THE MANAGEMENT BOARD’S REPORT ON THE CONSOLIDATED FINANCIAL STATEMENTS AS OF 31.12.2023
Page 2 of 29 Contents I. GENERAL INFO ABOUT THE GROUP............................................................................................................. 4 1.1. Legal framework ................................................................................................................................................... 4 1.2. Entities included in the consolidation................................................................................................. 4 1.3. Criteria for the recognition, measurement and assessment of financial assets 7 1.4. The structure of the group’s holdings................................................................................................. 9 II. CONSOLIDATED FINANCIAL DATA OF THE GROUP AS OF 31.12.2023 ..................................11 2.1. Basis for preparation of the consolidated financial statements .................................. 11 2.2. The consolidated statement of profit or loss and of other elements of the comprehensive income.......................................................................................................................................... 11 2.3. Segment reporting ............................................................................................................................................ 13 2.4. Consolidated statement of financial position ........................................................................... 18 III. THE MAIN RISKS OF THE GROUP................................................................................................................... 19 3.1. Market risk ............................................................................................................................................................. 20 3.1.2. The interest rate risk....................................................................................................................... 21 3.1.3. Foreign exchange risk ................................................................................................................... 21 3.2. Liquidity risk......................................................................................................................................................... 22 3.3. Credit risk .............................................................................................................................................................. 22 3.4. Operational risk ............................................................................................................................................... 23 3.5. Sustainability risk ........................................................................................................................................... 24 3.6. Capital adequacy ............................................................................................................................................25 IV. KEY MANAGEMENT STAFF ................................................................................................................................. 25 V. DISPUTES.........................................................................................................................................................................26 VI. SUBSEQUENT EVENTS ..........................................................................................................................................26
Page 3 of 29 The report of the Board of Directors on the consolidated financial statements as of 31.12.2023 was prepared in accordance with the provisions of Law no. 24/2017, republished, regarding issuers of financial instruments and market operations and Rule no. 39/2015 for the approval of accounting regulations in accordance with the International financial reporting standards applicable to entities authorized, regulated and supervised by the Financial Supervisory Authority in the financial instruments and investments sector, as well as the Investor Compensation Fund. Reporting date: 31.12.2023 Company name: INFINITY CAPITAL INVESTMENTS S.A. Registered seat: Craiova, 1 Tufănele street, Dolj County, postal code 200767 Telephone/fax: 0251-419,343; 0251-419,340 Company registration no. RO 4175676 Registry of Commerce registration no. J16/1210/30.04.1993 FSA registration number: PJR07.1AFIAA/160004/15.02.2018 FSA registration number: R.I.A.I.F.: PJR09FIAIR/160001/08.06.2021 ISIN: ROSIFEACNOR4 LEI Code: 254900VTOOM8GL8TVH59 Regulated market where the issued securities are traded: Bucharest Stock Exchange, Premium Category (INFINITY market symbol) Subscribed and paid in registered capital: 50,000,000 lei Number of issued shares: 500,000,000 Nominal value: 0.10 RON/share
Page 4 of 29 I. GENERAL INFO ABOUT THE GROUP 1.1. Legal framework 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 about the enforcement of international accounting standards, FSA Regulation no. 5/2018 about issuers of financial instruments and market operations, Regulation no. 7/2020 concerning the authorization and operation of alternative investment funds, the provisions of Law no. 24/2017, republished, about issuers of financial instruments and market operations and Law no. 243/2019 governing the Regulation of alternative investment funds and for the amendment and completion of certain regulatory acts, the Company is required to prepare annual consolidated financial statements. The annual consolidated financial reporting are prepared in accordance with International Financial Reporting standards adopted by the European Union (‘IFRS’). The Board Report presents the consolidated financial statements as of 31.12.2023, prepared in accordance with Rule no. 39/2015 issued for the approval of the Accounting Regulations aligned to the International Financial Reporting Standards, applicable to the authorized entities, governed and supervised by the Financial Supervisory Authority in the Financial Instruments and Investments Sector, as well as the Investors Compensation Fund. 1.2. Entities included in the consolidation The consolidated financial statements as of December 31, 2023 ("financial statements", "consolidated financial statements") include the Company and its subsidiaries (referred to hereinafter as the "Group") and are audited. The Parent Company’s subsidiaries Subsidiaries are entities under the control of the Company. The Company controls an investee when it is exposed to or has rights to variable returns based on its ownership interest in the investee and has the ability to influence those returns through its authority over the investee. The potential or convertible voting rights that are exercisable at the time must also be taken into account when assessing control. The core activities carried out by the Company and the companies included in the consolidation perimeter are represented by the financial investment activity carried out by the Company and the activities carried out by the respective companies, which are mainly represented by the following sectors: The manufacturing of instruments and devices for measurement, verification, control, navigation, food, tourism, as well as renting commercial spaces and engaging in commerce. As of 31 December 2023, there are 14 entities in which Infinity Capital Investments S.A. owns more than 50% of their share capital (13 entities as of 31 December 2022) and enters in the scope of consolidation.
Page 5 of 29 The list of subsidiaries as of 31 December 2023 and 31 December 2022 is as follows: No. Company name Market symbol Market on which is traded Percentage of the issuer's share capital on 31.12.2023 -%- Percentage of the issuer's share capital on 31.12.2022 -%- 1. COMPLEX HOTELIER DÂMBOVIȚA S.A. unlisted company 99.99 99.99 2. GRAVITY CAPITAL INVESTMENTS S.A.* unlisted company 99.99 99.99 3. VOLTALIM S.A. unlisted company 99.55 99.55 4. MERCUR S.A. MRDO AeRO Standard 97.86 97.86 5. LACTATE NATURA S.A. INBO AeRO Standard 93.70 93.70 6. FLAROS S.A. FLAO AeRO Standard 93.70 81.07 7. ARGUS S.A.** UARG AeRO Premium 91.42 86.42 8. GEMINA TOUR S.A. unlisted company 88.29 88.29 9. ALIMENTARA S.A. ALRV AeRO Standard 85.23 85.23 10. CONSTRUCȚII FEROVIARE S.A. CFED AeRO Standard 77.50 77.50 11. UNIVERS S.A. UNVR AeRO Standard 73.75 73.75 12. PROVITAS S.A. unlisted company 71.30 70.28 13. TURISM S.A. unlisted company 69.22 69.22 14. ELECTROMAGNETICA S.A. *** ELMA BSE Premium 65.45 28.16 * Gravity Capital Investments S.A. has the following ownership on 31 December 2023 and 31 December 2022: • Gravity Real Estate S.R.L. - 100% (also includes subsidiary Gravity Real Estate One S.R.L.) ** Argus S.A. Constanta has the following ownership on 31 December 2023 and 31 December 2022: • Comcereal S.A. Tulcea – 95.36% (also includes subsidiary Cereal Prest S.A.) • Argus Trans S.R.L. - 100% • Aliment Murfatlar S.R.L. is 100% owned by Infinity Capital Investments S.A. on 31 December 2023 and 100% by Argus S.A. on 31 December 2022 *** Electromagnetica S.A., a company introduced in the consolidation group during 2023, has the following ownership on 31 December 2023: • Electromagnetica Prestserv S.R.L. – 100% • ELECTROMAGNETICA fire S.R.L. – 100% • Procetel S.A. – 96.55%. As of December 31, 2023, the total assets of the 14 companies included in the consolidation scope of the Group represent 32.09% of the total assets of the Group (December 31, 2022: 31.52% excluding Electromagnetica S.A.), and 29.69% of the net assets of the Group (December 31, 2022: 26.16% excluding Electromagnetica S.A.), and have been consolidated using the full consolidation method.
Page 6 of 29 Intra-Group settlements and transactions, as well as realised profits resulting from intra-Group transactions, are removed entirely from the consolidated financial statements. The statement of mutual holdings of entities included in the consolidation as of 31 December 2023 is as follows: No. Branch name Shareholders No. of shares Share of holding in the share capital 1. COMPLEX HOTELIER DÂMBOVIȚA S.A. Infinity Capital Investments S.A. 1,754,221 99.9999% Voltalim S.A. 2 0.0001% Total 1,754,223 100.0000% 2. GRAVITY CAPITAL INVESTMENTS S.A. Infinity Capital Investments S.A. 2,258,999 99.99996% Voltalim S.A. 1 0.00004% Total 2,259,000 100.00000% 3. VOLTALIM S.A. Infinity Capital Investments S.A. 5,997,519 99.5506% Other shareholders 27,077 0.4494% Total 6,024,596 100.0000% 4. MERCUR S.A. Infinity Capital Investments S.A. 7,104,836 97.8593% Provitas S.A. 1,843 0.0254% Voltalim S.A. 486 0.0067% Flaros S.A. 441 0.0061% Alimentara S.A. 108 0.0015% Univers S.A. 90 0.0012% Other shareholders 152,456 2.0999% Total 7,260,260 100.0000% 5. LACTATE NATURA S.A. Infinity Capital Investments S.A. 4,495,235 93.7015% Voltalim S.A. 6 0.0001% Other shareholders 302,160 6.2984% Total 4,797,401 100.0000% 6. GEMINA TOUR S.A. Infinity Capital Investments S.A. 757,888 88.2866% Other shareholders 100,553 11.7134% Total 858,441 100.0000% 7. ARGUS S.A. Infinity Capital Investments S.A. 32,710,488 91.4200% Other shareholders 3,069,978 8.5800% Total 35,780,466 100.0000% 8. ALIMENTARA S.A. Infinity Capital Investments S.A. 350,342 85.2258% Other shareholders 60,733 14.7742% Total 411,075 100.0000% 9. FLAROS S.A. Infinity Capital 1,380,757 93.6951%
Page 7 of 29 Investments S.A. Other shareholders 92,913 6.3049% Total 1,473,670 100.0000% 10. CONSTRUCȚII FEROVIARE S.A. Infinity Capital Investments S.A. 908,441 77.5000% Construcții Feroviare S.A. Craiova 352 0.0300% Other shareholders 263,389 22.4700% Total 1,172,182 100.0000% 11. UNIVERS S.A. Infinity Capital Investments S.A. 587,519 73.7494% Other shareholders 209,123 26.2506% Total 796,642 100.0000% 12. PROVITAS S.A. Infinity Capital Investments S.A. 35,648 71.2960% Other shareholders 14,352 28.7040% Total 50,000 100.0000% 13. TURISM S.A. Infinity Capital Investments S.A. 1,010,599 69.2191% Voltalim S.A. 401,228 27.4814% Other shareholders 48,173 3.2995% Total 1,460,000 100.0000% 14. ELECTROMAGNETICA S.A. Infinity Capital Investments S.A. 442,465,466 65.4497% Other shareholders 233,573,238 34.5503% Total 676,038,704 100.0000% Associates of the Company Associates are those companies in which the Group can exercise significant influence but not control over financial and operational policies. Participations in which the Group holds between 20% and 50% of the voting rights, but over which it does not exercise significant influence, are classified as financial assets measured at fair value through other 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 have investments in associates as at 31 December 2023 and 31 December 2022. 1.3. Criteria for the recognition, measurement and assessment of financial assets The financial statements of subsidiaries are included in the consolidated financial statements from the moment when the Parent Company obtains control until the moment it losses it. The accounting policies of the Group's subsidiaries have been modified to align them with those of the Group. The Group's accounting records are maintained in RON.
Page 8 of 29 The main consolidation-specific adjustments are: - elimination from the statement of financial position of shareholdings held in Group companies; - elimination of intra-Group equity transactions and fair value adjustments; - elimination from the statement of profit or loss and other comprehensive income of dividend income at gross value settled within the Group; - elimination of balances, transactions, income and expenses within the Group; - Non-controlling interests are presented in the consolidated statement of financial position as an equity item, apart from the equity of the parent company and represent their quota in the equity items and profits of the Group companies. The accounting records of the Company's subsidiaries are maintained in Romanian Lei, in accordance with Romanian Accounting Regulations (RAR) or International Financial Reporting Standards (IFRS). Accounting records under RAR are consolidated at the Group level to reflect differences between them and those under IFRS. Accordingly, RAR accounts are adjusted, where necessary, to harmonize the consolidated financial statements in all material aspects with IFRS. - grouping several items into more comprehensive categories according to the requirements of IAS 1 – Presentation of Financial Statements; - adjustments in the profit or loss account to record dividend income at the time of declaration and at gross value; - adjustments related to financial investments measured at fair value through other comprehensive income for their classification, presentation and measurement at fair value in accordance with IFRS 9 – Financial Instruments and IFRS 13 – Fair Value; - adjustments to investment property for their fair value measurement in accordance with IAS 40 - Investment Property and IFRS 13 – Fair Value; - adjustments of property, plant and equipment for their valuation in accordance with the Group's accounting policies and in accordance with IAS 16 – Property, Plant and Equipment and IFRS 13 – Fair Value; - adjustments for the recognition of deferred income tax assets and liabilities in accordance with IAS 12 – Income Tax; - IFRS disclosure requirements. 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: inputs other than quoted prices included in Level 1 that are observable for assets or liabilities, either directly (e.g. prices) or indirectly (e.g. derived from prices); - Level 3: valuation techniques based largely on unobservable elements. This category includes all instruments for which the valuation technique includes elements that are not
Page 9 of 29 based on observable data and for which unobservable input parameters may have a significant effect on the valuation of the instrument. Valuation techniques include techniques based on net present value, the discounted cash flow method, the method of comparisons with similar instruments for which there is an observable market price, and other valuation methods. The fair value measurement of the equity instruments (shares) held is performed as follows: - for securities listed and traded on an active market during the reporting period, the market value was determined taking into account the quotation from the last trading day (the closing quotation on the main capital market for those listed on the regulated market – BSE, respectively the reference price for the alternative system - AeRO for level 1); - for the rest of the listed securities for which there is no active market or they are not listed, valuation techniques based on unobservable inputs were used, so valuation reports were prepared by an authorized valuer member of ANEVAR and revised also by the Group. 1.4. The structure of the Group’s holdings The consolidated structure of the share portfolio held by the Group, by business sectors, is presented as follows: Structure of the portfolio Market value of the package 31 December 2023 Market value of the package 31 December 2022 Economic sectors weighted in the Group’s value portfolio (in descending order): (lei) % (lei) % finance / banking 1,190,225,718 48.85 871,072,645 46.92 oil, methane gas and ancillary services 437,241,738 17.95 321,730,841 17.33 financial intermediation 375,349,788 15.41 296,069,865 15.95 pharmaceutical industry 275,478,777 11.31 103,032,727 5.55 energy and gas transport 146,523,998 6.01 124,100,007 6.69 distribution, supply of electricity and energy services 6,056,319 0.25 - - electronics, electrotechnics industry 4,146,437 0.17 33,191,013 1.79 machine building and processing industry 1,265,965 0.05 49,663,612 2.68 tourism, public catering, leisure - - 55,819,009 3.01 rentals and subrental of real estate - - 1,667,244 0.08 Total equity securities 2,436,288,740 100.00 1,856,346,963 100.00 From the analysis of the data presented above, as of 31 December 2023, the Group held mainly shares in issuers operating in finance, banking sector with a share of 48.85% of the total portfolio, up from 31 December 2022, while in the same sector of activity it recorded a share of 46.92% (increase determined by capital market transactions and fair value appreciation of portfolio holdings).
Page 10 of 29 The graphic representation of the consolidated structure of the share portfolio by activity sector on 31.12.2023 is presented as follows: The graphic representation of the consolidated structure of the share portfolio by activity sector on 31.12.2022 is presented as follows:
Page 11 of 29 II. CONSOLIDATED FINANCIAL DATA OF THE GROUP AS OF 31.12.2023 2.1. Basis for preparation of the consolidated financial statements The Group has adopted a liquidity-based presentation in the consolidated statement of financial position and the presentation of income and expenses has been made in relation to their nature in the consolidated statement of profit or loss and other comprehensive income. These disclosure methods were considered to provide information that is credible and more relevant than those that would have been disclosed under other methods permitted by IAS 1 “Presentation of Financial Statements” and IFRS 12 “Presentation of Interests in Other Entities”. Consolidated financial statements are prepared on the basis of the fair value convention for financial assets and liabilities measured at fair value through the income statement and financial assets measured at fair value through other comprehensive income. Other financial assets and liabilities as well as non-financial assets and liabilities are presented at amortised cost, revalued amount or historical cost. 2.2. The consolidated statement of profit or loss and other comprehensive income in RON 31 December 2023 31 December 2022 Income Gross dividend income 95,539,933 190,369,244 Interest received 5,442,797 4,820,667 Revenue from contracts with customers 307,999,975 403,321,858 Other operating income 3,374,308 6,773,366 Net foreign exchange loss - (14,986) Gain from a bargain purchase 154,850,032 - Net gain/(loss) on revaluation of financial assets at fair value through profit or loss 1,159,994 (177,388) Gain on revaluation of investment property - 8,507,174 Expenses Reversal of impairment losses on financial assets 5,898,689 (22,491) Losses from non-financial assets impairment - (190,392) (Increase)/decrease in provisions for risks and charges - (870,945) Expenses with salaries, allowances and similar charges (58,108,953) (51,192,910) Raw materials, consumables and merchandise (280,955,222) (273,469,489) Other operating expenses (65,537,954) (59,655,994) Interest expense (6,052,293) (6,821,935) Profit before tax 163,611,306 221,375,779 Profit tax (8,099,347) (26,449,495) Net profit for the financial year 155,511,959 194,926,284 Decrease in revaluation reserve for property, plant and equipment, net of deferred tax - (7,887,955)
Page 12 of 29 in RON 31 December 2023 31 December 2022 Gain/ net (loss) on revaluation of equity instruments measured at fair value through other comprehensive income, net of deferred tax 601,750,074 (222,869,271) Other comprehensive income – items that will not be reclassified subsequently to profit or loss 601,750,074 (230,757,226) Total other comprehensive result items 601,750,074 (230,757,226) Total comprehensive income for the financial year 757,262,033 (35,830,942) Net profit attributable to Owners of the parent company 159,549,390 189,431,383 Non-controlling interests (4,037,431) 5,494,901 Total net profit for the financial year 155,511,959 194,926,284 Basic and diluted earnings per share (net earnings per share) 0.3359 0.3889 Basic and diluted earnings per share (including gain on selling financial assets measured at fair value through other comprehensive income) 0.3729 0.4530 Total comprehensive income for the financial year 757,262,033 (35,830,942) Owners of the parent company 760,520,168 (27,801,743) Non-controlling interests (3,258,135) (8,029,199) - Gross dividend income recorded in 2023 were 50% lower compared to the previous year. In view of the volatile international context and the prudential recommendations of the National Committee for Macroprudential supervision and of the National Bank of Romania, the banking sector has decided not to distribute dividends from the profit for 2022, decision communicated during shareholders’ meeting in April 2023. Further, on 29 September 2023 during the general shareholders' meeting the shareholders of Banca Transilvania decided to distribute a gross dividend of 1.13 lei/share, with the record date being 23 October 2023, and the payment date being 6 November 2023. - The dividends distributed by the banking sector in 2023 represented 34% of Group total dividends income (2022: 68%). - During the general shareholders’ meeting from 14 December 2023, the shareholders of BRD-Groupe Societe Generale SA decided to distribute a gross dividend of 0.9226 lei/share, ex-date 8 January 2024, and the payment date 26 January 2024. These dividends will be posted as income in the 2024 profit and loss account. - The amount of 154,850,032 lei represents gain from the bargain purchase of subsidiaries and were generated by the Group’s acquisition of 37.29% of Electromagnetica S.A. share capital, gaining control over the entity with a total ownership of 65.45%. - The Group’s total expenses at the end of 2023 (404,755,733 lei, without profit tax) increased by 3.2% compared with the previous year (392,224,156 lei);
Page 13 of 29 - The Group recorded a net profit of 155,511,959 lei in 2023, below the net profit of 2022, in amount of 194,926,284 lei, this result being influenced by the dynamics of dividend income and contracts with customers; - As of 31.12.2023, the basic and diluted earnings per share of the Parent Company’s shareholders was 0.3359 lei, in a slight decrease, compared to the one reported at 31.12.2022 (0.3889 lei). - In 2023 In the "Other operating expenses" category, "Expenses with external services" which account for the largest quota, 25%, are decreasing by 19% compared to 2022. These mainly include the expenses representing advisory services (legal representation and counselling in investment activities), financial asset evaluation reports, marketing expenses (rebranding and visual identity), special services provided by third parties (security, occupational health and safety, and similar), rental expenses, and insurance. The "Other operating expenses" category is presented as follows: In LEI 31 December 2023 31 December 2022 Expenses with external services 16,585,807 20,429,527 Expenses with energy and water 15,866,017 14,315,288 Expenses related to depreciation of tangible and intangible assets 16,036,702 12,193,755 Expenses with commissions and fees 3,070,389 2,701,322 Expenses with taxes and duties 6,072,003 4.516.559 Protocol, advertising and publicity expenses 785,508 387,322 Other operating expenses 7,121,528 5,112,221 Total 65,537,954 59,655,994 Within the expenses with external services, the expenses related to external financial audit are included, amounting to 1,075.13 thousand lei for the year ended December 31, 2023 (December 31, 2022: 1,472.18 thousand lei). 2.3. Segment reporting Segment reporting represents segmentation by activities considering the main activity of the companies in the consolidation scope. The parent company together with the entities in which it holds more than 50% and which are included in the consolidation scope operate in the following main business segments: financial services, real estate rental and trade, manufacture of instruments and appliances for measuring, testing and navigation, food industry (mainly production of oil and related products), tourism.
Page 14 of 29 Assets, liabilities and equity according to the Consolidated Statement of Financial Position 31 December 2023 in RON Group Financial services Real estate rental and trade Manufacture of measurement, verification and control instruments and appliances Food industry (mostly production of sunflower oil and related products) Tourism Assets Cash and cash equivalents 139,020,419 69,096,362 28,953,605 28,934,125 8,157,714 3,878,613 Bank deposits 6,942,722 - 5,000,000 1,942,722 - - Financial assets at fair value through profit or loss 6,621,169 6,621,169 - - - - Financial assets at fair value through other comprehensive income 2,429,667,571 2,396,720,026 31,538,340 - 1,409,205 - Other financial assets at amortised cost 63,090,745 85,363 3,211,404 37,899,666 21,402,855 491,457 Inventories 93,202,257 12,143 36,801 18,741,313 74,353,802 58,198 Investment property 371,130,831 1,100,816 344,209,043 23,569,292 2,251,680 - Tangible assets 461,925,441 11,358,311 4,840,764 287,379,784 129,927,691 28,418,891 Other assets 7,440,927 648,719 365,217 6,119,577 163,994 143,420 Current profit tax receivables 895,819 19,416 (304,580) 822,603 380,797 (22,417) Total assets 3,579,937,901 2,485,662,325 417,850,594 405,409,082 238,047,738 32,968,162 Liabilities Loans 81,135,482 - - 81,135,482 - Dividends payable 51,080,777 48,747,231 1,105,656 1,227,890 - - Current profit tax liability - - - - - Trade payables - - - - - Financial liabilities at amortised cost 31,976,914 962,238 4,861,996 18,693,529 5,885,102 1,574,049 Other liabilities 27,226,626 10,048,725 2,710,209 11,640,456 2,057,949 769,287 Provisions for risks and charges 3,765,054 - 1,615,372 775,000 1,374,682 - Deferred tax liability 210,881,494 143,753,048 37,976,651 16,208,824 12,781,011 161,960 Total liabilities 406,066,347 203,511,242 48,269,884 48,545,699 103,234,226 2,505,296
Page 15 of 29 31 December 2022 in RON Group Financial services Real estate rental and trade Food industry (mostly production of sunflower oil and related products Tourism Assets Cash and cash equivalents 99,737,272 15,122,625 40,776,853 39,037,130 4,800,664 Bank deposits 527,433 - 527,433 - - Financial assets at fair value through profit or loss 4,475,075 4,475,075 - - - Financial assets at fair value through other comprehensive income 1,851,871,888 1,817,001,120 34,419,156 50,405 401,207 Trade receivables and sundry debtors 18,716,135 22,330 2,439,905 15,930,994 322,906 Inventories 178,085,563 45,100 43,115 177,951,473 45,875 Investment property 308,971,502 1,100,816 295,054,291 11,636,539 1,179,856 Tangible assets 204,768,162 12,400,449 4,462,100 161,240,262 26,665,351 Other assets 686,103 128,618 179,989 339,767 37,729 Current profit tax receivable 418,040 418,040 - - - Total assets 2,668,257,173 1,850,714,173 377,902,842 406,186,570 33,453,588 Liabilities Loans 160,737,859 - 1,336,273 159,324,280 77,306 Dividends payable 51,083,704 49,300,619 1,210,271 554,186 18,628 Current profit tax payable 690,393 324,149 771,108 (418,039) 13,175 Trade payables 11,670,375 1,610,683 2,163,458 7,542,589 353,645 Other liabilities 21,138,374 14,710,397 4,553,699 1,215,298 658,980 Provisions for risks and charges 3,108,189 - 1,340,000 1,768,189 - Deferred tax liability 114,762,592 63,028,769 37,240,018 14,304,896 188,909 Total liabilities 363,191,486 128,974,617 48,614,827 184,291,399 1,310,643 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 2023 by the Group, a share of 98.64% is held by the assets from the financial investment activity represented by the financial assets portfolio, namely 98.12% as of 31 December 2022.
Page 16 of 29 Income, expenses and result according to the consolidated statement of profit or loss and other comprehensive income 31 December 2023 in RON Group Financial services Real estate rental and trade Manufacture of measurement, verification and control instruments and appliances Food industry (mostly production of sunflower oil and related products) Tourism Income Gross dividend income 95,539,933 93,344,829 2,182,512 - - 12,592 Interest income 5,442,797 3,100,940 1,592,098 155,389 497,038 97,332 Revenue from contracts with customers 307,999,975 1,005 30,283,034 19,376,711 247,155,125 11,184,100 Other operating income 3,374,308 1,008,003 432,150 (590,938) 2,436,436 88,657 Net gain on revaluation of financial assets at fair value through profit or loss 1,159,994 1,159,994 - - - - Gain from a bargain purchase 154,850,032 154,850,032 - - - - Expenses Reversal of impairment losses on financial assets 5,898,689 28,779 (201,173) 961,256 5,101,219 8,608 Expenses with salaries, allowances and similar charges (58,108,953) (16,566,665) (7,095,081) (4,813,845) (25,173,276) (4,460,086) Raw materials, consumables and merchandise (280,955,222) (270,617) (363,893) (10,841,249) (267,412,331) (2,067,132) Interest expense (6,052,293) (32,011) (187,595) - (5,832,687) - Other operating expenses (65,537,954) (8,851,010) (9,724,166) (7,290,465) (36,463,995) (3,208,318) Profit before tax 163,611,306 227,773,279 16,917,886 (3,043,141) (79,692,471) 1,655,753 Profit tax (8,099,347) (7,798,751) (1,732,677) 820,356 718,860 (107,135) Net profit for the financial year 155,511,959 219,974,528 15,185,209 (2,222,785) (78,973,611) 1,548,618
Page 17 of 29 31 December 2022 in RON Group Financial services Real estate rental and trade Food industry (mostly production of sunflower oil and related products) Tourism Income Gross dividend income 190,369,244 187,605,794 2,743,121 - 20,329 Interest income 4,820,667 2,510,095 1,358,787 756,066 195,719 Revenue from contracts with customers 403,321,858 - 32,664,911 366,057,313 4,599,634 Other operating income 6,773,366 157,774 874,295 5,741,297 - Net foreign exchange loss (14,986) (4,880) 82,901 (94,624) 1,617 Net gain on revaluation of financial assets at fair value through profit or loss (177,388) (177,388) - - - Gain on revaluation of investment property 8,507,174 578,028 8,450,610 (233,970) (287,494) Expenses Impairment losses on financial assets (22,491) - (20,289) - (2,202) Losses from non-financial assets depreciation (190,392) - - (190,392) - (Accruals)/reversals of provisions for risks and charges (870,945) - - (870,945) - Expenses with salaries, allowances and similar charges (51,192,910) (17,506,362) (6,347,827) (23,609,908) (3,728,813) Raw materials, consumables and merchandise (273,469,489) (311,994) (455,638) (268,901,879) (3,799,978) Interest expense (6,821,935) - - (6,821,935) - Other operating expenses (59,655,994) (6,490,611) (7,562,330) (42,868,675) (2,734,378) Profit before tax 221,375,779 166,360,456 31,788,541 28,962,348 (5,735,566) Profit tax (26,449,495) (7,583,475) (15,920,734) (2,945,286) - Total net profit for the financial year 194,926,284 158,776,981 15,867,807 26,017,062 (5,735,566)
Page 18 of 29 2.4. Consolidated statement of financial position in RON 31 December 2023 31 December 2022 Assets Cash and cash equivalents 139,020,419 99,737,272 Deposits from banks 6,942,722 527,433 Financial assets at fair value through profit or loss 6,621,169 4,475,075 Financial assets at fair value through other comprehensive income 2,429,667,571 1,851,871,888 Other financial assets at amortised cost 63,090,745 18,716,135 Inventories 93,202,257 178,085,563 Investment property 371,130,831 308,971,502 Property, plant and equipment 461,925,441 204,768,162 Other assets 7,440,927 686,103 Current profit tax receivables 895,819 418,040 Total assets 3,579,937,901 2,668,257,173 Debts Loans 81,135,482 160,737,859 Dividends payable 51,080,777 51,083,704 Current income tax liabilities - 690,393 Financial liabilities at amortised cost 31,976,914 11,670,375 Other debts 27,226,626 21,138,374 Provisions for risks and charges 3,765,054 3,108,189 Deferred profit tax liabilities 210,881,494 114,762,592 Total debts 406,066,347 363,191,486 Equity Share capital 50,000,000 50,000,000 Legal and statutory reserves 40,233,147 30,937,825 Retained earnings 894,786,724 1,024,459,557 Reserves from revaluation of property, plant and equipment, net of deferred tax 202,831,910 125,720,104 Reserves from revaluation of financial assets at fair value through other comprehensive income, net of deferred tax 953,527,939 369,357,208 Other reserves 925,730,600 693,070,737 Own shares (63,372,773) (63,364,962) Total equity attributable to Owners of the parent company 3,003,737,547 2,230,180,469 Non-controlling interest 170,134,007 74,885,218 Total equity 3,173,871,554 2,305,065,687 Total equity and liabilities 3,579,937,901 2,668,257,173
Page 19 of 29 • As of 31.12.2023, total assets have a value of 3,579,937,901 lei, a 34% increase compared to the value as of 31.12.2022 (2,668,257,173 lei); • Bank deposits on 31.12.2023, in the amount of 6,942,722 lei, registered a significant increase compared to those on 31.12.2022 (527,433 lei). The same upward trend was also recorded for cash and cash equivalents, with this position experiencing an increase of 39% compared to 31 December 2022 (from 99,737,272 lei to 139,020,419 lei). The Group opted to maintain the cash in bank deposits; • Financial assets at fair value through other comprehensive income, amounting to 2,429,667,571 lei on 31.12.2023, are increasing by 31% compared to 31.12.2022 (1,851,871,888 lei). This result is influenced by the portfolio changes made, in order to capitalize on opportunities from 2023 (a period that comes after a 2022 marked by volatility and uncertainties); • Financial assets valued at fair value through profit or loss, amounting to 6,621,169 lei on 31.12.2023, are up by 48% compared to 31.12.2022 (4,475,075 lei). This category includes the fund units owned in the open investment funds: BT INDEX RO, FDI NAPOCA, FDI TRANSILVANIA, FDI TEHNOGLOBINVEST and FIA Agricultural Fund. The positive evolution of "Financial assets valued at fair value through profit or loss" is influenced by the subscription, in the first semester of 2023, of 80 fund units issued by FIA Agricultural Fund in the amount of 986,100 lei; • Equity, in the amount of 3,003,737,547 lei, registered an increase of 35% compared to 31.12.2022 (2,230,180,469 lei), being mainly influenced by the evolution of the indicator “Reserves from the revaluation of financial assets at fair value through other comprehensive income, net of deferred tax”, the acquisition of Electromagnetica S.A. and the evolution of the indicator "Other reserves" - where the allocation of net profit to "Other reserves - own sources of financing" was recorded. The performance of the portfolio of shares held by the Group is also visible in the increase in the value of equity. III. THE MAIN RISKS OF THE GROUP The risk management policy includes the procedures required to assess exposure to the main categories of relevant risks, which may have an impact on the performance of the activity and on the fulfilment of obligations stipulated in the regulatory framework. The risk management activity covers both general risks and specific risks, as required by national and international legal regulations. The group is or can be subject to financial risks resulting from the activity undertaken for the achievement of the established goals. The group, according to the specifics of the activity, is or may be subject to significant risks resulting from the activity carried out to achieve the established objectives. Managing 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 risk appetite and its ability to mitigate or cover these risks. Risk monitoring is carried out at each hierarchical level, with procedures for supervising and approving decision-making limits.
