SIF Oltenia S.A.

Quarterly Report • Aug 27, 2015

REPORT of Board of Directors of S.I.F. Oltenia S.A. on Consolidated Financial Statements ended on 31.12.2014

Name of Company: SOCIETATEA DE INVESTIȚII FINANCIARE OLTENIA S.A. Registered office: județul Dolj, municipiul Craiova, str. Tufănele nr. 1, cod poștal 200767 Tel./fax: 0251-419.343; 0251-419.340 Tax Code: RO 4175676 Trade Register no.: J16/1210/30.04.1993 N.S.C. Register No.: PJR09SIIR/160003/14.02.2006 Regulated market where the issued securities are traded: Bucharest Stock Exchange Subscribed and paid share capital: 58.016.571 RON The main characteristics of the securities issued by the company: shares of S.I.F. OLTENIA S.A. are registered, issued in dematerialized form and give equal rights to their holders. The nominal value of a share is 0,1 RON.

Societatea de Investiții Financiare OLTENIA S.A. ("The Company" -Romanian legal entity – established as a joint stock company on 01.11.1996 under Law no. 133/1996 is a collective investment undertaking which operates under Law no. 31/1990 on commercial companies and Law no. 297/2004 on the capital market, with subsequent amendments and additions.

According to the Articles of Incorporation, the Company has the following object of activity:

• Administration and management of shares in companies for which own shares were issued corresponding to Certificates of Ownership and Nominative Privatization Coupons subscribed by citizens in accordance with Art.4 paragraph 6 of Law no. 55/1995;
• Own securities portfolio management and investments in securities in accordance with the regulations in force;
• Other similar and adjacent activities, according to regulations in force and management of own assets.

Subscribed and paid Share Capital registered on 31.12.2014 is of 58.016.571 RON, divided in 580.165.714 shares having a nominal value of $0,1$ RON/share.

During the reporting period, the Company has worked observing the legal provisions contained in:

• Law no. 31/1990 R, with subsequent amendments and additions; $\frac{1}{2}$
• Law no. 297/2004, with subsequent amendments and additions;
• NSC/FSA Regulation no. 15/2004, with subsequent amendments and $\frac{1}{2}$ additions;
• Regulation No. 9/16.06.2014 regarding the authorization and operation of S.A.I., UCITS and depositories of UCITS
• NSC/FSA Regulation no. 1/2006, with subsequent amendments and additions;
• BSE Code;
• Corporate Governance Code of the Bucharest Stock Exchange;
• Other regulations on the matter;

And

$\triangleright$ Articles of Incorporation (the Statute and Memorandum of Association).

Making depository activities provided for by law and FSA regulations in the period analyzed was provided by RAIFFEISEN BANK S.A. - Bucharest branch.

The record of Company's shareholders is held by S.C. DEPOZITARUL CENTRAL S.A. Bucharest.

Company shares are listed on the first tier of the Bucharest Stock Exchange market symbol SIF5 being negotiable and freely transferable under the law. Following amendments made during 2014 on the Bucharest Stock Exchange Code, S.I.F. OLTENIA S.A. is currently assigned to the Premium tier.

In the financial year 2014 has been no significant merger or reorganization of the company or companies controlled by it.

I. GENERAL INFORMATION

These consolidated financial statements have been prepared in accordance with International Financial Reporting Standards ("IFRS") adopted by the European Union.

In accordance with NSC Decision no. 1176/15.09.2010, the Company shall prepare and submit to FSA Annual Consolidated Financial Statements in accordance with IFRS as adopted by the European Union, within 8 months from the closing of the financial year.

The consolidated financial statements of the Group comprise the Company and its subsidiaries (hereinafter the Group). The Group's core activities are the financial investment activities undertaken by the Company and the activities of subsidiaries, belonging to different sectors as: food, trade, tourism, rental of premises, etc.

The financial statements of subsidiaries are included in the consolidated financial statements since the start of controlling and until its termination. Accounting policies of Group's subsidiaries have been changed to align with those of the Group.

In addition to the specific consolidation adjustments, the main restatement of the financial information presented in financial statements prepared in accordance with RCR (Romanian Accounting Regulations) to align them to the requirements of IFRS as adopted by the European Union, consist of:

• $\triangleright$ group multiple items into more comprehensive categories;

• fair value adjustments and for impairment of financial assets under IAS 39 "Financial Instruments Recognition and Measurement";

• adjustments of assets and equity in accordance with IAS 29 "Financial" reporting in hyperinflationary economies" because the Romanian economy was a hyperinflationary economy until 31 December 2003;

• $\triangleright$ adjustments in profit or loss account to record dividend income at the moment of declaration of and gross value;
• $\triangleright$ adjustments of investment properties to assess their fair value in accordance with IAS 40 "Investment Property";
• $\triangleright$ adjustments for recognition of liabilities and debts on deferred tax under IAS 12 "Income Taxes";
• $\triangleright$ disclosure requirements under IFRS.

