Board of Directors' Report 2020

	Law no. 31/1990 R; Law 297/2004; CNVM Regulation no.
Annual Report according to:	1/2006; BVB Code; M.F.P. Order no. 40/2013
For the financial year	2020
Date of the report:	March 12, 2021
Name of the issuing Company:	Mecanica Ceahlău SA
	Piatra Neamţ, str. Dumbravei nr.6, Neamţ County Neamţ
Registered office:	Postal code 610202
Telephone/Fax:	Tel: 0233/215820; 0233/211104; Fax 0233/216069
Web	www.mecanicaceahlau.ro
E-mail	[email protected]
Tax Identification Code	RO 2045262
Number in the Trade Register	J27/8/08.01.1991
The regulated market where the securities issued are traded	Bucharest Stock Exchange - Standard category MECF Symbol
Subscribed and Paid-up Share Capital	RON 23,990,846
The main characteristics of securities issued by Mecanica Ceahlău SA	Ordinary, common, nominative, dematerialized, and evidenced by entry process

1) ANALYSIS OF COMPANY'S BUSINESS

1.1. a) Description of the Company's core business

Object of Activity ‐ Mecanica Ceahlău S.A. ("the Company") has as main area of activity the manufacture of agricultural and forestry machinery, NACE CODE 283. The main activity is the "Manufacture of agricultural and forestry machinery" - NACE CODE 2830.

The main farming machinery and equipment manufactured and traded by Mecanica Ceahlău cover the entire range of works, from soil preparation with a view to sowing to harvesting: ploughs, seed drills for hoeing plants, seed drills (mechanical and pneumatic) for straw plants, reversible ploughs, combine harvesters, compactors, disc harrows, farming hoes, tillers, irrigation installations, anti-pest sprayers, fertilizer spreaders, potato planting/tillers and harvesters etc.

In 2020 it successfully continued the partnership with CNH Industrial, for distribution of Steyr tractors in Romania, most farmers purchase tractors and agricultural machines from the same supplier, which is a financially competitive advantage by much easier access to purchases with non-refundable funds and an image advantage.

It also continued the partnerships with Projet from Bargam Italy Group for distribution of sprayers machines and self-propelled machines, with Stoll Germany for distribution in Romania of front end loaders for tractors and partnership with trailer manufacturer Bellucci & Rossini Italy for assembling and distribution under licence of trailers from 4 to 20 tons.

The Company has implemented the Integrated Management System "Quality-Environment" certified by the external auditor TÜV THÜRINGEN for the management systems ISO 9001: 2015 and ISO 14001: 2015.

1.1. b) Stating the date of the Company incorporation

Legal framework ‐ Mecanica Ceahlău S.A. is a joint stock Company, established pursuant to the Government Resolution no. 1254/ 04.12.1990, in Piatra Neamţ, Neamţ County.

1.1.c) Description of any merger or significant reorganisation of the Company during the fiscal year

Secondary office at the address Bucharest, Sector 1, Calea Grivitei, no. 136, Et.1, Room E1-I2 classified in the NACE class: "Own office activities for the Company", according to the BD Resolution no. 1 of 06.09.2019.

Secondary office (point of work) at address: Timiș county, Giarmata commune, Giarmata town, 24-26 Calea Timișoarei Street, according to the decision of Board of Directors no.1 of 25.05.2018.

Secondary office (office) at Mures County, Cipau, Nr. 10A, according to the decision of the Board of Directors no. 1 from 25.05.2020.

Secondary offices have no declarative and payment obligations.

1.1. d) The impact of the COVID 19 epidemic on the financial position and performance of the Company

The coronavirus epidemic ("COVID-19"), declared a pandemic by the World Health Organization on March 11, 2020, has significantly affected the economic environment, having multiple effects on all industries to a greater or lesser extent.

The Company operates in the field of production and sale of machinery and equipment for agriculture, a field affected by both the coronavirus pandemic and extreme drought, which has been one of the worst in the last 50 years.

In the context of safety measures, protection of the health of the population and declaration of emergency in Romania since March 16, 2020 and state of alert starting May 15, 2021, the option Mecanica Ceahlau was to implement the business continuity plan and take all necessary measures to prevent and combat the effects of infection with the new coronavirus-Covid 19. For this purpose they used both the Company's own resources and the support solutions provided by the Romanian Government.