Page 20 of 29 The main risks to which the Group is exposed 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 financial risks identified in the activity of the Group are: - market risk (price risk, currency risk, interest rate risk); - credit risk; - liquidity risk; - operational risk; - sustainability risk. 3.1. Market risk Market risk is the risk of incurring losses related to on-balance sheet and off-balance sheet positions due to unfavourable market price fluctuations (such as, for example, stock prices, interest rates, foreign exchange rates). The company monitors market risk with the aim of optimizing profitability in relation to the associated risk, in accordance with approved policies and procedures. From the point of view of the Group, the relevant market risks are: price risk (position risk), foreign exchange risk, interest rate risk. 3.1.1. Price risk Price (position) risk is generated by market price volatility, such as fluctuations in the market of financial instruments, as a result of changes in market prices caused either by factors affecting all instruments traded on the market (systemic component) or by factors specific to individual instruments or their issuer (non-systemic component). The Group monitors both the systemic component (general risk determined by factors at macro level) and the specific risk, determined by the issuers' own activity, so that when price risks are not in accordance with internal policies and procedures to act in consequence by rebalancing the asset portfolio. Given the nature of the Group's activities, price risk represents a significant risk for it. The Group also monitors sectoral concentration risk, for financial assets measured at fair value through profit or loss and financial assets designated at fair value through other comprehensive income. On 31 December 2023 and 31 December 2022, the assets subject to price risk held by the Group are those from the portfolio of listed shares (on BVB – regulated market, BVB-AeRO – alternative trading system). On 31 December 2023, the market value of listed shares represents 99.46% of the total value of the managed share portfolio, and on 31 December 2022 - 98.77%.
Page 21 of 29 3.1.2. The interest rate risk Interest rate risk is the current or future risk that profits and capital will be affected by adverse changes in interest rates. The interest rate directly influences the income and expenses attached to variable interest- bearing financial assets and liabilities. Most assets in the portfolio are non-interest bearing. The interest rates applied to cash and cash equivalents are short-term as of 31 December 2023. At Group level, the share of borrowed resources in the total financing resources of the companies is not significant, except for Argus S.A. Constanta at 31 December 2023 and 31 December 2022. The Group monitors the evolution of monetary policy to track effects that may influence interest rate risk. The Group did not use derivative financial instruments during the reported period to protect itself against interest rate fluctuations. In order to benefit from the volatility of interest rates, for a greater flexibility in the cash allocation policy, it will be pursued that the placement of cash in monetary instruments will be made especially in the short term, for a maximum of 3 months. 3.1.3. Foreign exchange risk Currency risk is the risk of losses resulting from changes in exchange rates. This risk takes into account 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 those positions. The Group did not use derivative financial instruments during the reporting period to protect itself against exchange rate fluctuations. As of 31 December 2023, the foreign currency cash amounted to 4,754,657 Lei, representing 3.3% of total cash and cash equivalents (as of 31 December 2022: 36,355,516 Lei, representing 36.3% of total cash and cash equivalents). The Group also owns a number of 80 fund units issued by FIA Agricultural Fund, totalling 951,733 lei (equivalent of 191,318 EUR). Given that most of the Group's assets are denominated in national currency, exchange rate fluctuations do not directly affect the Group's business. These fluctuations have an influence in the assessment of investments such as fund units, foreign currency deposits and current account cash. The Group carried out transactions during the reporting periods in both Romanian currency (Leu) and foreign currency. The Romanian currency fluctuated compared to foreign currencies, EUR and USD.
Page 22 of 29 The Group did not conduct any foreign exchange derivatives transactions during the submitted financial years. Foreign currency cash as at 31 December 2023 represents 0.2% (31 December 2022: 1.8%) of total financial assets, while foreign currency trade liabilities represent 0.2% as at 31 December 2023 (0.003%), which results in the currency risk at Group level being insignificant. Investments in foreign currency bank deposits are constantly monitored and measures are taken to invest, divest, depending on the forecasted evolution of the exchange rate. On 31.12.2023, the market risk falls within the approved risk limits for a medium risk appetite. 3.2. Liquidity risk Liquidity risk is the risk that a position in the portfolio of the Group cannot be sold, liquidated or closed at limited costs within a reasonably short period of time. The Group aims to maintain a level of liquidity adequate to its underlying obligations, based on an assessment of the relative liquidity of the assets on the market, taking into account the period required for liquidation and the price or value at which those assets can be liquidated their sensitivity to market risks or other external factors. The Group systematically monitors the liquidity profile of the asset portfolio, taking into account the contribution of each asset to liquidity, as well as significant liabilities and commitments, contingent or otherwise, that the company may have in relation to its underlying obligations. The liquidity risk related to payment obligations is very low, the Group's current liabilities being covered by holdings in current accounts and/or short-term deposits On 31.12.2023, the net negative positions recorded in the liquidity category between 3-6 months and 6-12 months, are influenced by the loan owed by Argus S.A. Constanța and will be managed by such company and by the Group, depending on the liquidation needs at the time, by using the resources obtained from the current operational activity. On 31.12.2023, the liquidity risk falls within the approved risk limits for a medium risk appetite. 3.3. Credit risk Credit risk represents the current or future risk of affecting profits and capital as a result of the debtor's failure to fulfil its contractual obligations or its failure to fulfil the established obligations. As of December 31, 2023, the exposure to the banking sector represents 37.32% of total assets, out of which 33.25% represents the market value of shares held in Banca Transilvania and B.R.D.-Group Societe Generale, while 4.07% represents cash and cash equivalents held in banking institutions.
Page 23 of 29 The main credit risk elements identified that can significantly influence the Group's activity are: - the risk of non-collection of dividends from portfolio companies; - the risk of non-collection of the contract value, in the case of commercial activity and sale of shares in "closed" companies; - the risk generated by investments in bonds and/or other credit instruments; - settlement risk in the case of transactions with shares issued by listed companies; - risk of bankruptcy or insolvency. The indicators used to measure the risk of insolvency of issuers are the following: the rate of exposure to issuers at high risk of bankruptcy (in the next 2 years), the rate of exposure by unlisted assets, the rate of exposure by sectors of activity. Credit risk may affect the Group's activity indirectly, in the case of portfolio companies that encounter financial difficulties in paying their payment obligations corresponding to dividends. Given the diversity of investments and the fact that most of them are made 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 the holding of current accounts and bank deposits, as well as from outstanding receivables. Regarding the Group's cash balances, they are placed with multiple banks, thus avoiding concentration risk. Bank deposits are held at banks in Romania. Regarding the Group's cash balances, primarily at the most significant banking institution in the system, Banca Transilvania, Fitch Ratings has reaffirmed the long-term rating of Banca Transilvania at 'BB+', with a stable outlook. As a result of evaluating the key elements of credit risk, as of December 31, 2023, the credit risk falls within the approved risk limits for a medium risk appetite. 3.4. Operational risk Operational risk is the risk of loss resulting either from the use of inadequate internal processes, persons or systems, or from external events, which includes legal risk. The operational risk category refers to: - legal risk - a sub-category of operational risk which is the risk of loss as a result both of fines, penalties and sanctions to which the Group is liable in the event of non- application or defective application of legal or contractual provisions and of the fact that the contractual rights and obligations of the company and/or its counterparty are not properly established;
Page 24 of 29 - Compliance risk - the current or future risk of affecting profits, own funds or liquidity, which may lead to significant financial losses or which may affect the reputation of the Group as a result of breach or non-compliance with the legal and regulatory framework, agreements, recommended practices or ethical standards applicable to its activities. - IT risk - is a sub-category of operational risk that refers to the risk caused by the inadequacy of IT strategy and policy, information technology and information processing, with reference to its management capacity, integrity, controllability and continuity, or by the inappropriate use of information technology. - money laundering and terrorism financing risk (SB/FT) – the inherent risk, respectively the level of money laundering and terrorist financing risk before its mitigation, meaning that the impact and probability of involvement of regulated entities in ML/TF operations is analysed. In order to assess the level of operational risk to which it is exposed, the Group acts to identify and classify operational risk events into specific categories, allowing the establishment of the most effective methods of control and mitigation of potential effects. The Group aims to maintain an optimal level of equity in order to develop its business and achieve its objectives. The Group's main objective is business continuity in order to increase the value of managed assets in the long term. Considering the complexity of the Group's activities, the volume of operations, staffing structure, level of digitalization, complexity of monitoring and control procedures, and other aspects related to the Group's risk policy, the operational risk at the Group level falls within the assumed risk appetite. 3.5. Sustainability risk Sustainability risk is an environmental, social or governance event or condition that, if it occurs, could cause a significant adverse effect, actual or potential, on the value of the investment. Sustainability risks are integrated into the classification and management of existing risks, as they also affect the types of existing risk, to which the company is exposed in its activities. The Group incorporates sustainability risks into the decision-making process and also 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 Group. In accordance with Art. 556 4 para. (1), lit. (b) of the Accounting Regulations regarding annual standalone financial statements and annual consolidated financial statements of 29.12.2014, approved by Order no. 1802/2014, the Group will make available to the public the consolidated non-financial statement until 30.06.2024 on the Company's website www.infinitycapital.ro
Page 25 of 29 3.6. Capital adequacy Management's capital adequacy policy focuses on maintaining a sound capital base in order to support the continue development of the Group and the achievement of investment objectives. Equity consists of share capital, created reserves, current result and retained earnings. As of 31 December 2023, the Group's equity is RON 3,003,737,547 (31 December 2022: RON 2,230,180,469). The Group is not subject to statutory capital adequacy requirements. IV. KEY MANAGEMENT Based on the articles of incorporation, Infinity Capital Investments S.A. is managed in a unitary system. Infinity Capital Investments S.A. is managed by a Board of Directors, made up of five members, elected by the ordinary general shareholders’ meeting for 4 years (with possibility of re-election) and authorized by the Financial Supervisory Authority. The composition of the Board of Directors as the Company at 31.12.2023 is as follows: Sorin - Iulian Cioacă – President of the Board of Directors; Mihai Trifu - Vice-president of the Board of Directors; Codrin Matei - independent non-executive member of the Board of Directors; Mihai Zoescu - independent non-executive member of the Board of Directors; Andreea Cosmănescu - independent non-executive member of the Board of Directors. The senior management As of 31.12.2023, the composition of the senior management of Infinity Capital Investments S.A. authorized by FSA by authorization no. 192/16.12.2020, was as follows: - Sorin - Iulian Cioacă - General Manager; - Mihai Trifu - Deputy General Manager. The Group has no contracted obligations regarding the payment of pensions to the former members of the Board of Directors and has no commitments of this nature. The Group has not granted credits or advances (except for advances for business travel, justified within the legal term) to the members of the Board of Directors and the management and has not recorded such type of commitments. The Group has not received and has not given guarantees to any affiliate.
Page 26 of 29 V. LEGAL DISPUTES The Group has several ongoing legal actions arising in the normal course of business. The Group's management considers that these actions will not have a material impact on the current consolidated financial statements. As of 31 December 2023, 231 cases were ongoing, out of which: • 136 cases as plaintiff; • 32 cases as defendant; • 4 cases as intervener; • 1 case as impleaded party; • 2 cases as injured party; • 56 cases in insolvency proceedings. SUBSEQUENT EVENTS INFINITY CAPITAL INVESTMENTS S.A. I. Proceedings regarding the sale of the shares held in Complex Hotelier Dâmbovița S.A. Infinity Capital Investments S.A. continued its efforts regarding the sale of its stake in Complex Hotelier Dâmbovița S.A. by reducing the selling price to 16,000,000 RON and organizing new auction rounds on 20 of March 2024 and 27 March 2024. II. Proceedings regarding the sale of the shares held in Biroul de Investiții Regional Oltenia IFN S.A. Infinity Capital Investments S.A. lowered the selling price of its stake in Biroul de Investiții Regional Oltenia IFN S.A. and set up three new tender rounds on 29 February 2024, 7 March 2024 and 14 March 2024, with no offers submitted. III. Proceedings regarding the sale of the shares held in Univers S.A. On 4 March 2024, Infinity Capital Investments S.A. sold its stake in Univers S.A. (73.7494%). The value of the transaction was 50.8 million RON. IV. Interim standalone financial statements as of and for the year ended 31 December 2023 Infinity Capital Investments S.A. released its interim standalone financial results for fiscal year 2023 which have not been audited. V. Information on the offering of shares to members of the Board, managers and employees of the company and start of a shares’ buyback program At the Board of Directors meeting held on 13 March 2024, it was approved the offer, free of charge, of a total of 1,937,888 shares to administrators, managers and employees of the company, as part of a 'Stock Option Plan'.
Page 27 of 29 ALIMENTARA S.A. The company has convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders on 27 and 28 March 2024. ARGUS S.A. I. On 22 February 2024, the company informed investors on the decision pronounced in file no. 857/118/2023. II. The company convened the Ordinary General Meeting of Shareholders on 17 and 18 April 2024. COMPLEX HOTELIER DÂMBOVITA S.A. On 15 February 2024, the Ordinary General Meeting of Shareholders approved all points on the agenda. CONSTRUCȚII FEROVIARE CRAIOVA S.A. I. The company has convened the Ordinary General Meeting of Shareholders on 27 and 28 March 2024. II. On 12 March 2024, the company informed investors about the decision pronounced in file no. 76/63/2013. ELECTROMAGNETICA S.A. The company convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders on 25 and 26 April 2024. FLAROS S.A. The company convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders on 29 March and 1 April 2024. GEMINA S.A. The company convened the Ordinary General Meeting of Shareholders on 28 and 29 March 2024. On 19 January 2024 the company signed the contract for the transfer of the hotel business for 3.7 million RON. GRAVITY CAPITAL INVESTMENTS S.A. There are no events to report.
Page 28 of 29 LACTATE NATURA S.A. I. On 13 March 2024, the Extraordinary General Meeting of Shareholders approved all items on the agenda. II. The company convened the Ordinary General Meeting of Shareholders for 29 and 30 March 2024. MERCUR S.A. I. On 23 January 2024, investors were informed about the early repayment of 780 corporate bonds issued by Mercur S.A. on 15 September 2021. II. The company convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders for 28 and 29 March 2024. PROVITAS S.A. The company convened the Ordinary General Meeting of Shareholders for 26 and 27 March 2024. TURISM S.A. On 16 February 2024, the Extraordinary General Meeting of Shareholders approved all items on the agenda. UNIVERS S.A. I. The company convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders for 28 and 29 March 2024. II. On 15 February 2024, the company informed investors on the sale of 1,200 social parts representing 23.86% of the share capital of Aliment Murfatlar S.R.L. to Voltalim S.A. The transaction was made at a value of 6,848,280 RON. III. On 20 February 2024, the company informed investors that Infinity Capital Investments S.A.'s process of selling its stake in Univers S.A. (73.7494%) through a 'special sale by order' at BSE will start on 4 March 2024. IV. On 6 March 2024, the company informed investors about major holdings - Appendix 18 according to FSA Regulation no. 5/2018, submitted by shareholders Infinity Capital Investments S.A. and Barecco S.R.L. VOLTALIM S.A. I. On 15 February 2024, the company acquired 1,200 shares representing 23.86% of the share capital of Aliment Murfatlar S.R.L. from Univers S.A. II. The company convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders on 28 and 29 March 2024.
Page 29 of 29 THE IMPACT ON THE OPERATIONS AND GOING CONCERN In 2023, the capital market experienced significant growth, after a challenging and uncertain year in 2022. Additionally, macroeconomic risks decreased during 2023, despite ongoing substantial uncertainties in the financial sector, high inflation, and present geopolitical conflicts. Global economic recovery following the COVID-19 pandemic, the conflict in Ukraine, and conflicts in the Middle East are leading to slow economic growth globally. These events have had, and are expected to continue to have, a negative impact on many economic sectors, considering the significant role played by Russia in the European energy commodities market. The current geopolitical context may lead to episodes of volatility in financial markets. These factors can significantly impact the Romanian economy and consequently the companies within the Group. The Board of Directors of the Company is aware that economic developments, both globally and locally, can influence the future activities of the Group, potentially affecting its future results. Management continuously monitors present risks and uncertainties, implementing measures to ensure the continuity of operations under optimal conditions. None of the commercial entities included in the consolidation scope, except Electromagnetica S.A., fall under the scope of Order no. 881/25 June 2012, and are not obliged to prepare and report financial statements under IFRS conditions. They maintain accounting records in accordance with the regulations of Order no. 1802/2014 approving accounting regulations regarding annual standalone financial statements and annual consolidated financial statements. For consolidation purposes, they prepare a second set of financial statements under IFRS conditions. The financial statements prepared under IFRS conditions result from restating the financial statements prepared under Order no. 1802/2014. The consolidated financial statements were prepared in accordance with Regulation no. 39/2015 approving accounting regulations compliant with the International Financial Reporting Standards applicable to entities authorized, regulated, and supervised by the Financial Supervisory Authority in the sector of financial instruments and investments, as well as the Investor Compensation Fund. These financial statements are intended exclusively for use by the Group, its shareholders and the Financial Supervisory Authority and do not generate changes in the rights of shareholders regarding dividends. This report was approved by the Board of Directors in the meeting of 28 March 2024 and was signed on its behalf by: Sorin – Iulian Cioacă Mihai Trifu President - General Manager Vice-President - Deputy General Manager
Page 2 of 101 CONTENTS CONSOLIDATED FINANCIAL STATEMENTS Page CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 3 - 4 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 5 - 6 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 7-9 CONSOLIDATED STATEMENT OF CASH FLOWS 10-11 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 12 - 101
The accompanying notes form an integral part of these consolidated financial statements. Page 3 of 101 Consolidated statement of profit or loss and other comprehensive income in RON Note 31 December 2023 31 December 2022 Income Gross dividend income 7 95,539,933 190,369,244 Interest received 8 5,442,797 4,820,667 Revenue from contracts with customers 9 307,999,975 403,321,858 Other operating income 10 3,374,308 6,773,366 Net foreign exchange loss - (14,986) Gain from a bargain purchase 11 154,850,032 - Net gain on revaluation of financial assets at fair value through profit or loss 1,159,994 (177,388) Gain on revaluation of investment property - 8,507,174 Expenses Reversal of impairment losses/(Losses) on financial assets 5,898,689 (22,491) Losses from non-financial assets depreciation - (190,392) Accruals of provisions for risks and charges - (870,945) Expenses with salaries, allowances and similar charges 12 (58,108,953) (51,192,910) Expenses with raw materials, consumables and goods 13 (280,955,222) (273,469,489) Other operating expenses 14 (65,537,954) (59,655,994) Interest expense (6,052,293) (6,821,935) Profit before tax 163,611,306 221,375,779 Corporate income tax 15 (8,099,347) (26,449,495) Net profit for the financial year 155,511,959 194,926,284 Decrease in revaluation reserve for property, plant and equipment, net of deferred tax - (7,887,955) Gain/ net (loss) on revaluation of equity instruments measured at fair value through other comprehensive income, net of deferred tax 601,750,074 (222,869,271) Other comprehensive income – items that will not be reclassified subsequently to profit or loss 601,750,074 (230,757,226) Total other comprehensive income 601,750,074 (230,757,226) Total comprehensive income for the financial year 757,262,033 (35,830,942) Net profit attributable to Owners of the parent company 159,549,390 189,431,383 Non-controlling interests (4,037,431) 5,494,901 Total net profit for the financial year 155,511,959 194,926,284
The accompanying notes form an integral part of these consolidated financial statements. Page 4 of 101 in RON Note 31 December 2023 31 December 2022 Basic and diluted earnings per share (net earnings per share) 30 0.3359 0.3889 Basic and diluted earnings per share (including gain on selling financial assets measured at fair value through other comprehensive income) 0.3729 0.4530 Total comprehensive income for the financial year 757,262,033 (35,830,942) Owners of the parent company 760,520,168 (27,801,743) Non-controlling interests (3,258,135) (8,029,199) The consolidated financial statements were approved by the Board of Directors at the meeting of 28 March 2024 and signed on its behalf by: Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President - General Manager Vice President - Deputy General Manager Economic Manager
The accompanying notes form an integral part of these consolidated financial statements. Page 5 of 101 Consolidated statement of financial position in RON Note 31 December 2023 31 December 2022 Assets Cash and cash equivalents 16 139,020,419 99,737,272 Bank deposits 6,942,722 527,433 Financial assets at fair value through profit or loss 17 6,621,169 4,475,075 Financial assets at fair value through other comprehensive income 17 2,429,667,571 1,851,871,888 Other financial assets at amortised cost 18 63,090,745 18,716,135 Inventories 19 93,202,257 178,085,563 Investment property 20 371,130,831 308,971,502 Property, plant and equipment 21 461,925,441 204,768,162 Other assets 7,440,927 686,103 Current profit tax receivable 895,819 418,040 Total assets 3,579,937,901 2,668,257,173 Liabilities Loans 22 81,135,482 160,737,859 Dividends payable 23 51,080,777 51,083,704 Current profit tax liabilities - 690,393 Financial liabilities at amortised cost 24 31,976,914 11,670,375 Other liabilities 25 27,226,626 21,138,374 Provisions for risks and charges 26 3,765,054 3,108,189 Deferred tax liabilities 27 210,881,494 114,762,592 Total liabilities 406,066,347 363,191,486 Equity Share capital 28 50,000,000 50,000,000 Legal and statutory reserves 40,233,147 30,937,825 Retained earnings 894,786,724 1,024,459,557 Reserves from revaluation of property, plant and equipment, net of deferred tax 17 202,831,910 125,720,104 Reserves from revaluation of financial assets at fair value through other comprehensive income, net of deferred tax 953,527,939 369,357,208 Other reserves 28 925,730,600 693,070,737 Own shares (63,372,773) (63,364,962) Total equity attributable to owners of the parent company 3,003,737,547 2,230,180,469 Non-controlling interests 29 170,134,007 74,885,218 Total equity 3,173,871,554 2,305,065,687 Total equity and liabilities 3,579,937,901 2,668,257,173 The consolidated financial statements were approved by the Board of Directors at the meeting of 28 March 2024 and signed on its behalf by: Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President - General Manager Vice President - Deputy General Manager Economic Manager
The attached notes form an integral part of the consolidated financial statements. Page 6 of 101 Consolidated statement of changes in equity in RON Share capital Reserves from revaluation of property, plant and equipment, net of deferred tax Reserves from revaluation of financial assets at fair value through other comprehensive income, net of deferred tax Retained earnings Legal and statutory reserves Other reserves Own shares* Total attributable to the owners of the parent company Non- controlling interests TOTAL Balance as at 31 December 2022 50,000,000 125,720,104 369,357,208 1,024,459,557 30,937,825 693,070,737 (63,364,962) 2,230,180,469 74,885,218 2,305,065,687 Comprehensive income for the financial year Net profit for the year ended 31 December 2023 - - - 159,549,390 - - - 159,549,390 (4,037,431) 155,511,959 Other comprehensive income net of tax - - - - - - - - - - Transfer of revaluation reserve to retained earnings due to derecognition of property, plant, and equipment, net of deferred tax - 2,417,119 - (2,417,119) - - - - - - Revaluation of equity instruments measured at fair value through other comprehensive income, net of deferred tax - - 600,970,778 - - - - 600,970,778 779,296 601,750,074 (Gain)/Loss on the transfer to retained earnings as a result of the sale of equity instruments measured at fair value through other comprehensive income - - (16,800,047) 16,800,047 - - - - - - Total other comprehensive income - 2,417,119 584,170,731 14,382,928 - - - 600,970,778 779,296 601,750,074 Total comprehensive income for the financial year - 2,417,119 584,170,731 173,932,318 - - - 760,520,168 (3,258,135) 757,262,033 Transfer to other reserves - - - (182,364,144) 1,072,222 181,291,922 - - - - Acquisition of subsidiaries with non-controlling interests - 81,076,506 - 46,506,305 8,223,100 53,257,608 - 189,063,519 123,160,722 312,224,241 Changes generated by the change in ownership percentage - (6,381,819) - (167,747,312) - (1,897,478) - (176,026,609) (24,653,798) (200,680,407) Other changes - - - - - 7,811 (7,811) - - - Balance as at 31 December 2023 50,000,000 202,831,910 953,527,939 894,786,724 40,233,147 925,730,600 (63,372,773) 3,003,737,547 170,134,007 3,173,871,554 * For own shares, Infinity Capital Investments S.A. submitted to the Financial Supervisory Authority the necessary documentation for the reduction of share capital, the procedures are ongoing. The consolidated financial statements were approved by the Board of Directors at the meeting of 28 March 2024 and signed on its behalf by: Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President - General Manager Vice President - Deputy General Manager Economic Manager
The attached notes form an integral part of the consolidated financial statements. Page 7 of 101 Consolidated statement of changes in equity in RON Share capital Reserves from revaluation of property, plant and equipment, net of deferred tax Reserves from revaluation of financial assets at fair value through other comprehensive income, net of deferred tax Retained earnings Legal and statutory reserves Other reserves Own shares* Other components of equity Total attributable to the Owners of the parent company Non- controlling interest TOTAL At 31 December 2021 50,000,000 121,428,404 622,479,609 845,871,529 28,933,688 665,681,380 - - 2,334,394,610 86,675,621 2,421,070,231 Comprehensive income for the financial year Net profit for the year ended 31 December 2022 - - - 189,431,383 - - - - 189,431,383 5,494,901 194,926,284 Other comprehensive income net of tax Revaluation of tangible assets, net of deferred tax - 4,657,525 - - - - - - 4,657,525 (12,545,480) (7,887,955) Revaluation of equity instruments measured at fair value through other comprehensive income, net of deferred tax - - (221,890,651) - - - - - (221,890,651) (978,620) (222,869,271) Total comprehensive income for the financial period - 4,657,525 (221,890,651) 189,431,383 - - - - (27,801,743) (8,029,199) (35,830,942) Transfers other than those related to transactions with shareholders Transfer of revaluation reserve to retained earnings as a result of derecognition of tangible assets - (365,825) - 365,825 - - - - - - - (Gain)/Loss on the transfer to retained earnings as a result of the sale of equity instruments measured at fair value through other comprehensive income - - (31,231,750) 31,231,750 - - - - - - - Total other transfers excluding those related to transactions with shareholders - (365,825) (31,231,750) 31,597,575 - - - - - - - Transactions with shareholders Redeemed own shares - - - - - - (63,364,962) - (63,364,962) (63,364,962) Other sources of funding - - - (23,300,761) - 23,300,761 - - - - - Other items with an impact on equity - - - 2,662,948 - - - - 2,662,948 - 2,662,948 Dividends distributed to non-controlling interests - - - - - - - - - (1,117,017) (1,117,017) Transactions resulting in a change in non-controlling interests - - - (1,460,384) - - - - (1,460,384) (2,644,187) (4,104,571)
The attached notes form an integral part of the consolidated financial statements. Page 8 of 101 Dividends distributed for 2021 - - - (14,250,000) - - - - (14,250,000) - (14,250,000) Other transfers between equity items - - - (6,092,733) 2,004,137 4,088,596 - - - - - Total transactions with shareholders - - - (42,440,930) 2,004,137 27,389,357 (63,364,962) - (76,412,398) (3,761,204) (80,173,602) Balance as at 31 December 2022 50,000,000 125,720,104 369,357,208 1,024,459,557 30,937,825 693,070,737 (63,364,962) - 2,230,180,469 74,885,218 2,305,065,687 * For own shares, Infinity Capital Investments S.A. submitted to the Financial Supervisory Authority the necessary documentation for the reduction of share capital, the procedures are ongoing. The consolidated financial statements were approved by the Board of Directors at the meeting of 28 March 2024 and signed on its behalf by: Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President - General Manager Vice President - Deputy General Manager Economic Manager
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CONSOLIDATED STATEMENT OF CASH FLOWS Item name 31 December 2023 31 December 2022 Operating activities Total net profit for the financial year 155,511,959 194,926,284 Adjustments for: (Reversal of impairment losses)/Impairment losses on financial assets (5,898,689) 22,491 Gain on revaluation of investment property - (8,507,174) Losses from non-financial assets depreciation - 190,392 Expenses related to the depreciation/amortisation of tangible and intangible assets 16,036,702 12,193,755 Net gain from the sale of tangible assets (402,559) - (Gain)/Loss on financial assets at fair value through profit or loss (1,159,994) 177,388 Dividend income (95,539,933) (190,369,244) Interest income (5,442,797) (4,820,667) Interest expenses 6,052,293 6,821,935 Accruals related to employee benefits - 8,987,267 Expenses with provisions for risks and charges 656,865 870,945 Profit tax 8,099,347 26,449,495 Gain from a bargain purchase (154,850,032) - Other gains and losses 3,451,920 (9,458,936) Changes in operating assets and liabilities Bank deposits with maturity of three months or more (6,415,289) (427,651) Payments for acquisitions of financial assets at fair value through profit or loss (986,100) - Payments for acquisitions of financial assets at fair value through other comprehensive income (34,822,996) (45,565,926) Proceeds from sales of financial assets at fair value through other comprehensive income 109,300,723 - Changes in other financial assets at amortised cost (51,950,686) 15,082,216 Changes in inventories 75,564,391 (61,825,165) Changes in other assets (6,215,643) 415,695 Changes in other financial liabilities at amortized cost 20,306,539 (3,185,305) Changes in other liabilities 6,088,253 (5,580,217) Dividends received 87,858,842 181,358,878 Interest received 5,442,797 4,820,667 Profit tax paid related to comprehensive income (4,411,791) (27,853,272) Net cash from operating activities 126,274,122 94,723,851 Investing activities Payments for purchases of tangible and intangible assets (5,802,052) (4,503,276)
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Item name 31 December 2023 31 December 2022 Payments for acquisitions of investment property (19,900,222) - Proceeds from the sale of tangible and intangible assets 1,974,464 - Net cash used in investing activities (23,727,810) (4,503,276) Financing activities Dividends paid (2,927) (11,865,384) Own shares bought back (7,811) (63,300,000) Changes in non-controlling interests, Group acquisitions 22,690,139 (8,794,266) Payments related to lease contracts (255,885) - Interest paid on leases (32,011) - Repayments related to loans and borrowings (235,649,968) - Proceeds from loans and borrowings 156,047,591 47,260,419 Interest paid on loans and borrowings (6,052,293) (6,821,935) Net cash used in financing activities (63,263,165) (43,521,166) Net increase in cash and cash equivalents 39,283,147 46,699,409 Cash and cash equivalents as at 1 January 99,737,272 53,037,863 Cash and cash equivalents as at 31 December 139,020,419 99,737,272
The consolidated financial statements were approved by the Board of Directors at the meeting of 28 March 2024 and signed on its behalf by: Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President - General Manager Vice President - Deputy General Manager Economic Manager
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1. REPORTING ENTITY Infinity Capital Investments S.A. ("the Company" or "Infinity Capital Investments S.A.") is classified under the applicable legal provisions as a closed-ended, self-managed, diversified retail Alternative Investment Fund (AIF). Infinity Capital Investments S.A. is authorised by the Financial Supervisory Authority (FSA) as an Alternative Investment Fund Manager (AIFM.) under License No. 45/15.02.2018 and as an Alternative Investment Fund for Retail Investors (AIFRI) by License No. 94/08.06.2021. The Company operates in compliance with the provisions of Law no. 74/2015 on alternative investment fund managers, Law no. 24/2017 – republished, on issuers of financial instruments and market operations, as amended and supplemented, Companies Law no. 31/1990, republished, as amended and supplemented, Law no. 243/2019 on the regulation of alternative investment funds, FSA Regulation no. 5/2018 on issuers of financial instruments and market operations, FSA Regulation no. 7/2020 on the authorization and operation of alternative investment funds and Rule no. 39/2015 for the approval of Accounting Regulations in compliance with International Financial Reporting Standards, applicable to entities authorized, regulated and supervised by the Financial Supervisory Authority in the financial instruments and investments sector, as well as the Investor Compensation Fund. The company is self-managed and has its registered office in Craiova, Str. Tufănele nr. 1, postal code 200767,
Dolj county.
