CONSOLIDATED FINANCIAL STATEMENTS as of 31 December 2021 prepared in accordance with Norm no. 39/2015 for the approval of Accounting Regulations compliant with International Standards of Financial Reporting, applicable to authorized entities, settled and supervised by the Financial Supervision Authority from the Sector of Financial Instruments and Investments and the Investor Compensation Fund AUDITED
Contents CONSOLIDATED FINANCIAL STATEMENTS page CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OF OTHER ELEMENTS OF THE COMPREHENSIVE INCOME .....……………..…....................................………... 1 CONSOLIDATED STATEMENT OF THE FINANCIAL POSITION....................................... 2 CONSOLIDATED STATEMENT OF EQUITY CHANGES ………………….............……..…………... 3 – 4 CONSOLIDATED STATEMENT OF TREASURY FLOWS ............................. 5 EXPLANATORY NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS ................. 6 – 60
The notes on pages 6- 61 are an integral part of the consolidated financial statements. page 1 The consolidated statement of profit or loss and of other elements of the comprehensive income In RON Note 31 December 2021 31 December 2020 re-treated* re-treatments 2020 31 December 2020 Incomes Gross incomes from dividends 7 54,969,176 66,282,634 (2,074,155) 68,356,789 Incomes from interests 8 439,193 499,751 90,322 409,429 Other operating income 9 268,344,224 277,051,914 56,963,157 220,088,757 Net profit from exchange rate differences 10 1,088,027 (185,233) (7,750) (177,483) Profit from financial assets at fair value through the profit or loss account 11 1,173 47,147 - 47,147 Gain from the sale of financial assets measured at fair value through profit or loss 1,053,520 - - - Expenses Fees and management and supervision taxes 12 (4,101,615) (3,211,974) (31,717) (3,180,257) Revenues from reversal of provisions for risks and expenses 11,042,975 921,851 146,515 775,336 Other operational expenses 13 (283,209,198) (285,844,360) (55,222,858) (230,621,502) Profit before taxation 49,627,475 55,561,730 (136,486) 55,698,216 Profit tax 14 (5,925,828) (3,817,578) (297,055) (3,520,523) Net profit of the financial year 43,701,647 51,744,152 (433,541) 52,177,693 Other elements of the comprehensive income Earnings related to the transfer of financial assets assessed at fair value through other elements of the comprehensive income, net of tax recognized in the result carried forward 94,529,873 46,840,261 - 46,840,261 Reserve variation from the reassessment of the tangible assets, net of deferred tax 218,042,296 - - - Net variation of the fair value of financial assets assessed through other elements of the comprehensive income 302,209,416 (141,790,706) - (141,790,706) Fair value reserve of the financial assets assessed through other elements of the comprehensive income delivered, transferred into the result carried forward, net of tax (95,002,888) (46,366,375) - (46,366,375) Total other elements of the comprehensive income 519,778,697 (141,316,820) - (141,316,820) Total comprehensive income for the period 563,480,344 (89,572,668) (433,541) (89,139,127) Afferent net profit Company shareholders 42,894,596 51,275,222 (433,541) 51,708,763 Minority interest 807,051 468.930 468,930 43,701,647 51,744,152 (433,541) 52,177,693 Afferent comprehensive result Company shareholders 528,799,543 (88,435,323) (433,541) (88,001,782) Minority interest 34,680,801 (1,137,345) (1,137,345) 563,480,344 (89,572,668) (433,541) (89,139,127) Result per share 28 Basic 0.0858 0.0990 - 0.0990 Diluted 0.0858 0.0990 - 0.0990 * Balances restated for comparability and presentation according to Note 3 to the financial statements. The consolidated financial statements were approved by the Board of Directors in the meeting of 23 March 2022 and were signed on their behalf by: Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President/General Manager Vice-president/Deputy General Manager Economic Manager
The notes on pages 6- 61 are an integral part of the consolidated financial statements. page 2 The consolidated statement of the financial position In RON Note 31 December 2021 31 December 2020 re-treated* re-treatments 2020 31 December 2020 Assets Cash and cash equivalents 15 16,426,242 24,952,727 3,845,283 21,107,444 Deposits placed in banks 16 37,108,220 51,395,240 4,950,000 46,445,240 Financial assets assessed at fair value through other elements of the comprehensive income 17 2,089,449,803 1,728,210,994 - 1,728,210,994 Financial assets assessed at fair value through the profit or loss account 17 4,652,463 3,598,943 - 3,598,943 Loans and receivables 18 34,018,497 39,713,075 8,254,211 31,458,864 Tangible assets 19 321,864,130 106,168,101 17,780,704 88,387,397 Real estate investments 20 166,017,540 106,334,747 5,289,927 101,044,820 Other assets 21 177,889,704 133,900,930 3,929,378 129,971,552 Total assets 2,847,426,599 2,194,274,757 44,049,503 2,150,225,254 Liabilities 0 Payable dividends 22 46,798,631 62,084,594 - 62,084,594 Taxes and fees 23 22,910,254 4,887,841 418,519 4,469,322 Deferred tax payables 24 147,418,888 87,469,908 - 87,469,908 Other liabilities 25 147,092,574 151,729,827 19,667,154 132,062,673 Total payables 364,220,347 306,172,170 20,085,673 286,086,497 Equity 0 Registered capital 26 50,000,000 52,214,914 -0 52,214,914 Share capital adjustment 2,609,389,550 2,182,560,795 - 2,182,560,795 Other elements of equity 628,863,670 423,847,073 - 423,847,073 Reserves from revaluation of tangible assets 143,789,418 55,433,894 14,638,526 40,795,368 Legal and statutory reserves 30,007,593 30,058,907 464,560 29,594,347 Other reserves 664,336,057 677,773,394 8,118,479 669,654,915 Own shares - (2,214,914) - (2,214,914) Other losses related to equity instruments - (59,747,655) - (59,747,655) Carried result representing non-allocated profit or non-covered loss (1,857,828) (17,279,459) 1,175,806 (18,455,265) The result carried forward as a result of the application of IAS 29 on the share capital and reserves (3,932,756,014) (3,932,756,014) - (3,932,756,014) The result carried forward as a result of the application of IAS without IAS 29 2,163,470,713 2,391,064,446 - 2,391,064,446 Current profit 42,894,596 51,275,222 (433,541) 51,708,763 Total equity attributable to the main company 2,398,137,755 1,852,230,603 23,963,830 1,828,266,773 Minority interest of which: 27 85,068,497 35,871,984 - 35,871,984 Profit or loss of the financial year for non- controlling interests 807,051 468,930 - 468,930 Other equity 84,261,446 35,403,054 - 35,403,054 Total capital 2,483,206,252 1,888,102,587 23,963,830 1,864,138,757 Total payables and equity 2,847,426,599 2,194,274,757 44,049,503 2,150,225,254 * Balances restated for comparability and presentation according to Note 3 to the financial statements. The consolidated individual financial statements were approved by the Board of Directors in the meeting of 23 March 2022 and were signed on their behalf by: Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President/General Manager Vice-president/Deputy General Manager Economic Manager
The notes on pages 6- 60 are an integral part of the consolidated financial statements. page 3 The consolidated statement of equity changes In RON Registered capital Own shares Other losses related to equity instruments Reserves from the reassessment of tangible assets Legal and statutory reserves Other reserves Differences from changes in the fair value of financial assets assessed through other elements of the comprehensive income Other elements of equity The result carried forward as a result of the enforcement of IAS 29 on the share capital and reserves Cumulated profit Total equity attributable to the main company Minority interest TOTAL BALANCE AS OF 31 December 2020 2,234,775,709 (2,214,914) (59,747,655) 40,795,368 29,594,347 669,654,915 427,057,782 (3,210,709) (3,932,756,014) 2,424,317,944 1,828,266,773 35,871,984 1,864,138,757 Re-treatments 2020 - - - 14,638,526 464,560 8,118,479 - - - 742,265 23,963,830 - 23,963,830 Re-treated balance* as of 31 December 2020 2,234,775,709 (2,214,914) (59,747,655) 55,433,894 30,058,907 677,773,394 427,057,782 (3,210,709) (3,932,756,014) 2,425,060,209 1,852,230,603 35,871,984 1,888,102,587 COMPREHENSIVE INCOME Profit of the financial exercise - - - - - - - - - 42,894,596 42,894,596 807,051 43,701,647 Other elements of the comprehensive income 1. Reserve variation from the reassessment of the tangible assets, net of deferred tax - - - 65,030,356 - - - - - 120,460,643 185,490,999 32,551,297 218,042,296 2. Net variation of the reserve from changes in the fair value of financial assets measured at fair value through other comprehensive income elements - - - - - - 300,003,362 (1,243,107) - 2,009,004 300,769,259 1,440,157 302,209,416 3. The fair value reserve of sales of financial assets measured at fair value through other assigned items of the overall result - - - - - - (94,556,057) 16,430 - 94,184,316 (355,311) (117,704) (473,015) TOTAL GLOBAL RESULT for the period - - - 65,030,356 - - 205,447,305 (1,226,677) - 259,548,559 528,799,543 34,680,801 563,480,344 Deferred tax for the retained earnings that are a taxed unachieved reassessment surplus - - - - - - - - - 19,112 19,112 - 19,112 Other reserves – own financial sources - - - - 93,174 29,301,898 - - - (28,861,502) 533,570 - 533,570 Other reserves – shares buyback - 2,214,914 - - - 54,115 - - - - 2,269,029 - 2,269,029 Other transfers (the reported result) - - - 7,137,108 (144,488) (6,169,147) - - - 20,355,728 21,179,201 - 21,179,201 Shares buyback – cancellation of redeemed own shares - - - - - - - - - - - - - Reduction of registered capital – cancellation of redeemed own shares (2,269,029) - 59,747,655 - - (59,664,876) - 70,877 - (85,888) (2,201,261) - (2,201,261) Coverage of losses from buyback of shares - - - - - - - - - - - - - Shareholders transactions directly recognized in equity 1. Prescribed dividends according to the law – transfer to the profit or loss account from other reserves - - - - - 21,561,289 - - - - 21,561,289 - 21,561,289 2. Payable dividends for 2020 - - - - - - - - (29,799,206) (29,799,206) - (29,799,206) 3. Variation related to subsidiaries (1,252,048) - - - - - - - - - (1,252,048) 14,515,712 13,263,664 4. Interest increase / decrease in subsidiaries 428,134,918 - - 16,188,060 - 1,479,384 1,440,157 (715,065) - (441,729,531) 4,797,923 - 4,797,923 TOTAL TRANSACTIONS WITH SHAREHOLDERS DIRECTLY RECOGNIZED IN EQUITY 426,882,870 - - 16,188,060 - 23,040,673 1,440,157 (715,065) - (471,528,737) (4,692,042) 14,515,712 9,823,670 BALANCE AS OF 31 December 2021 2,659,389,550 - - 143,789,418 30,007,593 664,336,057 633,945,244 (5,081,574) (3,932,756,014) 2,204,507,481 2,398,137,755 85,068,497 2,483,206,252 * Balances restated for comparability and presentation according to Note 3 to the financial statements. The consolidated individual financial statements were approved by the Board of Directors in the meeting of 23 March 2022 and were signed on their behalf by: Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President/General Manager Vice-president/Deputy General Manager Economic Manager
The notes on pages 6- 60 are an integral part of the consolidated financial statements. page 4 The consolidated statement of equity changes In RON Registered capital Own shares Other losses related to equity instruments Reserves from the reassessme nt of tangible assets Legal and statutory reserves Other reserves Differences from changes in the fair value of financial assets assessed through other elements of the comprehensive income Other elements of equity The result carried forward as a result of the enforcement of IAS 29 on the share capital and reserves Cumulated profit Total equity attributable to the main company Minority interest TOTAL BALANCE AS OF 01 January 2020 161,863,809 (1,962,259) (47,946,784) 38,691,915 28,599,049 748,126,025 615,859,683 (5,437,413) (158,148,438) 759,807,051 2,139,452,638 35,776,712 2,175,229,350 COMPREHENSIVE INCOME Profit of the financial exercise - - - - - - - - - 51,708,763 51,708,763 468,930 52,177,693 Other elements of the comprehensive income 1. Reserve variation from the reassessment of the tangible assets, net of deferred tax - - - (687,078) - - - - - 687,078 - - - 2. Net variation of the reserve from changes in the fair value of financial assets measured at fair value through other comprehensive income elements - - - - - - (140,916,262) 631,015 - - (140,285,247) (1,505,459) (141,790,706) 3. The fair value reserve of sales of financial assets measured at fair value through other assigned items of the overall result - - - - - - (46,252,408) (13,151) - 46,840,261 574,702 (100,816) 473,886 TOTAL GLOBAL RESULT for the period - - - (687,078) - - (187,168,670) 617,864 - 99,236,102 (88,001,782) (1,137,345) (89,139,127) Deferred tax for the retained earnings that are a taxed unachieved reassessment surplus - - - - - - - - - 23,358 23,358 - 23,358 Other reserves – own financial sources - - - - 260,731 2,373,197 - - - (2,626,736) 7,192 - 7,192 Other reserves – shares buyback - - - - - 71,917,360 - - - (71,917,360) - - - Other transfers (the reported result) - - - (128,000) 13,813 (53,100) (26,956) (81,902) - 10,321,505 10,045,360 - 10,045,360 Shares buyback – cancellation of redeemed own shares - (6,054,312) (163,318,580) - - - - - - - (169,372,892) - (169,372,892) Reduction of registered capital – cancellation of redeemed own shares (5,801,656) 5,801,657 - - - - - 185,655 - - 185,656 - 185,656 Coverage of losses from buyback of shares - - 151,517,709 - - (151,517,709) - - - - - - - Shareholders transactions directly recognized in equity 1. Prescribed dividends according to the law – transfer to the profit or loss account from other reserves - - - - - - - - - - - - - 2. Payable dividends for 2019 - - - - - - - - - (60,485,433) (60,485,433) - (60,485,433) 3. Variation related to subsidiaries 3,778,288,835 - - 5,104,685 720,754 - - - (3,774,607,576) (8,077,174) 1,429,524 1,232,617 2,662,141 4. Interest increase / decrease in subsidiaries (1,699,575,279) - - (2,186,154) - (1,190,858) (1,606,275) 1,505,087 - 1,698,036,631 (5,016,848) - (5,016,848) TOTAL TRANSACTIONS WITH SHAREHOLDERS DIRECTLY RECOGNIZED IN EQUITY 2,078,713,556 - - 2,918,531 720,754 (1,190,858) (1,606,275) 1,505,087 (3,774,607,576) 1,629,474,024 (64,072,757) 1,232,617 (62,840,140) BALANCE ON DECEMBER 31 ST 2020 2,234,775,709 (2,214,914) (59,747,655) 40,795,368 29,594,347 669,654,915 427,057,782 (3,210,709) (3,932,756,014) 2,424,317,944 1,828,266,773 35,871,984 1,864,138,757 The consolidated individual financial statements were approved by the Board of Directors in the meeting of 23 March 2022 and were signed on their behalf by: Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President/General Manager Vice-president/Deputy General Manager Economic Manager
The notes on pages 6- 60 are an integral part of the consolidated financial statements. page 5 Consolidated statement of treasury flows Name of the element 31 December 2021 31 December 2020 retreated 31 December 2020 A 1 2 3 Cash flows from operating activities Cash collection from customers, other cash collection 283,859,610 301,739,278 237,125,184 Cash collection from sales of financial investments (securities) 169,980,103 107,812,339 107,812,339 Payments for the purchase of shares (185,984,333) (12,473,260) (12,473,260) Payments for the purchase of bonds (6,800,000) - - Payments to suppliers and employees, other payments (294,107,201) (289,749,737) (231,118,659) Payments to the state budget, social security budget and local budget (32,327,868) (23,097,333) (21,841,985) Received interests 570,701 469,761 375,230 Received dividends 57,913,344 72,523,880 72,517,925 Paid interests (2,515,854) (3,006,842) (2,294,914) Paid profit tax (3,660,522) (10,990,646) (10,663,602) Proceeds from insurance against earthquakes - - - Net cash from operating activities (13,072,020) 143,227,441 139,438,258 Cash flows from investment activities Payments for the purchase of tangible assets (3,608,990) (3,919,444) (3,580,961) Cash collection from sales of tangible assets 665,068 316,850 316,850 Net cash from investment activities (2,943,922) (3,602,594) (3,264,111) Cash flows from financing activities: Cash collection from the issue of shares 7,800,000 - - Cash collection from short-term loans 121,740,162 187,878,578 131,976,313 Repayment of short-term loans (103,152,074) (164,750,575) (109,887,744) Cash collection from long-term loans 2,873,692 - - Repayments of long-term loans (9,012,208) (26,110) (26,110) Payment of debts for financial leasing (318,759) (54,247) (54,247) Advance amounts for redemptions of shares - (137,675,609) (137,675,609) Paid dividends (24,431,919) (44,483,480) (41,351,571) Down payments to the Central Deposit for dividend payment (1,238,786) (2,274,073) (2,274,073) Paid tax on dividends (1,032,815) (1,777,137) (1,771,872) Net cash from financing activities (6,772,707) (163,162,653) (161,064,913) Net increase of cash and cash equivalents (22,788,649) (23,537,806) (24,890,766) Cash and cash equivalents at the beginning of the financial year – 1 January 76,313,115 99,850,921 92,408,599 Cash and cash equivalents at the end of the reporting period – 31 December 53,524,467 76,313,115 67,517,833 * Balances restated for comparability and presentation according to Note 3 to the financial statements. The balances of the following accounts are included in the structure of the treasury and cash equivalents: 508, 5121, 531, 532, (excluding interest receivable). Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President/General Manager Vice-president/Deputy General Manager Economic Manager
Notes to the consolidated financial statements as of 31 December 2021 page 6 1. THE REPORTING ENTITY Societatea de Investiţii Financiare Oltenia S.A. („The Company or ,,SIF OLTENIA") was founded on the 1 st November 1996 in Craiova – Romania, being the under successor of V Oltenia Private Property Fund, reorganized and transformed according to the provisions of Law no. 133/1996, a law for the transformation of the Private Property Funds into financial investment companies. According to the applicable legal provisions, the company is classified as a closed-ended Alternative Investment Fund (AIF) for retail investors, diversified and self -managed. S.I.F. Oltenia S.A. is authorized by the Financial Supervisory Authority as an Alternative Investment Fund Manager (AIFM) by Authorization no. 45/15.02.2018 and as an Alternative Investment Fund for Retail Investors (A.I.F.R.I.) from 08.06.2021, according to Authorization no. 94/08.06.2021. The Company operates in compliance with the provisions of Law no. 74/2015 regarding alternative investment fund managers, Law no. 24/2017 on issuers of financial instruments and market transactions and Law no. 31/1990 on companies, as subsequently amended and supplemented, Law 243/2019 regarding alternative investment funds, FSA Regulation no. 5/2018 on financial instrument issuers and market operations, FSA Regulation no. 7/2020 on the authorization and operation of alternative investment funds and Norm no. 39/2015 for the approval of Accounting Regulations in accordance with International Financial Reporting Standards, applicable to entities authorised, regulated and supervised by the Financial Supervisory Authority in the Financial Instruments and Investments Sector, as well as the Investment Compensation Fund. The Company is self- administered and has its registered office in Craiova, 1 Tufanele street, zip code 200767, Dolj county. The Company is registered at the Trade Register Office attached to the Dolj Court, under the Registration Number J16/1210/1993, company registration number 4175676, fiscal attribute RO. The shares of the Company are listed with the Bucharest Stock Exchange in the Premium category (SIF 5 market symbol). The Company's shareholders and shares records are kept according to law by the Depozitarul Central S.A. Bucharest. The depositing activity provided by the legislation is provided by Raiffeisen Bank S.A. The main field of activity is NACE code 649 - other financial intermediation, except insurance and pension funds, and the main activity is NACE code 6499 - other financial intermediation n.e.c. In accordance with the articles of association, the Company can perform the following main activities: a) portfolio management; b) risk management. The company, as an A.I.F.M., can also carry out other activities such as: - administration of the entity; a) legal and fund accounting services; b) requests for information from customers; c) control of compliance with applicable legislation; d) income distribution; e) issues and redemptions of equity securities; f) record keeping. - activities relating to the assets of the AIF, namely services necessary for the performance of the A.I.F.M.’s management tasks, infrastructure management, real estate management, advice to entities on capital structure, industrial strategy and related matters, advice and services on mergers and acquisitions of entities, as well as other services related to the management of the AIF and other assets in which it has invested. The subscribed and paid-up social capital is 50,000,000 RON, divided into 500,000,000 shares with a nominal value of 0.1 RON/share.