The Group has adopted a presentation based on liquidity in the consolidated statement of financial position and presentation of income and expenses incurred in respect of their nature in the consolidated statement of comprehensive income, considering that these methods of presentation provide information that is reliable and more relevant than other methods allowed by IAS 1 "Presentation of the approximate

ROMANESCH ALEXANDRA NILIANA _dzi^ago

Statements".

It was used the going concern assumption, which assumes that the Company and its portfolio companies in the foreseeable future will be able to have insufficient assets to continue operations and meet obligations during operational activity.

The financial statements are prepared using the fair value for derivative financial instruments, financial assets and liabilities at fair value through profit or loss account and financial assets available for sale, except those for which fair value cannot be determined reliably.

Other financial assets and liabilities and non-financial assets and liabilities are stated at amortized cost, revalued amount or historical cost.

Fair value measurement of shareholdings on 31.12.2014 was performed as follows:

• $\triangleright$ for securities listed and traded in 2014, the market value was determined by taking into consideration the quotation on the last trading day (the closing quotation of the main market of capital);
• $\triangleright$ for securities listed that had no transactions in 2014 and for unlisted securities, the market value was determined based on equity of issuers on 31.12.2014:
• $\triangleright$ for related securities of companies in the insolvency proceedings or reorganization, valuation is zero;

• for units in UCITS, the value taken into account was the last net asset value, calculated and published.

治安法氏治疗治疗治療及治理治疗治疗

Synthetic structure of the portfolio held by the Group on 31.12.2014 - IFRS - consolidated statement -

Economic sectors with	Issuers		Total nominal value of the package		Total market value of the package
percentage in SIF value portfolio (in descending order)	Nr. SC	$\frac{9}{6}$	(RON)	$\frac{0}{6}$	(RON)	%
	86	100,00	508.399.098	100,00	1.356.246.439	100,00
finance, Banking, Insurance	5	5,81	177.487.007	34,91	593.423.387	43,75
oil resources and related services	$\overline{c}$	2,33	69.845.422	13,74	282.829.571	20,85
food industry	3	3,49	2.981.378	0,59	5.100.872	0,38
power and gas transport	$\overline{c}$	2,33	45.684.650	8,99	176.555.989	13,02
tourism, catering, entertainment	$\overline{4}$	4,65	36.579.815	7,20	42.753.097	3,15
metallurgical industry	3	3,49	35.010.145	6,89	20.453.363	1,51
machinery industry, processing	12	13,96	34.331.013	6,75	23.672.718	1,75
electronic, electrotechnical industry	10	11,63	25.591.758	5,03	39.871.807	2,94
lease and sublease of real estate	3	3,49	3.325.749	0,65	3.793.326	0,28
other financial service	8	9,30	10.462.969	2,06	24.005.667	1,77
wood, cellulose, paper	3	3,49	21.186.639	4,17	13.085.551	0,96
building	5	5,81	1.559.827	0,31
pharmaceutical industry	$\mathbf 1$	1,16	8.362.234	1,64	48.919.067	3,61
domestic trade	3	3,49	4.023.843	0,79	1.421.887	0,10
real estate development (promotion)	$\mathbf{1}$	1,16	6.491.174	1,28	37.648.809	2,78
glass, porcelain, earthenware industry	1	1,16	4.799.887	0,94	9.627.292	0,71
distribution, supply of electricity and energy services	1	1,16	4.789.490	0,94	5.445.650	0,40
chemical industry	1	1,16	4.682.466	0,92	11.237.918	0,83
administration of financial markets	$\overline{2}$	2,33	3.984.795	0,78	13.108.448	0,97
other activities	11	12,79	4.521.264	0,89	969.336	0,07
TOTAL EQUITY SECURITIES	82	94,19	505.701.525	99,47	1.353.923.755	99,83
FUND UNITS	5	5,75	2.697.573	0,53	2.322.684	0,17

ROMANESCU 6 $\eta_{\eta}$ 3091 MINISTERUL

Report of Board of Directors of S.I.F. Oltenia S.A. on Consolidated Financial Statements ended on 31.12.2014

ROMANESCU EXANDRA-HJLJANA 3562 3097

Total value of portfolio managed by the Group is 1.356.246.439 RON, found in titles to 5 investment funds amounting to $2.322.684$ RON (0,17% of the market value of the portfolio managed).