The company is registered with the Trade Register Office attached to the Dolj District Court under number J16/1210/1993 and Unique Registration Code 4175676, tax attribute RO. The Company's shares are listed on the Bucharest Stock Exchange, Premium category (market symbol INFINITY). The records of the Company's shares and shareholders are kept by Depozitarul Central S.A. Bucharest under the law. The deposit activity required by legislation is provided by Raiffeisen Bank S.A.
The main activity is NACE code 649 - other financial intermediation, except insurance and pension funding activities, and the main activity is NACE code 6499 - other financial intermediation n.e.c. According to the articles of association, the main activities that the Company may carry out are the following: a) portfolio management; b) risk management. The company, as AIFM, may also carry out other activities such as: - entity management; a) legal and fund accounting services; b) requests for information from clients; c) verification of compliance with applicable legislation; d) distribution of income; e) issues and buy-backs of equity securities; f) record keeping. - activities related to AIF assets, i.e. services necessary for the performance of the AIFM's management duties, infrastructure management, real estate management, advice to entities on capital structure, industrial strategy and related matters, advice and services relating to mergers and acquisitions of entities, and other services related to the management of the AIF and the companies and other assets in which it has invested. The subscribed and paid-up share capital is 50,000,000 lei, divided into 500,000,000 shares with a nominal value of 0.1 lei/share.
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1. REPORTING ENTITY (continued) The main characteristics of the shares issued by the Company: ordinary, registered shares of equal value, issued in dematerialized form, fully paid at the time of subscription, evidenced by account registration and granting equal rights to their holders, except for the limitations in the regulations and legal provisions. The consolidated financial statements as of 31 December 2023 ("financial statements", "consolidated financial statements") include the Company and its subsidiaries (referred to hereinafter as the "Group") and are audited. The core 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 the subsidiaries, which belong to different sectors of activity such as: manufacture of measurement instruments and devices, verification, control, navigation, food sector, tourism, rental of commercial premises and commerce.
The consolidated financial statements were approved by the Board of Directors at its meeting of 28 March 2024.
2. BASIS OF PREPARATION a) Declaration of Conformity The consolidated financial statements have been prepared in accordance with Rule no. 39/2015 approving the Accounting Regulations in accordance with the International Financial Reporting Standards, applicable to entities authorized, regulated and supervised by the Financial Supervisory Authority in the financial instruments and investments sector, as well as the Investor Compensation Fund as amended and supplemented, and are the responsibility of the Group's management.
The financial statements have been prepared on a going concern basis, which assumes that the Group will continue its operations in the foreseeable future.
In accordance with the provisions of Regulation (EU) no. 1606/2002 of the European Parliament and of the Council of the European Union of 19 July 2002, as well as of Law 24/2017 republished - regarding the issuers of financial instruments and market operations, the Company has the obligation to prepare and submit to the FSA annual consolidated financial statements, in accordance with the International Financial Reporting Standards ("IFRS"), no later than 4 months after the end of the financial year.
The consolidated financial statements of the Group as at 31 December 2023 have been prepared, approved and will be made available to the public in electronic format on the Company's website: www.infinitycapital.ro. The Group's accounting records are maintained in Ron. The main consolidation-specific adjustments are: - elimination from the statement of financial position of shareholdings held in Group companies; - elimination of intra-Group equity transactions and fair value adjustments; - elimination from the statement of profit or loss and other comprehensive income of dividend income at gross value settled within the Group; - elimination of balances, transactions, income and expenses within the Group;
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2. BASIS OF PREPARATION (continued) a) Declaration of Conformity (continued) - Non-controlling interests are presented in the statement of consolidated financial position as an equity item, separate from the equity of the parent company and represent their shares in the equity items and profits of the Group companies. The accounting records of the Company's subsidiaries are maintained in Romanian Lei, in accordance with Romanian Accounting Regulations (RAR) or International Financial Reporting Standards (IFRS). Accounting records under RAR are restated at the Group level to reflect differences between them and those under IFRS. Accordingly, RAR accounts are adjusted, where necessary, to harmonize the consolidated financial statements in all material aspects with IFRS. Apart from the consolidation-specific adjustments, the main restatements of the financial information contained in the financial statements prepared in accordance with RCR, in order to align them with IFRS requirements consist of: - grouping several items into more comprehensive categories according to the requirements of IAS 1 – Presentation of Financial Statements; - adjustments in the profit or loss account to record dividend income at the time of declaration and at gross value; - adjustments related to financial investments measured at fair value through other comprehensive income for their classification, presentation and measurement at fair value in accordance with IFRS 9 – Financial Instruments and IFRS 13 – Fair Value; - adjustments to investment property for their fair value measurement in accordance with IAS 40 - Investment Property and IFRS 13 – Fair Value; - adjustments of property, plant and equipment for their valuation in accordance with the Group's accounting policies and in accordance with IAS 16 – Property, Plant and Equipment and IFRS 13 – Fair Value; - adjustments for the recognition of deferred income tax assets and liabilities in accordance with IAS 12 – Income Tax; - IFRS disclosure requirements b) Presentation of the Financial Statements The Group has adopted a liquidity-based presentation in the consolidated statement of financial position and the presentation of income and expenses has been made in relation to their nature in the consolidated statement of profit or loss and other comprehensive income. These disclosure methods were considered to provide information that is credible and more relevant than those that would have been disclosed under other methods permitted by IAS 1 “Presentation of Financial Statements” and IFRS 12 “Presentation of Interests in Other Entities”. The management of Infinity Capital Investments S.A. considers that the Group will normally continue its activity in the future and consequently, the consolidated financial statements have been prepared on this basis (see also Note 2 (f) “The impact of the Russian-Ukrainian military conflict and other international trends on the financial position and performance of the Group)”.
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2. BASIS OF PREPARATION (continued) c) Functional and presentation currency The Group's management considers the functional currency, as defined by IAS 21 "The Effects of Changes in Foreign Exchange Rates," to be the Romanian Leu (RON or Lei). The consolidated financial statements are prepared in Romanian Leu, rounded to the nearest unit, which the Group's management has chosen as the presentation currency.
d) Basis of measurement Consolidated financial statements are prepared on the basis of the fair value convention for financial assets and liabilities measured at fair value through profit or loss and financial assets measured at fair value through other comprehensive income. Other financial assets and liabilities as well as non-financial assets and liabilities are presented at amortised cost, revalued amount or historical cost.
e) Use of estimates and judgments The preparation of the consolidated financial statements in accordance with IFRS requires the management to make estimates, judgements and assumptions that affect the application of accounting policies and the reported amounts of assets, liabilities, income and expenses. The estimates and assumptions associated with these judgements are based on historical experience as well as other factors considered reasonable in the context of these estimates. The results of these estimates form the basis of judgements about the carrying amounts of assets and liabilities that cannot be obtained from other sources of information. The results obtained may differ from the estimates. The Group periodically reviews the estimates and assumptions underlying the accounting records. Revisions of accounting estimates are recognized in the period in which the estimate is revised, if the revision affects only that period, or in the current period and future periods, if the revision affects both the current period and future periods. The information and judgments relating to the determination and application of accounting policies and the determination of accounting estimates having the highest degree of uncertainty in the estimates, which have a significant impact on the amounts recognised in these annual financial statements, are as follows: • Determining the fair value of financial instruments (see notes 18 and 6); • Fair value hierarchy and unobservable inputs used in valuation (Level 3) (see note 18); • Classification of financial instruments (see note 6).
(f) The impact of the Russian-Ukrainian military conflict and other international trends on the Group's financial position and performance On 24 February 2022, Russia began military operations against Ukraine. This was preceded by a troop build-up at the border with Ukraine and Russia's diplomatic recognition of the Donetsk People's Republic and the Luhansk People's Republic on 21 February 2022. This event has had, and is expected to continue to have, a negative impact on many economic sectors, also given the important role played by Russia in the energy raw materials market in Europe. The Group has no direct exposures in Russia or Ukraine.
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2. BASIS OF PREPARATION (continued) f) Impact of the Russian-Ukrainian military conflict and other international trends on the Company's financial position and performance (continued) In 2023, the capital market recorded significant growth, after a 2022 full of challenges and uncertainties. Macroeconomic risks also eased during 2023, despite ongoing substantial uncertainties in the financial sector, high inflation and ongoing geo-political conflicts. At Group level, developments in the financial market are constantly monitored in order to identify possible events that could have an impact on the business. Macroeconomic uncertainty is still present, influenced by geopolitical conflict, high inflation and restrictive monetary policy. These factors can have a significant impact on the Romanian economy and consequently on the companies in the Company's portfolio. The Board of Directors of the Company is aware that economic developments both globally and locally may influence the future activity of the Company and may have effects on the future results of the Company. Management constantly monitors the risks and uncertainties present, implementing measures to ensure the continuation of the activity in optimal conditions. During 2023, shareholders and investors were informed in a normal manner, with the company communicating relevant information and events through current and periodic reports and/or updates on the Company's website. g) Significant accounting policies The Group also adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) from 1 January 2023. Although the amendments did not result in any changes to the accounting policies themselves, they impacted accounting policy information disclosed in the financial statements. The amendments require the disclosure of "material" rather than “significant” accounting policies. The amendments also provide guidance on the application of materiality to disclosure of accounting policies, assisting entities to provide useful, entity-specific accounting policy information that users need to understand other information in the financial statements. Management reviewed the accounting policies and made updates to the information disclosed in Note 3 Material Accounting Policies (2022: Significant Accounting Policies) in certain instances in line with the amendments.
3. BASIS OF CONSOLIDATION
a) Business combinations Business combinations are accounted for using the acquisition method at the date when control is acquired. Application of the acquisition method requires: determination of the acquisition date, recognition and measurement of the identifiable assets acquired, liabilities assumed and any non-controlling interests held in the acquiree, and recognition and measurement of goodwill or bargain purchase gain. The date on which control of the acquiree is acquired is generally the date on which the Group legally transfers the consideration, acquires the assets and assumes the liabilities of the acquiree - the acquisition date.
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3. BASIS OF CONSOLIDATION (continued) a) Business combinations (continued) The Group recognises goodwill at the date of acquisition, measured as the amount by which the amount in (a) exceeds the amount in (b) below: (a) the total of: (i) the consideration transferred (ii) the value of any non-controlling interests held in the acquiree (iii) in a business combination achieved in stages, the acquisition-date fair value of the Group's previously held equity interest in the acquiree. (b) the net values of identifiable assets acquired and liabilities assumed at acquisition-date. Each identifiable asset acquired and liability assumed is measured at its acquisition-date fair value. After initial recognition, goodwill is measured at cost less accumulated impairment losses. If the net of the acquisition-date values of the identifiable assets acquired and liabilities assumed exceeds the amount of the consideration transferred, the value of any non-controlling interests in the acquiree and the fair value of the Group's previously held equity interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, the liabilities assumed by the Group to the former shareholders of the acquiree and the equity interests issued by the Group in exchange for obtaining control of the acquiree. Acquisition-related costs are recognised in the income statement as incurred. At the acquisition date, identifiable assets acquired and liabilities assumed are recognised at their fair values at the acquisition date, with the following exceptions: • Deferred tax assets or liabilities and assets or liabilities relating to employee benefit arrangements are recognised and measured in accordance with IAS 12 and IAS 19 Employee benefits, respectively; • Liabilities or equity instruments related to share-based payment arrangements of the acquiree or related to share-based payment arrangements of the Group entered into to replace share-based payment arrangements of the acquiree are measured in accordance with IFRS 2 'Share-based payment' at the acquisition date; • Assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 'Non-current assets held for sale and discontinued operations' are measured in accordance with that standard.
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3. BASIS OF CONSOLIDATION (continued) a) Business combinations (continued) When the consideration transferred by the Group in a business combination includes contingent consideration, the contingent consideration is measured at acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of contingent consideration that qualify as measurement period adjustments are adjusted retrospectively with appropriate adjustments to goodwill. Measurement period adjustments are adjustments resulting from additional information obtained during the 'measurement period' (which may not exceed one year from the acquisition date) about facts and circumstances that existed at the acquisition date. Subsequent accounting for changes in the fair value of contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounted for within equity. Other contingent consideration is remeasured to fair value at subsequent reporting dates with changes in fair value recognised in profit or loss. When a business combination is achieved in stages, the Group's previously held interests in the acquiree are remeasured to their acquisition-date fair value and the resulting gain or loss, if any, is recognised in the income statement. Amounts arising from interests held in the acquiree before the acquisition date that were previously recognised in other comprehensive income are reclassified to profit or loss if such treatment would be appropriate if those interests were sold. If the initial accounting for a business combination is incomplete by the end of the reporting period in which a combination occurs, the Group reports provisional amounts for items for which the accounting is not complete. These provisional amounts are adjusted during the measurement period, or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed at the acquisition date that, if known, would have affected the amounts recognised at that date. Non-controlling interests in an acquired entity are equity interests in a subsidiary that are not attributable, directly or indirectly, to the Parent. They are measured either at fair value or by reference to the proportionate share of the non-controlling interests in the acquiree's identifiable net assets. The Group has elected to measure non-controlling interests at the non-controlling interest's proportionate share of the acquiree's identifiable net assets.
b) Subsidiaries Subsidiaries are entities under the control of the Company. The Company controls an investee when it is exposed to or has rights to variable returns based on its ownership interest in the investee and has the ability to influence those returns through its authority over the investee. The potential or convertible voting rights that are exercisable at the time must also be taken into account when assessing control. As of 31 December 2023, there are 14 entities over which Infinity Capital Investments S.A. owns more than 50% of their share capital (13 entities as of 31 December 2022) and enters the scope of consolidation.
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3. BASIS OF CONSOLIDATION (continued) b) Subsidiaries (continued) The list of subsidiaries as at 31 December 2023 and 31 December 2022 is as follows: No. no. Company name Address Registration number Trade Register No. Percentage held by Company as at 31.12.2023 Percentage held by Company as at 31.12.2022 1 HOTEL COMPLEX DAMBOVITA S.A. TÂRGOVIȘTE, B-DUL LIBERTATII NR. 1, DÂMBOVIȚA COUNTY 10108620 J15/11/1998 99.99% 99.99% 2 GRAVITY CAPITAL INVESTMENTS S.A.* Bucharest, B-dul Unirii, No. 14, SECTOR 4 46979099 J40/20021/2022 99.99% 99.99% 3 VOLTALIM S.A. CRAIOVA, B-DUL DECEBAL 120 A, DOLJ COUNTY 12351498 J16/698/1999 99.55% 99.55% 4 MERCUR S.A. CRAIOVA, CALEA UNIRII 14, DOLJ COUNTY 2297960 J16/91/1991 97.86% 97.86% 5 LACTATE NATURA S.A. TÂRGOVIȘTE, 23 INDEPENDENTEI BLVD., DÂMBOVIȚA COUNTY 912465 J15/376/91 93.70% 93.70% 6 FLAROS S.A. Bucharest Municipality, Ion Minulescu 67-93, SECTOR 3 350944 J40/173/1991 93.70% 81.07% 7 ARGUS S.A. ** CONSTANTA, INDUSTRIALĂ 1, CONSTANTA COUNTY 1872644 J13/550/1991 91.42% 86.42% 8 GEMINA TOUR S.A. RM. VALCEA, STIRBEI VODA 103, VALCEA COUNTY 1477750 J38/876/1991 88.29% 88.29% 9 ALIMENTARA S.A. SLATINA, ARINULUI 1, OLT COUNTY 1513357 J28/62/1991 85.23% 85.23% 10 CONSTRUCȚII FEROVIARE S.A. CRAIOVA, ALEEA I BARIERA VÂLCII 28A, DOLJ COUNTY 2292068 J16/2209/1991 77.50% 77.50% 11 UNIVERS S.A. RM. VALCEA, REGINA MARIA 4, VALCEA COUNTY 1469006 J38/108/1991 73.75% 73.75% 12 PROVITAS S.A. BUCHAREST, B-DUL UNIRII 14, BL. 6A, 6B, 6C, SECTOR 4 7965688 J40/10717/1995 71.30% 70.28% 13 TURISM S.A. PUCIOASA, REPUBLICII 110, DÂMBOVIȚA COUNTY 939827 J15/261/1991 69.22% 69.22% 14 ELECTROMAGNETICA S.A.*** BUCHAREST, CALEA RAHOVEI NR. 266-268 414118 J40/19/1991 65.45% 28.16%
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3. BASIS OF CONSOLIDATION (continued) b) Subsidiaries (continued) * Gravity Capital Investments S.A. has the following ownership on 31 December 2023 and 31 December 2022: • Gravity Real Estate S.R.L. - 100% (also includes Gravity Real Estate One S.R.L. subsidiary) ** Argus S.A. Constanta has the following ownership on 31 December 2023 and 31 December 2022: • Comcereal S.A. Tulcea – 95.36% (also includes subsidiary Cereal Prest S.A.) • Argus Trans S.R.L. - 100% • Aliment Murfatlar S.R.L. is 100% owned by Infinity Capital Investments S.A. on 31 December 2023 and 100% by Argus S.A. on 31 December 2022 *** Electromagnetica S.A., a company introduced in the Consolidation Group during 2023, has the following ownership on 31 December 2023: • Electromagnetica Prestserv S.R.L. – 100% • ELECTROMAGNETICA fire S.R.L. – 100% • Procetel S.A. – 96.55%. As of 31 December 2023, the total assets of the 14 companies included in the consolidation scope of the Group represent 32.09% of the total assets of the Group (31 December 2022: 31.52% excluding Electromagnetica S.A.), and respectively 29.69% of the net assets of the Group (31 December 2022: 26.16% excluding Electromagnetica S.A.), and have been consolidated using the full consolidation method. The core activities carried out by the Company and the companies included in the consolidation scope are represented by the financial investment activity carried out by the Company and the activities carried out by the respective companies, which are mainly represented by the following sectors: The manufacturing of instruments and devices for measurement, verification, control, navigation, food, tourism, as well as renting commercial spaces and engaging in commerce. As of 1 January 2018, the Company's management has classified all investments in capital instruments (shares) in the category "Financial assets measured at fair value through other comprehensive income", except for fund units that are measured at fair value through profit or loss.
c) Associates Associates are those companies in which the Group can exercise significant influence but not control over financial and operational policies. Participations in which the Group holds between 20% and 50% of the voting rights, but over which it does not exercise significant influence, are classified as financial assets measured at fair value through other 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 have investments in associates as at 31 December 2023 and 31 December 2022.
d) Transactions eliminated on consolidation Intra-Group settlements and transactions, as well as realised profits resulting from intra-Group transactions, are removed entirely from the consolidated financial statements.
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4. MATERIAL ACCOUNTING POLICIES Accounting policies are the specific principles, bases, conventions, rules and practices applied in the preparation and presentation of the Financial Statements. The following policies have been consistently applied to all periods disclosed in the Financial Statements. The Group has consistently applied the following accounting policies for all periods presented in these consolidated financial statements, unless otherwise stated. In addition, the Group also adopted Disclosure of Accounting Policies (Amendments to IAS 1 and IFRS Practice Statement 2) from 1 January 2023. The amendments require the disclosure of "material" rather than “significant” accounting policies. A Although the amendments did not result in any changes to the accounting policies themselves, they impacted accounting policy information disclosed in the financial statements related to the financial instruments presented in Note 3 in certain instances (see Note 14 for further information).
a) Going concern In 2023, the capital market experienced significant growth, after a challenging and uncertain year in 2022. Additionally, macroeconomic risks decreased during 2023, despite ongoing substantial uncertainties in the financial sector, high inflation, and present geopolitical conflicts. Global economic recovery following the COVID-19 pandemic, the conflict in Ukraine, and conflicts in the Middle East are leading to slow economic growth globally. These events have had, and are expected to continue to have, a negative impact on many economic sectors, considering the significant role played by Russia in the European energy commodities market. The current geopolitical context may lead to episodes of volatility in financial markets. These factors can significantly impact the Romanian economy and consequently the companies within the Group. The Board of Directors of the Company is aware that economic developments both globally and locally can influence the future activities of the Group, potentially affecting its future results. Management continuously monitors present risks and uncertainties, implementing measures to ensure the continuity of operations under optimal conditions. None of the commercial entities included in the consolidation scope, except Electromagnetica S.A., fall under the scope of Order no. 881/25 June 2012, and are not obliged to prepare and report financial statements under IFRS conditions. They maintain accounting records in accordance with the regulations of Order no. 1802/2014 approving accounting regulations regarding annual standalone financial statements and annual consolidated financial statements. For consolidation purposes, they prepare a second set of financial statements under IFRS conditions. The financial statements prepared under IFRS conditions result from restating the financial statements prepared under Order no. 1802/2014. The consolidated financial statements were prepared in accordance with Regulation no. 39/2015 for approving accounting regulations compliant with the International Financial Reporting Standards applicable to authorized, regulated, and supervised entities by the Financial Supervisory Authority in the sector of financial instruments and investments, as well as the Investor Compensation Fund.
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4. MATERIAL ACCOUNTING POLICIES (continued) b) Foreign currency transactions Transactions denominated in foreign currency are initially recorded in Ron at the official exchange rate on the date of the transactions. Monetary assets and liabilities recorded in foreign currencies at the date of preparation of the statement of financial position are converted in functional currency at the exchange rate at the end of the financial year. Gains or losses on their settlement and conversion using the year-end exchange rate of monetary assets and liabilities denominated in foreign currency are recognised in profit or loss, except for those that have been recognised in equity as a result of being recorded under hedge accounting. The exchange rates of the main foreign currencies against RON used at the reporting date are: Currency 31 December 2023 31 December 2022 Variation Euro (EUR) 1:4,9746 1:4,9474 +0,55% US Dollar (USD) 1:4.4958 1:4.6346 -3%
c) Cash and cash equivalents Cash comprises cash in hand and at banks, demand deposits and deposits with an original maturity of less than 90 days. Cash equivalents are short-term, highly liquid financial investments that are easily convertible into cash and that are subject to an insignificant risk of change in value.
d) Subsidiaries and associated entities Subsidiaries are entities under the control of the Company. The Company controls an investee when it is exposed to or has rights to variable returns based on its ownership interest in the investee and has the ability to influence those returns through its authority over the investee. The potential or convertible voting rights that are exercisable at the time must also be taken into account when assessing control. The Group has concluded that as of 31 December 2023, there are 14 entities in which the Company holds more than 50% of their share capital (compared to 13 entities as of 31 December 2022) and that it does not hold investments in associates.
e) Financial assets and liabilities 1. Financial assets The Group's financial instruments under IFRS 9 “Financial Instruments” include the following: - Investments in equity instruments (e.g. shares); - Investments in fund units; - Trade and other receivables; - Cash and cash equivalents; and - Bank deposits.
