Separate Financial Statements
Annual Separate Management Report
Corporate Governance Declaration
Independent Auditor’s Report
“Sirma Group Holding” JSC
31 December 2021
Contents
Separate statement of financial position 1
Separate statement of financial position (continued) 2
Separate statement of profit or loss and other comprehensive income for the year ended 31
December 3
Separate statement of changes in equity for the year ended 31 December 4
Separate statement of changes in equity for the year ended 31 December (continued) 5
Separate Statement of cash flows for the year ended 31 December 6
Notes to the financial statements 7
1. General information about “Sirma Group Holding” JSC 7
1.1. Distribution of share capital 8
1.2. Management authorities 10
2. Basis for the preparation of the separate financial statements 12
3. Changes in accounting policies 14
3.1. New Standards adopted as at 1 January 2021 14
3.2. Standards, amendments and interpretations to existing standards that are not yet effective
and have not been adopted early by the Company 14
4. Significant accounting policies 15
4.1. Overall considerations 15
4.2. Presentation of separate financial statements 15
4.3. Investments in subsidiaries 15
4.4. Investments in associates 15
4.5. Foreign currency translation 16
4.6. Segment reporting 16
4.7. Revenue 16
4.7.1. Revenue recognised over time 17
4.7.2. Revenue recognised at a point of time 17
4.7.3. Revenue from investment property rental 17
4.7.4. Interest and dividend income 17
4.7.5. Revenue from financing 17
4.8. Contract assets and liabilities 17
4.9. Operating expenses 18
4.10. Interest expenses and borrowing costs 18
4.11. Intangible assets 18
4.12. Property, plant and equipment 19
4.13. Leases 20
4.14. Impairment testing of intangible assets and property, plant and equipment 21
4.15. Investment property 22
4.16. Financial instruments 22
4.16.1. Recognition and derecognition 22
4.16.2. Classification and initial measurement of financial assets 22
4.16.3. Subsequent measurement of financial assets 23
4.16.4. Impairment of financial assets 24
4.16.5. Classification and measurement of financial liabilities 24
4.17. Income taxes 25
4.18. Cash and cash equivalents 25
4.19. Equity, reserves and dividend payments 26
4.20. Post-employment benefits and short-term employee benefits 26
4.21. Provisions, contingent liabilities and contingent assets 26
4.22. Significant management judgement in applying accounting policies 27
4.22.1. Internally generated intangible assets and research costs 27
4.22.2. Deferred tax assets 27
4.23. Estimation uncertainty 27
4.23.1. Impairment of non-financial assets 28
4.23.2. Useful lives of depreciable assets 28
4.23.3. Measurement of expected credit losses 28
4.23.4. Defined benefit liability 28
4.23.5. Uncertain tax position and tax-related contingency 28
5. Property, plant and equipment 29
6. Intangible assets 30
7. Investments in subsidiaries 31
8. Investments in associates 31
9. Investment property 32
10. Deferred tax assets and liabilities 33
11. Non-current receivables 34
12. Trade receivables 34
13. Prepayments and other assets 34
14. Cash and cash equivalents 35
15. Equity 35
15.1. Share capital 35
15.2. Share premium reserve 36
15.3. Other reserves 36
16. Employee remuneration 36
16.1. Employee benefits expense 36
16.2. Pension and other employee obligations 37
17. Borrowings 39
17.1. Borrowings at amortized cost 40
18. Lease liabilities 41
19. Trade and other payables 41
20. Revenues from sales 42
20.1. Revenues recognized over time 42
20.2. Rental revenues 43
The company has realized rental income in relation to leased investment properties as follows: 43
21. Other income 43
22. Capitalized own expenses 43
23. Cost of materials 43
24. Hired services expenses 44
25. Other expenses 44
26. Finance costs and finance income 44
27. Income tax expense 45
28. Earnings per share and dividends 45
28.1. Earnings per share 45
28.2. Dividends 45
29. Related party transactions 46
29.1. Transactions with subsidiaries 46
29.2. Transactions with associates 46
29.3. Transactions with other related parties 46
29.4. Transactions with key management personnel 47
30. Related party balances at year-end 47
31. Reconciliation of liabilities arising from financing activities 49
32. Non-cash transactions 49
33. Contingent assets and contingent liabilities 50
34. Categories of financial assets and liabilities 51
35. Financial instrument risk 51
35.1. Market risk analysis 52
35.1.1. Foreign currency risk 52
35.1.2. Interest rate risk 53
35.2. Credit risk 53
35.3. Liquidity risk 54
36. Capital management policies and procedures 55
37. Post-reporting date events 55
38. Authorization of the separate financial statements 56
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
The accompanying notes on pages from 7 to 56 form an integral part of the Separate financial statements.
1
Separate statement of financial position
Asset
Note
31 December
31 December
2021
2020
BGN‘000
BGN‘000
Non-current assets
Property, plant and equipment
5
607
644
Intangible assets
6
9 664
9 653
Investments in subsidiaries
7
78 141
67 904
Investment property
9
9 601
7 171
Non-current receivables from related parties
30
3 807
3 807
Non-current receivables
11
426
-
Deferred tax assets
10
-
56
Total non-current assets
102 246
89 235
Current assets
Current trade receivables
12
60
48
Prepayments and other assets
13
170
718
Related party receivables
30
2 293
2 500
Income tax receivables
17
-
Cash and cash equivalents
14
1 775
1 288
Total current assets
4 315
4 554
Total Assets
106 561
93 789
Prepared by: ____________________
/Margarita Boldireva/
Chief accountant: ____________________
/Nikolay Yatzino/
Date: 25.03.2022
Auditor’s report
Mariy Apostolov, Managing Partner
Gergana Mihaylova, registered auditor responsible for the audit
Grant Thornton OOD, Audit firm № 032
Margarita
Petrova
Boldireva
Digitally signed by
Margarita Petrova
Boldireva
Date: 2022.03.25
16:15:13 +02'00'
Nikolay
Mladenov
Yatsino
Digitally signed by
Nikolay Mladenov
Yatsino
Date: 2022.03.25
16:29:53 +02'00'
Tsvetan
Borisov
Alexiev
Digitally signed
by Tsvetan
Borisov Alexiev
Date: 2022.03.25
16:47:41 +02'00'
Gergana PETROVA
MIHAYLOVA-
GEORGIEVA
Digitally signed by
Gergana PETROVA
MIHAYLOVA-GEORGIEVA
Date: 2022.03.29 19:15:51
+03'00'
MARIY GEORGIEV
APOSTOLOV
Digitally signed by MARIY
GEORGIEV APOSTOLOV
Date: 2022.03.29 20:07:14
+03'00'
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
The accompanying notes on pages from 7 to 56 form an integral part of the Separate financial statements.
2
Separate statement of financial position (continued)
Equity and liabilities
Note
31 December
31 December
2021
2020
BGN‘000
BGN‘000
Equity
Share capital
15.1
59 361
59 361
Purchased own shares
(585)
(585)
Share premium reserve
15.2
5 497
5 497
Other reserves
15.3
1 141
1 042
Retained earnings
8 028
7 130
Profit for the year
1 034
995
Total equity
74 476
73 440
Liabilities
Non-current liabilities
Pension obligations
16.2
22
38
Long-term borrowings
9 038
6 285
Long-term lease liabilities
17
102
122
Long-term related party payables
6 179
6 179
Deferred tax liabilities
18
28
-
Total Non-current liabilities
15 369
12 624
30
Current liabilities
10
Employee obligations
356
165
Short-term borrowings
6 830
4 281
Short-term lease liabilities
20
19
Trade and other payables
16.2
173
443
Short-term related party payables
9 337
2 811
Income tax liabilities
-
6
Total current liabilities
16 716
7 725
Total liabilities
32 085
20 349
Total equity and liabilities
106 561
93 789
Prepared by: ____________________
/Margarita Boldireva/
Executive Director: ___________
/Tsvetan Alexiev/
Chief accountant: ____________________
/Nikolay Yatzino/
Date: 25.03.2022
Auditor’s report
Mariy Apostolov, Managing Partner
Gergana Mihaylova, registered auditor responsible for the audit № 032
Grant Thornton OOD, Audit firm
Margarita
Petrova
Boldireva
Digitally signed by
Margarita Petrova
Boldireva
Date: 2022.03.25
16:15:47 +02'00'
Nikolay
Mladenov
Yatsino
Digitally signed by
Nikolay Mladenov
Yatsino
Date: 2022.03.25
16:30:47 +02'00'
Tsvetan
Borisov
Alexiev
Digitally signed
by Tsvetan
Borisov Alexiev
Date:
2022.03.25
16:48:23 +02'00'
Gergana PETROVA
MIHAYLOVA-
GEORGIEVA
Digitally signed by Gergana
PETROVA MIHAYLOVA-
GEORGIEVA
Date: 2022.03.29 19:16:52
+03'00'
MARIY GEORGIEV
APOSTOLOV
Digitally signed by MARIY
GEORGIEV APOSTOLOV
Date: 2022.03.29 20:08:03
+03'00'
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
The accompanying notes on pages from 7 to 56 form an integral part of the Separate financial statements.
3
Separate statement of profit or loss and other comprehensive
income for the year ended 31 December
Note
2021
2020
BGN‘000
BGN‘000
Revenues from sales
20
3 807
4 201
Interest income
41
158
Dividend income
21
240
146
Gain from sale of investments
7
-
Gain on sale of non-current assets
21
5
-
Revenues from financing
-
27
Other revenues
21
531
2
21
Cost of materials
21
(72)
(66)
Hired services expenses
21
(1 306)
(774)
Employee benefits expense
(1 462)
(1 215)
Depreciation and amortisation of non-financial assets
23
(567)
(753)
Capitalized own expenses
24
333
99
Other expenses
16.1
(122)
(443)
Operating profit
1 435
1 382
5, 6, 9
Finance costs
(362)
(339)
Finance income
22
50
44
Profit before tax
1 123
1 087
Income tax expense
25
(89)
(92)
Profit for the year
1 034
995
Other comprehensive income:
Items that will not be reclassified subsequently to profit or
loss:
26
Remeasurement of defined benefit liability
2
-
Total comprehensive income for the year
1 036
995
BGN
Earnings per share
28.1
0,0176
0,0169
Prepared by: ____________________
/Margarita Boldireva/
Executive Director: ___________
/Tsvetan Alexiev/
Chief accountant: ____________________
/Nikolay Yatzino/
Date: 25.03.2022
Auditor’s report
Mariy Apostolov, Managing Partner
Gergana Mihaylova, registered auditor responsible for the audit
Grant Thornton OOD, Audit firm № 032
Margarita
Petrova
Boldireva
Digitally signed by
Margarita Petrova
Boldireva
Date: 2022.03.25
16:16:09 +02'00'
Nikolay
Mladenov
Yatsino
Digitally signed by
Nikolay Mladenov
Yatsino
Date: 2022.03.25
16:31:21 +02'00'
Tsvetan
Borisov
Alexiev
Digitally signed
by Tsvetan
Borisov Alexiev
Date: 2022.03.25
16:48:55 +02'00'
Gergana PETROVA
MIHAYLOVA-
GEORGIEVA
Digitally signed by Gergana PETROVA
MIHAYLOVA-GEORGIEVA
Date: 2022.03.29 19:17:41 +03'00'
MARIY GEORGIEV
APOSTOLOV
Digitally signed by MARIY
GEORGIEV APOSTOLOV
Date: 2022.03.29 20:08:43
+03'00'
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
The accompanying notes on pages from 7 to 56 form an integral part of the Separate financial statements.
4
Separate statement of changes in equity for the year ended 31 December
All amounts are presented in BGN ‘000
Share
capital
Purchased
own shares
Share
premium
Other
reserves
Retained earnings
Profit for the
year
Total equity
Balance at 1 January 2021
59 361
(585)
5 497
1 042
7 130
995
73 440
Profit for the year
-
-
-
-
-
1 034
1 034
Other comprehensive income
-
-
-
-
2
-
2
Total comprehensive income for the year
-
-
-
-
2
1 034
1 036
Transfer of retained earnings to reserves
-
-
-
99
896
(995)
-
Balance at 31 December 2021
59 361
(585)
5 497
1 141
8 028
1 034
74 476
Prepared by: ____________________
/Margarita Boldireva/
Executive Director: ___________
/Tsvetan Alexiev/
Chief accountant: ____________________
/Nikolay Yatzino/
Date: 25.03.2022
Auditor’s report
Mariy Apostolov, Managing Partner
Gergana Mihaylova, registered auditor responsible for the audit
Grant Thornton OOD, Audit firm № 032
Margarita
Petrova
Boldireva
Digitally signed by
Margarita Petrova
Boldireva
Date: 2022.03.25
16:16:33 +02'00'
Nikolay
Mladenov
Yatsino
Digitally signed by
Nikolay Mladenov
Yatsino
Date: 2022.03.25
16:31:45 +02'00'
Tsvetan
Borisov
Alexiev
Digitally signed
by Tsvetan
Borisov Alexiev
Date: 2022.03.25
16:49:27 +02'00'
Gergana PETROVA
MIHAYLOVA-
GEORGIEVA
Digitally signed by Gergana
PETROVA MIHAYLOVA-
GEORGIEVA
Date: 2022.03.29 19:18:22
+03'00'
MARIY
GEORGIEV
APOSTOLOV
Digitally signed by MARIY
GEORGIEV APOSTOLOV
Date: 2022.03.29 20:09:24
+03'00'
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
The accompanying notes on pages from 7 to 56 form an integral part of the Separate financial statements.
5
Separate statement of changes in equity for the year ended 31 December (continued)
All amounts are presented in BGN ‘000
Share
capital
Purchased
own shares
Share
premium
Other
reserves
Retained earnings
Profit for the
year
Total equity
Balance at 1 January 2020
59 361
(475)
5 462
852
5 429
1 898
72 527
Repurchase of own shares
-
(110)
35
-
-
-
(75)
Transactions with owners
-
(110)
35
-
-
-
(75)
Profit for the year
-
-
-
-
-
995
995
Total comprehensive income for the year
-
-
-
-
-
995
995
Transfer of retained earnings to reserves
-
-
-
190
1 708
(1 898)
-
Other changes in equity
-
-
-
-
(7)
-
(7)
Balance at 31 December 2020
59 361
(585)
5 497
1 042
7 130
995
73 440
Prepared by: ____________________
/Margarita Boldireva/
Executive Director: ___________
/Tsvetan Alexiev/
Chief accountant: ____________________
/Nikolay Yatzino/
Date: 25.03.2022
Auditor’s report
Mariy Apostolov, Managing Partner
Gergana Mihaylova, registered auditor responsible for the audit
Grant Thornton OOD, Audit firm № 032
Margarita
Petrova
Boldireva
Digitally signed by
Margarita Petrova
Boldireva
Date: 2022.03.25 16:17:05
+02'00'
Nikolay
Mladenov
Yatsino
Digitally signed by
Nikolay Mladenov
Yatsino
Date: 2022.03.25
16:32:05 +02'00'
Tsvetan
Borisov
Alexiev
Digitally signed
by Tsvetan
Borisov Alexiev
Date: 2022.03.25
16:50:01 +02'00'
Gergana PETROVA
MIHAYLOVA-
GEORGIEVA
Digitally signed by Gergana
PETROVA MIHAYLOVA-
GEORGIEVA
Date: 2022.03.29 19:19:20
+03'00'
MARIY
GEORGIEV
APOSTOLOV
Digitally signed by MARIY
GEORGIEV APOSTOLOV
Date: 2022.03.29 20:10:12
+03'00'
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
The accompanying notes on pages from 7 to 59 form an integral part of the Separate financial statements.
6
Separate Statement of cash flows for the year ended 31
December
Note
2021
2020
BGN‘000
BGN‘000
Operating activities
Cash receipts from customers
4 791
2 622
Cash paid to suppliers
(2 284)
(1 897)
Cash paid to employees and social security institutions
(1 253)
(1 268)
Other receipts / (payments), net
(28)
(287)
Income taxes paid
(133)
(132)
Net cash flow from operating activities
1 093
(962)
Investing activities
Purchase of property, plant and equipment
(2 643)
(178)
Proceeds from sale of property, plant and equipment
5
-
Purchase of intangible assets
(307)
(65)
Loans granted
(232)
(235)
Loan repayments received
746
19
Cash flows related to the purchase of investments
(5 093)
-
Dividends received
270
-
Net cash flow from investing activities
(7 247)
(459)
Financing activities
Proceeds from borrowings
31
7 481
47
Repayments of borrowings
31
(2 186)
(2 095)
Interest paid
31
(131)
(187)
Payment of principal element of lease liabilities
31
(19)
(29)
Interest paid on payment of principal element of lease liabilities
31
(5)
(1)
Proceeds from deposits received
31
2 300
5 294
Payments on deposits received
31
(799)
(1 160)
Cash flows related to the purchase and sale of investments / shares
31
-
(75)
Net cash flow from financing activities
6 641
1 794
Net change in cash and cash equivalents
487
373
Cash and cash equivalents, beginning of year
1 288
917
Exchange (losses) on cash and cash equivalents
-
(2)
Cash and cash equivalents for continuing operations
1 775
1 288
Prepared by: ____________________
/Margarita Boldireva/
Executive Director: ___________
/Tsvetan Alexiev/
Chief accountant: ____________________
/Nikolay Yatzino/
Date: 25.03.2022
Auditor’s report
Mariy Apostolov, Managing Partner
Gergana Mihaylova, registered auditor responsible for the audit
Grant Thornton OOD, Audit firm № 032
Margarita
Petrova
Boldireva
Digitally signed by
Margarita Petrova
Boldireva
Date: 2022.03.25 16:17:36
+02'00'
Nikolay
Mladenov
Yatsino
Digitally signed by Nikolay
Mladenov Yatsino
Date: 2022.03.25 16:32:27
+02'00'
Tsvetan
Borisov
Alexiev
Digitally signed
by Tsvetan
Borisov Alexiev
Date:
2022.03.25
16:50:40 +02'00'
Gergana PETROVA
MIHAYLOVA-
GEORGIEVA
Digitally signed by Gergana
PETROVA MIHAYLOVA-
GEORGIEVA
Date: 2022.03.29 19:20:07 +03'00'
MARIY
GEORGIEV
APOSTOLOV
Digitally signed by MARIY
GEORGIEV APOSTOLOV
Date: 2022.03.29 20:10:59
+03'00'
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
www.sirma.bg
7
Notes to the financial statements
1. General information about “Sirma Group Holding” JSC
“Sirma Group Holding” JSC is a holding company registered on 25.04.2008 in the Commercial
Register under UIC 200101236.
Principal place of business and registered office: BULGARIA, Sofia (capital), Sofia municipality, city.
Sofia, 1784, Mladost area, bul. Tsarigradsko Shosse, No 135.
The company’s principal activities include
Acquisition, management, evaluation and sale of interest in Bulgaria and foreign entities; acquisition,
evaluation and sale of patents, granting of licenses to use patents of the entities in which the company
holds interests, financing the entities in which the company holds shares, organizing their accounting
and compiling financial statements under the Law of Accounting. The Company may perform
independent business activity that in not prohibited by law.
The share capital of the company amounts to BGN 59 360 518, divided into 59 360 518 dematerialized
shares with nominal value of BGN 1.
The capital of the Company has changed as follows:
Date
Amount of capital
30.10.2015
BGN 59 360 518
23.10.2014
BGN 49 837 156
22.10.2010
BGN 73 340 818
15.10.2008
BGN 77 252 478
25.04.2008
BGN 50 000
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
www.sirma.bg
8
The company's capital is fully paid.
the non-monetary contributions in the company’s capital are presented below:
• Software representing 29 (twenty nine) software modules
Amount: 61 555 838 BGN
• 81 960 ordinary registered shares of "Sirma Group" JSC registered in the Commercial
Register under UIC 040529004.
Amount: 11 734 980 BGN
• Real Estate - Floor 3 of an office building "IT - Center Office Express" in Sofia, bul. "Tsarigradsko
Shosse" N 135 with an area of 796,50 square meters, pursuant to Deed of buying and selling
real estate N 126, Volume I, reg. N 4551, case N 116 from 23.04.2003 and 5 floor of an office
building "IT - center office Express" in Sofiabul. "Tsarigradsko Shosse" N 135 with area of
281.81 square meters, according to Deed of sale of real estate N 86, Volume 4, Reg. N 10237,
Case N 592 of 23.12.2004
Amount: 3 911 660 BGN
1.1. Distribution of share capital
As of 31.12.2021 the distribution of the share capital of Sirma Group Holding is as follows:
31.12.2021
31.12.2020
Share capital (in thousands)
59 361
59 361
Number of shares (par value of 1.00 lev)
59 360 518
59 360 518
Total number of registered shareholders
1 026
1 041
Legal entities
45
47
Individuals
981
994
Number of shares held by legal entities
8 517 822
8 528 409
% Of participation of entities
14,35%
14,37%
Number of shares held by individuals
50 842 696
50 832 109
% Participation of individuals
85,65%
85,63%
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
www.sirma.bg
9
Share capital allocation, including deduction of repurchased own shares is as follows:
Shareholders
Number of
shares at
31.12.2021
Number of
shares at
31.12.2020
Nominal
VALUE
(BGN)
Value
(BGN)
%
Sharehol
ding
% shareholding
with deducted
repurchased
own shares
Georgi Parvanov Marinov
5 269 748
5 269 748
1
5 269 748
8,88%
8,97%
Tsvetan Borisov Alexiev
4 965 753
4 865 753
1
4 965 753
8,37%
8,45%
Chavdar Velizarov Dimitrov
4 750 786
4 750 786
1
4 750 786
8,00%
8,08%
Veselin Antchev Kirov
4 700 786
4 700 786
1
4 700 786
7,92%
8,00%
Ivo Petrov Petrov
4 500 000
4 400 000
1
4 500 000
7,58%
7,66%
Ognyan Plamenov Chernokozhev
3 741 620
3 741 620
1
3 741 620
6,30%
6,37%
Atanas Kostadinov Kiryakov
2 887 524
2 887 524
1
2 887 524
4,86%
4,91%
Krasimir Nevelinov Bozhkov
2 534 161
2 534 161
1
2 534 161
4,27%
4,31%
Vladimir Ivanov Alexiev
2 177 583
2 177 583
1
2 177 583
3,67%
3,70%
Rosen Vasilev Varbanov
2 156 687
2 156 687
1
2 156 687
3,63%
3,67%
Emiliana Ilieva Ilieva
1 925 820
1 925 820
1
1 925 820
3,24%
3,28%
“Sirma Solutions”
1 437 786
-
1
1 437 786
2,42%
2,45%
Yavor Liudmilov Djonev
1 392 746
1 392 746
1
1 392 746
2,35%
2,37%
UPF "Doverie" JSC
976 678
1 047 678
1
976 678
1,65%
1,66%
Peter Nikolaev Konyarov
870 665
870 665
1
870 665
1,47%
1,48%
"Mandjukov" Ltd.
860 000
860 000
1
860 000
1,45%
1,46%
UPF "DSK Rodina"
747 036
747 036
1
747 036
1,26%
1,27%
UPF “Pension Insurance Institute”
715 810
715 810
1
715 810
1,21%
1,22%
“First Financial Brokerage House”
677 368
437 422
1
677 368
1,14%
1,15%
Others
12 071 961
13 878 693
1
12 071 961
20,33%
19,54%
Total
59 360 518
59 360 518
59 360 518
100%
100%
As of 31.12.2021 „Sirma Group Holding“ JSC holds 584 474 repurchased own shares at the total amount
of BGN 584 474 (0,98 % of share capital). The Company has not acquired own shares during the period.
Shareholders holding more than 5% of the company's capital are:
Shareholders
Number of shares at
31.12.2021
% Shareholding
% shareholding with
deducted repurchased
own shares
Georgi Parvanov Marinov
5 269 748
8,88%
8,97%
Tsvetan Borisov Alexiev
4 965 753
8,37%
8,45%
Chavdar Velizarov Dimitrov
4 750 786
8,00%
8,08%
Veselin Antchev Kirov
4 700 786
7,92%
8,00%
Ivo Petrov Petrov
4 500 000
7,58%
7,66%
Ognyan Plamenov Chernokozhev
3 741 620
6,30%
6,37%
Shareholders
Number of shares at
31.12.2020
% Shareholding
% shareholding with
deducted repurchased
own shares
Georgi Parvanov Marinov
5 269 748
8,88%
8,97%
Tsvetan Borisov Alexiev
4 865 753
8,20%
8,28%
Chavdar Velizarov Dimitrov
4 750 786
8,00%
8,08%
Veselin Antchev Kirov
4 700 786
7,92%
8,00%
Ivo Petrov Petrov
4 400 000
7,41%
7,49%
Ognyan Plamenov Chernokozhev
3 741 620
6,30%
6,37%
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
www.sirma.bg
10
1.2. Management authorities
“Sirma Group Holding” JSC has a one-tier management system which comprises of a Board of Directors.
The Board of Directors as at 31.12.2021 includes the following members:
Chavdar Velizarov Dimitrov
Tsvetan Borisov Alexiev
Atanas Kostadinov Kiryakov
Georgi Parvanov Marinov
Petar Borisov Statev - independent member
Yordan Stoyanov Nedev - independent member
Method of determining the mandate of the Board of Directors: 2 years from the date of entry.
The current term of the Board of Directors is until 02.07.2023.
The company is represented by the executive director - Tsvetan Borisov Alexiev.
The following Committees are established within the Board of Directors:
- Investment and Risk Committee;
- Remuneration Committee – an internal authority not selected by the GMS;
- Information Disclosure Committee;
- Audit Committee.
The participation of members of the Board of Directors in the capital of the Company is as follows:
Shareholders
Number of
shares at
31.12.2021
Number of
shares at
31.12.2020
Nominal
value
(BGN)
Value
(BGN)
%
Shareholding
%
shareholding
with
deducted
repurchased
own shares
Georgi Parvanov Marinov
5 269 748
5 269 748
1
5 269 748
8,88%
8,97%
Tsvetan Borisov Alexiev
4 965 753
4 865 753
1
4 965 753
8,37%
8,45%
Chavdar Velizarov Dimitrov
4 750 786
4 750 786
1
4 750 786
8,00%
8,08%
Atanas Kostadinov Kiryakov
2 887 524
2 887 524
1
2 887 524
4,86%
4,91%
Petar Borisov Statev
10 100
10 100
1
10 100
0,02%
0,02%
Yordan Stoyanov Nedev
3 433
3 433
1
3 433
0,01%
0,01%
Total
17 887 344
17 787 344
17 887 344
30,14%
30,44%
During 2021 the member of the Board of Directors Tsvetan Borisov Alexiev acquired 100 000 additional
shares of the capital of the company.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
www.sirma.bg
11
Organizational structure of Sirma Group:
The structure of the Group includes “Sirma Group Holding” JSC as the parent company and the
companies listed below, as follows:
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
12
Subsidiaries of "Sirma Group Holding" JSC:
Company
Value of the
investment
at 31.12.2021
(in BGN’000)
Percentage
of capital at
31.12.2021
Percentage
of capital
with
adjusted
repurchased
own shares
at 31.12.2021
Value of the
investment
at 31.12.2020
(in BGN’000)
Percentage
of capital at
31.12.2020
Percentage
of capital
with
adjusted
repurchased
own shares
at 31.12.2020
Sirma Solutions
39 311
77,71%
82,43%
39 311
77,71%
82,43%
Ontotext
17 865
87,65%
90,44%
17 865
87,65%
90,44%
Sciant
10 237
80,00%
-
-
-
-
Sirma AI
7 035
100,00%
100,00%
7 035
100,00%
100,00%
Sirma Group Inc.
3 471
76,16%
76,29%
3 471
76,16%
76,29%
Sirma CI
106
80,00%
80,00%
106
80,00%
80,00%
Sirma Medical Systems
66
66,00%
66,00%
66
66,00%
66,00%
Engview Systems
50
72,90%
72,90%
50
72,90%
72,90%
Total
78 141
67 904
Associated companies of "Sirma Group Holding" JSC:
Value of
the
investment
at
31.12.2021
Percentage
of capital at
31.12.2021
Value of
the
investment
at
31.12.2020
Percentage
of capital at
31.12.2020
Company
BGN '000
BGN '000
E-Dom Management
-
-
-
35,00%
Total
-
-
On 18 January 2021 the company released its investment in the associate E-Dom Management Ltd. at
a nominal value of TBGN 7.
The number of employees as of 31.12.2021 is 26 people, including 20 employees under labour
contracts and 6 under management contracts.
2. Basis for the preparation of the separate financial statements
The financial statements of the Company have been prepared in accordance with International Financial
Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) and
approved by the European Union (IFRS, as adopted by the EU). The term “IFRS, as adopted by the
EU” has the meaning of paragraph 1, subparagraph 8 of the Additional provisions of Bulgarian
Accountancy Act, which is International Accounting Standards (IAS) adopted in accordance with
Regulation (EC) 1606/2002 of the European Parliament and of the Council.
The financial statements are presented in Bulgarian leva (BGN), which is also the functional currency
of the Company. All amounts are presented in thousand Bulgarian leva (BGN‘000) (including
comparative information for 2020) unless otherwise stated.
Management is responsible for the preparation and fair presentation of the information in these financial
statements.
These financial statements are separate financial statements. The Company also prepares
consolidated financial statements in accordance with International Financial Reporting Standards
(IFRS) developed and published by the International Accounting Standards Board (IASB) and approved
by EU. Investments in subsidiaries are accounted for and disclosed in accordance with IFRS 10
“Consolidated Financial Statements”.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
13
Emergency epidemic situation in Bulgaria to 31 March 2022
On 13 May 2020, the Council of Ministers declared an epidemic emergency situation, which was
extended periodically before its expiration. As of the date of preparation of these financial statements,
the emergency epidemic situation was extended by the government to 31 March 2022.
Effect of Covid-19 on the company's financial statements in 2021
Тhe information and communication technology (ICT) industry wasn’t severely affected by the Covid
crisis, and in 2021 the sector was recognized as the universal cure for many of the problems arising
from the pandemic. However, the quarantine measures needed to deal with the crisis hampered the
functioning of operational activities.
The crisis caused by the Covid pandemic did not lead to a significant change in the activity of “Sirma
Group Holding” JSC. It slowed down the sales growth processes and economic indicators of the
Company, which are expected to be overcome with the end of the pandemic.
In 2021, “Sirma Group Holding” JSC managed to generate more than one million BGN in profit. Rental
income levels remained the same, as the decrease in sales revenue stems mainly from a decrease in
the sale of licenses as a result of the global contraction of operating costs of the companies in the
various sectors of the economy affected by the Covid crisis that are users of this type of service.
Expected impact of Covid-19 on the company's operations in 2022
The forecasts for the expected development of the Information and Communication Technologies (ICT)
sector in 2022 and the following years are a function of the expected development of the health crisis,
as well as the effects of the ongoing hostilities in Ukraine and the ensuing economic crisis.
The development of the ICT market in 2020 and 2021 is experiencing the greatest volatility in its history.
The main reason for this is the Covid-19 pandemic and related restrictions. Despite encouraging news
of lifting restrictions in late 2021 and early 2022, the risks associated with Covid-19 for the growth of
the ICT industry remain. Sub-segments such as Business Services, IT Services and Periphery are
highly dependent on the development of the economy and enterprises. A corresponding return to Covid
restrictions would severely limit their development. At the other end of the spectrum is "Cloud
Infrastructure" and "Cloud Software", which will not only not be affected by the return of restrictions, but
are likely to achieve further growth. "Cloud services" and "Mobile phones" are relatively protected from
negative developments in the coming years. At the same time, IT services and infrastructure, which are
highly dependent on economic development, are respectively threatened by negative developments.
As of the date of approval of these separate financial statements, management continues to apply
measures leading to a productive and continuous work process, in strict compliance with the regulations
of the state authorities. The annual budget has been prepared taking into account the current situation
and analyzed in detail in order to minimize the consequences of the impact of the coronavirus and
military action in Ukraine to maintain stable financial indicators.
At present, the medical crisis is calming down and the introduction of new highly restrictive measures
for a long period of time is not expected, which will significantly suppress the financial indicators of the
Company. However, there are still a number of risks that could stop or slow down the development of
both the ICT industry and the global economy - geopolitical tensions, inflation, logistical difficulties,
rising interest rates, the "big exit" are just some of the looming risks.
In preparing its forecasts for the future development of the Company, management has made a number
of assessments and assumptions that are associated with a high degree of uncertainty arising from
factors and risks beyond the influence of management, such as the global health problem Covid-19,
the military conflict between Russia and Ukraine, rising inflation and others. Their development in a
direction different from that expected by the management may cause the need to reconsider some of
the assumptions and judgments made regarding the expected future development of the Company,
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
14
cash flows and results of operations. Despite the efforts of the management to identify the expected
direct and indirect effects of the manifestation of the mentioned factors and risks on the activity and
their respective addressing, their specificity complicates their reliable assessment and accordingly they
could cause significant adjustments to the carrying amount of assets and liabilities. in the separate
financial statements are determined when performing a number of judgments and assumptions by
management and reporting the most reliable information available at the date of estimates.
Application of the going concern principle
The separate financial statements have been prepared in accordance with the going concern principle
and taking into account the possible effects of the continuing impact of the Covid-19 pandemic,
geopolitical tensions and others set out above. An analysis of the excess of current liabilities over
current assets at the end of the year was made.
The management has performed an analysis and assessment of the ability of the company to continue
its activities as an operating enterprise based on the available information for the foreseeable future.
The assessment was performed on the basis of the actions taken by the management regarding the
maintenance of stable supply chains, efficient customer service, regular monitoring of liquidity and
negotiation of appropriate financing parameters.
The forecasts and budgets made for the future development of the company, taking into account the
possible changes in the activity, set out above, indicate that the company should continue its activity
normally and that the provided financing is sufficient. As a result of the review, the management expects
that the company has sufficient resources to continue its operational activities in the near future and
considers that the going concern principle has been used appropriately.
3. Changes in accounting policies
3.1. New Standards adopted as at 1 January 2021
The Company has adopted the new accounting pronouncements which have become effective this
year, and are as follows:
- IFRS 4 Insurance Contracts – deferral of IFRS 9 effective from 1 January 2021 adopted by the
EU
- IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform – Phase 2
effective from 1 January 2021 adopted by the EU
- IFRS 16 Leases: Covid-19- Related Rent Concessions beyond 30 June 2021 effective from 1
April 2021 adopted by the EU.
3.2. Standards, amendments and interpretations to existing standards that are not yet
effective and have not been adopted early by the Company
As of the date of approval of these financial statements, new standards, amendments and
interpretations to existing standards have been published, but have not entered into force or have not
been adopted by the EU for the financial year beginning on 1 January 2021 and have not been applied
from an earlier date by the company. Management expects all standards and amendments to be
adopted in the company's accounting policy in the first period beginning after the date of their entry into
force.
- Amendments IFRS 3 Business Combinations, IAS 16 Property, Plant and Equipment IAS 37
Provisions, Contingent Liabilities and Contingent Assets effective from 1 January 2022 adopted
by the EU
- Annual Improvements 2018-2020 effective from 1 January 2022 adopted by the EU
- IFRS 17 “Insurance Contracts” effective from 1 January 2023, adopted by the EU
- Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as
Current or Non-current effective from 1 January 2023 not yet adopted by the EU
- Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2:
Disclosure of Accounting policies effective from 1 January 2023 not yet adopted by the EU
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
15
- Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors:
Definition of Accounting Estimates effective from 1 January 2023 not yet adopted by the EU
- Amendments to IAS 12 Income Taxes: Deferred Tax related to Assets and Liabilities arising
from a Single Transaction effective from 1 January 2023 not yet adopted by the EU
- Amendments to IFRS 17 Insurance contracts: Initial Application of IFRS 17 and IFRS 9 –
Comparative Information effective from 1 January 2023 not yet adopted by the EU
Amendments to IFRS 14 “Regulatory deferral accounts” effective from 1 January 2016, not yet adopted
by the EU.
4. Significant accounting policies
4.1. Overall considerations
The significant accounting policies that have been used in the preparation of these separate financial
statements are summarized below.
The financial statements have been prepared using the measurement bases specified by IFRS for each
type of asset, liability, income and expense. The measurement bases are more fully described in the
accounting policies below.
It should be noted that accounting estimates and assumptions are used for the preparation of the
separate financial statements. Although these estimates are based on management's best knowledge
of current events and actions, actual results may ultimately differ from those estimates.
4.2. Presentation of separate financial statements
The separate financial statements are presented in accordance with IAS 1 “Presentation of Financial
Statements”.
The Company has elected to present the statement of profit or loss and other comprehensive income
as a single statement.
Two comparative periods are presented for the statement of financial position when the Company
applies an accounting policy retrospectively, makes a retrospective restatement of items in its financial
statements, or reclassifies items in the financial statements and this has a material impact on the
statement of financial position at the beginning of the preceding period.
The Company has agreed to present two comparative periods in all cases in order to ensure
consistency in presentation for each year.
4.3. Investments in subsidiaries
Subsidiaries are firms under the control of the Company. The Company controls an investee when it is
exposed, or has rights, to variable returns from its involvement with the investee and has the ability to
affect those returns through its power over the investee. In the financial statements of the Company
investment in subsidiaries is accounted at cost of the investment.
The Company recognises a dividend from a subsidiary in profit or loss in its separate financial
statements when its right to receive the dividend is established.
4.4. Investments in associates
Associates are those entities over which the Company is able to exert significant influence, but which
are neither subsidiaries nor interests in a joint venture. Investments in associates are initially recognised
and subsequently measured at cost or in accordance with IFRS 9 or using the equity method as
described in IAS 28.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
16
The Company recognises a dividend from a jointly controlled entity or associate in profit or loss in its
separate financial statements when its right to receive the dividend is established.
All subsequent changes to the Entity’s share of interest in the equity of the associate are recognised in
the carrying amount of the investment. Changes resulting from the profit or loss generated by the
associate are reported within “Profit/ (Loss) from equity accounted investments” in the consolidated
statement of profit or loss/ statement of profit or loss and other comprehensive income. These changes
include subsequent depreciation, amortization or impairment of the fair value adjustments of assets and
liabilities.
Changes resulting from other comprehensive income of the associate or items recognised directly in
the associate's equity are recognised in other comprehensive income or equity of the Entity, as
applicable. However, when the Entity’s share of losses in an associate equal or exceeds its interest in
the associate, including any unsecured receivables, the Entity does not recognise further losses, unless
it has incurred legal or constructive obligations or made payments on behalf of the associate. If the
associate subsequently reports profits, the investor resumes recognizing its share of those profits only
after its share of the profits exceeds the accumulated share of losses that has previously not been
recognised.
Unrealized gains and losses on transactions between the Entity and its associates and joint ventures
are eliminated to the extent of the Entity's interest in those entities. Where unrealized losses are
eliminated, the underlying asset is also tested for impairment losses from an Entity’s perspective.
Amounts reported in the financial statements of associates and jointly controlled entities have been
adjusted where necessary to ensure consistency with the accounting policies of the Entity.