Notes to the consolidated financial statements as of 31 December 2021 page 7 The main characteristics of the shares issued by the company are: ordinary, nominative, of equal value, issued in a dematerialized form, fully paid when subscribed, registered to the account and granting equal rights to their holders, except for the limitations in the legal provisions and regulations. The consolidated financial statements as of 31 December 2021 comprise the Company and its subsidiaries (hereinafter referred to as the Group) and are not audited. The basic activities of the Group are represented by the financial investment activity carried out by the Company, as well as by the activities carried out by subsidiaries, which belong to different sectors of activity such as: food, tourism, renting of premises, etc. The consolidated individual financial statements were approved by the Board of Directors in the meeting of 23 March 2022. 2. BASES OF ELABORATION a) The Compliance Statement The consolidated financial statements have been prepared in accordance with Norm no. 39/2015 for the approval of the Accounting Regulations conforming to the International Financial Reporting Standards, applicable to the entities authorized, regulated and supervised by the Financial Supervisory Authority in the Financial Instruments and Investments Sector, with further completions and amendments. In accordance with the provisions of Regulation no. 1606/2002 of the European Parliament and of the Council of the European Union of 19 July 2002, as well as of Law no. 24/2017 republished - regarding the issuers of financial instruments and market operations, the Company has the obligation to prepare and submit to the FSA consolidated annual financial statements, in accordance with International Financial Reporting Standards (“IFRS”), within 4 months at the latest. since the close of the financial year. The Group’s consolidated financial statements on 31 December 2021 were drawn up, approved and will be made available electronically on the company’s website: www.sifolt.ro. Based on the provisions of Law 24/2017 republished, and Regulation no. 5/2018 regarding issuers of financial instruments and market operations, the Company prepares half-yearly consolidated accounting reporting in accordance with IFRS. The half-yearly consolidated accounting report shall be prepared and submitted to the FSA no later than 3 months after the end of the semester. It will be prepared, approved by the Board of Directors and made available to the public in electronic format on the company’s website: www.sifolt.ro. The Group's accounting records are kept in RON. The main adjustments specific to consolidation are: - elimination from the financial position of the equity securities held in the group companies; - elimination of transactions with securities within the group and adjustments of fair value; - the registration of the goodwill identified as the difference between the purchase value and the market value of the securities held in the group companies; - elimination from the statement of profit or loss account and other elements of the comprehensive income of the gross dividend income settled within the group; - elimination of balances, transactions, incomes and expenses within the group; - minority interests are presented in the statement of the consolidated financial position as an equity element, separate from the equity of the parent company and represents the share held by them in the equity and profits of the group companies. The date of 31 December 2015 is the date of the transition to IFRS as an accounting basis by the Company, the date on which the transactions determined by the transition from CNVM Regulation no. 4/2011 to the Accounting Regulations in accordance with IFRS. The accounting records of the Company's subsidiaries are maintained in lei, in accordance with the Romanian Accounting Regulations (“RCR”). Appropriately, the accounts under the RCR are adjusted, if necessary, to harmonize the consolidated financial statements, in all material respects with IFRS.
Notes to the consolidated financial statements as of 31 December 2021 page 8 Accordingly, the RCR accounts are adjusted, where necessary, to harmonize consolidated financial statements in all material respects with IFRS. Apart from the specific consolidation adjustments, the main restatements of the financial information included in the financial statements prepared in accordance with the RCR, in order to align them with the requirements of the IFRS consist of: - grouping several elements into more comprehensive categories; - adjustments of the assets and equity elements in accordance with IAS 29 “Financial reporting in hyperinflationary economies”, because the Romanian economy was a hyperinflationary economy until 31 December 2003; - adjustments in the profit or loss account to record the dividend income at the time of the declaration and at the gross value; - adjustments of real estate investments for their assessment at fair value, in accordance with IAS 40 “Real estate investments”. - adjustments of tangible fixed assets for their evaluation in accordance with the Group's accounting policies and in accordance with IAS 16 "Tangible fixed assets"; - adjustments for the recognition of deferred tax assets and liabilities in accordance with IAS 12 “Profit tax”; - presentation requirements in accordance with IFRS. b) Presentation of financial statements The Group adopted a liquidity-based presentation in the consolidated statement of financial position, and the presentation of income and expenses was made in relation to their nature in the consolidated statement of profit or loss and other elements of the comprehensive income. It was considered that these presentation methods provide information that is reliable and more relevant than those that would have been presented based on other methods permitted by IAS 1 “Presentation of financial statements” and IFRS 12 “Disclosure of interests in other entities”. c) The functional and presentation currency Intra-Group settlements and transactions, as well as unrealised profits arising from intra-Group transactions, are eliminated in full from the consolidated financial statements. d) Assessment bases The consolidated financial statements are drawn up based on the fair value convention for the financial assets and debts appraised at their fair value through the profit and loss statement and for financial assets appraised at their fair value through other items of the global result. Other financial assets and liabilities, as well as non-financial assets and liabilities are presented at amortized cost, reassessed value or historical cost. e) Use of estimates and judgments Preparation of the consolidated financial statements in accordance with FSA Norm no. 39/2015 for the approval of the accounting regulations in accordance with the International Financial Reporting Standards, applicable to the entities authorized, regulated and supervised by the Financial Supervisory Authority in the Financial Instruments and Investment Sector, implies the use by the Group's management of estimates, judgments and assumptions that affect the application of policies. accounting, as well as the reported value of assets, liabilities, revenues and expenses. The estimates and assumptions associated with these judgments are based on historical experience as well as on other factors considered reasonable in the context of these estimates. The results of these estimates form the basis of judgments regarding the accounting values of assets and liabilities that cannot be obtained from other sources of information. The obtained results may be different from the values of the estimates.
Notes to the consolidated financial statements as of 31 December 2021 page 9 Estimates and assumptions underlying accounting records are reviewed periodically. Revisions to accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, or in the period when the estimate is revised and future periods, if the revision of the estimate affects both the current and future periods. 3. CONSOLIDATION BASIS a) Branches Branches are entities under the control of the Company. Control exists when the Company is exposed, or has variable return rights based on its participation in the entity in which it has invested and has the ability to influence those revenues through its authority over the entity in which it has invested. Potential or convertible voting rights that are exercisable at that time are also taken into account when evaluating the control. The financial statements of the subsidiaries are included in the consolidated financial statements from the moment when the exercise of control begins and until the moment of its termination. The accounting policies of the Group's subsidiaries have been modified in order to align them with those of the Group. There are 12 companies in which the Company holds more than 50% of the issuer’s registered capital (as of 31 December 2020: 12). The consolidation perimeter included all the 12 (twelve) companies where more than 50% of the voting rights are held, as follows: No. Company name Address Company Reg. no. Trade Register No. ORC Percentage held by SIF as of 31.12.2021 Percentage held by SIF as of 31.12.2020 1 COMPLEX HOTELIER DÂMBOVIȚA S.A. TÂRGOVIȘTE, 1 B-DUL LIBERTĂȚII, DÂMBOVITA County 10108620 J15/11/1998 99.99 99.94 2 VOLTALIM S.A. CRAIOVA, 120 A , B-DUL DECEBAL., DOLJ County 12351498 J16/698/1999 99.55 99.19 3 MERCUR S.A. CRAIOVA 14 CALEA UNIRII Street, DOLJ County 2297960 J16/91/1991 97.86 97.86 4 GEMINA TOUR S.A. RM.VÂLCEA, 103 ȘTIRBEI VODĂ street, VÂLCEA County 1477750 J38/876/1991 88.29 88.29 5 ARGUS S.A. * CONSTANȚA, 1 INDUSTRIALĂ street, CONSTANȚA County 1872644 J13/550/1991 86.42 86.42 6 ALIMENTARA S.A. SLATINA, 1 ARINULUI street, OLT County 1513357 J28/62/1991 85.22 52.24 7 FLAROS S.A. BUCUREȘTI, 67-93 ION MINULESCU street, SECTOR 3 350944 J40/173/1991 81.07 81.07 8 CONSTRUCȚII FEROVIARE S.A. CRAIOVA, 28A ALEEA I BARIERA VÂLCII 28A, DOLJ County 2292068 J16/2209/1991 77.50 77.50 9 UNIVERS S.A. RM.VÂLCEA, 4 REGINA MARIA street, VÂLCEA County 1469006 J38/108/1991 73.75 73.75 10 PROVITAS S.A. BUCUREȘTI, 14, B-DUL UNIRII, BL. 6A, 6B, 6C, SECT. 4 7965688 J40/10717/1995 70.28 70.28 11 TURISM S.A. PUCIOASA PUCIOASA, 110, REPUBLICII street, JUD. DÂMBOVITA 939827 J15/261/1991 69.22 69.22
Notes to the consolidated financial statements as of 31 December 2021 page 10 12 LACTATE NATURA S.A. TÂRGOVIȘTE, 23 B-DUL INDEPENDENȚEI, DÂMBOVIȚA County 912465 J15/376/91 66.33 55.07 * Argus SA Constanța holds majority stakes in: • Comcereal SA Tulcea - 99.36% (including the subsidiary Cereal Prest SA Tulcea) • Argus Trans Constanţa - 100% • Aliment Murfatlar SRL Constanta - 55.04%, Only Argus SA Constanța was included in the consolidated financial statements of the Group on 31 December 2020 without the companies in which Argus SA had majority holdings. On 31 December 2021, Argus Constanţa SA’s consolidated financial statements (statements including the above-mentioned companies) were included in the consolidation area of the Group. In this respect, for comparability purposes, the initial balance in the consolidated financial statements as at 31 December 2020 was adjusted. As of 31 December 2021, the twelve companies included in the consolidation scope represent a share of 14.26 % in the Company’s total assets (31 December 2020: 16.39 %) and 15.72 % respectively in net assets (31 December 2020: 16.90%) and were consolidated by the method of global integration. The basic activities carried out by the Company and the companies included in the consolidation scope are represented by the activity of financial investments carried out by the Company and by the activities carried out by the respective companies, these being represented mainly by the following sectors: food, tourism, space rental, etc. As of 1 January 2018, the management of the Company has classified all investments in equity instruments (shares) in the category of financial assets assessed at fair value through other elements of the comprehensive income, except the fund units that are measured by the profit or loss account. b) Associated entities Associated entities are those companies in which the Group can exercise significant influence, but not control over the financial and operational policies. The holdings in which the Group holds between 20% and 50% of the voting rights, but over which it does not exert significant influence, are classified as financial assets assessed at fair value through other elements of the comprehensive income. Following the analysis of the quantitative and qualitative criteria presented in IAS 28 - “Investments in associates and joint ventures”, the Group concluded that it does not hold investments in associates as of 31 December 2021 and 31 December 2020. c) Transactions eliminated on consolidation Settlements and transactions within the Group, as well as unrealized profits resulting from transactions within the Group, are completely eliminated from the consolidated financial statements. 4. SIGNIFICANT ACCOUNTING POLICIES The accounting policies represent the principles, bases, conventions, rules and specific practices applied by the Group when preparing and presenting the financial statements. The following accounting policies have been applied consistently over all periods presented in the consolidated financial statements prepared by the Group. a) Foreign currency transactions The transactions expressed in foreign currency are initially recorded in RON at the official exchange rate from the date of the transactions. Monetary assets and liabilities recorded in foreign currencies at the date of preparation of the consolidated statement of financial position are converted into functional currency at the exchange rate of that day. Gains or losses on settlement and conversion using the exchange rate at the end of the financial year for monetary assets and liabilities denominated in foreign currency are
Notes to the consolidated financial statements as of 31 December 2021 page 11 recognized in profit or loss, except those recognized in equity as a result of registration in accordance with risk hedging accounting. The differences of conversion on the elements of the nature of the investments held at the fair value through the profit or loss account are presented as gains or losses from the fair value. Conversion differences on the elements of the nature of the financial instruments measured at fair value through other elements of the comprehensive income are included in the reserve arising from the change in the fair value of these financial instruments. The exchange rates of the main foreign currencies reported to the RON, used on the reporting date, are as follows: Foreign Currency 31 December 2021 31 December 2020 Variation EUR 4.9481 4.8694 1.6 % USD 4.3707 3.9660 10.2 % b) Accounting for the effect of hyperinflation According to IAS 29 “Financial reporting in hyperinflationary economies”, the financial statements of a company whose functional currency is the currency of a hyperinflationary economy should be presented in terms of the current purchasing power of the currency at the date of the statement of financial position, ie non-monetary items are portrayed by applying the general index of prices from the date of purchase or contribution. IAS 29 stipulates that an economy is considered to be hyperinflationary if, among other factors, the cumulative inflation rate exceeds 100% over a three-year period. The continuous decrease of the inflation rate and other factors related to the characteristics of the economic environment in Romania, indicate that the economy has ceased to be hyperinflationary, with effect on the financial periods from 1 January 2004. Thus, the provisions of IAS 29 were adopted in the preparation of the financial statement. consolidated until 31 December 2003. Thus, the values expressed in the current measurement unit as of 31 December 2003 are treated as the basis for the accounting values reported in the individual financial statements and do not represent assessed values, replacement cost, or any other measurement of the current value of assets or prices at which transactions would take place at this time. For the preparation of the consolidated financial statements, the Group has adjusted the following items to be expressed in the current unit of measure as of 31 December 2003: - the share capital and elements of the nature of reserves; - financial assets available for sale assessed at cost for which there is no active market or the market is not active. c) Cash and cash equivalents The cash includes the cash available in the company and in the banks and sight deposits. Cash equivalents are short-term, highly liquid financial investments that are easily convertible into cash and which are subject to insignificant risk of changes in value. When drawing up the statement of cash flows, the Group considered to be cash and cash equivalents: actual cash, current accounts with banks and bank deposits Bank original maturity of less than 90 days. d) Financial assets and liabilities Financial instruments, in accordance with IFRS 9 “Financial Instruments”, include the following: - Investments in equity instruments (e.g. shares); - Investments in debt instruments (e.g. securities, bonds, loans); - Trade receivables and other receivables;
Notes to the consolidated financial statements as of 31 December 2021 page 12 - Cash and cash equivalents; - Derivative financial instruments; - Participations in subsidiaries, associates and joint ventures - according to the provisions of IFRS 10, IAS 27, IAS 28. • Classification The Group classifies the financial instruments held in accordance with IFRS 9 "Financial Instruments" in financial assets and financial liabilities. An asset is a resource controlled by the company as a result of past events and from which future economic benefits for the company are expected. A debt represents a current obligation of the company resulting from past events, the settlement of which is expected to result in an outflow of resources incorporating economic benefits for the company. The Group classifies financial assets as: assessed at amortized cost, at fair value through other comprehensive income or at fair value through profit or loss on the basis of: - the business model of the company for managing financial assets and - the characteristics of the contractual cash flows of the financial asset. In accordance with IFRS 9, financial assets fall into one of the following categories: Financial assets assessed at fair value through profit or loss Financial assets measured at fair value through profit or loss are: - equity instruments held for trading; - equity instruments designated to be measured at fair value through the profit or loss account; - debt instruments. A financial asset must be assessed at fair value through profit or loss, unless it is measured at the amortized cost or at fair value through other comprehensive income elements. A financial asset or a financial debt is held for trading if they meet the following conditions cumulatively: - it is held for sale and redemption in the near future; - upon initial recognition it is part of a portfolio of identified financial instruments, which are managed together and for which there is evidence of a recent real pattern of short-term profit tracking. Additionally, upon initial recognition, the Company may irrevocably appoint that a financial asset, which would otherwise meet the requirements to be appraised at the amortized cost or at fair value through other elements of the comprehensive income, should be appraised at fair value through profit or loss, if this discards or significantly reduces an accounting incongruity that would appear if otherwise proceeded. This category includes financial assets or financial liabilities held for trading and financial instruments designated at fair value through profit or loss at the time of initial recognition. Derivatives are classified as held for trading if they are not instruments used for hedge accounting. Financial assets assessed at fair value through other comprehensive income elements The financial assets assessed at fair value through other comprehensive income elements are: - equity instruments designated to be assessed at fair value through other elements of the comprehensive income; - debt instruments. A financial asset of the nature of debt instruments must be assessed at fair value through other comprehensive income elements if both of the following conditions are met: a) the financial asset is held within a business model whose objective is achieved by collecting the contractual cash flows as well as selling the financial assets and
Notes to the consolidated financial statements as of 31 December 2021 page 13 b) the contractual terms of the financial asset give rise, at certain dates, to cash flows that are exclusively payments of the principal and of the interest related to the value of the principal due. The Group may make an irrevocable choice upon initial recognition in the case of certain investments in equity instruments that would otherwise be assessed at fair value through profit or loss to present further changes in fair value in other comprehensive income (under points 5.7.5 and 5.7.6 of IFRS 9 - Financial Instruments). The Company's investments in equity instruments (shares) are fully classified as financial assets assessed at fair value through other elements of the comprehensive income. The Company's investments in fund units are classified and measured at fair value through profit or loss. The other financial assets and debts are presented at the depreciated cost, revaluated value or historical cost. The method used to record the Group’s investments in equity instruments (shares) is “first in, first out”, in terms of quantifying and evaluating the Group’s performance based on fair value. Financial assets assessed at fair value through other comprehensive income elements are assessed at fair value through other comprehensive income elements. Fair value changes are recognized in other comprehensive income until the investment is derecognized, when the cumulative gain or loss is reclassified from other comprehensive income to retained earnings for the period. Dividends received from entities in which the Group holds shares are recognized in profit or loss at gross value only when: a) the Group’s right to receive the dividend payment is established; b) the economic benefits associated with the dividend are likely to be generated for the Company, and c) the value of the dividend can be reliably measured. Financial assets measured at the amortized cost The financial assets measured at amortized cost are debt instruments. A financial asset must be measured at the amortized cost if both of the following conditions are met: a) the financial asset is held in the framework of a business model whose objective is to hold financial assets in order to collect contractual cash flows and b) the contractual terms of the financial asset give rise, at certain dates, to cash flows that are exclusively payments of the principal and of the interest related to the value of the principal due. Financial liabilities They are measured at the amortized cost, except for financial liabilities classified at fair value through profit or loss. • Initial recognition Financial assets and liabilities are recognized at the date when the Group becomes a contractual party under the terms of the respective instrument. When the Group first recognizes a financial asset, it must classify it in accordance with 4.1.1 - 4.1.5 (at the amortized cost, at fair value through profit or loss or at fair value through other comprehensive income elements) in IFRS 9 and assess it in accordance with points 5.1.1 - 5.1.3. (a financial asset or financial liability is assessed at its fair value plus or minus, in the case of a financial asset or a financial liability that is not at fair value through profit or loss, the transaction costs that are directly attributable to the acquisition or issue of the asset or debt). The Group initially recognizes deposits with banks on the date they are set up. All other financial assets and liabilities are initially recognized at the date of the transaction. • Assessment After the initial recognition, the Group shall assess the financial assets, in accordance with points 4.1.1 - 4.1.5 at:
Notes to the consolidated financial statements as of 31 December 2021 page 14 a) amortized cost; b) the fair value through other elements of the comprehensive income; or c) the fair value through profit or loss. After the initial recognition, the Company must assess the financial assets, in accordance with points 4.2.1 - 4.2.2 of IFRS 9. Thus, the Company will classify all financial liabilities at amortized cost, except: a) the financial liabilities assessed at fair value through profit or loss; b) the financial liabilities that arise when the transfer of a financial asset does not fulfil the conditions for derecognition; c) financial guarantee agreements, assessed at the highest value between the amount of the loss provision (section 5.5 of IFRS 9) and the amount initially recognized less the cumulative income (recognized under IFRS 15); d) commitments to provide an interest rate loan below market value, measured at the highest value between the amount of the loss provision (section 5.5 of IFRS 9) and the amount initially recognized less cumulative income (recognized under IFRS 15); e) the contingent consideration recognized by an acquirer in a business combination for which IFRS 3 applies. Such contingent consideration must be subsequently assessed at fair value with changes recognized in profit or loss. Assessment at the amortized cost The amortized cost of a financial asset or financial liability is the amount at which the financial asset or financial liability is measured at initial recognition less principal repayments, plus or less accumulated amortization using the effective interest method for each difference between the initial value and the value at maturity, and less any reduction (direct or through the use of an adjustment account) for impairment or inability to recover. The effective interest rate is the rate that accurately updates future cash payments or receipts estimated over the expected life of the financial asset or financial debt at the gross book value of the financial asset or at the amortized cost of a financial debt. When calculating the effective interest rate, the entity must estimate the expected cash flows considering all the contractual conditions of the financial instrument (e.g. prepayment, extension, call options and other similar options), but must not take into account the expected losses from lending. The calculation includes all commissions and points paid or collected by the contracting parties that form an integral part of the effective interest rate (see points B 5.4.1 - B 5.4.3), transaction costs and all other premiums or discounts. Assessment at fair value Fair value is the price that would have been received at the sale of an asset or paid for the settlement of a debt in a transaction carried out under normal conditions between participants in the main market, at the assessment date, or in the absence of the main market, on the most advantageous market to which the Group has access to that date. The Group measures the fair value of a financial instrument using quoted prices on an active market for that instrument. A financial instrument has an active market if quoted prices are available quickly and regularly for that instrument. The Group measures the instruments quoted on active markets using the closing price. A financial instrument is considered to be quoted on an active market when quoted prices are available immediately and regularly from an exchange, a dealer, a broker, an industry association, a pricing service or a regulatory agency, and these prices reflect transactions that occur on a real and regular basis, conducted under objective market conditions. The category of shares listed on an active market includes all those shares admitted to trading on the Stock Exchange or on the alternative market and which present frequent transactions. The market price
Notes to the consolidated financial statements as of 31 December 2021 page 15 used to determine fair value shall be the close-out price of the market on the last trading day before the measurement date. For the calculation of fair value, for equity instruments (shares), the Group uses the following hierarchy of methods: - Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities; - Level 2: entries other than the listed prices included in Level 1 which are observable for assets or liabilities, either directly (e.g. prices) or indirectly (e.g. price derivatives); - Level 3: assessment techniques based largely on unobservable elements. This category includes all instruments for which the evaluation technique includes elements that are not based on observable data and for which unobservable input parameters can have a significant effect on the evaluation of the instrument. The fair value measurement of the equity instruments (shares) held is as follows: - for listed and traded securities in the reporting period, the market value was determined by considering the quotation of the last trading day (closing quotation on the main capital market for those listed on the regulated market - BVB, respectively the reference price for the alternative system - AERO for level 1, and for level 2, quotations are taken for shares traded in the last 30 trading days); - for listed securities that have no transactions in the last 30 days of the reporting period, as well as for unlisted securities, the market value is determined at the book value per share as it results from the last approved yearly financial statement of the entity; - for securities issued by credit institutions not admitted to trading, the assessment is made at the book value per share calculated based on the value of the equity capital contained in the monthly reports transmitted to the NBR; - for securities not admitted to trading on a regulated market or within an alternative trading system in Romania issued by issuers holding more than 33% of the share capital, they are assessed exclusively in accordance with International Assessment Standards on the basis of a assessment report updated at least yearly; - for the securities related to companies in the insolvency or reorganization procedure, the assessment is made at zero value. The securities issued by the mutual fund are assessed taking into account the last unit value of the net asset, calculated and published. • Identifying and assessing the impairment The Group must recognize a provision for expected credit losses related to a financial asset that is measured in accordance with 4.1.2 or 4.1.2A (debt instruments measured at amortized cost or at fair value through other comprehensive income), a debt that arises from a leasing agreement, a loan commitment and a financial guarantee contract. The Group applies the impairment provisions for the recognition and measurement of the provision for losses related to the assets assessed at fair value through other elements of the global result in accordance with point 4.1.2A (assets held for the purpose of collecting cash flows and sales, whose cash flows represent exclusively principal repayments or interest payments). The provision thus determined is recognized on the basis of other comprehensive income and does not reduce the carrying amount of the financial asset from the statement of financial position. • Derecognition The Group derecognizes a financial asset when the rights to receive cash flows from that financial asset expire, or when the Company has transferred the rights to receive the contractual cash flows related to that financial asset in a transaction in which it has significantly transferred all the risks and benefits of ownership.