On 31.12.2014 Group held shares primarily active in the finance, banking, insurance, accounting area for 43.75% of total market value of the portfolio, down from 31.12.2013, when the same sector recorded a share of 51.12%.

Settlement and intragroup transactions, as well as unrealized gains arising from intragroup transactions, are eliminated in the consolidated financial statements. Unrealised gains arising from transactions with associates and jointly controlled entities are eliminated to the extent of the Group's participation percentage. Unrealised gains arising from transactions with an associate are eliminated in return for investment in the associate. Unrealised losses are eliminated in the same way as unrealized gains, but only to the extent that there are no indications of impairment.

In RON $Co.$ Market value Co. No. Market value No. 31.12.2014 31.12.2013 Capital investments Listed 45 928.804.675 50 958.510.802 companies Unlisted 36 425.119.080 39 585.340.483 companies Fund units 5 2.322.684 2.251.971 5 Total financial 86 1.356.246.439 94 1.546.103.256 assets

On 31 December 2014 the Group has the following structure of financial assets:

The placements held in companies whose securities are listed and traded on the capital market in Romania, plus placement owned in Romanian Commercial Bank, on 31.12.2014, represent 92.22% of the fair value of investments.

In the consolidation permiter was included a total of 13 companies in which ownership is over 50% of the voting rights, which were consolidated by the global integration method.

The 13 companies represent 11.46% of the total assets of the Company and 13.12% respectively of net assets.

Basic activities conducted by the Company and the companies included in the consolidation are the financial investment activities conducted by the Company and the activities of the respective companies.

In the consolidation were included the following 13 companies:

Net asset	1.385.535.986 RON
Total asset	1.586.129.669 RON

$C$ I. $n$ $o$ .	Issuer	Symbol	Percentage in the share capital of issuer on 31,12,2014	Percentage in the share capital of issuer on 31.12.2013	Trading market
	ALIMENTARA SLATINA	ALRV	51,9934	51,9934	RASDAQ RGBS
ø.	TURISM PUCIOASA		69,2191	69,2191	unlisted
	PROVITAS BUCHAREST		70,2780	70,2780 ser annonc	unlisted
	UNIVERS RM.VALCEA	UNVR	73,7494	73,7494	RASDAQ RGBS
	COMPLEX HOTELIER DAMBOVITA		75,4811	75,4811	unlisted
6	FLAROS BUCHAREST	FLAO	77,1058	77,1058	RASDAQ RGBS
	CONSTRUCTII FEROVIARE CRAIOVA	CFED	77,5001	77,5001	RASDAQ RGBS
	MERCUR CRAIOVA	MRDO	85,8533	85,8533	RASDAQ XMBS
	ARGUS CONSTANTA	UARG	85,9592	55,8922	RASDAQ RGBS
III	GEMINA TOUR RM.VILCEA		88,2866	88,2866	unlisted
31	CONSTRUCTII MONTAJ 1 CRAIOVA		96,5635	96,5635	unlisted
52	MAGAL CRAIOVA		99,9906	99,9906	unlisted
B	VOLTALIM CRAIOVA		99,9987	99,9987	unlisted

Management of the Company has classified all securities of portfolio activity in the category of financial assets available for sale.

page 11

II. ECONOMIC DATA

II. 1 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

$\bar{1}$

In RON	31 st December 2014	31 st December 2013
Incomes
Incomes from dividends	42.817.687	37.384.200
Incomes from interests	1.510.310	2.638.831
Other operational incomes	206.972.338	172.720.084
Net profit from differences of exchange rate	862.119	(279.264)
Net profit from sale of financial assets	82.537.358	150.253.313
Expenses
Commissions and administration and supervision fees	(3.283.766)	(3.620.583)
Incomes from restatement of commissions for
risks and expenses	5.952.047	5.595.558
Other operational expenses	(218.415.429)	(206.199.303)
Profit before taxation	118.952.664	158.492.836
Corporate tax	(20.069.215)	(28.741.454)
Net profit of the financial year	98.883.449	129.751.382
Other elements of the comprehensive income
Net modification of reserve from revaluation at fair value of financial assets available for sale and of tangible assets	(7.973.333)	47.999.380
Total comprehensive income for the period	90.910.116	177.750.762
Net profit for
Company shareholders	97.380.890	127.334.051
Minority interest	1.502.559	2.417.331
	98.883.449	129.751.382
Comprehensive income for
Company shareholders	89.405.781	179.015.940
Minority interest	1.504.335	(1.265.178)
	90.910.116	177.750.762
Result per share
Basic	0,168	0,219
Diluted	0,168	0,219

Net profit of 98.883.449 RON is down by 23,79% compared to 31.12.2013.

