor in the cases where an independent financial audit has been carried out;
takes a decision for profit distribution, for making contributions to the Reserve Fund and
for payment of dividends;
• Resolves on the issuance of bonds;
• Appoints liquidators in the event of termination of the Company, except for the case of
termination by bankruptcy;
• Releases from liability the members of the Board of Directors;
6
• Resolves on redemption of treasury shares of the Company;
• Elects an Audit Committee; determines the number and mandate of its members and
approves its Rules of Procedure in compliance with the provisions of the Independent
Financial Audit Act;
• Empowers the persons managing and representing the Company to conclude deals under
Article 114, paragraph 1 of POSA;
• Resolves on all other matters within its competence according to the law and/or the Articles
of Association.
Board of Directors:
• The Board of Directors manages and represents the company;
• The Board of Directors exercises its powers in compliance with the decisions of the
General Meeting, these Articles of Association and the applicable law.
Competence of the Board of Directors:
• Organises the implementation of the decisions taken at the General Meeting and control
this implementation;
• Elects the Executive Director(s)/representative(s), determines the limits of his/their
competence and controls his/their activity;
• Takes decisions on long-term cooperation essential to the Company on the termination of
such cooperation;
• Takes decisions on the establishment and/or closure of a branch;
• Takes decisions to increase the capital of the Company, in cases where it is expressly
authorized to do so by a General Meeting;
• Approves the disposal (including, but not limited to, transfer, closure, burdening, etc.) of
the Company's business or parts thereof;
• Approves the conclusion of transactions with Shareholders, members of the Board of
Directors or employees of the Company (or members of their families);
• Approves the taking of a loan or otherwise forming a Company's financial debt to a third
party at a value exceeding BGN 50,000 as a result of a single transaction or a series of transactions;
• Takes decisions on the participation and/or termination of the Company's participation in
other companies in the Republic of Bulgaria and abroad;
• Takes decisions on the exercise of rights of the Company as a shareholder/partner in
subsidiaries;
• Takes decisions on granting a loan or other form of financing to companies in which the
Company has equity participation and /or on which it exercises controls;
• Takes decisions on disposal of Intellectual Property Rights of the Company, as well as on
granting rights to objects of Intellectual Property of Company;
• Prepares, accepts and signs a prospectus for public offering of securities issued by the
Company;
• Selects and releases investment intermediaries which to take over and/or administer the
issue of securities issued by the Company, which will be subject to public offering;
7
• After obtaining a public status from the Company, it shall approve the conclusion of
transactions other than those specified in Art.114, para.1 of the Public Offering of Securities Act with the
participation of interested persons within the meaning of Art.114, para.7 of POSA,
• After obtaining a public status from the Company, it shall approve the conclusion of
transactions under Art.114, para.3 of POSA by the subsidiaries of the Company;
• Resolves all matters which are not within the exclusive competence of the General
Meeting.
Remuneration
The amount and structure of remuneration of the members of the Board of Directors are regulated
by the Articles of Association of Gradus AD, approved by the General Meeting of the company, their
management contracts, and the Remuneration Policy of the Board of Directors, adopted by the GMS of the
company on 10 June 2019.
Conflict of interest
The company has implemented a related party transactions policy, approved by minutes of the
Board of Directors dated 01 August 2018.
Supervisory bodies
The company has a one-tier management system and an Audit Committee has been established in
accordance with Article 107of the Independent Financial Audit Act.
The Audit Committee consists of 3 (three) members elected by the Board of Directors for a 4 (four)-
year mandate. Two of the members of the Audit Committee, including its Chairperson, should be
independent.
As of the date of preparation of this report, members of the Audit Committee are:
• Hristina Atanasova Filipova – Chairman of the Audit Committee;
• Ivaylo Nikolaev Nikolov – Member of the Audit Committee;
• Radka Dimcheva Peneva – Member of the Audit Committee.
The Chairman of the Audit Committee complied with the requirements to be an independent member of
the Audit Committee, as stipulated in Article 107, paragraph 4, item 1 of the Independent Financial Audit
Act.
The Audit Committee of Gradus AD is a specialised body entrusted with the following
powers:
• Informs the Board of Directors of the results of the statutory audit and clarifies how the
statutory audit has contributed to the credibility of financial reporting, and the role of the Audit Committee
in this process;
8
• monitors the financial reporting and audit processes, internal control and risk management
of the company, and provides recommendations and proposals to ensure their efficiency;
• monitors the statutory audit of the company's annual financial statements;
• inspects and monitors the independence of the registered auditors of the Company;
• is responsible for the registered auditor selection procedure and recommends the
appointment of a registered auditor;
• perform other functions provided for by law.
6. Description of the diversity policy applied as regards the administrative, managerial and
supervisory bodies of the issuer in connection with aspects such as age, gender or education and
professional experience, the objectives of such diversity policy, its method of application and the
results therefrom during the reporting period; when no such policy is applied, the declaration shall
contain an explanation regarding the reasons for that:
Gradus AD makes every effort to ensure equal opportunities for recruitment and respect in form
and substance of the whole range of laws relating to fair practices in the working environment and the
prevention of discrimination.
Discrimination and harassment, whether based on race, gender, feeling or expression of sex, colour
of the skin, belief, religion, national origin, nationality, citizenship, age, disability, family status (including
partnerships without marriage and civil alliances, defined and recognised by the current legislation), sexual
orientation, culture, pedigree, veteran status, socio-economic situation or other law-protected personal
characteristics are unacceptable and totally incompatible with the traditions of the Company, for ensuring
a reputable, professional and decent job. Repressive measures to persons raising complaints about
discrimination or harassment are also prohibited.
The main goals of the Company in implementing diversity policies include:
• attracting, hiring and retaining at work of people possessing a wide range of talents. The diverse
abilities and talent of managers and employees open up new opportunities for innovative and creative
solutions, increase creativity and innovation. This in turn would also lead to a more effective adaptation to
the impact of globalisation and technological change. A more diverse workforce can improve the ability of
the Company to achieve its objectives. This approach can raise the spirit of employees, give access to new
market segments and increase productivity;
• promoting a working atmosphere that respects ethical diversity and in which differences between
people are valued and respected;
• solving one of the most important problems for the employer – that of labour shortages, as well as
problems relating to the recruitment and retention of highly skilled workers;
• improving the reputation and overall representation of the company vis-à-vis external stakeholders
and society;
9
• creating opportunities for disadvantaged groups and building the unity of society.
Gradus AD aims to achieve the goals set by promoting and implementing in practice the types of
diversity that are of importance to the Company. By adopting good practices applied by other companies
and institutions, the Company's management aims at making diversity management a functioning part of
the Company. Gradus AD devotes its efforts to inform its employees, consumers, customers and investors
of the importance of diversity for them and their work, aiming to build trust willingness to render support.
22 March 2024
Executive Director
Georgi Babev
Chairman of Board of Directors:
Angel Angelov