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4. MATERIAL ACCOUNTING POLICIES (continued) e) Financial assets and liabilities (continued) 1. Financial assets (continued) Classification The Group classifies financial instruments held in accordance with IFRS 9 “Financial Instruments” into financial assets and financial liabilities. The Group classifies financial assets measured at: • amortised cost: cash and cash equivalents, deposits with banks and trade receivables and other receivables; • fair value through other comprehensive income: equity instruments (i.e. shares); and • fair value through profit or loss: fund units. The classification of financial assets depends on: - the Group's business model for the management of financial assets; and - the characteristics of the contractual cash flows of the financial asset. The business models used by the Group to manage its financial assets are: • To collect the contractual cash flows: Financial assets that are held under this business model are managed to obtain cash flows by collecting contractual payments over the life of the instrument. This means that the Group manages the assets held in the portfolio in order to collect those contractual cash flows (instead of managing the overall return of the portfolio through both holding and selling the assets). Assets held under this business model are not necessarily held until they mature, “infrequent” sales are also possible when the credit risk of the instruments has increased. An increase in the frequency of sales in a given period is not necessarily contrary to this business model, if the Group can explain the reasons that led to these sales and can demonstrate that the sales do not reflect a change in the current business model. • To collect the contractual and sales cash flows: Financial assets that are held under this business model are managed both for the collection of contractual cash flows and for the sale of financial assets. • Other business models Other business models include maximizing cash flows through selling, trading, asset management based on fair value, financial instruments purchased for sale or trading and measured at fair value through profit or loss. The management of this portfolio is based on the evolution of the market value of the respective assets and includes frequent sales and purchases for the purpose of maximizing profit. Analysis of cash flow characteristics (SPPI test) The SPPI test is the analysis of the contractual terms of financial assets in order to identify whether cash flows are solely payments of principal and interest on principal owed. IFRS 9 includes three categories of classification of financial assets: measured at amortised cost, measured at fair value through other comprehensive income and measured at fair value through profit or loss.
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4. MATERIAL ACCOUNTING POLICIES (continued) e) Financial assets and liabilities (continued) 1. Financial assets (continued) • Financial assets measured at amortized cost Financial assets measured at amortised cost are represented by cash and cash equivalents, deposits with banks and trade receivables and other receivables. After initial recognition, a financial asset is classified as measured at amortised cost only if two conditions are met simultaneously: o the asset is held within a business model whose objective is to retain financial assets to cash out the contractual cash flows; and o the contractual terms of the financial asset give rise, on specified dates, to cash flows representing solely principal and interest payments (“SPPI”). The Group performed the SPPI test for assets measured at amortised cost (e.g. bonds and trade receivables) and there were no significant deviations. • Financial assets designated at fair value through other comprehensive income (“FVTOCI”) The Group's holdings in equity instruments are fully measured at fair value through other comprehensive income as at 31 December 2023 and 2022. After initial recognition, a financial asset is classified as measured at fair value through other comprehensive income only if two conditions are met simultaneously: o the asset is held within a business model whose objective is to retain financial assets to cash out the contractual cash flows; and o the contractual terms of the financial asset give rise, on specified dates, to cash flows representing solely principal and interest payments. In addition, upon initial recognition of an investment in equity instruments not held for trading, the Group may irrevocably to present subsequent changes in fair value in other comprehensive income. The Group has used the irrevocable option to designate these equity instruments at fair value through other comprehensive income as these financial assets are held both for the collection of dividends and for gains on sale, not for trading. Gains or losses on a capital instrument measured at fair value through other comprehensive income are recognised in other comprehensive income, excluding dividend income. 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 payment of the dividend is established; b) the economic benefits associated with the dividend are likely to be generated for the Group, and c) the amount of the dividend can be reasonably measured.
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4. MATERIAL ACCOUNTING POLICIES (continued) e) Financial assets and liabilities (continued) 1. Financial assets (continued) • Financial assets measured at fair value through profit or loss (FVTPL) The financial assets valued at the Group's FVTPL are represented by the fund units as at 31 December 2023 and 2022. All financial assets that are not classified as measured at amortised cost or at fair value through other comprehensive income as described in these notes to the financial statements are measured at fair value through profit or loss. In addition, at initial recognition, the Group may irrevocably designate that a financial asset, which otherwise meets the requirements to be measured at amortised cost or at fair value through other comprehensive income, be measured at fair value through profit or loss, if doing so eliminates or significantly reduces an accounting mismatch that would otherwise occur. Financial assets that do not meet the criteria for cash flow collection (SPPI test) are required to be measured at fair value through profit or loss. Following the adoption of IFRS 9, equity financial assets for which the Group did not use the irrevocable option to classify them as financial assets at fair value through other comprehensive income and those not held for trading have been classified at fair value through profit or loss. Assets held for trading are measured at fair value through profit or loss. An asset is held for trading if it meets all of the following conditions: o Is held for the purpose of sale and buy-back in the near future; o Upon initial recognition is part of a portfolio of identified financial instruments that are managed together and for which there is evidence of a recent actual short-term profit-tracking pattern; or o it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument). The Group does not hold financial assets held for trading on 31 December 2023 or 31 December 2022. In the case of financial assets at fair value through profit or loss, changes in fair value are recorded in the statement of comprehensive income, in profit or loss.
2. Financial liabilities Classification Financial liabilities are classified after initial recognition at amortised cost, except for financial liabilities measured at fair value through profit or loss represented by financial liabilities held for trading, which are designated at initial recognition or subsequently at fair value through profit or loss, according to the specific provisions of IFRS 9, including financial liabilities related to derivatives. Infinity Capital Investments S.A. Group did not hold financial liabilities classified at fair value through profit or loss as at 31 December 2023 or 31 December 2022.
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4. MATERIAL ACCOUNTING POLICIES (continued) e) Financial assets and liabilities (continued) 3. Initial recognition of financial assets and liabilities Assets and liabilities are recognized by the Group at the date of the transaction. Financial assets and liabilities are measured at the time of initial recognition at fair value, plus or minus, in the case of financial assets or financial liabilities that are not at fair value through profit or loss, the transaction costs directly attributable to the acquisition or issuance of those financial assets or financial liabilities.
4. Offsets of financial assets and liabilities Financial assets and liabilities are offset and the net result is presented in the statement of financial position only when there is a statutory right of set-off and if there is an intention to settle them on a net basis or if the Group intends to realise the asset and extinguish the liability simultaneously. Income and expenses are presented net only when permitted by accounting standards, or for profit and loss resulting from a group of similar transactions such as those from the Group's trading activity.
5. Valuation i) at amortised cost The amortized cost of a financial asset or liability is the amount at which the financial asset or financial liability is measured at initial recognition, less principal repayments, plus or minus the accumulated amortization using the effective interest method of any difference between the initial value and the value at maturity, less, in the case of financial assets, allowances related to expected credit losses.
ii) at fair value Fair value is the price that would be received as a result of selling an asset or the price that would be paid to transfer a liability in a normal transaction between market participants at the valuation date (i.e. an exit price). The Group measures the fair value of a financial instrument using the prices quoted on an active market for that instrument. A financial instrument has an active market if quoted prices are available readily and regularly for that instrument. The Group measures instruments quoted on active markets using the closing price. A financial instrument is considered to be quoted in an active market when the 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 in a real and regular manner, 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 used to determine fair value is the closing price of the market on the last trading day before the valuation 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: inputs other than quoted prices included in Level 1 that are observable for assets or liabilities, either directly (e.g. prices) or indirectly (e.g. price derivatives);
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4. MATERIAL ACCOUNTING POLICIES (continued) e) Financial assets and liabilities (continued) 5. Valuation (continued) - Level 3: evaluation techniques based largely on unobservable elements. This category includes all instruments for which the valuation technique includes elements that are not based on observable data and for which unobservable input parameters may have a significant effect on the valuation of the instrument. Valuation techniques include techniques based on net present value, the discounted cash flow method, the method of comparisons with similar instruments for which there is an observable market price, and other valuation methods. The fair value measurement of the equity instruments (shares) held is performed as follows: - for securities listed and traded on an active market during the reporting period, the market value was determined taking into account the quotation on the last trading day (the closing quotation on the main capital market for those listed on the regulated market – BSE, respectively the reference price for the alternative system - AeRO for level 1); - for the rest of the listed securities for which there is no active market or they are not listed, valuation techniques based on unobservable elements were used, so valuation reports were drawn up by an authorized valuer member of ANEVAR and revised also by the Group.
iii) Identification and valuation of expected credit losses Financial assets measured at amortised cost The Group recognizes expected credit losses on financial assets at amortised cost under IFRS 9. The Group has defined as "impaired" exposures those receivables that meet one or both of the following criteria: • exposures for which the Group assesses that the debtor is unlikely to pay its obligations in full, irrespective of the amount of the exposures and the number of days for which the exposure is past due (e.g. due to major financial difficulties faced by the customer; in the case of amounts in dispute); • amounts outstanding at maturity with significant delays of more than 365 days. The Group recognizes in profit or loss the value of changes in expected credit losses over the lifetime of financial assets, as losses or reversal of expected credit losses. Expected credit losses or reversals are determined as the difference between the carrying amount of the financial asset and the present value of future cash flows using the financial asset's effective interest rate at baseline. The Group has assessed the potential impact of credit risk losses on its financial assets and does not consider it to be significant. 6. Gains and losses from changes in fair value Gains or losses resulting from a change in the fair value of a financial asset or financial liability that is not part of a hedging relationship are recognised as follows: • Gains or losses on financial assets or financial liabilities classified at fair value through profit or loss are recognised in profit or loss; • Gains or losses on a financial asset measured at fair value through other comprehensive income are recognised in other comprehensive income.
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4. MATERIAL ACCOUNTING POLICIES (continued) e) Financial assets and liabilities (continued) 7. Derecognition The Group derecognizes a financial asset when the contractual rights to receive cash flows from that financial asset expire, or when the Group has transferred the contractual rights to receive contractual cash flows related to that financial asset in a transaction in which it has significantly transferred all risks and rewards of ownership of that financial asset. Any interest in the transferred financial assets retained by the Group or created for the Group is separately recognised as an asset or liability. The Group derecognises a financial liability when the contractual obligations have ended or when the contractual obligations are cancelled or expire. If an entity transfers a financial asset through a transfer that qualifies for derecognition and retains the right to manage the financial asset for a fee, then it must recognize either an asset under management or a liability under management for that management agreement. Upon derecognition of a financial asset in its entirety (excluding capital instruments classified at fair value through other comprehensive income), the difference between: • its book value; and • the amount consisting of (i) the consideration of the amount received (including any new asset obtained less any new liability assumed) and (ii) any cumulative gain or loss that has been recognised in other comprehensive income, must be recognised in profit or loss. In the case of debt instruments, when the financial asset at fair value through other comprehensive income is derecognized, the cumulative gain or loss previously recognized in other comprehensive income is reclassified from the revaluation reserve to profit or loss as a reclassification adjustment (recycling to profit or loss). In the case of capital instruments measured at fair value through other comprehensive income, the cumulative gain or loss previously recognized in other comprehensive income is not reclassified from the revaluation reserve to profit or loss (e.g., not recycled to profit or loss), but reclassified to retained earnings.
f) Property, plant and equipment • Recognition and measurement Tangible assets recognized as assets are initially measured at acquisition cost (for those purchased for consideration), at the value of the contribution (for those received as a contribution in kind when establishing / increasing the share capital), respectively at the fair value from the acquisition date for those received free of charge. The cost of a tangible asset consists of the purchase price, including non-recoverable taxes, after deducting any commercial price reductions and any costs directly attributable to bringing the asset to the location and in the condition necessary for it to be usable for the purpose determined by management, such as: employee expenses resulting directly from the construction or purchase of the asset, site fit-out costs, initial delivery and handling costs, installation and assembly costs, professional fees.
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4. MATERIAL ACCOUNTING POLICIES (continued) f) Property, plant and equipment (continued)
Tangible assets are classified by the Group into the following asset classes of the same nature and with similar uses: - land and buildings - machinery and equipment - vehicles; - furniture, office equipment, equipment for the protection of human and material assets and other tangible assets.
• Evaluation after recognition For subsequent recognition, the Group adopted the revaluation model. After recognition as an asset, items of tangible assets in the form of buildings and land whose fair value can be measured reliably are recognized at revalued value, which is fair value at the date of revaluation less any subsequent amortization and any accumulated impairment losses. Other tangible assets are measured at cost less accumulated depreciation and any impairment losses. Revaluations must be made with sufficient regularity to ensure that the carrying amount does not differ materially from what would have been determined using fair value at the reporting period. If an item of tangible assets is revalued, then the entire class of property, plant and equipment to which that item belongs is subject to revaluation. If the carrying amount of an asset is increased as a result of a revaluation, the increase is recognized in other comprehensive income and accumulated in equity, as a revaluation surplus. However, the increase will be recognized in profit or loss to the extent that it offsets a decrease in the revaluation of the same asset previously recognized in profit or loss. If the carrying amount of an asset is reduced as a result of a revaluation, that decrease is recognized in profit or loss. However, the reduction will be recognized in other comprehensive income to the extent that the revaluation surplus shows a credit balance for that asset. Transfers from revaluation surplus to retained earnings are not made through profit or loss. The record of revaluation reserves is made for each individual asset and for each revaluation operation that has taken place. The revaluation surplus included in equity relating to an item of tangible assets is transferred directly to retained earnings as amortization and when the asset is ceased or disposed.
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4. MATERIAL ACCOUNTING POLICIES (continued) f) Property, plant and equipment (continued) Land and buildings are shown at revalued amount, which represents the fair value at the date of revaluation less accumulated depreciation and impairment losses. The re-evaluations are performed by specialized evaluators, members of ANEVAR.
• Subsequent costs Daily maintenance and repair expenses related to tangible assets are not capitalized. They are recognized as costs of the period in which they occur. These costs mainly consist of labor and consumables expenses and may also include the cost of low-value components. Expenses related to maintenance and repairs of tangible assets shall be recorded in the profit or loss account when they occur. Significant improvements to tangible assets, which increase their value or life span, or which significantly increase their ability to generate economic benefits, are capitalized (correspondingly increase the carrying amount of that asset).
• Depreciation Depreciation is calculated at the carrying amount (acquisition cost or revalued amount, minus residual value) for the activity for which they are intended. Depreciation is recognised in the profit or loss account using the straight-line method for the estimated useful life of property, plant and equipment (less land and assets in progress), which are recorded from the date on which they are available for use, for the activity for which they are intended, this modality reflecting the most accurate expected manner of consumption of the economic benefits embodied in the asset. Depreciation of an asset ceases at the earliest on the date when 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 "Assets held for sale and discontinued operations" and on the date when the asset is derecognized. Each part of an item of property, plant and equipment that has a significant cost in relation to the total cost of that item must be depreciated separately. The estimated useful lives for the current period and for the comparative periods are as follows: software – 3 years. - constructions 12-50 years - machinery and equipment and motor vehicles 3-20 years - furniture, office equipment, protection equipment 3-15 years for human and material assets and other tangible assets The depreciation methods, estimated useful lives, and residual values are reviewed by the Group's management at each reporting date. From the history of the Group, it resulted that the residual value of the assets is insignificant and therefore, the residual value is not taken into account in the calculation of the depreciation.
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4. MATERIAL ACCOUNTING POLICIES (continued) f) Property, plant and equipment (continued) • Impairment An asset is impaired when its carrying amount exceeds its recoverable amount. At each reporting date, the Group must check whether there are indications of asset impairment. If such indications are identified, the Group must estimate the recoverable amount of the asset. If the carrying amount of an asset is impaired as a result of a revaluation, that impairment must be recognized in profit or loss. However, the reduction must be recognized in other comprehensive income to the extent that the revaluation surplus shows a credit balance for that asset. The reduction recognized in other comprehensive income decreases the amount accumulated in equity as a revaluation surplus. Land does not depreciate. The depreciation of other tangible assets is calculated using the straight-line method, allocating costs related to the residual value, in accordance with the related useful life.
• Derecognition The carrying amount of an item of tangible assets is derecognised (removed from the statement of financial position) upon disposal or when no future economic benefit is expected from its use or disposal. Tangible assets that are scrapped or sold are removed from the balance sheet together with the appropriate cumulative depreciation. The gain or loss resulting from the derecognition of an item of tangible assets is included in the current income statement when the item is derecognised.
g) Investment property Investment property are real estate properties (land, buildings or parts of a building) owned by the Group for the purpose of lease or for value increase or both, and not: - to be used for the production or supply of goods or services or for administrative purposes; or - to be sold in the normal course of business. Some properties include a part that is owned for rent or for the purpose of increasing value and another part that is owned for the purpose of producing goods, providing services or for administrative purposes. If these parts can be sold separately (or leased separately under a finance lease), then they are accounted for separately. If the parts cannot be sold separately, the property is treated as investment property only if the part used for the purpose of producing goods, providing services or for administrative purposes is insignificant. • Recognition An investment property 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 the real estate investment can be measured reliably.
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4. MATERIAL ACCOUNTING POLICIES (continued) g) Investment property (continued) • Evaluation Initial assessment An investment property is initially valued 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 transaction costs). Subsequent evaluation The Group's accounting policy for the subsequent valuation of investment property is based on the fair value model. This policy is applied uniformly to all real estate investments. The valuation of the fair value of real estate investments is carried out by valuers who are members of the National Association of Valuers in Romania (ANEVAR). Fair value is based on market price quotes, adjusted, if applicable, to reflect differences in the nature, location, or conditions of that asset. These assessments are reviewed periodically by the Group. Gains or losses resulting from a change in the fair value of real estate investments are recognized in the income statement in the period in which they occur. The fair value of investment property reflects market conditions at the end of the reporting period.
• Transfers Transfers to and from the category of investment properties must be made when and only when there is a change in the use of the asset emphasised by: - commencement of use by the Group - for transfers from the category of investment properties to the category of property, plant and equipment used by the Group; - start of the fitting-out process for sale - for transfers from the category of investment properties to the category of inventories, accounted for in accordance with IFRS 5 "Assets held for sale and discontinued operations"; - termination of the use by the Group - for transfers from the category of property, plant and equipment used by the Group in the category of investment properties; - starting an operating lease with another party - for transfers from the category of inventories to the category of investment properties. For the transfer of an investment property accounted for at fair value to property, plant and equipment, the default cost of the asset for the purposes of its subsequent accounting is its fair value as of the date of change in use. If a real estate property used by the holder becomes an investment property that is accounted for at fair value, the Group applies IAS 16 “Property, plant and equipment” until the date of the change in use, and any difference from that date between the carrying amount of the real estate property in accordance with IAS 16 and its fair value is treated as a revaluation in accordance with IAS 16.
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4. MATERIAL ACCOUNTING POLICIES (continued) g) Investment property (continued) Derecognition The carrying amount of an investment property is derecognized at the time of disposal or when the investment is definitively withdrawn from use and no future economic benefits are expected from its disposal. Gains or losses resulting from the sale or disposal of an investment property are recognized in the income statement when it is sold or disposed of.
h) Inventories Inventories are assets held for sale in the ordinary course of business, assets in production to be sold in the ordinary course of business, or assets in the form of raw materials, consumables and other inventory to be used in the production process or for the provision of services. Inventories are measured at the lower amount between cost and net realizable value. The cost of inventories comprises all costs related to acquisition and processing, as well as other costs incurred in bringing inventories to their current location and condition. 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 asset and the estimated costs for carrying out the sale. The cost of inventories that are not normally fungible and goods and services produced for and destined for distinct orders is determined by specific identification of individual costs. For inventories, the cost at exit is determined using the first-in, first-out method.
i) Impairment of non-financial assets The carrying amount of non-financial assets of the company, other than deferred tax assets, is reviewed at each reporting date to identify impairment. If there are such indications, the recoverable amount of those 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 cash-generating group that is independent of other assets and groups of assets. Impairment losses are recognised in the income statement. The recoverable amount of an asset or a cash-generating unit is the maximum of its value in use and its fair value less costs to sell that asset or unit. To determine the net value in use, future cash flows are discounted using a pre-tax discount rate that reflects current market conditions and the specific risks of the asset. Impairment losses recognised in previous periods are measured at each reporting date to determine whether they have diminished or no longer exist. The impairment loss shall be reversed if there has been a change in the estimates used to determine the recovery value. The impairment loss shall be reversed only if the carrying amount of the asset does not exceed the carrying amount that would have been calculated, net of depreciation and impairment, if the impairment loss had not been recognized.
j) Share capital The share capital consists of ordinary, nominal shares, of equal value, issued in dematerialized form, granting equal rights to their holders.
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4. MATERIAL ACCOUNTING POLICIES (continued) k) Own shares The Group recognizes at the transaction date the own shares as a result of buybacks, as a decrease in equity, in the statement of financial position in the "Own shares" line for the value of redeemed amount. Own shares are recorded at the acquisition value, and brokerage commissions and other costs directly related to the acquisition are recorded directly in equity, in a separate account. The cancellation of own shares is carried out in accordance with the approval of the shareholders, after all legal requirements have been met. Upon cancellation, the balance of own shares is offset against the share capital and retained earnings. The cancellation of own shares may generate gains or losses, depending on the acquisition value of own shares in relation to their nominal value. Gains or losses from the cancellation of own shares are recognized directly in equity, in a separate account.
l) Dividends to be distributed Dividends are treated as a distribution of profits during the period in which they were declared and approved by the Ordinary General Meeting of Shareholders. The profit available for distribution is the profit of the year in the financial statements prepared in accordance with IFRS. m) Payment of dividends The rights to claim dividends not claimed by the shareholders is reviewed by the Group's management on an annual basis. The prescription decision is approved by the General Meeting of Shareholders (“GMS”) at the proposal of the Board of Directors, when the Group management concludes that there will be no more cash flow outflows. At the time of the time-bar, the prescribed amount is recorded in equity, in a separate account within retained earnings.
n) Employee benefits • Short-term benefits Short-term employee benefits include wages, bonuses, and social security contributions. The short-term employee benefit obligations are not discounted and are recognized in the income statement as the related service is performed. Short-term employee benefits are recognized as an expense when services are provided. A provision is recognised for amounts expected to be paid as short-term cash bonuses or employee profit-sharing schemes where the Group currently has a legal or constructive obligation to pay these amounts as a result of past services provided by employees and where that obligation can be reliably estimated. In addition to salaries and other salary-related rights, according to the Company Agreement (Articles of Incorporation) and the Collective Labour Agreement, the directors, managers with a mandate agreement and the employees of Infinity Capital Investments S.A. are entitled to receive bonuses (incentives) provided that the net profit indicator established by the income and expenses budget approved by the General Meeting of Shareholders for the current year is met, within the limit of the amount approved by the GMS for the approval of the financial statements of that year. This obligation is first recognized in the profit or loss account of the financial year in which the profit was made in the form of provisions for employee benefits. The distribution of these premiums (incentives) is carried out in the following year, after their approval by the General Meeting of Shareholders.
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4. MATERIAL ACCOUNTING POLICIES (continued) n) Employee benefits (continued) • Defined contribution plans The Group makes payments on behalf of its employees to the Romanian state pension system, health insurance and labour insurance contribution in the normal course of business. All employees of the Group are members and have a legal obligation to contribute (through individual social contributions) to the pension system and the health system of the Romanian state. The labour insurance contribution is recognised in the profit or loss account for the period. The Group has no further obligations. The Group is not engaged in any independent pension scheme and consequently has no other obligations in this respect. The Group is not engaged in any other post-retirement benefit scheme. The Group has no obligation to provide services subsequent to former or current employees. • Long-term employee benefits The Group's net obligation in respect of long-term service benefits is the amount of future benefits that employees have earned in exchange for services rendered by them in the current and prior periods. The present value of obligations arising from Collective Labour Agreements at the Group level is not significant, and therefore, the Group does not recognize these future costs as provisions in the financial statements.
o) Dividend income Dividend income is recognized in the income statement at the date on which the right to receive such income is established. Dividend income is recorded at gross amount including dividend tax, which is recognized as a current income tax expense. In the case of dividends received in the form of shares as an alternative to cash payment, dividend income is recognized at the level of cash that would have been received, in correspondence with the increase in the related participation. The Group does not record dividend income related to shares received free of charge when they are distributed proportionally to all shareholders. p) Revenue from contracts with customers Revenue from contracts with customers is recognised by the Group when or as it fulfils a performance obligation by transferring a good or service to a customer. An asset is transferred when or as the customer gains control of that asset. For each performance obligation identified, the Group determines at the beginning of the contract whether it will perform the performance obligation in time or whether it will perform it at a specific time. If the Group fails to fulfil an obligation to perform in time, the obligation to perform is fulfilled at a specific time. The Group analysed the main types of income applying the 5-step method in IFRS 15 "Revenue from contracts with customers": Step 1: Identification of contracts with customers; Step 2: Identification of the obligations resulting from these contracts; Step 3: Determining the transaction price; Step 4: Allocate the transaction price to the obligations to be fulfilled; Step 5: Revenue recognition upon completion/as contractual obligations are fulfilled.
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4. MATERIAL ACCOUNTING POLICIES (continued) p) Revenue from contracts with customers (continued) The table below provides information about the nature and timing of the performance obligation, including significant payment terms for the main categories of revenue from contracts with customers: Type of product /service Nature and timing of the performance obligation, including significant payment terms Revenue recognition accounting policies Delivery of goods/products The customer obtains control of the product on the date of its acceptance (representing the date on which the customer acquires the capacity to use the products and obtains all the benefits therefrom). The Group recognises a receivable as they represent the time when the right to consideration becomes unconditional. Payment terms are generally 30-180 days from the date of issue of the invoice. The obligation to perform is fulfilled at a specific time. The trade discounts granted to customers are based on their fulfilment of certain annual sales values. Returns are not usually accepted except in exceptional cases. Revenue is recognized on the date of dispatch to the customer or on the date of acceptance of the product by the customer. The income comprises the amount invoiced for the sale of the products, excluding VAT), minus the trade discounts granted to customers. The Group does not adjust the price of transactions with a financial component, applying the practical expedient in IFRS 15 "Revenue from contracts with customers": paragraph 63. If the Group receives short-term advances from customers, or for recognized revenues, it does not adjust the amounts received or revenues for the effects of a significant financing component, given that at the commencement of the contract it expects that the period lapsing from the transfer of the goods to collection will be less than 1 year. Trade discounts granted to customers (including expenses with related provisions) are deducted from the revenue from the sale of the products. Revenue from the provision of services (rental of commercial premises) The services provided by the Group are generally related to the rental of commercial premises. Service invoices are issued monthly for the period of providing the rent services. Invoices are generally payable within a maximum of 30 days from the date of the provision of the services or in the month of the provision of the services. The obligation to perform is fulfilled within a month. Revenue is recognized in the period in which the service is rendered. Revenue from the provision of tourism services The services provided by the Group are generally related to rental of hotel rooms. Invoices for services are issued at the end of the customer accommodation period and the provision of restaurant services. Invoices are generally payable within a maximum of 30 days from the date of the provision of the services or in the month of the provision of the services. The obligation to perform is fulfilled within a maximum of 1 month. Revenue is recognized in the period in which the service
is rendered.
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4. MATERIAL ACCOUNTING POLICIES (continued) p) Revenue from contracts with customers (continued) The profit tax for the year comprises the current tax (including the profit tax related to the subsidiaries that pay profit tax according to the Romanian Tax Code, applicable on 31 December 2023 and 31 December 2022) and the deferred tax. Current profit tax includes tax on income from dividends recognized on a gross basis. Profit tax is recognised in profit or loss or other comprehensive income if the tax relates to capital items. The current tax is the tax payable related to the profit made in the current period, determined based on the percentages applied at the reporting date and all adjustments related to the previous periods. For the fiscal year ended 31 December 2023 and 31 December 2022, the corporate tax rate was 16% and the profit tax rate was 1%. The tax rate related to taxable dividend income as at 31 December 2023 was: 8% and 0%, as at 31 December 2022 it was: 5% and 0%. Deferred tax is determined by the Group using the balance sheet method for those temporary differences that arise between the tax base for the calculation of tax on assets and liabilities and their carrying amount, used for reporting in the separate financial statements. Deferred tax is not recognised for the following temporary differences: initial recognition of goodwill, initial recognition of assets and liabilities arising from transactions which are not business combinations and which do not affect either accounting or tax profit and differences arising from investments in subsidiaries, provided they are not reversed in the near future. The deferred tax is calculated on the basis of the tax percentages that are expected to be applicable to the temporary differences upon their resumption, based on the legislation in force at the reporting date or issued at the reporting date and which will become effective thereafter. The deferred tax asset is recognized by the Group only to the extent that it is probable that future profits can be made that can be used to cover the tax loss. The claim is reviewed at the end of each financial year and is mitigated to the extent that the related tax benefit is unlikely to be realized. Deferred tax assets and liabilities are offset only if there is a legal right to set off current liabilities and assets against tax and if they are related to tax collected by the same tax authority for the same entity subject to tax or for different tax authorities but wishing to effect settlement of current assets and liabilities against tax using a net basis or the related assets and liabilities will be realized simultaneously. Additional taxes arising from the distribution of dividends are recognized on the same date as the dividend payment obligation.
q) Earnings per share The group presents basic and diluted earnings per share for ordinary shares. Basic earnings per share shall be determined by dividing the profit or loss attributable to the ordinary shareholders of the Group by the weighted average number of ordinary shares for the reporting period. 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.