Notes to the consolidated financial statements as of 31 December 2021 page 16 Any interest in the transferred financial assets held by the Group or created for the Group is separately recognized as an asset or liability. The Group derecognizes a financial liability when the contractual obligations have been concluded or when the contractual obligations are cancelled or expire. When derecognition of capital instruments (shares) the Group uses the first -in-first-out method. • Reclassifications If the Group reclassifies financial assets according to point 4.4.1 (as a result of changes in the business model for the management of its financial assets), then all the affected financial assets will be reclassified. Financial liabilities cannot be reclassified after the initial recognition. The Group applies the reclassification of financial assets prospectively from the date of reclassification. Any previously recognized gains, losses or interest will not be re-treated. In the event of a reclassification, the Group proceeds as follows: - when reclassifying an asset from the category of amortized cost to that of fair value through profit or loss, the fair value is determined at the date of reclassification. The difference between the amortized cost and the fair value is recognized in profit or loss; - when reclassifying an asset from fair value through profit or loss to the amortized cost, the fair value at the reclassification date becomes the new gross carrying amount; - when reclassifying an asset from the category of amortized cost to the fair value through other elements of the comprehensive income, fair value is determined at the reclassification date. The difference between the amortized cost and the fair value is recognized in other comprehensive income elements without adjusting the effective interest rate or expected credit losses; - when reclassifying an asset from the fair value category through other comprehensive income into the amortized cost, the reclassification is made at the fair value of the asset at the reclassification date. Amounts previously recognized in other comprehensive income are eliminated in relation to the fair value of the asset without affecting the profit or loss account. The effective interest rate and expected credit losses are not adjusted as a result of the reclassification; - when reclassifying an asset from the category of fair value through profit or loss to the category of fair value through other comprehensive income elements, the asset continues to be measured at fair value; - when reclassifying an asset from the category of fair value through other elements of the comprehensive income to that of fair value through profit or loss, the financial asset continues to be measured at fair value. Amounts previously recognized in other comprehensive income are reclassified from equity to the profit or loss account as a reclassification adjustment (in accordance with IAS 1). • Gains and losses Gains or losses arising from a change in the fair value of a financial asset or a financial liability that is not part of a hedging relationship are recognized as follows: a) Gains or losses generated by financial assets or financial liabilities classified as fair value through profit or loss are recognized in profit or loss; b) Gains or losses generated by a financial asset assessed at fair value through other elements of the comprehensive income are recognized against other elements of the global result. When the asset (in the case of equity instruments) is derecognised, the previously recognized accumulated losses or gains on other comprehensive income are transferred to the carried forward result. At the time of amortization or derecognition of financial assets and financial liabilities accounted for at amortized cost, as well as through their amortization process, the Company recognizes a gain or loss in the profit or loss account.
Notes to the consolidated financial statements as of 31 December 2021 page 17 e) Other financial assets and liabilities Other financial assets and liabilities are classified at the amortized cost, using the method of effective interest minus any depreciation losses. f) Assets held for sale Fixed assets and groups held for sale are classified as held for sale if their accounting value will be mainly recovered through a sale transaction, not through their continuous usage. This condition is considered to be fulfilled only when the sale is probable and it is estimated that it will be completed in more than one year from the date of classification, and the assets are available for immediate sale, as they are presented at that time. g) Intangible fixed assets Intangible assets are initially assessed at cost. After initial recognition, an intangible asset is accounted for at cost less accumulated amortization and any accumulated impairment losses. • Subsequent expenses Subsequent expenses are capitalized only when they increase the value of future economic benefits embodied in the asset to which they are intended. All other expenses, including expenses for impairment of goodwill and internally generated marks, are recognized in the profit or loss account when incurred. • Amortization of intangible assets Amortization is recognized in the profit or loss account using the straight -line method for the estimated useful life of the intangible assets, from the date they’re available for use, this modality most accurately reflecting the expected way of consuming the economic benefits incorporated in the asset. The estimated useful lives for the current period and for the comparative periods are: - software 1-3 years, and licenses for their validity period; - other intangible fixed assets 1-5 years. Amortization methods, useful lives and residual values are reviewed at the end of each financial year and adjusted accordingly. h) Tangible assets • Recognition and assessment Tangible assets recognized as assets are initially assessed at the acquisition cost (for those purchased on an onerous basis), at the contribution value (for those received as an in-kind contribution when setting up / increasing the share capital), respectively at the fair value from the acquisition date for those received free of charge. The cost of an item of property, plant and equipment consists of the purchase price, including non-recoverable taxes, after deducting any commercial price reductions and any costs that can be directly attributed to bringing the asset to the location and in the required condition for it to be used. for the purpose set by the management, such as: expenses with employees that result directly from the construction or acquisition of the asset, the costs for setting up the site, the initial costs of delivery and handling, the costs of installation and assembly, the professional fees. Tangible assets are classified by the Group in the following classes of assets of the same nature and with similar uses: - land and buildings; - technical installations and means of transport; - other installations, tools and furniture.
Notes to the consolidated financial statements as of 31 December 2021 page 18 • Assessment after recognition For further recognition, the Group adopted the revaluation model. After recognition as an asset, tangible assets items of the nature of lands and buildings whose fair value can be reliably measured are accounted for at a reassessed amount, this being the fair value at the date of revaluation minus any subsequent accumulated depreciation and any accumulated impairment losses. Other tangible assets are measured at cost less the accumulated amortization and any impairment losses. The revaluations should be done with sufficient regularity to ensure that the carrying amount does not differ significantly from what would have been determined by using the fair value at the end of the reporting period. If an item of tangible assets is reassessed, then the entire group of Tangible assets of which that item is subject is subject to reassessment. If the carrying amount of an asset is increased as a result of a revaluation, the increase is recognized in other comprehensive income elements and accumulated in equity, with the title of surplus from the reassessment. However, the increase will be recognized in profit or loss to the extent that it offsets a decrease in the reassessment of the same previously recognized asset in profit or loss. If the carrying amount of an asset is impaired as a result of a reassessment, this decrease is recognized in profit or loss. However, the reduction will be recognized in other comprehensive income elements to the extent that the reassessment surplus has a credit balance for that asset. Transfers from the reassessment surplus to the carried over result are not made through profit or loss. Land and buildings are shown at reassessed value, which represents the fair value at the date of reassessment less accumulated amortization and impairment losses. The revaluations are carried out by specialized assessors, members of the National Association of Romanian Assessors (“ANEVAR”). The frequency of reassessments is dictated by the dynamics of the markets to which the lands and constructions owned by the Group belong. • Subsequent costs Daily maintenance and repair expenses on tangible assets are not capitalized and are recognized as costs of the period in which they occur. These costs mainly consist of work costs and consumables and may also include the cost of low value components. Expenses related to the maintenance and repair of tangible assets are recorded in the profit or loss account when they occur. Significant improvements made to tangible assets, which increase their value or their lifetime, or which significantly increase their ability to generate economic benefits by them, are capitalized. • Amortization The amortisation is calculated at the carrying amount (acquisition cost or reassessed minus the residual value). The amortisation is recognized in the profit or loss account using the straight -line method for the estimated useful life of the tangible fixed assets (less the land and the fixed assets under execution). The amortisation is recorded starting from the date when they are available for use, for the activity for which they are intended, this modality most accurately reflecting the expected way of consuming the economic benefits incorporated in the asset. The amortization of an asset ceases at the earliest on the date the asset is classified as held for sale (or included in a disposal group that is classified as held for sale), in accordance with IFRS 5 and on the date the asset is derecognised. Amortisation methods, useful lives and residual values are reviewed by the Group's management at each reporting date. The estimated useful life spans for the current period and for the comparative periods are the following:
Notes to the consolidated financial statements as of 31 December 2021 page 19 - constructions 12-50 years - technical installations and means of transport 2-20 years - other installations, equipment and furniture 2-15 years • The accounting treatment of the revaluation surplus The Group opted for the following accounting treatment of the revaluation surplus: the revaluation surplus included in equity related to an item of Tangible assets is transferred directly to the result carried over as depreciation and when the asset is derecognised, upon disposal or disposal. The revaluation surplus included in the revaluation reserve is capitalized by the transfer in the deferred result, as the depreciation measure and at the removal of the asset from the record. Highlighting the reserves from the revaluation is performed on each fixed asset and on each revaluation operation that took place. The reduction of the reserves from the revaluation can be made only within the limit of the existing credit balance, related to the respective fixed assets. • Depreciation An asset has depreciated when its book value exceeds its recoverable amount. On each reporting date, the Group must verify whether there are indications of depreciation of assets. If such indications are identified, the Group must estimate the recoverable amount of the asset. If the book value of an asset is impaired as a result of a reassessment, this decrease must be recognized as profit or loss. However, the reduction must be recognized in other comprehensive income elements to the extent that the reassessment surplus presents a credit balance for that asset. The reduction recognized in other elements of the comprehensive income reduces the amount accumulated in the equity as a revaluation surplus. Land does not depreciate. The depreciation of other tangible assets is calculated using the method of linear depreciation, allocating costs related to the residual value, in accordance with the related service life. • Derecognition The carrying amount of an item of tangible assets is derecognised (eliminated from the Consolidated statement of the financial position) upon disposal or when no future economic benefit from its use or disposal is expected. Tangible assets sold or disposed of are removed from the balance sheet together with the corresponding cumulated depreciation. The gain or loss resulting from the derecognition of an item of property, plant and equipment is included in the current profit or loss account when the item is derecognised. i) Real estate investments Real estate investments are real estate (land, buildings or parts of a building) held by the Group (as owner) for the purpose of renting or for the increase of value or both, and not in order to: - be used in the production or supply of goods or services or for administrative purposes; or - be sold during the normal course of business. Certain properties include a part that is held for rental or for the purpose of increasing value and another part that is held for the purpose of producing goods, providing services or for administrative purposes. If these parts can be sold separately (or rented separately under a financial lease), then they are accounted for separately. If the parts cannot be sold separately, the property is treated as a real estate investment only if the part used for the purpose of producing goods, providing services or for administrative purposes is insignificant.
Notes to the consolidated financial statements as of 31 December 2021 page 20 • Recognition A real estate investment is recognized as an asset if and only if: - a future economic benefit associated with real estate investment is likely to enter the Group. - the cost of real estate investment can be reliably determined. • Assessment Initial assessment An investment property is initially assessed at cost, including trading costs. The cost of a purchased real estate investment consists of its purchase price plus any directly attributable expenses (for example, professional fees for the provision of legal services, fees for the transfer of ownership and other trading costs). Subsequent assessment The Group’s accounting policy regarding the subsequent assessment of real estate investments is based on the fair value model. This policy is applied uniformly to all real estate investments. Assessment of the fair value of real estate investments is carried out by ANEVAR member appraisers. Fair value is based on market price quotations, adjusted, as appropriate, to reflect differences related to the nature, location or conditions of the relevant asset. These evaluations are reviewed periodically by the Group management. Gains or losses resulting from changes in the fair value of real estate investments are recognized in the profit or loss account of the period in which they occur. The fair value of real estate investments reflects market conditions at the balance sheet date. • Transfers Transfers to and from the category of real estate investments must only be made when there is a change in the use of the asset, as shown by: - start of use by the Group - for transfers from the category of real estate investments into the category of tangible assets used by the Group; - start of the sale process - for transfers from the category of real estate investments into the category of stocks held for sale, accounted for in accordance with IFRS 5; - termination of use by the Group - for transfers in the category of tangible assets used by the Group in the category of real estate investments; - starting an operational lease with another party - for transfers from the stock category to the real estate investment category. For the transfer of a real estate investment accounted for at fair value to tangible assets, the implicit cost of the asset for the purpose of its subsequent accounting will be its fair value from the date of the change of use. • Derecognition The book value of a real estate investment is derecognised upon disposal or when the investment is definitively withdrawn from use and no future economic benefits from its disposal are expected. Gains or losses arising from the disposal or disposal of a real estate investment must be determined as the difference between the net proceeds from the disposal and the carrying amount of the asset and must be recognized in profit or loss during the termination or disposal. j) Inventories Inventories are assets held for sale in the ordinary course of business, assets in progress, to be sold in the ordinary course of business, or assets in the form of raw materials, materials and other consumables, to be used in the production process or for the provision of services.
Notes to the consolidated financial statements as of 31 December 2021 page 21 Inventories are assessed at the lower of cost and net realizable value. The cost of inventories includes all the costs related to the acquisition and processing, as well as other costs incurred to bring the stocks in the form and place they’re at present. The net realizable value is the estimated selling price, which could be obtained in the normal course of business, less the estimated costs for completing the good and the estimated costs for making the sale. The cost of inventories that are not normally fungible and of the goods and services produced for and intended for separate orders is determined by the specific identification of the individual costs. For inventories, the cost is determined at the output using the “first in, first out” (FIFO) method. k) Impairment of assets other than financial assets The book value of the Group’s assets that are not of a financial nature, other than deferred tax assets, is reviewed on each reporting date to identify the existence of impairment indications. If such indications exist, the recoverable amount of such assets is estimated. An impairment loss is recognized when the carrying amount of the asset or its cash-generating unit exceeds the recoverable amount of the asset or cash-generating unit. A cash generating unit is the smallest identifiable group that generates cash and is independent of other assets and other asset groups. Impairment losses are recognized in the profit or loss account. The recoverable amount of an asset or cash-generating unit is the maximum between the use value and its fair value less the costs for selling that asset or unit. To determine the net use value, future cash flows are discounted using a pre-tax discount rate that reflects current market conditions and risks specific to that asset. Impairment losses recognized in prior periods are assessed on each reporting date to determine whether they have decreased or no longer exist. An impairment loss is resumed if there has been a change in the estimates used to determine the recovery value. An impairment loss is only resumed if the carrying amount of the asset does not exceed the accounting value that would have been calculated, net of depreciation and depreciation, if the impairment loss had not been recognized. l) Share capital The registered capital includes ordinary, nominative shares, of equal value, issued in a dematerialized form, fully paid when subscribed, registered to the account and granting equal rights to their holders, except for the limitations in the legal provisions and regulations. m) Provisions Provisions are recognized in the profit or loss account when the Group has a current (legal or implicit) obligation generated by a past event, when an outflow of resources incorporating economic benefits is required for settlement of the obligation and when a reliable estimate can be made regarding the value of the obligation. To determine the provision, future cash flows are discounted using a pre-tax discount rate that reflects current market conditions and risks specific to the relevant debt. The amount recognized as a provision is the best estimate of the expenses required to settle the current obligation at the end of the reporting period. Provisions are re-analysed at the end of the reporting period and adjusted to reflect the best current estimate. If the outflow of resources that incorporate economic benefits is no longer likely, the provision should be cancelled. Provisions are not recognized for the costs that are incurred to carry out the activity in the future. The Group has provisions for onerous agreements when the benefits expected to be obtained from an agreement are lower than the inevitable expenses associated with fulfilling contractual obligations.
Notes to the consolidated financial statements as of 31 December 2021 page 22 n) Employee benefits • Short-term benefits Short-term employee benefits include salaries, bonuses and social security contributions. The obligations related to short-term benefits to employees are not updated and are recognized in the profit or loss account as the related service is provided. Short-term employee benefits are recognized as an expense when the services are provided. A provision is recognized for the amounts expected to be paid by way of short -term cash premiums or schemes for the participation of staff in profit, as long as the Group has a legal or implicit obligation to pay these amounts as a result of past services provided by the employees and if the obligation can be reliably estimated. Besides wages and other wage-related rights, according to the Company’s Articles of association and the collective employment contract, the Company’s administrators, directors with a mandate contract and employees are entitled to receive benefits (incentives) in case the net profit indicator set out in the budget of revenues and expenditures approved by the General shareholders meeting for the current year is met, up to the amount approved by the OGSM where the financial statements of the relevant year were approved. This obligation is first recognized in the profit or loss statement of the financial exercise where the profit was achieved under the form of provisions for employee benefits. The distribution of these bonuses (incentives) will be carried out the following year, after their approval by the General shareholders meeting. • Plans of determined contributions The Group makes payments on behalf of its employees to the Romanian state pension system, health insurance and the insurance contribution for work during the normal performance of activities. All the employees of the Group are members and have the legal obligation to contribute (through individual social contributions) to the pension system and to the health system of the Romanian state. The employment insurance contribution is recognized in the profit or loss account for the period. The Group has no additional obligations. All the employees of the Group are members and have the legal obligation to contribute (through individual social contributions) to the pension system and to the health system of the Romanian state. The Group has no obligation to provide subsequent services to former or current employees. • Long-term benefits for employees The Group’s net obligation regarding the benefits related to long-term services is represented by the value of the future benefits that the employees have gained in exchange for the services provided by them during the current period and the previous periods. On the basis of the collective employment agreements in force, the persons who retire at the age limit can benefit on the date of retirement of an allowance equal to the maximum value of two salaries taken at the time of retirement. o) Dividends to be distributed Dividends are treated as a distribution of profit during the period in which they were declared and approved by the Ordinary General shareholders meeting. The profit available for distribution is the profit of the year recorded in the financial statements prepared in accordance with IFRS. p) Revenue recognition Revenue is measured at the fair value of the consideration received or receivable. Revenues are reduced accordingly with the estimated value of the goods returned by customers, rebates and other similar items. • Revenue from the sale of goods and the provision of services Revenues from the sale of goods and services are recorded net of commercial discounts, value added tax and other taxes related to turnover.
