Vrancart S A : 1st Quarter Report 2023

Translation for information purposes only

Quarterly report for the 1st quarter of 2023

according to the Financial Supervisory Authority Regulation no. 5/2018

Report date	May 15th, 2023
Name of the issuing entity	VRANCART SA
Registered office	Adjud, 17 Ecaterina Teodoroiu
	Street, Vrancea county
Telephone/fax no.:	0237-640.800;0237-641.720
Tax Identification Number	1454846
Trade Registry registration no.	J39/239/1991
Subscribed and paid-in share capital	RON 120.338.551
The regulated market onto which
the securities issued are traded	the Bucharest Stock Exchange

1. The economic and financial situation of VRANCART SA

During the first quarter of 2023, the performance of Vrancart SA ("the Company") was influenced by the effects of price increases for raw materials, materials and commodities and the tariffs for services and utilities, as well as by the supply chain disruptions that occurred during the previous year.

The results of VRANCART SA in the first three months of 2023 are in line with the budgeted expectations, confirming the Company's ability to generate profit and value to the shareholders, as well as its financial strength. The commercial policy was constantly adapted to the new market conditions, which have been particularly volatile over the past 24 months.

Compared to the same period of the previous year, the net profit recorded was RON 3.54 million (vs. RON 4.24 million), the current liquidity recorded a slight decrease to 1.02 (vs. 1.07) and the Company's indebtedness remained at a relatively constant level.

The (simplified, unaudited) interim individual financial statements as at March 31st, 2023, in accordance with the Order of the Minister of Public Finance No. 2844/2016 for the approval of the Accounting Regulations compliant to the International Financial Reporting Standards, applicable to trade companies whose securities are admitted to trading on a regulated market are attached to this report.

The interim individual financial statements for the first 3 months of 2023 have not been reviewed by an independent external auditor, as this is not a legal or statutory requirement.

1.1. Balance sheet items

(all items in RON, unless otherwise stated)	March 31st, 2023	December 31st,
			2022
Non-current assets	427.645.053	427.806.735
Current assets, out of which:	192.740.558	176.710.451
-	Trade receivables	99.425.343	95.613.017
Total assets	620.385.611	604.517.186
Total liabilities, out of which:	296.177.480	283.859.685
Current liabilities	188.361.113	129.092.869
Equity, out of which:	324.208.131	320.657.501
-	Reserves	175.504.116	175.564.482
-	Retained earnings	28.365.464	24.754.468

As at March 31st, 2023 and during the period January 1st - March 31st, 2023, the evolution of the main financial indicators was as follows:

• The Company's non-current assets remained at a relatively constant level from the beginning of 2023.
• The Company's current assets increased by 9% as at March 31st, 2023 compared to the beginning of the year, mainly due to the inventory increase by 10%.
• The trade receivables increased during the first three months of 2023 compared to the beginning of the year by RON 3.812.326, due to a higher sales volume and also due to some price increases, in the context of reduction of the average number of collection.
• The total liabilities recorded as at March 31st, 2023 amount to RON 296.177.480, down by 4% from the amount recorded as at January 1st, 2023, mainly due to the financing of the additional working capital, through the use of short-term credit lines.
• The amount of equity as at March 31st, 2023 is RON 324.208.131, the additional capitalisation being 1% compared to the beginning of the year, following the incorporation of the profit achieved during the 1st quarter. The Company's reserves remained at a relatively constant level from the beginning of the year.

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1.2. Profit and loss account

(all items in RON, unless otherwise stated)	March 31st, 2023	March 31st, 2022
Operating income, out of which:	117.868.559	139.347.867
Income from turnover	114.816.932	140.755.593
Operating expenses	(111.354.982)	(133.342.173)
Operating profit	6.513.577	6.005.694
Financial income	243.615	89
Financial expenses	(2.690.022)	(1.417.492)
Total income	118.112.174	139.347.956
Total expenses	(114.045.004)	(134.759.665)
Gross profit	4.067.170	4.588.291
Net profit	3.539.131	4.244.508

The Company's performance in the first three months of 2023 was influenced by a decrease of demand, due to a reduction in consumption and increasing inventories at beneficiaries, which required an adjustment of sales prices. The constant increase in raw material prices and utility tariffs recorded during the previous year, generated by trends in the international market and also reflected in the local market, contributed to an increase in inventories. At the same time, wage costs and costs for services provided by third parties increased, naturally leading to a cost-saving policy adopted by companies.

The results achieved during this period, which are reflected in a profitability level in accordance with the expectations and good financial indicators, confirm the business sustainability, as well as the Company's resilience to adverse market changes.

During the first three months of 2023 compared to the same period of the previous year, the main indicators of the Profit and loss account are as follows:

• The total income during the analysed period amounted to RON 118.112.174, down by 15.2% from the same period of the previous year, due to a reduction in the production volume achieved and of the sales of finished and semi-finished products.
• The total expenses for the period amounted to RON 114.045.004, down by 15.4% from the same period of the previous year, following the decreasing trend of the production volume.
• The Company's operating profit recorded an increase by 8.5% as a result of the abovementioned effects. The net profit, in spite of the reduction by 17% compared to the same reporting period of the previous year, is still at the level expected according to the market evolution.

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1.3. Cash flows

(all items in RON, unless otherwise stated)	March 31st, 2023	March 31st, 2022
Cash flows from operating activities
Amounts collected from operating activities	129.424.047	140.796.194
Payments made from operating activities	(124.584.650)	(147.805.649)
Net cash flows from operating activities	4.839.397	(7.009.455)
Cash flows from investment activities
Amounts collected from investment activities	90.632	87.770
Payments made from investment activities	(5.370.491)	(11.026.352)
Net cash flows from investment activities	(5.279.859)	(10.938.582)
Cash flows from financing activities
Amounts collected from financing activities (including	22.113.183	30.880.240
bonds)
Payments made from financing activities	(18.708.523)	(9.766.760)
Net cash flows from financing activities	3.404.660	21.113.480
Balance as at the beginning of the period	1.288.888	1.536.938
Balance as at the end of the period	4.253.086	4.702.381

The balance of cash and cash equivalents recorded as at March 31st, 2023 is positive, namely RON 4.253.086. During this period, the Company was able to manage its cash flows effectively and paid all the amounts owed entirely and on time.

2. Economic and financial indicators as at March 31st, 2023, according to Appendix no. 13/the Financial Supervisory Authority Regulation no. 5/2018

	Indicator's name	Calculation modality		M.U.	Result
	Current liquidity indicator	Current assets/Current liabilities		ratio	1,02
	Indebtedness degree indicator	Borrowed capital/Equity x 100	%	64*
		Borrowed capital/Employed capital x	%	39*
		100
	Debts-clients turnover	Average customers balance/Turnover		days	79
		x 90
	Non-current assets turnover	Turnover/Non-current assets		ratio	0,3

• Borrowed capital includes credit lines, short-term and long-term bank loans, short-term and long- term lease liabilities and loans from bond issues.

CIUCIOI Ionel-Marian	ARSENE Vasilica-Monica
Chairman of the Board of Directors	Financial Manager

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Translation for information purposes only

VRANCART S.A.

Interim individual financial statements

(simplified, not audited)

as at March 31st, 2023

drawn up in accordance with

the Order of the Public Finance Ministry no. 2844/2016 for the approval of the Accounting regulations compliant with the International Financial Reporting Standards, applicable to trade companies whose securities are admitted to trading on a regulated market