Segment Reporting

		Trade		Rental		Food industry		Tourism		Financial activity		TOTAL
Indicators	2014	2013	2014	2013	2014	2013	2014	$-2013$	2014	2013	2014	2013
Fixed assets	3.435.925	3.925.725	83.261.643	62.838.073	56.018.368	57.628.983	13.969.204	10.301.656	1.384.579.074	1.563.754.181	1.541.264.214	.698.448.618
Current assets	371.879	4.163.065	20.248.007	35.432.169	107.730.625	85.795.911	1.723.816	1.833.680	57.012.736	43.005.274	187.087.063	170.230.099
Expenses in advance	2.738	22.565	19.727	33.592	114.245	56.187	17.328	17.100	91.275	102.895	245.313	232.339
Debts	235.224	716.370	7.741.952	7.084.186	80.734.401	64.077.263	487.317	612.514	181.274.732	265.736.406	270.473.626	338.226.739
Income in savance			465.906	347.928	4.179	4.347	8.427	404	77.521	77.521	556.033	430.200
Provisions	120.395	110.000	372.361	448.794	1.061.666	774.183	67.085	92.431	8.211.531	8.211.531	9.833.038	9.636.939
Minerity interests									32.776.884	54.577.056	32.776.884	54.577.056
Lquity	3.454.923	7.284.985	94 949 158	90.422.926	82.062.992	78.625.288	15 147.519	11.447.087	1.219.342.417	1.278.259,836	1.414.957.009	1 466 040 122
Total meome	1.804.290	3.101.216	19.933.578	21.551.123	175.463.769	142.389.355	4.330.610	5.081.982	133.167.565	190.922.978	334.699.812	363.046.654
Total expenses	1.776.692	4.056.388	15.855.166	16.219.553	171.961.917	139.355.532	3.957.365	4.558.326	22.196.008	40.364.019	215.747.148	204.553.818
Gross result	27.598	(955.172)	4.078.412	5.331.570	3.501.852	3.033.823	373.245	523.656	110.971.557	150.558.959	118.952.664	158.492.836
Net result	23.182	(955.172)	3.153.924	4.446.968	3.501.852	3.033.823	327.157	480.686	91.877.334	122.745.077	98.883.449	129.751.382

149982, 42 IRPENSISK VMD. ্ট
দ্র $\bigcirc$

Segment reporting

Segment reporting is the segmentation of the activities envisaged in the branch of activity of which the main object of the company is part in the perimeter of consolidation.

Company with portfolio companies in which it holds more than 50% and are included in the consolidation perimeter operates the following main business segments:

• Financial Investments

• Rental of premises

• Food industry

• Retail in non-specialized stores selling predominantly non food products.

• Tourism

The indicators presented were derived from the separate financial statements of the Company and of the companies in the consolidation.

In the fixed assets held on $31.12.2014$ by the Group a share of $89,83\%$ is held by financial investment assets represented by the portfolio of financial assets respectively 92,07% on 31.12.2013.

The high level of debt is due mainly to registration of deferred corporate tax related to reserves from measurement at fair value of the portfolio on 31.12.2014 with a share of 40,33% (31.12.2013: 38,70%) in total debt.

Also, the net result on 31.12.2014 made by financial investments has a share of 92,91%, well above the result obtained by the companies included in consolidation, respectively of 94,60% on 31.12.2013.

page

II.2 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

Report of Board of Directors of S.I.F. Oltenia S.A. on Consolidated Financial Statements ended on 31.12.2014