Upon loss of significant influence over the associate, the Entity measures and recognises any retaining
investment at its fair value. Any difference between the carrying amount of the associate upon loss of
significant influence and the sum of the fair value of the retaining investment and proceeds from disposal
is recognised in profit or loss.
If the ownership interest in an associate is reduced but significant influence is retained, only a
proportionate share of the amounts previously recognised in other comprehensive income are
reclassified to profit or loss where appropriate.
4.5. Foreign currency translation
Foreign currency transactions are translated into the functional currency, using the exchange rates
prevailing at the dates of the transactions (spot exchange rate as published by the Bulgarian National
Bank). Foreign exchange gains and losses resulting from the settlement of such transactions and from
the re-measurement of monetary items at year-end exchange rates are recognised in profit or loss.
Non-monetary items measured at historical cost are translated using the exchange rates at the date of
the transaction (not retranslated). Non-monetary items measured at fair value are translated using the
exchange rates at the date when fair value was determined.
Bulgarian leva is pegged to the euro at an exchange rate of EUR 1 = BGN 1,95583.
4.6. Segment reporting
“Sirma Group Holding” JSC is a parent company that prepares consolidated financial statements and
segment information is disclosed only in the consolidated financial statements.
4.7. Revenue
The basic revenue generated by the Company is related revenue from sales of services, interest
income, revenue from participations, revenue from financing and other revenue.
To determine whether to recognise revenue, the Company follows a 5-step process:
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
17
1. Identifying the contract with a customer
2. Identifying the performance obligations
3. Determining the transaction price
4. Allocating the transaction price to the performance obligations
5. Recognising revenue when/as performance obligation(s) are satisfied.
Revenue is recognised either at a point in time or over time, when (or as) the Company satisfies
performance obligations by transferring the promised goods or services to its customers.
The Company recognises contract liabilities for consideration received in respect of unsatisfied
performance obligations and reports these amounts as other liabilities in the statement of financial
position. Similarly, if the Company satisfies a performance obligation before it receives the
consideration, the Company recognises either a contract asset or a receivable in its statement of
financial position, depending on whether something other than the passage of time is required before
the consideration is due.
4.7.1. Revenue recognised over time
• Rendering of services
The services provided by the Company include the following services: subscriptions, administrative,
accounting, consulting and other services. Service revenue is recognized when control over the benefits
of the services provided is transferred to the service user.
4.7.2. Revenue recognised at a point of time
Revenue is recognized when the Company has transferred control of the assets provided to the buyer.
Control is considered to be transferred to the buyer when the customer has accepted the assets without
objection.
4.7.3. Revenue from investment property rental
Rental revenue from operating leases is recognized as revenue on a straight-line basis over the term
of the lease, except where the management of the company determines that another systematic basis
more accurately reflects the time model, which utilizes the reaped benefit of the leased asset.
4.7.4. Interest and dividend income
Interest income is related to loan agreements and deposits granted under the business activity of the
holding company. It is reported on an accrual basis using the effective interest method.
Dividend income is recognised at the time the right to receive payment is established.
4.7.5. Revenue from financing
Initially financing is recognised as deferred income when there is significant certainty as to whether the
Company will receive financing and will fulfil any associated requirements. Financing received to cover
current expenditure is recognised in the period when the respective expenses were incurred. Financing
received to cover capital expenditure for non-current assets is recognised in line with the depreciation
charges accrued for the period.
4.8. Contract assets and liabilities
The Company recognises contract assets and/ or liabilities when one of the parties in the contract has
fulfilled its obligations depending on the relationship between the business of the company and the
payment by the client. The Company presents separately any unconditional right to remuneration as a
receivable. The receivable is the unconditional right of the company to receive remuneration.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
18
A contract liability is presented in the statement of financial position where a customer has paid an
amount of consideration prior to the entity performing by transferring the related good or service to the
customer.
The Company recognises contract assets when performance obligations are satisfied, and payment is
not due on behalf of the client. A contract asset is the right of a company to receive remuneration in
exchange for the goods or services that the company has transferred to a customer.
Subsequent the Company measures a contract asset in accordance with IFRS 9 Financial Instruments.
4.9. Operating expenses
Operating expenses are recognised in profit or loss upon utilization of the service or as incurred.
The Company recognises two types of contract costs related to the execution of contracts for the supply
of services/ goods/ with customer: incremental costs of obtaining a contract and costs to fulfil a contract.
Where costs are not eligible for deferral under IFRS 15, they are recognised as current expenses at the
time they arise, such as they are not expected to be recovered, or the deferral period is up to one year.
The following operating expenses are always recognised as current expenses at the time of their
occurrence:
- General and administrative costs (unless those costs that are chargeable to the customer);
- Costs of wasted materials;
- Costs that relate to satisfied performance obligation;
- Costs for which the company cannot distinguish whether the costs relate to unsatisfied
performance obligation or to satisfied performance obligation.
Expenditure for warranties is recognised and charged against the associated provision when the related
revenue is recognised.
4.10. Interest expenses and borrowing costs
Interest expenses are reported on an accrual basis using the effective interest method.
Borrowing costs primarily comprise interest on the Company's borrowings. Borrowing costs directly
attributable to the acquisition, construction or production of a qualifying asset are capitalized during the
period of time that is necessary to complete and prepare the asset for its intended use or sale. Other
borrowing costs are expensed in the period in which they are incurred and reported in 'Finance costs'.
To the extent that the Company borrows funds generally and uses them for the purpose of obtaining a
qualifying asset, the Company shall determine the amount of borrowing costs eligible for capitalization
by applying a capitalization rate to the expenditures on that asset. The capitalization rate shall be the
weighted average of the borrowing costs applicable to the borrowings of the Company that are
outstanding during the period, other than borrowings made specifically for the purpose of obtaining a
qualifying asset.
4.11. Intangible assets
Intangible assets include software products and software module rights. They are accounted for using
the cost model. The cost comprises its purchase price, including any import duties and non-refundable
purchase taxes, and any directly attributable expenditure on preparing the asset for its intended use,
whereby capitalized costs are amortized on a straight-line basis over their estimated useful lives, as
these assets are considered finite.
After initial recognition, an intangible asset is carried at its cost less any accumulated amortization and
any accumulated impairment losses. Impairment losses are recognised in the statement of profit or
loss/ statement of profit or loss and other comprehensive income for the respective period.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
19
Subsequent expenditure on an intangible asset after initial are recognized in the separate statement of
profit or loss and other comprehensive income for the period of their occurrence, unless due to them
the asset can generate more than the originally projected future economic benefits and when these
costs can be reliably estimated and attributed to the asset. If these conditions are met, the subsequent
expenditure is added to the carrying amount of the intangible asset.
Residual values and useful lives are reviewed by the management at each reporting date.
Amortization is calculated using the straight-line method over the estimated useful life of individual
assets as follows:
• Software 5-20 years
• Others 2-20 years
Amortization has been included within “Depreciation, amortization of non-financial assets”.
Expenditure on research (or the research phase of an internal project) is recognised as an expense in
the period in which it is incurred.
Costs that are directly attributable to the development phase of an intangible asset are capitalized
provided they meet the following recognition requirements:
• completion of the intangible asset is technically feasible so that it will be available for use or sale;
• the Company intends to complete the intangible asset and use or sell it;
• the Company has the ability to use or sell the intangible asset;
• the intangible asset will generate probable future economic benefits. Among other things, this
requires that there is a market for the output from the intangible asset or for the intangible asset
itself, or, if it is to be used internally, the asset will be used in generating such benefits;
• there are adequate technical, financial and other resources to complete the development and to
use or sell the intangible asset; and
• the expenditure attributable to the intangible asset during its development can be measured
reliably.
Development costs not meeting these criteria for capitalization are expensed as incurred.
Directly attributable costs to the development phase include employee remuneration and social security
expense as well as hired services expenses. Internally generated intangible assets are subject to the
same subsequent measurement method as externally acquired intangible assets. However, until
completion of the development project, the assets are subject to impairment testing only as described
below in note 4.14.
The gain or loss arising on the disposal of an intangible asset is determined as the difference between
the proceeds and the carrying amount of the asset and is recognised in profit or loss within “Gain/ (Loss)
on sale of non-current assets”.
The recognition threshold adopted by the Company for the intangible assets amounts to BGN 700.
4.12. Property, plant and equipment
Property, plant and equipment are initially measured at cost, which comprises its purchase price and
any directly attributable costs of bringing the asset to working condition for its intended use.
After initial recognition, the property, plant and equipment is carried at its cost less any subsequent
accumulated depreciation and any subsequent accumulated impairment losses. Impairment losses are
recognised in the separate statement of profit or loss and other comprehensive income for the
respective period.
Subsequent expenditure relating to an item of property, plant and equipment is added to the carrying
amount of the asset when it is probable that this expenditure will enable the asset to generate future
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
20
economic benefits in excess of the its originally assessed standard of performance. All other
subsequent expenditure is recognised as incurred.
Material residual value estimates and estimates of useful life are updated from the management at each
reporting date.
Property, plant and equipment acquired under finance lease agreement, are depreciated based on their
expected useful life, determined by reference to comparable assets or based on the period of the lease
contract, if shorter.
Depreciation is calculated using the straight-line method over the estimated useful life of individual
assets as follows:
• Buildings 50 years
• Machines 3-8 years
• Vehicles 4 years
• Business inventory 7,5 years
• IT equipment 2-5 years
• Others 7,5 years
Depreciation expense is included in the separate statement of profit or loss and other comprehensive
income on the line "Depreciation expense for non-financial assets".
Gains or losses arising on the disposal of property, plant and equipment are determined as the
difference between the disposal proceeds and the carrying amount of the assets and are recognised in
profit or loss within “Gain/(Loss) on sale of non-current assets”.
The recognition threshold adopted by the Company for property, plant and equipment amounts to BGN
700.
4.13. Leases
The Company as a lessor
As a lessor the Company classifies its leases as either operating or finance leases.
A lease is classified as a finance lease if it transfers substantially all the risks and rewards of ownership
of the underlying asset, and as an operating lease if it does not substantially transfer all the risks and
rewards of ownership of the underlying asset.
Assets subject to operating lease agreements are presented in the statement of financial position and
are depreciated and amortized in accordance with the depreciation and amortization policy of the
Company for similar assets and with the requirements of IAS 16 “Property, Plant and Equipment” and
IAS 38 “Intangible Assets”. The Company earns rental income from operating leases of its investment
properties (see note 9). Rental income is recognised on a straight-line basis over the term of the lease.
The Company as a lessee
For any new contracts the Company considers whether a contract is, or contains a lease. A lease is
defined as ‘a contract, or part of a contract, that conveys the right to use an asset (the underlying asset)
for a period of time in exchange for consideration'. To apply this definition the Company assesses
whether the contract meets three key evaluations which are whether:
• the contract contains an identified asset, which is either explicitly identified in the contract or
implicitly specified by being identified at the time the asset is made available to the Company
• the Company has the right to obtain substantially all of the economic benefits from use of the
identified asset throughout the period of use, considering its rights within the defined scope of the
contract
• the Company has the right to direct the use of the identified asset throughout the period of use.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
21
The Company assesses whether it has the right to direct ‘how and for what purpose' the asset is used
throughout the period of use.
Measurement and recognition of leases as a lessee
At lease commencement date, the Company recognises a right-of-use asset and a lease liability on the
statement of financial position. The right-of-use asset is measured at cost, which is made up of the
initial measurement of the lease liability, any initial direct costs incurred by the Company, an estimate
of any costs to dismantle and remove the asset at the end of the lease, and any lease payments made
in advance of the lease commencement date (net of any incentives received).
The Company depreciates the right-of-use assets on a straight-line basis from the lease
commencement date to the earlier of the end of the useful life of the right-of-use asset or the end of the
lease term. The Company also assesses the right-of-use asset for impairment when such indicators
exist.
At the commencement date, the Company measures the lease liability at the present value of the lease
payments unpaid at that date, discounted using the interest rate implicit in the lease if that rate is readily
available or the Company’s incremental borrowing rate.
Lease payments included in the measurement of the lease liability are made up of fixed payments
(including in substance fixed), variable payments based on an index or rate, amounts expected to be
payable under a residual value guarantee and payments arising from options reasonably certain to be
exercised.
After initial measurement, the liability is reduced for payments made and increased for interest. It is
remeasured to reflect any reassessment or modification, or if there are changes in in-substance fixed
payments.
When a lease liability is revalued, the corresponding adjustment is recognized in the asset with the right
of use or recognized in profit or loss if the carrying amount of the asset with the right of use has already
been reduced to zero.
4.14. Impairment testing of intangible assets and property, plant and equipment
For the purposes of assessing impairment, assets are grouped at the lowest levels for which there are
largely independent cash inflows (cash-generating units). As a result, some assets are tested
individually for impairment and some are tested at cash-generating unit level.
All assets and cash-generating units are tested for impairment at least annually. All other individual
assets or cash-generating units are tested for impairment whenever events or changes in
circumstances indicate that the carrying amount may not be recoverable.
An impairment loss is recognised for the amount by which the asset's or cash-generating unit's carrying
amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-
in-use. To determine the value-in-use, management estimates expected future cash flows from each
cash-generating unit and determines a suitable interest rate in order to calculate the present value of
those cash flows. The data used for impairment testing procedures are directly linked to the Company's
latest approved budget, adjusted as necessary to exclude the effects of future reorganisations and
asset enhancements. Discount factors are determined individually for each cash-generating unit and
reflect their respective risk profiles as assessed by management.
Impairment losses for cash-generating units reduce the carrying amount of the assets allocated to that
cash-generating unit. All assets are subsequently reassessed for indications that an impairment loss
previously recognised may no longer exist. An impairment charge is reversed if the cash-generating
unit’s recoverable amount exceeds its carrying amount.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
22
4.15. Investment property
The investment property is initially measured at cost, which comprises the purchase price and any
directly attributable expenses, e. g. legal fees, property transfer taxes and other transaction costs.
The Company accounts for investment property as buildings that are held for rental income and / or for
capital appreciation, using the acquisition cost model.
The investment property of the Company includes buildings held to earn rentals and/or for capital
appreciation and are accounted for using the cost model.
The investment property is initially measured at cost, which comprises the purchase price and any
directly attributable expenses, e. g. legal fees, property transfer taxes and other transaction costs.
Following the initial recognition, the investment property is measured at cost less any subsequent
accumulated depreciation and any subsequent impairment losses.
Subsequent expenditure relating to investment property, which is already recognised in the Company’s
financial statements, is added to the carrying amount of the investment property when it is probable that
this expenditure will enable the existing investment property to generate future economic benefits in
excess of its originally assessed value. All other subsequent expenditure is recognised as incurred.
The investment property is derecognised upon its sale or permanent withdrawal from use in case that
no future economic benefits are expected from its disposal. Gains or losses arising from the disposal
of investment properties are determined as the difference between the net disposal proceeds and the
carrying amount of the asset and are recognised in profit or loss.
Depreciation is calculated using the straight-line method over the estimated useful life of the buildings,
which is 50 years.
Rental income and operating expenses from investment property are reported in the separate statement
of profit or loss and other comprehensive income, respectively in the line "Revenue from sales", "Other
expenses" and "Employee benefits expense" respectively and are recognised as described in note
19.2,note 24 and note 15.1.
4.16. Financial instruments
4.16.1. Recognition and derecognition
Financial assets and financial liabilities are recognised when the Company becomes a party to the
contractual provisions of the financial instrument.
Financial assets are derecognised when the contractual rights to the cash flows from the financial asset
expire, or when the financial asset and substantially all the risks and rewards are transferred.
A financial liability is derecognised when it is extinguished, discharged, cancelled or expires.
4.16.2. Classification and initial measurement of financial assets
Financial assets are initially measured at fair value, adjusted for transaction costs, except for financial
assets at fair value through profit or loss and trade receivables that do not contain a significant financial
component. The initial measurement of financial assets at fair value through profit or loss is not adjusted
with transaction costs that are reported as current expenses. The initial measurement of trade
receivables that do not contain a significant financial component represents the transaction price in
accordance with IFRS 15.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
23
Depending on the method of subsequent measurement, financial assets are classified into the following
categories:
• Debt instruments at amortised cost;
• Financial assets at fair value through profit or loss (FVTPL);
• Financial assets at fair value through other comprehensive income (FVOCI) with or without
reclassification in profit or loss, depending on whether they are debt or equity instruments.
The classification is determined by both:
• the entity’s business model for managing the financial asset;
• the contractual cash flow characteristics of the financial asset.
All income and expenses relating to financial assets that are recognised in profit or loss are presented
within finance costs, finance income or other financial items, except for impairment of trade receivables
which is presented within other expenses in the separate statement of profit or loss and other
comprehensive income.
4.16.3. Subsequent measurement of financial assets
The percentages of expected losses are based on the sales payment profiles and the corresponding
historical credit losses that occurred during that period. Historical loss values are adjusted to reflect
current and forecast information about the macroeconomic factors that affect customers' ability to settle
claims. The company has determined the GDP and unemployment rate of the countries in which it sells
its goods and services, as the most important factors and accordingly adjusts historical losses based
on the expected changes in these factors.
Financial assets at amortised cost
Financial assets are measured at amortised cost if the assets meet the following conditions and are not
designated as FVTPL:
• they are held within a business model whose objective is to hold the financial assets and collect
its contractual cash flows;
• the contractual terms of the financial assets give rise to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
This category includes non-derivative financial assets like loans and receivables with fixed or
determinable payments that are not quoted in an active market. After initial recognition, these are
measured at amortised cost using the effective interest method. Discounting is omitted where the effect
of discounting is immaterial. The Company’s cash and cash equivalents, trade and most other
receivables fall into this category of financial instruments.
Trade receivables
Trade receivables are amounts due from customers for goods or services sold in the ordinary course
of business. Typically, they are due to be settled within a short timeframe and are therefore classified
as current. Trade receivables are initially recognised at amortized cost unless they contain significant
financial components. The Company holds trade receivables for the purpose of collecting the
contractual cash flows and therefore measures them at amortized cost using the effective interest
method. Discounting is omitted where the effect of discounting is immaterial.
Financial assets at fair value through profit or loss (FVTPL)
Financial assets that are held within a different business model than “hold to collect” or “hold to collect
and sell”, and financial assets whose contractual cash flows are not solely payments of principal and
interest are accounted for at FVTPL. All derivative financial instruments fall into this category, except
for those designated and effective as hedging instruments, for which the hedge accounting
requirements apply (see below).
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
24
This category also contains an equity investment. The Company accounts for the investment at FVTPL
and did not make the irrevocable election to account for the investment in subsidiaries at FVOCI.
Assets in this category are measured at fair value with gains or losses recognised in profit or loss. The
fair values of financial assets in this category are determined by reference to active market transactions
or using a valuation technique where no active market exists.
4.16.4. Impairment of financial assets
IFRS 9’s new impairment requirements use forward-looking information to recognise expected credit
losses – the “expected credit loss” (ECL) model.
Instruments within the scope of the new requirements included loans and other debt-type financial
assets measured at amortised cost, trade receivables, contract assets recognised and measured under
IFRS 15 and loan commitments and some financial guarantee contracts (for the issuer) that are not
measured at fair value through profit or loss.
Recognition of credit losses is no longer dependent on the Company first identifying a credit loss event.
Instead the Company considers a broader range of information when assessing credit risk and
measuring expected credit losses, including past events, current conditions, reasonable and
supportable forecasts that affect the expected collectability of the future cash flows of the instrument.
In applying this forward-looking approach, a distinction is made between:
• financial instruments that have not deteriorated significantly in credit quality since initial
recognition or that have low credit risk (Stage 1) and
• financial instruments that have deteriorated significantly in credit quality since initial recognition
and whose credit risk is not low (Stage 2)
• Stage 3 would cover financial assets that have objective evidence of impairment at the reporting
date.
“12-month expected credit losses” are recognised for the first category while “lifetime expected credit
losses” are recognised for the second category. Expected credit losses are determined as the difference
between all contractual cash flows attributable to the Company and the cash flows it is actually expected
to receive (“cash shortfall”). This difference is discounted at the original effective interest rate (or credit
adjusted effective interest rate).
Measurement of the expected credit losses is determined by a probability-weighted estimate of credit
losses over the expected life of the financial instrument.
Trade and other receivables, contract assets and finance lease receivables
The Company makes use of a simplified approach in accounting for trade and other receivables as well
as contract assets and records the loss allowance as lifetime expected credit losses. These are the
expected shortfalls in contractual cash flows, considering the potential for default at any point during
the life of the financial instrument. In calculating, the Company uses its historical experience, external
indicators and forward-looking information to calculate the expected credit losses.
The Company allows 50% for amounts that are 180 to 365 days past due and writes off fully any
amounts that are more than 365 days past due.
4.16.5. Classification and measurement of financial liabilities
The Company’s financial liabilities include borrowings, finance lease payments, trade and other
payables and derivative financial instruments.
Financial liabilities are initially measured at fair value, and, where applicable, adjusted for transaction
costs unless the Company designated a financial liability at fair value through profit or loss.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
25
Subsequently, financial liabilities are measured at amortised cost using the effective interest method
except for derivatives and financial liabilities designated at FVTPL, which are carried subsequently at
fair value with gains or losses recognised in profit or loss (other than derivative financial instruments
that are designated and effective as hedging instruments).
The Company has designated some financial liabilities at FVTPL to reduce significant measurement
inconsistencies between investment properties in the United States and related US-dollar bank loans
with fixed interest rates. These investment properties are measured using the fair value model, with
changes in the fair value recognised in profit or loss. The fair value of loans used to finance these assets
correlates significantly with the valuation of the investment properties held by the Company, because
both measures are highly reactive to the market interest rate for 30-year government bonds. The loans
are managed and evaluated on a fair value basis through a quarterly management review in comparison
with the investment property valuations. Therefore, the Company designates such fixed interest rate
loans as at FVTPL if they are secured by specific investment property assets that are held by the
Company. This accounting policy reduces significantly what would otherwise be an accounting
mismatch.
All interest-related charges and, if applicable, changes in an instrument’s fair value that are reported in
profit or loss are included within finance costs or finance income.
4.17. Income taxes
Tax expense recognised in profit or loss comprises the sum of deferred tax and current tax not
recognised in other comprehensive income or directly in equity.
Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal
authorities relating to the current or prior reporting periods, that are unpaid at the reporting date. Current
tax is payable on taxable profit, which differs from profit or loss in the financial statements. Calculation
of current tax is based on tax rates and tax laws that have been enacted or substantively enacted by
the end of the reporting period.
Deferred income taxes are calculated using the liability method on temporary differences between the
carrying amounts of assets and liabilities and their tax bases. However, deferred tax is not provided on
the initial recognition of an asset or liability unless the related transaction affects tax or accounting profit.
Deferred tax assets and liabilities are calculated, without discounting, at tax rates that are expected to
apply to their respective period of realization, provided they are enacted or substantively enacted by
the end of the reporting period.
Deferred tax liabilities are always provided for in full.
Deferred tax assets are recognised to the extent that it is probable that they will be able to be utilized
against future taxable income. For management’s assessment of the probability of future taxable
income to utilize against deferred tax assets, see note 4.22.2.
Deferred tax assets and liabilities are offset only when the Company has a right and intention to set off
current tax assets and liabilities from the same taxation authority.
Changes in deferred tax assets or liabilities are recognised as a component of tax income or expense
in profit or loss, except where they relate to items that are recognised in other comprehensive income
or directly in equity, in which case the related deferred tax is also recognised in other comprehensive
income or equity, respectively.
4.18. Cash and cash equivalents
Cash and cash equivalents comprise cash on hand, current bank accounts, demand deposits and
deposits up to 3 months, together with other short-term, highly liquid investments that are readily
convertible into known amounts of cash and which are subject to an insignificant risk of changes in
value.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
26
4.19. Equity, reserves and dividend payments
Share capital represents the nominal value of shares that have been issued.
Share premium includes any premiums received on issue of share capital. Any transaction costs
associated with the issuing of shares are deducted from share premium, net of any related income tax
benefits.
Other reserves include the following:
• legal reserves, common reserves;
Retained earnings include all current and prior period retained profits and uncovered losses.
Dividend payables to shareholders are included in ‘Related party payables’ when the dividends have
been approved at the general meeting of shareholders prior to the reporting date.
All transactions with owners of the Company are recorded separately within equity.
4.20. Post-employment benefits and short-term employee benefits
The Company reports short-term payables relating to unutilized paid leaves, which shall be
compensated in case it is expected the leaves to occur within 12 months after the end of the accounting
period during which the employees have performed the work related to those leaves. The short-term
payables to personnel include wages, salaries and related social security payments.
In accordance with Labour Code requirements, in case of retirement, after the employee has gained
the legal right of pension due to years of services and age, the Company is obliged to pay him/her
compensation at the amount of up to six gross wages. The Company has reported a liability by law for
the payment of retirement compensation in accordance with IAS 19 “Employee Benefits”. The amount
is based on forecasts made for the next five years, discounted with the long-term income percentage
of risk free securities.
The Company has not developed and implemented post-employment benefit plans.
Net interest expense related to pension obligations is included in “Finance costs” in profit or loss.
Service cost on the net defined benefit liability is included in “Employee benefits expense”.
Short-term employee benefits, including holiday entitlement, are current liabilities included in “Pension
and other employee obligations”, measured at the undiscounted amount that the Company expects to
pay as a result of the unused entitlement.
4.21. Provisions, contingent liabilities and contingent assets
Provisions are recognised when present obligations as a result of a past event will probably lead to an
outflow of economic resources from the Company and amounts can be estimated reliably. Timing or
amount of the outflow may still be uncertain. A present obligation arises from the presence of a legal or
constructive commitment that has resulted from past events, for example, granted product warranties,
legal disputes or onerous contracts. Restructuring provisions are recognised only if a detailed formal
plan for the restructuring has been developed and implemented, or management has at least
announced the plan’s main features to those affected by it. Provisions are not recognised for future
operating losses.
Provisions are measured at the estimated expenditure required to settle the present obligation, based
on the most reliable evidence available at the reporting date, including the risks and uncertainties
associated with the present obligation. Where there are a number of similar obligations, the likelihood
that an outflow will be required in settlement is determined by considering the class of obligations as a
whole. Provisions are discounted to their present values, where the time value of money is material.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
27
Any reimbursement that the Company can be virtually certain to collect from a third party with respect
to the obligation is recognised as a separate asset. However, this asset may not exceed the amount of
the related provision.
All provisions are reviewed at each reporting date and adjusted to reflect the current best estimate.
In those cases where the possible outflow of economic resources as a result of present obligations is
considered improbable or remote, no liability is recognised.
Possible inflows of economic benefits to the Company that do not yet meet the recognition criteria of
an asset are considered contingent assets.
4.22. Significant management judgement in applying accounting policies
The following are significant management judgements in applying the accounting policies of the
Company that have the most significant effect on the financial statements. Critical estimation
uncertainties are described in note 4.23.
4.22.1. Internally generated intangible assets and research costs
Significant judgement is required in distinguishing research from the development phase. Development
costs are recognised as an asset when all the criteria are met, whereas research costs are expensed
as incurred.
To distinguish any research-type project phase from the development phase, it is the Company’s
accounting policy to also require a detailed forecast of sales or cost savings expected to be generated
by the intangible asset. The forecast is incorporated into the Company’s overall budget forecast as the
capitalization of development costs commences. This ensures that managerial accounting, impairment
testing procedures and accounting for internally-generated intangible assets is based on the same data.
The Company’s management also monitors whether the recognition requirements for development
costs continue to be met. This is necessary as the economic success of any product development is
uncertain and may be subject to future technical problems after the time of recognition.
4.22.2. Deferred tax assets
The assessment of the probability of future taxable income in which deferred tax assets can be utilized
is based on the Company’s latest approved budget forecast, which is adjusted for significant non-
taxable income and expenses and specific limits to the use of any unused tax loss or credit. The tax
rules in the numerous jurisdictions in which the Company operates are also carefully taken into
consideration. If a positive forecast of taxable income indicates the probable use of a deferred tax asset,
especially when it can be utilized without a time limit, that deferred tax asset is usually recognised in
full. The recognition of deferred tax assets that are subject to certain legal or economic limits or
uncertainties is assessed individually by management based on the specific facts and circumstances.
4.23. Estimation uncertainty
When preparing the financial statements management undertakes a number of judgements, estimates
and assumptions about recognition and measurement of assets, liabilities, income and expenses.
The actual results may differ from the judgements, estimates and assumptions made by management,
and will seldom equal the estimated results.
In the preparation of the presented Separate financial statements the significant judgments of the
management in applying the accounting policies of the Company and the main sources of uncertainty
of the accounting estimates do not differ from those disclosed in the annual financial statements of the
Company as at 31 December 2020.
Information about significant judgements, estimates and assumptions that have the most significant
effect on recognition and measurement of assets, liabilities, income and expenses are discussed below.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
28
4.23.1. Impairment of non-financial assets
An impairment loss is recognised for the amount by which the asset’s or cash-generating unit’s carrying
amount exceeds its recoverable amount, which is the higher of fair value less costs to sell and value-
in-use. To determine the value-in-use, management estimates expected future cash flows from each
cash-generating unit and determines a suitable interest rate in order to calculate the present value of
those cash flows (see note 4.14). In the process of measuring expected future cash flows management
makes assumptions about future operating results. These assumptions relate to future events and
circumstances. The actual results may vary and may cause significant adjustments to the Company’s
assets within the next financial year.
In most cases, determining the applicable discount rate involves estimating the appropriate adjustment
to market risk and the appropriate adjustment to asset-specific risk factors.
The Company hasn’t incurred an impairment loss on non-current assets in 2021 and 2020 in order to
reduce the carrying amount of non-current assets to its recoverable amount.
4.23.2. Useful lives of depreciable assets
Management reviews the useful lives of depreciable assets at each reporting date.
At 31 December 2021 management assesses that the useful lives represent the expected utility of the
assets to the Company. The carrying amounts are analysed in notes 5,6 and 9. Actual results, however,
may vary due to technical obsolescence, particularly relating to software and IT equipment.
4.23.3. Measurement of expected credit losses
Credit losses are the difference between all contractual cash flows due to the Company and all cash
flows that the Company expects to receive. Expected credit losses are a probability-weighted estimate
of credit losses that require the Company’s judgment. Expected credit losses are discounted at the
original effective interest rate (or the credit-adjusted effective interest rate for purchased or initially
created financial assets with credit impairment).
4.23.4. Defined benefit liability
Management estimates the defined benefit liability annually with the assistance of independent
actuaries; however, the actual outcome may vary due to estimation uncertainties. The estimate of its
defined benefit liability BGN 22 thousand (2020: BGN 38 thousand) is based on standard rates of
inflation, medical cost trends and mortality. It also takes into account the Company’s specific anticipation
of future salary increases. Discount factors are determined close to each year-end by reference to high
quality corporate bonds that are denominated in the currency in which the benefits will be paid and that
have terms to maturity approximating to the terms of the related pension liability. Estimation
uncertainties exist particularly with regard to actuarial assumptions, which may vary and significantly
impact the defined benefit obligations and the annual defined benefit expenses.
4.23.5. Uncertain tax position and tax-related contingency
The Company's management has assessed whether it is probable that the tax authority will accept
uncertain tax treatment. In its activities, the company complied with the tax practice and the probable
tax treatment, and therefore the taxable profit (tax loss), tax bases, unused tax losses, unused tax
credits and the tax rate, correspond to the used and expected treatment that will be used in declaring
income taxes.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
29
5. Property, plant and equipment
Buildings
Vehicles
Office equipment
Machinery
Computer
equipment
Assets under
construction
Others
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Gross carrying amount
Balance at 1 January 2021
170
199
289
208
486
7
51
1 410
Additions
-
-
86
1
39
126
-
252
Disposals
-
(10)
-
-
-
(133)
-
(143)
Balance at 31 December 2021
170
189
375
209
525
-
51
1 519
Depreciation
Balance at 1 January 2021
(21)
(33)
(80)
(199)
(413)
-
(20)
(766)
Depreciation
(3)
(35)
(51)
(4)
(56)
-
(7)
(156)
Disposals
-
10
-
-
-
-
-
10
Balance at 31 December 2021
(24)
(58)
(131)
(203)
(469)
-
(27)
(912)
Carrying amount
at 31 December 2021
146
131
244
6
56
-
24
607
Buildings
Vehicles
Office equipment
Machinery
Computer
equipment
Assets under
construction
Others
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Gross carrying amount
Balance at 1 January 2020
143
28
126
203
483
550
46
1 579
Additions
27
171
163
5
3
357
5
731
Disposals
-
-
-
-
-
(900)
-
(900)
Balance at 31 December 2020
170
199
289
208
486
7
51
1 410
Depreciation
Balance at 1 January 2020
(18)
(22)
(50)
(196)
(363)
-
(14)
(663)
Depreciation
(3)
(11)
(30)
(3)
(50)
-
(6)
(103)
Balance at 31 December 2020
(21)
(33)
(80)
(199)
(413)
-
(20)
(766)
Carrying amount
at 31 December 2020
149
166
209
9
73
7
31
644
All depreciation charges are included within “Depreciation and amortization of non-financial assets” in the separate statement of profit or loss and other
comprehensive income.
As at 31 December 2021 there were no material contractual commitments related to acquisition of items of property, plant and equipment.
The carrying amount of the Company’s property, plant and equipment pledged as security for its liabilities (see note 17) is presented as follows:
Buildings
Vehicles
Office equipment
Machinery
Computer
equipment
Others
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Carrying amount
at 31 December 2021
146
131
244
6
56
24
607
Carrying amount
at 31 December 2020
149
166
209
9
73
31
637
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
30
6. Intangible assets
The carrying amounts for the reporting periods under review can be analysed as follows:
Software
products
Rights to
software
modules
In process of
acquisition
Others
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Gross carrying amount
Balance at 1 January 2021
57
1 623
4 831
4 269
10 780
Additions, internally developed
-
-
333
-
333
Balance at 31 December 2021
57
1 623
5 164
4 269
11 113
Amortization and impairment
Balance at 1 January 2021
(57)
(658)
-
(412)
(1 127)
Amortization
-
(109)
-
(213)
(322)
Balance at 31 December 2021
(57)
(767)
-
(625)
(1 449)
Carrying amount
at 31 December 2021
-
856
5 164
3 644
9 664
Software
products
Rights to
software
modules
In process of
acquisition
Others
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
Gross carrying amount
Balance at 1 January 2020
57
1 622
4 732
4 269
10 680
Additions, internally developed
-
1
99
-
100
Balance at 31 December 2020
57
1 623
4 831
4 269
10 780
Amortization and impairment
Balance at 1 January 2020
(50)
(311)
-
(197)
(558)
Amortization
(7)
(347)
-
(215)
(569)
Balance at 31 December 2020
(57)
(658)
-
(412)
(1 127)
Carrying amount
at 31 December 2020
-
965
4 831
3 857
9 653
The Company’s intangible assets reported under “Other” and “In process of acquisition” are internally
developed. These include SIRMA CLOUD PLATFORM, which is a cloud management platform:
• Data centre virtualization management.
• Data warehouse storage virtualization management;
• Resource efficiency management;
• Resource cost management;
• Cloud management distributed in different geographical locations.
The Company has not entered into material contractual commitments to acquire intangible assets as at
31 December 2021 or 2020.
All amortization expenses are included within “Depreciation and amortization of non-financial assets” in
the separate statement of profit or loss and other comprehensive income.
No intangible assets have been pledged as security for liabilities.
From the standpoint of the specific economic situation caused by the Covid-19 pandemic, the performed
analysis of the recoverable amount of intangible fixed assets did not show any indications of their
impairment. In confirming its judgment, the management has used the expert judgment of an
independent licensed appraiser.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
31
7. Investments in subsidiaries
The Company has the following investments in subsidiaries:
Name of the subsidiary
Country of
incorporation
and principal
place of
business
Main activities
2021
2021
share
2020
2020
share
BGN‘000
%
BGN‘000
%
Sirma Solutions AD
Bulgaria
Software services
39 311
82,46%
39 311
82,43%
Ontotext AD
Bulgaria
Software services
17 865
90,44%
17 865
90,44%
Sciant AD
Bulgaria
Software services
10 237
80,00%
-
-
Sirma AI EAD
Bulgaria
Software services
7 035
100,00%
7 035
100,00%
Sirma Group Inc.
USA
Software services
3 471
76,30%
3 471
76,15%
Sirma CI AD
Bulgaria
Software services
106
80,00%
106
80,00%
Sirma Medical Systems AD
Bulgaria
Software services
66
66,00%
66
66,00%
Engview Systems Sofia AD
Bulgaria
Software services
50
72,90%
50
72,90%
78 141
67 904
On 16.11.2021, after receiving approval from the Commission for Protection of Competition, “Sirma
Group Holding” JSC has signed a contract with the shareholders of the IT company “Sciant” AD for the
acquisition of a majority stake. Pursuant to this agreement, the share acquired from Saint AD is 80% or
200,000 of the company's shares amounting to BGN 10 237 232.75. The agreement also provides for
an option for “Sirma Group Holding” JSC for subsequent acquisition of the remaining 20% of the
company's shares on 01.04.2024. The Company’s liability as of 31.12.2021 related to the agreement
amounts to BGN 5 144 tousand.
The subsidiaries are recognised in the financial statements of the Company using the cost method.
During 2021 the Company received dividends respectively at the amount of BGN 240 thousand (2020:
BGN 146 thousand).
The shares of the subsidiaries are not traded on a stock exchange.
The Company has contingent liabilities as a guarantor on loans granted to subsidiaries (see note 32).
The management has analyzed the recoverable amount of investments in subsidiaries, taking into
account the impact of the Covid-19 pandemic on the activities of the subsidiaries and the expected
impact on them in the future. All investments are in companies operating in the field of information and
communication technologies, which is one of the industries partially affected by the Covid crisis. During
the assessment, for the preparation of which an independent licensed appraiser was involved, no
indications were established for the presence of the need to report impairment costs.
8. Investments in associates
The carrying amount of investments in associates by company is as follows:
2021
Share
2020
Share
BGN '000
BGN '000
Е-Dom Management
-
-
-
35.00%
2021
2020
BGN’000
BGN’000
Investments in associates, gross amount before impairment
-
7
Impairment of investments in associates
-
(7)
Investments in associates
-
-
On 18 January 2021 the company released its investment in the associate E-Dom Management Ltd.
The Company has not incurred any contingent liabilities or other commitments relating to its investments
in associates.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
32
9. Investment property
Investment properties are specially detached parts of buildings for self-operation, intended for long-
term rent to subsidiaries and third parties. The investment properties have a total built-up area of 5 180
square meters and are part of a business building in Mladost district, Sofia.