In the context of the COVID-19 pandemic, it is expected that there will continue to be a degree of uncertainty in the field in which the Company operates. The Company's management does not estimate difficulties in honoring commitments to shareholders and obligations to third parties, the availability of present and future liquidity being in line with the limits imposed by regulations and sufficient to cover payments for the next period.

The Company's management has as permanent objectives the analysis of the future impact of the Covid-19 pandemic on the financial performance and the taking of adequate measures to reduce the related risks.

1.1. e) Description of procurement and/or alienation of assets

e). 1 Procurement

In 2020, according to Investment Programme, it made investments in total amount of RON 699,277 from own financing sources and financial leasing in the following chapters:

Investment Name	Value (RON)	Financing sources	Investments New	Modernizations
PRODUCTION ACTIVITY	258,871	own sources	2,581	256,290
LOGISTICS AND SALES	160,826	own sources + leasing	141,598	19,228
SOFTWARE and IT APPLICATIONS	9,998	own sources	9,998	-
SERVICE ACTIVITY	202,435	own sources + leasing	56,036	146,399
SHOWROOM MURES	67,147	own sources	67,147	-
TOTAL INVESTMENTS	699,277		277,360	421,917

e). 2 Alienation

In 2020, a number of 52 fixed assets and 23 fully depreciated intangible assets that no longer brought future economic benefits, approved by the CA Decision, were scrapped.

1.1.f. Description of main outcome of assessing the Company operations

1.1.1. Items of general assessment

The Company presents the main indicators achieved in the year 2020:

	2020	2019	2020 vs 2019 %
Turnover	18,823,557	29,500,719	-36%
The cost of the goods sold	(11,231,653)	(18,279,305)	-39%
Gross margin	7,591,904	11,221,414	-32%
Operating expenses	(10,020,118)	(14,847,785)	-33%
Result of the operational activities	(2,041,025)	8,136,939	-125%
Financial net result	8,350	(43,133)	-119%
Result before taxes	(2,032,675)	8,093,806	-125%
Net expense with current profit tax and deferred tax	(306,250)	(1,611,645)	-81%
Net result	(2,338,925)	6,482,161	-136%
Average number of employees	101	121	-17%

a) Profit/(loss)

In the financial year 2020, Mecanica Ceahlău recorded from operating activities a negative result in the amount of RON (2,041,025), a positive net financial result in the amount of RON 8,350, resulting in a gross loss in the amount of RON (2,032,675).

b) Turnover

	2020	2019
Sales of goods	19,230,024	30,228,171
Commissions granted to dealers	(612,097)	(1,351,126)
Net turnover from sales of goods	18,617,927	28,877,045
Services rendered	113,173	98,090
Sales of residual goods	92,457	525,585
Total net turnover	18,823,557	29,500,719

The gross turnover of the Company as of December 31, 2020 is of RON 19,435,654 (December 31,2019: RON 30,851,845), out of which export RON 182,189 (December 31, 2019: RON 239,515) and internally RON 19,253,465 (December 31, 2019: RON 30,612,330).

In order to achieve this sales volume, commercial discounts were granted in the form of bonuses according to the contracts in force in the amount of RON 612,097 on December 31, 2020, respectively RON 1,351,126 on December 31, 2019, resulting in a net turnover in the amount of RON 18,823,557 on December 31, 2020, respectively RON 29,500,719 on December 31, 2019. The commercial bonus granted to distributors according to the contracts in force represents a variable consideration that the Company estimated and recognized in the transaction price on 31.12.2020 and 31.12.2019, respectively.

Compared to the same period of the previous year, the Company's net turnover decreased by 36%, the main causes being: coronavirus pandemic and extreme drought, which was one of the worst in the last 50 years.

1. Negative effects of drought

Unfortunately, this year's extreme drought has wreaked havoc on large agricultural areas in the country, and the forecasts of the US Department of Agriculture (USDA) and the European Commission on grain production and exports have become increasingly pessimistic, starting in May, May. chosen for the southern part of the country. Many of the crops sown in the fall of 2019 and in the spring of this year were destroyed, with damage recorded on about 2.4 million hectares out of a total of almost 6 million hectares sown.