In RON	31 st December 2014	31 st December 2013
Assets
Cash and cash equivalents	12.302.014	3.391.890
Deposits placed in banks	78.560.292	93.810.796
Financial assets available for sale	1.356.246.439	1.546.103.256
Financial assets at fair value by profit or loss	3.903.255	3.609.668
Credits and receivables	46.907.322	24.201.506
Tangible assets	71.216.715	72.488.098
Real estate investments	40.228.829	37.813.159
Other assets	119.231.724	87.492.683
Total assets	1.728.596.590	1.868.911.056
Liabilities
Payment dividends	66.601.125	128.067.288
Taxes and fees	10.882.860	12.514.966
Debts with deferred tax	109.069.343	130.898.955
Other debts	94.309.369	76.812.669
Total debts	280.862.697	348.293.878
Own capitals
Share Capital	58.016.571	58.016.571
Updating Share Capital	786.505.309	774.976.933
Reserves from revaluation of tangible assets	30.870.481	22.589.868
Legal and statutory reserves	27.734.413	46.406.520
Reserves from revaluation of financial assets
available for sale	575.016.997	604.165.714
Other reserves	2.491.248.949	2.108.148.417
Deferred result representing undistributed profit or uncovered loss	(32.581.568)	(34.926.247)
Deferred result following the application of IAS 29 on the Share Capital and reserves Deferred result following the application of IAS	(2.656.645.975)	(2.356.996.247)
less IAS 29	37.410.942	116.324.542
Current profit	97.380.890	127.334.051
Total equity assignable to mother company	1.414.957.009	1.466.040.122
Minority interest
Of which:	32.776.884	54.577.056
Profit or loss of the financial year related to	1.502.559	2.417.331
interests which do not control	31.274.325	52.159.725
Other own capitals	1.447.733.893	1.520.617.178
Total capitals Total debts and equity	1.728.596.590	1.868.911.056

میگر ۱۹۸۴.
م DA ENG ر
د AOMANESCU
ALEXANDRAHULIANA Vortifier & T ALLE 285621/2014

page

available for 31.12.2014 financial On assets sale amounting to 1.356.246.439 RON represent 78,46% of total assets, decreasing by 12,28% compared to 31.12.2013.

Companies with share in total securities available for sale the Group holds are the following:

	Company	Percentage of ion E.	Market value on 31 December 2014
	BANCA COMERCIALA ROMANA BUCHAREST	$- \frac{6}{9}$ 23,74	- RON- 321.986.498
2	OMV PETROM BUCHAREST	20,85	282.812.656
3	B.R.D.-GROUPE SOCIETE GENERALE BUCHAREST	13,48	182.857.500
4	C.N.T.E.E. TRANSELECTRICA BUCHAREST	9,46	128.350.560
5	BANCA TRANSILVANIA CLUJ	3,90	52.839.455
6	ANTIBIOTICE IASI	3,61	48.919.067
7	S.N.T.G.N. TRANSGAZ MEDIAS	3,55	48.205.429
8	PRODPLAST IMOBILIARE BUCHAREST	2,78	37.648.809
9	EXIMBANK BANCA DE EXPORT IMPORT A ROMANIEI BUCHAREST	2,64	35.739.931
10	ELECTROMAGNETICA BUCHAREST	2,49	33.706.377
	Total	86,49	1.173.066.282

Deposits with banks have a value of 78.560.292 RON, decreasing by 16,26% compared to 31.12.2013.

Total liabilities amount to 280.862.697 RON, decreasing by 19,36% compared to 31.12.2013.

Deferred tax liabilities represent 38.83% of the total liabilities.

ົາຊີ page STERU

III. EVALUATING THE COMPANY'S BUSINESS ON RISK MANAGEMENT

The group, with its complexity business carried out, is subject to various risks.

Risk management is an integral part of all decision-making and business processes within the Group.

Group Management continuously evaluates the risks that may affect the achievement of its objectives and takes appropriate action on any change in operating conditions.

The Group's management pays particular attention to risk identification. Exposure to risks inherent in its business by daily operations and transactions (especially operations on the stock market) is identified and aggregated through risk management infrastructure implemented: internal auditor, internal control and operational monitoring, hierarchical levels of authorization and transaction validation.

Risk Monitoring is performed on each hierarchical level, with approval and supervisory procedures of decision-making and trading limits.

Internal reporting of risk exposure is continuously done on business lines; management is kept informed about the risks inherent in conducting business.

The main risk factors identified by the Group are:

• a) Economic environment risk
• b) Liquidity risk
• c) Market risk (price risk, currency risk, interest rate risk)
• d) Credit risk
• e) Tax risk
• f) Operational risk

The Group has implemented policies to assess risks posed, policies approved by the Board of Directors.

a) Economic environment risk

This risk is extremely important, by the direct effect on the Group's business and indirectly through companies in which the Group holds interests.

Romanian economy continues to exhibit the specific characteristics of emerging economies, and there is a significant degree of uncertainty regarding the development of the political, economic and social environment.