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4. MATERIAL ACCOUNTING POLICIES (continued) r) Segment reporting A segment is a distinct component of the Group that provides certain products or services (business segment) or provides products or services in a particular geographical environment (geographic segment) and that is subject to risks and benefits different from those of the other segments. The Group is organized on the basis of a main business segment, its main activity being the performance of financial investments, in order to increase the value of the shares in accordance with the regulations in force and the subsequent management, of the investment profit and the exercise of all related rights to the invested instruments. The other segments included in the presentation of the financial statements are: - Rental of commercial spaces and trade - which presents in aggregate a number of 9 subsidiaries, whose activity consists of rental of commercial spaces and trade. This segment has the highest share of investment properties in the Group's total investment properties, i.e. 92.75% as at 31 December 2023 (similar share as at 31 December 2022, 95.48%). The customers of this segment are commercial companies with which there are rental contracts signed mainly on an annual basis. - Food industry - mainly represented by Argus S.A., the parent company's shareholding is 91.42% as of 31 December 2023 (86.42% as of 31 December 2022), whose contribution to consolidation is RON 102.7 million net assets in 2023. Argus S.A. is active in the production of vegetable and animal oils and fats, its main business being the manufacture and marketing of crude and refined oils and fats and sunflower meal. - Segment Manufacture of instruments and devices for measurement, checking, control - is a segment added for the first time in the presentation of the financial statements in order to highlight the acquisition by the Parent Company of subsidiary Electromagnetica S.A. in 2023. The Parent Company's shareholding at 31 December 2023 is 65.45% (28.16% at 31 December 2022). - The Tourism segment - is represented by 3 subsidiaries that own 3 hotels, in the following locations: Targoviste, Pucioasa and Rm. Vâlcea. The hotels offer accommodation services throughout the year.
s) Contingent liabilities and assets Contingent liabilities or assets are potential liabilities or assets arising as a result of previous events and whose existence will be confirmed or not by the occurrence of one or more uncertain future events, which are not entirely controlled by the Group. The measurement of contingent liabilities and assets inherently involves the use of judgements and estimates about the outcome of future events. Contingent liabilities are not recognized in the financial statements. They are presented in the notes, except in cases where the possibility of an outflow of economic benefits is reduced. Contingent assets are not recognised in the financial statements but are disclosed when an inflow of benefits is likely.
t) New standards and amendments New IFRS Accounting Standards and Amendments to Existing Standards, effective this year In the current year, the Group has applied a number of amendments to IFRS Accounting Standards issued by the International Accounting Standards Board (IASB) and adopted by the European Union that have entered into force on a mandatory basis for the reporting period beginning on or after 1 January 2023. Their adoption did not have a significant impact on the disclosures nor on the amounts reported in these Financial Statements.
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4. MATERIAL ACCOUNTING POLICIES (continued) t) New standards and amendments (continued) Standard Title IFRS 17 The new standard IFRS 17 "Insurance Contracts", including amendments to IFRS 17 issued by the IASB in June 2020 and December 2021. Amendments to IAS 1 Disclosure of accounting policies Amendments to IAS 8 Definition of accounting estimates Amendments to IAS 12 Deferred tax on receivables and payables arising from a single transaction Amendments to IAS 12 International Tax Reform — Pillar II Model Rules * * the exception mentioned in the amendments to IAS 12 (that an entity does not recognise and provide information on deferred tax assets and liabilities subject to OECD Pillar Two) is applicable immediately after the amendments are issued and retrospectively in accordance with IAS 8. The other presentation requirements are mandatory for annual periods starting on or after January 1, 2023. • IFRS 17 "Insurance Contracts" issued by the IASB on 18 May 2017. The new standard requires insurance liabilities to be measured at a current fulfillment value and provides a more uniform measurement and presentation approach for all insurance contracts. These requirements are designed to achieve the goal of a consistent, principle-based accounting for insurance contracts. IFRS 17 supersedes IFRS 4 “Insurance Contracts” and related interpretations while applied. Amendments to IFRS 17 “Insurance Contracts” issued by IASB on 25 June 2020 defer the date of initial application of IFRS 17 by two years to annual periods beginning on or after 1 January 2023. Additionally, the amendments issued on 25 June 2020 introduce simplifications and clarifications of some requirements in the Standard and provide additional reliefs when applying IFRS 17 for the first time. • Amendments to IFRS 17 “Insurance Contracts” - Initial Application of IFRS 17 and IFRS 9 - Comparative Information issued by the IASB on 9 December 2021. This is a narrow-scope amendment to the transition requirements of IFRS 17 for entities applying IFRS 17 and IFRS 9 simultaneously for the first time. • Amendments to IAS 1 “Presentation of Financial Statements” - Disclosure of Accounting Policies issued by the IASB on 12 February 2021. The amendments require entities to disclose significant accounting policies rather than important accounting policies and provide guidance and examples to help the authors of the financial statements decide what accounting policies to disclose in the financial statements. • Amendments to IAS 8 “Accounting Policies, Changes in Accounting Estimates and Errors” - Definition of Accounting Estimates issued by the IASB on 12 February 2021. Amendments focus on accounting estimates and provide guidance how to distinguish between accounting policies and accounting estimates. • Amendments to IAS 12 “Income Taxes” - Deferred Taxes on Receivables and Liabilities arising from a Single Transaction issued by the IASB on 6 May 2021. According to amendments, the initial recognition exemption does not apply to transactions in which both deductible and taxable temporary differences arise on initial recognition that result in the recognition of equal deferred tax assets and liabilities. • Amendments to IAS 12 “Income Tax” – International Tax Reform — Pillar 2 Model Rules issued by the IASB on 23 May 2023. The amendments introduced a temporary exception to the accounting for deferred taxes arising from jurisdictions implementing the global tax rules and disclosure requirements about company’s exposure to income taxes arising from the reform, particularly before legislation implementing the rules is in effect.
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4. MATERIAL ACCOUNTING POLICIES (continued) t) New standards and amendments (continued) New IFRS accounting standards and amendments to existing standards issued and adopted by the EU, but not yet effective At the date of approval of these financial statements, the Group has not applied the following amended IFRS Accounting Standards which have been issued by the IASB and adopted by the EU but are not yet effective: Standard Title Effective date Amendments to IFRS 16 Leasing liabilities in a sale and leaseback transaction 1 January 2024 Amendments to IAS 1 Classification of Liabilities as Current or Non- Current and Non-current Liabilities with Covenants 1 January 2024 • Amendments to IFRS 16 “Leases” - Lease Liability in a Sale and Leaseback issued by IASB on 22 September 2022. Amendments to IFRS 16 require a seller-lessee to subsequently measure lease liabilities arising from a leaseback in a way that it does not recognise any amount of the gain or loss that relates to the right of use it retains. The new requirements do not prevent a seller-lessee from recognising in profit or loss any gain or loss relating to the partial or full termination of a lease. • Amendments to IAS 1 “Presentation of Financial Statements” - Classification of Liabilities as Current or Non-Current issued by IASB on 23 January 2020 and Amendments to IAS 1 “Presentation of Financial Statements” - Non-current Liabilities with Covenants issued by IASB on 31 October 2022. Amendments issued on January 2020 provide more general approach to the classification of liabilities under IAS 1 based on the contractual arrangements in place at the reporting date. Amendments issued on October 2022 clarify how conditions with which an entity must comply within twelve months after the reporting period affect the classification of a liability and set the effective date for both amendments to annual periods beginning on or after 1 January 2024. New IFRS accounting standards and amendments to existing standards issued but not yet adopted by the EU Currently, IFRS as adopted by the EU does not materially differ from IFRS adopted by the International Accounting Standards Board (IASB), with the exception of the following new standards and amendments to existing standards, which were not adopted by the EU at the date of authorisation of these financial statements: Standard Title EU Adoption Status Amendments to IAS 7 and IFRS 7 Supplier Finance Arrangements (IASB effective date: 1 January 2024) Not yet adopted by EU Amendments to IAS 21 Lack of Exchangeability (IASB effective date: 1 January 2025) Not yet adopted by EU
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4. MATERIAL ACCOUNTING POLICIES (continued) t) New standards and amendments (continued) IFRS 14 Regulatory Deferral Accounts (IASB effective date: 1 January 2016) The European Commission has decided not to launch the endorsement process of this interim standard and to wait for the final standard Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture and further amendments (effective date deferred by IASB indefinitely but earlier application permitted) Endorsement process postponed indefinitely until the research project on the equity method has been concluded • Amendments to IAS 7 “Cash Flow Statements” and IFRS 7 “Financial Instruments: Disclosures” – Supplier Finance Agreements issued by the IASB on 25 May 2023. Amendments add disclosure requirements, and ‘signposts’ within existing disclosure requirements to provide qualitative and quantitative information about supplier finance arrangements. • Amendments to IAS 21 “The Effects of Changes in Foreign Exchange Rates” - Lack of Exchangeability issued by IASB on 15 August 2023. Amendments contain guidance to specify when a currency is exchangeable and how to determine the exchange rate when it is not. • Amendments to IFRS 10 “Consolidated Financial Statements” and IAS 28 “Investments in Associates and Joint Ventures” - Sale or Contribution of Assets between an Investor and its Associate or Joint Venture issued by IASB on 11 September 2014. The amendments address a conflict between the requirements of IAS 28 and IFRS 10 and clarify that in a transaction involving an associate or joint venture the extent of gain or loss recognition depends on whether the assets sold or contributed constitute a business. • IFRS 14 “Regulatory Deferral Accounts” issued by IASB on 30 January 2014. This standard is intended to allow entities that are first-time adopters of IFRS, and that currently recognise regulatory deferral accounts in accordance with their previous GAAP, to continue to do so upon transition to IFRS. The Group anticipates that the adoption of these new standards and amendments to the existing standards will not have a material impact on the Group's financial statements in the future. Hedge accounting of a portfolio of financial assets and liabilities whose principles have not been adopted by the EU remains unregulated. According to the Group's estimates, the use of hedge accounting for a portfolio of financial assets and liabilities under IAS 39: “Financial Instruments: Recognition and Measurement” would not materially affect the financial statements, if applied at the balance sheet date. The material accounting policies applied in these financial statements are consistent with those in the Group's annual financial statements for the year ended 31 December 2023 and comply with the provisions of Rule 39/2015 approving the Accounting Regulations in accordance with the International Financial Reporting Standards, applicable to entities authorized, regulated and supervised by the Financial Supervisory Authority in the sector of financial instruments and investments, as well as the Investor Compensation Fund, with subsequent amendments.
5. MANAGEMENT OF SIGNIFICANT RISKS The risk management policy includes all the procedures necessary to assess exposure to the main categories of relevant risks that may have an impact on the performance of the activity and the fulfilment of the obligations provided by the regulatory framework. The risk management activity, an important component of the Group's activity, covers both general risks and specific risks, as provided for by national and international legal regulations. The Group is or may be subject to financial risks resulting from the activity carried out to achieve the objectives set.
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) The Group, according to the specifics of the activity, is or may be subject to significant risks resulting from the activity carried out in order to achieve the established objectives. Managing 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 risk appetite and its ability to mitigate or cover these risks. Risk monitoring is carried out at each hierarchical level, with procedures for supervising and approving decision-making limits. In its current activities, the Group may face both specific risks arising from its current operation and indirect risks arising as a result of carrying out operations and services in collaboration with other financial entities. The main risks identified in the Group's activity are: - market risk (price risk, foreign exchange risk, interest rate risk); -credit risk -liquidity risk -operational risk - sustainability risk.
a) Market risk Market risk is the risk of incurring losses related to on-balance sheet and off-balance sheet positions due to unfavourable market price fluctuations (such as, for example, stock prices, interest rates, foreign exchange rates). The company monitors market risk with the aim of optimizing profitability in relation to the associated risk, in accordance with approved policies and procedures. From the point of view of the Group, the relevant market risks are: price risk (position risk), foreign exchange risk, interest rate risk. The Group is exposed to the following market risks: • Price risk (position risk) Price (position) risk is generated by market price volatility, such as fluctuations in the market of financial instruments, as a result of changes in market prices caused either by factors affecting all instruments traded on the market (systemic component) or by factors specific to individual instruments or their issuer (non- systemic component). The Group monitors both the systemic component (general risk determined by factors at macro level) and the specific risk, determined by the issuers' own activity, so that when price risks are not in accordance with internal policies and procedures to act in consequence by rebalancing the asset portfolio. Given the nature of the Group's activities, price risk represents a significant risk for it. The Group also monitors sectoral concentration risk, which is as follows, for financial assets measured at fair value through profit or loss and financial assets designated at fair value through other comprehensive income.
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) a) Market risk (continued) • Price risk (position risk) (continued) As at 31 December 2023 and 31 December 2022, the Group has the following structure of assets subject to price risk: The market value of the portfolio of listed shares (on BSE – regulated market, BSE-AeRO – alternative trading system) as of 31 December 2023 represents 99.46% of the total value of the managed portfolio of shares (31 December 2022: 98.77%). Portfolio structure Market value of the portfolio 31 December 2023 Market value of the portfolio 31 December 2022 Economic sectors with a share in group value portfolio (in descending order): (RON) % (RON) % finance / banking 1,190,225,718 48.85 871,072,645 46.92 oil, methane gas and ancillary services 437,241,738 17.95 321,730,841 17.33 financial intermediation 375,349,788 15.41 296,069,865 15.95 pharmaceutical industry 275,478,777 11.31 103,032,727 5.55 energy and gas transport 146,523,998 6.01 124,100,007 6.69 distribution, supply of electricity and energy services 6,056,319 0.25 - - electronics, electrotechnics industry 4,146,437 0.17 33,191,013 1.79 machine building and processing industry 1,265,965 0.05 49,663,612 2.68 tourism, public catering, leisure - - 55,819,009 3.01 rental and sublease of real estate - - 1,667,244 0.08 TOTAL 2,436,288,740 100.00 1,856,346,963 100.00 From the analysis of the data presented above, on 31 December 2023, the Group held mainly shares in issuers operating in the field of finance, banks with a share of 48.85% of the total portfolio, up from 31 December 2022, when in the same sector of activity it recorded a share of 46.92% (increase determined by capital market transactions and fair value appreciation of portfolio holdings).
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) • Foreign exchange risk Foreign exchange risk is the risk that the value of a financial instrument will be affected as a result of changes in foreign exchange rates. Foreign exchange risk is the risk of losses resulting from changes in exchange rates. This risk takes into account 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 those positions. The Group did not use derivative financial instruments during the reporting period to protect itself against exchange rate fluctuations. As of 31 December 2023, the foreign currency cash amounted to 4,754,657 Lei, representing 3.3% of total cash and cash equivalents (as of 31 December 2022: 36,355,516 Lei, representing 36.3% of total cash and cash equivalents). The Group also owns a number of 80 fund units issued by FIA Agricultural Fund, totalling 951,733 lei (equivalent to 191,318 euro). Given that most of the Group's assets are denominated in national currency, exchange rate fluctuations do not directly affect the Group's business. These fluctuations have an influence in the assessment of investments such as fund units, foreign currency deposits and current account cash. The Group carried out transactions during the reporting periods in both Romanian currency (Leu) and foreign currency. The Romanian currency fluctuated compared to foreign currencies, EURO and USD. The Group did not conduct any foreign exchange derivatives transactions during the submitted financial years. Foreign currency cash as at 31 December 2023 represents 0.2% (31 December 2022: 1.8%) of total financial assets, while foreign currency trade liabilities represent 0.2% as at 31 December 2023 (0.003%), which results in the currency risk at Group level being insignificant. Investments in foreign currency bank deposits are constantly monitored and measures are taken to invest, divest, depending on the forecasted evolution of the exchange rate. On 31.12.2023, the market risk falls within the approved risk limits for a medium risk appetite. The Group's financial assets and liabilities in Ron and foreign currencies as at 31 December 2023 and 31 December 2022 are presented in the following table: in RON Book value 31 December 2023 RON EUR USD 31 December 2023 Financial assets Cash and cash equivalents 139,020,419 134,265,762 4,524,958 229,699 Bank deposits 6,942,722 6,942,722 - - Financial assets measured at fair value through profit or loss 6,621,169 5,669,436 951,733 - Financial assets designated at fair value through other comprehensive income 2,429,667,571 2,429,667,571 - - Other financial assets at amortised cost 63,090,745 63,090,745 - - Total financial assets 2,645,342,626 2,639,636,236 5,476,691 229,699
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) • Foreign exchange risk (continued) Other financial liabilities Loans 81,135,482 81,135,482 - - Dividends payable 51,080,777 51,080,777 - - financial liabilities at amortized cost 31,976,914 31,631,362 345,552 - Total financial liabilities 164,193,173 163,847,621 345,552 - Net position 2,481,149,453 2,475,788,615 5,131,139 229,699 in RON Book value 31 December 2022 RON EUR USD 31 December 2022 Financial assets Cash and cash equivalents* 99,737,272 63,807,652 14,016,261 21,913,359 Bank deposits* 527,433 101,537 425,896 - Financial assets measured at fair value through profit or loss 4,475,075 4,475,075 - - Financial assets designated at fair value through other comprehensive income (“FVTOCI”) 1,851,871,888 1,851,871,888 - - Other financial assets at amortised cost 18,716,135 18,716,135 - - Total financial assets 1,975,327,803 1,938,972,287 14,442,157 21,913,359 Other financial liabilities Loans 160,737,859 160,737,859 - - Dividends payable 51,083,704 51,083,704 - - Trade liabilities 11,670,375 11,663,420 6,955 - Total financial liabilities 223,491,938 223,484,983 6,955 - Net position 1,751,835,865 1,715,487,304 14,435,202 21,913,359 * Reclassified as of 31 December 2022 • Interest rate risk Interest rate risk is the current or future risk that profit and capital will be affected by adverse changes in interest rates. The interest rate directly influences the income and expenses attached to variable interest-bearing financial assets and liabilities. Most assets in the portfolio are non-interest bearing. The interest rates applied to cash and cash equivalents are short-term as of 31 December 2023. At Group level, the share of borrowed resources in the total financing resources of the companies is not significant, except for Argus S.A. Constanta as at 31 December 2023 and 31 December 2022. The Group monitors the evolution of monetary policy to track effects that may influence interest rate risk.
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) a) Market risk (continued) • Interest rate risk (continued) The Group did not use derivative financial instruments during the reported period to protect itself against interest rate fluctuations. In order to benefit from the volatility of interest rates, for a greater flexibility in the cash allocation policy, the placement of cash in monetary instruments will be made especially in the short term, for a maximum of 3 months. The following table summarizes the Group's exposure to interest rate risk. in RON Book value as at 31 December 2023 < 1 month 1-3 months 3-6 months 6-12 months >1 year without interest risk 31 December 2023 Financial assets Cash and cash equivalents 139,020,419 106,722,879 20,278,483 - - - 12,019,057 Deposits with banks 6,942,722 - - 6,942,722 - - - Financial assets measured at fair value through profit or loss 6,621,169 - - - - - 6,621,169 Financial assets designated at fair value through other comprehensive income (“FVTOCI”) 2,429,667,571 - - - - - 2,429,667,571 Other financial assets at amortised cost 63,090,745 - - - - - 63,090,745 Total financial assets 2,645,342,626 106,722,879 20,278,483 6,942,722 - - 2,511,398,542 Other financial liabilities Loans 81,135,482 50,269 7,630,367 42,545,766 30,240,227 668,853 - Dividends payable 51,080,777 - - - - - 51,080,777 Financial liabilities evaluated at amortized cost 31,976,914 - - - - - 31,976,914 Total financial liabilities 164,193,173 50,269 7,630,367 42,545,766 30,240,227 668,853 83,057,691 Net position 2,481,149,453 106,672,610 12,648,116 (35,603,044) (30,240,227) (668,853) 2,428,340,851 * The net negative positions recorded in the liquidity categories of 3-6 months and 6-12 months are influenced by the bank loans of Argus S.A. These will be managed by Argus and by the Group, based on liquidity needs at that time. The Group's cumulative liquidity over a period of 1 year is positive and consequently covers the liquidity needs for the 3-12 month period.
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) Market risk (continued) • Interest rate risk (continued) in RON book value as at 31 December 2022 < 1 month 1-3 months 3-12 months >1 year Without risk interest 31 December 2022 Financial assets Cash and cash equivalents* 99,737,272 39,025,814 51,395,822 - - 9,315,636 Deposits with banks* 527,433 - - 527,433 - - Financial assets measured at fair value through profit or loss 4,475,075 - - - - 4,475,075 Financial assets designated at fair value through other comprehensive income (“FVTOCI”) 1,851,871,888 - - - - 1,851,871,888 Other financial assets at amortised cost 18,716,135 - - - - 18,716,135 Total financial assets 1,975,327,803 39,025,814 51,395,822 527,433 - 1,884,378,734 Other financial liabilities Loans 160,737,859 - - 159,080,652 956,305 700,902 Dividends payable 51,083,704 - - - - 51,083,704 Trade liabilities 11,670,375 - - - - 11,670,375 Total financial liabilities 223,491,938 - - 159,080,652 956,305 63,454,981 Net position 1,751,835,865 39,025,814 51,395,822 (158,553,219) (956,305) 1,820,923,753 *Reclassified as of 31 December 2022
b) Credit risk Credit risk represents the current or future risk of affecting profits and capital as a result of the debtor's failure to fulfil its contractual obligations or its failure to fulfil established obligations. As of 31 December 2023, the exposure to the banking sector represents 37.32% of total assets, out of which 33.25% represents the market value of shares held in Banca Transilvania and B.R.D.-Group Societe Generale, while 4.07% represents cash and cash equivalents held in banking institutions. The main credit risk elements identified that can significantly influence the Group's activity are: - the risk of non-collection of dividends from portfolio companies; - the risk of non-collection of the contract value, in the case of commercial activity and sale of shares in "closed" companies; - the risk generated by investments in bonds and/or other credit instruments; - settlement risk in the case of transactions with shares issued by listed companies; - risk of bankruptcy or insolvency.
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) b) Credit risk (continued) The indicators used to measure the risk of insolvency of issuers are the following: the rate of exposure to issuers at high risk of bankruptcy (in the next 2 years), the rate of exposure by unlisted assets, the rate of exposure by sectors of activity. Credit risk may affect the Group's activity indirectly, in the case of portfolio companies that encounter financial difficulties in paying their payment obligations corresponding to dividends. Given the diversity of investments and the fact that most of them are made 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 the holding of current accounts and bank deposits, as well as from outstanding receivables. Regarding the Group's cash balances, they are placed with multiple banks, thus avoiding concentration risk. Bank deposits are held at banks in Romania. Regarding the Group's cash balances, primarily at the most significant banking institution in the system, Banca Transilvania, Fitch Ratings has reaffirmed the long-term rating of Banca Transilvania at 'BB+', with a stable outlook. As a result of evaluating the key elements of credit risk, as of 31 December 2023, the credit risk falls within the approved risk limits for a medium risk appetite. in RON Rating Labels 31 December 2023 31 December 2022 EximBank Fitch: BBB- (assimilated to sovereign rating) - 932 BANCA TRANSILVANIA Fitch: BB+ 85,916,402 76,900,451 B.R.D. - Group Societe Generale Moody's: Prime -2 2,210,207 423,795 Raiffeisen Bank Moody's: Baa1 278,422 471,334 BCR Moody's: Prime -2 40,431,470 14,039,410 Garanti Bank SA Fitch: BB+ 6,864,020 3,997,387 Vista Bank No rating 212 3,627,732 CEC Bank Fitch: BB+ 4,215 634,414 Treasury Fitch: BBB- (assimilated to sovereign rating) 3,392,317 81,499 OTP Bank Moody's: Prime -2 6,740,792 - Total cash at banks 145,838,057 100,176,954 Make local payment 125,084 87,751 Total current accounts and deposits, of which: 145,963,141 100,264,705 Cash and cash equivalents 139,020,419 99,737,272 Bank deposits 6,942,722 527,433
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) b) Credit risk (continued) Expected credit loss, of which related: - - Cash and cash equivalents - - Bank deposits - - Total cash and cash equivalents and bank deposits 145,963,141 100,264,705 Other financial assets at amortised cost in RON 31 December 2023 31 December 2022 Other financial assets at amortised cost 97,586,569 21,457,539 Expected credit loss (34,495,824) 2,741,404 Other financial assets at amortised cost 63,090,745 18,716,135
c) Liquidity risk Liquidity risk is the risk that a position in the Company's portfolio may not be sold, liquidated or closed at limited cost within a reasonably short period of time. The Group aims to maintain a level of liquidity adequate to its underlying obligations, based on an assessment of the relative liquidity of the assets on the market, taking into account the period required for liquidation and the price or value at which those assets can be liquidated. their sensitivity to market risks or other external factors. The Group systematically monitors the liquidity profile of the asset portfolio, taking into account the contribution of each asset to liquidity, as well as significant liabilities and commitments, contingent or otherwise, that the company may have in relation to its underlying obligations. Liquidity risk related to local payments is very low, Group current liabilities being covered by cash and cash equivalents and bank deposits As at 31 December 2023, the negative net positions recorded in the liquidity category between 3-6 months, 6- 12 months, are influenced by the loan owed by Argus S.A. Constanta and will be managed by the respective company and the Group, depending on the needs to be liquidated at that time, by using the resources obtained from the current operational activity. As at 31 December 2023, liquidity risk is between the approved risk limits for a medium risk profile.
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) c) Liquidity risk (continued) The structure of assets and liabilities in terms of liquidity is analysed in the following table: in RON Book value 31 December 2023 < 1 month 1-3 Months 3-6 months 6-12 months >1 year No Default Maturity 31 December 2023 Financial assets Cash and cash equivalents 139,020,419 106,722,879 20,278,483 - - - 12,019,057 Bank deposits 6,942,722 - - 6,942,722 - - - Financial assets measured at fair value through profit or loss 6,621,169 - - - - - 6,621,169 Financial assets designated at fair value through other comprehensive income (“FVTOCI”) 2,429,667,571 - - - - - 2,429,667,571 Other financial assets at amortised cost 63,090,745 54,202,025 992,893 2,089,710 2,260,456 3,545,661 - Total financial assets 2,645,342,626 160,924,904 21,271,376 9,032,432 2,260,456 3,545,661 2,448,307,797 Other financial liabilities Loans 81,135,482 50,269 7,630,367 42,545,766 30,240,227 668,853 - Dividends payable 51,080,777 12,547,438 - - - - 38,533,339 financial liabilities evaluated at amortized cost 31,976,914 18,889,157 1,569,206 224,170 7,706,686 573,350 3,014,345 Total financial liabilities 164,193,173 31,486,864 9,199,573 42,769,936 37,946,913 1,242,203 41,547,684 Net position 2,481,149,453 129,438,040 12,071,803 (33,737,504) (35,686,457) 2,303,458 2,406,760,113 * The net negative positions recorded in the liquidity categories of 3-6 months and 6-12 months are influenced by the bank loans of Argus S.A. These will be managed by Argus and by the Group, based on liquidity needs at that time. The Group's cumulative liquidity over a period of 1 year is positive and consequently covers the liquidity needs for the 3-12 month period.
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) c) Liquidity risk (continued) in RON Book value 31 December 2022 < 1 month 1 to 3 months Between 3 and 12 months More than 1 year No default maturity 31 December 2022 Financial assets Cash and cash equivalents* 99,737,272 39,025,814 51,395,822 - - 9,315,636 Deposits with banks* 527,433 - - 527,433 - - Financial assets measured at fair value through profit or loss 4,475,075 - - - - 4,475,075 Financial assets designated at fair value through other comprehensive income (“FVTOCI”) 1,851,871,888 - - - - 1,851,871,888 Other financial assets at amortised cost 18,716,135 12,603,898 2,830,198 116,545 3,165,494 - Total financial assets 1,975,327,803 51,629,712 54,226,020 643,978 3,165,494 1,865,662,599 Other financial liabilities Loans 160,737,859 - - 159,080,652 956,305 700,902 Dividends payable 51,083,704 51.,083,704 - - - - Trade liabilities 11,670,375 5,965,866 2,672,233 61,085 367,172 2,604,019 Total financial liabilities 223,491,938 57,049,570 2,672,233 159,141,737 1,323,477 3,304,921 Net position 1,751,835,865 (5,419,858) 51,553,787 (158,497,759) 1,842,017 1,862,357,678 * Reclassified as of 31 December 2022
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) d) Operational risk Operational risk is the risk of loss resulting either from the use of inadequate internal processes, persons or systems, or that did not fulfil their function appropriately, or from external events, and which includes legal risk. In the category of operational risk, the following are pursued: - legal risk - a sub-category of operational risk which is the risk of loss as a result both of fines, penalties and sanctions to which the Group is liable in the event of non-application or defective application of legal or contractual provisions and of the fact that the contractual rights and obligations of the company and/or its counterparty are not properly established; - compliance risk - the current or future risk of affecting profits, own funds or liquidity, which may lead to significant financial losses or which may affect the reputation of the Group as a result of breach of or non- compliance with the legal and regulatory framework, agreements, recommended practices or ethical standards applicable to its activities. - IT risk - is a sub-category of operational risk that refers to the risk caused by the inadequacy of IT strategy and policy, information technology and information processing, with reference to its management capacity, integrity, controllability and continuity, or by the inappropriate use of information technology. - money laundering and terrorist financing (ML/TF) risk - the inherent risk, namely the level of money laundering and terrorism financing risk before its mitigation, meaning that the impact and probability of involvement of regulated entities in ML/TF operations is analysed. In order to assess the level of operational risk to which it is exposed, Infinity Capital Investments S.A. Group acts to identify and classify operational risk events into specific categories, allowing the establishment of the most effective methods of control and mitigation of potential effects. The Group aims to maintain an optimal level of equity in order to develop its business and achieve its objectives. The Group's main objective is business continuity in order to increase the value of managed assets in the long term. Considering the complexity of the Group's activities, the volume of operations, staffing structure, level of digitization, complexity of monitoring and control procedures, and other intrinsic aspects related to the Group's risk policy, the operational risk at the Group level falls within the assumed risk appetite. e) Sustainability risk Sustainability risk is an environmental, social or governance event or condition that, if it occurs, could cause a significant adverse effect, actual or potential, on the value of the investment. Sustainability risks are integrated into the classification and management of existing risks, as they also affect the types of existing risk, to which the company is exposed in its activities. The Group incorporates sustainability risks into the decision-making process and also assesses the relevant sustainability risks, i.e. those environmental, social or governance events or conditions that, if they occurred, could have an impact on the Group.