Changes to the carrying amounts presented in the separate statement of financial position can be
summarized as follows:
Investment
property
BGN’000
Gross carrying amount
Balance at 1 January 2021
8 475
Newly acquired assets:
2 519
- by purchase
2 407
- through additional costs
112
Balance at 31 December 2021
10 994
Depreciation
Balance at 1 January 2021
(1 304)
Depreciation
(89)
Balance at 31 December 2021
(1 393)
Carrying amount at 31 December 2021
9 601
Investment
property
BGN’000
Gross carrying amount
Balance at 1 January 2020
7 750
Newly acquired assets:
- through additional costs
725
Balance at 31 December 2020
8 475
Depreciation
Balance at 1 January 2020
(1 223)
Depreciation
(81)
Balance at 31 December 2020
(1 304)
Carrying amount at 31 December 2020
7 171
At the reporting date the fair value of the investment property accounted for using the cost model
amounts to BGN 9 763 thousand (2020: BGN 7 346 thousand). The market valuation was performed in
March 2022 by licensed appraiser „Bright Consult“ Ltd. and the valuation methods used include: Cost
method, Revenue method and Quick sale method. The market assessment took into account the impact
of the Covid-19 pandemic on average rental prices at the date of the assessment. In general, the
pandemic requires holding back prices before the advent of Covid-19 due to the existing risk to
investors.
Investment properties valued at BGN 9 601 thousand are pledged as security for borrowings (2020:
BGN 7 171 thousand).
Rental income of BGN 523 thousand (2020: BGN 533 thousand) is shown within “Revenue from sales”
in the separate statement of profit or loss and other comprehensive income. They include variable lease
payments not dependent on an index or rate. Direct operating expenses of BGN 137 thousand are
reported within “Other expenses” and “Employee benefits expense” (2020: BGN 149 thousand), of
which BGN 37 thousand is incurred on vacant properties that did not generate rental income in 2021
(2020: BGN 39 thousand).
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
33
Future minimum lease rentals are as follows:
Minimum lease income
Within
1 year
1-2
years
2-3
years
3-4
years
4-5
years
After 5
years
Total
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
31 December 2021
808
808
808
808
808
1 616
5 656
31 December 2020
533
533
533
533
533
1 599
4 264
10. Deferred tax assets and liabilities
Deferred taxes arising from temporary differences and unused tax losses can be summarized as
follows:
Deferred tax liabilities (assets)
31 December 2020
Recognised in profit
and loss
31 December 2021
BGN‘000
BGN‘000
BGN‘000
Non-current assets
Property, plant and equipment,
Intangible assets,
Investment property
94
5
99
Impairment of investments
(1)
1
-
Current assets
Trade and other receivables
(130)
89
(41)
Non-current liabilities
Pension and other employee obligations
(4)
2
(2)
Current liabilities
Employee obligations
(15)
(13)
(28)
(56)
56
28
Deferred tax assets
94
99
Deferred tax liabilities
(150)
(71)
Recognised as:
Net deferred tax liabilities/(assets)
(56)
28
Deferred taxes for the comparative period 2020 can be summarized as follows:
Deferred tax liabilities (assets)
31 December 2019
Recognised in profit
and loss
31 December 2020
BGN‘000
BGN‘000
BGN‘000
Non-current assets
Property, plant and equipment,
Intangible assets,
Investment property
88
6
94
Impairment of investments
(22)
21
(1)
Current assets
Trade and other receivables
(151)
21
(130)
Non-current liabilities
Pension and other employee obligations
(4)
-
(4)
Current liabilities
Employee obligations
(23)
8
(15)
(112)
56
(56)
Deferred tax assets
88
94
Deferred tax liabilities
(200)
(150)
Recognised as:
Net deferred tax (assets)
(112)
(56)
All deferred tax assets and liabilities have been recognised in the separate statement of financial
position.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
34
11. Non-current receivables
As of 31 December 2021 the Company reports a long-term receivable on a loan granted to one
individual person in the amount of BGN 547 thousand with a repayment period of 31 December 2023
and interest in the amount of 3%. The receivable is unsecured. The company has reported expected
credit losses for the said receivable in the amount of BGN 121 thousand.
12. Trade receivables
Current trade receivables:
2021
2020
BGN‘000
BGN‘000
Trade receivables, gross amount before impairment
78
67
Impairment of trade receivables
(18)
(19)
Current trade receivables
60
48
All trade receivables are short term. The net carrying value of trade and other receivables is considered
a reasonable approximation of fair value.
All trade receivables of the Company have been reviewed for indicators of impairment. They have
applied simplified approach for determining the expected credit losses at the end of the period.
The movement in the allowance for credit losses can be reconciled as follows:
2021
2020
BGN‘000
BGN‘000
Balance at 1 January
(19)
(9)
Amounts written off (uncollectible)
15
5
Adjustment for expected credit losses
(14)
(15)
Balance at 31 December
(18)
(19)
An analysis of unimpaired trade receivables that are past due is presented in note 34.
The most significant current trade receivables as at 31 December are presented below:
2021
2020
BGN‘000
BGN‘000
Client 1
14
24
Client 2
14
11
Client 3
12
10
40
45
13. Prepayments and other assets
2021
2020
BGN‘000
BGN‘000
Other receivables, gross amount before impairment
19
616
Impairment losses on other receivables
-
(121)
Other receivables
19
495
Prepayments
151
223
Other assets, non-financial
170
718
For all other assets of the Company a simplified approach has been applied to determine the expected
credit losses at the end of the period.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
35
The change in the amount of the adjustment for expected credit losses on other assets can be presented
as follows:
2021
2020
BGN‘000
BGN‘000
Balance at 1 January
(121)
(1)
Adjustment for expected credit losses
-
(120)
Transfer to non-current receivables
121
-
Balance at 31 December
-
(121)
In view of the Covid-19 pandemic, the Company regularly monitors and analyzes on an individual basis
the available estimates with its counterparties. Measures have also been taken to improve the practices
applied in the collection of receivables and to improve the collection. In assessing the collection of
receivables, the Company takes into account the actual and potential effects on counterparties and
their ability to repay their obligations to the Company.
14. Cash and cash equivalents
Cash and cash equivalents include the following components:
2021
2020
BGN‘000
BGN‘000
Cash at bank and in hand:
- BGN
1 665
1 179
- EUR
95
95
- USD
15
14
Cash and cash equivalents
1 775
1 288
The amount of cash and cash equivalents inaccessible to the Company as at 31 December 2021
amounts to BGN 500 thousand (2020: BGN 500 thousand).
The Company has evaluated the expected credit losses on cash and cash equivalents. The estimated
amount is less than 0.1% of the gross amount of cash deposited in financial institutions, which is
therefore considered to be immaterial and has not been accounted for in the separate financial
statements of the Company.
15. Equity
15.1. Share capital
The share capital of “Sirma Group Holding” JSC consists only of 59 360 518 fully paid ordinary shares
with a nominal value of BGN 1. All shares are equally eligible to receive dividends and the repayment
of capital and represent one vote at the shareholders meeting of the Company.
2021
2020
Number of shares
Number of shares
Number of shares issued and fully paid:
- beginning of the year
59 360 518
59 360 518
Number of shares issued and fully paid
59 360 518
59 360 518
Total number of shares authorized as at 31 December
59 360 518
59 360 518
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
36
The list of the shareholders of the “Sirma Group Holding” JSC is as follows:
Shareholders
Number of
shares at
31.12.2021
Number of
shares at
31.12.2020
Nominal
VALUE
(BGN)
Value
(BGN)
%
Sharehol
ding
% shareholding
with deducted
repurchased
own shares
Georgi Parvanov Marinov
5 269 748
5 269 748
1
5 269 748
8,88%
8,97%
Tsvetan Borisov Alexiev
4 965 753
4 865 753
1
4 965 753
8,37%
8,45%
Chavdar Velizarov Dimitrov
4 750 786
4 750 786
1
4 750 786
8,00%
8,08%
Veselin Antchev Kirov
4 700 786
4 700 786
1
4 700 786
7,92%
8,00%
Ivo Petrov Petrov
4 500 000
4 400 000
1
4 500 000
7,58%
7,66%
Ognyan Plamenov Chernokozhev
3 741 620
3 741 620
1
3 741 620
6,30%
6,37%
Atanas Kostadinov Kiryakov
2 887 524
2 887 524
1
2 887 524
4,86%
4,91%
Krasimir Nevelinov Bozhkov
2 534 161
2 534 161
1
2 534 161
4,27%
4,31%
Vladimir Ivanov Alexiev
2 177 583
2 177 583
1
2 177 583
3,67%
3,70%
Rosen Vasilev Varbanov
2 156 687
2 156 687
1
2 156 687
3,63%
3,67%
Emiliana Ilieva Ilieva
1 925 820
1 925 820
1
1 925 820
3,24%
3,28%
“Sirma Solutions”
1 437 786
-
1
1 437 786
2,42%
2,45%
Yavor Liudmilov Djonev
1 392 746
1 392 746
1
1 392 746
2,35%
2,37%
UPF "Doverie" JSC
976 678
1 047 678
1
976 678
1,65%
1,66%
Peter Nikolaev Konyarov
870 665
870 665
1
870 665
1,47%
1,48%
"Mandjukov" Ltd.
860 000
860 000
1
860 000
1,45%
1,46%
UPF "DSK Rodina"
747 036
747 036
1
747 036
1,26%
1,27%
UPF “Pension Insurance Institute”
715 810
715 810
1
715 810
1,21%
1,22%
“First Financial Brokerage House”
677 368
437 422
1
677 368
1,14%
1,15%
Others
12 071 961
13 878 693
1
12 071 961
20,33%
19,54%
Total
59 360 518
59 360 518
59 360 518
100%
100%
15.2. Share premium reserve
The share premium reserve in the amount of BGN 5 497 thousand consists of reserves from initial
valuation of contributed fixed assets in the amount of BGN 3 619 thousand and reserves from issue of
shares in the amount of BGN 1 878 thousand.
15.3. Other reserves
The other reserves consist of legal reserves set aside according to Art. 246 of the Commercial Law
over the years as follows:
2021
2020
BGN‘000
BGN‘000
Balance at January 1
1 042
852
Allocation of reserves
99
190
Balance at December 31
1 141
1 042
16. Employee remuneration
16.1. Employee benefits expense
Expenses recognised for employee benefits include:
2021
2020
BGN‘000
BGN‘000
Salary expenses
(1 347)
(1 093)
Social security expenses, including:
(115)
(122)
- pension - defined contribution plans
14
(5)
Employee benefits expense
(1 462)
(1 215)
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
37
16.2. Pension and other employee obligations
The liabilities for pension and other employee obligations recognised in the statement of financial
position consist of the following amounts:
2021
2020
BGN‘000
BGN‘000
Non-current:
Compensations in compliance with Labour Code
22
38
Non-current pension and other employee obligations
22
38
Current:
Payroll obligations
255
68
Social security obligations
74
26
Accrued holiday entitlement
27
71
Current pension and other employee obligations
356
165
The current portion of these liabilities represents the Company's obligations to its current employees
that are expected to be settled during 2022. Other short-term employee obligations arise mainly from
accrued holiday entitlement at the end of reporting date. As none of the employees has the right for
early settlement of pension arrangements, the remaining part of pension obligations for defined benefit
plans is considered non-current.
In accordance with the requirements upon termination of the employment relationship under Article 222,
paragraph 2 and paragraph 3 of the Labour Code, the employee shall have the right to:
* sickness benefit in the amount of his gross wage for a period of 2 months, if he has at least five years
of service and has not received compensation on the same grounds in the last 5 years.
* compensation, after acquiring the right to a pension for length of service and old age, irrespective of
the reason for termination - in the amount of his gross salary for a period of 2 months, and if he worked
with the same employer during the last 10 years of his work experience - compensation in the amount
of his gross salary for a period of 6 months.
The event that gives rise to the obligation of the employer is the release of the person when he / she
has acquired the right to a pension for length of service and old age. This requires an accurate prediction
of the time of departure of employees, according to the time of occurrence of this right. The amount of
the benefit is directly dependent on the person's length of service and, after a period of 10 years or
more, future length of service does not affect the further amount of the obligation. In order to determine
the exact amount of the obligation, it is necessary to forecast the amount of compensation at the future
time when it will be due to the employee and this compensation must be discounted at the time of the
assessment of the obligation.
As a result of the current employment contracts in the Company as of 31.12.2021, the payments upon
retirement due to illness and due to reaching age and seniority, follow the amounts specified in Article
222, paragraph 2 and paragraph 3 of the Labour Code.
The mortality table reflects the probability that individuals will reach the specified retirement age. It is
calculated for each person individually based on his / her gender and age at the time of the assessment.
A table for mortality and average life expectancy of the population of Bulgaria of the National Statistical
Institute for the period 2018-2020 was used.
On the basis of the information provided by the company on the number of people who left in the last
year, the probability of leaving has been calculated. This probability is set in the projections for the
future development of staff in relation to the group of voluntarily left and dismissed in this model as an
arithmetic mean of 0.2477.
The likelihood of disability reflects the likelihood of a person falling into a state that prevents him from
interacting with the environment, which in turn creates social, intellectual, physical or moral difficulties.
The probability is calculated on the basis of statistical information received from the NCHI.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
38
An effective annual interest rate of 3.0% was used to calculate the discount factor, which corresponds
to a discount annual rate of 2.91%. The proposal made is based on the yield data of long-term
government securities offered on the Bulgarian Stock Exchange and the forecast for a longer term,
based on the recommendations of Article 78 of IAS 19 and Articles 80 and 81 of the IAS, since the
discount rate should reflect the estimated time of payment of income.
According to the company's development plans, the current model envisages 1.5% annual growth of
the average gross salary compared to the previous year. The amount of the expected increase in the
basic salary is in line with the levels of remuneration in the company, remuneration in alternative
companies on the same market, long-term expectations and projected inflation.
Acquisition of pension rights for length of service and age - according to the Social Insurance Code and
the underlying plans for increasing the retirement age. If a person cannot qualify for a pension for length
of service and old age from the social security services listed in the table, then he / she shall acquire a
pension right upon reaching the age of 65 and having at least 15 years of service. From 31.12.2015 the
age from the previous sentence is increased from the first day of each following year by 2 months until
reaching 67 years.
According to the requirements of the Labour Code, the benefit is paid when the employee acquires the
right to a pension for length of service and age, and its amount is directly dependent on the amount of
his gross salary and his length of service with the employer so far. This necessitates a precise prediction
of the moment at which the person will leave the employer, obtaining the right to compensation. For all
persons, this moment is calculated individually, on the basis of their age and sex at the time of the
assessment and the age required to qualify for a pension, as required by the Social Security Code for
the acquisition of a retirement pension by the State Public insurance. When forecasting the moment of
retirement of all persons employed under a contract of employment in the structures of the company, it
is assumed that they will retire upon reaching the age necessary for acquiring the right to retirement
pension and age for persons working under the conditions of the third category of labour. In determining
the time of retirement, the requirement of the Social Security Code for the minimum length of service
required to qualify for retirement and old age pension was also taken into account. When a worker who
has reached the required retirement age does not have the required length of service, the time of
retirement is deferred until, he accumulates this length of service.
After determining the time of departure of employees who have acquired the right to a pension for length
of service and age, the amount of the last salary can be predicted. The value of the gross salary at the
time of the appraisal is multiplied by the projected percentage for growth of the salaries per year, for
the period from the date of the appraisal to the foreseen moment of leaving the worker. The number of
gross salaries due is directly dependent on the time served by the employer at the time of leaving. For
employees who at the time of retirement will have ten or more years of service with the employer,
compensation in the amount of six gross salaries is calculated, and for all others in the amount of two
gross salaries.
The amount of the obligation can be divided into two main attributes related to demographic
assumptions - gender and reason for payment of the obligation, with the present values of the respective
payment obligations as of 31.12.2021:
Gender
Amount upon retirement for
reaching length of service and old
age in BGN
Amount upon retirement
due to illness in BGN
Total amount
Female
17 771,52
380,71
18 152,23
Male
4 183,03
62,88
4 245,91
Total
21 954,55
443,59
22 398,14
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
39
The changes in the pension provisions in compliance with the Labour Code are summarized as follows:
2021
2020
BGN‘000
BGN‘000
Pension provisions at 1 January
38
32
Decrease/increase of pension provisions due to an increased number of
employees expected to retire in next 5 years
(15)
5
Discounted
1
1
Actuarial gain
(2)
-
Pension provisions at 31 December
22
38
The total expenses of the Company's defined benefit plans recognized in profit or loss may be presented
as follows:
2021
2020
BGN‘000
BGN‘000
Current service expenses
14
(5)
Interest expenses
(1)
(1)
Total expenses recognized in profit or loss
13
(6)
Current and past service expenses are included in " Employee benefits expense". Net interest expense is
included in the separate statement of profit or loss in the line “Finance costs” (see Note 25).
17. Borrowings
Borrowings include the following financial liabilities:
Current
Non-current
2021
2020
2021
2020
BGN‘000
BGN‘000
BGN‘000
BGN‘000
Financial liabilities measured at
amortized cost
Bank loans
6 821
4 281
9 038
8 380
Interest on bank loans
9
-
-
-
Total carrying amounts
6 830
4 281
9 038
8 380
All loans are denominated in Bulgarian leva (BGN).
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
40
17.1. Borrowings at amortized cost
Bank
Type of loan
Currency
Total
amount of
credit
(BGN)
Outstanding
obligation at
31.12.2021
(BGN)
Date of
contract
Interest rate
Number
of
outstanding
installments
Amount of
monthly
installment
(BGN)
Maturity date
Pledges
“Eurobank
Bulgaria” AD
Overdraft
BGN
4 200 000
3 635 493
21.07.2016
Base + 0.7
points, but not
less than
1.7% per year
-
-
31.12.2022
Pledge of the Receivables
under the Business
Incubator Contract
№BG161PO003-
2.2.0012-C0001 /
02.02.2012; Mortgage of a
real estate located in Sofia,
Mladost district,
“Tsarigradsko Shosse”
Blvd 135, namely the 5th
floor of the building
“United
Bulgarian
Bank” AD
Investment
BGN
10 475 000
6 285 080
12.12.2019
RIR + 1.2%,
but no less
that 1.3% per
year
36
174 580
20.12.2024
Pledge of receivables,
pledge of commercial
enterprises, pledge of real
estate
“United
Bulgarian
Bank” AD
Investment
EUR
2 933 745
1 931 382
11.12.2021
3 m.
EURIBOR +
1.2%, but no
less that 1.3%
per year
116
16 230
11.12.2031
Pledge of receivables,
pledge of real estate
“United
Bulgarian
Bank” AD
Investment
EUR
6 391 652
4 007 496
11.12.2021
3 m.
EURIBOR +
1.2%, but no
less that 1.3%
per year
95
42 184
11.12.2029
Pledge of receivables,
pledge of commercial
enterprises, pledge of real
estate
The carrying values of borrowings are considered to be a reasonable approximation of fair value.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
41
18. Lease liabilities
2021
2020
BGN’000
BGN’000
Lease liabilities – non-current portion
102
122
Lease liabilities – current portion
20
19
Lease liabilities
122
141
Future minimum lease payments at 31 December 2021 were as follows:
Minimum lease payments due
Within
1 year
1-2
2-3
3-4
4-5
Total
years
years
years
years
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
31 December 2021
Lease payments
23
23
23
23
43
135
Finance charges
(3)
(3)
(3)
(3)
(1)
(13)
Net present values
20
20
20
20
42
122
Minimum lease payments due
Within
1 year
1-2
2-3
3-4
4-5
Total
years
years
years
years
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
BGN’000
31 December 2020
Lease payments
23
23
23
23
62
154
Finance charges
(4)
(3)
(3)
(2)
(1)
(13)
Net present values
19
20
20
21
61
141
Interest expense on leases included in the finance costs for the year ended 31 December 2021 is BGN
5 thousand (2020: BGN 1 thousand).
Total cash outflow for leases for the year ended 31 December 2021 was BGN 24 thousand (2020: BGN
30 thousand).
19. Trade and other payables
2021
2020
BGN’000
BGN’000
Non-current:
Trade payables
107
128
Financial liabilities
107
128
Tax payables
64
315
Others
2
-
Non-financial liabilities
66
315
Current trade and other payables
173
443
The carrying values of current trade and other payables are considered to be a reasonable
approximation of fair value.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
42
20. Revenues from sales
20.1. Revenues recognized over time
The Company presents revenues from the sale of goods and services at a point in time and over time in the following product lines and geographical regions:
Administrative and accounting services
Technical
support
Sale of
licenses
Cloud services
Other
revenues
Total
Bulgaria
Great Britain
USA
Bulgaria
Bulgaria
USA
Bulgaria
2021
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
Gross revenue
865
9
20
36
1 803
195
356
3 284
Revenues from contracts with clients
865
9
20
36
1 803
195
356
3 284
Revenue recognition
Over time
865
9
20
36
1 803
195
356
3 284
Administrative and accounting services
Technical
support
Sale of licenses
Other
revenues
Total
Bulgaria
Great Britain
USA
Bulgaria
Bulgaria
Bulgaria
2020
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
Gross revenue
875
10
21
36
2 518
208
3 668
Revenues from contracts with clients
875
10
21
36
2 518
208
3 668
Revenue recognition
Over time
875
10
21
36
2 518
208
3 668
Revenues at the amount of BGN 1 605 thousand (2020: BGN 2 028 thousand) are reported by one external client.
Product lines
2021
2020
BGN‘000
BGN‘000
Sale of licenses
1 803
2 518
Administrative, accounting services
893
906
Cloud services
195
-
Technical Support
36
36
Others
357
208
3 284
3 668
The decrease in the sales of licenses and respectively in the revenues of the Company is a result of the global contraction of operating expenses of the
companies in the various sectors of the economy affected by the Covid crisis, which are users of this type of services.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
43
20.2. Rental revenues
The company has realized rental income in relation to leased investment properties as follows:
2021
2020
BGN‘000
BGN‘000
Rental revenues
523
533
523
533
21. Other income
2021
2020
BGN‘000
BGN‘000
Dividend income
240
146
Interest income
33
158
Gain from sale of investments
7
-
Gain on sale of non-current assets
5
-
Revenues from financing
-
27
Other revenues
531
2
824
333
Dividends received in the period relate to interests held in subsidiaries.
Interest income relates to loans granted to related parties.
Gain from sale of investments is related to the sale of the company's shares in an associate.
Other revenues in the amount of BGN 531 thousand (2020: BGN 2 thousand) represent reintegrated
impairment of receivables, of which BGN 376 thousand were collected during the year and BGN 155
thousand - offset.
22. Capitalized own expenses
The Company’s capitalized own expenses can be summarized as follows:
2021
2020
BGN‘000
BGN‘000
Hired services expenses
251
-
Employee benefits expense
57
65
Depreciation and amortisation of non-financial assets
25
34
333
99
23. Cost of materials
2021
2020
BGN‘000
BGN‘000
Electricity
(13)
(2)
Inventory
(12)
(21)
Office repair and maintenance materials
(10)
(11)
Hygienic materials
(9)
(10)
Heating
(4)
(1)
Office supplies
(3)
(4)
Computer components
(2)
(2)
Water
(2)
(1)
Advertising materials
-
(1)
Others
(17)
(13)
(72)
(66)
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
44
24. Hired services expenses
2021
2020
BGN‘000
BGN‘000
Consulting services
(603)
(327)
Software services
(255)
(4)
Software license rental
(195)
(220)
Office maintenance and repair
(47)
(7)
Audit
(43)
(39)
Insurance
(32)
(12)
Civil contracts
(26)
(4)
Commissions and fees
(23)
(37)
Internet
(22)
(18)
Advertising
(17)
(29)
Subscriptions
(14)
(21)
Mobile phones
(10)
(9)
Security
(6)
(4)
Cleaning
(5)
(5)
Seminars and training
(2)
(18)
Car maintenance and repair
(1)
(4)
Notary taxes
-
(11)
Others
(5)
(5)
(1 306)
(774)
The remuneration for independent financial audit for 2021 amounts to BGN 43 thousand. No tax
consultancy or other services, not related to the audit, have been provided. This disclosure is made in
compliance with the requirements of Article 30 of Bulgarian Accountancy Act.
25. Other expenses
2021
2020
BGN‘000
BGN‘000
Local taxes and fees
(70)
(80)
Impairment of receivables
(27)
(228)
Social expenses
(9)
(9)
Entertainment expenses
(8)
(9)
Penalties under commercial contracts
-
(106)
Business trips
-
(7)
Others
(8)
(4)
(122)
(443)
26. Finance costs and finance income
2021
2020
BGN‘000
BGN‘000
Interest expense for deposits
(165)
(86)
Borrowings at amortized cost
(140)
(188)
Interest expense for finance lease agreements
(5)
(1)
Interest expense NRA
-
(6)
Total interest expenses for financial liabilities
not at fair value through profit or loss
(310)
(281)
Bank fees and commissions
(44)
(29)
Loss on foreign currency financial liabilities designated at fair value through profit
or loss
(7)
(28)
Net interest expense on defined benefit plans
(1)
(1)
Finance costs
(362)
(339)
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
45
2021
2020
BGN‘000
BGN‘000
Interest income on financial assets carried at amortized cost and financial
instruments carried at fair value through profit or loss
4
30
Total interest income for financial assets
4
30
Gain on foreign currency financial liabilities designated at fair value through profit
or loss
46
14
Finance income
50
44
27. Income tax expense
The relationship between the expected tax expense based on the applicable tax rate in Bulgaria of 10%
(2020: 10%) and the reported tax expense in profit or loss can be reconciled as follows:
2021
2020
BGN‘000
BGN‘000
Profit before tax
1 123
1 087
Tax rate
10%
10%
Expected tax expense
(112)
(109)
Tax effect of:
Increase of the financial result for tax purposes
(76)
(108)
Decrease of the financial result for tax purposes
183
181
Current tax expense
(5)
(36)
Deferred tax income:
Origination and reversal of temporary differences
(84)
(56)
Income tax expense
(89)
(92)
28. Earnings per share and dividends
28.1. Earnings per share
Basic earnings per share has been calculated using the profit attributed to shareholders of the Company
as the numerator.
The weighted average number of outstanding shares used for basic earnings per share as well as profit
attributable to shareholders are as follows:
2021
2020
Profit attributable to the shareholders (BGN)
1 034 416
994 825
Weighted average number of outstanding shares
58 776 047
58 776 047
Basic earnings per share (BGN per share)
0,0176
0,0169
The weighted average number of shares used to calculate earnings may be equal to the weighted
average number of ordinary shares used to calculate basic income, as follows:
2021
2020
Number of
shares
Number of
shares
Weighted average number of outstanding shares for earnings per share
58 776 047
58 776 047
Weighted average number of outstanding shares for earnings
58 776 047
58 776 047
28.2. Dividends
The Company has not paid dividends in 2021 and 2020.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
46
29. Related party transactions
The Company's related parties include its owners, subsidiaries and associates, key management
personnel and others described below.
Unless otherwise stated, none of the transactions incorporate special terms and conditions and no
guarantees were given or received.
29.1. Transactions with subsidiaries
2021
2020
BGN‘000
BGN‘000
Purchases of goods and
services:
Purchases of services:
- Software services
(4)
(4)
- Office supplies
(3)
(3)
- Inventory
(1)
(1)
- Computer components
(2)
(1)
Purchases of LTA
(39)
(5)
Sales of goods and services
Sales of services
- Administrative, accounting
services
738
732
- Rent
476
476
- Consulting services
91
47
- Sale of licenses
1 803
2 518
- Cloud services
195
-
- Technical Support
22
22
- Marketing and Advertising
156
72
- Software Services
2
-
Sales of goods:
- Consumables
77
74
Dividends
240
146
- Received deposits
2 300
5 421
- Refund of received deposits
915
3 443
- Given loans
(196)
(235)
- Refunded loans
209
3
- Interest on received deposits
166
86
- Interest on loans granted
25
146
29.2. Transactions with associates
The company had no transactions with associates in 2021 and 2020.
29.3. Transactions with other related parties
2021
2020
BGN‘000
BGN‘000
Purchases of services:
- Internet
(20)
(17)
- Consulting services
(7)
-
- Subscriptions
(1)
(9)
Sale of services
- Administrative, accounting
services
155
158
- Rent
47
47
- Consulting services
1
3
-
80
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
47
2021
2020
BGN‘000
BGN‘000
- Technical support
15
15
Sale of licenses
-
80
Purchases of goods
- Consumables
-
6
- Deposits received
-
150
- Given loans
-
(320)
- Refunded loans
317
20
- Interest on loans granted
16
37
- Interest on loans received
1
-
29.4. Transactions with key management personnel
Key management of the Company includes members of the board of directors. Key management
personnel remuneration includes the following expenses:
2021
2020
BGN‘000
BGN‘000
Short-term employee benefits:
Salaries including bonuses
(448)
(281)
Social security costs
(7)
(7)
Total short-term employee benefits
(455)
(288)
Total remunerations
(455)
(288)
30. Related party balances at year-end
2021
2020
BGN‘000
BGN‘000
Non-current
Receivables from:
- subsidiaries:
3 807
3 807
- loans
3 807
3 807
Total non-current receivables from related parties
3 807
3 807
Current
Receivables from:
- subsidiaries:
2 064
2 226
- trade and other receivables
1 130
1 311
- impairment of trade receivables
(11)
(376)
- loans
879
1 079
- dividends
66
212
- other related parties under common control
157
202
- trade and other receivables
63
126
- impairment of trade receivables
(47)
(106)
- loans
329
800
- impairment of loans
(188)
(618)
- key management personnel
72
72
- other receivables
92
92
- impairment of other receivables
(20)
(20)
Total current receivables from related parties
2 293
2 500
Total receivables from related parties
6 100
6 307
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
48
2021
2020
Non-current
BGN‘000
BGN‘000
Payables to:
- subsidiaries:
6 179
6 179
- deposits
6 179
6 179
Total non-current payables to related parties
6 179
6 179
Current
Payables to:
- subsidiaries:
3 665
2 266
- trade and other liabilities
-
150
- deposits
3 501
2 116
- interests
164
-
- other related parties under common control
5 665
538
- trade and other liabilities
4
21
- deposits
514
514
- others
5 147
3
- key management personnel
7
7
Total current payables to related parties
9 337
2 811
Total payables to related parties
15 516
8 990
As at 31 December 2021 the Company reports the following granted loans:
- to two subsidiaries in the amount of BGN 879 thousand maturing on 31.12.2022
- to one subsidiaries in the amount of BGN 3 807 thousand maturing on 31.12.2023 and
- to four other related parties under common control in the amount of BGN 328 thousand with
maturity on 31.12.2022.
Interest rates vary between 1,3%, 2,8% and 6,5%. There are no collateral for the deposits.
As at 31 December 2021 the Company has received the following deposits:
- from one subsidiary in the amount of BGN 6 179 thousand with maturity on 31 December 2022
and interest in the amount of 0,1% and and incurred bank charges,
- from one subsidiaries in the amount of BGN 3 501 thousand with maturity on 31 December
2022 and interest in the amount of 0,1% and incurred bank charges and
- by one other related parties under common control in the amount of BGN 514 thousand with
maturity on 31.12.2022 and interest rate 0,1%.
A simplified approach for determining the expected credit losses at the end of the period has been
applied to all receivables from related parties of the Company.
The change in the amount of the adjustment for expected credit losses of receivables from related
parties can be presented as follows:
2021
2020
BGN‘000
BGN‘000
Balance as of January 1
(1 120)
(1 461)
Amounts written off (uncollectible)
343
434
Amounts paid
531
-
Impairment loss
(20)
(93)
Balance as of December 31
(266)
(1 120)
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
49
31. Reconciliation of liabilities arising from financing activities
The changes in the Company’s liabilities arising from financing activities can be classified as follows:
Long-term
borrowings
Short-term
borrowings
Interest on
borrowings
Lease
liabilities
Interest on lease
agreements
Deposits
liabilities
Purchase of
own shares
Total
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
1 January 2021
6 285
4 281
-
141
-
8 809
-
19 516
Cash flows:
Repayment
-
(2 186)
(131)
(19)
(5)
(799)
-
(3 140)
Proceeds
6 030
1 451
-
-
-
2 300
-
9 781
Non-cash:
Offsetting
-
-
-
-
-
(116)
-
(116)
Accrual of interest
-
-
140
-
5
-
-
145
Reclassification
(3 277)
3 277
-
-
-
-
-
-
31 December 2021
9 038
6 823
9
122
-
10 195
-
26 186
Long-term
borrowings
Short-term
borrowings
Interest on
borrowings
Lease
liabilities
Interest on lease
agreements
Deposits
liabilities
Purchase of
own shares
Total
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
BGN‘000
1 January 2020
8 380
4 234
-
-
-
6 999
-
19 613
Cash flows:
Repayment
-
(2 095)
(187)
(29)
(1)
(1 160)
(75)
(3 547)
Proceeds
-
47
-
-
-
5 294
-
5 341
Non-cash:
Offsetting
-
-
-
-
-
(2 324)
-
(2 324)
Occurrence of leasing obligations
-
-
-
170
-
-
-
170
Accrual of interest
-
-
187
-
1
-
-
188
Accrual of repurchased shares
75
75
Reclassification
(2 095)
2 095
-
-
-
-
-
-
31 December 2020
6 285
4 281
-
141
-
8 809
-
19 516
32. Non-cash transactions
During the presented reporting periods, the Company entered into the following non-cash investing and financing activities which are not reflected in the
statement of cash flows:
• Тhe company acquired assets at amount of BGN 3 thousand (2020: BGN 5 thousand);
• The company reimbursed deposits in the amount of BGN 116 thousand, which are offset against receivables from participations (2020: BGN 2 604
thousand);
• The company has offset impaired receivables in the amount of BGN 155 thousand.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
50
33. Contingent assets and contingent liabilities
There are no contingent liabilities relating to subsidiaries and associates of the Company, except for:
The Company is a guarantor for loans granted to related parties as follows:
Recipient of loan
Bank
Type of loan
Currency
Total
amount of
credit in
BGN)
Outstanding
obligation to
31.12.2021 (in
BGN)
Date of
contract
Interest rate
Maturity date
Pledges
Sirma Solutions AD
United
Bulgarian
Bank AD
overdraft
BGN
4 025 000
3 485 907
12.12.2019
RIR + 1.2%,
but no less
that 1.3%
per year
20.12.2025
Pledge of receivables,
pledge of commercial
enterprises, pledge of
real estate
Sirma Solutions AD
United
Bulgarian
Bank AD
Revolving credit line
BGN
4 000 000
4 000 000
28.10.2020
RIR + 1.4%,
but no less
that 1.5%
per year
28.10.2025
Pledge of receivables.
Sirma AI EAD
United
Bulgarian
Bank AD
overdraft
EUR
1 449 270
-
15.08.2019
1 m.
EURIBOR +
1,4% (but
not less than
1,4%)
20.09.2022
Second in a row pledge
on Sirma AI; Second
pledge of his shares; A
second pledge of current
and future receivables
totaling EUR 741
thousand; Pledge on
receivables on all
accounts of the borrower
in UBB in the amount of
EUR 741 thousand.
Sirma AI EAD
United
Bulgarian
Bank AD
overdraft
EUR
5 867 490
5 763 451
15.08.2019
1 m.
EURIBOR +
1,4% (but
not less than
1,4%)
20.09.2022
The first in a row pledge
of Sirma AI; The first
pledge of the shares he
holds; First in a row
pledge of current and
future receivables totaling
EUR 3 million; Pledge on
receivables on all
accounts of the borrower
in UBB in the amount of
EUR 3 million.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
51
Litigations
No claims were brought against the Company.
Tax liabilities
The Company's management does not believe that there are significant risks as a result of the dynamic
fiscal and regulatory environment in Bulgaria, which would require adjustments to the financial
statements for the year ended 31 December 2021.
34. Categories of financial assets and liabilities
The carrying amounts presented in the statement of financial position relate to the following categories
of assets and liabilities:
Financial assets
2021
2020
BGN’000
BGN’000
Trade and other receivables
486
543
Related party receivables
6 100
6 307
Cash and cash equivalents
1 775
1 288
8 361
8 138
Financial liabilities
2021
2020
BGN‘000
BGN‘000
Financial liabilities measured at amortized cost
Borrowings:
15 868
10 566
non-current
9 038
6 285
current
6 830
4 281
Lease liabilities:
122
141
non-current
102
122
current
20
19
Trade and other payables
107
128
Related party payables:
15 516
8 990
non-current
6 179
6 179
current
9 337
2 811
31 613
19 825
See note 4.16 about information related to the accounting policy for each category financial instruments.
Description of the risk management objectives and policies of the Company related to the financial
instruments is presented in note 35.
35. Financial instrument risk
Risk management objectives and policies
The Company is exposed to various risks in relation to financial instruments. The Company's financial
assets and liabilities by category are summarized in note 34. The main types of risks are market risk,
credit risk and liquidity risk.
The Company's risk management is coordinated at its headquarters, in close co-operation with the
board of directors and focuses on actively securing the Company's short to medium-term cash flows by
minimizing the exposure to financial markets.
The Company does not actively engage in the trading of financial assets for speculative purposes nor
does it write options.
The most significant financial risks to which the Company is exposed are described below.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
52
35.1. Market risk analysis
The Company is exposed to market risk through its use of financial instruments and specifically to
currency risk, interest rate risk and certain other price risks, which result from both its operating and
investing activities.
Annual inflation continued to accelerate in 2021. The rise in prices is widespread by component and
reflects the simultaneous action of pro-inflationary factors on both the external and internal
macroeconomic environment. According to BNB data, energy products (excluding those with
administratively set prices) and food had the highest positive contribution to headline inflation in
September amid a significant annual increase in commodity prices on international markets.
Administratively set prices continued to contribute to headline inflation, mainly due to higher energy,
heat and gaseous fuel prices approved by the Energy and Water Regulatory Commission.
The expected rise in inflation, influenced by domestic and international factors, will continue to affect
the increase in purchase prices of goods and services used by the Company, which could lead to an
unexpected contraction in consumer demand and future revenues.
35.1.1. Foreign currency risk
Most of the Company’s transactions are carried out in Bulgarian leva (BGN). Exposures to currency
exchange rates arise from the Company's overseas sales and purchases, which are primarily
denominated in US-Dollars.
To mitigate the Company's exposure to foreign currency risk, non-BGN cash flows are monitored.
Generally, Company’s risk management procedures distinguish short-term foreign currency cash flows
(due within 6 months) from longer-term cash flows. Where the amounts to be paid and received in a
specific currency are expected to largely offset one another, no further hedging activity is undertaken.
Foreign currency denominated financial assets and liabilities which expose the Company to currency
risk are disclosed below. The amounts shown are translated into Bulgarian leva at the closing rate:
Short-term exposure
BGN‘000
31 December 2021
Financial assets
416
Total exposure
416
31 December 2020
Financial assets
8
Total exposure
8
Financial liabilities
150
Total exposure
150
The tables below show the sensitivity of the annual net financial result after taxes and equity to possible
changes in the exchange rates of the Bulgarian lev against the following foreign currencies:
• USD +/- 3.8% (for 2020: +/- 6.5%)
All other parameters are assumed to be constant.