Notes to the consolidated financial statements as of 31 December 2021 page 23 The proceeds from the sale of the goods are recognized in the profit or loss account when the significant risks and rewards of ownership of the goods are transferred to the buyer, which most often happens upon delivery. The revenues from the provision of services are recognized in the profit or loss account depending on their stage of execution. • Dividend income Dividend income is recognized in the profit or loss account on the date on which the right to receive such income is established. Dividend income is recorded at gross value including dividend tax, which is recognized as current expense with profit tax. The effective calculation is made according to the fiscal provisions in force at the date of calculation. In the case of dividends received in the form of shares as an alternative to the payment in cash, the income from dividends is recognized at the level of the cash that would have been received, in correspondence with the increase of the related participation. The company does not record dividend income for the shares received free of charge when they are distributed proportionally to all shareholders. • Interest revenues and expenses Interest income and expenses are recognized in the profit or loss account through the effective interest method. The effective interest rate is the rate that exactly updates the expected cash payments and receipts in the future over the expected life of the financial asset or debt (or, where appropriate, for a shorter term) to the carrying amount of the financial asset or debt. • Revenues from lease and rental The revenues from the rents are generated by the real estate investments rented by the group in the form of operational leases and are recognized in the profit or loss account for the entire period of the contract. r) Recognition of expenses The expenses are highlighted during their execution, and their recognition in the profit or loss account is made in compliance with the principle of the independence of the exercise. Operating expenses are recognized in the profit or loss account during the period in which they were incurred. Expenses on bank commissions are recorded at the time of their occurrence. Expenses on transactions are recognized together with the revenues from these operations, at the date of the transaction in the case of quoted securities, respectively at the date of the last installment payment in the case of the sale of unlisted securities. At the entry date, the cost of the securities is the cost of the purchase. Expenses with administration fees and taxes are recognized at the time of their occurrence. Expenses with commissions related to transactions are recognized on the date of the transactions. Expenses on salaries and the related contributions are recognized at the time of their appearance, respecting the principle of the independence of the financial year. s) Revenues and losses from exchange rate differences Currency transactions are recorded in the functional currency (RON), by converting the amount into foreign at the official exchange rate communicated by the National Bank of Romania, valid on the date of the transaction. On the reporting date, the monetary items expressed in Currency are converted using the exchange rate from the last day of currency auction of the year. Rate differences arising on the settlement of monetary items or conversion of monetary items at different rates from those at which they were converted to initial recognition (during the period) or in previous
Notes to the consolidated financial statements as of 31 December 2021 page 24 financial statements are recognized as profit or loss in the profit and loss account, during the period in which they occur. t) Income tax The income tax for the year includes the current tax and the deferred tax. Current income tax includes income tax from dividends recognized at gross value. Income tax is recognized in profit or loss or in other overall result if the tax is related to capital items. The current tax is the tax payable for the profit realized during the current period, determined on the basis of the percentages applied on the reporting date and all the adjustments related to the previous periods. For the period ending on 31 December 2021, the corporate income tax rate was 16% (31 December 2020: 16%). The tax rate for dividend income was 5% and zero (31 December 2020: 5% and zero). The deferred tax is determined using the balance sheet method for those temporary differences that appear between the fiscal basis for calculating the tax for assets and liabilities and their accounting value, used for reporting in the consolidated financial statements. The deferred tax is not recognized for the following temporary differences: the initial recognition of goodwill, the initial recognition of assets and liabilities arising from transactions that are not business combinations and which do not affect the accounting or fiscal profit and differences arising from investments in subsidiaries, provided they are not resumed in the near future The deferred tax is calculated on the basis of the tax rates that are expected to be applicable to the temporary differences upon their resumption, based on the legislation in force on the reporting date. Receivables and debts with deferred tax are offset only if there is a legal right to offset current debts and debts with the tax and if they are related to the tax collected by the same tax authority for the same entity subject to taxation or for different tax authorities but wishing to settle the claims and current tax liabilities using a net basis or the related assets and liabilities will be achieved simultaneously. The deferred tax claim is recognized only insofar as it is probable that future profits may be used to cover the tax loss. The claim is revised at the end of each financial year and is diminished to the extent that the related tax benefit is unlikely to be carried out. The additional taxes arising from the distribution of dividends are recognized on the same date as the dividend payment obligation. u) The result per share The Group presents the result on a basic and diluted share for ordinary shares. The basic result per share is determined by dividing the profit or loss attributable to the ordinary shareholders of the Group to the weighted average number of ordinary shares related to the reporting period. The diluted earnings per share is determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares with the dilution effects generated by potential ordinary shares. v) Segment reporting A segment is a distinct component, which provides certain products or services (segment of activity) or provides products and services in a certain geographical environment (geographic segment) and which is subject to risks and benefits different from those of the other segments. On 31 December 2021 the activity carried out by the Company together with the companies in the portfolio in which it holds over 50% of the share capital, included in the consolidation scope, was segmented on the following main activities: - financial investment activity - rental of spaces - food industry - tourism.
Notes to the consolidated financial statements as of 31 December 2021 page 25 x) New standards and amendments 1)New standards, amendments and interpretations applicable after 1 January 2021. There are new standards, amendments and interpretations that apply for the annual periods beginning after 1 January 2021 and have not been applied in the preparation of these financial statements. We show below the standards / interpretations that have been issued and are applicable from or after 1 January 2021. • Lease reductions as a consequence of COVID-19 – Amendments to IFRS 16. Following COVID-19 numerous rent reductions were granted to tenants in various forms, including deferment to payment. In May 2020, IASB issued an amendment to IFRS 16 allowing the lessees to treat advantages to the lease payment as a change to the lease agreement. The entities applying this amendment must present this in the financial statements. The amendment was extended until 30 June 2022. • The reference interest reform - amendments to IFRS 7, IFRS 9 and IAS 39 (1 January 2020) The amendments modify certain hedge accounting requirements to provide some exemptions on the reference interest reform. 2) On 31 September 2021, the following standards and interpretations were issued, but were not mandatory for the yearly reporting periods ended 31 December 2021. • IFRS 17 Insurance agreements (1 January 2021, likely to be extended until 1 January 2022) IFRS 4 will soon be replaced by a new standard on insurance contracts below which the temporary exemptions and or the general approach of IFRS 9 for insurance companies will no longer apply. IFRS 17 was issued in May 2017 as a substitute for IFRS 4. It involves an assessment model in which estimates are re-assessed each year. Agreements are assessed considering the following elements: - cash flows updated weighted according to the probability of accomplishment; - an explicit risk adjustment; and - a contractual service margin that represents the profit from the agreement recognized as income of the period covered. • Classification of debts into current and long-term debts - Amendments to IAS 1 The amendment to IAS 1 sets out that the debts should be presented according to maturity, depending on the rights that exist on the balance sheet date. The classification is not affected by the expectations of the entity or by the events occurring after the reporting date. The amendment also classifies what is understood by covering a debt. • Amendments to IAS 16 – Tangible assets. The amendment forbids the entity to deduct from the cost of a tangible asset incomes that have been obtained as a consequence of the use of the asset for the period when such asset is in progress of being brought to the required level for operation. • The definition of a business - Amendments to IFRS 3 The modified definition of a business implies that an acquisition should include input data and a substantive process that, together, significantly contributes to the ability of the company to create results. The definition of “results” is modified to focus on goods and services delivered to customers, which generate investment income and other income and exclude returns in the form of cost reductions or other economic benefits. These changes can lead to a multiplication of acquisitions that are considered asset purchases. • Onerous contracts — cost of meeting a contract — amendments to IAS 37. The amendments to IAS 37 clarify the direct costs related to the performance of a contract and the allocation of other costs directly to the performance of that contract. Before recognizing a provision for the performance of the contract, the entity shall record any impairment of assets that arose in the performance of the contract. • Annual improvements for the 2018 - 2020 cycle (effective as of 1 January 2022) - IFRS 9 – Financial instruments – clarifying what kind of fees must be included in the 10% test for the derecognition of the financial debts; - IFRS 16 – Leases – amendment to example 13, discarding the illustration of payments from the
Notes to the consolidated financial statements as of 31 December 2021 page 26 lessor regarding upgrades, in order to discard any confusions regarding the treatment of lease-related benefits; - IFRS 1 – First-time adoption of IFRS – allowing the entities to appraise the assets and debts at book values registered in the holding company’s financial statements, together with any related exchange rate differences; - IAS 41 - Agriculture – discarding the requirement that the entities should exclude cash flows for taxes determined by the assessment at fair value based on IAS 41. • Definition of accounting estimates - amendment to IAS 8 (effective as of 1 January 2023) IASB has issued an amendment to IAS 8 “Accounting Policies” that clarifies how entities should distinguish between changes in accounting estimates and accounting policies. The distinction is important because changes in accounting estimates apply prospectively, but changes in accounting policies are generally applied retrospectively also for the current period. 5. FINANCIAL RISKS MANAGEMENT According to the specificities of its activity, the Group is or can be subject to financial risks resulting from the activity undertaken for the achievement of the established goals. Through the risk management system, the Group awards significance to the management of risks, policies and procedures regarding the management of risks that are significant and relevant for the investment strategy. The risk management policy sets out the main coordinates for the control and management of issues that may have or even have an impact on the activity. The risk management activity, a major component of the Group’s activity, deals with both general and specific risks, as set out in national and international legal regulations. The Company’s organizational chart includes the Risk Management Bureau, which is hierarchically and functionally independent from the other departments of the Company. The Group attaches utmost importance to efficient risk management in order to achieve the strategy’s objectives and to ensure shareholder benefits. The management of significant risks involves providing the framework for identifying, evaluating, monitoring and controlling these risks in order to maintain them at an acceptable level in relation to the appetite to risk and its ability to mitigate or hedge these risks. Risk monitoring is done at each hierarchical level, with procedures for supervising and approving decision-making limits. Internal reporting of risk exposure is made on a continuous basis, on each line of business, as the management is constantly informed about the risks that may arise in the course of the business. The risk profile represents all the risks to which the Group is exposed, depending on the strategic objectives and the risk appetite undertaken by the management structure. Through its risk profile, the Group has established, for each risk category, the level by which the Group is willing to take or accept risks, provided that significant risks are kept under control. The risk profile was established both at a global and at an individual level, for each risk category, considering the Group’s nature, dimension and complex activities. The global risk profile undertaken by the Group is average and corresponds to an average risk appetite. Investments in the Company’s shares involve not only specific benefits, but also the risk that objectives are not achieved, as well as losses to investors, since revenues from investments generally are proportional to risk. In its current activities, the Group may face both the specific risks resulting from its current operation, as well as indirect risks resulting from the performance of operations and services in cooperation with other financial entities. The main risks identified in the activity of the Group are:
Notes to the consolidated financial statements as of 31 December 2021 page 27 - market risk (price risk, currency risk, interest rate risk) credit risk - credit risk; - liquidity risk; - operational risk. a) Market risk Market risk is the current or future risk of adverse outcome on profits, caused by fluctuations in the market prices of equity securities - in terms of activities belonging to the trading portfolio - as well as interest rate and exchange rate fluctuations for the entire activity of the Group. The Group monitors the market risk with the objective of optimizing profitability in relation to the associated risk, in accordance with the approved policies and procedures. From the Group’s point of view, the relevant market risks are: price risk (position risk), currency exchange risk, interest rate risk. • Price (position) risk This is generated by the volatility of market prices, such as fluctuations in the market of financial instruments as a result of changing market prices, changes caused either by factors affecting all instruments traded on the market, or by factors specific to the individual instruments or their issuer. The Group monitors both the systemic component (the general risk determined by factors at the macro level) and the specific risk determined by the issuer's own activity, so that when the price risks are not in accordance with the internal policies and procedures, they will act accordingly by rebalancing the portfolio of assets. On 31 December 2021 and 31 December 2020 the Group has the following asset structure subject to price risk: In RON No. comp. Market value 31 December 2021 No. comp. Market value 31 December 2020 Capital investment Listed companies 23 2,002,743,609 24 1,641,178,221 Unlisted companies 21 86,706,194 22 87,032,773 Fund units 4 4,652,463 4 3,598,943 Total capital investment 48 2,094,102,266 50 1,731,809,937 The market value of the portfolio of listed shares (on BVB - regulated market, BVB-AERO - alternative trading system), as of 31 December 2021 represents 95.85% of the total value of the managed portfolio of shares (31 December 2020: 94.96%). A number of 7 issuers are found in the managed portfolio, of the 17 that constitute the BET index of the Bucharest Stock Exchange. The market value of the share packages held with the 7 issuers represents, as of 31 December 2021, 79.18 % of the market value of the shares held in the listed companies (31 December 2020: 86.05%). The Group also monitors the risk concentration by activity sectors, as follows: Portfolio structure The market value of the participation on 31 December 2021 The market value of the participation on 31 DECEMBER 2020 Economic sectors with a share in the Group’s portfolio: (RON) % (RON) % finance, banking 1,153,088,518 55.06 1,026,003,902 59.25 resources of oil, methane gas and related services 345,485,479 16.50 278,880,875 16.10 financial intermediation 197,976,371 9.46 77,590,385 4.48 energy and gas transport 117,620,064 5.62 138,415,383 7.99 pharmaceutical industry 107,751,847 5.15 62,396,107 3.60 tourism, public food catering, leisure 84,628,021 4.04 81,300,358 4.70 machine building industry, processing 56,818,684 2.71 28,620,353 1.65
Notes to the consolidated financial statements as of 31 December 2021 page 28 electronic, electrotechnical industry 24,170,137 1.15 26,211,928 1.51 lease and sublease of real estate 1,710,053 0.08 1,811,409 0.11 metallurgical industry - - 5,098,546 0.29 grain storage and trade - - 1,731,294 0.10 other activities 200,629 0.01 150,454 0.01 TOTAL SECURITIES 2,089,449,803 99.78 1,728,210,994 99.79 FUND UNITS 4,652,463 0.22 3,598,943 0.21 GENERAL TOTAL 2,094,102,266 100.00 1,731,809,937 100.00 Based on the analysis of the data presented above, as of 31 December 2021, the Group mainly held shares that are active in the field of finance, banking with a share of 55.06% of the total portfolio, decreasing compared to 31 December 2020, when in the same sector of activity registered a weight of 59.25%. • Exchange rate risk The exchange rate risk is the risk that the value of a financial instrument will be adversely affected by a fluctuation in the foreign exchange market. This risk concerns all positions held by the Group in foreign currency deposits, financial instruments denominated in foreign currency, regardless of the holding period or the level of liquidity recorded by the respective positions. During the reporting period ending on 31 December 2021, the Group did not use derivative securities to protect itself against interest rate fluctuations. The exchange rate risk due to price fluctuations is insignificant. As of 31 December 2021, the foreign currency availabilities were 2,487,940 RON (31 December 2020: 13,720,343 RON), i.e. 4.65 % (31 December 2020: 20.31 %) of the total availabilities. Given that most of the Group’s assets are expressed in national currency, exchange rate fluctuations do not directly affect the Group’s activity. These fluctuations have an influence on the assessment of investments such as foreign currency deposits and current account availability. The available cash in foreign currency represents, as of 31 December 2021, 0.11% (31 December 2020: 0.7%) of the total financial assets, so the exchange rate risk is insignificant. Investments in bank deposits in foreign currency are constantly monitored and investment/disinvestment measures are taken, depending on the forecast evolution of the exchange rate. The concentration of assets and liabilities by types of currencies is presented as follows:: In RON Accounting value RON EUR USD 31 December 2021 Financial assets Cash and cash equivalents 16,426,242 14,617,311 1,748,263 60,668 Deposits placed in banks 37,108,220 36,429,211 210,563 468,446 Financial assets assessed at fair value through other elements of the comprehensive income 2,089,449,803 2,089,449,803 - - Financial assets assessed at fair value through the profit or loss account 4,652,463 4,652,463 - - Credits and receivables 34,018,497 34,018,497 - - Other financial assets 177,889,704 177,889,704 - - Total financial assets 2,359,544,929 2,357,056,989 1,958,826 529,114 Financial debt Payable dividends 46,798,631 46,798,631 - - Other financial liabilities 147,092,574 147,092,574 - - Total financial liabilities 193,891,205 193,891,205 - -
Notes to the consolidated financial statements as of 31 December 2021 page 29 In RON Accounting value RON EUR USD 31 DECEMBER 2020 Financial assets Cash and cash equivalents 21,107,444 19,237,886 1,864,774 4,784 Deposits placed in banks 46,445,240 34,594,455 207,116 11,643,669 Financial assets assessed at fair value through other elements of the comprehensive income 1,728,210,994 1,728,210,994 - - Financial assets assessed at fair value through the profit or loss account 3,598,943 3,598,943 - - Credits and receivables 31,458,864 25,732,951 - 5,725,913 Other financial assets 129,971,552 129,971,552 - - Total financial assets 1,960,793,037 1,941,346,781 2,071,890 17,374,366 Financial debt Payable dividends 62,084,594 62,084,594 - - Other financial liabilities 132,062,673 131,399,457 663,216 - Total financial liabilities 194,147,267 193,484,051 663,216 - • The interest rate risk The interest rate risk is the current or future risk that profits and capitals may change as a result of adverse changes in market interest rates. The factors that define this type of market risk are a wide range of interest rates corresponding to a variation of markets, currencies and maturities for which the Group holds positions. The interest rate directly influences the income and expenditure attached to the financial assets and liabilities bearing variable interest rates. Most of the assets in the portfolio do not bear interest. As a result, the Group is not significantly affected by the interest rate risk. Interest rates applied to cash and cash equivalents are short-term. At the Group level, the share of borrowed resources in the total financing resources of companies is not significant, except for Argus SA Constanta and Lactate Natura S.A. Târgoviște. In order to benefit from the interest rate volatility, for greater flexibility in the policy of allocating the money availabilities, it will be intended that the placing of the money availabilities in monetary instruments will be made especially in the short term, i.e. 1-3 months. The risk of lowering the interest rate is moderate, taking into account the amounts placed in deposits in relation to the total liquidities of the Group. The following table summarizes the Group's exposure to interest rate risk. In lei In RON Accounting value Less than 3 months Between 3 and 12 months Between 1 - 5 yrs No interest 31 December 2021 Cash and cash equivalents 16,426,242 - - - 16,426,242 Deposits placed in banks 37,108,220 35,982,334 722,308 403,578 - Financial assets assessed at fair value through other elements of the comprehensive income 2,089,449,803 - - - 2,089,449,803 Financial assets measured at fair value through profit or loss 4,652,463 - - - 4,652,463 Credits and receivables 34,018,497 - - - 34,018,497 Other financial assets 177,889,704 - - - 177,889,704 Total financial assets 2,359,544,929 35,982,334 722,308 403,578 2,322,436,709 Financial debt Payable dividends 46,798,631 - - - 46,798,631