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5. MANAGEMENT OF SIGNIFICANT RISKS (continued) f) Capital adequacy Management's capital adequacy policy focuses on maintaining a sound capital base in order to support the continued development of the Group and the achievement of investment objectives. Equity consists of share capital, created reserves, current result and retained earnings. As at 31 December 2023, the Group's equity is RON 3,003,737,547 (31 December 2022: RON 2,230,180,469). The Group is not subject to statutory capital adequacy requirements.
6. FINANCIAL ASSETS AND LIABILITIES Accounting classifications and fair values The book values and fair values of financial assets and liabilities are presented as of 31 December 2023, as follows: in RON Fair value through other comprehensiv e income (FVOCI) Fair value through profit or loss Amortised cost Total book value Fair value Cash and cash equivalents - - 139,020,419 139,020,419 139,020,419 Bank deposits - - 6,942,722 6,942,722 6,942,722 Financial assets measured at fair value through profit or loss - 6,621,169 - 6,621,169 6,621,169 Financial assets measured at fair value through other comprehensive income 2,429,667,571 - - 2,429,667,571 2,429,667,571 Other financial assets at amortised cost - - 63,090,745 63,090,745 63,090,745 Total financial assets 2,429,667,571 6,621,169 209,053,886 2,645,342,626 2,645,342,626 Loans - - 81,135,482 81,135,482 81,135,482 Dividends payable - - 51,080,777 51,080,777 51,080,777 Financial liabilities evaluated at amortized cost - - 31,976,914 31,976,914 31,976,914 Total financial liabilities - - 164,193,173 164,193,173 164,193,173 For financial assets and liabilities held at amortised cost, the Group estimated that fair value equals amortised cost considering low credit risk, short maturities and similar amounts based on observable inputs.
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6. FINANCIAL ASSETS AND LIABILITIES (continued) Accounting classifications and fair values (continued) The book values and fair values of financial assets and liabilities are presented as of 31 December 2022, as follows: in RON Fair value through other comprehensiv e income Fair value through profit or loss Amortised cost Net book value Fair value Cash and cash equivalents* - - 99,737,272 99,737,272 99,737,272 Bank deposits* - - 527,433 527,433 527,433 Financial assets measured at fair value through profit or loss - 4,475,075 - 4,475,075 4,475,075 Financial assets measured at fair value through other comprehensive income 1,851,871,888 - - 1,851,871,888 1,851,871,888 Other financial assets at amortised cost - - 18,716,135 18,716,135 18,716,135 Total financial assets 1,851,871,888 4,475,075 118,980,840 1,975,327,803 1,975,327,803 Loans - - 160,737,859 160,737,859 160,737,859 Dividends payable - - 51,083,704 51,083,704 51,083,704 Trade liabilities - - 11,670,375 11,670,375 11,670,375 Total financial liabilities - - 223,491,938 223,491,938 223,491,938 * Reclassified as of 31 December 2022
7. Dividend income Dividend income is recorded on a gross basis. The dividend tax rates for the period ended 31 December 2023 were 8% and zero (31 December 2022: 5% and zero). Dividend income, mainly by contributor, is as follows: in RON 31 December 2023 31 December 2022 OMV PETROM S.A. 49,450,967 42,160,472 BANCA TRANSILVANIA S.A. 32,491,707 28,183,908 S.N.G.N. ROMGAZ S.A 6,321,138 7,023,487 SNTGN TRANSGAZ SA MEDIAS 2,726,203 3,607,277 C.N.T.E.E. "TRANSELECTRICA" S.A. 1,723,632 - ANTIBIOTICE S.A. 1,564,451 571,603 BURSA DE VALORI BUCUREȘTI S.A 893,795 475,582 EVERGENT INVESTMENTS S.A. 263,276 188,496 Depozitarul Central S.A. 79,091 86,693
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7. Dividend income (continued) B.R.D. Groupe Societe Generale - 102,134,508 LION CAPITAL S.A. - 2,728,596 ȘANTIERUL NAVAL ORȘOVA S.A. - 1,696,179 IAMU S.A. Blaj - 1,289,229 ELBA S.A. Timisoara - 59,225 Others 25,673 163,989 Total 95,539,933 190,369,244
8. INTEREST INCOME in RON 31 December 2023 31 December 2022 Interest income related to bank deposits 5,442,797 4,820,667 Total 5,442,797 4,820,667
9. REVENUE FROM CONTRACTS WITH CUSTOMERS in RON 31 December 2023 31 December 2022 Revenue from sales of finished goods 250,102,663 362,498,861 Revenue from sales of goods 15,904,804 5,688,541 Income from rentals of commercial premises 33,558,212 35,134,456 Income from services rendered 8,434,296 - Total 307,999,975 403,321,858 The Group's revenues from the sale of finished products and goods mainly come from the sale of bottled refined oil, meal, bulk refined oil, and crude oil. Most of the Group's sales contracts are signed with customers in Romania on 31 December 2023 and 31 December 2022. The timing of revenue recognition from contracts with customers as at 31 December 2023 and 31 December 2022 is as follows: In RON n Lei 31 December 2023 31 December 2022 Income from sales of goods transferred at a given time 256,036,962 364,560,670 Income from sales of goods transferred over time 10,694,809 - Income from services transferred at a point in time 7,445,880 4,267,567 Income from services transferred over time 33,822,324 34,493,621 Total 307,999,975 403,321,858
10. OTHER OPERATING INCOME in RON 31 December 2023 31 December 2022 Other operating income 1,615,622 4,661,927 Income from subsidies/grants 1,980,984 2,091,698 Other financial income (222,298) 19,741 Total 3,374,308 6,773,366
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11. GAIN FROM BARGAIN PURCHASE OF SUBSIDIARIES On 15 November 2023, the Parent Company acquired 37.29% of the share capital of Electromagnetica S.A., thus gaining control of the entity with a total ownership of 65.45%. At 31 December 2023, the consolidated financial statements include the identifiable assets acquired and liabilities assumed from the acquisition of Electromagnetica S.A. The business combination resulted in a bargain purchase gain of 154,850,032 lei, which the Group recognized and presented under the line "Gain from bargain purchase of subsidiaries" in the Consolidated Statement of Profit or Loss and Other Comprehensive Income. Relevant provisions of IFRS 3 "Business Combinations" impose several requirements on companies acquiring control over other businesses. These requirements include determining whether and when control over the acquirees is obtained by the acquiring entity, the consideration transferred, and the identifiable net assets acquired, as well as measuring the fair value of those identifiable net assets at the acquisition date. Estimating fair value is complex and requires significant judgments in developing forecasts and underlying assumptions. Regarding the above-mentioned acquisition, the fair value of the identifiable net assets acquired was estimated through a Purchase Price Allocation Report prepared by Darian DRS, an authorized valuer, a corporate member of ANEVAR. The fair value of the net assets was estimated based on the asset approach, namely the Adjusted Net Asset Method, using primarily the following significant special assumptions as per the Purchase Price Allocation Report: 1) The valuation scope refers to the assets and liabilities subject to the transaction, including the following categories: Property, Plant, and Equipment (land, buildings, and equipment); Intangible Assets (concessions, patents, and purchased licenses); Financial Assets; Leased assets; Receivables, inventories, advances; Cash and bank accounts; Trade payables, other liabilities, investment subsidies, provisions. 2) According to the information received from the Parent Company, there were no major events impacting the financial statements between the two reference dates (October 31, 2023 – the balance sheet date of the accounting information and November 15, 2023 – the transaction date). In estimating the fair value of tangible assets such as land, buildings, and equipment, at the explicit request of the Parent Company, the valuation report for financial reporting at 31 December 2023, prepared by Colliers Valuation and Advisory SRL for the tangible assets (land, buildings, and equipment) based on the fixed assets register of Electromagnetica S.A. as of October 31, 2023, was made available to the valuer, Darian DRS. The following valuation techniques were used: market approach – market comparison method for land, income approach – income capitalization method for buildings, and cost approach – net replacement cost method for equipment and other fixed assets. Thus, valuer Darian DRS (authorized valuer by ANEVAR) incorporated in the Purchase Price Allocation Report the fair values as of 31 December 2023, of the tangible assets estimated by Colliers Valuation and Advisory S.R.L. and recorded by Electromagnetica S.A. at 31 December 2023, considering that they reflect the fair value of the assets at the transaction date. 3) For accounts receivable and inventory items, adjustments were made based on information received from Electromagnetica S.A. regarding the provisioning policies for these assets. Furthermore, before recognizing a bargain purchase gain, the parent company reassessed whether it correctly identified all acquired assets and assumed liabilities and reviewed the procedures used to measure the amounts to be recognized at the acquisition date for the identified net assets. The amounts recognised in respect of identifiable assets acquired and liabilities assumed are shown in the table below:
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11. GAIN FROM BARGAIN PURCHASE OF SUBSIDIARIES (continued) in RON 15 November 2023 Financial assets 11,097,614 Inventories 19,508,358 Investment property 17,709,588 Tangible assets 290,685,770 Intangible assets 602,248 Trade receivables and sundry debtors 51,798,065 Cash and cash equivalents 15,530,918 Trade payables (13,190,168) Other liabilities (33,700,583) Total identifiable assets acquired and liabilities assumed 360,041,810 Gain from a bargain purchase (154,850,032) Non-controlling interests held in the acquiree (124,395,439) Market value of shares previously held by the Group in the acquiree (45,382,175) Total market value 35,414,164 Compensated by Cash paid for control acquisition 35,414,164 Total amount paid 35,414,164 Cash used in the acquisition of the subsidiary Cash paid for control acquisition 35,414,164 Minus: cash balance and cash equivalents purchased 15,530,918 19,883,246
12.SALARIES, ALLOWANCES AND OTHER SIMILAR EXPENSES in RON 31 December 2023 31 December 2022 Number of beneficiaries Amount (RON) Number of beneficiaries Amount (RON) Fixed remuneration Board of Directors 50 3,436,334 46 3,321,331 Effective leadership (senior) 14 5,047,423 22 4,887,121 Control personnel 4 1,501,852 3 433,764 Identified personnel whose actions have a significant impact on the AIF risk profile 4 1,576,383 3 823,200 Employees 793 34,542,503 464 25,363,692 Total fixed remuneration - 46,104,495 - 34,829,108 Variable remuneration Board of Directors 26 2,362,384 19 795,509 Effective leadership (senior) 8 3,076,205 11 2,569,212
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12. SALARIES, ALLOWANCES AND OTHER SIMILAR EXPENSES (continued) in RON 31 December 2023 31 December 2022 Number of beneficiaries Amount (RON) Number of beneficiaries Amount (RON) Control personnel 4 242,340 3 149,808 Identified personnel whose actions have a significant impact on the AIF risk profile 4 860,414 3 538,465 Employees 122 1,515,465 369 2,068,363 Total variable remuneration - 8,056,808 - 6,121,357 Social and similar contributions - 1,983,855 - 1,721,729 Net expenses/income from provisions related to annual leave not taken - 1,661,915 - 1,467,051 Incentive provisions expenses - 301,880 - 7,053,665 Total salaries, allowances, contributions and assimilated expenses - 58,108,953 - 51,192,910 31 December 2023 31 December 2022 Personnel with mandate contract 27 22 Employees with higher education 308 120 Employees with secondary education 398 305 Employees with minimum mandatory education 75 45 Total 808 492 In the financial year ended 31 December 2023, the average number of employees was 808 (31 December 2022: 412), and the number of employees registered at the end of 2023 was 815 (31 December 2022: 470). The Group makes payments to Romanian state institutions on behalf of its employees' pensions. All employees are members of the Romanian State Pension Plan. The present value of the obligations arising from Collective Labour Agreements at Group level is not material, and as such the Group does not recognise these future costs as a provision in the financial statements.
13. RAW MATERIALS, CONSUMABLES AND MERCHANDISE in RON 31 December 2023 31 December 2022 Raw materials and consumables expenses 265,716,649 270,515,716 Merchandise 15,238,573 2,953,773 Total 280,955,222 273,469,489
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14. OTHER OPERATING EXPENSES in RON 31 December 2023 31 December 2022 Expenses with external services 16,585,807 20,429,527 Expenses with energy and water 15,866,017 14,315,288 Expenses related to depreciation of tangible and intangible assets 16,036,702 12,193,755 Expenses with commissions and fees* 3,070,389 2,701,322 Expenses with taxes and duties* 6,072,003 4,516,559 Protocol, advertising and publicity expenses 785,508 387,322 Other operating expenses* 7,121,528 5,112,221 Total 65,537,954 59,655,994 Within the expenses with external services, the expenses related to external financial audit are included, amounting to 1,075.13 thousand lei for the year ended 31 December 2023 (31 December 2022: 1,472.18 thousand lei). * For better presentation, the Group has provided additional information in the current year regarding "Expenses with commissions and fees" and "Expenses with taxes and duties" which were not presented in the previous year. Therefore, for comparability, the line "Other operational expenses" totalling RON 12,330,102 in 2022, has been further detailed to show the values for 2022 for "Expenses with commissions and fees" and "Expenses with taxes and duties".
15. PROFIT TAX in RON 31 December 2023 31 December 2022 Current profit tax Current profit tax 1,308,453 4,220,225 Dividends tax (5%) 7,681,091 9,202,508 Deferred profit tax Liabilities related to profit-sharing and other benefits (167,338) (1,845,912) Investment property (722,859) 12,438,909 Other items (including tax loss impact) - 2,848,162 Provisions for risks and charges and other liabilities - (414,397) Total 8,099,347 26,449,495 Profit before tax 163,611,306 221,375,779 Tax according to Group tax rate (16%) 26,177,809 35,420,125 Effect on corporate income tax of: Non-deductible expenses 6,101,334 9,124,602 Non-taxable income (41,911,266) (34,205,526) Recording of temporary differences from Investment property and other items 8,856,662 13,026,762 Dividends tax (8% in 2023 and 5% in 2022) 7,681,091 9,202,508 Other elements 616,006 (2,118,630) Effect of different tax rates 577,711 (4,000,346) Corporate profit tax 8,099,347 26,449,495
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16. CASH AND CASH EQUIVALENTS Cash and cash equivalents comprise: in RON 31 December 2023 31 December* 2022 Cash in hand 125,084 87,751 Current bank accounts 11,893,972 9,227,885 Bank deposits with an original maturity of less than 3 months 127,001,363 90,421,636 Cash and cash equivalents 139,020,419 99,737,272 Expected credit loss related to current accounts and bank deposits with a maturity of less than 3 months - - Total 139,020,419 99,737,272 * Reclassified as of 31 December 2022 Current accounts opened with banks are permanently at the disposal of the Group and are not restricted.
17. FINANCIAL ASSETS • Financial assets measured at fair value through profit or loss Financial assets at fair value through profit or loss as at 31 December 2023 and 31 December 2022 are presented as follows: in RON Market value 31 December 2023 Market value 31 December 2022 Fund units 6,621,169 4,475,075 Total 6,621,169 4,475,075 The category "Financial assets at fair value through profit or loss" includes fund units held in open-end investment funds: BT INDEX RO, FDI NAPOCA, FDI TRANSILVANIA, FDI TEHNOGLOBINVEST. In the first half of 2023, the fund units of FIA AGRICULTURAL Fund were purchased in the amount of RON 986,100. The value of these fund units in the Group's portfolio is presented at the net asset value of each fund on the last day of the month, information available on the website of each fund. The buy-back of these fund units is carried out continuously without any buy-back conditions being imposed. Based on these characteristics, investments in fund units have been classified as Level 1 investments. The movement of financial assets measured at fair value through other comprehensive income for the reporting periods ended 31 December 2023 and 31 December 2022 is shown in the following table:
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17. FINANCIAL ASSETS (continued) • Financial assets measured at fair value through profit or loss (continued) Changes in fair value related to financial investments measured at fair value through profit or loss 2023 2022 January 1 4,475,075 4,652,462 Purchasing 986,100 - Sales - - Net change in fair value 1,159,994 (177,387) 31 December 6,621,169 4,475,075
• Financial assets measured at fair value through other comprehensive income As at 31 December 2023 and 31 December 2022, the Group's portfolio structure according to the market in which it was traded was as follows: in RON 31 December 2023 31 December 2022 Shares measured at fair value through other comprehensive income 2,429,667,571 1,851,871,888 Changes in fair value related to financial investments measured at fair value through other comprehensive income 2023 2022 January 1 1,851,871,888 2,066,921,577 Purchasing 34,822,996 156,671,129 Sales (109,300,723) (109,051,347) Net change in fair value 684,096,428 (262,669,471) Eliminate subsidiary consolidation (65.45% ownership in 2023 and 28.16% in 2022) (31,823,018) - 31 December 2,429,667,571 1,851,871,888 The Group's trading activity aimed at implementing the investment strategy, in order to ensure the necessary conditions for the consolidation and rebalancing of the portfolio taking into account the opportunities offered by the market and the need to comply with the prudential limitations incidental to the activity of alternative investment funds. The inflows of shares in 2023 amounted to 34.82 million RON and mainly represent the acquisition of shares mainly on the capital market in Lion Capital S.A. (18.35 million RON), Antibiotice S.A. (9.28 million RON), Hidroelectrica S.A. (4.68 million RON), SIF Muntenia S.A. (1.20 million RON) and CCP.RO Bucharest S.A. (1 million RON).
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17. FINANCIAL ASSETS (continued) • Financial assets measured at fair value through other comprehensive income (continued) The sale value of the shares in 2023 amounted to 109.30 million RON and represents the sale value on the capital market of the shares of the following issuers from the Group's portfolio: Turism Felix S.A. (44.56 million RON), IAMU S.A. (18.84 million RON), Santierul Naval Orsova S.A. (16.29 million RON), Turism Lotus Felix S.A. (9.05 million RON) Sinterom S.A.(7.37 million RON), Banca Transilvania (5.23 million RON), C.N.T.E.E. Transelectrica S.A. (4.25 million RON), Corealis S.A. (1.6 million RON), Tusnad Baile S.A. (1.29 million RON), Relee S.A. (0.49 million RON) and Antibiotice S.A. (0.33 million RON). Decisions to sell are reviewed by the management of the Group and take place in the context where the Group identifies reasonable opportunities to maximize return on investment. The share inflows in 2022 amounted to 156.67 million RON and mainly represent the acquisition of shares on the capital market in Lion Capital S.A. (69.51 million RON), SIF Muntenia S.A. (43.77 million RON), Banca Transilvania S.A. (20.77 million RON), O.M.V. Petrom S.A. (10.33 million RON), Bucharest Stock Exchange S.A. (8.12 million RON), Electromagnetica S.A. (1.85 million RON) and Antibiotice S.A. (2.28 million RON). The sale value of the shares in 2022 was 109.05 million RON, consisting mainly of the following issuers: Banca Transilvania S.A. (52.43 million RON), Eximbank S.A. (42.42 million RON), S.N.G.N. Romgaz S.A. (6.95 million RON) and C.N.T.E.E. Transelectrica S.A. (0.96 million RON). Decisions to sell are reviewed by the management of the Group and take place in the context where the Group identifies reasonable opportunities to maximize return on investment. The sales and acquisitions took place according to the Group's internal decisions in accordance with the risk policy and investment strategy, in order to maximize returns and maintain the weights established by the risk and investment policy in the banking and energy sectors. The market value at 31 December 2023 of the top 10 issuers in the Group's portfolio represents 99.16% of the total value of the Group's financial assets measured at fair value through other comprehensive income. Company Market value 31 December 2023 - RON - percentage - % - BANCA TRANSILVANIA S.A. 695,693,303 28.63 B.R.D. Groupe Societe Generale 494,532,416 20.35 OMV PETROM S.A. 344,642,610 14.18 LION CAPITAL S.A. 275,478,777 11.34 ANTIBIOTICE S.A. 196,578,783 8.09 S.I.F. MUNTENIA S.A. 118,108,653 4.86 S.N.G.N. ROMGAZ S.A 92,599,129 3.81 SNTGN TRANSGAZ SA MEDIAS 73,421,527 3.02 C.N.T.E.E. "TRANSELECTRICA" S.A. 73,072,295 3.01 BUCHAREST STOCK EXCHANGE S.A. 45,388,574 1.87 Total 2,409,516,067 99.16 Financial assets measured at fair value through other comprehensive income 2,429,667,571 The market value as of 31 December 2022, of the top 10 issuers in the Group's portfolio represents 92.85% of the total fair value of financial assets through other comprehensive income of the Group.
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17. FINANCIAL ASSETS (continued) • Financial assets measured at fair value through other comprehensive income (continued) Company Market value 31 December 2022 - RON - percentage - % - BANCA TRANSILVANIA S.A. 512,315,870 27.66 B.R.D. Groupe Societe Generale 358,756,775 19.37 OMV PETROM S.A. 251,958,044 13.61 LION CAPITAL S.A. 166,666,349 9.00 ANTIBIOTICE S.A. 103,032,727 5.56 S.I.F. MUNTENIA S.A. 92,351,408 4.99 S.N.G.N. ROMGAZ S.A 69,772,797 3.77 SNTGN TRANSGAZ SA MEDIAS 67,059,731 3.62 C.N.T.E.E. "TRANSELECTRICA" S.A. 56,781,978 3.07 TURISM FELIX BAILE FELIX S.A. 40,942,936 2.21 Total 1,719,638,615 92.86 Financial assets measured at fair value through other comprehensive income 1,851,871,888
• Fair value hierarchy 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: inputs other than quoted prices included in Level 1 that are observable for assets or liabilities, either directly (e.g. prices) or indirectly (e.g. price derivatives); - Level 3: evaluation techniques based largely on unobservable inputs. This category includes all instruments for which the valuation technique includes elements that are not based on observable data and for which unobservable input parameters may have a significant effect on the valuation of the instrument. 31 December 2023 in RON Level 1 Level 2 Level 3 Total Financial assets measured at fair value through profit or loss 6,621,169 - - 6,621,169 Financial assets designated at fair value through other comprehensive income (“FVTOCI”) 2,420,589,156 - 9,078,415 2,429,667,571 Total 2,427,210,325 - 9,078,415 2,436,288,740
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17. FINANCIAL ASSETS (continued) • Fair value hierarchy (continued) 31 December 2022 in RON Level 1 Level 2 Level 3 Total Financial assets measured at fair value through profit or loss 4,475,075 - - 4,475,075 Financial assets designated at fair value through other comprehensive income (“FVTOCI”) 1,752,138,244 - 99,733,644 1,851,871,888 Total 1,756,613,319 - 99,733,644 1,856,346,963 The fair value measurement of the ownerhsips (capital instruments - shares) held as at 31 December 2023 was carried out as follows: - for securities listed and traded on an active market during the reporting period, the market value was determined taking into account the quotation on the last trading day (the closing quotation on the main capital market for those listed on the regulated market – BSE, respectively the reference price for the alternative system - AeRO for level 1); - for listed securities without active or unquoted market, the fair value was determined in accordance with the International Valuation Standards based on a valuation report performed by an independent ANEVAR authorized valuer, updated at least annually. Fair value movement – Level 3 31 December 2023 31 December 2022 January 1 99,733,644 102,934,759 Purchases 1,000,000 - Sales (83,033,476) (42,416,586) Reclassifications from level 1 - 51,047,391 Net change in fair value (8,621,753) (11,831,920) 31 December 9,078,415 99,733,644
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17. FINANCIAL ASSETS (continued) • Fair value hierarchy (continued) Financial assets Fair value 31 December 2023 Valuation technique Unobservable input data, mean values Relationship between unobservable input data and fair value Unlisted minority shareholdings 9,078,415 Asset-based approach – Net accounting assets Book value of assets Carrying amount of liabilities The higher the book value of the assets, the higher the fair value The higher the carrying amount of the liabilities, the lower the fair value Total 9,078,415
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17. FINANCIAL ASSETS (continued) • Fair value hierarchy (continued) Financial assets Fair value 31 December 2022 Valuation technique Unobservable input data, mean values Relationship between unobservable input data and fair value Listed minority shareholdings, no active market 3,119,986 Asset-based approach – Net Accounting Assets Book value of assets Carrying amount of liabilities The higher the book value of the assets, the higher the fair value The higher the carrying amount of the liabilities, the lower the fair value Unlisted minority shareholdings 16,659,508 Income approach – discounted cash flow method Weighted average cost of capital: 14.13% Growth rate in long-term income perpetuity: 3.77% The lower the weighted average cost of capital, the higher the fair value. The higher the long-term revenue growth rate, the higher the fair value. Listed minority shareholdings without active market 73,822,266 Income approach – discounted cash flow method Weighted average cost of capital: 16.67% Growth rate in long-term income perpetuity: 3.77% The lower the weighted average cost of capital, the higher the fair value. The higher the long-term revenue growth rate, the higher the fair value. Unlisted minority shareholdings 6,131,884 Asset-based approach – Net Accounting Assets Book value of assets Carrying amount of liabilities The higher the book value of the assets, the higher the fair value The higher the carrying amount of the liabilities, the lower the fair value Total 99,733,644
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17. FINANCIAL ASSETS (continued) • Fair value hierarchy (continued) Although the Group considers fair value estimates as presented in these financial statements to be appropriate, the use of other methods or assumptions in analysis and measurement could lead to values different from those presented. For fair values recognised from the use of a significant number of unobservable inputs (Level 3), changing one or more determinants in the analysis would have effects on the overall result and the current result. At the value resulting from the evaluation of equity investments, a sensitivity analysis was performed by estimating risk variations on the main influencing factors. In 2023, only one valuation technique was used for equity investments, namely the Equity Asset Approach - Adjusted Net Asset Method and the Book Net Asset Method, and the sensitivity analysis that takes into account the change in fair value of assets and liabilities is presented on the following pages. For 2022, two valuation techniques have been used for equity investments, namely the Income Approach - Discounted Cash Flow Method and the Capital Asset Approach - Adjusted Net Asset Method and the Net Book Asset Method. The sensitivity analysis is presented below for each method used: 1) Income approach– discounted cash flow method– the values of the net operating financial flows as well as the values of the weighted average cost of capital were statistically changed by +/-5% and +/-50 bps, respectively, considered as a risk limit, obtaining values per share and implicitly of the company's equity with a deviation from the standard value. Considering that within the holdings valued using the discounted cash flow method, there are companies for which the total value of the capital was strongly influenced by the value of the excess assets that are added to the present value of the assets in operation, we also included a sensitivity analysis by estimating risk variations by +/-5% of the excess assets. All these deviations from the standard value influence other elements of the comprehensive income (before tax). Altered assumption (Lei) Impact in other comprehensive income (before tax) 31 December 2023 Impact in other comprehensive income (before tax) 31 December 2022 Increase in net operating financial flows by 5% n/a 4,752,473 Decrease in net operating financial flows by 5% n/a (2,739,303) Increase in weighted average cost of capital by 50 bps n/a (2,226,882) Increase in weighted average cost of capital by 50 bps n/a 4,514,493 Increase growth rate in perpetuity by 50 bps n/a 4,315,564 Decrease in growth rate in perpetuity by 50 bps n/a (2,017,224) Increase in the value of excess assets by 5% n/a 1,220,355 Decrease in the value of excess assets by 5% n/a (1,253,397)
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17. FINANCIAL ASSETS (continued) • Fair value hierarchy (continued) From the information presented above it can be seen that there is a direct relationship between the value of the net operating financial flows and the value of the excess assets and the fair value and an inverse relationship between the weighted average cost of capital and the fair value: • the increase/decrease in net operating financial flows causes an increase/decrease in fair value; • increasing/decreasing the weighted average cost of capital causes a decrease/increase in fair value; • increase/decrease in excess assets causes an increase/decrease in fair value. The weighted average cost of capital is the cost of the company's capital in nominal terms (including inflation), based on the "Capital Asset Pricing Model". All sources of capital – shares, bonds and other long-term liabilities – are included in the calculation of the weighted average cost of capital. Excess assets are assets that are not used in the current (operational) business of the company and may include financial assets, tangible assets, etc. 2) Asset based approach – Corrected net asset method and accounting net asset method – both asset values and liability values have been changed by +/-5% (2022: +/-5%), obtaining values per share and equity of the company, with a deviation from the standard value. All these deviations from the standard value influence other elements of the comprehensive income (before tax). Altered assumption (Lei) Impact in other comprehensive income (before tax) 31 December 2023 Impact in other comprehensive income (before tax) 31 December 2022 5% increase in net asset value 451,921 488,131 Decrease in the value of net assets by 5% (451,921) (463,113) From the information presented above it can be seen that there is a direct relationship between the value of the net asset and the fair value: • increase/decrease in net assets results in an increase/decrease in fair value.