These percentages are determined on the basis of the average exchange rates for the last 12 months.
The sensitivity analysis is based on the Company's investments in foreign currency financial
instruments held at the end of the reporting period.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
53
31 December 2021
Increase in the exchange rate of
the Bulgarian lev
Decrease in the exchange rate of
the Bulgarian lev
Net financial
result
Equity
Net financial
result
Equity
BGN‘000
BGN‘000
BGN‘000
BGN‘000
US Dollars (+/- 3.8 %)
(14)
(14)
14
14
31 December 2020
Increase in the exchange rate of
the Bulgarian lev
Decrease in the exchange rate of
the Bulgarian lev
Net financial
result
Equity
Net financial
result
Equity
BGN‘000
BGN‘000
BGN‘000
US Dollars (+/- 6.5 %)
(8)
(8)
8
8
Despite the small size of foreign currency financial instruments, the impact of the general economic
situation and the dynamics of international markets could have an impact, leading to unexpected
changes in the US dollar and significantly affecting the Company's financial performance in the future.
35.1.2. Interest rate risk
The Company's policy is to minimize interest rate cash flow risk exposures on long-term financing.
Longer-term borrowings are therefore usually at fixed rates. As of 31 December 2021 the interest rates
on loans are formed plus a margin, but due to the slight changes in the respective reference values in
recent years, the exposure to interest rate risk of the Company is insignificant. All other Company's
financial assets and liabilities are with fixed interest rates.
35.2. Credit risk
Credit risk is the risk that a counterparty fails to discharge an obligation to the Company. The Company
is exposed to this risk for various financial instruments, for example by granting loans and receivables
to customers, placing deposits, etc. The Company's maximum exposure to credit risk is limited to the
carrying amount of financial assets recognised at the reporting date, as summarized below:
2021
2020
BGN‘000
BGN‘000
Financial assets
Trade and other receivables
486
543
Related parties receivables
6 100
6 307
Cash and cash equivalents
1 775
1 288
8 361
8 138
The Company continuously monitors defaults of customers and other counterparties, identified either
individually or by group, and incorporates this information into its credit risk controls. Where available
at reasonable cost, external credit ratings and/or reports on customers and other counterparties are
obtained and used. The Company's policy is to deal only with creditworthy counterparties. The
Company's management considers that all the above financial assets that are not impaired or past due
for each of the reporting dates under review are of good credit quality.
The Company has not provided its financial assets as collateral for transactions other than collateral for
received bank loans.
In respect of trade and other receivables, the Company is not exposed to any significant credit risk
exposure to a single counterparty or any group of counterparties having similar characteristics. Trade
receivables consist of a small number of customers in single industry and geographical area. Based on
historical information about customer default rates management consider the credit quality of trade
receivables that are not past due or impaired to be good.
The management of the company performs a regular and detailed analysis of the settlements with its
counterparties on an individual basis, as well as an assessment of the potential effect on their credit
quality, incl. in terms of forming a reasonable amount of impairment losses. The negative economic
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
54
consequences and potential cash flow difficulties for customers as a result of Covid-19 were taken into
account when assessing collection. Based on the performed analysis, and taking into account the
collection of its receivables in the period after the pandemic, until the date of preparation of these
separate financial statements, the company's management believes that there are currently no
indications of deterioration in the credit quality of counterparties.
The credit risk for cash and cash equivalents is considered negligible, since the counterparties are
reputable banks with high quality external credit ratings.
The carrying amounts disclosed above are the Company's maximum possible credit risk exposure in
relation to these instruments.
35.3. Liquidity risk
Liquidity risk is the risk arising from the Company not being able to meet its obligations. The Company
manages its liquidity needs by monitoring scheduled debt servicing payments for long-term financial
liabilities as well as forecast cash inflows and outflows due in day-to-day business. Liquidity needs are
monitored in various time bands, on a day-to-day and week-to-week basis, as well as on the basis of a
rolling 30-day projection. Long-term liquidity needs for a 180-day and a 360-day lookout period are
identified monthly. Net cash requirements are compared to available borrowing facilities in order to
determine headroom or any shortfalls. This analysis shows that available borrowing facilities are
expected to be sufficient over the lookout period.
The Company's objective is to maintain cash to meet its liquidity requirements for 30-day periods.
Funding for long-term liquidity needs is additionally secured by an adequate amount of committed credit
facilities and the ability to sell long-term financial assets.
As at 31 December 2021, the Company's non-derivative financial liabilities have contractual maturities
(including interest payments where applicable) as summarized below:
Current
Non-current
31 December 2021
Within 6
months
6 to 12
months
1 to 5 years
BGN‘000
BGN‘000
BGN‘000
Loan liabilities
3 415
3 415
9 038
Lease liabilities
11
12
112
Trade and other payables
107
-
-
Related party payables
5 315
4 022
6 179
Total
8 848
7 449
15 329
This compares to the maturity of the Company's non-derivative financial liabilities in the previous
reporting period as follows:
Current
Non-current
31 December 2020
Within 6
months
6 to 12
months
1 to 5 years
BGN‘000
BGN‘000
BGN‘000
Loan liabilities
3 234
1 047
6 285
Lease liabilities
11
12
131
Trade and other payables
128
-
-
Related party payables
181
2 630
6 179
Total
3 554
3 689
12 595
The above amounts reflect the contractual undiscounted cash flows, which may differ from the carrying
values of the liabilities at the reporting date.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
55
Financial assets used for managing liquidity risk
The Company considers expected cash flows from financial assets in assessing and managing liquidity
risk, in particular its cash resources and trade receivables. The Company's existing cash resources and
trade receivables do not significantly exceed the current cash outflow requirements. Cash flows from
trade and other receivables are all contractually due within six months.
36. Capital management policies and procedures
The Company's capital management objectives are:
• to ensure the Company's ability to continue as a going concern; and
• to provide an adequate return to the shareholder by pricing products and services
commensurately with the level of risk.
The Company monitors capital on the basis of the correlation between adjusted capital and net debt.
Net debt comprises of total liabilities, incl. total borrowings, trade and other payables less the carrying
amount of cash and cash equivalents.
Company's goal is to maintain a capital-to-net debt ratio within reasonable limits.
The amount of the correlation for the presented accounting periods is summarized as follows:
2021
2020
BGN‘000
BGN‘000
Equity
74 476
73 440
Total liabilities/Total borrowings, trade and other payables/
32 085
20 370
- Cash and cash equivalents
(1 775)
(1 288)
Net debt
30 310
19 082
Adjusted capital to net debt
1:2.46
1:3.85
The ratio-change during 2021 is primarily a result of the increase of liabilities and increase of equity.
The Company manages the capital structure and makes adjustments to it in the light of changes in
economic conditions and the risk characteristics of the underlying assets. In order to maintain or adjust
the capital structure, the Company may adjust the amount of dividends paid to shareholders, return
capital to shareholders, issue new shares, or sell assets to reduce debt.
No changes were made in the objectives, policies or processes for managing capital during the
presented periods and in the description of what the Company manages as capital.
37. Post-reporting date events
The ongoing global pandemic of Covid-19
In relation with the ongoing global pandemic of Covid-19, information on the impact of which on the
company's activities is set out in note 2 of these separate financial statements, the Council of Ministers
extended the emergency epidemic situation in Bulgaria until 31 March 2022. The management monitors
the development of the pandemic, the measures adopted and imposed by the government and timely
analyzes their potential effect on the operational and financial condition, in order to balance the liquidity
positions of the Company and ensure financial stability.
“Sirma Group Holding” JSC
Separate Financial Statements
31 December 2021
56
Complicated international situation
The full-scale military invasion of Russia in Ukraine, which began on 24 February 2022, caused a wide
international response and affected the countries of Europe in various aspects. The expectation is that
the military conflict will have a negative impact and affect all businesses to one degree or another.
The escalation of hostilities between Russia and Ukraine, the imposition of sanctions and restrictions
by the European Union, USA, Canada, Britain and other countries on Russia, the Russian Central Bank,
credit institutions, companies, individuals and the closure of Russian stock exchanges, cause significant
shocks, ubiquitous on financial markets. The company has no direct exposure to Ukraine or Russia.
However, the impact on the general economic situation may necessitate a revision of some
assumptions and judgments. At the same time, inflationary pressures continue to increase, with military
action and rising quotations on all commodities expected to increase further.
Systematic risks operate outside the Company, but have a key impact on its activities. These risks are
specific to the whole market and cannot be avoided by diversifying the risk, as they are related to the
macroeconomic situation, the political situation, regional development and others.
The economic sanctions imposed on Russia by USA and the European Union in connection with the
military conflict are likely to have a direct impact on the Company's activities, in relation with the indirect
effects of the effect on business and consumer confidence and commodity markets.
Contracts for transfer of receivables
On 2 March 2022, contracts for transfer of receivables (Assignment) were signed as follows:
• Daticum AD transfers its receivable from Sirma AI EAD at the amount of BGN 1 241 786.93 to Sirma
Group Holding JSC (Assignee), the transferred receivable passes to the assignee's patrimony together
with its accessories.
• Sirma Group Inc. USA transfers its receivable from Sirma AI EAD at the amount of BGN 416 009.45
to Sirma Group Holding JSC (Assignee), the transferred receivable passes to the assignee's patrimony
together with its accessories.
No adjusting or significant non-adjusting events have occurred between the reporting date and the date
of authorization.
38. Authorization of the separate financial statements
The financial statements for the year ended 31 December 2021 (including comparatives) were
authorised for issue by the Board of Directors on 25.03.2022.
sirma.com
Annual Separate
Management Report
of "Sirma Group Holding" JSC
according to Annex N10 of Ordinance 2
to Article 32, Paragraph 1, ltem 2, Article
35, Paragraph 1, ltem 2, Article 41,
Paragraph 1, ltem 2
for 2021
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC I
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Content
1/ STATEMENT BY THE BOARD OF DIRECTORS OF “SIRMA GROUP HOLDING” JSC................................... III
2/ ORGANIZATION AND WAY OF PRESENTATION ............................................................................................ IV
3/ PORTFOLIO OF “SIRMA GROUP HOLDING” JSC ........................................................................................... VI
4/ STRUCTURE OF SHAREHOLDERS CAPITAL AND MANAGEMENT AUTHORITIES .................................... VII
4.1. Distribution of share capital ........................................................................................................................ VII
4.2. Management authorities ............................................................................................................................ VIII
5/ “SIRMA GROUP HOLDING” IN 2021 ................................................................................................................ XII
EVENTS AND BUSINESS NEWS IN 2021 ...................................................................................................... XVI
MAIN LEGAL INFORMATION IN 2021 ............................................................................................................. XX
6/ INDIVIDUAL FINANCIAL RESULTS .............................................................................................................. XXIII
6.1. REVENUES ................................................................................................................................................. XXIII
6.2. EXPENSES ................................................................................................................................................ XXIV
6.3. FINANCIAL INCOME / COSTS (NET) ........................................................................................................ XXIV
6.4. ASSETS ..................................................................................................................................................... XXIV
6.5. EQUITY ....................................................................................................................................................... XXV
6.6. LIABILITIES ................................................................................................................................................. XXIII
6.7. CASH FLOW ............................................................................................................................................ XXVIII
6.8. FINANCIAL RATIOS AND INDICATORS .................................................................................................... XXX
6.9 RELATED PARTY TRANSACTIONS ......................................................................................................... XXXII
7/ ECOLOGY AND PERSONNEL ................................................................................................................... XXXIV
7.1 ECOLOGY ................................................................................................................................................. XXXIV
7.2 PERSONNEL ............................................................................................................................................ XXXIV
8/ RISK FACTORS ............................................................................................................................................. XXX
8.1 System Risks ............................................................................................................................................. XXXIV
8.1.1. Economic Growth ............................................................................................................................... XXXV
8.1.2. Political Risk ....................................................................................................................................... XXXV
8.1.3. Credit Risk .......................................................................................................................................... XXXV
8.1.4. Currency Risk ..................................................................................................................................... XXXV
8.1.5. Interest Rate Risk .............................................................................................................................. XXXVI
8.1.6. Inflation Risk ..................................................................................................................................... XXXVII
8.1.7. Liquidity risk ...................................................................................................................................... XXXVI
8.1.8. Risk from unfavorable changes in tax and other legislation ............................................................. XXXVII
8.1.9. Force Majeure Risks ........................................................................................................................ XXXVII
8.2. Non-system Risks .................................................................................................................................... XXXVII
8.2.1. Industry Risks ................................................................................................................................... XXXVII
8.2.2. Specific Company Risk .................................................................................................................... XXXVII
8.2.3. Operation Risk ................................................................................................................................. XXXVII
8.2.4. Intelectual Property Protection ........................................................................................................ XXXVIII
8.2.5. Risk of concluding insider deals at prices differing from the market ones ....................................... XXXVIII
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC II
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8.2.6. Risk of asset depreciation ............................................................................................................... XXXVIII
8.3. Risk factors, characteristic of share traded on the Stock Exchange ....................................................... XXXVIII
8.3.1. Price Risk................................................................................................................................. XXXVIII
8.3.2. Liquidity Risk ............................................................................................................................ XXXVIII
8.3.3. Inflation Risk .............................................................................................................................. XXXIX
8.3.4. Dillution Risk .............................................................................................................................. XXXIX
8.3.5. Currency Risk ............................................................................................................................ XXXIX
8.3.6. Lack of an annual dividend payment guaranty........................................................................... XXXIX
8.3.7. Risk of change in the tax treatment of investments in shares .................................................... XXXIX
8.3.8. Risk factors included in the Registration document ................................................................... XXXIX
9/ INFORMATION ABOUT EVENTS AND INDICATORS WITH INCREASED NATURE OF THE COMPANY,
HAVING A SIGNIFICANT EFFECT ON THEIR ACTIVITY AND THEIR INCOME AND EXPENDITURE;
EVALUATION OF THEIR IMPACT ON RESULTS IN THE CURRENT YEAR. ............................................... XXXIX
10/ INFORMATION ABOUT OUT OF THE BALANCE SHEET TRANSACTIONS - NATURE AND BUSINESS
PURPOSE, FINANCIAL IMPACT OF THE TRANSACTION ON ACTIVITY IF THE RISKS AND BENEFITS OF
THESE TRANSACTIONS ARE ESSENTIAL FOR THE COMPANY AND THE DISCLOSURE OF THIS
INFORMATION IS ESSENTIAL FOR ASSESSING THE FINANCIAL POSITION OF THE COMPANY. .............. XL
11/ ANALYSIS AND EVALUATION OF THE POLICY FORFINANCIAL RESOURCES MANAGEMENT AS WELL
AS INDICATING THE OPPORTUNITIES FOR SERVICING OBLIGATIONS, ANY THREATS AND MEASURES
WHICH THE COMPANY HAS TAKEN TO PREVENT THEM. ............................................................................. XL
12/ ASSESSMENT OF THE POSSIBILITIES FOR THE IMPLEMENTATION OF INVESTMENT INTENTIONS
WITH THE SIGNIFICANCE OF THE AMOUNT OF EXPENDITURE AND THE EFFECTIVENESS OF THE
POSSIBLE CHANGES IN THE STRUCTURE OF FINANCING THAT ACTIVITY. ............................................... XL
13/ INFORMATION ABOUT OCCURRING CHANGES IN THE REPORTING PERIOD IN THE MAIN
PRINCIPLES FOR THE MANAGEMENT OF THE COMPANY AND ITS ECONOMIC GROUP. ......................... XLI
14/ INFORMATION ABOUT THE MAIN CHARACTERISTICS OF THE FINANCIAL REPORTING PROCESSING,
INTERNAL CONTROL SYSTEM AND RISK MANAGEMENT SYSTEM IN THE COMPANY. ............................. XLI
15/ INFORMATION ON CHANGES IN MANAGEMENT AND SUPERVISORY BODIES DURING THE PERIOD.
............................................................................................................................................................................. XLI
16/ INFORMATION ABOUT THE USE OF THE FUNDS FROM A NEW ISSUED SHARES AND SECURITIES IN
THE REPORTING PERIOD. ............................................................................................................................... XLII
17/ DETAILS OF THE DIRECTOR FOR INVESTOR RELATIONS, INCLUDING TELEPHONE NUMBER AND
ADDRESS FOR CORRESPONDENCE. ............................................................................................................. XLII
18/ CHANGES IN THE PRICE OF THE SHARES OF THE COMPANY ............................................................ XLIII
19/ EVENTS AFTER THE END OF THE REPORTING PERIOD ........................................................................ XLIV
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC III
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1/ STATEMENT BY THE BOARD OF DIRECTORS OF
“SIRMA GROUP HOLDING” JSC
The present annual separate management report of „Sirma
Group Holding“ JSC covers the period, ending on 31
December 2021 and is prepared in accordance with the
provisions of Article 39 of the Accountancy Law and Art.
100o, para. 2 and 5 of the Law on the Public Offering of
Securities (POSA), including also the established events,
occurring after the balance sheet date. The structure of this
report is in accordance with Annex 9, 10 and Appendix 11
to Article 32a (2) of Ordinance No. 2.
The board of directors of the holding confirms that:
- there were no irregularities in which managers or
employees were involved, which may be material to the
separate financial statements;
- all material transactions are duly accounted for and
reflected in the annual separate financial statements as at
31 December 2021;
- there is no actual or potential breach of laws and (or) other
regulatory provisions that would have a material impact on
the separate financial statements or could serve as a basis
for reporting contingent losses;
- there are no legal or other restrictions on the flow of funds;
- there are no known trends, requests, commitments, events
or occasional circumstances for which we could reasonably
expect to affect the company as a whole
This management report contains estimates and
information based on our beliefs and assumptions, using
currently available information about them. Any statements
contained in this report that are not historical facts are
predictions. We have based these statements on the future
of our current expectations, assumptions and predictions
about future conditions and events. As a result, our
predictions and information are exposed to uncertainties
and risks, many of which are beyond our control. If one or
more of these uncertainties or risks materialize or if the
underlying management assumptions prove to be incorrect,
our actual results may differ materially from those described
in the report. We describe these risks and uncertainties in
the Risk Section of the report.
The words "purpose", "predict", "accept", "believe", "in the
future", "we could", "rely", "we are confident", "appreciate",
"expect", "we intend", "we can", "can", "prospect", "plan",
"project", "predict", "would" and other similar expressions
are intended to identify these forward-looking statements.
Such estimates are, for example, those made in the
Business Results section of our quantitative and qualitative
disclosures about market risk in accordance with
International Financial Reporting Standards (IFRS), namely
IFRS 7 and related statements in our Notes to the financial
statements, our prospects for development, and other
forecast information that appears in other parts of this
report. Unless required by law, we do not commit and we
have no obligation to update or revise predictive statements
as a result of new information we have received about the
conditions that existed at the time of this report, future
events, or otherwise unless we are obliged to do so under
the law.
This report includes IT industry statistics and global
economic trends that come from information published by
sources including International Data Corporation (IDC), a
market information and information technology consultant,
telecoms and consumer technology markets; Gartner, the
European Central Bank (ECB); and the International
Monetary Fund (IMF). This data type is only the forecasts of
IDC, the ECB, the IMF and other data sources for the global
economy and industry. SIRMA does not guarantee any
statistical information provided by sources such as IDC,
Gartner, ECB, IMF, or other similar sources cited in this
report. In addition, although we believe that information from
these sources is generally reliable, this type of data is
inaccurate. We warn readers not to create unnecessary
dependence on this data.
In our Separate Management Report, we analyze our
business activities for the reporting financial period as well
as the current situation of Sirma Group Holding. Starting
from a description of our business, economic environment
and strategy, we present our financial system and explain in
detail our results and operations as well as our financial
position and net assets. We also report on the various
aspects of financial sustainability of “Sirma Group Holding”
and the expected development of possible risks.
The financial information presented in the „Sirma Group
Holding“ JSC report includes our separate financial
statements, our report to the Board of Directors and some
financial aspects derived from our management
accountability. The non-financial data presented in the
report includes aspects of intellectual, human and social
rights and relationships derived from our materiality
assessment.
Our annual separate financial statements have been
prepared in accordance with IFRSs. Internal control over
financial reporting ensures the reliability of the information
presented in the separate financial statements. Our Board
of Directors has confirmed the effectiveness of our internal
financial reporting.
The reporting period is the financial period ending on
31.12.2021. The report includes the activity of “Sirma Group
Holding” JSC.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC IV
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2/ ORGANIZATION AND WAY OF PRESENTATION
“Sirma Group Holding” JSC is a holding company which
invests in technological businesses. It provides its
subsidiaries with strategical and operational management
as well as administrative, marketing and financial services.
Over the years, Sirma has created over 20 companies and
has invested a tremendous financial and human capital in
these. Our strategy is to create, incubate and develop
businesses.
Generating robust growth, cost-effectiveness and
consistent business results are among the company's top
priorities.
2.1. Group structure
твото;
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC V
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HISTORY AND DEVELOPMENT OF THE COMPANY
“Sirma Group Holding” JSC is a holding company registered
on 25.04.2008 in the Commercial Register under UIC
200101236, with principal place of business and registered
office: BULGARIA, Sofia (capital), Sofia municipality, city.
Sofia, 1784, Mladost area, bul. Tsarigradsko Shosse, No
135.
The name of the company was changed on 23.03.2009.
from "SGH" JSC to "Sirma Group Holding" JSC. "Sirma
Group Holding" JSC is not a limited life entity.
The company’s principal activities include: Acquisition,
management, evaluation and sale of interest in Bulgarian
and foreign entities; acquisition, evaluation and sale of
patents, granting of licenses to use patents of the entities in
which the company holds interests, financing the entities in
which the company holds shares, organizing their
accounting and compiling financial statements under the
Law of Accounting. The Company may perform
independent business activity that is not prohibited by law.
Changes in the principal activity:
On 23.03.2009 “Sirma Group Holding” changed its principal
activity as follows: Acquisition, management, evaluation
and sale of interest in Bulgarian and foreign entities;
acquisition, evaluation and sale of patents, granting of
licenses to use patents of the entities in which the company
holds interests, financing the entities in which the company
holds shares, organizing their accounting and compiling
financial statements under the Law of Accounting. On The
company may also carry out its own commercial activity,
which is not prohibited by law. 04.07.2012 the subject of
activity was changed to the current one.
At the time of its incorporation, the company operated under
the following business activities: design, development,
marketing, sales, implementation, training and support of
software products and integrated solutions, including
software project management, information and
communication technology consultancy; accounting
services, as well as any other activity not prohibited by law.
Since the incorporation of the company until the date of this document, “Sirma Group Holding” JSC:
• has not transferred or established a pledge of the enterprise;
• has not filed claims for the opening of insolvency proceedings of the company;
• has not received tenders from third parties to purchase the Company or from the Company to purchase other companies;
CAPITAL
The share capital of the company amounts to BGN 59 360
518, divided into 59 360 518 dematerialized shares with
nominal value of BGN 1.
• On 30.10.2015, after a successful initial public
offering, the capital was increased to BGN 59 360 518 by
issuing 9 523 362 new shares with nominal value per share
BGN 1 and issue price BGN 1,20
Non-monetary contributions - description:
1. Software representing 29 (twenty nine) software
modules.
Amount: BGN 61 555 838
2. 81 960 number of ordinary registered shares of "Sirma
Group" JSC, the company registered in the Commercial
Register to the Registry Agency under UIC 040529004.
Amount: BGN 11 734 980
3. Real Estate - Floor 3 of an office building "IT - Center
Office Express" in Sofia, bul.”Tsarigradsko Shosse " N 135
with an area 796, 50 square meters, pursuant to Deed of
buying and selling real estate N 126, Volume I, reg. N 4551,
case N 116 from 23.04.2003 and 5 floor of an office building
"IT - center office Express" in Sofia
bul. " Tsarigradsko Shosse " N 135 with area 281.81 square
meters, according to Deed of sale of real estate N 86,
Volume 4, Reg. N 10237, Case N 592 of 23.12.2004
Amount: BGN 3 911 660
Total Amount: BGN 77 202 478
Non-cash contributions are detailed in Article 7, paragraph
3 of the Articles of Association of the Company.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC VI
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HISTORY OF SHAREHOLDER CAPITAL
• Through an initial public offering, according to a
resolution of the GMS dated 04.12.2014, an increase of the
capital of “Sirma Group Holding” JSC was registered on
30.10.2015, increasing the capital to BGN 59 360 518 BGN.
• During the transformation entered in the
Commercial Register on 23.10.2014. the Company's capital is
reduced to 49 837 156 BGN through the cancellation of 23 503
662 shares. This decrease is a result of the estimated fair
value of the shares of “Sirma Group Holding” JSC by three
independent valuers. The shareholding structure of the
Company does not change as a result of the separation until
the shareholding structures in the transforming and newly
established companies are mirrored.
• On 22.10.2010. as a result of the decision of the
regular annual general meeting of the Company's
shareholders, a reduction of the capital of “Sirma Group
Holding” JSC from 77 252 478 BGN to 73 340 818 BGN was
recorded through the cancellation of 3 911 660 shares with a
par value of one each. The Company's capital was reduced on
the basis of Art. 200, para. 2, in conjunction with Art. 187f, par.
1, item 2n in Bulgarian commercial law.
• On 15.10.2008 after the adoption of three triple
expert appraisals, the share capital is increased from 50 000
BGN to 77 252 478 BGN through non-cash contributions by
issuing new 77 202 478 shares as follows:
1) 29 software modules worth 61 555 838 BGN;
2) Non-monetary contribution representing real estate
amounting to 3 911 660 BGN:
Office building - offices, floor 3th and floor 5th of an
office building, located in Sofia, 135 Tsarigradsko shose Blvd.,
owned by “Sirma Group” JSC, a company registered in the
Commercial Register at the Registry Agency UIC 040529004,
with headquarters and address of management in Sofia,
Mladost district, 135 Tsarigradsko shose Blvd., accepted as
shareholder in “SGH” JSC by decision of the General Meeting
of “SGH” JSC from 10.07.2008
3) Non-cash contribution representing shares of 11 734 980
BGN:
A total of 81 690 shares of the total amount of 11
734 980 BGN (143.6526 BGN per share) of the capital of
"Sirma Group" JSC, registered in the Commercial Register at
the Registry Agency UIC, 040529004.
Information on the terms of any vesting rights and / or liabilities for statutory but unissued capital
“Sirma Group Holding” JSC does not have information about the terms of any acquisition and / or liabilities for statutory but unissued
capital.
3/ PORTFOLIO OF “SIRMA GROUP HOLDING” JSC
Subsidiaries of "Sirma Group Holding" JSC
Company
Value of the
investment at
31.12.2021
(BGN’000)
Percentage of capital at
31.12.2021
Percentage of
capital with
adjusted
repurchased
own shares
31.12.2021
Value of the
investment at
31.12.2020
(BGN’000)
Percentage
of capital at
31.12.2020
Percentage of
capital with
adjusted
repurchased
own shares at
31.12.2020
Sirma Solutions
39 311
77,71%
82,46%
39 311
77,71%
82,43%
Ontotext
17 865
87,65%
90,44%
17 865
87,65%
90,44%
Sciant
10 237
80,00%
80,00%
-
-
-
Sirma AI
7 035
100,00%
100,00%
7 035
100,00%
100,00%
Sirma Group Inc.
3 471
76,30%
76,30%
3 471
76,15%
76,15%
Sirma CI
106
80,00%
80,00%
106
80,00%
80,00%
Sirma Medical Systems
66
66,00%
66,00%
66
66,00%
66,00%
Engview Systems
50
72,90%
72,90%
50
72,90%
72,90%
Total
78 141
67 904
Associated companies of "Sirma Group Holding" JSC
Company
Value of the investment at
31.12.2021
(BGN’000)
Percentage of capital at
31.12.2021
Value of the
investment at
31.12.2020
(BGN’000)
Percentage
of capital at
31.12.2020
Changes
(BGN’000)
E-Dom Management
-
-
-
35,00%
-
Total
-
-
-
On 18 January 2021 the company released its investment in the associate E-Dom Management Ltd. at a nominal value of TBGN 7.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC VII
www.sirma.com
www.sirma.com
INFORMATION ON PARTICIPATION
Apart from the above mentioned participations of the Company under PORTFOLIO above, there are no other participations which are
likely to have a significant effect on the valuation of its own assets and liabilities, financial position or profits or losses.
The company has no branches.
4/ STRUCTURE OF SHAREHOLDERS CAPITAL AND
MANAGEMENT AUTHORITIES
4.1. Distribution of share capital
As of 31.12.2021 the distribution of the share capital of “Sirma Group Holding” is as follows:
31.12.2021
31.12.2020
Share capital (in thousands)
59 361
59 361
Number of shares (par value of BGN 1.00)
59 360 518
59 360 518
Total number of registered shareholders
1 026
1 041
Including legal entities
45
47
individuals
981
994
Number of shares held by legal entities
8 517 822
8 528 409
% Of participation of entities
14,35%
14,37%
Number of shares held by individuals
50 842 696
50 832 109
% Participation of individuals
85,65%
85,63%
Shareholders
Number of
shares at
31.12.2021
Number of
shares at
31.12.2020
Nominal
VALUE
(BGN)
Value
(BGN)
%
Shareholding
%
shareholding
with
deducted
repurchased
own shares
Georgi Parvanov Marinov
5 269 748
5 269 748
1
5 269 748
8,88%
8,97%
Tsvetan Borisov Alexiev
4 965 753
4 865 753
1
4 965 753
8,37%
8,45%
Chavdar Velizarov Dimitrov
4 750 786
4 750 786
1
4 750 786
8,00%
8,08%
Veselin Antchev Kirov
4 700 786
4 700 786
1
4 700 786
7,92%
8,00%
Ivo Petrov Petrov
4 500 000
4 400 000
1
4 500 000
7,58%
7,66%
Ognyan Plamenov Chernokozhev
3 741 620
3 741 620
1
3 741 620
6,30%
6,37%
Atanas Kostadinov Kiryakov
2 887 524
2 887 524
1
2 887 524
4,86%
4,91%
Krasimir Nevelinov Bozhkov
2 534 161
2 534 161
1
2 534 161
4,27%
4,31%
Vladimir Ivanov Alexiev
2 177 583
2 177 583
1
2 177 583
3,67%
3,70%
Rosen Vasilev Varbanov
2 156 687
2 156 687
1
2 156 687
3,63%
3,67%
Emiliana Ilieva Ilieva
1 925 820
1 925 820
1
1 925 820
3,24%
3,28%
“Sirma Solutions”
1 437 786
-
1
1 437 786
2,42%
2,45%
Yavor Liudmilov Djonev
1 392 746
1 392 746
1
1 392 746
2,35%
2,37%
UPF "Doverie" JSC
976 678
1 047 678
1
976 678
1,65%
1,66%
Peter Nikolaev Konyarov
870 665
870 665
1
870 665
1,47%
1,48%
"Mandjukov" Ltd.
860 000
860 000
1
860 000
1,45%
1,46%
UPF "DSK Rodina"
747 036
747 036
1
747 036
1,26%
1,27%
UPF “Pension Insurance Institute”
715 810
715 810
1
715 810
1,21%
1,22%
“First Financial Brokerage House”
677 368
437 422
1
677 368
1,14%
1,15%
Others
12 071 961
13 878 693
1
12 071 961
20,33%
19,54%
Total
59 360 518
59 360 518
59 360 518
100%
100%
As of 31.12.2021 „Sirma Group Holding“ JSC holds 584 474 repurchased own shares at the total amount of BGN 584 474 (0,98 % of
share capital). The Company has not acquired own shares during the period.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC VIII
www.sirma.com
www.sirma.com
Shareholders holding more than 5% of the company's capital are:
Shareholders
Number of shares at
31.12.2021
% Shareholding
% shareholding with
deducted
repurchased own
shares
Georgi Parvanov Marinov
5 269 748
8,88%
8,97%
Tsvetan Borisov Alexiev
4 965 753
8,37%
8,45%
Chavdar Velizarov Dimitrov
4 750 786
8,00%
8,08%
Veselin Antchev Kirov
4 700 786
7,92%
8,00%
Ivo Petrov Petrov
4 500 000
7,58%
7,66%
Ognyan Plamenov Chernokozhev
3 741 620
6,30%
6,37%
Shareholders
Number of shares at
31.12.2020
% Shareholding
% shareholding with
deducted
repurchased own
shares
Georgi Parvanov Marinov
5 269 748
8,88%
8,97%
Tsvetan Borisov Alexiev
4 865 753
8,20%
8,28%
Chavdar Velizarov Dimitrov
4 750 786
8,00%
8,08%
Veselin Antchev Kirov
4 700 786
7,92%
8,00%
Ivo Petrov Petrov
4 400 000
7,41%
7,49%
Ognyan Plamenov Chernokozhev
3 741 620
6,30%
6,37%
Insofar as it is known to the Company, indicate whether the company is directly or indirectly owned or controlled and by whom and
how the nature of that control and the measures introduced are introduced to avoid abusing such control.
“Sirma Group Holding” JSC is owned by its shareholders exercising full control over the company. Operational control is delegated to
the Board of Directors and, respectively, the Executive Director. The company has implemented a number of internal documents aimed
at regulating the work and preventing abuses. Such are the "Instruction on the Obligations and Responsibilities of Insiders with Insider
Information", "Code of Conduct for Financial and Accounting Posts", "Rules of Procedure of the Board of Directors", "Good Corporate
Governance Program".
Description of any arrangements known to the Company, the operation of which may at any subsequent date result in a change in the
control of the Company
The Company is not aware of any arrangements the effect of which could lead to a change in the control of “Sirma Group Holding”
JSC in the future.
4.2. Management authorities
“Sirma Group Holding” has a one-tier management system comprising of a Board of Directors.
The Board of Directors as at 31.12.2021 includes the following members:
Chavdar Velizarov Dimitrov
Tsvetan Borisov Alexiev
Atanas Kostadinov Kiryakov
Georgi Parvanov Marinov
Petar Borisov Statev - independent member
Yordan Stoyanov Nedev - independent member
Determination of the mandate of the Board of Directors: 2 years from the date of entry.
The current mandate of the Board of Directors: 02.07.2023
The company is represented by the CEO of “Sirma Group Holding” JSC Tsvetan Borisov Alexiev.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC IX
www.sirma.com
www.sirma.com
Competencies of the management
The competences of the management are in line with those listed in the Commercial Law, the Statute and the POSA.
Participation of the members of the BD of “Sirma Group Holding”JSC in other companies
The members of the BD of “Sirma Group Holding” JSC have the following other participations in companies, as per the provisions of
Art. 247, Par.2, p.4 of the Commercial Code:
Georgi Parvanov Marinov – Chairman of the BD
Data for activities external to the issuer:
1. Does not participate as an unlimited liability partner in companies in 2021.
2. Does not own more than 25% of the capital of other companies in 2021.
3. Procurator/manager/member of a managing/supervisory body in 2021:
• Executive director and Chairman of the BD of “Engview Systems Sofia” JSC;
• Member of the BD of “Sirma Business Consulting” JSC;
• Executive director and Member of the BD of “Pirina Technologies” JSC;
Chavdar Velizarov Dimitrov – Deputy Chairman of the BD
Data for activities external to the issuer:
1. Does not participate as an unlimited liability partner in companies in 2021.
2. Does not own more than 25% of the capital of other companies in 2021.
3. Procurator/manager/member of a managing/supervisory body in 2021:
• Member of the BD of „Sirma Medical Systems“ JSC;
• Member of the BD of „Daticum“ JSC.
Tsvetan Borisov Aleksiev – Executive director and member of the BD
Data for activities external to the issuer:
1. Does not participate as an unlimited liability partner in companies in 2021.
2. Does not own more than 25% of the capital of other companies in 2021.
3. Procurator/manager/member of a managing/supervisory body in 2021:
• Executive director and Chairman of the BD of “Sirma Solutions” JSC;
• Chairman of the BD of „Sirma Business Consulting“ JSC;
• Member of the BD of „Ontotext“ JSC;
• Member of the BD of „Daticum“ JSC;
• Member of the BD of „SIrma AI“ EAD;
• Member of the BD of “Engview Systems Sofia” JSC;
• Member of the BD of „Sirma“ Sha., Albania.
Atanas Kostadinov Kirjakov - Member of the BD
Data for activities external to the issuer:
1. Does not participate as an unlimited liability partner in companies in 2021.
2. Does not own more than 25% of the capital of other companies in 2021.
3. Procurator/manager/member of a managing/supervisory body in 2021:
• Executive director and Member of the BD of “Ontotext” JSC;
• Member of the BD of “Sirma Solutions” JSC;
• Member of the BD of "Engview Systems Sofia" JSC;
• Executive director and Member of the BD of „Sirma AI” EAD.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC X
www.sirma.com
www.sirma.com
Peter Borisov Statev – independent Member of the BD as per Art. 116а, Par. 2 of POSA.
Data for activities external to the issuer:
1. Does not participate as an unlimited liability partner in companies in 2021.
2. Owns more than 25% of the capital of:
• „Smartcom Bulgaria“ AD - 50 % of capital;
3. Procurator/manager/member of a managing/supervisory body in 2021:
• Executive director of “Smartcom Bulgaria“ AD;
• Chairman of the BD of “Barin Sports” AD;
• Chairman of the MB of the Foundation "Cluster Information and Communication (ICT)".
• Member of the BD of “Smart Networks” AD;
• Member of the SD of “Sofia Tech Park AD;
Yordan Stoyanov Nedev – independent Member of the BD as per Art. 116а, Par. 2 of POSA.
Data for activities external to the issuer:
1. Does not participate as an unlimited liability partner in companies in 2021.
2. Owns more than 25% of the capital of:
• “Susana and Vesko – SV” OOD – 75 %.
3. Procurator/manager/member of a managing/supervisory body in 2021:
• Member of the BD of MAC „Bushido“;
• Trustee of the foundation „Alexander“.
Stock options of the company
As of the date of this report, no options are available to the members of the Board of Directors on its shares.
Committees in The Company
“Sirma Group Holding” JSC creates the following internal
committees, which are assigned to manage the respective
activities at the operational level, as well as to propose
decisions to the Board of Directors of the company:
1. Investment and Risk Committee, composed of:
Yordan Nedev – chairman
Tsvetan Alexiev – member
Georgi Marinov – member
2. Remuneration Committee, composed of:
Georgi Marinov – chairman
Petar Statev – member
Yordan Nedev – member
3. Information Disclosure Committee, composed
of:
Tsvetan Alexiev – chairman
Stanislav Tanushev – member
Chavdar Dimitrov – member
Atanas Kiryakov - member
4. Audit Committee, composed of:
Angel Petrov Kraychev - chairman
Alexander Todorov Kolev - member
Emilian Ivanov Petrov – member
Adopted internal documents
In 2015 the company adopts the necessary internal documents related to the company's working and management processes and
fulfillment of its obligations as a public company:
• Good Corporate Governance Program;;
• Operating Rules of the Board of Directors;
• Instructions and clarifications on the obligations and responsibilities of internal insiders;;
• Special code of conduct for financial and accounting positions.