Notes to the consolidated financial statements as of 31 December 2021 page 30 Other financial liabilities 147,092,574 - - - 147,092,574 Total financial liabilities 193,891,205 - - - 193,891,205 In RON Accounting value Less than 3 months Between 3 and 12 months Between 1 - 5 yrs No interest 31 DECEMBER 2020 Cash and cash equivalents 21,107,444 - - - 21,107,444 Deposits placed in banks 46,445,240 45,319,059 722,603 403,578 - Financial assets assessed at fair value through other elements of the comprehensive income 1,728,210,994 - - - 1,728,210,994 Financial assets measured at fair value through profit or loss 3,598,943 - - - 3,598,943 Credits and receivables 31,458,864 - - - 31,458,864 Other financial assets 129,971,552 - - - 129,971,552 Total financial assets 1,960,793,037 45,319,059 722,603 403,578 1,914,347,797 Financial debt Payable dividends 62,084,594 - - - 62,084,594 Other financial liabilities 132,062,673 635,503 78,071,066 251,931 53,104,173 Total financial liabilities 194,147,267 635,503 78,071,066 251,931 115,188,767 b) The credit risk The credit risk is the Group’s risk of having losses or not achieving the estimated profits pursuant to the insolvency of its debtors or pursuant to the counterparty's failure of meeting its financial obligations. The credit risk expresses the possibility that debtors or issuers may not meet their obligations at maturity due to the deterioration of the borrower’s financial situation and its insolvency or due to the general economic situation. The credit risk appears in relation to any type of debt. The main elements of credit risk that are identified and can significantly influence the activity of the Group are: - the risk of non-collection of dividends from portfolio companies; - the risk of non-collection of the contract value in the case of the activity of the sale of shares in closed- ended companies under a sales contract; - the risk that, in the event of the liquidation of a portfolio undertaking, the value obtained will be less than the value of the initial investment, or nothing will be recovered; - settlement risk in the case of transactions in shares issued by listed companies; - concentration risk. The indicators used to measure the insolvency risk of issuers are the following: the exposure rate to high- risk issuers (over the next 2 years), the exposure rate to unlisted issuers, the exposure rate by business sectors. The credit risk may indirectly affect the activity of the Group, the case of the companies in the portfolio that have financial difficulties in paying their payment obligations corresponding to the dividends. Given the diversity of investments and the fact that most of them are carried out in stable entities and with increased liquidity in the market, this risk is greatly diminished and properly managed by the Group. The Group may be exposed to credit risk through investments in bonds, current accounts, bank deposits, and other receivables. At the Group level, there are no bonds, derivatives, which minimizes the credit risk. Through the specificities of its portfolio, the sector with high exposure if the “finance and banking” sector, with an exposure of more than 20% in total assets, which holds 55.06% of the total share portfolio
Notes to the consolidated financial statements as of 31 December 2021 page 31 as of 31 December 2021. The exposure on this sector is monitored; a positive issue of such holding is the liquidity of investments, with 3 issuers being present in this sector: Banca Transilvania, B.R.D. and Eximbank, of which the first 2 issuers are listed on the main market of the Bucharest Stock Exchange, Premium category. As for the company’s cash, it is held in several banks, so as to avoid the concentration risk. Bank deposits are held at banking institutions in Romania. The assessment of the main elements of credit risk results in the conclusion that they fall within the risk limits approved for an average risk appetite. c) Liquidity risk The liquidity risk is the risk that the profit may be affected as a consequence of the operations related to financial instruments which are not liquid (which could generate difficulties in the purchase or sale of such financial instruments in a reasonable time, with minimum loss), as well as the one generated by the possibility that the Group may not be able to meet its financial obligations in the short run. The Group aims to maintain a level of liquidity appropriate to its underlying obligations, based on an assessment of the relative liquidity of the assets on the market, considering the period required for liquidation and the price or value at which the respective assets can be liquidated, as well as their sensitivity to market risks or other external factors. The Group must hold liquid assets, the aggregate value of which will cover the difference between liquidity outflows and liquidity inflows in crisis statements, so as to ensure that the Group maintains levels of liquidity reserves that are adequate to enable it to cope. any imbalances between liquidity inflows and outflows in crisis statements. The company shall systematically monitor the liquidity profile of the asset portfolio taking into account the contribution of each asset on liquidity and the significant, contingent or other kind of liabilities that the company may have in relation to its underlying obligations. The liquidity risk related to payment obligations is low, with the company’s current liabilities being covered by holdings in current accounts and/or short-term deposits. The liquidity risk is mainly related to the shares held in the “closed” type companies existing in the managed portfolio. Thus, the sale of shareholdings - in the event of negative aspects in their economic and financial situation or in the pursuit of obtaining liquidity - cannot be made fast enough, with the risk of not being able to obtain a price higher or at least equal to the one for which these shareholdings are valued in the calculation of the net asset, according to the FSA regulations. The company constantly monitors the liquidity profile of the portfolio, analysing the impact of each asset on the liquidity, adopting a prudent policy regarding the cash outflows, permanently evaluating the quantitative and qualitative risks of the positions held and of the expected investments to be made. We estimate that this risk is within the approved risk limits for a medium risk appetite. The structure of assets and liabilities in terms of liquidity is analysed in the following table: In RON Accounting value Less than 3 months Between 3 and 12 months Between 1 - 5 yrs No preset maturity 31 December 2021 Financial assets Cash and cash equivalents 16,426,242 - - - 16,426,242 Deposits placed in banks 37,108,220 35,982,334 722,308 403,578 - Financial assets assessed at fair value through other elements of the comprehensive income 2,089,449,803 - - - 2,089,449,803 Financial assets measured at fair value through profit or loss 4,652,463 - - - 4,652,463
Notes to the consolidated financial statements as of 31 December 2021 page 32 Credits and receivables 34,018,497 - - - 34,018,497 Other financial assets 177,889,704 - - - 177,889,704 Total financial assets 2,359,544,929 35,982,334 722,308 403,578 2,322,436,709 Financial debt Payable dividends 46,798,631 46,798,631 - - - Other financial liabilities 147,092,574 147,092,574 - - - Total financial liabilities 193,891,205 193,891,205 - - - In RON Accounting value Less than 3 months Between 3 and 12 months Between 1 - 5 yrs No preset maturity 31 DECEMBER 2020 Financial assets Cash and cash equivalents 21,107,444 - - - 21,107,444 Deposits placed in banks 46,445,240 45,319,059 722,603 403,578 - Financial assets assessed at fair value through other elements of the comprehensive income 1,728,210,994 - - - 1,728,210,994 Financial assets measured at fair value through profit or loss 3,598,943 - - - 3,598,943 Credits and receivables 31,458,864 - - - 31,458,864 Other financial assets 129,971,552 - - - 129,971,552 Total financial assets 1,960,793,037 45,319,059 722,603 403,578 1,914,347,797 Financial debt Payable dividends 62,084,594 - - - 62,084,594 Other financial liabilities 132,062,673 635,503 78,071,066 251,931 53,104,173 Total financial liabilities 194,147,267 635,503 78,071,066 251,931 115,188,767 d) Operational risk Operational risk refers to losses resulting from acts (or negligence) in the conduct of business activities. Operational risk is also assimilated to legal risk, i.e. the risk of having losses due to the improper enforcement or failure to enforce legal or contractual provisions. The operational risk category refers to: - IT risk - a subcategory of operational risk that refers to the risk caused by inadequate strategies and IT policies, of information technology and information processing, regarding its management capacity, integrity, controllability and continuity or the improper use of information technology. - Strategic risk - the current or future risk that profits and capitals are affected, generated by changes in the business environment or by unfavourable business decisions, by the improper implementation of decisions or by the failure to react to changes in the business environment. The strategic risk is uncontrollable and unquantifiable, as the companies’ management adopts a cautious policy with a view to minimizing exposure to this risk. The main benchmarks in pursuing the strategic risk are: the pursuit of efficiency indicators according to the undertaken strategic objectives. In order to avoid the strategic risk, the market evolution is pursued compared to the provisions undertaken in the budget of revenues and expenditures. We estimate that, at the Group’s level, the strategic risk is low and the business policy adopted by the company’s management is cautious. - Reputation risk - the current or future risk that the profits and capitals are affected, resulting from the unfavourable perception of the image of the companies in the Group by shareholders, investors or the supervisory authority. The companies’ objective is to satisfy the interests of shareholders and investors and to perform a fair activity, according to the regulations of the capital market.
Notes to the consolidated financial statements as of 31 December 2021 page 33 - The risk related to outsourced activities - the financial, reputational and operational impact that the improper performance of the outsourced activity by the service provider may have on the companies in the Group, including the risk that the pursue the performance of financial activities and/or the performance of financial activities and/or comply with the provisions of the relevant legislation, as a consequence of the failure or difficulties encountered by the legal person employed by the company to perform certain activities, based on a contract. It shall be managed by the compartments managing the entered contracts. - Model risk – the potential loss that any company in the Group may incur, as a consequence of decisions that could be mainly based on the output of internal models, due to errors in the development, implementation or use of such models. It shall be managed at the level of each compartment. - The risk of conflicts of interest - any situation when the interests of the companies in the Group diverge from the personal interests of employees, directors, managers or their close relatives. - Sustainability risks – an environmental, social or governance event or condition which, if it occurs, could have a potential or actual adverse material impact on the value of the investment. Sustainability risks are not considered to be a separate type of risk, but are integrated into the classification and management of existing risks, as they also affect the existing types of risk to which the company is exposed in its activities. The company shall incorporate sustainability risks into the risk culture. S.I.F. Oltenia S.A. integrates into the decision-making process and continuously assesses the relevant sustainability risks, i.e. those environmental, social or governance events or conditions that, if they occur, could have an impact on the profitability of the investments. With a view to assessing the level of operational risk to which it is exposed, the Group acts to identify and frame operational risk events within specific categories, that will allow to establish the most efficient methods of controlling and reducing potential effects. The functional departments within the Group are responsible for the preliminary analysis of the operational risks arising in their area of activity. The Group has a policy of maintaining an optimum level of equity in order to develop the company and achieve the proposed objectives. The main objective of the Group is the continuity of the activity in order to provide profitability for its shareholders. Considering the complexity of the Group’s activities, the amount of its activities, the staff structure, the level of informatization, the complexity of the monitoring and control procedures and other intrinsic aspects related to the company’s risk policy, we estimate that the operational risk at the Group’s level is average. e) Capital adequacy The management policy regarding capital adequacy focuses on maintaining a solid capital base in order to support the continued development of the Group and to achieve the investment objectives. Equity consists of the share capital, the reserves created, the current result and the deferred result. As of 31 December 2021, the equity of the Group is 2,483,206,252 RON (31 December 2020: 1,864,138,757 RON). The group is not subject to legal requirements for capital adequacy. 6. FINANCIAL ASSETS AND LIABILITIES Accounting classifications and fair values The accounting values and fair values of financial assets and liabilities are presented as of 31 December 2021, as follows: In RON The fair value through other elements of the comprehensive income The fair value through the profit or loss account Amortized cost Net book value Fair value Cash and cash equivalents - - 16,426,242 16,426,242 16,426,242 Deposits placed in banks - - 37,108,220 37,108,220 37,108,220
Notes to the consolidated financial statements as of 31 December 2021 page 34 Financial assets assessed at fair value through other elements of the comprehensive income 2,089,449,803 - - 2,089,449,803 2,089,449,803 Financial assets assessed at fair value through the profit or loss account - 4,652,463 - 4,652,463 4,652,463 Other financial assets - - 211,908,201 211,908,201 211,908,201 Total financial assets 2,089,449,803 4,652,463 265,442,663 2,359,544,929 2,359,544,929 Payable dividends - - 46,798,631 46,798,631 46,798,631 Other financial liabilities - - 147,092,574 147,092,574 147,092,574 Total financial liabilities - - 193,891,205 193,891,205 193,891,205 The accounting values and fair values of financial assets and liabilities are presented as of 31 December 2020, as follows: In RON The fair value through other elements of the comprehensive income The fair value through the profit or loss account Amortized cost Net book value Fair value Cash and cash equivalents - - 21,107,444 21,107,444 21,107,444 Deposits placed in banks - - 46,445,240 46,445,240 46,445,240 Financial assets assessed at fair value through other elements of the comprehensive income 1,728,210,994 - - 1,728,210,994 1,728,210,994 Financial assets assessed at fair value through the profit or loss account - 3,598,943 - 3,598,943 3,598,943 Investments held to maturity - - - - - Other financial assets - - 161,430,416 161,430,416 161,430,416 Total financial assets 1,728,210,994 3,598,943 228,983,100 1,960,793,037 1,960,793,037 Payable dividends - - 62,084,594 62,084,594 62,084,594 Other financial liabilities - - 132,062,673 132,062,673 132,062,673 Total financial liabilities - - 194,147,267 194,147,267 194,147,267 7. INCOME FROM DIVIDENDS Dividend income is recorded at gross value. The tax rates for dividends for the period ending on 31 December 2021 were 5% and zero (31 December 2020: 5% and zero). Dividend income, mainly by taxpayers, is presented as follows: In RON 31 December 2021 31 December 2020 re- treated 31 December 2020 BANCA TRANSILVANIA S.A. Cluj Napoca 20,832,510 25,883,320 25,883,320 OMV PETROM S.A. București 17,822,604 23,051,791 23,051,791 S.N.G. ROMGAZ S.A. Mediaș 4,029,655 3,624,439 3,624,439 SANTIERUL NAVAL Orsova 3,200,337 768,081 768,081 C.N.T.E.E. TRANSELECTRICA S.A. București 2,359,273 1,301,668 1,301,668 BRD - GROUPE SOCIETE GENERALE S.A. 2,150,581 - -
Notes to the consolidated financial statements as of 31 December 2021 page 35 S.N.T.G.N. TRANSGAZ S.A. Mediaș 1,981,325 3,765,491 3,765,491 IAMU BLAJ S.A. 793,372 793,372 793,372 ANTIBIOTICE S.A. Iaşi 579,867 3,835,393 3,835,393 SNP PETROM 520,967 - - BURSA DE VALORI BUCUREȘTI S.A. 409,494 315,496 315,496 EVERGENT INVESTMENTS SA 148,682 201,176 201,176 ELBA TIMISOARA 98,982 - - DEPOZITARUL CENTRAL S.A. București 32,553 58,601 58,601 SN NUCLEARELECTRICA SA 8,974 - - TURISM FELIX S.A. Băile Felix - 1,451,900 1,451,900 ALIMENT MULFATLAR S.R.L. Constanța - - 1,107,200 COMCEREAL TULCEA S.A. - - 966,955 ELECTROMAGNETICA S.A. București - 706,871 706,871 S.I.F. TRANSILVANIA S.A. - 524,840 524,840 Other - 195 195 TOTAL 54,969,176 66.282.63494 68,356,789 8. INTEREST INCOME In RON 31 December 2021 31 December 2020 re-treated Re-treatments 2020 31 December 2020 Incomes from interests for bank deposits 494,543 473,071 90,250 382,821 Incomes from interests for current bank accounts 14,911 26,680 72 26,608 Income from dividends (70,261) - - - Total 439,193 499,751 90,322 409,429 9. OTHER OPERATIONAL INCOMES In RON 31 December 2021 31 December 2020 re-treated Re-treatments 2020 31 December 2020 Income from the production sold 208,378,527 190,970,077 7,155,561 183,814,516 Revenues from lease and rental 26,242,079 23,098,194 3,666,638 19,431,556 Income from sales of goods 23,617,001 57,149,055 45,145,553 12,003,502 Other operating revenues 8,355,011 4,520,092 812,966 3,707,126 Incomes from provisions for the depreciation of current assets 1,317,719 808,233 151,301 656,932 Revenues from operating subsidies - - - - Other financial revenues 109,974 506,263 31,138 475,125 Financial revenues from adjustments for loss of value of financial assets 164,272 - - - Deferred tax liabilities 13,083 - - - Total 268,344,224 277,051,914 56,963,157 220,088,757
Notes to the consolidated financial statements as of 31 December 2021 page 36 10. NET INCOME FROM CURRENCY DIFFERENCES In RON 31 December 2021 31 December 2020 re-treated Re-treatments 2020 31 December 2020 Revenues from foreign currency exchange 1,228,849 959,846 7,152 952,694 Expenses from foreign currency exchange (140,822) (1,145,079) (14,902) (1,130,177) Net profit from exchange rate differences 1,088,027 (185,233) (7,750) (177,483) 11. EARNINGS FROM FINANCIAL ASSETS ASSESSED AT FAIR VALUE THROUGH THE PROFIT OR LOSS ACCOUNT In RON 31 December 2021 31 December 2020 re- treated Re- treatmen ts 2020 31 DECEMBER 2020 Earnings for financial assets assessed at fair value through profit or loss 5,326 1,004,388 - 1,004,388 Losses for financial assets assessed at fair value through profit or loss (4,153) (957,241) - (957,241) Earnings/losses for financial assets assessed at fair value through profit or loss 1,173 47,147 - 47,147 12. FEES AND MANAGEMENT AND SUPERVISION TAXES In RON 31 December 2021 31/12/2020 re-treated Re- treatment s 2020 31 December 2020 Expenses on commissions due to SSIF for share transactions 439,093 277,771 - 277,771 Expenses on commissions payable for shareholder register services 196,805 160,670 2,192 158,478 Expenses on commissions with the depository company 484,119 419,867 - 419,867 BVB expenses 83,839 29,916 2,000 27,916 Expenditure on taxes due to entities in the capital market (FSA) 1,986,365 1,721,457 - 1,721,457 Audit fee expenses 378,296 367,303 27,525 339,778 Other expenses related to commissions, fees and contributions 533,098 234,990 - 234,990 Total 4,101,615 3,211,974 31,717 3,180,257 13. OTHER OPERATIONAL EXPENSES In RON 31 December 2021 31/12/2020 re-treated Re-treatments 2020 31 December 2020 Expenses on raw materials and materials 175,927,471 159,698,854 3,452,989 156,245,865 Tax and tax expenses 3,926,309 3,766,974 458,300 3,308,674 Expenses for staff 41,874,642 32,530,738 3,362,287 29,168,451 Expenses on depreciation, amortisations and provisions 13,509,984 14,027,273 1,222,088 12,805,185 Expenditure on external benefits 46,126,465 75,360,193 46,727,194 28,632,999 Expenses on late payments to suppliers 70,666 - - - Interest expenses 281,155 - 281,155 Other expenses 1,773,661- 179,173 - 179,173 Total 283,209,198 285,844,360 55,222,858 230,621,502
Notes to the consolidated financial statements as of 31 December 2021 page 37 Other operational expenditure includes expenditure on raw materials and materials, personnel costs, other taxes and charges, depreciation and provisioning charges, external benefit charges. Salaries and similar expenses In RON 31 December 2021 31 December 2020 re- treated Re-treatments 2020 31 December 2020 Salaries 40,328,061 31,171,295 3,232,346 27,938,949 Expenditure on insurance and social protection 1,546,581 1,359,443 129,941 1,229,502 Other salary expenses based on judge’s decisions - - - - Total 41,874,642 32,530,738 3,362,287 29,168,451 The actual the number of employees by categories during 2021 is as follows: 31 December 2021 31 December 2020 re- treated Re-treatments 2020 31 December 2020 Staff with mandate contract 25 19 6 13 Employees with higher education 120 130 10 120 Employees with upper secondary education 310 320 18 302 Employees with general education 55 87 30 57 Total 510 556 64 492 The evolution of the number of employees by categories during 2021 is as follows*: No. of employees re- treated 31 December 2020 Incoming employees in 2021 Outgoing employees in 2021 No. of employees 31 December 2021 Employees with higher education 134 32 42 124 Employees with upper secondary education 323 67 95 295 Employees with general education 80 8 22 66 Total 537 107 159 485 * Does not include persons with a mandate contract. The actual number of employees as of 31 December 2021 is 485 (31 December 2020: 537). The average number of employees as of 31 December 2021 is 483 (31 December 2020: 471). The compensation granted in the financial year 2021 to the administrative, effective management and supervisory bodies, representing salary rights, as well as the incentives in the profit-sharing fund, amounts to 14,010,755 RON (2020: 7,133,039 RON). The Group makes payments to institutions of the Romanian state in the account of the pensions of its employees. All employees are members of the pension plan of the Romanian state. The Group operates no other pension or post-retirement benefit plan and, hence, has no further obligations regarding pensions. Moreover, the Group is not obliged to provide additional benefits to employees after retirement. The Group did not grant any advances or credits to members of the board of directors during the reporting period, except for advances for travel in the interests of the service, duly justified, so that no amount of this kind is due at the end of the period.