Year 2014 was, economically, a good year, Romania's GDP growth was 2.9%. Despite this good result, the Romanian economy is still fragile and dependent in particular of developments of economies in the EU, so that the prospects for 2015 are regarded with caution by management.

The Group management is closely watching the changes taking place at the macroeconomic level and looks – as possible – to reduce negative impact on the Group business.

The Group Debtors may also be affected by the situations of lower liquidity which could affect the ability to meet their current liabilities. The deteriorating of operating conditions for debtors may also affect the management of cash flow forecasts.

There are periodically estimated the effects on the financial position and on the results of next year that would cause the possible decrease of liquidity on the financial market, impairment of financial assets caused by damage to credit conditions and increased volatility in the currency and equity markets.

b) Liquidy risk

Liquidity is the ability of the Group to secure the necessary funds to meet all its direct and indirect payment obligations, at a reasonable price at any time.

Liquidity risk is the actual or potential risk to which the corporate profits could be subject to from its inability to meet payment obligations when due.

Liquidity risk can arise from:

• Inability to manage unplanned decreases in volume or significant changes in the structure of funding resources;

• $\triangleright$ The Group's inability to recognize changes in market conditions that may affect the ability to liquidate certain assets in very short time and with minimum loss of value.

The Group has profit particularly from transactions in shares. Liquidity risk from the managed portfolio is mainly related to holdings in commercial companies of "closed" type existing in the managed portfolio.

Thus, the sale of certain shares $-$ in case of emergence of negative aspects of their economic and financial situation, or if there is the purpose of obtaining liquidity - is particularly difficult, with the risk of not being possible to obtain a higher price or at least equal to that at which those holdings are valued in calculating the net asset.

However, the low liquidity of the capital market in Romania makes often difficult even trading of shareholdings in commercial companies listed on regulated markets.

The Group follows the evolution of liquidities in order to be able to pay the obligations on due time and permanently analyzes the assets and liabilities, according to the period remained until the contractual due terms.

The structure of assets and liabilities is analyzed in the following table:

In RON	Accounting value	Below 3 months	Between 3 and 12 months	Without preestablished maturity
31 st December 2014
Financial assets
Cash and cash equivalents	12.302.014			12.302.014
Deposits placed in banks	78.560.292	69.840.250	8.720.042
Financial assets available for sale	1.356.246.439			1.356.246.439
Financial assets measured at fair value through profit or
loss	3.903.255			3.903.255
Credits and receivables	46.907.322			46.907.322
Total financial assets	1.497.919.322	69.840.250	8.720.042	1.419.359.030
Financial debts
Payment dividends	66.601.125	66.601.125
Other financial debts	94.309.369	83.920.298	10.389.071
Total financial debts	160.910.494	150.521.423	10.389.071

c) Market risk

Market risk is defined as the risk that price movements in financial markets (the value of shares and other securities, exchange rates, interest rates) to change the value of the portfolio.

The efficient management of market risk is made through the use of fundamental analysis that gives an indication of the soundness of an investment as well as estimating potential of certain companies, and taking into account forecasts on the evolution of economic sectors and financial markets.

The main issues pursued in market risk analysis are: assessment of shares portfolio in terms of profitability and growth potential, strategic allocation of long term investments, identification of short-term investments in order to capitalize price fluctuations in the stock market, the establishment of asset concentration limits in a particular economic sector.

The Group is subject to market risk, mainly due to its trading activities. Taking into account the particularities of the Company, the most relevant risks to the current activity are: share price risk, interest rate risk, foreign exchange risk.

Price risk

The market value of the portfolio of listed shares (on BVB, SIBEX, RASDAQ, SIBEX-ATS), on 31.12.2014, represents 68,60% (3). 3:2013: 62,09%) of the total value of shares portfolio managed.

In these conditions, the Group has a high risk - associated with price movements of financial assets in the stock market.

In the managed portfolio a number of 7 issuers can be found, of the 10 that constitute the BET index of Bucharest Stock Exchange.

Market value of the holdings in those 7 issuers, represents on 31.12.2014 76.82% (31.12.2013: 50.17%) of the market value of shares held in listed companies. Thus, the risk associated with the BET index variation of BVB is high.

The Management of the Group monitors market risk and grants powers regarding trading limits on the capital market to the effective management of the company.

On 31^st December 2014 the company has the following structure of assets subject to price risk:

In RON	Co. No.	Market value 31.12.2014
Capital investments
Companies listed		928.804.675
Companies not listed		425.119.080
Fund units		2.322.684
Total capital investments?	Ki	1.356.246.439

Placements held in companies whose securities are listed and traded on the stock market in Romania, plus placement owned in Romanian Commercial Bank on 31.12.2014 represent 92,22% (31.12.2013: 92,47%) of the fair value of investments. On 31.12.2014 Group held shares mainly activating in finance, banking, insurance, accounting for 43.75%.