All documents are publicly available on the company's website:
https://investors.sirma.com/investors/corporate-governance.html
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XI
www.sirma.com
www.sirma.com
The participation of members of the Board of Directors in the capital of the Company is as follows:
Shareholders
Number of
shares at
31.12.2021
Number of
shares at
31.12.2020
Nominal
VALUE
(BGN)
Value
(BGN)
%
Shareholding
%
shareholding
with
deducted
repurchased
own shares
Georgi Parvanov Marinov
5 269 748
5 269 748
1
5 269 748
8,88%
8,97%
Tsvetan Borisov Alexiev
4 965 753
4 865 753
1
4 965 753
8,37%
8,45%
Chavdar Velizarov Dimitrov
4 750 786
4 750 786
1
4 750 786
8,00%
8,08%
Atanas Kostadinov Kiryakov
2 887 524
2 887 524
1
2 887 524
4,86%
4,91%
Petar Borisov Statev
10 100
10 100
1
10 100
0,02%
0,02%
Yordan Stoyanov Nedev
3 433
3 433
1
3 433
0,01%
0,01%
Total
17 887 344
17 787 344
17 887 344
30,14%
30,44%
During the period 01.01.2021 - 31.12.2021 the member of the Board of Directors Tsvetan Borisov Alexiev acquired 100 000
additional shares of the capital of the company.
Remuneration of the members of the Board of Directors of “Sirma Group Holding” JSC
Pursuant to Article 25, paragraph 5 of the Articles of Association of the Company, each member of the Board of Directors has
accrued the following permanent gross remuneration under management contracts:
Name
Company
Period: 01.01.2021 - 31.12.2021
(BGN)
Tsvetan Borisov Alexiev
“SIRMA GROUP HOLDING” JSC
(150 000)
Yordan Stoyanov Nedev
“SIRMA GROUP HOLDING” JSC
(75 660)
Atanas Kostadinov
Kiryakov
“SIRMA GROUP HOLDING” JSC
(18 000)
Georgi Parvanov Marinov
“SIRMA GROUP HOLDING” JSC
(18 000)
Chavdar Velizarov
Dimitrov
“SIRMA GROUP HOLDING” JSC
(18 000)
Petar Borisov Statev
“SIRMA GROUP HOLDING” JSC
(18 000)
Total
(297 660)
In addition to the above amounts, with decision of the Board of Directors of the Company, a bonus in the amount of BGN 150,000 has
been provided in accordance with the current Remuneration policy of the Company. The amount will be paid after the audit of the
consolidated report of the Group.
INFORMATION ON THE CONTRACTS OF THE MEMBERS OF THE ADMINISTRATIVE, MANAGEMENT
OR SUPERVISORY BODIES WITH THE COMPANY PROVIDING BENEFITS FOR THE
DISCONTINUATION OF EMPLOYMENT
The contracts of the members of the board of directors, both
with the Company and its subsidiaries, where such contracts
are available, do no include the right to benefits upon
termination.
INFORMATION ON THE COMPANY'S AUDIT COMMITTEE, INCLUDING THE NAME OF THE
MEMBERS OF THE COMMITTEE AND A MANDATE SUMMARY ON WHICH THE COMMITTEE
FUNCTIONS
At the Extraordinary General Meeting of the Shareholders of the Company held on 26.08.2019, the mandate of the Audit Committee
was extended with 3 (three) years at the current remuneration. The Audit Committeeincludes the following members:
Angel Petrov Kraychev - chairman
Alexander Todorov Kolev - member
Emilian Ivanov Petrov – member
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XII
www.sirma.com
www.sirma.com
STATEMENT ON WHETHER THE COMPANY COMPLIES OR DOES NOT WITH THE REGIME FOR
CORPORATE GOVERNANCE
In view of the fact that “Sirma Group Holding” JSC is entered
in the register under Art. 30, para. 1, item 3 of FSCA, kept by
FSC, the Company has implemented a program prepared in
accordance with internationally recognized standards for good
corporate governance. In accordance with the provision of Art.
100n, para. 4, item 3 of POSA
“Sirma Group Holding” JSC is obliged to comply its financial
statements with the requirements within the program for the
application of internationally recognized standards for good
corporate governance and maintains its accounting policy in
accordance with International Accounting Standards.
5/ “SIRMA GROUP HOLDING” IN 2021
Summary – growth and optimism
2021 was a year of recovery to growth. Most countries have
restored their economies after the COVID pandemic. In 2022,
Bulgaria will join this group (with a slight delay).
2021 was a year of increased growth in all ICT segments. The
products and services of the industry were seen as the remedy
to all ailments from the pandemic restrictions. In 2022, this
growth is expected to slow down some and markets to return
to normal.
There are still a number of risks that could stop or slow down
the growth of both the ICT industry and the global economy as
a whole - geopolitical tensions, inflation, logistical difficulties,
rising interest rates, the "the great resignation" are just some
of the looming risks
Development of the economy in Bulgaria in 2021 and
forecast for the future years
According to a report by the European Commission
(November 2021), after a contraction in GDP of 4.4% in 2020,
a recovery of 3.8% in 2021 followed. Despite a return to
growth, Bulgaria has failed to recover its economy from before
the pandemic crisis. This is expected to happen in 2022, when
GDP growth is forecast to be 4.1%, which will subsequently
decrease to 3.5% in 2023.
Bulgaria's GDP growth
2020
2021
2022
2023
EU
-4,4%
3,8%
4,1%
3,5%
BNB
-4,4%
3,7%
3,6%
4,5%
The expectations for the development of the Bulgarian
economy by the European Commission coincide with those of
the Bulgarian National Bank (December 2021) for the years
2020 and 2021. The growth in 2021 is entirely due to the 7.5%
increase in private consumption. All other components of
GDP, except government consumption are expected to make
a negative contribution, according to the bank. In 2022, private
consumption is shrinking, government consumption is holding
steady, which together with the private investments, and
exports are expected to contribute to annual GDP growth. The
BNB expects GDP to grow by 3.6% in 2022 (as opposed to
the EC), and this growth will intensify in 2023 to 4.5% as a
result of increased public and private investment supported by
the Plan for Recovery.
The BNB expects increased inflation reaching 7.5% by the end
of 2022. Inflation is driven by rising prices of major energy
sources and electricity, which started in the end of 2021. It is
also fueled by rising consumer prices in the euro area, as well
as in other trade partners of Bulgaria. Inflation is expected to
fall to 3.4% by the end of 2023.
According to the BNB, the risks to the development of the
Bulgarian economy in 2022 and 2023 are:
• Postponement of the implementation of investment
projects;
• Slow pace of utilization of funds under European
programs;
• Delayed implementation of the National Recovery
Plan;
• Higher than expected inflation due to prolonged
retention of high energy prices.
Development of the global economy in 2021 and forecast
for the future years
Following COVID-caused decline in global GDP of 3.1% in
2020 (less than expected), the economy recovered rapidly in
2021. The IMF forecast expects 5.9% global GDP growth for
the year and another 4.4 % in 2022 - about half a percent lower
than expected at the end of 2021 (World Economic Outlook
Update, IMF, January 2022). The recovery was rapid, but in
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XIII
www.sirma.com
www.sirma.com
early 2022 its momentum slowed, some risks surfaced (new
variants of COVID, logistical problems, energy prices,
shortages of goods, inflation) and uncertainty increased.
The risks to the world economy are increasing also due to
growing geo-political tensions, as well as expectations of
further climate crises due to global warming. These two factors
alone have the potential to radically change growth
expectations.
Recovery from economic downturns varies from region to
region. Growth in 2021 is mainly due to the rapid recovery in
only a few major economies (US 5.6%, China 8.1% and India
9%). The averages mask a great variety, both in the recovery
and in the forecasts for future development.
Despite the rapid start of the recovery and optimistic
expectations for continued growth, the World Bank (World
Bank Development Report, February 15, 2022) outlines some
important risks. According to the bank, rising inflation and the
associated rise in interest rates outline an increasing risk for
the financial sector from a sharp increase in non-performing
loans. This would reduce access to finance for small and
medium-sized businesses. This, in turn, risks slowing or
halting the economic recovery. These risks are particularly
strong in developing countries and low to middle-income
countries (including Bulgaria).
The Industry of Sirma
The companies from Sirma Group specialize in the information
technology (IT) industry. Industrial data is usually combined
with data for the "communication segment", as this segment
depends entirely on information technology. Accordingly, the
industry has acquired the name "Information and
Communication Technologies" or ICT for short. Of all the
variety of ICT segments, the companies in the Group work
mainly in the segments "IT Services" (system integration,
infrastructure as a service, software as a service, software
support, consulting) and "Business Software" (various
software products and services aimed at different business
verticals and custom software development).
The two main segments (IT Services and Software) in which
the Group operates were the fastest growing in the past
(Gartner, january 2022). Both segments are seen as the
solution to all the problems arising from the global pandemic.
The mass digitalization that is unfolding relies on "Software"
for the various technological solutions and "IT services"
through which these solutions can be implemented. This led
to a dramatic growth in both segments in 2021 by 14.4% and
10.7% respectively on an annual basis.
Expectations for 2022 are that the two segments will maintain
their growth, albeit at a slightly slower pace - 11% for
“Software” and 7.9% for “IT Services”. The growth of these two
segments is expected to be sustainable in the coming years
with CAGR 2020 - 2025 of 12.18% and 9.07% respectively.
Geographically, Sirma is focused on the world's leading
markets (USA, UK and Europe), which are also expected to
recover their IT costs the fastest, to pre-COVID levels as early
as 2021.
Sirma is a B2B IT provider. Sirma's client portfolio - Digital
Business (AI of Sirma, Consulting and Integration, Chatbots,
IT Security and Software Development), Financial Institutions
(AI of Sirma, Consulting, Integration, IT Security, Chatbots and
products of Sirma Business Consulting JSC), Insurance
(Sirma's Insurance Broker Platform), communication (AI of
Sirma, GraphDB), publishing (AI of Sirma, GraphDB), media
(AI of Sirma, GraphDB) and healthcare (AI of Sirma and
products of Sirma Medical Systems AD) show a moderate
reduction in IT spending levels in 2020, resilience during the
COVID crisis, and a significant increase in their ICT
investment is expected in the coming years (see Gartner
below, ICT vertical spending). Sirma is not exposed to the
verticals most affected by the COVID crisis - Transport,
Entertainment and Tourism.
The global ICT market in 2021 and forecast for the future
years
The COVID crisis has had a major impact on the ICT industry
and its customers. The ICT market in 2020 experienced strong
instability and has stopped growing (growth under 1% for the
year). At the same time, in 2021 the ICT industry was identified
as the solution to most difficulties resulting from the pandemic
by all other industries. This led to a strong increase in ICT
spending during the year. According to Gartner (Gartner,
january 2022), the ICT spending in the world in 2021 has
grown 9% y/y to $ 4.2 trillion in current prices.
The recovery of the ICT sector was indeed V-shaped. Growth
has affected all segments of ICT in 2021, and in almost all it is
measured in double digits. As a result, the ICT market far
exceeded 2019 before-COVID levels. The world has greatly
accelerated the levels of digitalization, offices have become
"home", online payments have increased by nearly 50% in just
one year. Logically the segment “Software” is ahead of the
other segments and has an expected growth of 10.4% in 2021.
Immediately after it is the "Devices" segment, where growth is
expected to be 13% for the year – a result from the delayed
purchases from the pandemic year 2020. This growth was
closely followed by the IT services segment by 10.7%. Total
ICT spending is expected to reach $ 4.239 billion in 2021 and
will continue to rise sharply in the coming years:
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XIV
www.sirma.com
www.sirma.com
Global ICT Spending in Current Prices USD
2019
2020
2021
2022
2023
2024
2025
CAGR 2020-25
Data Center Systems
Spending (B$)
191
194
216
226
237
247
257
Growth y/y
1.57%
11.34%
4.63%
4.87%
4.22%
4.05%
5.78%
Software
Spending (B$)
485
529
605
672
752
841
940
Growth y/y
9.07%
14.37%
11.07%
11.90%
11.84%
11.77%
11.95%
Devices
Spending (B$)
708
697
787
814
804
824
843
Growth y/y
-
1.55%
12.91%
3.43%
-1.23%
2.49%
2.31%
3.88%
IT Services
Spending (B$)
1
053
1 071
1 186
1 280
1 392
1 516
1 653
Growth y/y
1.71%
10.74%
7.93%
8.75%
8.91%
9.04%
9.07%
TELCO
Spending (B$)
1
418
1 396
1 444
1 463
1 494
1 524
1 554
Growth y/y
-
1.55%
3.44%
1.32%
2.12%
2.01%
1.97%
2.18%
All ICT
Spending (B$)
3
855
3 888
4 239
4 454
4 679
4 952
5 247
Growth y/y
0.86%
9.03%
5.07%
5.05%
5.83%
5.96%
6.18%
IT w/o TELCO
Spending (B$)
2
437
2 492
2 795
2 991
3 185
3 428
3 693
Growth y/y
2.26%
12.16%
7.01%
6.49%
7.63%
7.73%
7.21%
Recovery across countries, vertical industries and IT sub-
segments still varies significantly, prompting a “K-shape
recovery” when we view the uneven recovery for many sub-
segments and geographies. The difference in 2021 ICT
growth is linked, according to Gartner, to the different kind of
support rendered by the governments. Countries which
supported the individuals (USA, Canada, Australia) tend to
have done better in 2021 compared to countries which have
supported businesses and employment (Italy, Greece).
Looking at the various industries, “Manufacturing and Natural
Resources”, “Transport” and “Retail” have not yet reached the
level of ICT spending of 2019. Peculiar with the “Retail” sector,
which definitely has embraced digital sales during the
pandemic, is that the infrastructure needed to do this was in
place prior to the pandemic. Hence the sector is seeing less
growth in 2021 in their ICT spending.
The other sectors of the economy are making extensive use
of technology to deal with the effects of the pandemic –
“Education” (9% growth), “Government” (7% growth),
“Healthcare” (7% growth), “Insurance” (6.5% growth),
“Banking and Investment Services” (6.7% growth) and “Media”
(growth 6.7%).
The development of the different sub-segments of ICT varies
greatly. “Infrastructure as a Service” (offered by Daticum) is
undoubtedly the winner for 2021 (growth reaching 40% y/y)
and in the coming years (CAGR above 30%). The other sub-
segments, where Sirma specializes are clustered together:
• Infrastructure Software (offered by Daticum)
• Enterprise Application Software (offered by Sirma
AI, Sirma Solutions and Sirma Business Consulting)
• Consulting (offered by Sirma Solutions and Sirma
Business Consulting)
• Application Implementation and Managed Services
(offered by Sirma Solutions)
• Business Process Services (offered by Sirma ICS,
Sirma Medical Systems and Sirma Business
Consulting)
and also enjoy strong growth of 7-14% in 2021 and CAGR
2020-2025 of 5-13%.
Cloud market growth is expected to be even more spectacular.
The sub-segment “Desktop as a Service” will have
outstanding growth above 65% in 2021 and a strong CAGR
2020-2025 exceeding 25%. This is followed by the emerging
“Business Intelligence Applications” and the “Database
Management Systems” and “Business Intelligence Platforms”
where Sirma AI is specialized. All of them are expected to
have 2021 growth between 25% and 50% and CAGR 2020-
2025 ranging between 20% and 33%.
2022 is also emerging as a strong year for the ICT sector,
although segment growth is expected to be a bit more
moderate. The market volume is expected to reach USD 4.5
trillion, an increase of 6% on an annual basis in constant
prices, or 5.1% growth in constant prices.
Leading the growth of the sector are again “Software” and “IT
Services”, which are expected to grow by 11% and 7.9%
respectively during the year.
The analysis of the components of the different segments
shows an extremely diverse picture. The picture of the growing
gap between the desire for owning things to using things as a
service becomes visible. The growth of the “Software”
segment in 2022 and the near future is mainly due to cloud
technologies. Accordingly, “Infrastructure as a Service” (IaaS)
is expected to grow by as much as 31% in 2022, and to
maintain this growth until 2025. Other sub-segments of the
“Software” segment also have dramatic and sustainable
growth. “Infrastructure Software” and “Enterprise Software”
are expected to grow by 11-12% in 2022 and maintain this
growth in the coming years with a CAGR of around 12% by
2025.
From the “IT Services” segment, there are also several well-
performing sub-segments that are somewhat interconnected
and often offered together. "IT consulting", "Implementation
and managed services" and "Business process services" are
expected to grow between 6 and 11% in 2022, and this growth
will be sustainable over time with CAGR to 2025 also between
Annual separate management report of “Sirma Group Holding” JSC
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7 and 11%. At the other end of the spectrum of the IT Services
segment are the “Infrastructure Implementation” and
“Hardware Support” sub-segments, which are growing poorly
or shrinking altogether - clearly showing the sustainable
transition of all businesses and users to the cloud
environment. This assertion is reinforced by the shrinking
“Fixed Services” market for both businesses and consumers.
When we look at the IT spending of the different industries, we
see that in 2022 there are still four industries that have failed
to recover their IT investments from the pandemic crisis - "Air
Transport", "Heavy Industry" and "Online and Offline
Entertainment". All other verticals increase their IT spending
by an average of about 7% in 2022.
Risks
Inflation
2% per year is considered a normal inflation rate. At the same
time, in 2022 and probably in 2023, most countries in the world
are expected to experience higher than normal inflation, with
levels in the United States alone expected to reach 6.56% in
2022.
According to Gartner (Gartner, january 2022), inflation, which
is expected to sweep the world in 2022 and 2023, does not
pose a threat to the ICT industry. The reason for this is the fact
that the current inflation is driven by demand. This is an
increased demand for goods that was diverted from the
demand for services during the pandemic.
Lack of chips
A more serious risk for the ICT industry was the breakdown of
logistic chains and the resulting - a shortage of chips. This
shortage cost a number of problems in 2021. Gartner expects
that by the end of the first half of 2022, the supply and
inventory of microprocessors (MCUs), semiconductor disks
(SSDs) and display drivers will be adjusted and returned to
normal. The DRAM (dynamic RAM) and NAND markets are
expected to remain tight within 2022, with supplies expected
to return to normal by the end of the year.
The great resignation
Although the term "Great Resignation" is applicable to the
United States and to some extent to the United Kingdom, it is
beginning to appear in some other European countries. To
some extent, the large resignation wave is also a result of the
rising inflation. If the current employer cannot provide an
increase in wages commensurate with inflation, employees
change jobs for higher wages. This is not difficult to do
because there is currently a shortage in the labor market.
Accordingly, employees who have changed their employer
actually find themselves in a better position than those who
have not. Hence the risk for ICT companies of not being able
to retain employees or the need to increase wages above the
inflation rates.
The ability of ICT companies to provide and present the
motivators they offer can mean filling the necessary numbers
and joining the growth of the industry in 2022 or missing
opportunities and stagnation.
The ability of companies to attract and retain talent in 2022 will
be key to maintaining competitiveness. In addition to
increasing salaries, employers will need to look at other
motivations of their employees to keep their jobs.
COVID-19 pandemic
According to IDC, the development of the ICT market in 2020
and 2021 experienced the greatest volatility in its history. The
main reason for this was the COVID pandemic and related
restrictions. Despite encouraging news of the lifting of
restrictions in late 2021 and early 2022, the risks associated
with COVID for the growth of the ICT industry remain. Some
of the client-industries of the ICT sector would be more
resilient to recovering new COVID restrictions, while for
others. The division among the different sub-segments in the
ICT sector is similar. Sub-segments such as “Business
Services”, “IT Services” and “Periphery” are highly dependent
on the development of the economy and enterprises. A
corresponding return to COVID restrictions would severely
limit their growth. At the other end of the spectrum is "Cloud
Infrastructure" and "Cloud Software", which will not only be
unaffected by the return of restrictions, but are likely to achieve
additional growth.
PARTICIPATION IN MANAGEMENT AND IMPLEMENTATION OF CONTROL ON THE SUBSIDIARY
COMPANIES
In 2021, as in previous periods, Sirma Group Holding's
senior management was actively involved in the
management of its subsidiaries. The high expertise and
accumulated experience of Sirma Group Holding’s managers
helped companies to formulate their development goals and
strategies as well as their business and financial plans. As a
result, the company achieved outstanding successes over
the past period. At the same time, taking part in the
management of the Group's companies, they monitored the
Group's overall objectives, strategies for its development and
financial discipline.
MARKETING
In operational terms, the annual marketing strategy and
budget of the “Sirma Group Holding” for 2021 ensured the
planning, development and successful implementation of the
following activities:
1. Creating, developing and maintaining a general knowledge
of the Sirma brand through a range of activities that help for
successful branding and corporate communications - public
relations, investor relations, public institutions, company
employees, general public. They included internet marketing,
online meetings, helping managers and managers with
Annual separate management report of “Sirma Group Holding” JSC
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marketing materials for their investment tours, press
interviews, TV, radio, participation in specialized and high
profile business events.
2. Building a strong employer brand and affirming the
company as an attractive place to work, career development
and realization of own innovative ideas for creating new
software products and solutions, working with the most
advanced technologies, entering new market niches. A
favorable environment has been created and the innovation
process in companies is regularly promoted. Social media is
actively used for informal communication with employees,
engaging in important causes, informing about upcoming
events, company and product news. The team building
conducted at the end of the year was traditionally one of the
most anticipated events that enabled people from different
companies, cities and offices to communicate in an informal
environment.
3. Increased presence of the brand in social media and
communication management through digital channels. As part
of marketing through social channels, a content marketing
program has been developed. It aims at:
• enhanced performance across the global network
through digital tools - a substantial increase in traffic to “Sirma
Group Holding” sites and subsidiaries; improved detection in
the most popular search engines - SEO & SEM activities;
• raising awareness of external and internal
audiences about corporate initiatives and key business
events;
• informing the audience about new products and
services created by our companies, the development of
existing products and services, company achievements;
FINANCIAL ACTIVITY AND MANAGEMENT OF FINANCIAL RESOURCES OF THE
GROUPASPECTS OF THE FINANCIAL ACTIVITY OF HOLDING AND GROUP
Over the past period the management of the financial activities
of “Sirma Group Holding” was carried out in the following:
І. Goals
As a strategic goal of financial management, “Sirma Group
Holding” has accepted the increase in the wealth of the
owners, which can only be achieved by maximizing the market
value of the company based on the share price.
As a tactical objective of the financial management, “Sirma
Group Holding” JSC opted the maximization of revenues and
profit.
As an operational objective of financial management, “Sirma
Group Holding” has determined the maintenance of the
solvency of the company and the Group companies as an
opportunity to service all emerging uncontested payments.
II. Execution of functions
1. Executed functions of Sirma Group Holding’s management:
a) Financial planning - plans of “Sirma Group Holding”
and of all companies of the Group for a one-year and mid-term
period were prepared.
b) Co-ordination of the financial activity - “Sirma Group
Holding” coordinated the activities of all the companies in the
Group for the fulfillment of the general objectives of the
financial activity management and for the implementation of
unified policies in this activity;
с) Control - The financial team of the “Sirma Group
Holding” throughout the year carried out regular and periodical
control over the financial activity of the companies in the
group.
2. As regards the financial activities of “Sirma Group Holding”
and the subsidiaries, the Holding had the following functions:
a) financing - related to the provision of financial
resources and the structuring of capital needed for the proper
functioning of the enterprise.
This function is related to the company Balance liability. There
are the sources of capital available to the enterprise for the
conduct of its business.
b) vestment - covers the insured capital in different
assets in order to realize the strategic objective of the
company. This feature is related to the Balance asset.
III. Completed tasks
1. Ensure sufficient financial resources in accordance
with the strategy and tasks for the development of “Sirma
Group Holding” and the subsidiaries during the respective
period.
2. Ensuring the most efficient allocation and utilization
of the volume of financial resources formed in the main
directions of the Group's activity.
3. Optimization of the monetary turnover -
synchronization by size and time of the receipts and payments
for the normal service of the undisputed payments. 4.
Ensure maximum profit at a given level of risk.
5. Ensure the financial equilibrium of “Sirma Group
Holding” and the subsidiaries in the process of their
development.
In fulfilling the task of financial equilibrium, we have complied
with the golden balance rule, which requires long-term assets
to be funded by long-term capital sources, and short-term
assets from short-term sources of capital.
6. Providing opportunities for quick capital
reinvestment when changing the external and internal
conditions for carrying out the business activity.
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- ACCOUNTING SERVICES
In 2021 “Sirma Group Holding” performed the accounting
services for 19 subsidiaries and associated companies and
related companies. In addition to regular accounting services,
management is presented with various BI reports built as
know-how of the Group. The FAD of “Sirma Group Holding”
achieved monthly reporting of results at individual and group
level. The department also managed to manage the
companies' relationships with the fiscal and social security
systems. The timely introduction of taxes, timely information
submission and the preparation of information under the Law
for Public Offering of Securities to the Financial Supervision
Commission and the BSE have been performed in the period.
.
- LEGAL SERVICES
The legal department of “Sirma Group Holding” carries out
legal services to the companies of the Group, which includes
the preparation of corporate documents; assistance with the
preparation and implementation of the GMS; preparation of
any commercial documents and contracts; settlement of
commercial disputes; conducting court cases.
- MANAGEMENT OF RISKS
The Board of Directors is responsible for risk management in
“Sirma Group Holding”. The Investment and Risk Committee
assist the Board in this activity. The holding also supports its
subsidiaries for risk management.
Risk management is, inherently, the ability to anticipate
threats to the company's activities, individual projects and
minimize their adverse effects. The process is iterative. It
starts with identifying the possible risks, goes through risk
analysis and planning their management, then begins a
process of monitoring and a regular return to the analysis
process.
A sophisticated risk management system has been set up in
“Sirma Group Holding”.
Risk management in the “Sirma Group Holding” includes:
● Risk identification - This is a lengthy process that
detects potential threats. In order to identify the expected and
predictable risks, different methods are used: questionnaires
(interview questionnaires), interviews, brainstorming,
document analysis, a list of expected and predictable risks
(checklist analysis), based on a previous experience
● Qualitative and quantitative risk analysis - Once the
potential risks have been identified, a qualitative and
quantitative analysis of each of them is required. The
likelihood of occurrence and impact through predefined scales
is estimated, for example Probability: very small, small,
medium, large or very large; Impact: catastrophic, critical,
permissible, insignificant.
A risk table is prepared with the data. Risks are grouped into
categories, their likelihood of occurrence and their impact, as
well as case scenarios that are implemented in case the risk
occurs. The resulting list is sorted by impact and probability. A
threshold is set, the risks over which it will be managed. The
risk table is reviewed and reassessed on a regular basis, as
there is a chance that risks may be dropped, new ones added
or ratings changed.
● Planning actions to overcome the risk
The next step in risk management is planning. This is the
process of documenting the measures that will be applied to
managing each of the identified key risks. 3 management
strategies are used:
a) risk avoidance - a strategy that reduces the
likelihood of risk occurring;
b) minimizing the risk-taking effect - a strategy that
reduces the consequences of the risk;
c) Emergency action plans - a strategy where the
organization accepts the risk and is ready to deal with it if it
comes to fruition;
As a result of the risk planning, a Risk Mitigation Monitoring
and Management Plan is established. It may be a separate
document or a set of information cards for each individual risk
to be stored and managed in a database.
- Risk monitoring and control - This is the latest
activity in risk management. This process has
several main tasks:
- confirm the occurrence of a risk
- ensure that activities to prevent or deal with risks are
implemented
- Identify what risk has caused the relevant problems
- document information to be used in a subsequent
risk analysis;
IMPACT OF EXCEPTIONAL FACTORS
The information in this report is not affected by the presence of exceptional factors.
Annual separate management report of “Sirma Group Holding” JSC
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SUMMARY INFORMATION RELATING TO THE STATE OF WHICH THE COMPANY DEPENDS ON
PATENTS OR LICENSES, INDUSTRIAL, COMMERCIAL OR FINANCIAL CONTRACTS OR FROM
NEW PROCESSING PROCESSES
“Sirma Group Holding” is not dependent on patents or
licenses, industrial, commercial or financial contracts, or new
production processes.
The Company has the appropriate licenses for operating
systems and application software for PCs and servers
required for the normal workflow for all employees.
INFORMATION, CONCERNING SIGNIFICANT FACTORS, INCLUDING NON-ORDINARY OR RARE
EVENTS OR NEW DEVELOPMENTS, THAT EXPRESSLY RENDER THE INCOME OF THE
COMPANY'S ACTIVITY
There are no significant factors, including unusual or rare
events or new developments that materially affect the
Company's revenue and future investments.
SIGNIFICANT CHANGES IN NET SALES OR REVENUES DISCLOSED IN THE ACCOUNTS
Significant changes in net sales or earnings reported in the
Company's accounts detailed in Section 6 of this Report are
observed during the period considered.
INFORMATION ON GOVERNANCE, ECONOMIC, FISCAL, MONETARY POLICY OR POLITICAL
COURSE OR FACTORS THAT SIGNIFICANTLY HAVE BEEN CONCERNED OR MAY CONTRIBUTE
TO SIGNIFICANT, DIRECT, OR CONSEQUENTIAL ACTIVITY OF THE COMPANY
During the period under review, there were no factors of
government, economic, fiscal, monetary or political factors
that had a significant impact on the company's operations.
The main factors that may affect the Company's operations
and how it manages the risk are described in the Risk Factors
of this document
EVENTS AND BUSINESS NEWS IN 2021
The following events and business news took place in 2021:
07.12.2021
Sirma Solutions JSC – a daughter company of Sirma Group Holding JSC, finalized its grant management system GRACE (Grant
Administration and Collaboration Environment).
29.11.2021
Disclosure of interim quarterly consolidated reports of Sirma Group Holding JSC for the period ending on 30.09.2021.
24.11.2021
Mr. Tsvetan Alexiev – Executive Director of Sirma Group Holding JSC and Evlogi Georgiev – Executive Director of Sciant AD
participated in the discussion in “The World is Business” on Bloomberg TV, Bulgaria.
16.11.2021
Disclosure of a finalize deal for the acquisition of the majority shares in the IT company Sciant AD.
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01.11.2021
Disclosure of interim quarterly individual reports of Sirma Group Holding JSC for the period ending on 30.09.2021.
26.10.2021
Sirma Medical Systems JSC – daughter company of Sirma Group Holding JSC, launched a new telemedicine platform: Medrec:M
Clinic.
26.10.2021
Engview Systems and their local partner Boxware Distribuidora de Software took part in the biggest wide-format print industry exhibition
FESPA Brazil.
08.09.2021
Sirma is Showing off Melinda at the Biggest FinTech Event Money 20/20 in Amsterdam.
31.08.2021
Second consecutive disclosure of the consolidated reports of Sirma Group Holding JSC for the period ending on 30.06.2021 due to
error in the Report for the Activity, established in the first publication.
30.08.2021
Disclosure of interim quarterly consolidated reports of Sirma Group Holding JSC for the period ending on 30.06.2021.
28.07.2021
Disclosure of interim quarterly individual reports of Sirma Group Holding JSC for the period ending on 30.06.2021.
25.06.2021
Disclosure of Minutes of the GMS of Sirma Group Holding JSC.
23.06.2021
Disclosure of the decision for distribution of the profit from 2020 as adopted by the GMS of Sirma Group Holding JSC.
23.06.2021
Sirma Group Holding’s annual shareholding meeting is held in hybrid mode – in person and online.
19.06.2021
Interview with Sirma Medical Systems Executive director Rosen Varbanov in the new edition of “In spite of Diabetes with Marieta
Kotova”.
09.06.2021
Disclosure of information on the online GMS of Sirma Group Holding.
04.06.2021
Disclosure of purchase of shares from Sirma Group Holding JSC by Tsvetan Alexiev – Executive Director.
01.06.2021
The daughter company Daticum and CLICO Bulgaria collaborate to provide top-notch cybersecurity solutions.
31.05.2021
Disclosure of interim quarterly consolidated reports of Sirma Group Holding JSC for the period ending on 31.03.2021.
21.05.2021
Publication of Invitation for General Annual Meeting of the Shareholders on 23.06.2021 and the relative documentation.
05.05.2021
Disclosure of interim quarterly individual reports of Sirma Group Holding JSC for the period ending on 31.03.2021.
29.04.2021
Disclosure of audited annual consolidated reports of Sirma Group Holding JSC for the period ending on 31.12.2020.
29.04.2021
Article on Sirma in L’Europeo.
27.04.2021
The product EngView Package & Display Designer is now available through subscription plans.
Annual separate management report of “Sirma Group Holding” JSC
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16.04.2021
Launch of version 3.4 of the product Ontotext Platform with improved data processing and query functions.
07.04.2021
Disclosure of purchase of shares by the daughter company Sirma Solutions JSC.
02.04.2021
Launch of version 9.7 of Sirma AI’s product GraphDB with enhanced capabilities.
31.03.2021
Sirma Group Hoding is among the founders of the “Green Center” at BSE.
30.03.2021
Disclosure of audited annual individual reports of Sirma Group Holding JSC for the period ending on 31.12.2020.
24.03.2021
The daughter company Sirma Business Consulting becomes a member of the American Chamber of Commerce.
04.03.23021
The new version of the telemedicine product of Sirma Medical Services - Medrec:M offers vaccination plans.
28.02.2021
Disclosure of interim consolidated financial reports of Sirma Group Holding JSC as at 31.12.2020.
15.02.2021
The stock exchange code of the shares of Sirma Group Holding JSC was changed from SKK to SGH.
04.02.2021
Disclosed information for a big deposit opened by the daughter company Sirma Solutions JSC with Sirma Group Holding JSC.
03.02.2021
New partnership between the daughter company Sirma AI and the provider of semantic technology Eccenca.
29.01.2021
Disclosure of interim individual financial reports of Sirma Group Holding JSC as at 31.12.2020.
19.01.2021
The daughter company Sirma Medical Systems is certified with the international quality control certificate ISO 13485:2016 by Lloyd’s
Register.
MAIN LEGAL INFORMATION IN 2021
Transactions with shares for the period 01.01.2021 - 31.12.2021:
- Sale of an investment in an associate
On 18 January 2021, the company released its investment in the associated company E-Dom Management Ltd., selling its stake at a
nominal value of BGN 7 thousand.
- Purchase of shares
On 7 April 2021 in the office of “Sirma Group Holding” JSC a letter-notification was received from Rosen Marinov - Executive Director
of the subsidiary “Sirma Solutions” that it has acquired 1 437 786 shares from the capital of “Sirma Group Holding” JSC through 4
transactions made on a regulated market (Bulgarian Stock Exchange - Sofia) on 6 April 2021 for the amount of BGN 718 893.
- Establishment of a new company in the Group
On 21 July 2021 „EngView Systems Sofia“ JSC, part of Sirma Group established its subsidiary in Germany - EngView Systems
GmbH. The new company is 100% owned by „EngView Systems Sofia“ JSC, with a capital of EUR 200 000. The CEO of the new
company will be Peter Bernhard. He is a long-time partner of EngView in the German-speaking market and will manage operations
in Germany, Austria and Switzerland.
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- Acquisition of a new company by “Sirma Group Holding” JSC
On 16 November 2021, after receiving approval from the Commission for Protection of Competition, “Sirma Group Holding” JSC
signed a contract with the shareholders of the IT company “Sciant” AD for the acquisition of a majority stake, as follows:
• Acquired share: 80% (eighty percent) or 200 000 (two hundred thousand) shares of the company;
• Option: the contract also provides for an option for „Sirma Group Holding“ JSC for subsequent acquisition of the remaining 20% of
the company's shares on 01.04.2024.
With the implementation of this contract, "Sciant" AD officially became part of "Sirma Group Holding" JSC.
- Liquidation of an associate of “Sirma Solutions”
On 24 November 2021, the company “Flash Media” AD, in which “Sirma Solutions” owned 50% of the capital, was finally liquidated
and ceased its activities.
n 30 December 2021, the company “Sirma Mobile” AD, in which “Sirma Solutions” owned 40% of the capital, was finally liquidated
and ceased its activities.
Litigation for the period 01.01.2021 - 31.12.2021:
There are no lawsuits filed against the company for the period.
Audit compensation in 2021
„Grant Thornton“ OOD, registered under number 032 in the public register of audit companies at the Institute of Certified Public
Accountants in Bulgaria, was selected as the auditor of the separate annual financial statements of „Sirma Group Holding“ JSC. The
renumeration for the independent financial audit amounts to BGN 43 028 without VAT for 2021.
Information for contracted large transactions in 2021
In 2021, the company signed several large contracts with customer and subcontracts:
Purchases:
• Deal 1 for BGN 206 thousand
• Deal 2 for BGN 166 thousand
• Deal 3 for BGN 99 thousand
Sales:
• Deal 1 for BGN 1 605 thousand
• Deal 2 for BGN 1 358 thousand
• Deal 3 for BGN 292 thousand
Information of the used financial instruments in 2021
In 2021 the company has not used any financial instruments.
R&D activity of the company in 2021
The strategy for growth and development of “Sirma Group Holding” JSC forsees the concentration of the intellectual property of the
Group in the Holding company. This concentration also implies the concentration of the Group's research and development activities
at “Sirma Group Holding” JSC. Implementation of this process started in 2018.
In 2021 the Company invested BGN 333 thousand for research and development.
Possible futue development of the company
The forecasts for the development of the Information and Communication Technologies sector in 2022 and the following years are a
function of the expected development of the health crisis, as well as of the effects caused by the ongoing military actions in Ukraine
and the resulting economic crisis.
As of the date of this report, management continues to apply measures leading to a productive and continuous work process, in strict
compliance with the regulations of the state authorities. The annual budget has been prepared taking into account the current
situation and detailed analysis in order to minimize the effects of the coronavirus and military action in Ukraine and to maintain stable
financial performance.
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At present, the medical crisis is calming down and the introduction of new highly restrictive measures for a long period of time is not
expected, which will significantly suppress the financial indicators of the Company. However, there are still a number of risks that could
stop or slow down the development of both the ICT industry and the global economy - geopolitical tensions, inflation, logistical
difficulties, rising interest rates, the "big exit" are just some of the looming risks.
In preparing its forecasts for the future development of the Company, management has made a number of assessments and
assumptions that are associated with a high degree of uncertainty arising from factors and risks beyond the influence of management,
such as the global health problem Covid-19, the military conflict between Russia and Ukraine, rising inflation and others. Their
development in a direction different from that expected by the management may cause the need to reconsider some of the assumptions
and judgments made regarding the expected future development of the Company, cash flows and results of operations. Despite the
efforts of the management to identify the expected direct and indirect effects of the manifestation of the mentioned factors and risks
on the activity and their respective addressing, their specificity complicates their reliable assessment and accordingly they could cause
significant adjustments to the carrying amount of assets in the separate financial statements is determined when performing a number
of judgments and assumptions by management and reporting the most reliable information available at the date of estimates.
The Company reports liabilities on loans received. The Company does not expect its revenue to shrink to such an extent that it will
affect its ability to repay its current borrowings.