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17. FINANCIAL ASSETS (continued) • Fair value hierarchy (continued) Revaluation reserves of financial assets at fair value through other comprehensive income, net of deferred tax 31 December 2023 31 December 2022 As at 1 January 369,357,208 622,479,609 Gross (Loss)/Gain on revaluation of financial assets measured at fair value through other comprehensive income 684,096,428 (262,669,472) Deferred tax related to revaluation gain on financial assets measured at fair value through other comprehensive income (82,346,354) 39,800,200 Net (Loss)/Gain on revaluation of financial assets measured at fair value through other comprehensive income 601,750,074 (222,869,272) Gross gain on deferred tax related to the transfer to the retained earnings account as a result of the sale of financial assets (18,276,557) (36,022,470) Deferred tax related to the revaluation gain on financial assets measured at fair value through other comprehensive income transferred to retained earnings following the sale of financial assets 697,214 5,769,341 Gross gain on deferred tax related to the transfer to the retained earnings account as a result of the sale of financial assets (17,579,343) (30,253,129) At 31 December 953,527,939 369,357,208
18. OTHER FINANCIAL ASSETS AT AMORTISED COST in RON 31 December 2023 31 December 2022 Trade receivables 90,327,712 13,155,479 Advance payments to suppliers 514,175 2,348,960 Receivables and sundry debtors 6,744,682 5,953,100 Total other financial assets at amortised cost – gross amount 97,586,569 21,457,539 Minus expected credit loss 34,495,824 2,741,404 Total other financial assets at amortised cost 63,090,745 18,716,135
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18) Other financial assets at amortised cost (continued) in RON 31 December 2023 31 December 2022 Trade receivables and other sundry debtors – performance 63,090,745 18,716,135 Trade receivables and other sundry debtors – impaired 34,495,824 17,850,331 Trade receivables and other sundry debtors – gross value 97,586,569 36,566,466 Expected credit loss adjustments for trade receivables and other sundry debtors – impaired 34,495,824 17,850,331 Total other financial assets at amortised cost 63,090,745 18,716,135 The receivables ageing is as follows on 31 December 2023 and 31 December 2022: in RON 31 December 2023 Expected credit loss Gross value Net book value Not overdue - 48,243,330 48,243,330 Outstanding 0-30 days - 14,847,415 14,847,415 Outstanding 31-60 days - - - Outstanding 61 to 90 days - - - Outstanding 91 to 180 days - - - Outstanding 181 to 365 days - - - Outstanding over 365 days 34,495,824 34,495,824 - Total 34,495,824 97,586,569 63,090,745 in RON 31 December 2022 Expected credit loss Gross value Net book value Not overdue - 7,501,065 7,501,065 Outstanding 0-30 days - 8,969,923 8,969,923 Outstanding 31-60 days - 1,679,211 1,679,211 Outstanding 61 to 90 days - 449,218 449,218 Outstanding 91 to 180 days - - - Outstanding 181 to 365 days - 116,718 116,718 Outstanding over 365 days 17,850,331 17,850,331 - Total 17,850,331 36,566,466 18,716,135
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18. OTHER FINANCIAL ASSETS AT AMORTISED COST (continued) The Group has analysed credit risk losses related to receivables less than 365 days old according to the Group's policy, and the impact at the level of the consolidated financial statements is insignificant as at 31 December 2023 and 31 December 2022. Changes in the balance of expected credit risk losses on trade receivables and other sundry debtors as at 31 December 2023 and 31 December 2022 are as follows: in RON 31 December 2023 31 December 2022 As at 1 January 17,850,331 14,613,094 Additions 5,501,398 6,177,331 Reversal (11,400,087) (2,940,094) Taking over the expected credit losses from credit risk related to the receivables of the acquired subsidiary during the financial year 22,544,182 - At 31 December 34,495,824 17,850,331
19. INVENTORIES in RON 31 December 2023 31 December 2022 Raw materials 67,547,457 113,753,871 Semi-finished goods 13,438,697 46,969,337 Finished goods 20,446,003 16,686,920 Production in progress 2,064,672 71,379 Merchandise 318,239 33,911 Other inventories - 368 Write-downs of inventories (10,612,811) 569,777 Total 93,202,257 178,085,563 The inventories pertain to the production of sunflower oil and sunflower-derived products, as well as inventory necessary for the production of electrical and electronic equipment. The balance of impairment losses at 31 December 2023, is mainly related to the inventories of Electromagnetica S.A., amounting to 9,318,915 RON, a subsidiary introduced during the year 2023 into the consolidation group. As of 31 December 2022, the balance of impairment losses related to inventories amounts to 365,399 RON and pertains to the production of sunflower oil and sunflower-derived products held by Argus S.A.
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20. INVESTMENT PROPERTY in RON 31 December 2023 31 December 2022 Balance as at 1 January 308,971,502 299,930,012 Changes in fair value - 9,041,490 Purchases 19,900,222 - Transfers from tangible assets 18,689,815 - Subsidiary acquisitions 23,569,292 - Balance as at 31 December 371,130,831 308,971,502 The Group has no mortgaged investment property at 31 December 2023 and 31 December 2022 respectively.
The fair value hierarchy is Level 3 for investment properties The last revaluation of the investment properties held was conducted on 31 December 2022, with the differences from revaluation being recorded in the profit or loss account. The revaluation was carried out by an authorized valuer, namely Neoconsult Valuation S.R.L., a corporate member of ANEVAR. During 2023, market data published by real estate companies indicated that there were no significant changes in the input data used in the calculation of the market value of real estate investments - rents, occupancy rates, capitalization rates, unit values of land, utilized in applying these methods. Investment property arising from the acquisition of subsidiaries is at fair value, having been valued at the date of acquisition by an ANEVAR authorised valuer. The following valuation techniques were used in their valuation: market approach - market comparison method for land, income approach - income capitalisation method for buildings and cost approach - net replacement cost method for equipment and other fixed assets. The investment properties resulting from the acquisition of subsidiaries are carried at fair value, evaluated at the acquisition date by an authorized evaluator ANEVAR. In their evaluation, the following appraisal techniques were used: market approach - market comparison method for lands, income approach - income capitalization method for buildings, and cost approach - net replacement cost method for equipment and other fixed assets. Considering that the input data used in the evaluation of lands and buildings from the Group's portfolio as of 31 December 2022, did not significantly vary in the market throughout the year 2023, it was considered that the net book value of the investment properties as of 31 December 2023, represents an estimate of fair value at the reporting date. In estimating the market value as of 31 December 2022, three valuation methods were utilized: market approach - market comparison method, income approach - income capitalization method, and cost approach - net replacement cost method: 1) Market approach - The Sales Comparison Method utilizes comparative analysis, wherein the estimation of value is made by analyzing the market to find similar properties, and then comparing these properties with the one being evaluated. The method assumes that the market value of a real estate property is directly related to the transaction prices of comparable properties, with the comparative analysis relying on the similarities and differences between properties and how they influence value.
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20. INVESTMENT PROPERTY (continued) The method is a full approach that applies information gathered by following the supply-demand ratio in the market, as reflected in the media or other credible sources of information. It is based on the unit value resulting from transactions with similar or comparable properties in a satisfactory comparable area or areas. In this method there is a direct relationship between the market price and the resulting value, the higher the price of comparable properties, the higher the value resulting from this method, the lower the price of comparable properties, the lower the value resulting from this method. The method was used in principle for land, the average price considered in the valuation being EUR 169/sqm with a minimum of EUR 2/sqm and a maximum of EUR 781/sqm. For buildings, the price varied between EUR 97/sqm and EUR 2,128/sqm. 2) The income approach using the direct capitalisation method the value of the property is determined on the basis of the ability of the property to generate positive cash flows which ultimately remain with the owner. The monthly gross operating income and related expenses are determined and the net cash flow is then discounted at a rate that represents the expected return to investors under similar risks associated with the property. As with valuation based on discounted net cash flows, there is a direct relationship between the cash flows expected to be generated and the appraised value and an inverse relationship between the discount rate and the appraised value - as the expected cash flows increase or the discount rate decreases, the appraised value increases, as the expected cash flows decrease or the discount rate increases, the appraised value decreases. The method has been used for buildings such as commercial premises, with the net rent considered in the valuation methodology (after deduction of property related expenses) ranging from EUR 1.7/sqm/month to EUR 8.55/sqm/month depending on location and amenities. Also the capitalisation rate considered in the valuation was in the range 8 - 11%. 3) Cost approach - The net replacement cost method (after deducting depreciation) is used when there is either no evidence of trading prices for similar properties or no identifiable income stream, real or theoretical, that would accrue to the owner and involves establishing the market value of the property by estimating the cost of building a new property with the same use or adapting an old property to the same use, without costs related to construction/adaptation time. In the case of the valued buildings, the replacement cost was estimated using the guidance 'Reconstruction costs - replacement costs, industrial, commercial and agricultural buildings. Special constructions" - Corneliu Șchiopu - Iroval Publishing House Bucharest, 2010, updated with 2022-2023 indexes. Depreciation estimation was done using the segregation method, whereby each cause of depreciation was analysed separately, quantified and then applied to the reconstruction cost. There is a direct relationship between the estimated costs and the resulting value - as the estimated construction costs increase, the assessed value increases, as the estimated costs decrease, the reassessed value decreases. There is an inverse relationship between estimated depreciation and the resulting value - as depreciation increases, the assessed value decreases, as depreciation decreases, the revalued value increases. The average net replacement cost considered in the valuation (after depreciation) ranged from 363 EUR/ sqm to 646 EUR/ sqm.
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20. INVESTMENT PROPERTY (continued) The review of fair values obtained from independent valuers takes place within each Group company through an independent committee that reviews and approves the fair values to be presented by each Group company at the end of each reporting period. For undivided quota land, a combination of the income approach and the cost approach (residual method) was used given that there are no comparable properties - the total value of the property was determined using the income method and to determine the value of the land, the net replacement cost of construction was subtracted from the total value of the property. The resulting value for this land ranged from EUR 3/sqm to EUR 9,240/sqm depending on the location. Investment property Fair value as at 31 December 2023 Fair value as at 31 December 2022 Valuation method Land 161,454,294 161,454,294 Market approach Buildings 1,033,344 1,033,344 Market approach Buildings 36,831,742 36,831,742 Income approach Buildings 90,238,563 90,238,563 Cost approach Land 19,413,558 19,413,558 Residual method Land (acquired during the financial year) 7,455,750 - Market approach Buildings (acquired during the financial year) 12,444,472 - Income approach Market approach Transfers from property, plant and equipment during the financial year 18,689,815 - Cost approach, Market approach Income approach Investment property from acquisition of subsidiaries 23,569,292 - Cost approach TOTAL 371,130,831 308,971,502
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21. PROPERTY, PLANT AND EQUIPMENT Gross book value 1 January 2023 Additions Acquisition of subsidiaries Disposals Transfer to investment property Other transfers 31 December 2023 Property, plant and equipment Land 78,414,793 - 157,971,181 (386,392) (18,689,815) (316,551) 216,993,216 Buildings 110,741,610 2,389,254 116,525,179 (124,946) - 635,285 230,166,382 Equipment 76,088,794 1,137,249 15,202,091 (618,651) - - 91,809,483 Vehicles 14,299,218 536,543 1,711,529 (397,390) - 1,270,570 17,420,470 Other fixed assets 3,504,924 288,219 1,174,632 (143,755) - (23,205) 4,800,815 Tangible assets in progress 1,566,099 1,450,788 1,218,687 - - (1,566,099) 2,669,475 Total 284,615,438 5,802,053 293,803,299 (1,671,134) (18,689,815) - 563,859,841 Accumulated depreciation 1 January 2023 Additions Acquisition of subsidiaries Disposals Transfer to investment property Other transfers 31 December 2023 Property, plant, and equipment Land (*) 3,714,679 3.714.679 Buildings (**) 1.867.802 8,519,836 1,171,230 (126,162) - - 11.432.706 Equipment 65,905,819 4,341,215 1,291,887 - - - 71,538,921 Vehicles 10,275,991 854,082 - - - (245,720) 10,884,353 Other fixed assets 1,797,664 2,320,357 - - - 245,720 4,363,741 Total 79,847,276 16,035,490 6,177,796 (126,162) - - 101,934,400 Net book value 1 January 2023 31 Dec Property, plant, and equipment 204,768,162 461,925,441 (*) The value of 3.714.679 RON represents impairment allowances for land, acquired through Electromagnetica S.A. consolidation. (**) In the financial statements for the year 2022, the value of 1.867.802 RON represents impairment of buildings and was presented as a separate line – “Value impairment”. Tangible assets include assets purchased through a government subsidy by Electromagnetica S.A. and used in the licensed activity at one of the microhydroelectric power plant located in Brodina, Suceava county. The remaining value of the investment at 31 December 2023 is 5,516,713 lei, out of which the subsidized value is 3,920,651 RON.
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21. PROPERTY, PLANT AND EQUIPMENT (continued) Gross book value 1 January 2022 Additions Transfers Disposals/ Write-offs Depreciation reversal due to revaluation Surpluses from revaluation Losses from revaluation 31 December 2022 Tangible assets Lands 79,661,598 - - - - 3,080,725 (4,327,530) 78,414,793 Buildings 112,703,196 409,051 (399,502) - (8,730,188) 20,023,668 (13,264,615) 110,741,610 Equipment 76,207,787 520,197 1,480,850 (2,120,040) - - - 76,088,794 Vehicles 13,696,704 1,961,910 394,544 (1,753,940) - - - 14,299,218 Other fixed assets 3,506,571 150,227 - (151,874) - - - 3,504,924 Tangible assets in progress 1,189,753 2,383,214 (1,875,393) (131,475) - - - 1,566,099 Total 286,965,609 5,424,599 (399,501) (4,157,329) (8,730,188) 23,104,393 (17,592,145) 284,615,438 Accumulated depreciation 1 January 2022 Expense during the year Inflows Acquisition of subsidiaries Transfer to investment property Other transfers 31 December 2022 Accumulated depreciation Tangible assets Buildings - 8,680,112 - - (8,680,112) - - - Equipment 65,658,782 2,945,483 - (2,660,083) (38,363) - - 65,905,819 Vehicles 11,092,522 388,014 - (1,204,545) - - - 10,275,991 Other fixed assets 1,685,927 212,784 - (101,047) - - - 1,797,664 Total 78,437,231 12,226,393 - (3,965,675) (8,718,475) - - 77,979,474 Value impairment 1,867,802 - - - - - - 1,867,802 Net book value 1 January 2022 31 December 2022 Property plant and equipment 206,660,576 - - - - - - 204,768,162 (*) The value of pledged tangible assets is presented in note 22 “Loans”
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21. PROPERTY, PLANT AND EQUIPMENT (continued) The last revaluation of land and buildings owned was carried out on 31 December 2022, with the revaluation differences being recorded within equity. The revaluation was carried out by a certified valuer, namely Neoconsult Valuation S.R.L., a corporate member of ANEVAR. In estimating the market value on 31 December 2022, three valuation techniques were used, as follows: the market approach –market comparisons method, the revenue approach – the income capitalization method and the cost approach – the net replacement cost method. During 2023, market data published by real estate companies indicate that no significant changes have been recorded in the input data – rents, occupancy rates, capitalization rates, land unit values, used in the application of these methods. Taking into account that the input data used in the valuation of land and buildings in the Group's heritage as of 31 December 2022 did not vary significantly in the market during 2023, it was considered that their net book value as of 31 December 2023 represents an estimate of the fair value at reporting date. The other categories of tangible assets are valued at cost, less accumulated depreciation. Tangible fixed assets from the acquisition of subsidiaries are at the level of fair value, being evaluated on the date of acquisition by an ANEVAR authorized appraiser. In their evaluation, the following valuation techniques were used: the market approach – the method of market comparisons for land, the revenue approach – the method of income capitalization for buildings, and the cost approach – the net replacement cost method for equipment and other fixed assets. The fair value hierarchy is Level 3 for land and buildings. The other categories of property, plant and equipment are stated at cost, less accumulated depreciation and amortization. On 31 December 2022, three valuation techniques were used in their estimation, as follows: 1. The market approach – The market comparison method uses comparative analysis, respectively the estimation of the value is done by analysing the market to find similar properties, then comparing these properties with the evaluated one. The method assumes that the market value of a real estate property is in direct relationship with the trading prices of comparable properties, the comparative analysis being based on the similarities and differences between the properties and how they influence the value. The method is a global approach, which applies to the information gathered following the supply-demand ratio in the market, reflected in the mass media or other credible sources of information. It is based on the unit value resulting from transactions with similar or comparable real estate carried out in a satisfactorily comparable area or areas. In this method there is a direct relationship between the market price and the resulting value, the higher the price of comparable properties, the higher the value resulting from this method, the lower the price of comparable properties, the lower is the resulting value by using this method. The method was basically used for land, the average price considered in the evaluation being 15 EUR/m2 with a minimum of 1 EUR/m2 and a maximum of 1,553 EUR/m2. In case of buildings for which this method was used, the considered price varied between 412 and 2,053 EUR/m2 with an average of 685 EUR/m2. 2. Income approach – Two evaluation methods were used within this approach: 2.1. Discounted Net Cash Flow method– The expected cash flows from an asset or business (FCFF) are discounted to present value using a rate of return that reflects the relative risk of the investment as well as the time value of cash (WACC). This rate is based on the individual rates of return on invested capital (equity and interest-bearing liabilities) and formed by the individual levels of return for each asset.
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21. PROPERTY, PLANT AND EQUIPMENT (continued) This rate is calculated by weighting the cost of interest-bearing debt and equity, in proportion to their estimated weight in an estimated capital structure. Cash flow forecasts are made over a limited period (usually 5 years). The residual value, which represents the value of the business after the forecast period was explicitly estimated by capitalizing the profit at the end of the forecast period. The capitalization rate was estimated starting from the discount rate by deducting the continuous annual growth rate (long-term growth rate – g). In this method, there is a direct relationship between the estimated FCFF level and the resulting value, the higher the estimated cash flows, the higher the resulting value by using this method, the lower the estimated cash flows, the lower the value resulting by using this method. This method was mainly used for the valuation of companies assets from hospitality businesses, the forecasts considering specifics of each hotel, and for evaluation of Argus S.A’s silos. In this method there is an inverse relationship between the estimated rate of return and the resulting value, the higher the discount rate, the lower the value, the lower the discount rate, the higher the value resulting by using this method. The discount rate used in the valuations of companies in the hospitality business varied between 10.98% and 14.96%, for industrial sites such as silos, a discount rate between 9.72% and 13.25% was used. In this method there is a direct relationship between the level of the long-term growth rate (g) and the resulting value, the higher the growth rate, the higher the resulting value, the lower the growth rate, the lower the value resulting by using this method. The long-term growth rate used in hospitality business companies valuations ranged from 2.5% to 5.98% for silo-type industrial sites was used a long-term growth rate of 0.62% to 2.51%. 2.2. Direct capitalization method – The value of the property was determined based on the property's ability to generate positive cash flows that ultimately remain with the owner. The monthly gross operating income and related expenses are determined, with the net cash flow subsequently being discounted at a rate that represents the return expected by investors in the context of similar risks to those associated with property. As with net discounted cash flow method, there is a direct relationship between the cash flows expected to be generated and the appraised value and an inverse relationship between the discount rate and the appraised value – as the estimated cash flows increase or discount rate decreases, appraised value increases, as forecasted number decrease or discount rate increases, appraised value decreases. The forecasted cash flows considered an occupancy rate of the locations that varied between 65% and 85%, and the capitalization rate considered in this approach varied between 9.5% and 11%. 3. Cost method - The net replacement cost method (after depreciation deduction) is used when there is either no evidence of transaction prices for similar properties or no identifiable stream of income, real or theoretical, that would accrue to the owner and involves establishing the market value of the property by estimating the costs of building a new property, with the same utility, or adapting an old property to the same use, without costs of time related to construction / adaptation. In the case of the appraised buildings, the replacement cost was estimated by using the guide "Reconstruction costs - replacement costs, industrial, commercial and agricultural buildings. Special constructions" - Corneliu Şchiopu - Iroval Publishing House Bucharest, 2010, updated with indexes 2022-2023.
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21. PROPERTY, PLANT AND EQUIPMENT (continued) The estimation of depreciation was done using segregation method, by which each cause of depreciation was analysed separately, quantified and then applied to the reconstruction cost. It is a direct relationship between estimated costs and resulting value – as the estimated construction costs increase, the assessed value increases, as the estimated costs decrease, the reassessed value decreases. It is an inverse relationship between the estimated depreciation and the resulting value – the higher the depreciation, the lower the assessed value, the lower the depreciation, the higher the reassessed value. The total impairment considered in the evaluation was in the range of 25 - 95%. The average net replacement cost considered in the evaluation varied between 697 and 756 EUR/m2, but separately, certain improvements are also considered for buildings at a specific cost which is not allocated to the surface. For undivided shared land a combination of the income approach and the cost approach (residual method) was used given that there are no comparable properties – the total value of the property was determined using the income method and to determine the value of the land, from the total value of the property has been deducted the net replacement cost of the construction. The resulting value for these plots varied between 25 and 6,051 EUR/m2 depending on the location. Property, plant and equipment Fair value as at 31 December 2023 Fair value as at 31 December 2022 Valuation technique Land, excluding transfer to investment property 59,022,035 78,414,793 Market approach, Residual method Buildings 105,247,528 110,741,610 Market approach, Income approach, Cost approach Other fixed assets 10,030,374 15,611,759 Cost approach Land acquired through subsidiary acquisitions 157,971,181 - Market approach Buildings acquired through subsidiary acquisitions 115,353,949 - Income approach, Cost approach Other fixed assets acquired through subsidiary acquisitions 14,300,374 - Cost approach TOTAL 461,925,441 204,768,162
22. LOANS As of 31 December 2023, the Group's loans are mainly located by banking units as follows: The Company Bank Currenc y Interest rate Final maturity Balance on 31 December 2023 Argus S.A. Constanta BANCA TRANSILVANIA RON Robor 1M +1% 27.08.2024 65,951,289 Argus S.A. Constanta BANCA TRANSILVANIA RON Robor 1M +1% 5.08.2024 5,241,813
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22. LOANS (continued) Argus S.A. Constanta B.R.D. - Group Societe Generale RON Revolving 24.06.2025 4,500,000 Argus S.A. Constanta B.R.D. - Group Societe Generale RON Revolving 16.12.2025 4,552,156 Argus S.A. Constanta B.R.D. - Group Societe Generale RON Rural Invest 24.06.2028 890,224 As at 31 December 2023 the Group had other commitments as follows: - credit line for working capital financing in the maximum amount of RON 10,000,000 and bank letter of guarantee (BLG) issuance ceiling in the maximum amount of RON 2,000,000 facilities granted by OTP Bank to Electromagnetica S.A. at an interest rate of Robor 3M + 2.21%, maturing on 17.05.2025. The facilities were undrawn at 31.12.2023. - non-cash guarantee agreements amounting to RON 10,000,000 granted by BCR to Electromagnetica S.A. of which RON 1,247,792 was undrawn. As of 31 December 2022, the Group's loans are mainly located by banking units as follows: The Company Bank Currency Interest rate Final maturity Balance on 31 December 2022 Argus S.A. Constanta BANCA TRANSILVANIA RON Robor 3M +1.2% 27.08.2023 152,921,978 Argus S.A. Constanta B.R.D. - Group Societe Generale RON Revolving 31.07.2024 5,000,000 Argus S.A. Constanta B.R.D. - Group Societe Generale RON Rural Invest 24.06.2028 1,158,674 The Group drawdowns and repayments related to the loans as at 31 December 2023 and 31 December 2022 are as follows: 31 December 2023 31 December 2022 Long-term bank loans 3,444,464 2,285,790 Opening balance Drawdowns 98,762 1,158,674 Refunds (2,653,002) - Closing balance 890,224 3,444,464 31 December 2023 31 December 2022 Short-term loans Opening balance 157,293,395 111,191,650 Drawdowns 155,948,829 235,800,441 Refunds (232,996,966) (189,698,696) Closing balance 80,245,258 157,293,395 Total loans 81,135,482 160,737,859
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22. LOANS (continued) The guarantees provided to obtain credit and non-cash facilities were as follows: Argus S.A. 2023 The Company's loans are secured by mortgages on fixed assets with a net book value of RON 21,109,791 as at 31 December 2023 and inventories totalling 73,550,234 RON. 2022 The Company's loans are secured by mortgages on fixed assets with a net book value of RON 25,768,699 as at 31 December 2022 and inventories in the total amount of RON 178,748,589. Electromagnetica S.A. The commitments granted to Electromagnetica S.A. are secured by accounts opened with creditor banks, receivables, collateral deposits in the amount of 90,000 RON at which they add land and in the amount of 38,668,772 RON respectively: Building from Calea Rahovei 266-268 (Parcell 18, Parcell 21/1) with an net accounting value as at 31 December 2023 of 8,803,206 Lei and M.H.C.s (land and related buildings) with a net accounting value as of 31 December 2023 of 29,865,566 Lei. According to current loan agreements, Electromagnetica S.A. should fulfil certain requirements imposed by creditor banks. As at 31 December 2023, the Company fulfilled all the financial covenants imposed by loan agreements.
23. DIVIDENDS PAYABLE in RON 31 December 2023 31 December 2022 Dividends payable related to 2022 479,012 - Dividends payable related to 2021 4,396,599 4,875,611 Dividends payable related to 2020 7,411,724 7,411,724 Dividends payable related to 2019 14,653,427 14,653,427 Dividends payable related to 2018 21,091,389 21,094,316 Dividends payable related to 2017 448,733 448,733 Dividends payable related to 2016 414,640 414,640 Dividends payable related to 2015 596,370 596,370 Dividends payable related to 2014 492,337 492,337 Dividends payable related to 2013 644,644 644,644 Dividends from previous years 451,902 451,902 Total dividends payable 51,080,777 51,083,704
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24. FINANCIAL LIABILITIES AT AMORTIZED COST in RON 31 December 2023 31 December 2022 Trade payables 19,605,057 11,452,916 Advance payments from customers 3,078,013 217,459 Other financial liabilities at amortized cost 9,293,844 - Total 31,976,914 11,670,375
25. OTHER LIABILITIES in RON 31 December 2023 31 December 2022 Liabilities to state budget 3,713,648 979,141 Liabilities to employees 16,354,888 6,077,225 Other liabilities 7,158,090 14,082,008 Total 27,226,626 21,138,374
26. PROVISIONS FOR RISKS AND CHARGES in RON 31 December 2023 31 December 2022 As at 1 January 3,108,189 2,947,824 Set-ups 656,865 2,327,091 Reversed - (2,166,726) As at 31 December 3,765,054 3,108,189
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27. DEFERRED TAX LIABILITIES Deferred tax liabilities were determined by the following items: 31 December 2023 In RON Assets Liabilities Net Taxable effect Property, plant and equipment – revaluation 233,516,563 - 233,516,563 37,362,650 Investment property – revaluation 227,985,125 - 227,985,125 36,477,620 Financial assets at fair value through other comprehensive income 882,371,300 - 882,371,300 141,179,408 Impairment of inventories (7,201,113) - (7,201,113) (1,152,178) Impairment of other assets at amortized cost (trade receivables) (16,867,163) - (16,867,163) (2,698,746) Other liabilities (employee benefits, untaken holidays) - 16,476,375 (16,476,375) (2,636,220) Other equity - (20,244,732) 20,244,732 3,239,157 Fiscal losses from Argus subsidiary (5,563,731) - (5,563,731) (890,197) Total 1,314,240,981 (3,768,357) 1,318,009,338 210,881,494 Deffered tax liabilities 210,881,494
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27. DEFERRED TAX LIABILITIES (continued) 31 December 2022 In RON Assets Liabilities Net Taxable effect Tangible assets 122,350,703 - 122,350,703 21,153,826 Investment property 226,346,870 - 226,346,870 36,477,620 Financial assets at fair value through other comprehensive income 367,706,587 - 367,706,587 58,833,054 Provisions for risks and charges - 16,254,227 (16,254,227) (2,600,676) Other liabilities (employee benefits, untaken holidays) - 14,627,434 (14,627,434) (2,340,389) Other equity - (20,244,741) 20,244,741 3,239,157 Total 716,404,160 10,636,920 705,767,240 114,762,592 Deffered tax liabilities 114,762,592
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27. DEFERRED TAX LIABILITIES (continued) 31 December 2023 In RON Balance as at 1 January 2023 (Income)/Expense through profit or loss (Income)/Expense through retained earnings (from acquision of subsidiary) (Income)/Expense through other comprehensive income Balance as at 31 December 2023 Tangible assets 21,153,826 - - 16,208,824 37,362,650 Investment property 36,477,620 - - - 36,477,620 Financial assets at fair value through other comprehensive income 58,833,054 - - 82,346,354 141,179,408 Impairment of inventories - - (1,152,178) - (1,152,178) Impairment of other assets at amortized cost (trade receivables) (2,600,676) - (98,070) - (2,698,746) Other liabilities (employee benefits, untaken holidays) (2,340,389) (295,831) - - (2,636,220) Other equity 3,239,157 - - - 3,239,157 Fiscal losses from Argus subsidiary - - - (890,197) (890,197) Total 114,762,592 (295,831) (1,250,248) 97,664,981 210,881,494
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27. DEFERRED TAX LIABILITIES (continued) 31 December 2022 In RON Balance as at 1 January 2022 (Income)/Expense through profit or loss (Income)/Expense through retained earnings (from acquision of subsidiary) (Income)/Expense through other comprehensive income Balance as at 31 December 2022 Property, plant and equipment 22,320,649 - - (1,166,823) 21,153,826 Investment property 24,038,711 12,438,909 - - 36,477,620 Financial assets at fair value through other comprehensive income 103,441,303 - - (44,608,249) 58,833,054 Impairment of other assets at amortized cost (trade receivables) (2,186,279) (414,397) - - (2,600,676) Other liabilities (employee benefits, untaken holidays) (166,260) (2,174,129) - - (2,340,389) Fiscal losses (3,337,630) - 3,337,630 - - Other equity 3,776,687 - - (537,530) 3,239,157 Total 147,887,181 9,850,383 3,337,630 (46,312,602) 114,762,592
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27. DEFERRED TAX LIABILITIES (continued) In RON 31 December 2023 31 December 2022 Deferred tax asset (7,377,341) (4,941,065) Deferred tax liability 218,258,835 119,703,657 Net deferred tax (deferred tax liability) 210,881,494 114,762,592
28. CAPITAL AND RESERVES • Share capital The share capital according to the Articles of Incorporation of the parent company has a value of RON 50,000,000 and it is divided into 500,000,000 shares, each with a nominal value of RON 0.1 and it is the result of direct subscriptions to share capital and of the conversion of dividends payable into shares under Law 55/1995 and by the effect of Law no. 133/1996. As of 31 December 2023 there is an ongoing process for obtaining the approval of the Financial Supervisory Authority for the reduction of the share capital of Infinity Capital Investments S.A. by cancelling the 25.000.000 own shares redeemed during 2022. Additional details regarding the share capital of the parent company can be found in its separate financial statements. The share capital according to the Articles of Incorporation of the parent company is as follows: in RON 31 December 2023 31 December 2022 Share capital 50,000,000 50,000,000 As of 31 December 2023, the number of shareholders of the parent company is 5,725,640 (31 December 2022: 5,728,907) as follows: Number of shareholders Share Count Amount (RON) (%) 31 December 2023 Individuals 5,725,467 207,333,918 20,733,392 41% Legal entities 173 292,666,082 29,266,608 59% Total 31 December 2023 5,725,640 500,000,000 50,000,000 100% Number of shareholders Share Count Amount (RON) (%) 31 December 2022 Individuals 5,728,730 209,676,656 20,967,666 42% Legal entities 177 290,323,344 29,032,334 58% Total 31 December 2022 5,728,907 500,000,000 50,000,000 100%
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28. CAPITAL AND RESERVES (continued) • Legal reserves As required by law, each company from the Group sets legal reserves as 5% of the profit recorded according to the applicable accounting regulations up to the maximum level of 20% of the entity’s share capital. Legal reserves cannot be distributed to shareholders. As of 31 December 2023, legal and statutory reserves amount 40,233,147 RON (as of 31 December 2022: 30,937,825 RON), of which legal reserves amount 33,842,074 RON (as of 31 December 2022: 23,409,585 RON). • Other reserves in RON 31 December 2023 31 December 2022 Other reserves – own funds 657,744,821 451,941,744 Other reserves – following the application of Law no. 133/1996* 144,636,073 144,636,073 Other reserves 123,349,706 96,492,920 Total 925,730,600 693,070,737 * The reserve related to the initial portfolio was established following the application of Law 133/1996 as a difference between the value of the contributed portfolio and the value of the share capital subscribed to the parent company. These reserves are assimilated to a share premium.