Official data announced by the Ministry of Agriculture show that over 1.18 million hectares of wheat, rye, triticale, barley, barley, oats and rapeseed, crops established last autumn, were destroyed by drought and over 1.21 million hectares with corn and sunflower, from the main crops sown in spring. Romanian farmers, very vulnerable to extreme weather phenomena, recorded serious damage in the agricultural year 2019/2020, claiming that it is the hardest in the last 50 years.

2. The negative effects of the COVID-19 epidemic

The agricultural sector has faced special situations due to the coronavirus pandemic, producing negative effects on farmers' activity and on their ability to sell production. Even if the activity in the sector never stopped closing HORECA or other activities that were directly related to agriculture and the food industry, during the year there were problems and losses in this sector.

In 2020 the Company earned Other Incomes as follows:

	2020	2019
Revenue from indemnities and penalties	15,851	4,278
Revenue from rental of real estate investments	294,437	299,701
Other operating incomes	76,901	122,783
Other operational revenues	387,189	426,762

c) Costs

	2020	2019
The cost of the goods sold	(11,231,653)	(18,279,305)
Expenses with utilities	(381,369)	(445,177)
Expenses with salaries, contributions and other assimilated expenses	(6,464,126)	(6,869,566)
Other administrative expenses	(2,142,951)	(2,465,234)
Other operational expenses	(445,699)	(614,073)
Expenses with amortization and impairment of assets and depreciation of assets related to the rights to use	(1,509,017)	(1,503,466)
Adjustment of the value of current assets	1,042,620	(2,640,630)
Profit/loss from provisions for risks and expenses	(68,624)	(299,861)
Earnings/losses from lease of fixed assets	-	(3,658)
Earnings/losses from revaluation of tangible assets	(91,121)	2,173
Gains / losses from revaluation of assets held for sale	(33,561)	-
Earnings/losses from revaluation of real estate investments	73,730	(8,293)
Operational expenses	(10,020,118)	(14,847,785)
Costs	(21,251,771)	(33,127,090)

The main weight in total operating expenses is held by the cost of raw materials and consumables, of merchandise in distribution, followed by expenses with salaries, indemnities and similar and administrative expenses (with external supplies).

The financial expenses include interests and discounts granted for advance payments and exchange rate differences. In 2020, the interest expenses (including related to leasing contracts) are in the amount of RON 68,494, the expenses from exchange rate differences are in the amount of RON 99,473, and the expenses with discounts are in the amount of RON 105,721.

d) Market share held

The Company holds an important segment of the market of agricultural machines and equipment for sowing machines for hoeing plants and sowing machines for stalky plants. The products were modernised during 2020 by application of research results in the field of agriculture, preparation of soil and sowing of soil.

The assessed market share for these products is between 20 and 30% in terms of the number of units sold.

	31 December	31 December
Cash and current accounts	2020	2019
Cash	13,024	12,020
Current bank accounts	2,232,038	2,622,812
Cash and current accounts - gross value	2,245,062	2,634,832

e) Liquidity (available funds in account etc.)

The current accounts opened with banks are permanently available for the Company and are not restricted.

Bank deposits	December 31, 2020	December 31, 2019
Bank deposits - gross value	5,000,000	18,800,000
Expected credit loss related to bank deposits	(2,767)	(1,573)
Total bank deposits	4,997,233	18,798,427

The bank deposits are permanently available for the Company and are not restricted.

The Company holds on 31st December 2020 investments in fund units evaluated at fair value by the profit and loss account, as follows:

Fund type	Fund management Company	Number of fund units	Value of fund units
Open-end investment fund BT OBLIGATIUNI	BT Asset Management	13,591	261,851

1.1.2 Assessment of the technical level of the Company

Description of the main products manufactured and goods distributed

The main object of activity is the production and sale of agricultural machines and equipment.

In the production structure in 2020, the significant share is the range of seeders for hoeing plants with a percentage of 38%, seeders (mechanical or pneumatic) for straw plants with a percentage of 32%, followed by the range of combine harvesters with a percentage of 5% and the range of cultivators with a percentage of 5%.