Contracts under Art.240b of the Commerical Code in 2021
During 2021 the company has not been notified for contracted transactions with the members of the Board of Directors or parties
related to them, which fall outside the line of activity of the company or the terms of which differ substantially from the current market
ones.
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6/ INDIVIDUAL FINANCIAL RESULTS
6.1. REVENUES
The company's revenues includes:
31.12.2021
31.12.2020
Change
2021 - 2020
(BGN '000)
Change
2021 - 2020
(%)
BGN '000
BGN '000
Revenues from sales
3 807
4 201
(394)
(9,38%)
Dividends
240
146
94
64,38%
Interest income
41
158
(117)
(74,05%)
Income from sale of investments
7
-
7
n/a
Gain on sale of non-current assets
5
-
5
n/a
Revenues from financing
-
27
(27)
(100%)
Other revenues
531
2
529
26450%
Total
4 631
4 534
97
2,14%
In 2021 the revenues of “Sirma Group Holding” JSC increased
by BGN 97 thousand or by 2,14% compared to 2020.
Revenues in the period include interest income on loans
granted to subsidiaries and associates. Additionally, the
Company has received dividends due to its interests in
subsidiaries as part of the principal activity of the holding
company is holding shares in other entities.
Revenues by product line includes:
31.12.2021
31.12.2020
Change
2021 - 2020
Change
2021 - 2021
(%)
BGN '000
BGN '000
(BGN '000)
Sales of licenses
1 803
2 518
(715)
(28,40%)
Administrative, accounting services
893
906
(13)
(1,43%)
Rental of investment properties
523
533
(10)
(1,88%)
Cloud Services
195
-
195
n/a
Technical Support
36
36
-
-
Others
357
208
149
71,63%
Total
3 807
4 201
(394)
(9,38%)
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXIV
www.sirma.com
www.sirma.com
6.2. EXPENSES
31.12.2021
31.12.2020
Change
BGN '000
BGN '000
2021/2020
Cost of materials
(72)
(66)
(6)
Change in %
9,09%
Hired services expenses
(1 306)
(774)
(532)
Change in %
68,73%
Employee benefits expense
(1 462)
(1 215)
(247)
Change in %
20,33%
Depreciation and amortisation of non-financial assets
(567)
(753)
186
Change in %
(24,70%)
Capitalized own expenses
333
99
234
Change in %
236,36%
Other expenses
(122)
(443)
321
Change in %
(72,46%)
Total expenses
(3 196)
(3 152)
(44)
Change in %
1,40%
In 2021 the expenses of “Sirma Group Holding” JSC increased by BGN 44 thousand or by 1,40% as compared to 2020. During the
period there is significant increase in the hired services expenses while other expenses decrease.
6.3. FINANCIAL INCOME / COSTS (NET)
31.12.2021
31.12.2020
Change
2021 - 2020
(BGN '000)
Change
2021 - 2020
(%)
BGN '000
BGN '000
Financial costs
(362)
(339)
(23)
6,78%
Financial income
50
44
6
13,64%
Financial income / costs (net)
(312)
(295)
(17)
5,76%
In 2021, financial income / costs (net) of "Sirma Group Holding" JSC increased by BGN 17 thousand as compared to 2020.
6.4. ASSETS
The sum of total assets of “Sirma Group Holding” JSC at the end of 2021 is with BGN 12 772 thousand (13,62%) higher than their
value at the end of 2020.
31.12.2021
31.12.2020
Change
2021 - 2020
(BGN '000)
Change
2021 - 2020
(%)
BGN '000
BGN '000
Property, plant and equipment
607
644
(37)
(5,75%)
Intangible assets
9 664
9 653
11
0,11%
Investments in subsidiaries
78 141
67 904
10 237
15,08%
Investment property
9 601
7 171
2 430
33,89%
Related party receivables
3 807
3 807
-
-
Non-current receivables
426
-
426
n/a
Deferred tax assets
-
56
(56)
(100%)
Total non-current assets
102 246
89 235
13 011
14,58%
31.12.2021
31.12.2020
Change
2021 - 2020
(BGN '000)
Change
2021 - 2020
(%)
BGN '000
BGN '000
Trade receivables
60
48
12
25%
Prepayments and other assets
170
718
(548)
(76,32%)
Related party receivables
2 293
2 500
(207)
(8,28%)
Income tax receivables
17
-
17
n/a
Cash and cash equivalents
1 775
1 288
487
37,81%
Total current assets
4 315
4 554
(239)
(5,25%)
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC 25
www.sirma.com
www.sirma.com
6.5. EQUITY
31.12.2021
31.12.2020
Change
2021 - 2020
(BGN '000)
Change
2021 - 2020
(%)
BGN '000
BGN '000
Equity
Main / Share Capital
59 361
59 361
-
-
Purchased own shares
(585)
(585)
-
-
Share premium reserve
5 497
5 497
-
-
Other reserves
1 141
1 042
99
9,50%
Retained earnings
8 028
7 130
898
12,59%
Current financial result
1 034
995
39
3,92%
Total equity
74 476
73 440
1 036
1,41%
In 2021, Equity increased by BGN 1 036 thousand compared to the previous reporting period.
For the reporting period share capital remained unchanged from the previous period. In execution of the decisions of the regular
General Meeting of Shareholders in 2017, “Sirma Group Holding” JSC purchased 584 474 оwn shares. The board of directors believes
in the development of the “Sirma Group Holding” JSC and the increase of the market value of the shares in the future and therefore
decided to purchase these shares at a relatively low price.
6.6. LIABILITIES
The amount of the liabilities of “Sirma Group Holding” JSC at the end of 2021 is with BGN 11 736 thousand (57,67%) bigger than
their value at the end of 2020.
31.12.2021
31.12.2020
Change
2021 - 2020
(BGN '000)
Change
2021 - 2020
(%)
BGN '000
BGN '000
Pension employee obligations
22
38
(16)
(42,11%)
Long-term borrowings
9 038
6 285
2 753
43,80%
Long-term lease liabilities
102
122
(20)
(16,39%)
Long-term related party payables
6 179
6 179
-
-
Deferred tax liabilities
28
-
28
n/a
Total Non-current liabilities
15 369
12 624
2 745
21,74%
31.12.2021
31.12.2020
Change
2021 - 2020
(BGN '000)
Change
2021 - 2020
(%)
BGN '000
BGN '000
Employee obligations
356
165
191
115,76%
Short-term borrowings
6 830
4 281
2 549
59,54%
Short-term lease liabilities
20
19
1
5,26%
Trade and other payables
173
443
(270)
(60,95%)
Short-term related party payables
9 337
2 811
6 526
232,16%
Income tax liabilities
-
6
(6)
(100%)
Total Current liabilities
16 716
7 725
8 991
116,39%
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXVI
www.sirma.com
www.sirma.com
LONG-TERM AND SHORT-TERM BANK LOANS
Recipient of credit
In Bank
Type of
loan
Currency
Total amount
of credit
(BGN)
Outstanding
obligation to
31.12.2021
(BGN)
Date of
contract
Interest
rate
Number
of outstanding
installments
The amount of
monthly
installment
(BGN)
Maturity
date
Pledges
Loans for which the
Issuer is a debtor
“Sirma Group Holding” JSC
Eurobank
Bulgaria AD
overdraft
BGN
4 200 000
3 635 493
21.07.2016
Base + 0.7
points, but
not less
than 1.7%
per year
-
31.12.2022
Pledge of the
Receivables under
the Business
Incubator Contract
№BG161PO003-
2.2.0012-C0001 /
02.02.2012; Mortgage
of a real estate
located in Sofia,
Mladost district,
Tsarigradsko Shosse
Blvd 135, namely the
5th floor of the
building
“Sirma Group Holding” JSC
United Bulgarian
Bank AD
Investment
BGN
10 475 000
6 285 080
12.12.2019
RIR +
1.2%, but
no less
that 1.3%
per year
36
174 580
20.12.2024
Pledge of receivables,
pledge of commercial
enterprises, pledge of
real estate
“Sirma Group Holding” JSC
United Bulgarian
Bank AD
Investment
EUR
2 933 745
1 931 382
11.12.2021
3 m.
EURIBOR
+ 1.2%,
but no less
that 1.3%
per year
116
16 230
11.12.2031
Pledge of receivables,
pledge of commercial
enterprises, pledge of
real estate
“Sirma Group Holding” JSC
United Bulgarian
Bank AD
Investment
EUR
6 391 652
4 007 496
11.12.2021
3 m.
EURIBOR
+ 1.2%,
but no less
that 1.3%
per year
95
42 184
11.12.2029
Pledge of receivables,
pledge of commercial
enterprises, pledge of
real estate
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXVII
www.sirma.com
www.sirma.com
Loans for which the
Issuer is a guarantor
Sirma Solutions
United Bulgarian
Bank AD
United Bulgarian
Bank AD
United Bulgarian
Bank AD
United Bulgarian
Bank AD
overdraft
BGN
4 025 000
3 485 907
12.12.2019
RIR +
1.2%, but
no less
that 1.3%
per year
-
20.12.2025
Pledge of receivables,
pledge of commercial
enterprises, pledge of
real estate
Sirma Solutions
Revolving
credit line
BGN
4 000 000
4 000 000
28.10.2020
RIR +
1.2%, but
no less
that 1.3%
per year
-
28.10.2025
Pledge of receivables.
Sirma AI
overdraft
EUR
1 449 270
-
15.08.2019
1 m.
EURIBOR
+ 1,4%
(but not
less than
1,4%)
-
20.09.2022
Second in a row
pledge on Sirma AI;
Second pledge of his
shares; A second
pledge of current and
future receivables
totaling EUR 741
thousand; Pledge on
receivables on all
accounts of the
borrower in UBB in
the amount of EUR
741 thousand.
Sirma AI
overdraft
EUR
5 867 490
5 763 451
15.08.2019
1 m.
EURIBOR
+ 1,4%
(but not
less than
1,4%)
-
20.09.2022
The first in a row
pledge of Sirma AI;
The first pledge of the
shares he holds; First
in a row pledge of
current and future
receivables totaling
EUR 3 million; Pledge
on receivables on all
accounts of the
borrower in UBB in
the amount of EUR 3
million.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXVIII
www.sirma.com
www.sirma.com
Other loans and deposits provided by “Sirma Group Holding” JSC and its subsidiaries:
Lender
Recipient
United
identification
code
Relationships
Type
Currency
Liability as of
31.12.2021 in
BGN
thousand
Date of contract/
last annex
Interest
rate
%
Term of
contract
Pledges
Sirma Group Holding
Sirma Medical Systems
204054855
Subsidiary
Loan
BGN
816
31.01.2017
31.01.2021
1,30
31.12.2022
No pledges
Sirma Group Holding
Sirma AI
200421236
Subsidiary
Loan
BGN
3 807
14.02.2011
1,3, 2,8,
3,5, 5
31.12.2023
No pledges
Sirma Group Holding
Sirma CI
205364846
Subsidiary
Loan
BGN
63
02.01.2019,
31.01.2021
0,013
31.12.2022
No pledges
Sirma Group Holding
Sirma ISG
201580558
Company under common
control
Loan
BGN
188
26.04.2017
1,3, 2,8,
6,5
31.12.2022
No pledges
Sirma Group Holding
Sirma ICS
203940550
Company under common
control
Loan
BGN
141
23.01.2017,
31.01.2021
0,013
31.12.2022
No pledges
Sirma Group Holding
*Individual SS
Non related party
Loan
BGN
546
19.09.2017
20.10.2017
0,03
31.12.2023
No pledges
Sirma Solutions
Sirma ISG
201580558
Subsidiary
Loan
BGN
107
12.12.2016
0,05
31.12.2022
No pledges
Sirma Solutions
Sirma Group Holding
200101236
Parent company
Deposit
BGN
3 501
29.10.2020
Bank
charges
incurred
31.12.2022
No pledges
Sirma Solutions
*Individual T.A.
Related party
Loan
BGN
47
10.12.2021
0,025
12.04.2023
No pledges
Sirma Solutions
*Individual S.S.
Non related party
Loan
BGN
150
27.06.2017
20.09.2017
0,03
31.12.2023
No pledges
Sirma Solutions
*Individual B.I.
Related party
Loan
BGN
15
13.05.2021
0,025
31.12.2022
No pledges
Smartcom Bulgaria
Sirma Solutions
040529004
Non related company
Loan
BGN
64
18.12.2019
03.06.2020
0,015
06.03.2022
No pledges
Siesens
Sirma Solutions
040529004
Non related company
Loan
BGN
121
20.12.2019
05.06.2020
0,015
06.05.2022
No pledges
Sirma AI
Sirma Group Holding
200101236
Parent company
Deposit
BGN
5 867
01.02.2020
Bank
charges
incurred
31.12.2023
No pledges
Sirma AI
Sirma Group Holding
200101236
Parent company
Deposit
BGN
312
01.02.2020
0,001
31.12.2023
No pledges
Sirma AI
Ontotext
200356710
Subsidiary
Loan
BGN
6
04.01.2019
0,0175
31.12.2022
No pledges
EngView Systems Sofia
Pirina Technologies
175149906
Company under common
control
Loan
BGN
300
12.01.2021
0,02
12.01.2022
No pledges
Sciant
Re Solutions Sh.p.k.
Foreign
company
Non related company
Loan
EUR
59
10.05.2021
0,03
15.12.2022
No pledges
Daticum
Sirma Group Holding
200101236
Company under common
control
Deposit
BGN
514
04.01.2009
0,001
31.12.2022
No pledges
Sirma Group Inc
Ontotext USA
Foreign
company
Company under common
control
Loan
USD
17
25.11.2016
0,0001
31.12.2022
No pledges
Worklogic Canada
Sirma Group Inc
Foreign
company
Non related company
Loan
USD
82
31.07.2017
0,0001
31.12.2022
No pledges
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXIX
www.sirma.com
www.sirma.com
Other loans and deposits received from Sirma Group Holding and its subsidiaries:
Recipient
Lender
United
identification
code
Relationships
Type
Currency
Liability as
of
31.12.2021
(BGN '000)
Date of
contract/ last
annex
Interest rate
%
Term of contract
Pledges
Sirma Medical Systems
Sirma Group Holding
200101236
Parent company
Loan
BGN
816
31.01.2017
31.01.2021
1,30%
31.12.2022
No pledges
Sirma AI
Sirma Group Holding
200101236
Parent company
Loan
BGN
3 807
14.02.2011
1,3% 2,8%,
3,5%, 5%
31.12.2023
No pledges
Sirma CI
Sirma Group Holding
200101236
Parent company
Loan
BGN
63
02.01.2019
31.01.2021
0,013
31.12.2022
No pledges
Sirma Group Holding
Sirma Solutions
040529004
Subsidiary
Deposit
BGN
3 501
29.10.2020
Bank charges
incurred
31.12.2022
No pledges
Sirma Solutions
Smartcom Bulgaria
130985811
Non related
company
Loan
BGN
64
18.12.2019
03.06.2020
0,015
06.03.2022
No pledges
Sirma Solutions
Siesens
121708078
Non related
company
Loan
BGN
121
20.12.2019
05.06.2020
0,015
06.05.2022
No pledges
Sirma Group Holding
Sirma AI
200421236
Subsidiary
Deposit
BGN
5 867
01.02.2020
Bank charges
incurred
31.12.2023
No pledges
Sirma Group Holding
Sirma AI
200421236
Subsidiary
Deposit
BGN
312
01.02.2020
0,001
31.12.2023
No pledges
Ontotext
Sirma AI
200421236
Company under
common control
Loan
BGN
6
04.01.2019
0,0175
31.12.2022
No pledges
Sirma Group Holding
Daticum
200558943
Company under
common control
Deposit
BGN
514
04.01.2009
0,001
31.12.2022
No pledges
Sirma Group Inc
Worklogic Canada
Foreign
company
Non related
company
Loan
USD
82
31.07.2017
0,0001
31.12.2022
No pledges
*The Issuer has disclosed only the initials of the individuals to whom it has granted loans, in compliance with the provisions of the Personal Data Protection Act and the General Regulation on Data
Protection (Regulation (EU) 2016/679, GDPR).
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXX
www.sirma.com
www.sirma.com
6.7. CASH FLOW
31.12.2021
31.12.2020
Change
2021 - 2020
(BGN '000)
Change
2021 - 2020
(%)
BGN '000
BGN '000
Net cash flow from operating activities
1 093
(962)
2 055
n/a
Net cash flow from investing activities
(7 247)
(459)
(6 788)
1478,87%
Net cash flow from financing activities
6 641
1 794
4 847
270,18%
Net change in cash and cash equivalents
487
373
114
30,56%
Cash and cash equivalents at the beginning of
the year
-
(2)
2
n/a
Exchange gains/(losses) on cash and cash
equivalents
1 288
917
371
40,46%
Cash and cash equivalents at the end of the
year
1 775
1 288
487
37,81%
The Company has no liquidity problems and operates with the available resources.
6.8. FINANCIAL RATIOS AND INDICATORS
Over the past financial period, the company has realized the following financial results:
(The indices and the coefficients have been calculated according to the instructions of BSE)
31.12.2021
31.12.2020
Change 2021/2020
№
Indicators
BGN '000
BGN '000
(Abs.)
(%)
1
Revenue from operating activities
4 631
4 534
97
2,14%
2
Cost of sales
(3 074)
(2 709)
(365)
13,47%
3
Gross profit
1 557
1 825
(268)
(14,68%)
4
Other operating costs
(122)
(443)
321
(72,46%)
5
Operating profit
1 435
1 382
53
3,84%
6
Financial income
50
44
6
13,64%
7
Financial costs
(362)
(339)
(23)
6,78%
8
Profit before tax expense
1 123
1 087
36
3,31%
9
Tax costs
(89)
(92)
3
(3,26%)
10
Net profit
1 034
995
39
3,92%
11
Cash and cash equivalents
1 775
1 288
487
37,81%
12
Short-term assets
4 315
4 554
(239)
(5,25%)
13
Total amount of assets
106 561
93 789
12 772
13,62%
14
Average arithmetic total asset value for 5 quarters
96 671
93 724
2 947
3,14%
15
Current liabilities
16 716
7 725
8 991
116,39%
16
Debt
15 992
10 707
5 285
49,36%
17
Total Liabilities
32 085
20 349
11 736
57,67%
18
Equity
74 476
73 440
1 036
1,41%
19
Equity averaged 5 quarters
73 857
73 021
836
1,14%
20
Turnover capital
(12 401)
(3 171)
(9 230)
291,08%
21
Number of shares at the end of the period (in thousands)
59 361
59 361
-
-
22
Interest expenses
(310)
(281)
(29)
10,32%
23
Weighted average share price of last trading session
0,442
0,5475
(0,1055)
(19,27%)
24
Last share price of last trading session
0,44
0,555
(0,115)
(20,72%)
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXXI
www.sirma.com
www.sirma.com
Indicators
31.12.2021
31.12.2020
Change 2021/2020
(Abs.)
(%)
EBITDA
2 000
2 121
(121)
(5,70%)
DEPRECIATION
(567)
(753)
186
(24,70%)
EBIT
1 433
1 368
65
4,75%
FIN/INVEST NET
(312)
(295)
(17)
5,76%
EBT
1 123
1 087
36
3,31%
ROA
0,0097
0,0106
(0,0009)
(8,54%)
ROA(BSE)
0,0107
0,0106
0,0001
0,75%
Debt/EBITDA Ratio
7,9960
5,0481
2,9479
58,40%
Quick Ratio
0,2581
0,5895
(0,3314)
(56,21%)
ROE (BSE)
0,0140
0,0136
0,0004
2,74%
ROE
0,0140
0,0136
0,0004
2,74%
EBITDA
0,4308
0,2771
0,1537
55,48%
Profitability ratios
Gross profit margin
0,3362
0,4025
(0,0663)
(16,47%)
Operating profit margin
0,3099
0,3048
0,0051
1,66%
Net profit margin
0,2233
0,2195
0,0038
1,74%
Coefficients for assets and liquidity
Assets turnover ratio
0,0484
0,0488
(0,0004)
(0,87%)
Assets turnover ratio (BSE)
0,0479
0,0484
(0,0005)
(0,97%)
Operating cycle
(0,3734)
(1,4298)
1,0564
(73,88%)
Current ratio
0,2581
0,5895
(0,3314)
(56,21%)
Quick ratio
0,2581
0,5895
(0,3314)
(56,21%)
Cash ratio
0,1062
0,1667
(0,0605)
(36,31%)
Odds per share
P/S ratio
5,6656
7,1681
(1,5025)
(20,96%)
P/E ratio
25,3748
32,6635
(7,2886)
(22,31%)
P/B ratio
0,3523
0,4425
(0,0902)
(20,39%)
Revenue per share
0,0780
0,0764
0,0016
2,14%
Earnings per share
0,0174
0,0168
0,0007
3,92%
Book value of equity per share
1,2442
1,2301
0,0141
1,14%
Development Ratios
Revenue growth
0,0214
(0,1485)
0,1699
(114,40%)
Gross profit growth
(0,1468)
(0,3018)
0,1550
(51,35%)
Assets growth
0,1362
0,0069
0,1293
1875,79%
Leverage Ratios
Debt/total assets
0,1654
0,1142
0,0512
44,81%
Debt/capital
0,1780
0,1279
0,0501
39,19%
Debt/equity
0,2165
0,1466
0,0699
47,67%
Total assets/equity
1,3089
1,2835
0,0254
1,98%
Market value of the company
26 119
32 945
(6 827)
(20,72%)
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXXII
www.sirma.com
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6.9 RELATED PARTY TRANSACTIONS
The Company's related parties include its owners, subsidiaries and associates, key management personnel and others
described below.
Unless otherwise stated, none of the transactions incorporate special terms and conditions and no guarantees were given or
received.
Transactions with subsidiaries
2021
2020
BGN‘000
BGN‘000
Purchases of goods and services:
Purchases of services:
- Software services
(4)
(4)
- Office supplies
(3)
(3)
- Inventory
(1)
(1)
- Computer components
(2)
(1)
Purchases of LTA
(39)
(5)
Sales of goods and services
Sales of services
- Administrative, accounting services
738
732
- Rent
476
476
- Consulting services
91
47
- Sale of licenses
1 803
2 518
- Cloud services
195
-
- Technical Support
22
22
- Marketing and Advertising
156
72
- Software Services
2
-
Sales of goods:
- Consumables
77
74
Dividends
240
146
- Received deposits
2 300
5 421
- Refund of received deposits
915
3 443
- Given loans
(196)
(235)
- Refunded loans
209
3
- Interest on received deposits
165
86
- Interest on loans granted
25
146
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXXIII
www.sirma.com
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Transactions with other related parties
2021
2020
BGN‘000
BGN‘000
Purchases of services:
- Internet
(20)
(17)
- Consulting services
(7)
-
- Subscriptions
(1)
(9)
Sale of services
- Administrative, accounting services
155
158
- Rent
47
47
- Consulting services
1
3
- Sale of licenses
-
80
- Technical Support
15
15
Sale of licenses
-
80
Purchases of goods
- Consumables
-
6
- Deposits received
-
150
- Given loans
-
(320)
- Refunded loans
266
20
- Interest on loans granted
16
37
- Interest on loans received
1
-
Transactions with key management personnel
2021
2020
BGN‘000
BGN‘000
Short-term employee benefits:
Salaries including bonuses
(448)
(281)
Social security costs
(7)
(7)
Total short-term employee benefits
(455)
(288)
Total remunerations
(455)
(288)
None of these transactions incorporate special terms and conditions that deviate from the market for such transactions.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXXIV
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7/ ECOLOGY AND PERSONNEL
7.1 ECOLOGY
“Sirma Group Holding” maintains and observes its
commitments in compliance with the national legislation in
the field of environmental protection. The company applies
measures for separate collection of waste, minimization,
recovery and recycling of municipal waste. In 2017, the use
of plastic cups stopped, and they were replaced with
porcelain and glass cups.
7.2 PERSONNEL
The Company believes that its employees play a key role in
the development of its business and the overall corporate
goals and therefore pays special attention to the
development of a common human resources management
strategy and policies. Sirma Group Holding's policies in this
regard are aimed at stimulating the responsibility and
motivation of the staff to fulfill the assigned tasks and
objectives.
The company and the companies in the group apply certain
selection criteria and consider that they have an ambitious
team of professionals capable of pursuing the strategic and
operational objectives. “Sirma Group Holding” invests in
various training programs for its employees and provides its
employees with opportunities for professional development.
The structure of the personnel of “Sirma Group Holding” has the following dynamics:
31.12.2021
31.12.2020
Relative
share in 2021
%
Number of Employees
26
24
100,00%
Higher education
24
22
92,31%
Secondary education
2
2
7,69%
Employees 31 - 40 years
7
5
26,92%
Employees 41 - 50 years
15
15
57,69%
Employees 51 - 60
3
3
11,54%
Employees over 60
1
1
3,85%
Women
13
11
50,00%
Men
13
13
50,00%
DESCRIPTION OF ALL AGREEMENTS FOR THE PARTICIPATION OF THE EMPLOYEES IN THE
CAPITAL OF THE COMPANY.
There are no arrangements for the participation of employees in the capital of the Company.
8/ RISK FACTORS
8.1 System Risks
The general risks stem from possible changes in the overall
economic system and, in particular, a change in the
conditions of the financial markets. They can not be
diversified, as all economic entities in the country are
exposed to them.
Twenty-five years after the end of the planned economy in
Bulgaria, a policy of economic reforms and stabilization
aimed at the imposition and functioning of the principles of
a free market economy is being pursued. As a result,
business entities in Bulgaria have a limited history of activity
in free market conditions. In this regard, Bulgarian
companies, compared to Western companies, are
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XXXV
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characterized by a lack of experience in the market
economy and limited capital resources, with which to
develop their business. Bulgaria also has limited
infrastructure to maintain the market system.
In Bulgaria, as in most transition countries, there is a trade
deficit and a current account deficit. Our country is an
importer of crude oil and energy resources. In this regard,
increases in oil prices and energy resources reduce the
competitiveness of the Bulgarian economy and, in addition,
its dependence on oil and energy imports further exposes
the economy to currency risks from unfavorable changes in
the USD exchange rate against the Bulgarian Lev. The
capital gains from privatization are expected to gradually
decrease as the privatization program is completed.
8.1.1. Economic Growth
The interaction between economic growth and external
indebtedness of the country has a direct impact on the
formation and change of market conditions and the
investment climate. Official statistics show real GDP and
GDP growth per capita in recent years, which are in line with
the government's development agenda.
According to published information from NSI, after the
introduction of the currency board system in 1997, Bulgaria
achieved macroeconomic stability and good indicators for
economic development.
Delayed economic growth, not only in Bulgaria but also in
other countries where the Company realizes its output,
means reduced activity on the part of economic operators,
where there is also a reduced level of investment in general
and in particular in software solutions. In this respect, lower
economic growth adversely affects the Company's activity
and would prevent the future plans from being realized
according to predefined parameters.
8.1.2. Political Risk
The political risk is the likelihood of a change in government,
or a sudden change in its policy, the emergence of internal
political turmoil and unfavorable changes in European and /
or national legislation, resulting in a negative change in the
environment in which local businesses operate, and
investors to suffer losses.
The political risks for Bulgaria at international level are
related to the commitments made to implement serious
structural reforms in the country as an equal member of the
EU, increasing the social stability of the inefficient spending
on the one hand, as well as the severe destabilization of the
countries The Middle East, the increasing threats of terrorist
attacks in Europe, refugee waves, and the volatility of key
countries in the immediate vicinity of Bulgaria.
Bulgaria, as well as the other EU member states in the
region, continues to be seriously affected by the common
European problem of the intensive Middle East refugee
flow.
Other factors that also affect this risk are possible legislative
changes, particularly those that concern the economic and
investment climate in the country.
8.1.3. Credit Risk
Credit risk is the risk that a counterparty fails to discharge
an obligation to the Company. The Company is exposed to
this risk for various financial instruments, for example by
granting loans and receivables to customers, placing
deposits, etc. The Company's maximum exposure to credit
risk is limited to the carrying amount of financial assets
recognised at the reporting date, as summarized below:
2021
2020
BGN‘000
BGN‘000
Financial assets
Trade and other receivables
486
543
Related parties receivables
6 100
6 307
Cash and cash equivalents
1 775
1 288
8 361
8 138
The Company continuously monitors defaults of customers
and other counterparties, identified either individually or by
group, and incorporates this information into its credit risk
controls. Where available at reasonable cost, external credit
ratings and/or reports on customers and other
counterparties are obtained and used. The Company's
policy is to deal only with creditworthy counterparties. The
Company's management considers that all the above
financial assets that are not impaired or past due for each
of the reporting dates under review are of good credit
quality.
The Company has not provided its financial assets as
collateral for transactions other than collateral for received
bank loans.
In respect of trade and other receivables, the Company is
not exposed to any significant credit risk exposure to a
single counterparty or any group of counterparties having
similar characteristics. Trade receivables consist of a small
number of customers in single industry and geographical
area. Based on historical information about customer
default rates management consider the credit quality of
trade receivables that are not past due or impaired to be
good.
The credit risk for cash and cash equivalents is considered
negligible, since the counterparties are reputable banks with
high quality external credit ratings.
The carrying amounts disclosed above are the Company's
maximum possible credit risk exposure in relation to these
instruments.
8.1.4. Currency Risk
Most of the Company’s transactions are carried out in
Bulgarian leva (BGN). Exposures to currency exchange
rates arise from the Company's overseas sales and
purchases, which are primarily denominated in US-Dollars.
To mitigate the Company's exposure to foreign currency
risk, non-BGN cash flows are monitored. Generally,
Company’s risk management procedures distinguish short-
term foreign currency cash flows (due within 6 months) from
longer-term cash flows. Where the amounts to be paid and
received in a specific currency are expected to largely offset
one another, no further hedging activity is undertaken.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
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Foreign currency denominated financial assets and
liabilities which expose the Company to currency risk are
disclosed below. The amounts shown are translated into
Bulgarian leva at the closing rate:
Short-term exposure
BGN‘000
31 December 2021
Financial assets
416
Total exposure
416
31 December 2020
Financial assets
8
Total exposure
8
Financial liabilities
150
Total exposure
150
The tables below show the sensitivity of the annual net
financial result after taxes and equity to possible changes
in the exchange rates of the Bulgarian lev against the
following foreign currencies:
• USD +/- 3.8% (for 2020: +/- 6.5%)
All other parameters are assumed to be constant.
These percentages are determined on the basis of the
average exchange rates for the last 12 months. The
sensitivity analysis is based on the Company's
investments in foreign currency financial instruments held
at the end of the reporting period.
31 December 2021
Increase in the
exchange rate of the
Bulgarian lev
Decrease in the
exchange rate of the
Bulgarian lev
Net
financial
result
Equity
Net
financial
result
Equity
BGN‘000
BGN‘000
BGN‘000
BGN‘000
US Dollars (+/- 3.8 %)
(14)
(14)
14
14
31 December 2020
Increase in the
exchange rate of the
Bulgarian lev
Decrease in the
exchange rate of the
Bulgarian lev
Net
financial
result
Equity
Net
financial
result
Equity
BGN‘000
BGN‘000
BGN‘000
BGN‘000
US Dollars (+/- 6.5 %)
(8)
(8)
8
8
Despite the small size of foreign currency financial
instruments, the impact of the general economic situation
and the dynamics of international markets could have an
impact, leading to unexpected changes in the US dollar and
significantly affecting the Company's financial performance
in the future.
8.1.5. Interest Rate Risk
The Company's policy is to minimize interest rate cash flow
risk exposures on long-term financing.
As of 31 December 2021 the interest rates on loans are
formed plus a margin, but due to the slight changes in the
respective reference values in recent years, the exposure to
interest rate risk of the Company is insignificant. All other
Company's financial assets and liabilities are at fixed
interest rates.
8.1.6. Liquidity risk
Liquidity risk is the risk arising from the Company not being
able to meet its obligations. The Company manages its
liquidity needs by monitoring scheduled debt servicing
payments for long-term financial liabilities as well as
forecast cash inflows and outflows due in day-to-day
business. Liquidity needs are monitored in various time
bands, on a day-to-day and week-to-week basis, as well as
on the basis of a rolling 30-day projection. Long-term
liquidity needs for a 180-day and a 360-day lookout period
are identified monthly. Net cash requirements are compared
to available borrowing facilities in order to determine
headroom or any shortfalls. This analysis shows that
available borrowing facilities are expected to be sufficient
over the lookout period.
The Company's objective is to maintain cash to meet its
liquidity requirements for 30-day periods. Funding for long-
term liquidity needs is additionally secured by an adequate
amount of committed credit facilities and the ability to sell
long-term financial assets.
As at 31 December 2021, the Company's non-derivative
financial liabilities have contractual maturities (including
interest payments where applicable) as summarized below:
Current
Non-current
31 December 2021
Within 6
months
6 to 12
months
1 to 5 years
BGN‘000
BGN‘000
BGN‘000
Loan liabilities
3 415
3 415
9 038
Lease liabilities
11
12
112
Trade and other payables
107
-
-
Related party payables
5 315
4 022
6 179
Total
8 848
7 449
15 329
Annual separate management report of “Sirma Group Holding” JSC
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This compares to the maturity of the Company's non-
derivative financial liabilities in the previous reporting period
as follows:
Current
Non-current
31 December 2020
Within 6
months
6 to 12
months
1 to 5 years
BGN‘000
BGN‘000
BGN‘000
Loan liabilities
3 234
1 047
6 285
Lease liabilities
11
12
131
Trade and other payables
128
-
-
Related party payables
181
2 630
6 179
Total
3 554
3 689
12 595
8.1.7. Inflation Risk
Inflationary risk is a general price increase whereby money
is depreciated and there is a likelihood of loss from
households and firms.
Inflationary risk is a general price increase whereby money
is depreciated and there is a likelihood of loss from
households and firms.
8.1.8. Risk from unfavorable changes in tax and other
legislation
The taxes paid by Bulgarian legal persons include
withholding tax, local taxes and fees, corporate income tax,
value added tax, excise duties, export and import duties and
property taxes. The tax system in Bulgaria is still
developing. This may result in contradictory tax practices,
both at state and local level.
Investors should also take into account that the value of the
investment in shares may be adversely affected by changes
in the current tax legislation, including its interpretation and
application. In addition, tax legislation is not the only one
that can undergo changes, and thease changes adversely
to affect the Company's business. Although the bulk of
Bulgarian legislation is already harmonized with EU law, the
application of the law is subject to criticism by the European
partners in Bulgaria. Judicial and administrative practice
remains problematic: the Bulgarian courts are not able to
effectively resolve disputes over property rights, breaches
of legal and contractual obligations, etc., resulting in a
systemic regulatory risk being relatively high.
Unfavorable changes to tax and other laws would lead to a
worsening of the general conditions in which the Company
operates, from wherever its future results may deteriorate.
In particular, the increase in the corporate income tax and
other taxes would reduce the ultimate disposable profit for
new investments and / or the distribution of dividends to its
shareholders.
8.1.9. Force Majeure Risks
Force majeure events such as natural disasters, sabotage,
war and terrorist acts, and others may lead to unpredictable
changes in investor and interest in the market for all shares,
as well as, in particular, the shares of Sirma Group Holding,
Some force majeure events do not provide for the possibility
of insurance.
Force majeure events could seriously affect the Company's
performance by reducing its ability to conduct normal
business activities and cause an increase in some cost
items.
8.2. Non-system Risks
Non-system risks are associated with the overall investment
risk specific to the firm and the industry itself. Non-system
risks can be divided into two types: sectoral risk related to
the uncertainty in the development of the sector as a whole
and general business risk - arising from the specifics of the
particular company.
8.2.1. Industry Risks
The activity of the Company and of the companies within
Sirma Group are exposed to various risks, including: 1) risks
typical of the Information and Communication Technology
(ICT) industry and 2) risks specific to the Company itself.
Revenue and profit of the Company may be adversely
affected by a number of factors: the financial market
situation and the information and communication
technology market; the ability of the Company to ensure
effective management, assessment of the different risks
and economic feasibility of individual transactions, the
economic climate in the country and others.
8.2.2. Specific Company Risk
The company risk is related to the nature of the Company's
business, as for every firm it is important that the return on
the invested funds and resources is consistent with the risk
associated with the investment.
The main company risk for “Sirma Group Holding” JSC is
related to the possibility of reduction of the solvent demand
for the products and services offered by the Group, as well
as changes in the terms of sale of those products and
services. The company risk may have an impact on the
growth of service and software solutions development
contracts. Uncertainty can be measured by the variability of
revenue earned over time. This means that the more volatile
the revenues of a company, the greater the uncertainty of
the company to realize a positive financial result, ie. the risk
for the investors, respectively the creditors, will be higher.
8.2.3. Operation Risk
Operational risks are related to the management of the
company and can be expressed in the following:
• Making erroneous decisions for the ongoing management
of the investment and liquidity of the company by the
management staff;
• the inability of the management team to start the
implementation of planned projects or lack of suitable
personnel for this;
• key employees leaving and impossibility to recruit new
ones;
• the risk of excessive spending on management and
administration, leading to a reduction in the overall
profitability of the company.
Various mechanisms will be used to optimize and manage
this risk, including the following:
• sound investment policy;
• optimizing the structure, quality and return on assets of the
Company;
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• protection against unfavorable and undesirable external
factors and attacks, etc.
8.2.4. Intelectual Property Protection
The protection of the intellectual property of the Group is
crucial to its success. It uses a variety of tools to identify and
control potential risks and to protect its intellectual property.
These measures include application for patents,
trademarks, and other brands and copyrights to prevent
infringement of copyright and trademarks. Despite these
efforts, the Group may not be able to prevent third parties
from using or selling without permission what it regards as
its own technology. All these measures provide only limited
protection and its rights could be challenged or otherwise
affected. Any intellectual property may be vulnerable to
disclosure or misuse by employees, partners or third
parties. Third countries can independently develop
technologies that are substantially equivalent to or better
than the technology of the Company. In addition, a third
party may reengineer or otherwise obtain and use
technology and information that the Group considers to be
its own. In this regard, the Company may not be able to
protect its proprietary rights against unauthorized copying
or third party use, which could have an adverse effect on
the competitive and financial situation and lead to a decline
in sales. In addition, the laws and courts of some countries
may not offer effective protection of intellectual property
rights.
8.2.5. Risk of concluding insider deals at prices differing
from the market ones
The company is part of an economic group. The risk of
engaging in transactions with Group entities, whose
conditions differ from market at the date of the transaction
is eliminated to the extent that the Company seeks to
maintain a transparent policy regarding its relations and the
treatment of related companies. As far as there are
transactions in the economic group, they are concluded
under standard market conditions at the moment of
transaction and do not favor any of the parties.
8.2.6. Risk of asset depreciation
The impairment risk of assets is related to the possibility of
reducing the carrying amount of the Company's assets.
Possible impairment of tangible and / or intangible fixed
assets would result in the need to account for an impairment
loss. This, in turn, may worsen the Company's future
financial performance as well as lead to a final negative
financial result for an annual period. This in turn leads to the
risk of not being able to distribute dividends to existing
shareholders at this future moment, as well as a possible
decrease in the market price of a shares of the Company
due to the deteriorated financial indicators.