• Dividends During the reporting period ended 31 December 2023, the Group did not declare dividends payable (as of 31 December 2022: 14,250,000 RON). The value of the gross dividend per share was 0.03 RON as of 31 December 2022.
29. NON-CONTROLLING INTERESTS The non-controlling interest in the equity of subsidiaries included in consolidation was as follows: in RON 31 December 2023 31 December 2022 As of 1 January 74,885,218 86,675,621 Net (Loss)/Profit attributable to non-controlling interests (4,037,431) 5,494,901 Reserves from revaluation of property, plant and equipment attributable to non-controlling interests (6,381,819) (12,545,480) Reserves from revaluation of equity instruments at fair value through other comprehensive income, net of deferred tax 779,296 (978,620) Dividends distributed to non-controlling interests - (1,117,017) Non-controlling interests from acquisition of subsidiaries during the period 123,160,722 - Changes in Group’s structure (18,271,979) (2,644,187) As of 31 December 170,134,007 74,885,218
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29. NON-CONTROLLING INTERESTS (continued) The Group’s subsidiaries that have significant non-controlling interests are Electromagnetica S.A. and Argus S.A. as of 31 December 2023 and Argus S.A. as of 31 December 2022. Information from the statement of financial position, statement of profit and loss and other comprehensive income and statement of cash flows of Argus S.A. as at and for the year ended 31 December 2023 and 31 December 2022, that were consolidated by the Group, before intra-group eliminations, were as follows: Information from Statement of financial position 31 December 2023 31 December 2022 Assets Cash and cash equivalents 7,256,835 37,630,654 Financial assets at fair value through other comprehensive income 1,409,205 33,584 Other financial assets at amortized cost 22,417,059 15,801,493 Inventories 74,353,802 177,750,960 Investment property 2,251,680 11,636,539 Tangible assets 118,141,593 148,552,353 Other assets 121,877 314,250 Current income tax receivable 380,796 418,040 Total assets 226,332,847 392,137,873 Liabilities Loans 81,135,482 159,324,280 Dividends payable - 554,186 Financial liabilities at amortized cost 5,607,425 7,140,542 Other liabilities 3,483,557 1,146,632 Provisions for risks and charges 933,794 6,742,942 Deferred tax liabilities 12,781,011 14,304,896 Total liabilities 103,941,269 189,213,478 Net assets, out of which: 122,391,578 202,924,395 Net assets attributable to non-controlling interest 10,501,197 29,671,793 Net assets attributable to the owners of the parent company 111,890,381 173,252,602
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29. NON-CONTROLLING INTERESTS (continued) Information from Statement of profit and loss and other comprehensive income 31 December 2023 31 December 2022 Income Gross dividend income 8,089,838 - Interest received 442,990 741,138 Revenue from contracts with customers 247,105,000 366,057,313 Other operating income 17,193,315 5,741,297 Net foreign exchange loss - (94,622) Gain on revaluation of investment property - 235,311 Expenses Impairment losses on financial assets (5,270,974) - Losses from non-financial assets impairment - (190,392) Increase in provisions for risks and charges - (870,945) Expenses with salaries, allowances and similar charges (14,499,965) (22,283,220) Raw materials, consumables and merchandise (267,390,822) (268,901,879) Other operating expenses (35,313,030) (40,979,709) Interest expense (5,832,686) (6,821,935) (Loss)/Profit before tax (55,476,334) 32,632,357 Profit tax (718,860) 2,945,286 Net (Loss)/Profit for the year (54,757,474) 29,687,071 Other comprehensive income Decrease in revaluation reserves for property, plant and equipment, net of deferred tax - (6,454,092) Other comprehensive income – items that will not be subsequently reclassified to profit or loss - (6,454,092) Total other comprehensive income items - (6,454,092) Total comprehensive income for the financial year (54,757,474) 23,232,979 Net (Loss)/Profit attributable to non-controlling interests (4,698,191) 4,031,504 Total comprehensive income attributable to non-controlling interests (4,698,191) 3,155,039
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29. NON-CONTROLLING INTERESTS (continued) Information from Statement of cashflows 31 December 2023 31 December 2022 Cash and cash equivalents as at 1 January 37,630,654 15,046,811 Cash and cash equivalents as at 31 December 7,256,835 37,630,654 Net (decrease)/increase in cash and cash equivalents (30,373,819) 22,583,844 Net cash from operating activities 26,532,233 (23,609,339) Net cash (used in)/from investing activities 28,748,618 (3,131,098) Net cash (used in)/from financing activities (85,654,670) 49,324,280 Net (decrease)/increase in cash and cash equivalents (30,373,819) 22,583,844 As of 15 th of November 2023 the parent company increased its share in Electromagnetica S.A. from 37.09% to 65.45%, by acquiring additional 37.29% of Electromagnetica S.A. share capital. Starting from this date, Electromagnetica S.A. became a subsidiary included in consolidation. All financial information presented and included by the parent company in consolidation is for the period 15 November - 31 December 2023 and as at 31 December 2023. Elements from the statement of financial position, statement of profit and loss and other comprehensive income and statement of cash flows of Electromagnetica S.A. as of and for the period ended 31 December 2023 that were consolidated by the Group, before intra-group eliminations, were as follows: Information from Statement of financial position 31 December 2023 31 December 2022 Assets Cash and cash equivalents 28,934,075 - Bank deposits 1,942,722 - Other financial assets at amortized cost 37,899,666 - Inventories 18,741,313 - Investment property 23,569,292 - Property, plant and equipment 287,379,784 - Other assets 6,584,415 - Current profit tax receivable 822,603 - Total assets 405,873,870 - Liabilities - Dividends payable 1,227,890 - Financial liabilities at amortized cost 18,693,529 - Other liabilities 12,880,244 - Deferred tax liabilities 16,208,824 - Total liabilities 49,010,487 - Net assets, out of which: 356,863,383 - Non-controlling interest 123,160,722 - Net assets attributable to the owners of the parent company 233,702,661 -
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29. NON-CONTROLLING INTERESTS (continued) Information from Statement of profit and loss and other comprehensive income 31 December 2023 31 December 2022 Income Gross dividend income 155,389 - Revenue from contracts with customers 19,376,711 - Other operating income (590,938) - Expenses Reversal of impairment losses on financial assets 961,256 - Expenses with salaries, allowances and similar charges (4,813,845) - Raw materials, consumables and merchandise (10,841,249) - Other operating expenses (7,290,464) - Loss before tax (3,043,140) - Profit tax (820,356) - Net loss for the period (2,222,784) - Other comprehensive income elements - - Other comprehensive income – items that will not be subsequently reclassified to profit or loss - - Total other comprehensive income items - - Total comprehensive income for the financial year (2,222,784) - Loss attributable to non-controlling interests (767,128) - Total comprehensive income attributable to non- controlling interests (767,128) - Information from Statement of cashflows 31 December 2023 31 December 2022 Cash and cash equivalents as at 15 November 15,530,918 - Cash and cash equivalents as at 31 December 28,934,075 - Net (decrease)/increase in cash and cash equivalents 13,403,157 - Net cash from operating activities 15,345,879 - Net cash (used in)/from investing activities (1,942,722) - Net cash (used in)/from financing activities - - Net (decrease)/increase in cash and cash equivalents 13,403,157 -
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30. EARNINGS PER SHARE in RON 31 December 2023 31 December 2022 Net profit attributable to the owners of the parent company 159,549,390 189,431,383 Weighted average number of ordinary shares outstanding 475,000,000 487,123,288 Basic earnings per share (net profit per share) 0.3359 0.3889 Net profit attributable to the owners of the parent company 159,549,390 189,431,383 Gain reflected in retained earnings attributable to ordinary shareholders (from sale of financial assets at fair value through other comprehensive income) 17,579,343 31,231,750 Weighted average number of ordinary shares outstanding 475,000,000 487,123,288 Basic earnings per share (including gain on sale of financial assets measured at fair value through other comprehensive income) 0.3729 0.4530
31. RECLASSIFICATION OF CASH AND CASH EQUIVALENTS From 1 January 2023, the Group has classified and disclosed bank deposits with original maturity of three months or less as "Cash and cash equivalents" in the Consolidated Statement of Financial Position. Therefore, for the year ended 31 December 2022, bank deposits with original maturity of three months or less have been reclassified from the line "Bank deposits" to line "Cash and cash equivalents" in the Consolidated Statement of Financial Position. in RON 31 December 2022 Reclassification 31 December 2022 * Reported *Reclassified Cash and cash equivalents 9,315,636 90,421,636 99,737,272 Bank deposits 90,949,069 (90,421,636) 527,433 Total assets 2,668,257,173 - 2,668,257,173 The reclassification has no impact on the Group's total assets, total liabilities, total equity, income statement, revenue, or earnings per share as of and for the year ended 31 December 2022. The reclassification changes the presentation of the Consolidated Statement of Cash Flows, Note 5 – Significant Risk Management and Note 16 – Cash and cash equivalents as of and for the year ended 31 December 2022.
32. GUARANTEES GRANTED There are no other obligations assumed by the Group beside the ones related to the bank loans and non-cash facilities.
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33. TRANSFER PRICING The Romanian legislative framework includes rules to be applied on transfer pricing between related parties since 2000. The Romanian fiscal legislation is based on the arm's length principle according to which transactions between related parties must be carried out at market value, in compliance with transfer pricing rules. Local taxpayers carrying out transactions with related parties must prepare and present to fiscal authorities, upon their written request, the transfer pricing file. This must be made available within the timeframe established by authorities (large taxpayers carrying out transactions with related parties above the caps established by law are required to prepare the transfer pricing file on an annual basis starting with transactions carried in 2016). Failure to submit the transfer pricing documentation file or submission of an incomplete file might result in penalties for non-compliance. However, regardless of the existence of the file, in addition to the information included in the file, fiscal authorities might interpret the transactions and circumstances different from management and, as a result, they might impose additional fiscal obligations from adjusting the transfer prices (materialized in revenue increases, deductible expense reductions, thus increasing the taxable base of the corporate income tax). As a result, the fiscal authorities are expected to initiate thorough transfer pricing checks to ensure that the fiscal result is not distorted by the effect of the prices charged in transactions with related parties. The Group cannot quantify the result of such check.
34. TRANSACTIONS AND BALANCES WITH RELATED PARTIES Entities in which the parent company holds between 20% and 50% of share capital As of 31 December 2023, the parent company holds shares of more than 20%, but not more than 50% in the share capital of 2 issuers (31 December 2022: 7 issuers). All these entities are based in Romania. For these entities the percentage of ownership by the parent company is not different from the percentage of the number of votes held. Company name Percentage held at 31 December 2023 - % - Percentage held at 31 December 2022 - % - SINTEROM S.A. Cluj-Napoca - 32.13 ELECTRO TOTAL S.A. Botosani * 29.86 29.86 TURISM FELIX S.A. Baile Felix - 29.26 ȘANTIERUL NAVAL ORȘOVA S.A. - 28.02 TURISM LOTUS FELIX S.A. Baile Felix - 27.46 ANTIBIOTICE S.A. Iasi 29.42 27.04 ELECTROMAGNETICA S.A. Bucharest** - 28.16 * Company in liquidation **Holding of 65.45% as of 31 December 2023 Following the analysis of the quantitative and qualitative criteria presented in IAS 28 - "Investments in associates and joint ventures" and IFRS 10 – "Consolidated Financial Statements", the Group concluded that it holds no investments in associates as of 31 December 2023 and 31 December 2022.
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35. KEY PERSONNEL 31 December 2023 Members of the Board of Directors of Infinity Capital Investments S.A.: Sorin – Iulian Cioacă – President, Mihai Trifu - Vice President, Codrin Matei, Mihai Zoescu and Andreea Cosmănescu. Senior management: Sorin – Iulian Cioacă – General Manager, Mihai Trifu - Deputy General Manager. 31 December 2022 Members of the Board of Directors of Infinity Capital Investments S.A.: Sorin – Iulian Cioacă - President, Mihai Trifu - Vice President, Codrin Matei, Mihai Zoescu and Andreea Cosmănescu. Senior management: Sorin – Iulian Cioacă – General Manager, Mihai Trifu - Deputy General Manager. The Group has no contractual obligations regarding retirement to former members of the Board of Directors and management and therefore it has not accounted for any commitment of this kind. The Group has not granted any loans or cash advances to the members of the Board of Directors and to management (except for those advances for business travel justified within the legal term) and has no commitments of this kind accounted for. The Group has not received or given any representation or warranty in favour of a related party.
36. SEGMENT REPORTING Segment reporting is represented by activity segmentation that considers the field of activity to which the main object of activity of the companies within the scope of consolidation belongs. The parent company together with the entities in which it holds more than 50% and which are included in the scope of consolidation operate in the following main business segments: - financial services; - real estate rental and trade; - food industry (mainly production of sunflower oil and related products); - manufacture of instruments and appliances for measuring, testing and navigation, and - tourism.
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36. SEGMENT REPORTING (continued) We present below the benchmarks for the purpose of an analysis as of 31 December 2023 and 31 December 2022: - Assets, liabilities and equity according to the Consolidated Statement of Financial Position 31 December 2023 in RON Group Financial services Real estate rental and trade Manufacture of instruments and appliances for measuring, testing and navigation Food industry (mostly production of sunflower oil and related products) Tourism Assets Cash and cash equivalents 139,020,419 69,096,362 28,953,605 28,934,125 8,157,714 3,878,613 Bank deposits 6,942,722 - 5,000,000 1,942,722 - - Financial assets at fair value through profit or loss 6,621,169 6,621,169 - - - - Financial assets at fair value through other comprehensive income 2,429,667,571 2,396,720,026 31,538,340 - 1,409,205 - Other financial assets at amortised cost 63,090,745 85,363 3,211,404 37,899,666 21,402,855 491,457 Inventories 93,202,257 12,143 36,801 18,741,313 74,353,802 58,198 Investment property 371,130,831 1,100,816 344,209,043 23,569,292 2,251,680 - Property, plant and equipment 461,925,441 11,358,311 4,840,764 287,379,784 129,927,691 28,418,891 Other assets 7,440,927 648,719 365,217 6,119,577 163,994 143,420 Current income tax receivables 895,819 19,416 (304,580) 822,603 380,797 (22,417) Total assets 3,579,937,901 2,485,662,325 417,850,594 405,409,082 238,047,738 32,968,162 Liabilities Loans 81,135,482 - - - 81,135,482 - Dividends payable 51,080,777 48,747,231 1,105,656 1,227,890 - - Current income tax liability - - - - - - Trade payables - - - - - - Financial liabilities at amortised cost 31,976,914 962,238 4,861,996 18,693,529 5,885,102 1,574,049 Other liabilities 27,226,626 10,048,725 2,710,209 11,640,456 2,057,949 769,287 Provisions for risks and charges 3,765,054 - 1,615,372 775,000 1,374,682 - Deferred tax liability 210,881,494 143,753,048 37,976,651 16,208,824 12,781,011 161,960 Total liabilities 406,066,347 203,511,242 48,269,884 48,545,699 103,234,226 2,505,296
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36. SEGMENT REPORTING (continued) 31 December 2022 in RON Group Financial services Real estate rental and trade Food industry (mostly production of sunflower oil and related products Tourism Assets Cash and cash equivalents 99,737,272 15,122,625 40,776,853 39,037,130 4,800,664 Bank deposits 527,433 - 527,433 - - Financial assets at fair value through profit or loss 4,475,075 4,475,075 - - - Financial assets at fair value through other comprehensive income 1,851,871,888 1,817,001,120 34,419,156 50,405 401,207 Trade receivables and sundry debtors 18,716,135 22,330 2,439,905 15,930,994 322,906 Inventories 178,085,563 45,100 43,115 177,951,473 45,875 Investment property 308,971,502 1,100,816 295,054,291 11,636,539 1,179,856 Property, plant and equipment 204,768,162 12,400,449 4,462,100 161,240,262 26,665,351 Other assets 686,103 128,618 179,989 339,767 37,729 Current income tax receivable 418,040 418,040 - - - Total assets 2,668,257,173 1,850,714,173 377,902,842 406,186,570 33,453,588 Liabilities Loans 160,737,859 - 1,336,273 159,324,280 77,306 Dividends payable 51,083,704 49,300,619 1,210,271 554,186 18,628 Current income tax payable 690,393 324,149 771,108 (418,039) 13,175 Trade payables 11,670,375 1,610,683 2,163,458 7,542,589 353,645 Other liabilities 21,138,374 14,710,397 4,553,699 1,215,298 658,980 Provisions for risks and charges 3,108,189 - 1,340,000 1,768,189 - Deferred tax liability 114,762,592 63,028,769 37,240,018 14,304,896 188,909 Total liabilities 363,191,486 128,974,617 48,614,827 184,291,399 1,310,643 The amounts presented above were taken from the separate financial statements of the parent company and those of the consolidated subsidiaries. As of 31 December 2023, the assets from financial services activity represented by the financial investments portfolio had a share of 98.64% in total Group long-term assets (98.12% as of 31 December 2022).
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36. SEGMENT REPORTING (continued) - Income, expenses and net result according to the Consolidated Statement of Profit or Loss and other comprehensive income 31 December 2023 in RON Group Financial services Real estate rental and trade Manufacture of instruments and appliances for measuring, testing and navigation Food industry (mostly production of sunflower oil and related products) Tourism Income Gross dividend income 95,539,933 93,344,829 2,182,512 - - 12,592 Interest income 5,442,797 3,100,940 1,592,098 155,389 497,038 97,332 Revenue from contracts with customers 307,999,975 1,005 30,283,034 19,376,711 247,155,125 11,184,100 Other operating income 3,374,308 1,008,003 432,150 (590,938) 2,436,436 88,657 Net gain/(loss) on revaluation of financial assets at fair value through profit or loss 1,159,994 1,159,994 - - - - Gain from a bargain purchase 154,850,032 154,850,032 - - - - Expenses Reversal of impairment losses on financial assets 5,898,689 28,779 (201,173) 961,256 5,101,219 8,608 Expenses with salaries, allowances and similar charges (58,108,953) (16,566,665) (7,095,081) (4,813,845) (25,173,276) (4,460,086) Raw materials, consumables and merchandise (280,955,222) (270,617) (363,893) (10,841,249) (267,412,331) (2,067,132) Interest expense (6,052,293) (32,011) (187,595) - (5,832,687) - Other operating expenses (65,537,954) (8,851,010) (9,724,166) (7,290,465) (36,463,995) (3,208,318) Profit before tax 163,611,306 227,773,279 16,917,886 (3,043,141) (79,692,471) 1,655,753 Profit tax (8,099,347) (7,798,751) (1,732,677) 820,356 718,860 (107,135) Net profit for the financial year 155,511,959 219,974,528 15,185,209 (2,222,785) (78,973,611) 1,548,618
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36. SEGMENT REPORTING (continued) - Income, expenses and net result according to the Consolidated Statement of Profit or Loss and other comprehensive income 31 December 2022 in RON Group Financial services Real estate rental and trade Food industry (mostly production of sunflower oil and related products) Tourism Income Gross dividend income 190,369,244 187,605,794 2,743,121 - 20,329 Interest income 4,820,667 2,510,095 1,358,787 756,066 195,719 Revenue from contracts with customers 403,321,858 - 32,664,911 366,057,313 4,599,634 Other operating income 6,773,366 157,774 874,295 5,741,297 - Net foreign exchange loss (14,986) (4,880) 82,901 (94,624) 1,617 Net gain/(loss) on revaluation of financial assets at fair value through profit or loss (177,388) (177,388) - - - Gain on revaluation of investment property 8,507,174 578,028 8,450,610 (233,970) (287,494) Expenses Impairment losses on financial assets (22,491) - (20,289) - (2,202) Losses from non-financial assets depreciation (190,392) - - (190,392) - (Increase)/decrease in provisions for risks and charges (870,945) - - (870,945) - Expenses with salaries, allowances and similar charges (51,192,910) (17,506,362) (6,347,827) (23,609,908) (3,728,813) Raw materials, consumables and goods for resale expense (273,469,489) (311,994) (455,638) (268,901,879) (3,799,978) Interest expense (6,821,935) - - (6,821,935) - Other operating expenses (59,655,994) (6,490,611) (7,562,330) (42,868,675) (2,734,378) Profit before tax 221,375,779 166,360,456 31,788,541 28,962,348 (5,735,566) Profit tax (26,449,495) (7,583,475) (15,920,734) (2,945,286) - Total net profit for the financial year 194,926,284 158,776,981 15,867,807 26,017,062 (5,735,566)
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37. COMMITMENTS AND CONTINGENT LIABILITIES The Group has ongoing several legal actions arising in the normal course of business. The Group's management considers that these actions will not have a material impact on the current consolidated financial statements. As of 31 December 2023, 231 cases were ongoing, out of which: • 136 cases as plaintiff; • 32 cases as defendant; • 4 cases as intervener; • 1 case as impleaded party; • 2 cases as injured party; • 56 cases in insolvency proceedings. Environmental contingencies The Group has reported a guarantee recorded by Argus S.A. for the closure of a technological landfill at the disposal of A.F.M. in total amount of 922,700 RON. The management does not consider the expenses associated with these items to be significant.
38. SUBSEQUENT EVENTS INFINITY CAPITAL INVESTMENTS S.A. I. Proceedings regarding the sale of the shares held in Complex Hotelier Dâmbovița S.A. Infinity Capital Investments S.A. continued its efforts regarding the sale of its stake in Complex Hotelier Dâmbovița S.A. by reducing the selling price to 16,000,000 RON and organizing new tender rounds on 20 March 2024 and 27 March 2024. II. Proceedings regarding the sale of the shares held in Biroul de Investiții Regional Oltenia IFN S.A. Infinity Capital Investments S.A. lowered the selling price of its stake in Biroul de Investiții Regional Oltenia IFN S.A. and set up three new tender rounds on the 29 th of February 2024, 7 th of March 2024 and 14 th of March 2024, with no offers submitted. III. Proceedings regarding the sale of the shares held in Univers S.A. On 4 March 2024, Infinity Capital Investments S.A. sold its stake in Univers S.A. (73.7494%). The value of the transaction was 50.8 million RON. IV. Interim separate financial statements as of and for the year ended 31 December 2023 Infinity Capital Investments S.A. released its Interim separate financial results for the fiscal year 2023 which have not been audited. V. Information on the offering of shares to members of the Board, managers and employees of the company and start of a shares’ buyback program At the Board of Directors meeting held on 13 th of March 2024, it was approved the offer, free of charge, of a total of 1,937,888 shares to administrators, managers, and employees of the company, as part of a 'Stock Option Plan'. ALIMENTARA S.A. The company has convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders on 27 and 28 March 2024.
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38. SUBSEQUENT EVENTS (continued) ARGUS S.A. I. On 22 February 2024, the company informed investors on the decision pronounced in file no. 857/118/2023. II. The company convened the Ordinary General Meeting of Shareholders on 17 and 18 April 2024. COMPLEX HOTELIER DÂMBOVITA S.A. On 15 February 2024, the Ordinary General Meeting of Shareholders approved all points on the agenda. CONSTRUCȚII FEROVIARE CRAIOVA S.A. I. The company has convened the Ordinary General Meeting of Shareholders on 27 and 28 March 2024. II. On 12 March 2024, the company informed investors about the decision pronounced in file no. 76/63/2013. ELECTROMAGNETICA S.A. The company convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders on 25 and 26 April 2024. FLAROS S.A. The company convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders on 29 March and 1 April 2024. GEMINA S.A. The company convened the Ordinary General Meeting of Shareholders on 28 and 29 March 2024. On 19 January 2024 the company signed the contract for the transfer of the hotel business for 3.7 million RON. GRAVITY CAPITAL INVESTMENTS S.A. There are no events to report. LACTATE NATURA S.A. I. On 13 March 2024, the Extraordinary General Meeting of Shareholders approved all items on the agenda. II. The company convened the Ordinary General Meeting of Shareholders for 29 and 30 March 2024. MERCUR S.A. I. On 23 January 2024, investors were informed about the early repayment of 780 corporate bonds issued by Mercur S.A. on 15 September 2021. II. The company convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders for 28 and 29 March 2024. PROVITAS S.A. The company convened the Ordinary General Meeting of Shareholders for 26 and 27 March 2024. TURISM S.A. On 16 February 2024, the Extraordinary General Meeting of Shareholders approved all items on the agenda.
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38. SUBSEQUENT EVENTS (continued) UNIVERS S.A. I. The company convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders for 28 and 29 March 2024. II. On 15 February 2024, the company informed investors on the sale of 1,200 social parts representing 23.86% of the share capital of Aliment Murfatlar S.R.L. to Voltalim S.A. The transaction was made at a value of 6,848,280 RON. III. On 20 February 2024, the company informed investors that Infinity Capital Investments S.A.'s process of selling its stake in Univers S.A. (73.7494%) through a 'special order sale” by at the BSE will start on March 4, 2024. IV. On 6 March 2024, the company informed investors about major holdings - Appendix 18 according to FSA Regulation no. 5/2018, submitted by shareholders Infinity Capital Investments S.A. and Barecco S.R.L. VOLTALIM S.A. I. On 15 February 2024, the company acquired 1,200 social parts representing 23.86% of the share capital of Aliment Murfatlar S.R.L. from Univers S.A. The transaction was made at a value of 6,848,280 RON. II. The company convened the Ordinary General Meeting of Shareholders and the Extraordinary General Meeting of Shareholders on 28 and 29 March 2024.
These consolidated financial statements are intended solely for use by the Group, its shareholders and the Financial Supervisory Authority and cannot generate changes in shareholders' rights regarding dividends. The consolidated financial statements were approved by the Board of Directors at the meeting of 28 March 2024 and signed on its behalf by: Sorin – Iulian Cioacă Mihai Trifu Valentina Vlăduțoaia President - General Manager Vice President - Deputy General Manager Economic Manager