Currency risk

Currency risk is the risk that the value of a portfolio may be negatively affected as a result of variations in exchange rates.

Since the majority of the Group's assets are denominated in the national currency exchange rate fluctuations do not directly affect the Group's activity.

Exposure to currency risk is due to deposits in foreign currency, some of the money availability being placed in foreign currency, for instance in USD and EUR.

Currency available holdings represent, on 31.12.2014, 0,88% (2013: 0,84%) of total financial assets, so that the currency risk is insignificant.

Due to the low share of assets expressed in foreign currency, the Group does not have a formalized policy of covering foreign currency risk.

Investments in bank deposits in foreign currency are constantly monitored and action is taken for investment, disinvestment, depending of ethe torecast

DRANNUM BAG4

evolution of the exchange rate.

Focusing of assets and liabilities on the types of currency is summarized in the table below:

In RON	Accounting value.	RON	EUR	USD
$314$ December 2014
Financial assets
Cash and eash equivalents	12.302.014	11.861.540	239.346	201.128
Deposits placed in banks.	78.560.292	64.801.324	896.420	12.862.548
Financial assets available for sale	1.356.246.439	1.356.246.439
Financial assets measured at fair value through profit or loss	3.903.255	3.903.255
Credits and receivables	46.907.322	46.907.322
Other financial assets	119.231.724	119.231.724
Total financial assets	1.617.151.046	1.602.951.604	1.135.766	13.063.676
the company of the company of the company of

Total financial debts	160.910.494	160.910.494
Other financial debiss	94.309.369	94.309.369
Payment dividends.	66.601.125	66.601.125
▒

Interest rate risk

Interest rate risk is that the value of a portfolio will fluctuate due to changes in market interest rates. Factors that define this type of market risk are a wide range of interest rates corresponding to a change in markets, currencies and maturities for which the Group holds positions.

The interest rate directly influences revenues and expenses attached to financial assets and liabilities bearing variable interest rates.

Most of the assets in the portfolio are not interest bearing. Consequently the Group is not significantly affected by interest rate risk. The interest rates applied to cash and cash equivalents are short-term.

d) Credit risk

Credit risk is the risk of loss registration due to non-fulfillment of obligations by the counterparty in a financial instrument.

The Group may be exposed to credit risk through investments realized in bank deposits, bonds issued by commercial companies or municipalities, current accounts and other receivables.

In accordance with legal provisions, the Group has not granted any type of loans or guarantees to third parties.

On 31^st December 2014 the Group did not hold in portfolio bonds, real guarantees as insurance and did not record outstanding financial assets.

All buying - selling of shares transactions of the company are made through storage bank with which there was a custody – storage agreement under the law, so the risk of default of settlement obligations is minimal.

The maximum exposure to credit risk at 31^st December 2014 is of 119.786.671 RON increased by 2,62% compared to 31.12.2013.

Exposure to credit risk:

In RON	31 St December 2014	31 St December
Deposits and accounts in banks	90.403.770	96.812.795
Other assets	29.382.901	19.915.124
FIOIAL.	119 786 671 1	116.727.919

e) Taxation Risk

Starting with the date of Romania's accession to the European Union, the Group had to obey EU fiscal regulations and implement the changes brought by European legislation. The way the Group implemented these changes remains open to tax audits for five years.

The Group's management believes that it correctly interpreted the legislative provisions and recorded fair values for taxes, fees and other debts to the state but in these conditions, too, there is some risk attached.

The tax system in Romania is subject to various interpretations and permanent changes. In some cases, the tax authorities may adopt different interpretations toward the group of some fiscal issues and can calculate interests and penalties.

Statements regarding taxes and duties may be subject to control and revision for a five years' period, in general after their submission.

Romanian Government has a significant number of agencies authorized to audit companies operating on the territory of Romania. These controls are similar to tax audits in other countries and can cover not only fiscal issues, but also other legal and regulatory issues of interest to these agencies. It is possible that the Group will be subject to tax audits as the issue of new fiscal regulations occurs.

f) Operational risk

Operational risk is "the risk of registering certain losses resulting from inadequate or wrong internal processes applied by people, inoperative systems or external events" Basel Committee on Banking Supervising 2001

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Operational risk is related to human resource management, as well as to external events.