8.3. Risk factors, characteristic of share traded
on the Stock Exchange
The risk of investing in securities is linked to the uncertainty
and the inability to accurately predict future effects and the
impact on the expected return on the investment made.
The main risk and uncertainty for the shareholders of “Sirma
Group Holding” JSC is the probability that the investments
in the company's shares will not retain its value, nor
generate the expected return on them, due to a decrease in
the price of the shares or a lack of other income (dividends)
from them.
“Sirma Group Holding” JSC informs potential investors that
investing in shares is associated with certain risks. Investors
should carefully read and understand the risks associated
with investing in shares of the current issue before making
an investment decision.
“Sirma Group Holding” JSC seeks to maintain a low risk
profile by maintaining low levels of financial and operational
leverage, a high level of operational efficiency, the
introduction of strict rules and procedures in the
management of the activity and strict control over their
compliance, diversification of the client base and suppliers.
The above makes the company resistant to external
negative shocks, but nevertheless has significant risks for
its business that could negatively affect the company's
results.
8.3.1. Price Risk
The changes in the price of the shares of “Sirma Group
Holding” JSC can be created both from the fundamental
state of the Company - current and expected results from
the activity and financial results as well as from the
economic and market conditions in Bulgaria and from the
market and economic conditions in the world economy.
Shareholders should keep in mind that events that may
cause sudden fluctuations in market prices of shares that
have previously occurred on the Bulgarian capital market
and in international financial markets may occur and that
such fluctuations are likely to affect unfavorable price
movements of the shares of “Sirma Group Holding” JSC.
The market value of the shares will be determined on the
basis of supply and demand, and the share price may
increase or decrease. These "price fluctuations" can cause
a security to cost at a certain point much less than the value
at which it is purchased. This price dynamic is particularly
typical for the ordinary stock market, whose stock prices
may be subject to sharp fluctuations as a result of publicly
disclosed information about the Company's financial
performance, changes in legislation and other material
events.
A significant number of sales of the shares of “Sirma Group
Holding” JSC for a certain period of time may have an
adverse effect on the maintenance of their achieved price
level. Such an event would result from a significant excess
of the sellers of those shares over buyers in that period. At
this point in time, the Issuer or a third party does not commit
to maintaining a particular price level and a significant
number of sales may lead to a decrease in that level.
The Company does not guarantee to investors that the price
of its shares will remain stable and / or increase its value in
the future. At the moment of preparation of this document,
“Sirma Group Holding” JSC or, to the best of its knowledge,
other persons, do not intend to purchase shares of the
Company in order to preserve and / or increase the market
price of the Company's shares after the increase of capital.
8.3.2. Liquidity Risk
Liquidity risk is directly related to the liquidity of the
securities market itself and expresses the potential for short-
term purchase or sale of the securities on the secondary
market. The liquidity of the issue depends on the number of
investors who will be interested in investing in the issue. The
liquidity risk of the shares will also depend on the
development of the equity market in terms of the volume
and variety of instruments offered, the issuer's financial
position, the ability of the local capital market to attract new
investors,
Investors should keep in mind that the BSE is significantly
smaller and less liquid than the securities markets in most
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developed market economies. Thus, for the shareholders of
“Sirma Group Holding” JSC there is no guarantee that the
listing of the shares of the Company on the BSE will
guarantee their active trading and sufficient liquidity.
8.3.3. Inflation Risk
The manifestation of the inflationary risk for the
shareholders of “Sirma Group Holding” JSC would arise in
cases when the income from the shares (increase in the
price and / or received dividends) were lower than the
inflation for the investment period. The inflation processes
leads to a decrease in the real yield that investors receive.
Although in the long run equity yields usually outweigh the
inflationary processes in Bulgaria and other countries with a
developed market economy, there is no guarantee for the
investors in the shares of “Sirma Group Holding” JSC that
their investment in shares of the Company will represent a
real protection against inflation.
8.3.4. Dillution Risk
Pursuant to the Articles of Association of the Company no
limitations on the maximum amount of future issues of
shares are envisaged. For this reason, shareholder
participation may be reduced as a result of a public offering
if they do not exercise their rights and do not subscribe a
proportionate share of the new shares. In the event that, as
a result of a future public offering, the number of issued
shares of the Company increases at a faster rate than the
amount of the assets of the Company, it is possible to
decrease the value of the assets per share of the Company.
8.3.5. Currency Risk
This current issue is denominated in BGN. Currency risk of
the investment exists for investors whose funds are
denominated in US dollars or currencies other than Lev and
Euro, due to the constant exchange rate movements.
Investors who take a currency risk in the purchase of the
current issue would increase or reduce the effective return
on their investment as a consequence of strengthening or
weakening the BGN and EUR exchange rate against the
currency in which the investor's funds are denominated.
Stability and high confidence in the credibility of the
Currency Board in the country, as well as the relatively
stable positions of the euro on international currency
markets, reduce the existence of the currency risk to
minimum levels.
8.3.6. Lack of an annual dividend payment guaranty
The financial results of the company depend on many
factors, including the skills and professionalism of the
management team, the development of the market in which
the company operates, the economic development of the
country and the region, etc. There is a risk for investors due
to the lack of a guarantee for annual dividends payment.
8.3.7. Risk of change in the tax treatment of investments
in shares
The risk of changing in the taxation of investments in
securities is linked to the change in the current taxation
regime for such instruments. The latter may be considered
favorable, as capital gains are tax-exempt. Changes in
capital gains tax, as well as other potential changes in the
taxation of securities’ investments, may have a negative
impact on the final realized net result by an investor.
8.3.8. Risk factors included in the Registration
document
The specific risks associated with the core activity of “Sirma
Group Holding” JSC, as well as the general risks that may
have an impact on its activities, are detailed on pages of the
Registration document, Section “Risk Factors”.
9/ INFORMATION ABOUT EVENTS AND
INDICATORS WITH INCREASED NATURE OF THE
COMPANY, HAVING A SIGNIFICANT EFFECT ON
THEIR ACTIVITY AND THEIR INCOME AND
EXPENDITURE; EVALUATION OF THEIR IMPACT ON
RESULTS IN THE CURRENT YEAR.
There are no events and indicators with an unusual nature for the company that have a significant impact on its operations and
its realized revenues and expenses; assessing their impact on results during the current period.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XL
www.sirma.com
www.sirma.com
10/ INFORMATION ABOUT OUT OF THE BALANCE
SHEET TRANSACTIONS - NATURE AND BUSINESS
PURPOSE, FINANCIAL IMPACT OF THE TRANSACTION ON
ACTIVITY IF THE RISKS AND BENEFITS OF THESE
TRANSACTIONS ARE ESSENTIAL FOR THE COMPANY AND
THE DISCLOSURE OF THIS INFORMATION IS ESSENTIAL
FOR ASSESSING THE FINANCIAL POSITION OF THE
COMPANY.
There are no deals out of the balance sheet of the Company.
11/ ANALYSIS AND EVALUATION OF THE POLICY
FORFINANCIAL RESOURCES MANAGEMENT AS WELL AS
INDICATING THE OPPORTUNITIES FOR SERVICING
OBLIGATIONS, ANY THREATS AND MEASURES WHICH
THE COMPANY HAS TAKEN TO PREVENT THEM.
The management of financial resources is subject to the requirement of maximizing efficiency while respecting payment deadlines
agreed with both suppliers and customers. This means a predominant use of own funds, resulting in lower financial costs and
interest costs. On the other hand, there is a significant reserve of undrawn loans that can serve both current and investment costs,
which maintain high liquidity of payments.
The entity's ability to service obligations is expressed in terms of liquidity ratios in the description of the liquidity risk in this report.
As evidenced by the values of the liquidity indicators, “Sirma Group Holding” JSC has no problems in meeting its obligations, both
in the medium and long term. The company has regular proceeds from sale, while also using bank overdrafts, which allows it to
service its obligations by successfully managing its financial resources and to properly and timely service its obligations.
12/ ASSESSMENT OF THE POSSIBILITIES FOR THE
IMPLEMENTATION OF INVESTMENT INTENTIONS WITH
THE SIGNIFICANCE OF THE AMOUNT OF EXPENDITURE
AND THE EFFECTIVENESS OF THE POSSIBLE CHANGES IN
THE STRUCTURE OF FINANCING THAT ACTIVITY.
The management estimates that it is possible to realize the investment intentions declared with the prospectus for initial public
offering.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XLI
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13/ INFORMATION ABOUT OCCURRING CHANGES IN
THE REPORTING PERIOD IN THE MAIN PRINCIPLES FOR
THE MANAGEMENT OF THE COMPANY AND ITS ECONOMIC
GROUP.
There were no changes during the reporting period in the company's main management principles and its economic group.
14/ INFORMATION ABOUT THE MAIN
CHARACTERISTICS OF THE FINANCIAL REPORTING
PROCESSING, INTERNAL CONTROL SYSTEM AND RISK
MANAGEMENT SYSTEM IN THE COMPANY.
Under Bulgarian law, the management should prepare an
interim report on the operations and a financial statement
for each quarter to give a true and fair view of the
Company's financial position as of the end of the year,
financial performance and cash flows in accordance with the
applicable accounting framework. Management's
responsibility also includes the implementation of an
internal control system to prevent, detect and correct
mistakes and false statements as a result of the accounting
system's actions. In this respect, the management observes
the following basic principles in its activities:
- adherence to a particular management and accounting
policy disclosed in the financial statements;
- carrying out all operations in compliance with the laws and
regulations; coverage of all events and operations in a
timely manner, with the exact amount of the amounts in the
appropriate accounting articles.
- accounts and the relevant reporting period so as to allow
the financial statements to be prepared in accordance with
the specific accounting framework;
- observance of the precautionary principle in the valuation
of assets, liabilities, income and expenses;
- detection and termination of frauds and errors;
- completeness and regularity of accounting information;
- preparation of reliable financial information;
- adherence to international financial reporting standards
and adherence to the going concern principle.
The separate financial statements have been prepared in
accordance with the going concern principle, taking into
account the possible effects of the continuing impact of the
Covid-19 pandemic.
During the reporting period, there have been no changes in
the basic principles of management of Sirma Group Holding
JSC.
15/ INFORMATION ON CHANGES IN MANAGEMENT
AND SUPERVISORY BODIES DURING THE PERIOD.
There is no change in the management and supervisory bodies of the Company during the reporting period.
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XLII
www.sirma.com
www.sirma.com
16/ INFORMATION ABOUT THE USE OF THE FUNDS
FROM A NEW ISSUED SHARES AND SECURITIES IN THE
REPORTING PERIOD.
No funds from a new issued shares and securities were used during the reporting period.
17/ DETAILS OF THE DIRECTOR FOR INVESTOR
RELATIONS, INCLUDING TELEPHONE NUMBER AND
ADDRESS FOR CORRESPONDENCE.
Stanislav Tanushev
Bul. 135 Tsarigradsko shose, fl. 3
Sofia 1784
ir@sirma.com
Contact phone: +359 2 976 8310
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XLIII
www.sirma.com
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18/ CHANGES IN THE PRICE OF THE SHARES OF THE COMPANY
Annual separate management report of “Sirma Group Holding” JSC
for 2021
”Sirma Group Holding” JSC XLIV
www.sirma.com
www.sirma.com
19/ EVENTS AFTER THE END OF THE REPORTING
PERIOD
World pandemic and the declaration of a state of emergency in the Republic of Bulgaria.
In relation with the ongoing global pandemic of Covid-19, information on the impact of which on the company's activities is set out
in note 2 of these separate financial statements, the Council of Ministers extended the emergency epidemic situation in Bulgaria
until 31 March 2022. The management monitors the development of the pandemic, the measures adopted and imposed by the
government and timely analyzes their potential effect on the operational and financial condition, in order to balance the liquidity
positions of the Company and ensure financial stability.
Complicated international situation
The full-scale military invasion of Russia in Ukraine, which began on 24 February 2022, caused a wide international response and
affected the countries of Europe in various aspects. The expectation is that the military conflict will have a negative impact and
affect all businesses to one degree or another.
The escalation of hostilities between Russia and Ukraine, the imposition of sanctions and restrictions by the European Union,
USA, Canada, Britain and other countries on Russia, the Russian Central Bank, credit institutions, companies, individuals and the
closure of Russian stock exchanges, cause significant shocks, ubiquitous on financial markets. The company has no direct
exposure to Ukraine or Russia. However, the impact on the general economic situation may necessitate a revision of some
assumptions and judgments. At the same time, inflationary pressures continue to increase, with military action and rising
quotations on all commodities expected to increase further.
Systematic risks operate outside the Company, but have a key impact on its activities. These risks are specific to the whole market
and cannot be avoided by diversifying the risk, as they are related to the macroeconomic situation, the political situation, regional
development and others.
The economic sanctions imposed on Russia by USA and the European Union in connection with the military conflict are likely to
have a direct impact on the Company's activities, in relation with the indirect effects of the effect on business and consumer
confidence and commodity markets.
Contracts for transfer of receivables
On 2 March 2022, contracts for transfer of receivables (Assignment) were signed as follows:
• Daticum transfers its receivable from Sirma AI in the amount of BGN 1 241 786.93 to Sirma Group Holding JSC (Assignee),
the transferred receivable passes to the assignee's patrimony together with its accessories.
• Sirma Group Inc. USA transfers its receivable from Sirma AI in the amount of BGN 416 009.45 to Sirma Group Holding JSC
(Assignee), the transferred receivable passes to the assignee's patrimony together with its accessories.
Sofia CEO:
25.03.2022
Tsvetan Alexiev
Tsvetan
Borisov
Alexiev
Digitally signed
by Tsvetan
Borisov Alexiev
Date: 2022.03.25
16:52:07 +02'00'
“SIRMA GROUP HOLDING” JSC
DECLARATION OF „SIRMA GROUP HOLDING“ JSC
FOR CORPORATE GOVERNANCE IN 2021
AS PER ART.100m, PAR. 8 IN RELATION TO PAR. 7, PТ. 1 FROM
POSA
“SIRMA GROUP HOLDING” JSC
ii
„Sirma Group Holding“ JSC (the Company) is a public holding company, recorded in the
Registration Agency.
„Sirma Group Holding“ JSC considers that the effective application of the principles of
internationally recognized standards for good corporate governance is highly important for the future
development of the Company. The Board of directors of the company believes that it is imperative
to strive to establish and validate a modern management style that will contribute to the better
performance of the company, respectively to provide favorable conditions for achieving sustainable
growth and achievement of the long-term objectives, as well as establishing a transparent and fair
relationship with all stakeholders.
“Sirma Group Holding” JSC considers good corporate governance as a set of relationships between
company’s management body, its shareholders and all stakeholders - employees, trading partners,
corporate creditors, potential future investors and society as a whole.
“SIRMA GROUP HOLDING” JSC
iii
I. Information as per art. 100m, par. 8, item 1 from the Public Offering of Securities Act
“Sirma Group Holding” JSC adheres to the National Corporate Governance Code, adopted by the
National Corporate Governance Commission and approved as a Corporate Governance Code
under Art. 100m, par. 7, item 1 in relation to par. 8, item 1 of the Public Offering of Securities Act
(POSA) by Resolution No. 461-CCC dd.: 30.06.2016 of the Deputy Chair of the Financial
Supervision Commission in charge of the Investment Activity Supervision Division.
II. Information under Art. 100m, par. 8 of POSA. Applying the principles of transparency,
independence and accountability of the Company's Management Board (Board of Directors)
in accordance with established vision, objectives, strategies of the company and interests of
the shareholders.
1. The Board of Directors of the Company consists of 6 (six) members who are elected by the
General Meeting of Shareholders for a given term of office.
2. The Board of Directors shall carry out its activities in accordance with the Company's Articles
of Association and the Rules for Operation of the Board of Directors.
3. The Board of Directors shall decide on:
o Closure or transfer of businesses or significant parts thereof;
o A significant change of the company's activity by unanimity of the Board of Directors;
o Essential organizational changes;
o Long-term cooperation essential for the company or the termination of such cooperation;
o Establishment and closure of branches, representations and offices;
o Adoption of the annual business program of the company;
And all other decisions that are not within the express competence of the General Meeting of
Shareholders.
4. The members of the Board of Directors shall be guided in their activities by the generally
accepted principles of integrity and managerial and professional competence.
5. The members of the Board of Directors shall apply in their activity the principle of avoidance
“SIRMA GROUP HOLDING” JSC
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and prevention of real or potential conflict of interests. The members of the Board of Directors
shall inform the General Meeting of Shareholders whether directly or on behalf of third parties
they have a substantial interest in transactions or issues that have a direct impact on the
Company. In 2021, no ethical issues arose between the members of the management, including
the need to comply with certain written procedures.
6. Main criteria and principles of the diversity policy for selection and evaluation of the Company’s
management members and management bodies (information under Art. 100m, para 8, item 6
of POSA):
• The members of the Board of Directors may be only legally capable physical or
corporate persons, without any imposed restrictions on age, gender, nationality,
education;
• Good reputation, professional experience and managerial skills;
7. Corporate governance follows rules for the organization and conduct of each general meeting,
which are agreed in the form of an organization scenario. The GMS Invitation shall be drafted
with maximum detail and in accordance with the regulatory requirements, indicating all of the
proposed decisions, in order for each shareholder to have the opportunity to acquaint himself
with them in advance, from the moment of its publication. Written procedures for the conduct
of the GMS have not been drafted, because the legal framework has explicitly regulated the
basic principles and all other specific points are stipulated in the Invitation.
8. Any significant periodic and incidental information shall be disclosed immediately. The
company has compiled its activity with the current local legal framework as well as with the
European regulations, having direct application in the local legislation. Notwithstanding the
above, the corporate management will develop rules as part of the Quality Management and
Information Security Policy to assess the materiality of any information or the need for its
disclosure.
9. The annual and interim reports are prepared with the involvement and under the strict control
of the corporate management, without official formalization in the form of internal rules.
However, such rules will be developed and implemented as part of the Quality Management
and Information Security Policy.
“SIRMA GROUP HOLDING” JSC
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III. System for internal control and risk management (information as per art. 100m, par. 8, item
3 from POSA)
In “Sirma Group Holding” JSC an internal control system is in place, to ensure the effective
functioning of the reporting and disclosure systems. The internal control system is also being
developed and functioning in order to identify the risks associated with the Company's activity and to
support their effective management. The Company also has elected and Audit Committee, in
accordance with the requirements of the Public Offering of Securities Act.
“Sirma Group Holding” JSC has adopted and applies rules and procedures, regulating the effective
functioning of the reporting and disclosure systems of the company. The rules describe in detail the
different types of information created and disclosed by the company, the internal flow of documents,
the different levels of access to different information types, for the persons responsible and the terms
for handling and managing the information flows. The established risk management system ensures
the effective implementation of internal control in the creation and management of all corporate
documents, including financial statements and other regulated information, which the Company is
required to disclose in accordance with legal regulations.
1. Control environment.
The Control environment in „Sirma Group Holding“ JSC is formed on the basis of:
1.1. Communicating and enforcing integrity and ethical values.
“Sirma Group Holding” JSC has approved a Code of Ethics, which sets a framework for personal
integrity and professional ethics in the Company. The Code of Ethics is communicated with all
employees who agree to abide by the established ethical norms and professional ethics. It is
implemented in the job descriptions of all employees, including the Financial and Accounting
Department and is a model for their behavior.
1.2. Commitment and competence
“Sirma Group Holding” JSC has developed a Procedure for selection and appointment of employees
under labor contracts. There are requirements for the education, work experience and professional
experience of employees at all levels
1.3. Participation of persons in charge of general management
The Executive Director of “Sirma Group Holding” JSC has introduced adequate procedures and rules
for the implementation of internal control. He is responsible for the implementation of financial
management and control in the Company managed by him, in compliance with the principles of legal
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compliance, sound financial management and transparency. The Executive Director delegates his
powers to other officials of the Company, defining their specific rights and obligations and requires
periodic reporting on the implementation of delegated powers.
Management bodies that have certain responsibilities and powers regarding the financial reporting
process and respectively other related processes are: the Board of Directors, the Audit Committee, the
Chief Financial Officer, the Financial Controller, the Chief Accountant.
The Board of Directors accepts and confirms: the Accounting policy and the changes in it for each
reporting period, the developed accounting estimates as of the date of each reporting period, incl. the
applied methodology; financial statements, and other public documents containing financial
information.
The Audit Committee independently monitors the implementation of the financial reporting processes,
the applied accounting policies and the efficiency of the internal control system of the company, incl.
risk management, as well as the implementation and results of the external audit.
The CFO is responsible for the overall organization, operation and ongoing control of accounting and
financial reporting. He directly manages the whole process, makes all key decisions related to
financial statements and other public documents with financial information.
The CFO also approves at the first level the Accounting policy, the main reporting methodologies and
evaluates the acceptance of the work of used independent experts (appraisers, actuaries, consultants,
etc.) involved in the financial reporting process. He monitors on an ongoing basis, together with the
Chief accountant, the effects and risks on the financial statements of the identified business risks for
the company.
The Chief accountant organizes and manages the accounting activity of the company - controls and
methodologically, directs the current accounting, manages the preparation of financial and
management reports; is responsible for the development and implementation of accounting
methodologies and techniques; is responsible for the process of accounting closing and preparation of
all accounting estimates, proposes and develops accounting policies and changes in them, monitors
current changes in IFRS. He is the direct contact with the internal and external experts used for the
purposes of financial reporting.
1.4. Philosophy and operational style of leadership
The management of “Sirma Group Holding” JSC prepares the financial statements, adhering to the
principle of providing a true and fair view of the condition of the Company and its accounting results.
“SIRMA GROUP HOLDING” JSC
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The financial statements have been prepared in accordance with International Financial Reporting
Standards (IFRS) and are in accordance with local law.
Management confirms that it has consistently applied an adequate accounting policy and that the
principle of prudence in the assessment of assets, liabilities, income and expenses has been observed
in the preparation of the financial statements as of December 31.
Management also confirms that it has adhered to the applicable accounting standards, and the financial
statements have been prepared on the going concern basis.
Management is responsible for the proper keeping of accounting records, for the proper management
of assets and for taking the necessary measures to avoid and detect possible abuses and other
irregularities.
1.5. Human resource management policies and practices.
In “Sirma Group Holding” JSC a Procedure has been developed for selection and appointment of
employees, as well as a Procedure for evaluation of employees;
1.6. Competence of the staff.
The requirements for the competence of the employees are laid down in the job descriptions. The
desire and the need for additional qualification are reflected in the annual individual plans of the
employees. They are prepared on the basis of the annual evaluation of the company's employees.
Following the completion of the annual evaluations, the results in terms of areas for improving skills
and competences are discussed with the directors of departments and a training program is prepared.
The management provides the opportunity to develop the necessary knowledge and skills by including
them in appropriate training programs.
2. Process for risk evaluation in “Sirma Group Holding” JSC.
Risk management is a mandatory element of the overall management process of “Sirma Group
Holding” JSC.
It is known that every organization is dynamic and involves a constant transition - in time, money,
participants, therefore there is always a certain risk that needs to be managed. The purpose of risk
management in the Company is: To maximize the probability of a positive impact on its activities,
and to reduce to a minimum the probability of a negative impact.
The management of “Sirma Group Holding” JSC perceives risk management as a key activity
contributing to the achievement of the Company's objectives. For this purpose, all decisions / actions
“SIRMA GROUP HOLDING” JSC
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taken to manage the identified risks and to ensure a periodic review of the process, in view of its
timeliness, are documented.
The operating environment in which the Management of “Sirma Group Holding” JSC operates is the
framework in which risk management should be applied. It consists of external and internal factors
for the Company that affect its activities.
The main types of risks and their detailed description related to the company's activities and the policy
for their management are regulated in item 8 – “Risk factors” of the Report on the company's activities
for 2021, to which this declaration is attached.
The Risk management policy is applied in an integrated manner and in accordance with all other
policies and principles regulated in the internal acts of “Sirma Group Holding” JSC.
3. Information system
“Sirma Group Holding” JSC has implemented and uses a set of different software products forming
an Information System related to financial reporting and communication. Elements of the overall
information system are:
• Financial and accounting software ERP system - serves to reflect all income and expenditure
operations on bank accounts and their distribution by items;
• Payroll software - serves to automate the formation of remuneration of employees in the Company
and automate the mandatory deductions and installments on individual accounts;
In general, the Information System covers methods and documentation that:
• identify and reflect all valid transactions and operations;
• describe contracts and transactions in a timely manner in sufficient detail to enable them to be
properly classified for financial reporting purposes;
• determine the value of transactions and operations in a way that allows their appropriate monetary
value to be reflected in the financial statements;
• determine the time period during which the transactions and operations have occurred in order to
allow their recording in the appropriate accounting period;
• present deals and transactions and related disclosures in the financial statements as appropriate.
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The quality of the information generated by the systems affects the ability of the Management to make
appropriate decisions in the management and control of the activities of the enterprise and in the
preparation of reliable financial statements.
Communication, which includes providing an understanding of individual roles and responsibilities
related to internal control over financial reporting, is done electronically or through the actions of
Management.
4. Control activities, policies and procedures.
The control activities, which are related to the audit, may be categorized as follows:
4.1. Reviews of the implementation and results of the activity
• reviews and analysis of the real results compared to budgets, forecasts and results from previous
periods;
• linking different groups of data - operational or financial - together with analyzes of relationships
and exploratory and corrective measures;
• comparison of internal data with external sources of information;
• review of the results of the work by functions or by activities.
4.2. Information processing
The two common categories of the control activities in information systems are application program
controls and general IT controls, which are policies and procedures related to multiple application
programs and support the effective functioning of application program controls by helping to ensure
the continued proper functioning of information systems.
Examples of application controls include:
• checking the mathematical accuracy of the records;
• maintenance and review of accounts and turnover sheets;
• Automated controls, such as input checks and numbering sequence checks and non-automatic
tracking of exception reports.
“SIRMA GROUP HOLDING” JSC
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Examples of common IT controls include:
• controls over the change of programs;
• controls that restrict access to programs or data;
• controls over the implementation of new editions of bundled software applications;
• Controls over system software that restrict access or ongoing monitoring of the use of system support
features that could alter financial data or records without leaving a trace.
4.3. Physical controls
These activities include:
• the physical security of the assets, including appropriate security measures, such as secure facilities
and conditions for access to assets and documents;
• approval of access to computer programs and data files;
• periodic counting and comparison with the amounts recorded in the control documents (for example,
comparison of the results of the cash counting and the results of the inventories with the accounting
documents).
The extent to which physical controls aimed at preventing theft of assets relate to the reliability of the
financial statements and therefore to the audit, depends on circumstances, such as cases where the
assets are highly susceptible to misuse.
4.4. Distribution of the responsibilities
Assigning responsibilities for approving transactions and operations, recording them and maintaining
responsibility for the assets of various employees. The distribution of duties is intended to reduce the
possibility of allowing an employee to be in a position to both commit and conceal errors or fraud in
the normal course of his duties.
5. Ongoing monitoring of controls
The control in “Sirma Group Holding” JSC is a continuous process carried out by the Management,
the Administration and the personnel in the Company.
The ongoing control process aims to achieve reasonable confidence in the achievement of the
objectives, divided into the following categories:
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• implementation and optimization of operations;
• reliability of financial and accounting information;
• compliance with the laws and by-laws.
Management's ongoing monitoring of controls includes an assessment of whether they are operating
as intended and whether they are being modified in an appropriate manner to reflect changes in
conditions. Ongoing monitoring of controls includes:
• Management review - which addresses the main objectives of the organization, including those
related to performance, cost-effectiveness and resource conservation.
• Assessment by internal auditors of compliance with the Company's policy - which includes the
preparation of reliable financial statements - interim results and published statements of results.
• Supervision over the observance of the ethical norms or the policy for business practice in the
Company - which covers the compliance with the laws and by-laws, regulating the activity of the
organization.
Ongoing monitoring is carried out to ensure that controls continue to operate effectively over time.
The assessment of the current monitoring of the controls in “Sirma Group Holding” JSC is assigned
on a rotating basis to external Audit companies, which will confirm the proper functioning of the
internal controls or give their recommendations for their improvement.
Inventory of required documents
1. Code of Ethics;
2. Job descriptions for the following posts:
• regular accountants, cashiers, accountants and employees of “Reporting” department;
• senior accountants;
• deputy Chief Accountants;
• Controller
• Chief Accountant;
• Financial director.
“SIRMA GROUP HOLDING” JSC
xii
3. Rules of the Board of Directors and the Audit Committee. Both documents must have a section for
reviewing the financial statements, accounting policies, significant accounting estimates. Ongoing
monitoring at two levels - by the Board of Directors / Management Board and respectively from Audit
Committee.
4. Organizational structure of the company with written functions, responsibilities and powers of the
individual units in terms of financial reporting;
5. Rules and criteria for selection of qualified persons from the financial and accounting departments
and the "Reporting" department - with a focus on educational qualifications, previous professional
experience, past achievements and evidence of integrity and ethical behavior.
6. The policy for training of the staff of the financial and accounting departments and the “Reporting”
department;
7. Policy for attestations, promotions and bonuses of the financial accounting staff and other persons
engaged in the financial reporting process;
IV. Information on the availability of takeover/merger proposals in 2021 (information under
Article 10 (1) (c), (d), (f), (h) and (i) of Directive 2004/25/EC of the European Parliament and
of the Council from 21 April 2004 on takeover bids pursuant to the provisions of Article
100m (8) (4) of the POSA)
1. As at 31.12.2021, no proposals for takeover and/or merger with another company have been
made to the Company.
2. Information under Art. 10 of Directive 2004/25 / EC of the European Parliament and of the
Council from 21 April 2004
• Participation of the Company in the capital of other commercial companies are described in
item 3, “Portfolio of “Sirma Group Holding” JSC” in the Company’s Activity Report for 2021,
to which this declaration is an Annex.
• "Sirma Group Holding" JSC does not have shares that give special control rights.
• There are no restrictions on voting rights, such as restrictions on the voting rights of holders
of a certain capital percentage or number of votes, deadlines for the exercise of voting rights
in relation to the shares issued by “Sirma Group Holding” JSC.
• The rules for the election of members of the Board of Directors of “Sirma Group Holding”
JSC are regulated in the Company's Articles of Association.
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• The powers of the members of the Board of Directors are specified in Art. 41 of the Articles
of Association of the company. The rights to issue or buy back shares are within the
competence of the General Meeting of Shareholders.
V. Composition and function of the administrative and management bodies and their
committees (Information under Article 100m, paragraph 8, item 5 of POSA)
BOARD OF DIRECTORS
1. Functions and duties
1.1. The Board of Directors of “SIRMA GROUP HOLDING” JSC manages the Company
independently and responsibly in accordance with the established Vision, goals and strategies of
the Company and the interests of the shareholders. The members of the Board of Directors provide
a guarantee for their management to the amount of their three-month gross remuneration, as
determined by the General Meeting of Shareholders.
1.2. The Board of Directors of “SIRMA GROUP HOLDING” JSC establishes and controls the
strategic directions for development of the Company.
1.3. The Board of Directors of “SIRMA GROUP HOLDING” JSC establishes the Company's risk
management policy and controls the establishment and functioning of the internal control and risk
management systems.
1.4. The Board of Directors of “SIRMA GROUP HOLDING” JSC shall ensure the observance of
the legal, regulatory and contractual obligations of the Company in accordance with the adopted
Articles of Association and Rules of Procedure of the Board of Directors.
1.5. The Board of Directors is responsible for the establishment and reliable operation of the
financial and information system of the Company.
1.6. The Board of Directors gives guidance, approves and controls the implementation of the
business plan of the Company, transactions of substantial nature, as well as other activities
established in the Company's statutes.
1.7. The Board of Directors approves the disclosure policy in accordance with legal requirements
and statutes. The information disclosure system ensures that addresses of information
(shareholders, stakeholders, investment community) are not discriminated and does not allow
abuse of insider information and market manipulation of financial instruments.
1.8. During their term of office, the members of the Board of Directors are guided in their activity
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xiv
by the generally accepted principles of integrity, managerial and professional competence. The
Board of Directors adheres to the Code of Ethics of the Company's employees.
1.9. The Board of Directors of “SIRMA GROUP HOLDING” JSC reports its actions to the
General Meeting of Shareholders by preparing an annual report on its activities and submitting it
for acceptance by the General Meeting of Shareholders.
2. Election and dismissal of members of the Board of Directors
2.1. The General Meeting of Shareholders elects and releases the members of the Board of
Directors of “SIRMA GROUP HOLDING” JSC, in accordance with the law and the
statutes of the Company, observing the principles of continuity and sustainability of the
Board of Directors' work. All members meet the legal requirements for taking their
position.
2.2. The management contracts with the members of the Board of Directors determine their
duties and tasks, the criteria for the amount of their remuneration, their loyalty obligations
to the Company and the grounds for the waiver. The management contract with a member
of the Board of Directors or the Executive Director respectively are in compliance with
the Articles of Association of the Company and the Board of Directors' Policy for
Determining the Remuneration of the Members of the Board of Directors as approved by
the General Meeting of the Shareholders on 04.12.2014.
3. Structure and competence
3.1. The number of members and the structure of the Board of Directors is defined in the Articles of
Association of the Company. The Company is managed and represented by a Board of Directors,
which consists of six individuals, meeting the requirements of Article 234 of the Commercial Act
and Article 116 a, paragraph 2 of the Public Offering of Securities Act.
3.2. The composition of the Board of Directors elected by the General Meeting is structured in such a
way as to ensure the professionalism, impartiality and independence of the decisions and actions
of its members in relation to the management of the Company.
3.3. The Board of Directors shall ensure a proper division of tasks and duties among its members. The
main function of the independent directors is to control the actions of the executive management
and to participate effectively in the Company's work in accordance with the interests and rights of
the shareholders. The main functions of the members of the Board of Directors, as well as these
“SIRMA GROUP HOLDING” JSC
xv
of the independent members, are laid down in the Articles of Association of the Company. There
is one independent member of the Board of Directors of “SIRMA GROUP HOLDING” JSC.
3.4. The competencies, rights and obligations of the members of the Board of Directors follow the
requirements of law, statutes and standards of good professional and managerial practice.
3.5. The members of the Board of Directors of “SIRMA GROUP HOLDING” JSC have the
appropriate knowledge and experience, which are required by their position. After their election,
the new members of the Board of Directors are acquainted with the main legal and financial issues
related to the Company's activities. The Company encourages the improvement of the qualification
of the members of the Board of Directors.
3.6. The members of the Board of Directors have the necessary time to perform their tasks and duties.
The Statute of the Company does not specify the number of companies in which the members of
the Board of Directors may be in managerial positions, as the activity of the members of the Board
of Directors cannot be limited.
3.7. The election of the members of the Board of Directors of the Company takes place through a
transparent procedure which provides, among other things, timely and sufficient information on
the personal and professional qualities of the members. The number of successive mandates of the
members of the Board of Directors ensures the effective operation of the Company and compliance
with the legal requirements. According to the Articles of Association of the Company, the
members of the Board of Directors may be re-elected without any restrictions.
“SIRMA GROUP HOLDING” JSC
xvi
4. Remuneration
4.1. The Board of Directors of “SIRMA GROUP HOLDING” JSC prepared a remuneration policy
for the members of the Board of Directors adopted by the General Meeting of Shareholders
on 04.12.2014, as amended by a decision of the GMS of 14.06.2016. The remuneration policy
has been developed in accordance with Ordinance No 48 from 20 March 2013 of the Financial
Supervision Commission and the Public Offering of Securities Act. The amount and structure
of remuneration shall be determined by the General Meeting of the Company.
4.2. In accordance with legal requirements and good corporate governance practice, the size and
structure of the remuneration take into account:
4.2.1. The duties and the contribution of each member of the Board of Directors to the
Company's activities and results. The members of the Board of Directors receive a permanent
remuneration in the form of an amount determined by the General Meeting of Shareholders
paid under the terms and within the periods as determined in the management contracts
concluded between them and the Company.
4.2.2. The ability to select and retain qualified and loyal members of the Board of Directors
of “SIRMA GROUP HOLDING” JSC. These requirements are applied through the
remuneration policy of the members of the Board of Directors adopted by the General Meeting
of Shareholders on 04.12.2014.
4.2.3. The need to reconcile the interests of the members of the Board of Directors and the
long-term interests of the Company. The remunerations of the members of the Board of
Directors are based on the results of the Company's operations and are in line with the
Company's business strategy, objectives, values and long-term interests.
4.3. The executive member of the Board of Directors receives a permanent remuneration in the
form of an amount determined by the General Meeting of Shareholders, paid under the terms
and within the periods as set in the management contract concluded between him and the
Company.
4.3.1. The remunerations and benefits of the members of the Board of Directors and the
Executive Director of the Company shall be determined by the General Meeting of
Shareholders.
4.3.2. As of 31.12.2021, the executive members of the BD have not been granted shares
or other financial instruments.
“SIRMA GROUP HOLDING” JSC
xvii
4.4. The members of the Board of Directors receive a permanent remuneration in the form of an
amount determined by the General Meeting of Shareholders paid under the terms and within
the periods as set in the management contracts concluded between them and the Company.
4.5. The disclosure of information about the remuneration of the members of the Board of
Directors is in accordance with the legal requirements and the Company's statutes:
4.5.1. Information about the remuneration of the members of the Board of Directors
is presented in the annual financial statements and is published on the website
www.sirma.com.
5. Committees
5.1. The work of the Board of Directors is assisted by committees. The Board of Directors
determines the necessity of their establishment in accordance with the specifics of the
Company.
5.2. In accordance with the requirements of the current legislation and on the basis of the criteria
set by it, the Board of Directors proposes to the General Meeting of Shareholders of the
Company to elect an Audit Committee with a composition meeting the legal requirements and
the specific needs of the Company.
5.3. The committees are set up on the basis of a written structure, range of tasks, way of functioning
and reporting procedures. The audit committee of “SIRMA GROUP HOLDING” JSC was re-
elected the Extraordinary GMS, held on 26.08.2019.
The members of the Audit Committee meet the requirements set forth in Article 40f (3) and
(4) of the Independent Financial Audit Act.
GENERAL MEETING OF SHAREHOLDERS
5.4. All shareholders are entitled to participate in the General Meeting of Shareholders and to
express their opinion:
5.4.1. Shareholders entitled to vote have the opportunity to exercise their voting rights at
the General Meeting of the Company in person or through representatives, as well as by
correspondence or by electronic means.
5.4.2. The corporate management applies effective control by creating the necessary
organization for the voting of the authorized persons in accordance with the instructions of the
shareholders or in the ways set forth in the legislation.
“SIRMA GROUP HOLDING” JSC
xviii
5.4.3. The corporate management shall establish rules for the organization and holding of
the regular and extraordinary General Meetings of the Company's shareholders, which ensures
equal treatment of all shareholders and the right of each shareholder to express their opinion
on the items on the agenda of the General Meeting.