Apart from the range of agricultural machines and equipment from own production, the Company sells tractors, front end loaders, sprayers machines, bundling machines, trailers etc.

a). The main outlets for each product or service and distribution methods

The products marketed by the Company are intended for both the domestic market and the external market.

In 2020, the domestic market was the main outlet, the sales volume in this market accounting for 99% of turnover.

On the internal market, the Company has collaborated with a number of 20 distributors from the entire country, the most important ones being located preponderantly in the agricultural area.

On the external market, the volume of sales was achieved in proportion of 1% from the turnover. On this market, it is maintained the connection with the traditional clients that know and promote the products of the Company.

b). The weight of each product category in total turnover for the last 3 years

The weight of the main products sold in the total turnover of the Company for the past three years is as follows:

Weight in
turnover Products	2018	2019	2020
Seed drills	32%	29%	27%
Machinery for soil preparation	22%	15%	20%
Machinery for crop maintenance	8%	6%	7%
Goods in distribution	28%	38%	28%
Spare parts	7%	9%	14%
Other	3%	3%	4%

c. New products considered for which a substantial volume of assets will be used in the next financial year, as well as the development stage of these products

In 2020, the program of developing the own portfolio of products continued at an accelerated pace, in terms of innovation, quality and aspect.

I. I. The main directions in view of diversification of the product supply in 2020 were:

1. design and homologation of new agricultural machines by applying the research results in the field of agriculture, especially preparation and sowing of soil. In this direction a number of 9 new products were designed, executed and tested: Plow CERES 120/2, 3, 4 M, universal seed drill carried with double disc coulters with working width of 3m, respectively 4 m - SUP 300DIAMANT, respectively SUP 400DIAMANT, 6-row, respectively 8-row, precision seed drill with double disc coulter and SAFIR 6, respectively SAFIR 8 fertilizer intended
2. modernization of machinery and agricultural equipment from the portfolio, consisted of constructive and technical characteristics for 18 machineries for the efficiency of the manufacturing processes: weeding seeders, straw seeders, SOLARIS6 combiners , vibromixt combinators, Stiffening tie rods, etc

II. The main directions in order to diversify the offer of products in the year 2021 were:

The research and development program for 2021 includes objectives in order to diversify the supply of machinery and equipment for agriculture and forest exploitation, classified in two chapters:

1. design and approval of new agricultural machinery based on the results of the research in agriculture, soil preparation and seeding.
2. modernization of machinery and agricultural equipment from the portfolio by preparing constructive and technological documentations.

Achieving the objectives for the diversification of the portfolio for 2021 will be carried out through the successive implementation of several activities specific to technical, constructive and technological innovation and in correlation with the manufacturing program.

1.1.3 Evaluation of technical-material supply activity (local sources, imported sources)

In 2020, the procurement activity took place in more difficult conditions and with some delays in the supply chain, which did not generate delays in the production process.

Even if we encountered small difficulties, we managed to provide the material basis necessary for the production activity based on the monthly and quarterly programs from suppliers on the domestic market, from suppliers from the EU and outside the EU.

The activity of procurement of raw materials (sheets, round steel, square, profiles, etc.), cast steel and cast iron parts, rubber parts (tires, chambers, gaskets) was more difficult in 2020 due to the fact that some employees they restricted their activity, motivated by the restrictions generated by the COVID-19 epidemic.

In a market characterized by significant price increases, through negotiations, we managed to limit the increase of acquisition costs for metal products and active organs. In 2020, the partnerships with external suppliers of castings and active organs were maintained.

The commercial relations with our partners were developed on the basis of orders, sales-purchase contracts through which the delivery conditions, transport and payment methods were regulated.

1.1.4. Assessment of sales

a) Description of the evolution of sales on the internal and/or external market and the medium and long‐ term perspectives for sales

The gross turnover of the Company associated to 2020 is of RON 19,435,654 (on 31 December 2019: RON 30,851,845).