In the context of an investment company, operational risk is the risk of registering financial losses or the risk not to obtain the estimated profits.

This is determined by:

• $\triangleright$ Internal factors:
• the existence of insufficient qualified personnel;
• · inadequate ongoing of certain activities, due to insufficient internal regulations;
• the existence of inadequate information systems.
• $\triangleright$ External factors:
• hostile macroeconomic conditions;
• socio-political events;
• frequent changes in the business environment as a result of legislative changes.

Operational risk management is about managing processes for the identification, evaluation and assessment of operational risks, establishing responsibilities, taking action to mitigate or anticipate them, periodic review and progress monitoring.

It should be noted that in the management of operational risk, models and techniques are not the most important, but the attitude towards risk, which is formed over time and is an aspect of organizational culture.

The Company is also subject to operational risks including the custodian risk. Custodian risk refers to the risk of loss of securities held in custody occasioned by the insolvency or negligence of the custodian. Even if the law provides for and protects the company against such risks, however in such cases the group's ability to transfer titles in such a situation could be temporarily affected.

The Company's objective is to manage this risk to avoid or limit financial losses and generate returns for its shareholders.

IV. CHANGES IN COMPANY

MANAGEMENT

In accordance with the Articles of Incorporation, the Company is managed

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$\frac{1}{2}$

as a single unit.

The Board of Directors of the Company consists of seven members elected by the General Assembly for a period of 4 years, with the possibility of being reelected.

Most board members – five members – are non-executive.

Of these, two administrators are independent and represent the audit committee.

Management structure is as follows:

31 December 2014

Board of Directors Members: Tudor Ciurezu - President, Anina Radu -Vice President, Cristian Busu, Victor Capitanu, Nicolae Stoian, Carmen Popa, Iulius Grigore Postolache

Effective Management: Tudor Ciurezu (General Director), Anina Radu (Deputy General Director).

Executive Management: Elena Sichigea - Economic Department Director, Elena Calitoiu - Director of Investments and Risk Management, Dan Voiculescu -Director of Portfolio Monitoring Department, Vasilica Bucur - Legal Department Director.

31 December 2013

Board of Directors Members: Tudor Ciurezu - President, Anina Radu -Vice President, Petre Ghibu, Ana Barbara Bobirca, Cristian Busu, Daniela Toader, Lucian Buse - interim administrator.

Effective Management: Tudor Ciurezu (General Director), Anina Radu (Deputy General Director).

Executive Management: Elena Sichigea - Economic Department Director, Elena Calitoiu - Director of Investments and Risk Management, Dan Voiculescu -Director of Portfolio Monitoring Department, Vasilica Bucur - Legal Department Director, Ion Patrichi - Director of Human Resources - Logistics Department.

In the context of existing legislation, the lack of legal provisions requiring companies included in the scope of consolidation to prepare, audit, submit and approve the annual financial statements under IFRS conditions (except for companies that fall within the scope of the OMFP no. 881/25.06.2012 on the application by companies whose securities are admitted to trading on a regulated market of International Financial Reporting Standards.) in conjunction with Art. 24

of the Accounting Regulations in accordance with Directive VII of the European Economic Communities approved by NSC Order No. 12/2011, under which "an entity may not be included in consolidated financial statements if:

b) information for the development of the consolidated financial statements can be obtained only with costs or undue delay, or

c) shares in that entity are held exclusively with a view to their subsequent sale" (the Company has classified all securities held in companies in the category of financial assets available for sale).

None of the companies included in the consolidation is not covered by OMFP no. 881 / 25.06.2012, respectively shall not be required to prepare and report financial statements in terms of IFRS.

The Board of Directors of the Company believes that the Company unjustified, is included in the category of companies that must prepare consolidated financial statements, especially under IFRS. Moreover, in the EEC, investment funds in the category UCITS are not required to prepare annual consolidated financial statements.

These consolidated financial statements are prepared in accordance with NSC Decision no 1176/15.09.2010. The Company shall prepare and submit to FSA annual consolidated financial statements in accordance with IFRS adopted by the European Union within 8 months from the closing of the financial year.

These financial statements have been prepared solely for information purposes and are intended to be used exclusively by the Group, its shareholders and FSA, they cannot be relied upon as the basis of investment decision and do not generate modifications in the shareholders' rights regarding dividends.

Associate Prof. PhD.ec. Tudor CIUREZU

Anina RADU

Ec.Elena SICHIGEA

President / General Director

Vicepresident / Deputy General Director

CFO

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