Notes to the consolidated financial statements as of 31 December 2021 page 38 14. INCOME TAX In RON 31 December 2021 31 December 2020 re-treated Re-treatments 2020 31 DECEMBER 2020 Current profit tax 2,493,774 259,997 - 259,997 Tax on the income of micro-enterprises / specific 683,755 462,648 297,055 165,593 Dividend tax 2,438,062 2,823,241 - 2,823,241 Deferred income tax 310,237 271,692 - 271,692 Total income tax 5,925,828 3,817,578 297,055 3,520,523 Reconciliation of profit before tax, at the expense of profit tax in profit or loss account: In RON 31 December 2021 31 December 2020 Profit before taxation 49,627,475 55,698,216 Tax according to the statutory tax rate of 16% and other rates 6,937,162 7,993,040 The effect on the profit tax of: In RON 31 December 2021 31 December 2020 Non-taxable income (10,827,667) (10,459,064) Dividend tax rate 2,438,062 2,823,241 Non-deductible expenses 6,859,279 2,145,451 Fiscal losses from current activities - 580,570 Amounts representing sponsorship within legal limits (475,000) - Records and resumes of temporary differences 310,237 271,692 Income tax 5,242,073 3,354,930 Tax on the income of micro-enterprises / specific 683,755 165,593 Total income tax 5,925,828 3,520,523 15. CASH AND CASH EQUIVALENTS In RON 31 December 2021 31 December 2020 re-treated Re-treatments 2020 31 December 2020 Cash in the cashier’s office 124,348 217,661 22,973 194,688 Current accounts in banks 16,287,445 24,633,766 3,819,217 20,814,549 Cash equivalents 14,449 101,300 3,093 98,207 Total cash and cash equivalents 16,426,242 24,952,727 3,845,283 21,107,444 Current accounts opened with banks are permanently available to the Group and are not restricted. 16. DEPOSITS PLACED IN BANKS In RON 31 December 2021 31 December 2020 re-treated Re-treatments 2020 31 December 2020 Sight deposits 37,098,227 51,360,389 4,950,000 46,410,389 Attached claims 9,993 34,851 34,851 Total deposits in banks 37,108,220 51,395,240 4,950,000 46,445,240 Bank deposits are permanently available to the Group and are not restricted or encumbered.
Notes to the consolidated financial statements as of 31 December 2021 page 39 17. FINANCIAL ASSETS • Financial assets assessed at fair value through other elements of the comprehensive income As of 31 December 2021 and 31 December 2020, the structure of the Group’s portfolio according to the market on which it was traded was as follows: In RON Market value 31 December 2021 Market value 31 December 2020 retreated Market value 31 December 2020 - Securities admitted or traded on a regulated market in Romania; 1,963,248,924 1,622,449,139 1,622,449,139 - Securities admitted or traded on an alternative Romanian market; 39,494,685 18,729,082 18,729,082 - Securities not admitted to trading on a regulated market or on an alternative trading system; 86,706,194 87,032,773 87,032,773 Total 2,089,449,803 1,728,210,994 1,728,210,994 As of 31 December 2021 and 31 December 2020, the category of shares assessed at fair value mainly includes the value of the shares held by the following issuers: Banca Transilvania S.A. Cluj Napoca, BRD – Groupe Societe Generale, OMV Petrom S.A. București, Antibiotice S.A. Iași, S.I.F Banat - Crișana S.A., SNGN Romgaz S.A. Mediaș, SNTGN Transgaz S.A. Mediaș, CNTEE Transelectrica S.A. București, etc. • Financial assets at fair value through the profit or loss account Financial assets at fair value through the profit or loss account as of 31 December 2021 and 31 December 2020 are presented as follows: In RON Market value 31 December 2021 Market value 31 December 2020 re-treated Re- treatments 2020 Market value 31 December 2020 - Securities admitted or traded on a regulated market in Romania; - - - - - Fund units 4,652,463 3,598,943 - 3,598,943 Total 4,652,463 3,598,943 - 3,598,943 The movement of financial assets measured at Fair value by other items of the comprehensive income for the reporting periods ended as of 31 December 2021 and 31 December 2020 is presented in the following table: In RON Shares appraised at the fair value Shares assessed at cost Total 01 January 2020 1,996,294,969 - 1,996,294,969 Purchases 14,964,884 - 14,964,884 Sales (52,145,645) - (52,145,645) Impairment losses (5,690,691) - (5,690,691) Changes in the fair value (220,353,301) - (220,353,301) Reclassifications 2020 (4,859,222) - (4,859,222) 31 DECEMBER 2020 1,728,210,994 - 1,728,210,994 Purchases 174,577,958 - 174,577,958 Sales (57,576,476) - (57,576,476) Impairment losses (4,202,957) - (4,202,957) Changes in the fair value 248,440,284 - 248,440,285 Reclassifications 2021 - - - 31 December 2021 2,089,449,803 - 2,089,449,803
Notes to the consolidated financial statements as of 31 December 2021 page 40 The share inflows during 2021 are in the amount of 174.57 million RON and mainly represent the purchase of shares on the capital market in S.I.F. Muntenia (78.83 million RON), S.I.F. Banat -Crișana (40.58 million RON), Antibiotice Iași (26.94 million RON), Banca Transilvania (27.14 million RON), Bursa de Valori Bucuresti (0.94 million RON) and Sinterom (0.14 million RON). The sales of shares during the reporting period have been 57.56 million RON and represent the cost of shares exiting the Company’s portfolio, i.e. Banca Transilvania (31.41 million RON), OMV Petrom (13.6 million RON), SNGN Romgaz (6.22 million RON), S.I.F. Transilvania (3.57 million RON), Altur S.A. Slatina (1.32 million RON), CNTEE Transelectrica (0.74 million RON), Cerealcom Alexandria (0.41 million RON) and Corint S.A. Târgoviște (0.03 million RON). As of 31 December 2021, the Group held a portfolio of participations in companies and investment funds with a market value of 2,094,102,266 RON. The companies with a share in the total securities in which the Group held holdings are the following: No. Company Percentage of total securities - % - Market value on 31 December 2021 - RON - 1 BANCA TRANSILVANIA S.A. Cluj 29.79 623,764,043 2 B.R.D. - GROUPE SOCIETE GENERALE S.A. 23.33 488,461,147 3 OMV PETROM S.A. București 12.71 266,188,144 4 ANTIBIOTICE S.A. Iași 5.15 107,751,847 5 S.I.F. BANAT CRIȘANA S.A. 4.91 102,810,576 6 S.N.G.N. ROMGAZ S.A. Mediaș 3.79 79,297,335 7 S.I.F. MUNTENIA S.A. 3.63 76,051,820 8 C.N.T.E.E. TRANSELECTRICA S.A. București 2.86 59,891,423 9 S.N.T.G.N. TRANSGAZ S.A. Mediaș 2.74 57,444,996 10 TURISM FELIX S.A. Băile Felix 2.39 50,025,845 Total 91.29 1,911,687,176 As of 31 December 2020, the Group held a portfolio of participations in companies and investment funds with a market value of 1,731,809,937 RON. The companies with a share in the total securities in which the Group held holdings are the following: No. Company Percentage of total securities - % - Market value on 31 December 2020 - RON - 1 BANCA TRANSILVANIA S.A. Cluj 32.30 559,414,711 2 B.R.D. - GROUPE SOCIETE GENERALE S.A. 24.64 426,717,798 3 OMV PETROM S.A. București 12.45 215,622,043 4 C.N.T.E.E. TRANSELECTRICA S.A. București 4.01 69,422,285 5 S.N.T.G.N. TRANSGAZ S.A. Mediaș 3.98 68,885,313 6 S.N.G.N. ROMGAZ S.A. Mediaș 3.65 63,258,832 7 ANTIBIOTICE S.A. Iași 3.60 62,396,107 8 S.I.F. BANAT CRISANA S.A. 3.19 55,283,184 9 TURISM FELIX S.A. Băile Felix 2.62 45,425,768 10 EXIMBANK - BANCA DE EXPORT IMPORT A ROMANIEI S.A. 2.30 39,871,393 Total 92.74 1,606,297,434 • The hierarchy of fair values For the calculation of fair value, for equity instruments (shares), the Group uses the following hierarchy of methods: - Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities; - Level 2: entries other than the listed prices included in Level 1 which are observable for assets or liabilities, either directly (e.g. prices) or indirectly (e.g. price derivatives);
Notes to the consolidated financial statements as of 31 December 2021 page 41 - Level 3: assessment techniques based largely on unobservable elements. This category includes all instruments for which the evaluation technique includes elements that are not based on observable data and for which unobservable input parameters can have a significant effect on the evaluation of the instrument. In RON 31 December 2021 31 December 2020 Level 1 1,968,922,933 1,595,938,885 Level 2 37,708,745 48,069,347 Level 3 87,470,588 87,801,705 Total 2,094,102,266 1,731,809,937 The fair value measurement of the equity investments (equity instruments - shares) held as of 31 December 2021 was performed as follows: - for listed and traded securities in the reporting period, the market value was determined by considering the quotation of the last trading day (closing quotation on the main capital market for those listed on the regulated market - BVB, respectively the reference price for the alternative system - AERO for level 1, and for level 2, quotations are taken for shares traded in the last 30 trading days); - for listed securities that have no transactions in the last 30 days of the reporting period, as well as for unlisted securities, the market value is determined at the book value per share as it results from the last approved yearly financial statement of the entity; - for securities issued by credit institutions not admitted to trading, the assessment is made at the book value per share calculated based on the value of the equity capital contained in the monthly reports transmitted to the NBR; - for securities not admitted to trading on a regulated market or within an alternative trading system in Romania issued by issuers holding more than 33% of the share capital, they are assessed exclusively in accordance with International Assessment Standards on the basis of a assessment report updated at least yearly; - for securities relating to companies in insolvency proceedings or in reorganization, the valuation shall be made at zero. The securities issued by the mutual fund are assessed taking into account the last unit value of the net asset, calculated and published. 18. LOANS AND RECEIVABLES In RON 31 December 2021 31 December 2020 re- treated Re-treatments 2020 31 December 2020 Trade receivables 28,725,905 38,590,894 7,337,010 31,253,884 Borrowers 4,078,212 2,492,164 1,164,896 1,327,268 Claims in connection with the state budget and the social insurance budget 1,052,741 1,786,613 698,489 1,088,124 Other receivables 3,394,067 49,057 12,390 36,667 Debt impairment adjustments (debtors) (3,232,428) (3,205,653 (958,574) (2,247,079) TOTAL 34,018,497 39,713,075 8,254,211 31,458,864
Notes to the consolidated financial statements as of 31 December 2021 page 42 19. TANGIBLE ASSETS In RON Land and buildings Technical installations and machinery Other installations, tools and furniture Advance payments and tangible assets in progress Total Gross book value 01 January 2020 93,788,852 69,257,352 3,006,254 3,729,072 169,781,530 Increase 9,644,832 13,550,245 159,147 4,408,865 27,763,089 Decrease (822,799) (1,244,273) (30,627) (5,112,690) (7,210,389) 31 DECEMBER 2020 102,610,885 81,563,324 3,134,774 3,025,247 190,334,230 Re-treatments 2020 19,462,558 9,417,004 455,453 13,405 29,348,420 31 December 2020 re-treated 122,073,443 90,980,328 3,590,227 3,038,652 219,682,650 Increase 225,728,560 3,916,268 69,334 2,937,034 232,651,196 Decrease (38,969,789) (3,972,294) (152,991) (4,104,077) (47,199,151) 31 December 2021 308,832,214 90,924,302 3,506,570 1,871,609 405,134,695 Accumulated amortization 01 January 2020 25,840,204 60,747,184 1,578,642 1,274,373 89,440,403 Amortization recorded during the exercise 3,266,576 10,370,810 318,171 - 13,955,557 Decrease or resumption (652,579) (774,810) (21,738) - (1,449,127) 31 DECEMBER 2020 28,454,201 70,343,184 1,875,075 1,274,373 101,946,833 Re-treatments 2020 3,069,746 8,244,614 253,357 - 11,567,717 31 December 2020 re-treated 31,523,946 78,587,798 2,128,432 1,274,373 113,514,549 Amortization recorded during the exercise 3,096,099 5,083,105 239,255 - 8,418,459 Decrease or resumption (34,681,465) (3,833,857) (147,122) - (38,662,444) 31 December 2021 (61,419) 79,837,046 2,220,565 1,274,373 83,270,565 Net book value Net accounting value as of 01 January 2020 67,948,648 8,510,168 1,427,612 2,454,699 80,341,127 Net accounting value as of 31 December 2020 74,156,684 11,220,140 1,259,699 1,750,874 88,387,397 Correction 2020 16,392,813 1,172,390 202,096 13,405 17,780,704 Net accounting value re- treated as of 31 December 2020 90,549,497 12,392,530 1,461,795 1,764,279 106,168,101 Net accounting value as of 31 December 2021 308,893,633 11,087,256 1,286,005 597,236 321,864,130
Notes to the consolidated financial statements as of 31 December 2021 page 43 20. REAL ESTATE INVESTMENT In RON 31 December 2021 31 December 2020 re- treated Re- treatments 2020 31 December 2020 Balance at the beginning of the financial year 106,334,747 105,581,030 5,575,328 100,005,702 Assessment of real estate investment 54,222,677 129,894 - 129,894 Reclassifications in the category of tangible assets (3,040,985) 112,665 (301,501) 414,166 Reclassifications in the category of tangible assets 8,501,101 - 16,100 - - Purchases of real estate investment - 495,058 - 495,058 - Sales of real estate investment - - - - Balance at the end of the reporting period 166,017,540 106,334,747 5,289,927 101,044,820 21. OTHER ASSETS In RON 31 December 2021 31 December 2020 re- treated Re- treatments 2020 31 December 2020 Intangible fixed assets 178,173 47,926,434 540 47,925,894 Other fixed receivables (446,060) 1,146,956 (15,894,426) 17,041,382 Stocks 121,836,367 84,282,914 19,803,081 64,479,833 Advance expenses 271,151 544,626 20,183 524,443 Goodwill 56,050,073 - - - TOTAL 177,889,704 133,900,930 3,929,378 129,971,552 22. PAYABLE DIVIDENDS In RON 31 December 2021 31 December 2020 retreated Re- treatments 2020 31 DECEMBER 2020 Payable dividends for 2020 7,705,697 - - - Payable dividends for 2019 15,039,533 15,980,798 - 15,980,798 Payable dividends for 2018 21,374,579 21,718,496 - 21,718,496 Payable dividends for 2017 418,621 10,061,664 - 10,061,664 Payable dividends for 2016 412,510 12,475,929 - 12,475,929 Payable dividends for 2015 597,572 597,580 - 597,580 Payable dividends for 2014 487,291 487,297 - 487,297 Payable dividends for 2013 652,681 652,685 - 652,685 Payable dividends for 2012 11,973 11,973 - 11,973 Payable dividends for 2011 10,598 10,598 - 10,598 Payable dividends for 2010 7,929 7,929 - 7,929 Payable dividends for previous years 79,647 79,645 - 79,645 Total payable dividends 46,798,631 62,084,594 - 62,084,594
Notes to the consolidated financial statements as of 31 December 2021 page 44 23. FEES AND CHARGES In RON 31 December 2021 31 December 2020 re-treated Re-treatments 2020 31 December 2020 Debts related to the Social Insurance Budget 2,630,425 1,806,284 98,171 1,708,113 Debts related to the State Budget 20,192,838 2,747,814 76,234 2,671,580 Other taxes and fees 86,991 333,743 244,114 89,629 Total 22,910,254 4,887,841 418,519 4,469,322 24. DEBT REGARDING DEFERRED PROFIT TAX Deferred tax liabilities are determined by the following elements: In RON Assets Liabilities Net Tax 31 December 2021 Differences from changes in the fair value of financial assets measured at fair value through other comprehensive income elements 734,224,479 3,290,970 730,933,509 113,091,678 Financial assets assessed at fair value through other elements of the comprehensive income - received free of charge 32,161,693 - 32,161,693 5,081,484 Reassessment of tangible assets 17,637,824 - 17,637,824 3,547,489 The result carried forward representing reserves from revaluations of tangible assets 97,230,512 1,380,700 95,849,812 15,813,251 Fixed assets adjustments 4,841,048 1,962,410 2,878,638 460,582 Provisions for litigation and other provisions 373,600 201,556 172,044 27,527 Other reserves 58,730,466 - 58,730,466 9,396,877 TOTAL 945,199,622 6,835,636 938,363,986 147,418,888 The value of the tax is recognized directly by the diminution of its own capital and does not affect the income and expenses. In RON Assets Liabilities Net Tax 31 DECEMBER 2020 Differences from changes in the fair value of financial assets measured at fair value through other comprehensive income elements 488,158,172 2,118,892 486,039,280 73,368,361 Financial assets assessed at fair value through other elements of the comprehensive income - received free of charge 42,529,131 - 42,529,131 6,777,832 Reassessment of tangible assets 9,059,354 - 9,059,354 1,449,498 The result carried forward representing reserves from revaluations of tangible assets 11,377,083 1,380,700 9,996,383 1,599,423 Fixed assets adjustments 2,270,432 1,962,410 308,022 58,519 Provisions for litigation and other provisions 2,030,679 136,535 1,894,144 303,063 Other reserves 24,457,562 - 24,457,562 3,913,212 TOTAL 579,882,413 5,598,537 574,283,876 87,469,908
Notes to the consolidated financial statements as of 31 December 2021 page 45 25. OTHER PAYABLES In RON 31 December 2021 31 December 2020 re- treated Re- treatments 2020 31 December 2020 Staff-related payables 2,094,941 3,930,724 2,613,716 1,317,008 Trade payables 14,783,109 25,795,303 400,173 25,395,130 Bank loans and other similar liabilities (leasing) 112,477,927 103,088,256 15,806,574 87,281,682 Other loans and assimilated debt 10,616,642 - - - Received guarantees (4,510,053) 2,713,699 67,361 2,646,338 Various creditors 1,585,652 2,345,763 125,473 2,220,290 Payments to be made for financial assets 30,743 - - - Deferred revenues 954,410 1,101,595 454,178 647,417 Provisions for risks and expenses 9,059,203 12,754,487 199,679 12,554,808 Other liabilities - - - - Total other payables 147,092,574 151,729,827 19,667,154 132,062,673 As of 31 December 2021, the Group's loans are mainly located on banking units as follows: In RON Company Bank Foreign Currency Interest rate Final maturity Balance on 31 December 2021 Argus S.A. Constanța Banca Transilvania RON Robor 3M + bank margin 31/07/2022 110,000,000 Lactate Natura S.A. CEC RON Robor 3M + 1.2% 04/06/2023 151,098 Lactate Natura S.A. CEC RON Robor 3M + 3.5% 03/06/2022 2,276,975 Total 112,428,073 As of 31 December 2020, the Group's loans are mainly located across banking units as follows: In RON Company Bank Foreign Currency Interest rate Final maturity Balance on 31 December 2020 Argus S.A. Constanța Banca Transilvania RON Robor 3M + bank margin 30/07/2021 70,000,000 Argus S.A. Constanța Banca Transilvania RON Robor 3M + bank margin 08/08/2021 5,605,337 Mercur S.A. Raiffeisen Bank SA RON Robor 1M +1.5% 17/12/2021 8,911,476 Lactate Natura S.A. CEC RON 4.35% 04/10/2022 251,830 Lactate Natura S.A. CEC RON Robor 3M + 3.5 pp. 01/06/2022 2,465,729 Lactate Natura S.A. BRD FACTORING RON Robor 1M + 1.75 pa 10/07/2021 635,504 Total 87,869,876 The guarantees granted in order to obtain the loans were as follows: • Lactate Natura S.A. For the loan due on 03.06.2022: - First-rank real estate mortgage on the Targoviste dairy factory; - Mortgage on company accounts opened with CEC Bank S.A.;