5.4.4. The corporate management organizes the procedures and the terms of the General
Meeting of Shareholders in a way which does not make the voting unnecessarily difficult or
expensive.
5.4.5. The corporate management takes action to encourage the participation of
shareholders in the General Meeting of Shareholders, by providing the possibility of remote
access by technical means (including the Internet) where this is possible and necessary and
does not contradict item 23.2.4. of this Code.
5.5. All members of the corporate management shall endeavour to attend the General Meetings of
the Shareholders of the Company.
5.6. Materials for the General Meeting of Shareholders:
5.6.1. All texts in the written materials, connected to the Agenda of the General Meeting
of Shareholders must be clear, accurate and to the point in order not to mislead the
shareholders. All proposals related to major corporate events shall be presented as separate
items on the Agenda of the General Meeting, including the proposal for distribution of
dividends.
5.6.2. Corporate management assists shareholders, entitled under the current legislation,
to include additional items on the agenda of the General Meeting of Shareholders.
“Sirma Group Holding” JSC publishes the Corporate Governance Code and the present
Corporate Governance Declaration on the Company's website www.sirma.com for disclosure
of information pursuant to Art. 100m, para. 7 and 8 of POSA.
In this respect, the requirement of Article 100m, Paragraphs 7 and 8 of POSA and Article 40,
Paragraphs 1 and 2 of the Accountancy Act shall be deemed to be met.
This Declaration of Corporate Governance is an integral part of the 2021 Annual Financial
Statements of “Sirma Group Holding” JSC.
Tsvetan Alexiev
CEO of “Sirma Group Holding” JSC
Tsvetan
Borisov Alexiev
Digitally signed by
Tsvetan Borisov Alexiev
Date: 2022.03.25
16:53:24 +02'00'
REPORT OF THE REMUNERATION COMMITTEE
ON THE IMPLEMENTATION OF THE REMUNERATION POLICY OF THE MEMBERS OF THE BOARD OF
DIRECTORS OF „SIRMA GROUP HOLDING“ JSC FOR 2021
1. INTRODUCTION
1.1. The legal basis of the Report
During the period 1 January 2021 – 31 December 2021 (hereafter referred to as the "Reporting
Period"), “Sirma Group Holding” JSC (hereinafter referred to as "the Company") has applied the
remuneration policy of the members of the Board of Directors approved by resolution of the General
Meeting of Shareholders of the Company held on 04.12.2014, as amended by decision of the General
Meeting of Shareholders held on 14.06.2016 and on 23.06.2021, published on the Internet at the
following address:
https://investors.sirma.com/investors/corporate-governance.html
(Hereinafter referred to as the "Policy").
This report has been prepared by the Remuneration Committee in compliance with the requirement
of Art. 12, para. 1 of Ordinance No. 48 of March 20, 2013, on the Fees Requirements, issued by the
Financial Supervision Commission (hereinafter "Ordinance No. 48"). The report forms an
independent document to the annual financial statement of the Company for the year 2021. The
report is presented to the shareholders of the Company and may be discussed with the members of
the Board of Directors at the regular annual meeting of the General Meeting of Shareholders of the
Company.
The composition of the Remuneration Committee is as follows:
- Georgi Parvanov Marinov - Chairman
- Peter Borisov Statev - member
- Jordan Stoyanov Nedev - member
1.2. Subject and Scope of the Report
According to Art. 12, para. 2 of Ordinance No. 48, the Report contains a review of the way the Policy
is applied during the Reporting Period;
The Report includes all the requisites, which are mandatory according to Art. 13 of Ordinance No.
48.
Summary information of amendments to the Policy during the Reporting Period:
Decision on item 10 of the agenda of GMS of “Sirma Group Holding” JSC, held on 23.06.2021:
1. In the text under para. 1 of art.2 the following sentence is added:
„It is subject to regular supervision by the Board of Directors of the company minimum once per year
and a review by the General Meeting of Shareholders at least every 4 years.“
2. In the text of art.6 a new para. 5 is added with the following content:
„5. In preparing the remuneration policy, the remuneration and working conditions of the company's
employees are taken into account, observing the following indicators - average number of staff,
salary and length of service, benefits and material incentives they receive, as well as workload and
working environment. The relationship between the remuneration of the members of the board of
directors and the remuneration of other employees is carefully monitored and is one of the key
factors in deciding to determine the remuneration of the board of directors.“
3. The text in para. 3, of art.7 is changed as follows:
„(3) The amount of the short-term variable remuneration is up to 6% (six per cent) of the net
consolidated profit, but not more than 40% (forty per cent) of the value of the individual accounting
profit before taxes and provisions for the short-term variable remuneration. "
4. The text of point 4, of art.7 is changed as follows:
(4) The amount of the annual long-term variable remuneration, paid in the form of shares, is up to
1% of the total number of shares in the company's capital. "
5. The text of point 2 and 3 of art.8 is changed with the following text:
„ (2) The criteria for payment of the short-term variable remuneration are:
• Achieving 8% growth of the consolidated revenues of the group;
• Achieving equal or higher consolidated profit of the company, before taxes and provisions,
compared to the previous year;
• Implementation of technological innovation and product development;
• Profit and development of the company;
• Imposing high standards of corporate governance;
• Integration of corporate social responsibility in the daily management practice of the company;
• Stable and sustainable development of the company in economic, social and environmental
aspects;
• Adequacy of the administrative, organizational and reporting structures of the company and
ensuring the maximum efficiency of the company's activities;
• Compliance with applicable rules and procedures;
• Encouraging cooperation with stakeholders;
• Compliance with obligations - work in the interest of the company and loyalty; observing the due
care of a good trader.
(3) The criteria for payment of the long-term variable remuneration are:
• Achieving a growth compared to the previous year of at least 5% (five percent) of the average
market price per share, calculated for a reference period of two months, including the last month of
the respective financial year and the first month of the next compared to the average market price
per share for a reference period of two months, including the last month of the previous financial
year and the first month of the current one.
• Achieving equal or higher consolidated profit of the company, before taxes and provisions,
compared to the previous year.
• Implementation of technological renewal and product development;
• Profit and development of the company;
• Imposing high standards of corporate governance;
• Integration of corporate social responsibility in the daily management practice of the company;
• Stable and sustainable development of the company in economic, social and environmental
aspects;
• Adequacy of the administrative, organizational and reporting structures of the company and
ensuring the maximum efficiency of the company's activities;
• Compliance with applicable rules and procedures;
• Encouraging cooperation with stakeholders;
• Compliance with obligations - work in the interest of the company and loyalty with the diligence of
a good trader. "
6. The text of art.10 is changed with the following text:
„Art.10. (1) With the adoption of the Remuneration Policy the General Meeting of shareholders
explicitly authorize the board of directors to make decisions on payment of incidental earmarked
prizes to each of the members of the board of directors, whose amount in respect of each member
of the board of directors within a calendar year may not exceed ¼ the gross annual fixed
remuneration of the member concerned. "
7. A new art.13а is created with the following content:
Art. 13a. (1) In case the members of the board of directors receive a variable remuneration, in order
to achieve stable financial results, the payment of 40% of the variable remuneration will be
rescheduled for a period of 3 years, and the rescheduled part of the variable remuneration will be
paid proportionally or by gradual increase each year during the rescheduling period.
(2) In the hypothesis of accrual of the variable remuneration, the same may
not to be paid in case of non-fulfillment of the set criteria and / or in case of financial difficulties of
the public company.
(3) Paid variable remuneration shall be subject to return when within the term under para. 1 it is
established that the following circumstances are present:
1. the achieved results do not contribute to the achievement of the business goals of the company
and
2. the achieved results do not contribute to the achievement of the long-term interest of the
Company and
3. the achieved results are not sustainable and do not contribute to the sustainable development of
the public company. "
1. In art. 18 a new para 3 shall be created with the following content:
"(3) In the event of a decision to pay variable remuneration pursuant to this Article, the Board of
Directors shall submit to the general meeting of shareholders an amendment to this policy to
describe how this type of variable remuneration will contribute to achieving of the objectives under
Art. 6, the term for acquisition of rights and the conditions for preservation of the shares after the
acquisition of the rights / if applicable /. ”
9. The text of para 2 of art. 20 shall be replaced by the following text:
"(2) SIRMA GROUP HOLDING JSC shall disclose its remuneration policy and any subsequent changes
thereto in a clear and accessible manner, without disclosing sensitive commercial information or
other information constituting a secret protected by law. In case of amendments and / or additions ,
it includes:
1. description and explanation of the significant changes;
2. the manner in which the results of the votes of the general meeting, the opinions of the
shareholders and
3. the minutes of the general meetings at which the remuneration policy was considered and
voted. "
2. INFORMATION ON THE APPLICATION OF POLICY IN THE REPORTING PERIOD
2.1. Information on the decision-making process in defining the Policy
According to Art. 116c, para. 1 of the Public Offering of Securities Act, the Company's Articles of
Association and the Policy, the determination of the remuneration of the members of the Board of
Directors, their right to receive part of their profits and their right to acquire shares or debt
instruments of the Company shall be the power of the General Meeting.
In exercising this power, the General Assembly is:
• determined the remuneration of the members of the Board of Directors with the decision under
item 7 of the agenda of the annual general meeting held on 14 June 2016 and item 10 of the agenda
of the annual general meeting held on 23 June 2021, as follows:
• The General Meeting of Shareholders approves a maximum permissible total amount of the
remuneration of the members of the Board of Directors as follows:
- The maximum amount of permanent salaries - up to BGN 384 000 per year.
- The maximum amount of the short-term variable remuneration - up to 6% (six percent) of the net
consolidated profit, but not more than 40% (forty percent) of the unconsolidated profit before tax
and provisions.
- The total number of shares from the capital of the Company, which may be granted as
remuneration to the members of the Board, are detailed in the Policy for remuneration.
2.2. Information on the relative weighting of the variable and permanent remuneration of
members of the Board of Directors
In accordance with Article 7 and 8 of policy, "Sirma Group Holding" JSC can be paid to the members
of the Board of Directors as permanent (fixed) and variable remuneration in the form of premiums,
bonuses, benefits related to retirement and other material incentives that are given on the basis of
performance evaluation criteria. Variable remuneration is short-term and long-term. Short-term
remuneration is paid in cash and long-term - in the form of shares in the company's capital. The
amount of short-term variable remuneration is up to 6% (six percent) of the net consolidated profit,
but not more than 40% (forty percent) of the value of individual accounting profit before tax and
provisions for short-term variable remuneration. The amount of the annual long-term variable
remuneration paid in the form of shares shall be no more of 1% of the total number of shares in the
company's capital.
Variable remuneration payments are made in accordance with objective and measurable
performance criteria and non-financial indicators that are designed to promote long-term business
stability and are relevant to the long-term business of the company.
About the Reporting Period:
• Only permanent fixed remuneration was paid to each of the members of the Board of Directors,
representing 100% (one hundred percent) of the remuneration charged by the Company for its
activity as such during the Reporting Period; and
• no authority of the Company has taken any decisions on payment of additional fees, bonuses,
incentives, non-monetary benefits or payments and benefits of any kind to the members of the
Board as such during the period.
2.3. Information on the performance criteria on the basis of which variable remuneration is
provided; an explanation of how these criteria contribute to the long-term interests of the
Company; an explanation of the methods used to assess whether the criteria are met and the
relationship between remuneration and the results achieved and the periods of postponement of
the payment of variable remuneration
For the Reporting Period, no variable remuneration has been charged or paid to any member of the
Board of Directors. Accordingly, no methods have been applied to assess the fulfilment of the criteria
and the relationship between the results achieved and such remuneration.
No payment of any part of the remuneration of the members of the Board of Directors was
postponed for the Reporting Period. These remunerations have been paid, in their capacity as
permanent remuneration, in their entirety and within the deadlines provided for in the individual
contracts between the respective member of the Board of Directors and the Company.
2.4. Information on the main payments and justification of the annual bonus scheme and/or any
other non-monetary additional remuneration
For the Reporting Period, the total value of the Company's accrued and paid basic remuneration
amounts to:
• Georgi Parvanov Marinov as Chairman of the Board of Directors - BGN 18 000 (eighteen thousand);
• Chavdar Velizarov Dimitrov as Deputy Chairman of the Board of Directors - BGN 18 000 (eighteen
thousand);
• Tsvetan Borisov as a member of the Board of Directors - BGN 18 000 (eighteen thousand);
• Atanas Kostadinov Kiriakov as a member of the Board of Directors - BGN 18 000 (eighteen
thousand);
• Petar Borisov Statev as a member of the Board of Directors BGN BGN 18 000 (eighteen thousand);
• Yordan Stoyanov Nedev as a member of the Board of Directors BGN 75 660 (seventy five thousand
six hundred and sixty).
For each charging or payment of remuneration to the members of the Board of Directors, the
Company has withheld and contributed to the relevant budgets within the statutory period any and
all public liabilities (including but not limited to: tax, state social security contributions,
supplementary compulsory insurance and health insurance ) in the way these obligations are
established by law.
About the Reporting Period:
• none other material incentives have been accrued or owed by the Company to any member of the
Board of Directors;
• No annual scheme for the payment of bonuses and/or other non-monetary additional
remuneration to the members of the Board of Directors has not been adopted and implemented in
the Company.
2.5. Description of the main characteristics of the supplementary voluntary pension scheme and
information on the paid and/or due contributions by the Company to the members of the Board of
Directors
No supplementary voluntary pension assurance scheme for the members of the Board of Directors
has been adopted and implemented for the Reporting Period and no contributions have been paid or
due by the Company under such scheme.
2.6. Information on the severance policy for termination of contracts
The rules governing benefits for members of the Board of Directors in the termination of their
contracts are contained in Section VI of the Policy. The company brings individual contracts to each
member of the BD in full compliance with these rules.
No termination of the assignment contracts with members of the Company's Board of Directors has
occurred for the Reporting Period.
Early termination benefits have not been accrued or paid.
2.7. Information on the period during which shares cannot be transferred and share options cannot
be exercised at variable share-based remunerations and policy information on the retention of a
certain number of shares until the end of the BD members' term of office
No variable remuneration based on shares or share options has been paid for the Reporting Period.
Accordingly, the Company does not have terms and conditions for restrictions on the transfer of such
shares or options to shares or for the maintenance of a certain number of shares until the end of the
term of the members of the Board of Directors.
2.8. Information on the BD members contracts
During the reporting period members of the Board of Directors were:
• Georgi Parvanov Marinov (throughout the Reporting Period)
• Tsvetan Borisov Alexiev; (throughout the Reporting Period)
• Chavdar Velizarov Dimitrov; (throughout the Reporting Period)
• Atanas Kostadinov Kiriakov (throughout the Reporting Period)
• Yordan Stoyanov Nedev (throughout the Reporting Period)
• Peter Borisov Statev (throughout the Reporting Period)
The term of the BD members' contracts during the Reporting Period and the notice period for the
early termination of these contracts by the Company are as follows:
The term of the contract
The term of notice for early termination
by the Company
until the expiration of the 2-year term
mandate (i.e. 02.07.2023)
none
Pursuant to Article 16 of the Policy, in the event of early termination of a Management Agreement
with the Executive Director, the total amount of benefits due to the person in respect of the early
termination and the payments related to the notice period may not exceed the sum of the annual
paid permanent salary for two years. Benefits are not due if the termination of the contract is due to
unsatisfactory results and/or guilty behaviour of the Executive Director. In case of early termination
of a Management Agreement with the Executive Director, due to a breach of the clause prohibiting
the conduct of competitive activity, the person owes damages to the company in an amount not
higher than the paid annual fixed remuneration of the person for two years.
Information on the remuneration of any person who has been a member of the Board of Directors of
the Company for a certain period of the respective financial year
2.8.1 Remuneration by the Company
The full amount of the basic remuneration accrued and/or paid under management contracts by the
Company for the Reporting Period of the persons who were members of the Board of Directors is
indicated in paragraph 4.2 of the Report for the activity of the Company for 2021.
2.8.2 Other payments by the Company for services rendered by members of the Board of Directors
outside their normal roles
For the reporting period, the Company has charged and paid to members of the Board of Directors
for services beyond the usual roles of these members as follows:
• Tsvetan Borisov Alexiev as Executive Director - BGN 132 000 (one hundred and thirty two
thousand);
For each charging or payment of remuneration to the members of the Board of Directors, the
Company has withheld and contributed to the relevant budgets within the statutory period any and
all public liabilities (including but not limited to: tax, state social security contributions,
supplementary compulsory insurance and health insurance ) in the way these obligations are
established by law.
2.8.3 Remuneration and other payments to members of the Board of Directors from other persons
belonging to the Group of the Company
For the Reporting Period of the members of the Board of Directors, the remuneration of other
persons belonging to the Company's Group is charged and paid as follows:
• Gеorgi Parvanov Marinov as:
- Executive Director of “Engview Systems Sofia” JSC BGN 160 000 (one hundred and sixty thousand);
- Member of the Board of Directors of “Sirma Business Consulting” JSC BGN 6 000 (six thousand);
• Chavdar Velizarov Dimitrov as:
- Senior Programmer under labor contract with “Engview Systems Sofia” JSC - BGN 91 824.89 (ninety
one thousand eight hundred and twenty four 0.89);
- Member of Board of Directors of “Sirma Medical Systems” JSC- BGN 1 200 (one thousand and two
hundred);
- Member of the Board of Directors of Daticum JSC - BGN 200 (two hundred);
• Tsvetan Borisov Alexiev as:
- Project Manager under labor contract with “Sirma Solutions” JSC - BGN 67 343.68 (sixty seven
thousand three hundred and forty three 0.68 );
- Executive Director under a control and management contract at “Sirma Solutions” JSC BGN 84 000 -
(eighty four thousand);
- Member of the Board of Directors of “Sirma AI” JSC - BGN 6 000 (six thousand);
- Member of the Board of Directors of “Sirma Business Consulting” JSC - BGN 12 000 (twelve
thousand);
- Member of the Board of Directors of “EngView Systems Sofia” JSC - BGN 600 (six hundred);
- Member of the Board of Directors of “Daticum” JSC - BGN 240 (two hundred and forty);
• Atanas Kostadin Kiriakov as:
- Member of the Board of Directors of “EngView Systems Sofia” JSC - BGN 600 (six hundred);
- Executive Director under a control and management contract of “Sirma AI” JSC - BGN 6 000 (six
thousand)
- Project Manager under labor contract with “Sirma AI” JSC - BGN 186 639.63 (one hundred and
eighty six thousand six hundred and thirty nine 0.63)
- Member of the Board of Directors of “Sirma AI” JSC - BGN 6 000 (six thousand);
- Member of the Board of Directors of “Sirma Solutions” JSC - BGN 6 000 (six thousand);
With each accrual or payment of the relevant remuneration, the companies have deducted and
contributed to the relevant budgets any and all public liabilities (including, but not limited to: tax,
state social security contributions, supplementary compulsory insurance and health insurance) these
obligations are established by law.
2.8.4 Paid and/or accrued indemnities in case of termination of BD member's duties
For the Reporting Period, none of the members of the BD has been charged or compensated for the
termination of his functions as such.
2.8.5 Overall assessment of all non-cash benefits equated to remuneration granted to members of the
Board of Directors
For the Reporting Period, no member of the Board of Directors has been charged, paid or provided in
any form whatsoever any non-monetary benefit equated to remuneration.
2.8.6 Information on all loans, payments of social and household expenses and guarantees from the
Company or its subsidiaries or other companies that are subject to consolidation in its annual
financial statements, including data on the remaining outstanding amount and interests
For the Reporting Period, none of the members of the Board of Directors has been granted a loan, no
payment for social and household expenses has been made and no guarantee has been provided by
the Company, a subsidiary or another company that is subject to consolidation in the Company's
annual financial statements.
2.8.7 Shares and / or share options and / or other incentive schemes for members of the BD based on
shares
For the Reporting Period, none of the members of the Board of Directors has been accrued, paid or
given in any form of remuneration or payment on the basis of shares or share options and there have
been no incentive schemes in the Company for the members of the Board of Directors .
2.8.8 Determining short-term variable remuneration of the members of the Board of Directors
The amount of the short-term variable remuneration is up to 6% (six per cent) of the net
consolidated profit, but not more than 40% (forty per cent) of the value of the individual accounting
profit before taxes and provisions for the short-term variable remuneration.
The criteria for payment of the short-term variable remuneration are:
• Achieving 8% growth of the consolidated revenues of the group;
• Achieving equal or higher consolidated profit of the company, before taxes and provisions,
compared to the previous year;
• Implementation of technological innovation and product development;
• Profit and development of the company;
• Imposing high standards of corporate governance;
• Integration of corporate social responsibility in the daily management practice of the company;
• Stable and sustainable development of the company in economic, social and environmental
aspects;
• Adequacy of the administrative, organizational and reporting structures of the company and
ensuring the maximum efficiency of the company's activities;
• Compliance with applicable rules and procedures;
• Encouraging cooperation with stakeholders;
• Compliance with obligations - work in the interest of the company and loyalty; observing the due
care of a good trader.
2.8.9 Information on exercising the possibility to demand a refund of variable remuneration
Paid variable remuneration shall be subject to return if is established that the following
circumstances are present:
1. the achieved results do not contribute to the achievement of the business goals of the company
and
2. the achieved results do not contribute to the achievement of the long-term interest of the
Company and
3. the achieved results are not sustainable and do not contribute to the sustainable development of
the public company.
2.9. Information on all deviations from the procedure for the implementation of the remuneration
policy in connection with extraordinary circumstances under Art. 11, para. 13, including an
explanation of the nature of the exceptional circumstances and an indication of the specific
components not implemented
For the Reporting Period in the Company there are no deviations from the procedure for the
implementation of the remuneration policy in connection with extraordinary circumstances.
2.10. Information on the annual change in the remuneration, the results of the company and the
average amount of remuneration based on full-time employees of the company who are not
directors, during the previous five financial years
2016
2017
2018
2019
2020
2021
Average gross remuneration of the employees of “Sirma Group Holding” JSC, BGN
2547,26
3516,62
3541,20
3574,03
3817,91
4432,98
Annual change in remuneration,%
12,53%
38,06%
0,70%
0,93%
6,82%
16,11%
Net individual profit of “Sirma Group Holding” JSC, in thousands BGN
1 643
2 809
2 557
1 898
995
1 034
Chairman of the Remuneration Committee:
Georgi Parvanov Marinov
Georgi
Parvanov
Marinov
Digitally signed
by Georgi
Parvanov
Marinov
Date: 2022.03.25
15:04:41 +02'00'
DECLARATION
under Art. 100o, para 4, item 3 of POSA
The undersigned:
1. Tsvetan Borisov Alexiev in his capacity as CEO of “Sirma Group Holding“ JSC,
UIC 200101236
2. Nikolay Mladenov Yatzino in his capacity as Chief Accountant CEO of
“Sirma Group Holding“ JSC, UIC 200101236
WE DECLARE that to the best of our knowledge:
a) The annual individual financial statements as at 31.12.2021 are prepared in
accordance with the applicable accounting standards and reflect honestly and
fairly the information about the assets and liabilities, the financial position and the
profit / loss of “Sirma Group Holding” JSC.
b) The annual individual report on the activity of “Sirma Group Holding” JSC as at
31.12.2021contains a reliable overview of the development and results of the
company's operations.
Date: 25.03.2022 Declarers: CEO
Chief Accountant
Nikolay
Mladenov
Yatsino
Digitally signed by
Nikolay Mladenov
Yatsino
Date: 2022.03.25
16:32:54 +02'00'
Tsvetan
Borisov
Alexiev
Digitally signed
by Tsvetan
Borisov Alexiev
Date: 2022.03.25
16:54:25 +02'00'
1
Grant Thornton OOD
A 26, Cherni Vrah Blvd, 1421 Sofia
A 4, Paraskeva Nikolau Str., 9000 Varna
T (+3592) 987 28 79, (+35952) 69 55 44
F (+3592) 980 48 24, (+35952) 69 55 33
E office@bg.gt.com
W www.grantthornton.bg
INDEPENDENT AUDITOR’S REPORT
To the shareholders of
Sirma Group Holding JSC
135 Tsarigradsko shosse blvd., Sofia
Report on the Audit of the Separate Financial Statements
Opinion
We have audited the financial statements of Sirma Group Holding JSC (the Company), which comprise the
separate statement of financial position as at 31 December 2021 and the separate statement of profit or loss
and other comprehensive income, the separate statement of changes in equity and the separate statement of
cash flows for the year then ended, and notes to the financial statements, including a summary of significant
accounting policies.
In our opinion, the accompanying separate financial statements give a true and fair view of the financial
position of the Company as at 31 December 2021 and of its financial performance and its cash flows for the
year then ended in accordance with International Financial Reporting Standards (IFRS), as adopted by the EU
and Bulgarian legislation.
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 “Auditor’s Responsibilities for the Audit of the 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 Independent Standards) issued by the
International Ethics Standards Board for Accountants (IESBA Code), together with the ethical requirements of
Bulgarian Independent Financial Audit Act, and we have fulfilled our other responsibilities in accordance with
these requirements. 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 „Basis for the preparation of the separate financial statements”, „Expected impact
of Covid-19 and other risks on the Company's operations in 2022“ and Note 37 “Post - reporting date events”,
where information is disclosed on management's judgments related to a high degree of uncertainty and
depending on factors and risks that could not be controlled by the Company, such as the development of the
global health problem Covid-19, the military conflict between Russia and Ukraine, rising inflation and others.
The management expects the military conflict to have a negative impact by affecting to one degree or another
all businesses and to affect the Company's activities indirectly as a result of the effect of the conflict on
business and consumer confidence and commodity markets. In the event of military conflict and other factors
in a different direction than expected by the management, it may be necessary to review some of the
assumptions and judgments made regarding the expected future development of the Company, cash flows and
results of operations. Despite the efforts of the management to identify the expected direct and indirect effects
of their manifestation on the activity and their respective addressing, their specificity complicates their reliable
assessment and accordingly they could cause significant adjustments in the carrying amount of assets
determined in the separate financial statements. in making a number of judgments and assumptions by
management and considering the most reliable information available at the date of the estimates. Our opinion
has not been modified on this issue.
2
Key Audit Matters
Key audit matters are those matters that, in our professional judgment, were of most significance in our audit of
the 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.
Impairment testing of intangible assets, accounted for using the cost model
Note
6
to the
sep
arate
financial statements
Key audit matter
How this mat
ter was addressed during the audit
Most of the revenue generated by the Company is
due to the intangible assets owned by the Company.
As at 31 December 2021, their carrying amount
amounts to BGN 9 664 thousand. Intangible assets
are subsequently measured at cost less accumulated
amortization and impairment losses.
At least annually, management analyses the
recoverable amount of cash-generating assets and /
or units. The purpose of this analysis is to determine
whether it is necessary to recognize an impairment
loss for intangible assets.
In performing this analysis, determining the value in
use, the Company's management, in cooperation
with independent licensed appraisers, determines the
expected future cash flows for each cash-generating
unit and defines the appropriate discount factor in
order to calculate the present value of these cash
flows.
We consider the valuation of intangible assets to be a
key audit issue, as analyses performed by
management require the use of significant judgments
and assumptions regarding future gross gains,
accumulated cash-generating units related to future
events and circumstances. The use of different
valuation methods, scenarios and assumptions may
lead to different valuations of intangible assets.
During our audit, our audit procedures included, but
were not limited to:
- review of the adopted accounting policy of the
Company regarding the subsequent reporting of
intangible assets and analysis of its compliance
with applicable IAS / IFRS;
- review of the determined useful life of the
intangible assets and analysis of the
appropriateness in its definition, including impact
of Covid-19;
- assessment of the key assumptions used by the
management of the Company in determining the
useful life of the assets, as well as their
recoverable amount, including impact of Covid-
19;
- an assessment of the control over the output
used to carry out the assessments and the review
of the assessments by management;
- verification and analysis of the qualification and
independence of the independent appraisers
used by the company;
- analysis of evaluations performed by licensed
appraisers with the help of our internal expert
appraisers;
- analysis and evaluation of the applied evaluation
methods, incl. assumptions and other key
indicators, with the participation of our internal
experts-evaluators;
- comparison of historically achieved business
results and forecasts made by management, as
well as comparison with external data sources,
where possible and appropriate;
- performing independent impairment tests based
on our knowledge of the nature and activities of
the Company, as well as information on the
specifics of its assets, taking into account
external and internal indicators of impairment;
- comparison of the results of the audit tests with
the results of the assessment of the management
of the Company;
- assessment of the adequacy of the disclosures in
the separate financial statements.
3
Impairment testing of
investments in subsidiaries
,
accounted for using the cost model
Note
7
to the
sep
arate
financial statements
Key audit matter
How this matter was addres
sed during the aud
it
As of 31 December 2021, the investments in
subsidiaries of Sirma Group Holding AD amount to
BGN 78 141 thousand and represent 73% of the
Company's assets. Investments in subsidiaries are
measured at cost and are subject to regular annual
impairment testing.
In determining the recoverable amount of
investments, the Company's management makes a
number of significant assumptions and assumptions
that may be based on uncertain future events.
Management performs detailed analyses of the
activities of its subsidiaries and the financial results
achieved by them to determine whether there are
indications of impairment of the value of investments.
In addition, it uses reports from independent licensed
appraisers to determine the fair value of those who
have a significant fund of assets as of 31 December
2021.
Due to the importance of investments in subsidiaries,
as well as the fact that management's judgment is
based on significant assumptions and future events,
we have identified this issue as a key audit issue for
the audit.
During our audit, our audit procedures included, but
were not limited to:
- assessment of the control regarding the initial
information used for the performance of the
analyses by the Management;
- review of the financial statements, other
available, relevant financial information, including
budgets, business plans and estimates of
subsidiaries;
- -a detailed review and analysis of the financial
condition of the most significant components of
investments in subsidiaries, including their
investments in other companies;
- assessment and analysis of the assumptions and
assumptions used by management regarding
their relevance, relevance and adequacy,
including assumptions about the impact of Covid-
19 on the activities of subsidiaries and the
assumptions used;
- assessment of the control of the source
information used to carry out the assessments by
licensed assessors and verification thereof;
- assessment and verification of the qualification of
the external appraisers;
- assessment and analysis of the independence of
external experts, including through a declaration
of independence;
- analysis and evaluation of the applied valuation
methods, including assumptions and other key
indicators and their comparison with our available
information on the real estate market and other
external information;
- assessment of the adequacy of the disclosures in
the separate financial statements, including the
disclosures of the main assumptions.
Information Other than the Separate Financial Statements and Auditor’s Report Thereon
Management is responsible for the other information. The other information comprises the annual management
report, including the corporate governance statement and the report on compliance with the remuneration
policy, prepared in accordance with Bulgarian Accountancy Act, but does not include the separate financial
statements and our auditor’s 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. 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 whether our knowledge obtained in the audit
may indicate that there is a material misstatement or otherwise the other information 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 International Financial Reporting Standards (IFRS), as adopted by the EU and Bulgarian
4
legislation, and for such internal control as management determines is necessary to enable the preparation of
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.
Auditor’s 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 auditor’s 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 and Bulgarian Independent Financial Audit Act 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 our 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 auditor’s 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 auditor’s
report. However, future events or conditions may cause the Company to cease to continue as a going
concern;
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 to 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
In addition to our responsibilities for reporting under ISAs, described above in section “Information Other than
the Separate financial statements and Auditor’s Report Thereon”, regarding annual management report,
5
including the corporate governance statement, we have performed the additional procedures contained in the
Guidelines of the professional organisation of certified public accountants and registered auditors in Bulgaria -
Institute of Certified Public Accountants (ICPA). The procedures on the existence, form and contents of the
other information have been carried out in order to state whether the other information includes the elements
and disclosures in accordance with Chapter Seven of Bulgarian Accountancy Act, Article 100н, paragraph (10)
in relation to Article 100n, paragraph (8), subparagraphs (3) and (4) of Bulgarian Public Offering of Securities
Act, as well as Article 100n, paragraph 14 in relation to Article 116c, paragraph (1) of Bulgarian Public Offering
of Securities Act.
Statement Pursuant to Article 37, Paragraph (6) of Bulgarian Accountancy Act
Based on the procedures performed, we describe the outcome of our work:
(a) the information in the separate management report is consistent with the separate financial
statements for the same reporting period;
(b) the separate management report is prepared in accordance with the applicable legal requirements;
(c) as a result of the acquired knowledge and understanding of the activities of the Company and the
environment in which it operates, we have found no cases of material misrepresentation in the
separate management report;
(d) the separate corporate governance statement for the financial year contains the required information
in accordance with the applicable legal requirements, including Article 100n, paragraph (8) of
Bulgarian Public Offering of Securities Act;
(a) the report on compliance with the remuneration policy has been prepared in accordance with the
requirements of the ordinance pursuant to Article 116c, paragraph 1 of Bulgarian Public Offering of
Securities Act and the information in it is consistent with the separate financial statements for the
same reporting period.
Statement Pursuant to Article 100n, Paragraph (10) of Bulgarian Public Offering of Securities Act
Based on the procedures performed and our knowledge of the Company and the environment in which it
operates, in our opinion, there is no material misstatement in the description of the main characteristics of the
internal control system and of the risk management system of the Company in connection with the financial
reporting process and also in the information pursuant to Article 10, paragraph 1, items “c”, “d”, “f”, “h” and “i” of
Directive 2004/25/EC of the European Parliament and of the Council of 21 April 2004 on takeover bids, which
are included in the corporate governance statement, being a component of the annual separate management
report.
Additional reporting concerning the audit of separate financial statements in connection with Article
100n, paragraph (4), subparagraph (3) of Bulgarian Public Offering of Securities Act
Statement on Article 100n, paragraph 4, subparagraph (3), item "b" of Public Offering of Securities Act
Related party transactions are disclosed in note 29 to the separate financial statements. Based on the
performed audit procedures on related party transactions as part of our audit of separate financial statements
as a whole, no facts, circumstances or other information have come to our attention that caused us to conclude
that the related party transactions are not disclosed in the accompanying separate financial statements for the
year ended on 31 December 2021, in all material respects, in accordance with the requirements of IAS 24
„Related Party Disclosures“. The results of our audit procedures on related party transactions were taken into
consideration for the purposes of issuing an auditor’s opinion on the separate financial statements as a whole,
not for issuing a separate opinion only on related party transactions.
Statement on Article 100n, paragraph (4), subparagraph 3, item "c" of Public Offering of Securities Act
Our responsibilities for audit of the separate financial statements as a whole, described in our report in section
„Responsibilities of the Auditor for the Audit of Separate financial statements“, include assessment whether the
separate financial statements present fairly the significant transactions and events. Based on the performed
audit procedures on the significant transactions, which are fundamental to the separate financial statements for
the year ended on 31 December 2021, no facts, circumstances or other information have come to our attention
that caused us to conclude that there are instances of unfair presentation and disclosure in accordance with
the requirements of IFRS, as adopted by the European Union. The results of our audit procedures on the
significant transactions and events of the Company, which are material to the separate financial statements,
were taken into consideration for the purposes of issuing an auditor’s opinion on the separate financial
statements as a whole, not for issuing a separate opinion only on the significant transactions.
6
Reporting on compliance with the electronic format of the separate financial statements included in the
annual separate financial statements for the activity under Art. 100n, paragraph 4 of POSA with the
requirements of the EEEF Regulation
In addition to our responsibilities and reporting under ISA, described above in the section " Auditor’s
Responsibilities for the Audit of the Separate financial statements", we have followed the procedures in
accordance with the Guidelines on the Audit Opinion in Implementing the Single European Electronic Format (
EEEF) on the financial statements of companies whose securities are admitted to trading on a regulated
market in the European Union (EU) of the Institute of Certified Public Accountants (ICPA) in Bulgaria". These
procedures concern verification of the form and part of this electronic format corresponds to the audited
separate financial statements and an opinion on the compliance of the electronic format of the separate
financial statements of Sirma Group Holding AD for the year ending 31 December 2021, attached to the
electronic file "8945007AD80FTJTEGH37-20211231-EN-SEP.xhtml“.’, with the requirements of Commission
Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109 / EC of the
European Parliament and of the Council through regulatory technical standards to define the uniform electronic
format for reporting ("EEEF Regulation"). Based on these requirements, the electronic format of the separate
financial report included in the annual separate report on the activities under Art. 100n, paragraph 4 of POSA,
must be submitted in XHTML format.
The management of the Company is responsible for the application of the requirements of the EEEF
Regulation when preparing the electronic format of the separate financial statements in XHTML.
Our opinion is only regarding the electronic format of the separate financial statements attached to the
electronic file "8945007AD80FTJTEGH37-20211231-EN-SEP.xhtml" and does not cover other information
included in the annual separate financial statements for the activities of Art. 100n, paragraph 4 of the POSA.
Based on the performed procedures, our opinion is that the electronic format of the separate financial
statement of the Company for the year ending 31 December 2021, contained in the attached electronic file
"8945007AD80FTJTEGH37-20211231-EN-SEP.xhtml” has been prepared in all essential respects in
accordance with the requirements of the EEEF Regulation.
Reporting Pursuant to Article 59 of Bulgarian Independent Financial Audit Act in relation to Article 10
of Regulation (ЕС) № 537/2014
In accordance with the requirements of Bulgarian Independent Financial Audit Act and in relation with Article
10 of Regulation (ЕС) № 537/2014, we report additionally the information as follows:
- Grant Thornton OOD was appointed as statutory auditor of the separate financial statements of Sirma
Group Holding JSC for the year ended on 31 December 2021 by the general meeting of shareholders,
held on 23 June 2021, for a period of one year.
- The audit of the separate financial statements of the Company for the year ended on 31 December
2021 has been made for the third year.
- In support of our audit opinion, we have provided a description of the most significant assessed risks
of material misstatement, a summary of the auditor’s response and where relevant, key observations
arising with respect to those risks in the section „Key audit matters“ of this report.
- We confirm that our audit opinion is consistent with the additional report to the audit committee, which
was provided in accordance with Article 60 of Bulgarian Independent Financial Audit Act.
- We declare that prohibited non-audit services referred to in Article 64 of Bulgarian Independent
Financial Audit Act were not provided.
- We confirm that we remained independent of the Company in conducting the audit.
- For the period for which we were engaged as statutory auditors, we have not provided any other
services to the Company and its controlled undertakings in addition to the statutory audit
Mariy Apostolov
Gergana Mihaylova
Managing partner Registered auditor responsible for the audit
Grant Thornton Ltd.
Audit firm № 032
29 March 2022
Bulgaria, Sofia, 26, Cherni Vrah Blvd.
Gergana PETROVA
MIHAYLOVA-
GEORGIEVA
Digitally signed by Gergana
PETROVA MIHAYLOVA-GEORGIEVA
Date: 2022.03.29 19:04:40 +03'00'
MARIY GEORGIEV
APOSTOLOV
Digitally signed by MARIY
GEORGIEV APOSTOLOV
Date: 2022.03.29 19:58:08 +03'00'