Notes to the consolidated financial statements as of 31 December 2021 page 46 For the loan due on 04.06.2023: - Second-rank real estate mortgage on the Targoviste dairy factory; - Mortgage on the current account opened with CEC Bank S.A., Targoviste branch; - Mortgage on movable property purchased, to the bank’s benefit. • Argus - The company's loans are secured by mortgages on fixed assets with a net book value of 33,766,705 RON at 31 December 2021. 26. CAPITAL AND RESERVES • Registered capital The registered capital, according to the Company’s articles of association, has the value of 50,000,000 RON, is divided into 500,000,000 shares with a nominal value of 0.1 RON / share and is the result of the direct subscriptions made to the share capital of the Company and of the conversion into shares of amounts due as dividends based on Law no. 55/1995 and through the effect of Law no. 133/1996. The shares issued by the Company are traded on the Bucharest Stock Exchange, the Premium category (SIF5 market symbol). The record of the shares and the shareholders is kept by Depozitarul Central S.A. of Bucharest. The Company’s shares are: ordinary, nominative, of equal value, issued in a dematerialized form, fully paid when subscribed, registered to the account and granting equal rights to their holders, except for the limitations in the legal provisions and regulations. The following events resulting in the decrease of registered capital occurred during 2020 and 2021: • On 1 July 2020, FSA issued the Registration Certificate for financial securities no. AC-419-2/01 July 2020 for the registration of the decrease in the registered capital, as a consequence of the EGSM resolution of 18 November 2019. The registered capital was decreased by 19,622,585 shares with a nominal value of 0.1 RON, from 58,016,571.40 RON (divided into 580,165,714 shares) to the value of 56,054,312.90 RON (divided into 560,543,129 shares). • On 19 August 2020, FSA issued the Registration Certificate for financial securities no. AC-419-3/19 August 2020 for the registration of the decrease in the registered capital, as a consequence of the EGSM resolution no. 10 of 25 March 2020. The registered capital was decreased by 38,393,986 shares with a nominal value of 0.1 RON, from 56,054,312.90 RON (divided into 560,543,129 shares) to the value of 52,214,914.30 RON (divided into 522,149,143 shares). • Based on the Resolution No. 8 of the Extraordinary General Shareholders Meeting of 25 March 2020, the Company purchased a number of 22,149,143 of its own shares representing 3.8177% of the share capital. The acquisition of the shares was made within the public share purchase offer issued by the Company and approved by FSA, by Decision No. 863 / 15.07.2020. • On 24 June 2021, FSA issued the Registration Certificate for financial securities no. AC-419- 4/24.06.2021 for the registration of the decrease in the registered capital, as a consequence of the EGSM resolution no. 6 of 29 October 2020. The registered capital was decreased by 22,149,143 shares with a nominal value of 0.1 RON, from 52,214,914.30 RON (divided into 522,149,143 shares) to the value of 50,000,000 RON (divided into 500,000,000 shares). According to the articles of association, the registered capital is as follows: In RON 31 December 2021 31 December 2020 Statutory registered capital 50,000,000 52,214,914 The effect of applying IAS-29 on the share capital 2,609,389,550 2,182,560,795 Total 2,659,389,550 2,234,775,709
Notes to the consolidated financial statements as of 31 December 2021 page 47 As of 31 December 2021, the number of shareholders is 5,732,113 (31 December 2020: 5,734,987) with the following structure: No. of shareholders No. of shares Amount (RON) (%) 31 December 2021 Resident natural entities 5,730,002 227,821,753 22,782,175 45.56 Non-resident natural entities 1,900 2,202,879 220,288 0.44 Total natural entities 5,731,902 230,024,632 23,002,463 46.00 Resident legal entities 185 206,924,700 20,692,470 41.38 Non-resident legal entities 26 63,050,668 6,305,067 12.62 Total legal entities 211 269,975,368 26,997,537 54.00 Total 31 December 2021 5,732,113 500,000,000 50,000,000 100.00 No. of shareholders No. of shares Amount (RON) (%) 31 DECEMBER 2020 Resident natural entities 5,732,877 226,484,341 22,648,434 43.37 Non-resident natural entities 1,885 2,194,251 219,425 0.42 Total natural entities 5,734,762 228,678,592 22,867,859 43.79 Resident legal entities 189 225,290,250 22,529,025 43.15 Non-resident legal entities 36 68,180,301 6,818,030 13.06 Total legal entities 225 293,470,551 29,347,055 56.21 Total 2020 5,734,987 522,149,143 52,214,914 100.00 • Legal reserves According to the legal requirements, the Group constitutes legal reserves in the amount of 5% of the profit registered according to the accounting regulations applicable up to the level of 20% of the share capital according to the articles of association. Legal reserves cannot be distributed to shareholders. As of 31 December 2021, the legal reserves are of 23,828,872 lei (31 December 2020: 23,415,626). • Dividends During the reporting period ending on 31 December 2021, the Group declared payment dividends amounting to 29,799,206 lei (31 December 2020: 60,485,433 RON). • Differences from changes in the fair value of financial assets measured at fair value through other comprehensive income elements This includes the cumulative net changes in the fair values of the financial assets measured at fair value by other items of the comprehensive income, from the date of their classification in this category to their derecognition or impairment. The reserves from the assessment of the financial assets assessed at fair value by other items of the comprehensive income are recorded at net value by the related deferred tax and are as of 31 December 2021 in the amount of: 628,863,670 lei (31 December 2020: 423,847,073 RON). The deferred tax related to these reserves is recorded on the equity and deducted from the reserves of the financial assets assessed at fair value by other items of the comprehensive income. • Other reserves In RON 31 December 2021 31 December 2020 Other reserves – own financing sources 34,129,601 435,127,678 Other reserves – established following the enforcement of Law no. 133/1996* - 144,636,073 Other reserves 630,206,456 89,891,164 Total 664,336,057 669,654,915
Notes to the consolidated financial statements as of 31 December 2021 page 48 * The reserve related to the initial portfolio was established following the application of Law No. 133/1996, as a difference between the value of the contributed portfolio and the value of the registered capital subscribed to the Company. These reserves are assimilated to a contribution premium. 27. MINORITY INTEREST The minority interest in the equity of the companies included in the consolidation is as follows: In RON 31 December 2021 31 December 2020 Profit or loss of the financial year for non-controlling interests 807,051 468,930 Other equity 84,261,446 35,403,054 Total 85,068,497 35,871,984 28. EARNINGS PER SHARE In RON 31 December 2021 31 December 2020 Profit attributable to ordinary shareholders 42,894,596 51,708,763 The weighted average number of ordinary shares 500,000,000 522,149,143 The result per basic share 0.0858 0.0990 The diluted earnings per share is equal to the earnings per share basis because the Group did not record potential ordinary shares. 29. GRANTED GUARANTEES Apart from the guarantees granted for obtaining bank loans, the Group does not have any guarantees granted. 30. ENVIRONMENTAL CONTINGENCIES Within the Group, Argus S.A. Constanţa has registered a provision for future environmental costs amounting to 699,025 RON, representing costs for closing a cell of technological waste. The Group management does not consider the costs associated with these elements to be significant. 31. TRANSFER PRICE The Romanian legislative framework contains rules on transfer prices between affiliated persons since 2000. The Romanian tax legislation includes the principle of market value, according to which the transactions between the related parties must take place at the market value, respecting the principles of transfer pricing. Local taxpayers conducting transactions with affiliated parties must draw up and make available to the tax authorities, at their written request, the file of documentation of transfer prices, within the period granted by the authorities (the big taxpayers who carry out transactions with affiliated personnel over the ceilings established by legislation have the obligation to prepare the annual transfer pricing file starting with the transactions of 2016). Failure to file the transfer pricing documentation or submitting an incomplete file may result in penalties for non-compliance. However, regardless of the file's existence, in addition to the content of the transfer pricing documentation file, tax authorities may interpret transactions and circumstances differently from the management's interpretation and, as a result, impose additional tax obligations resulting from adjusting transfer prices (materialized in increases). of income, reductions of deductible expenses, thus increasing the tax base of the corporate tax).
Notes to the consolidated financial statements as of 31 December 2021 page 49 As a result, it is expected that the tax authorities will initiate thorough checks of the transfer prices, to ensure that the fiscal result is not distorted by the effect of the prices charged in the relations with affiliated persons. The Company cannot quantify the result of such a review. 32. TRANSACTIONS AND MONEY WITH PARTIES IN SPECIAL RELATIONS Subsidiaries of the Company In accordance with the legislation in force, the Company holds control over a number of 12 issuers as of 31 December 2021 (31 December 2020: 12 issuers). All the subsidiaries of the Company at the reporting date are based in Romania. For these, the percentage of ownership of the Company is not different from the percentage of the number of votes held. Company name Percentage held as of 31 December 2021 - % - Percentage held as of 31 December 2020 - % - COMPLEX HOTELIER DÂMBOVIȚA S.A. Târgoviște 99.99 99.94 VOLTALIM S.A. Craiova 99.55 99.19 MERCUR S.A. Craiova 97.86 97.86 GEMINA TOUR S.A. Rm. Vâlcea 88.29 88.29 ARGUS S.A. Constanța 86.42 86.42 ALIMENTARA S.A. Slatina 85.22 52.24 FLAROS S.A. București 81.07 81.07 CONSTRUCTII FEROVIARE S.A. Craiova 77.50 77.50 UNIVERS S.A. Rm. Vâlcea 73.75 73.75 PROVITAS S.A București 70.28 70.28 TURISM PUCIOASA S.A. Dâmbovița 69.22 69.22 LACTATE NATURA S.A. Târgoviște 66.33 55.07 Settlements and transactions within the Group, as well as unrealized profits resulting from transactions within the Group, are completely eliminated from the consolidated financial statements. Associated entities of the Company As of 31 December 2021, the company had holdings of more than 20% but not more than 50% of the share capital in a number of 7 issuers (31 December 2020: 6 issuers). All these companies are based in Romania. For these issuers, the Company’s holding percentage does not differ from the percentage of votes held. Company name Percentage held in 31 December 2021 - % - Percentage held in 31 DECEMBER 2020 - % - SINTEROM S.A. Cluj-Napoca 32.13 31.88 ELECTRO TOTAL S.A. Botoșani * 29.86 29.86 TURISM FELIX S.A. Băile Felix 29.26 28.97 ȘANTIERUL NAVAL Orșova S.A. 28.02 28.02 TURISM LOTUS FELIX S.A. Băile Felix 27.46 27.46 ANTIBIOTICE S.A. Iași 26.41 19.05 ELECTROMAGNETICA S.A. București 26.14 26.14 *Company under judicial liquidation Following the analysis of the quantitative and qualitative criteria presented in IAS 27 - “Separate Financial Statements” and IFRS 10 – “Consolidated Financial statements”, the Group concluded that it did not have investments in associated entities as of 31 December 2021 and 31 December 2020. 33. KEY MANAGEMENT STAFF
Notes to the consolidated financial statements as of 31 December 2021 page 50 31 December 2021 On 15 September 2021, the company received the decision no. 1135/15.09.2021 from the Financial Supervisory Authority, which withdrew the approval of of Mr Adrian Andrici as a member of the Board of Directors. Following the decision of the FSA, the Board of Directors of the company meeting on 20 September 2021 adopted decision no. 20/20.09.2021 in order to supplement the number of board members, with Andreea Cosmanescu being appointed as interim administrator. By FSA authorization no. 236/19.11.2021, in which changes in the way the company is organized and operated were authorized following the appointment of Ms Andreea Cosmanescu as the (provisional) administrator of the company, the membership of the Board of Directors is: Sorin – Iulian Cioacă - President, Mihai Trifu - Vicepresident, Codrin Matei, Mihai Zoescu and Andreea Cosmanescu. Upper management: Sorin – Iulian Cioacă – General Director, Mihai Trifu - Deputy General Director. 31 DECEMBER 2020 Members of the Board of Directors: Sorin - Iulian Cioacă – President, Mihai Trifu, Adrian Andrici and Codrin Matei. Upper management: Sorin – Iulian Cioacă – General Director, Mihai Trifu - Deputy General Director. The Group has no contracted obligations regarding the payment of pensions to the former members of the Board of Directors and therefore has no commitments of this nature. The Group has not granted credits or advances (except for advances for travel in the interest of the service, justified in legal terms) to the members of the Board of Directors and the management and has not recorded commitments of this nature. The Group has not received and has not given guarantees to any affiliated party. 34. SEGMENT REPORTING Segment reporting is represented by the segmentation by activities that takes into account the branch of activity of which the main object of activity of the companies in the consolidation perimeter is part. The company together with the portfolio companies in which it owns more than 50%, included in the consolidation scope, operates in the following main activity segments: - financial investment activity - rental of spaces - food industry - tourism.
Notes to the consolidated financial statements as of 31 December 2021 page 51 We present below the benchmarks for the purpose of a possible analysis as of 31 December 2021 and 31 December 2020: - Assets, liabilities and equity according to the Consolidated Statement of Financial Position Indicators Lease of areas Food industry Tourism Financial activity TOTAL 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 Fixed assets 330,891,037 162,606,519 179,162,770 53,740,414 25,233,936 14,841,890 2,102,944,614 1,690,061,865 2,638,232,357 1,921,250,688 Current assets 21,345,948 12,037,306 162,464,480 132,887,521 3,698,572 3,630,082 21,419,678 79,940,453 208,928,678 228,495,362 Advance expenses 44,304 360,941 129,395 48,013 24,827 19,601 72,624 97,446 271,150 526,001 Liabilities 37,259,111 16,719,563 135,872,274 107,681,228 1,899,946 677,567 180,791,021 147,778,923 355,822,352 272,857,281 Deferred revenues 452,693 624,487 205,207 3,171 87,121 34,171 12,134 17,587 757,155 679,416 Provisions 1,800,676 1,655,554 195,047 739,830 150,703 138,059 5,500,000 10,063,154 7,646,426 12,596,597 Minority interest 35,857,797 21,572,834 45,753,230 11,993,630 3,457,470 2,305,520 - - 85,068,497 35,871,984 Equity 276,911,012 134,432,328 159,730,887 66,258,089 23,362,095 15,336,256 1,938,133,761 1,612,240,100 2,398,137,755 1,828,266,773 The indicators presented were established on the basis of the individual financial statements of the Company and of the companies in the consolidation scope. Within the fixed assets held on 31 December 2021 by the Group, a weight of 79.71% is held by the assets of the financial investment activity represented by the portfolio of financial fixed assets, respectively 87.97% on 31 December 2020. - Income, expenses and result according to the consolidated statement of profit or loss and other elements of the comprehensive income Indicators Lease of areas Food industry Tourism Financial activity TOTAL 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 Total revenues 26,406,312 24,486,424 235,253,891 194,556,536 9,418,474 5,709,399 65,859,848 64,790,718 336,938,525 289,543,077 Total expenses 15,449,631 17,394,900 237,412,981 194,179,312 6,532,655 5,576,741 27,915,784 16,693,909 287,311,051 233,844,862 Gross result 10,956,681 7,091,524 -2,159,090 377,224 2,885,819 132,658 37,944,064 48,096,809 49,627,474 55,698,215 Net earnings 9,964,553 6,442,765 -2,283,364 376,972 2,364,185 83,568 33,656,272 45,274,388 43,701,646 52,177,693 The net profit on 31 December 2021 was made from the financial investment activity at 77.01% (86.77% on 31 December 2020).
Notes to the consolidated financial statements as of 31 December 2021 page 52 35. COMMITMENTS AND CONTINGENT LIABILITIES • Legal actions The Group has a number of court actions arising from the normal course of business. The Group’s management believes that these actions will not have a significant impact on the financial statements. As of 31 December 2021, a number of 143 cases were registered in court, of which: • 74 cases where they have the status of applicant; • 39 cases where they have the quality of defendant; • 1 cases where they have the quality of intervener; • 23 cases in insolvency proceedings; • 2 cases as an injured party; • 1 case as a guarantee; • 3 cases as a seized third party. According to their scope, the cases are structured as follows: • 35 commercial cases; • 13 cases - cancellation of GSM decisions; • 33 cases in the insolvency procedure: in 31 cases it acts as a chirographic creditor; in 2 cases, it acts as a creditor • 62 other cases. The total of 143 cases is structured as follows: • 114 cases are found in the companies included in the consolidation scope, as follows: - 56 cases as plaintiff for the amount of 11,666,366 RON; - 33 cases as defendant for the amount of 3,949,018 RON; - 20 cases in the insolvency procedure for the amount of 2,784,022 RON; - 2 cases as plaintiff for the amount of 587,034 RON; - 3 cases as a seized third party. • 29 cases belong to the Company and consist mainly of: - 18 cases - plaintiff; - 6 cases - defendant; - 3 cases - in insolvency proceedings; - 1 case - impleaded; - - 1 case – intervener; According to their scope, the 29 cases belonging to the company are structured as follows: • 11 cases - cancellation of GSM resolutions, where the Company is the plaintiff; • 2 cases - cancellation of GSM resolutions, where the Company is the defendant; • 2 cases - invalidation of decisions issued by FSA; • 3 cases - companies in insolvency proceedings, as follows: - in a case the Company has the status of contribution creditor; - in 2 cases the Company has the status of chirographic creditor; - 11 other cases.
Notes to the consolidated financial statements as of 31 December 2021 page 53 According to their purpose, we exemplify the following cases: a) Cases in which S.I.F. Oltenia S.A. has the status of plaintiff, mainly aiming to cancel some decisions of the General Shareholders Meetings, having as object: operations with shares, right of withdrawal from the company, decisions adopted with violation of the limits of competence, among the defendant companies including: Elba S.A., Sinterom S.A., Altur S.A., Cerealcom Alexandria S.A., for instance: 1. Case no. 3678/30/2021, before the Timis Court, defendant Elba S.A., seeking an action for the cancellation of the 25.05.2021 OGSM decision. Deadline: 31 January 2022. 2. Case no. 154/1285/2021, before the Cluj Court, defendant Sinterom S.A., seeking an action for the cancellation of the OGSM decision of 05 January 2021. The case was settled on 12 October 2021 with the admission of the Company’s request. On 24 December 2021, Sinterom SA appealed, the next deadline to be set at a later date. 3. Case no. 483/87/2016 *, pending before the Teleorman Court, defendant Cerealcom Alexandria S.A., having as action in the claims, representing the value of the shares held by S.I.F. Oltenia S.A. at Cerealcom Alexandria S.A., following the withdrawal from the company, in the amount of 1,660,825.83 lei, representing the value of the package of shares due upon withdrawal from the company, in accordance with the provisions of art. 134 of Law no. 31/1990 R, with subsequent modifications and completions. The case was settled on 28 December 2017 with the rejection of the Company’s request. An appeal was made and on 3 July 2018 the Bucharest Court of Appeal admitted the appeal of S.I.F. Oltenia S.A. and sent the case to re-trial. In the retrial, the Teleorman Court dismissed the action brought by the plaintiff in civil judgment no. 298/2020. On 17 September 2021, S.I.F. Oltenia S.A. appealed against the above- mentioned judgment. S.I.F. Oltenia S.a. made use of the share package it held in Cerealcom S.A. Alexandria, with a total value of 1,659,633 RON, without any interest in supporting the claim and no longer having active standing, and therefore intended to renounce the trial on the first deadline. Deadline: 14 January 2022. 4. Case no. 1738/104/2019, before the Olt Court, defendant Altur S.A., concerning an action for the establishment of the company’s right of withdrawal from the registered capital of Altur S.A. The court granted numerous deadlines for the preparation and submission of expert and evaluation reports. On the deadline of 27 October 2021, the court ordered the replacement of Avensis Capital Consulting SRL by Veridio S.R.L. Deadline: 12 January 2022 for the purposes of the assessment report. In the chapter “other cases”, in which the Company has the status of complainant, files with various scopes are registered: criminal complaints, forced executions, claims-damages, appeals to enforced execution on the due dividends, requests for intervention, etc. b) Cases in which S.I.F. Oltenia S.A. acts as defendant: 1. case no. 2636/63/2020, with the Dolj Court, against S.I.F. Banat -Crișana S.A., S.I.F. Muntenia S.A., SAI Certinvest S.A., for FIA Certinvest Acțiuni, FDI Certinvest BET FI Index, FDI Certinvest XT Index, Szitas Ștefan, Forțan Procopie, Miulescu Mihai Răzvan, Ivănescu Dumitru, intervening on his own behalf, Complex Doina S.A., intervening on its own behalf, Lin & Ema S.R.L., intervening on its own behalf, Buzdea Gheorghe Cătălin, intervening on his own behalf, Tudor Dumitru, intervening on his own behalf, referring to the cancellation of the decisions of the OGSM of S.I.F. Oltenia S.A. of 28 April 2020. On the deadline of 29 March 2021, the court took note of the complainants’ request to waive the judgment. Mr Buzdea Gheorghe Catalin, who intervened in his own name, filed an appeal. On the deadline of 23 September 2021, the court dismissed the appeal as unfounded. c) In the cases of insolvency, there were three cases left as of the date of the analysis : - in two cases, S.I.F. Oltenia S.A. is a creditor, respectively: 1. Electrototal Botosani – case file no. 6146/40/2005, pending before the Botosani Court for 23 February 2022;
Notes to the consolidated financial statements as of 31 December 2021 page 54 2. SCCF Bucharest - file no. 6131/3/2005, pending with the Bucharest Court for 12 January 2022; In one case, S.I.F. Oltenia S.A. is a chirographic creditor in one of the cases, i.e. Geochis S.A. Galați - file no. 1065/121/2019, pending before the Galati Court, with a deadline on 17 January 2022. Compared to 31.12.2020, when 41 cases were registered in the courts, there has been a significant decrease in the number of disputes in which the company is involved. During 1 January 2021 - 10 March 2021, some of the cases presented above had the following procedural evolution: ▪ Case no. 3678/30/2021, pending with the Timis Court, defendant Elba S.A. - as of the 01.03.2022 deadline the application was rejected as unfounded. With right of appeal within 30 days from notification. ▪ case no. 154/1285/2021, pending with the Court of Cluj, defendant Sinterom S.A. - at the deadline of 07.03.2022 the Cluj Court of Appeal postponed the judgment, the next deadline being set on 21.03.2022; ▪ case no. 483/87/2016*, pending with the Court of Teleorman, defendant Cerealcom Alexandria S.A. - on the deadline of 11.02.2022 the court takes note of the applicant’s waiver to the claim. The appealed sentence is fully cancelled; ▪ case no. 1738/104/2019, pending with the Court of Olt, defendant Altur S.A. - at the deadline of 09.03.2022 the court postpones the case, the next deadline being set on 04.05.2022; ▪ case no. 6146/40/2005, pending with the Court of Botosani - deadline on 24.05.2022; ▪ case no. 6131/3/2005, pending with the Court of Bucharest - deadline on 23.03.2022; ▪ case no. 1065/121/2019, pending with the Court of Galati - deadline on 11.04.2022. • Environmental contingencies The Company did not record any provision for future environmental costs. The management does not consider the expenses associated with these elements to be significant. • Transfer pricing Romanian tax legislation includes rules on transfer prices between affiliated entities as of 2000. The current legislative framework defines the principle of “market value” for transactions between affiliated persons, as well as the methods for establishing transfer prices. As a result, it is expected that the tax authorities will initiate thorough checks of the transfer prices, to ensure that the fiscal result is not distorted by the effect of the prices charged in the relations with affiliated persons. The Company cannot quantify the result of such a review. 36. FURTHER EVENTS AFTER THE BALANCE DATE • SOCIETATEA DE INVESTIȚII FINANCIARE OLTENIA S.A. On 23 February 2022, the Board of Directors called the Extraordinary General Shareholders Meeting of S.I.F. Oltenia S.A. for 31 of March 2022 to approve the performance of a programme of redemption by the Company of its own shares, in accordance with the applicable legal provisions, under the following conditions: (i) size of the programme - repurchase no more than 25,000,000 own shares with a nominal value of 0.10 RON / share representing 5% of the current share capital; (ii) the acquisition price of the shares - the minimum purchase price will be 0.1 RON/share and the maximum price will be 4 RON/share; (iii) the duration of the programme - a period of maximum 5 months from the date of publication of the EGSM decision in the Official Gazette of Romania, Part IV; (iv) the payment of the repurchased shares will be made from the distributable profit or the available reserves of the company registered in the last approved annual financial statement, except for the legal reserves, based on the financial statements 2020, according to the provisions of art. 1031 letter d) of Law No. 31/1990, on companies, as republished and modified;
Notes to the consolidated financial statements as of 31 December 2021 page 55 (v) the purpose of the program - the reduction of the share capital by cancelling the repurchased shares. • ALIMENTARA SA Slatina On 14/15.04.2022, an OGSM was convened for the approval of: − financial statements as of 31 December 2021; − the distribution of profits to dividends; − the discharge of the administrators for the year 2021; − the revenue and expenditure budget for 2022; − the remuneration report for the financial year 2021; − the level of the remuneration of the administrators for 2022 and the value of the insurance policy for - the professional liability of the administrators in 2022; − drawing up the annual financial statements for 2021, according to IFRS. − the appointment of COMBINED IDEAS SRL as financial auditor for 3 years. • ARGUS S.A. Constanța On 20/21.04.2022, an OGSM was convened for the approval of: − financial statements as of 31 December 2021; − the net profit allocation for 2021 − the discharge of the administrators elected in the OGSM from 12.03.2021 for the year 2021; − the revenue and expenditure budget and the investment program for 2022; − the remuneration report for the financial year 2021; − the level of the remuneration of the administrators for 2022 and the value of the insurance policy for - the professional liability of the administrators in 2022; − drawing up the annual financial statements for 2021, according to IFRS. − the appointment of Deloitte Audit SRL as the financial auditor for 1 year. • COMPLEX HOTELIER DÂMBOVIȚA S.A. Târgoviște 1. At the meeting of the Board of Directors of Complex Hotelier Dâmbovița of 18.02.2022, the addendum no. 2/18.01.2022 to the loan agreement no. 480/11.02.2021 with Lactate Natura SA was approved. 2. On 12/14.04.2022, an OGSM was convened for the approval of: - financial statements as of 31 December 2021; − the distribution of the profit achieved in 2021; − the execution of the Investment Program for 2021; − the discharge of the administrators for the year 2021; − the revenue and expenditure budget for 2022; − the investment program for 2022; − the level of administrators’ remuneration for the year 2022 and until the OGSM approving the financial statements for the year 2022; − the value of the insurance policy for the professional liability of the administrators in 2022; − drawing up the annual financial statements for 2021, according to IFRS. − the appointment of COMBINED IDEAS SRL as financial auditor for 3 years. • CONSTRUCTII FEROVIARE CRAIOVA S.A. 1. From the current report submitted to the market regarding file no. 1425/63/2016, CONSTRUCTII CRAIOVA S.A., as the defendant, in contradiction with the MULTIFUNCTIONAL ECOLOGICAL SYSTEMS SRL, concerning claims arising from the contract entered on 28.12.2009, it follows that the court has partially accepted the claim: - it allows the exception of the prescription of the substantive right to an action in respect of late payment penalties relating to the period 28.08.2012 to 02.02.2013, invoked by the defendant by means of a claim; - it rejects the action for the period 28.08.2012-02.02.2013 as prescribed. - it partly admits the law suit, as stipulated;
Notes to the consolidated financial statements as of 31 December 2021 page 56 - it compels the defendant to pay penalties of 0.4% per day of delay calculated at 500,000 RON, according to the contract of 28.12.2009, starting from 03.02.2013 to 29.03.2016, the date of payment of the debt. The decision can be appealed within 30 days from notification. 2. On 12/13.04.2022, an OGSM was convened for the approval of: − financial statements as of 31 December 2021; − the discharge of the administrators for the year 2021; − the revenue and expenditure budget and the investment program for 2022; − the level of remuneration of the administrators for 2022; − the value of the insurance policy for the professional liability of the administrators in 2021; − drawing up the annual financial statements for 2021, according to IFRS. − the appointment of COMBINED IDEAS SRL as financial auditor for 3 years. − the remuneration report for the financial year 2021. • FLAROS S.A. București 1. In file no. 337/108/2020 Flaros SA — the applicant, having as its object an action for the holding of own shares by SIF Banat Crișana SA through other persons (defendants), the existence of a concerted action between the defendants against SIF Banat Crișana, the Court took note of the waiver of the judgment made by FLAROS SA and obligated the applicant to pay the costs, with right of appeal within 30 days of the communication. 2. a) On 15/18.04.2022, an EGSM was convened for the approval of: - the transfer of the property right on the land in the estate of FLAROS-S.A. located in 82 Ion Minulescu street, 3 rd district, Bucharest, identified by the cadastral number NC 211413, contained in the land book no. 211413 with an area of 399 m², free from constructions (“the building”). b) On 15/18.04.2022, an OGSM was convened for the approval of: − financial statements as of 31 December 2021; − the discharge of BoD members for the period 26.02.2021-31.12.2021. − the distribution of the realized profit;to record in the financial year 2022 under "income" the dividends not paid for more than three years, i.e. the dividends for the financial year 2018, existing in the balance as unpaid at the end of 27.08.2022. − the revenue and expenditure budget and the investment program for 2022; − drawing up the annual financial statements for 2021, according to IFRS. − the appointment of COMBINED IDEAS SRL as financial auditor for 3 years. − the remuneration report for the financial year 2021. • GEMINA S.A. Rm. Vâlcea 1. Mr. Stănescu Cristian Robert was appointed as general manager and he entered a mandate contract for the period 03.01.2022-30.06.2022. 2. On 11/12.04.2022, an OGSM was convened for the approval of: − the financial statements as of 31 December 2021; − the discharge of the administrators for the year 2021 − the revenue and expenditure budget and the investment program for 2022; − the level of remuneration of the administrators for 2022; − the value of the insurance policy for the professional liability of the administrators in 2021; − drawing up the annual financial statements for 2021, according to IFRS. − the appointment of COMBINED IDEAS SRL as financial auditor for 3 years. • LACTATE NATURA S.A. Târgoviște 1. By the report published on the BVB dated 10.02.2022, the company Lactate Natura S.A. informs that it has signed with VOLTALIM SA (a company in the portfolio of S.I.F. OLTENIA S.A. ) an addendum to the loan agreement entered on 08.09.2021 to supplement it with the amount of 400,000 RON, necessary for the current activity. 2. By the report published on the BVB on 23.02.2022, the company Lactate Natura S.A. informs that the company puts up for sale the asset of the Găesti Cheese Section, by tender.
Notes to the consolidated financial statements as of 31 December 2021 page 57 3. By the report published on the BVB dated 23.02.2022, the company Lactate Natura S.A. informed that in file no. 1509/2021, where Turnir SRL is the debtor, the forced execution was commenced. 4. On 21/22.04.2022, an OGSM was convened for the approval of: − the financial statements as of 31 December 2021; − the discharge of the administrators for the year 2021 − the revenue and expenditure budget for 2022; − the remuneration report for the financial year 2021. − drawing up the annual financial statements for 2021, according to IFRS − the appointment of COMBINED IDEAS SRL as financial auditor for 3 years; − the level of the remuneration of the administrators for 2022 and the professional insurance policy for the administrators. 5. On 21/22.04.2022, an EGSM was convened for the approval of: − increasing the share capital of the company with a cash contribution in a maximum amount of 10,000,000 RON, from 4,096,751.25 RON to 14,096,751.25 RON, by issuing a maximum of 8,000,000 new shares with a nominal value of 1.25 RON/share, at an issue price equal to the nominal value, with the granting of preference rights in accordance with the provisions of Law no. 31/1990 R, as amended and supplemented, of Law no. 24/2017 R, for all the shareholders of the company registered in the shareholder register on the date of registration. Preference rights are not tradable. The increase is necessary in order to obtain liquidity for the company’s debt reduction and the support of the investment program, and will be carried out in two stages. − The mandate of the company’s General Manager for the registration and operation of the increase in the share capital, the corresponding amendment of the company’s articles of association, the drawing up and signing of all documents and the carrying out of any formalities for the implementation and recording of the share capital with the competent authorities and institutions. − ratification of the decision of the Board of Directors no. 342 of 07.02.2022 approving the report no. 90/07.02.2022, drawn up by the Executive Management of the company regarding the approval of the addition of 400,000 RON to the money loan agreement entered between Lactate Natura S.A. and Voltalim S.A. Craiova, for a total amount of 1,100,000 RON and the approval of the guarantee of this loan by maintaining the established mortgage , approved by the EGSM ruling of Lactate Natura S.A. dated 22.12.2021. − approval of the sale by public auction of the building situated in Găesti, Dâmboviţa county, registered in the Land Book No. 72437 of Găesti. • MERCUR S.A. Craiova 1. On 12/13.04.2022, an OGSM was convened for the approval of: − the financial statements as of 31 December 2021; − the distribution of the realized profit; − the discharge of the administrators for the year 2021 − the revenue and expenditure budget for 2022; − the activity and investment program for 2022; − the level of remuneration of the administrators for 2022; − the value of the insurance policy for the professional liability of the administrators in 2021; − the appointment of COMBINED IDEAS SRL as financial auditor for 3 years; − the remuneration report for the financial year 2021. − drawing up the annual financial statements for 2021, according to IFRS. 2. Through the current report published on 11.03.2022, investors are informed that the company will pre- purchase 100 corporate bonds out of the 780 corporate bonds issued on 15.09.2021 on the basis of the prospectus. A corporate bond has a nominal value of 10,000 RON, and the total value of the redeemed bonds is lei 1,000,000 RON.
Notes to the consolidated financial statements as of 31 December 2021 page 58 In accordance with point 4.3.xiii and point 6.2.ii. of the prospectus, MERCUR S.A. is understood to exercise its right to early repurchase part of the corporate bonds issued, as follows: − the price of the repurchase: 10,000 RON/bond; − the early redemption will be carried out using the ‘pro rata’ method for the bonds registered in the Register of Bond Holders held by the company on the reference date 14.04.2022; − the issuer MERCUR SA will pay to the bondholders for each bond held the accrued interest up to the time of redemption plus the nominal value of each bond; − the date of payment of the redeemed bonds is: 15.04.2022. By the current report published on 15.03.2022, investors are informed that according to the offer documents (prospectus) the interest on bonds issued by MERCUR S.A. is ROBOR 1M + 1% per year of the total issue amount, it follows that the interest rate on the coupon payment for the period 15.03.2022 to 15.09.2022 is: 5.29 %. • PROVITAS S.A. București On 15/16.04.2022, an OGSM was convened for the approval of: − the financial statements as of 31 December 2021; − the distribution of the profit achieved in 2021 − the discharge of the sole administrator for the activity carried out in 2021; − the revenue and expenditure budget and the investment plan for 2022; − the appointment of the financial auditor for 3 years; − drawing up the annual financial statements for 2021, according to IFRS. • TURISM SA Pucioasa On 13/14.04.2022, an OGSM was convened for the approval of: − the financial statements as of 31 December 2021; − approval of the distribution of the net result achieved in 2021; − the discharge of the administrators for the year 2021; − the revenue and expenditure budget for 2022 and the investment program for 2022; − the election of a Member to the board of directors following the vacancy for a period equal to that of the current Noard of Directors; − the level of the remuneration of the administrators for 2022 and the value of the insurance policy for - the professional liability of the administrators in 2022; − drawing up the annual financial statements for 2021, according to IFRS. − the appointment of COMBINED IDEAS SRL as financial auditor for 3 years. • UNIVERS SA Rm. Vâlcea 1. Mr. Stănescu Cristian Robert was appointed as general manager and he entered a mandate contract for the period 03.01.2022-29.12.2023. 2. On 11/12.04.2022, an OGSM was convened for the approval of: − the financial statements as of 31 December 2021; − the distribution of the realized profit; − the discharge of the administrators for the year 2021 − the revenues and expenditure budget for 2022 and the program of financial investments on the capital market. − the level of the remuneration of the administrators for 2022 and the value of the insurance policy for the professional liability of the administrators in 2022 − the remuneration report for the financial year 2021. − drawing up the annual financial statements for 2021, according to IFRS. − the appointment of COMBINED IDEAS SRL as financial auditor for 3 years. • VOLTALIM SA Craiova
Notes to the consolidated financial statements as of 31 December 2021 page 59 1. On 12/13.04.2022, an OGSM was convened for the approval of: - the financial statements as of 31 December 2021; - the distribution of the profit achieved in 2021; - the discharge of the administrators for the year 2021; - the revenue and expenditure budget for 2022; - the investment program for 2022; - the level of administrators’ remuneration for the year 2022 and until the OGSM approving the financial exercise 2022; - drawing up the annual financial statements for 2021, according to IFRS. - the appointment of COMBINED IDEAS SRL as financial auditor for 3 years; - the authorization of the person to sign the management contracts with members of the BoD - the election of a permanent administrator, for a term of office equal to that of the current BoD; - the election of the members of the company’s Board of Directors for a term of 2 years from 26.06.2022 to 26.06.2024. The impact of the COVID-19 pandemics on the Company’s activity The COVID-19 pandemic will continue to impact the capital market in 2022. In addition to the risks caused by the COVID-19 pandemic, 2022 brings new uncertainties, including changes in the geopolitical environment, which can significantly influence the global economy and thus the Romanian economy. The evolution of the Romanian economy has been achieved in the context of uncertainties and risks, with varying degrees and durations, regarding the worsening of the medical situation, the rise in the prices of energy products and some raw materials, and the continuity of the shortcomings in the supply chains. The last quarter of 2021 was marked by overlapping tensions, with unfavourable effects on both supply and demand, leading to a wider deceleration of economic developments. Thus, on the basis of the data published by the INS in the infra-annual statistics, the National Strategy and Forecast Commission1 estimates a reduction in the gross domestic product in the fourth quarter compared to the previous quarter, which corresponds to a significant deceleration in the annual dynamics. In view of the evolution of the economy with the impact of the inflationary shock in the fourth quarter of 2021, the emergence of the fifth pandemic wave and the continuation of the energy crisis, in particular in early 2022, an economic advance of 4.3% has been estimated for this year, a slight downward revision compared to the autumn forecast (4.6%) and a rising 6.1% deflator coupled with higher prices. This scenario did not take into account the outbreak of a conflict caused by geopolitical tensions on the border with Ukraine. According to the IMF’s World Economic Outlook report published 2 in January 2022, global growth is expected to reach 4.4 percent in 2022 – half a percentage point lower for 2022, largely reflecting the expected decreases for the two major economies - the United States and China. The negative health effects in most countries are expected to decrease by the end of 2022, assuming that the SARS COV2 vaccination rates improve globally and therapies become more efficient. In addition to the risks posed by the COVID-19 pandemic, disruptions in the supply chain, volatility of energy prices and wage pressures create numerous uncertainties. Financial stability risks may arise against the background of the adverse effects on emerging economies resulting from the tightening of monetary policy in advanced economies. Other global risks may become more specific as geopolitical tensions remain high and climate risks are closely monitored, with the likelihood of major natural disasters remaining high. Global trade is expected to moderate in 2022 and 2023, in line with the overall pace of expansion. Assuming that the pandemic is fading in 2022, the problems of the "supply chain" are expected to also ease during the year. Tourism is expected to remain moderate. Futures markets indicate that oil prices will rise by around 12 per cent and natural gas prices by around 58 per cent in 2022. 1 https://cnp.ro/wp-content/uploads/2022/02/Prognoza_2021_2025_varianta_de_iarna_2022-NOTA.pdf 2 https://www.imf.org/en/Publications/WEO/Issues/2022/01/25/world-economic-outlook-update-january-2022
Notes to the consolidated financial statements as of 31 December 2021 page 60 A global growth forecast assumes that the health-related negative effects of the COVID pandemic (severe diseases, hospitals, deaths) will decrease in most countries by the end of 2022. Due to low vaccination rates in many countries, there is a risk of new virus variants emerging. The Group S.I.F. Oltenia S.A. will seek to improve its portfolio performance by taking advantage of market opportunities. The investments to be made in 2022 will be part of the group risk profile and the applicable prudential limits. The investments will mostly focus on the opportunities provided by the capital market and the money market, without affecting the financial situation of the group, to be financed from its own resources. The impact on the operations and business continuity Given the current economic context - the effects of the COVID-19 pandemic are still felt, in conjunction with the effects of the Ukraine crisis - the company believes that many of the economic sectors represented in the portfolio will feel the financial impact and impact on their operations. The Group S.I.F. Oltenia S.A. will monitor macroeconomic and sectoral developments carefully with a view to implementing a prudent approach to taking advantage of investment opportunities within the risk limits assumed. The Group S.I.F. Oltenia S.A. maintains as its main objective the generation of added value for shareholders and investors. The senios management will take account of the risk factors (persistence of the health crisis, the internal political climate, the regional geo-political context) so that the trading activity will lead to long-term value increases of assets through profitable investment/disinvestment. Communication with shareholders and investors is normal, they are kept informed of relevant events taking place at company level through current reports, e-mail and website updates. None of the companies included in the consolidation scope fall within the scope of the O.M.F.P. No. 881/25 June 2012, respectively, is not obliged to prepare and report financial statements under I.F.R.S. These conduct the accounting records according to the regulations of O.M.F.P. 1802/2014 for the approval of the accounting regulations regarding the individual annual financial statements and the consolidated annual financial statements. In order to consolidate, they prepare the second set of financial statements under IFRS. The financial statements prepared under I.F.R.S. result from the portrayal of the financial statements prepared based on the O.M.F.P. 1802/2014. The consolidated financial statements have been prepared in accordance with Norm no. 39/2015 for the approval of the Accounting Regulations conforming to the International Financial Reporting Standards, applicable to the entities authorized, regulated and supervised by the Financial Supervisory Authority in the Financial Instruments and Investments Sector, as well as the Investors Compensation Fund. These financial statements are intended exclusively for use by the Group, its shareholders and F.S.A. and do not generate changes in the rights of shareholders regarding dividends. Sorin – Iulian Cioacă Mihai Trifu President/General Manager Vice-president/Deputy General Manager Valentina Vlăduțoaia Economic Manager