Compared to the same period of the previous year, the Company's turnover decreased by 36%, the main causes being: coronavirus pandemic and extreme drought, which was one of the worst in the last 50 years.

b) Description of the competitive status in the Company's line of business, of the market share of Company's products or services and of the main competitors

The competitors faced by the Company in the market are:

‐ well‐known EU‐based manufacturers, renowned in the field, with relatively high prices and aiming primarily at conquering the market and reaching the leading position in the market. These companies (Maschio-Gaspardo, Vogel Noot, Class, Lemken, New Holand, John Deere, Case, Horsch Germany, Kuhn, Amazone, Sulky, Sola, Lamusa) have their own financial support which allows them to promote the investment projects made by large farms by European funds and financing of important stock levels of own products any time available to the market. These companies can afford to give important facilities to customers and retailers.
manufacturers of agricultural machines from Poland, Ukraine, Bulgaria, India Mahindra & Mahindra and Turkey, which have low prices agreed by a large market segment.
‐ traders of second‐hand machinery originating mainly from the European Union.

c) Description of any significant dependence of the Company on a single customer or group of customers whose loss would have a negative impact on the revenue of the Company

The Company addresses farmers who hold surfaces between 50 ha and 3,000 ha, organised in:

companies, agricultural associations, resorts and research institutes etc., which represent about 30,000 exploitations and
organised in sole partnerships, self-employed persons, family owned companies which represent over 5,000 exploitations.

Taking into account the diversity and the large number of agricultural exploitations, we cannot reach the point where the Company would depend on one customer or on a limited group of customers.

1.1.5. Assessment of aspects related to the Company employees/personnel

a) Specifying the number and degree of unionization of the labor force

In 2020, the Company operated with an average number of 101 employees. As of December 31, 2020, the Company had an effective number of 91 employees structured by personnel categories as follows:

Categories of personnel	Nr. Effective December 31, 2020
- directly productive workers	40
- indirectly productive workers	7
- TESA personnel	44
TOTAL	91

The employees are organized in the Free Trade Union "TESA" which has a staff of 46 members, employees from the production section and functional compartments

The regulation of labor relations is made based on the labor legislation in Romania. The Company has concluded the Collective Labor Agreement with its employees.

In labor relations in the Company, the principle of equal treatment applies to all employees, being prohibited any direct or indirect discrimination against an employee whose purpose is not to grant, restrict or remove the recognition of use or exercise of rights under labor law and the Contract Work Collective, based on criteria of sex, sexual orientation, age, race, ethnicity, religion, political choice, social origin, disability, family situation or responsibility, membership or union activity.

Remuneration levels, by professional categories and standard benefits for employees are established in the process of negotiating the Collective Labor Agreement. In principle, the increase of the wage fund follows the increase of labor productivity.

In accordance with the provisions of the Collective Labor Agreement, the employees benefited from work and protection equipment, antidote, social benefits for serious illnesses and other benefits. Meal vouchers are granted for each day worked for 8 hours.

In order to protect employees against infection with the new COVID-19 coronavirus, the Company has implemented a General Plan of Measures on Specific Regulations, which is an integral part of the Prevention and Protection Plan to improve occupational safety and health in Ceahlau Mechanics for 2020. The protection measures applied have helped in most cases to eliminate the risk of occurrence and development of outbreaks of infection within the Society.

b) Description of the relationships between managers and employees and of any conflictual elements characterizing these relationships

The relationships between the executive management and the employees aim to promote and apply fair labour principles, allowing the Company to carry out its activity in conditions of profitability, financial balance and capacity for payment, and on this basis ensuring social protection for employees, as well as to avoid the emergence of collective labour conflicts.

1.1.6. Assessment of aspects related to the impact of the Company's main activity on the environment.

Mecanica Ceahlău S.A. holds the Environmental Permit no. 159 of 17.06.2010, reviewed on 25.09.2020 based on the activity presentation documents and the Environmental Balance, valid for the entire period in which the Company obtains the annual visa according to art.16, paragraph 2 1 of OUG 195/2005 on environmental protection and Water Management Authorization no. 10 / 30.01.2020, valid until 30.01.2025.

Mecanica Ceahlău S.A. did not have and is not estimated to have disputes about the violation of environmental protection laws and follows up the implementation of the plan of measures for prevention of accidental pollutions, with deadlines and responsibilities.

1.1.7. Assessment of the research and development activity

The main objective in the research-development activity are:

the extension of offer portfolio of agricultural machinery and equipment which comply with the world trends in the mechanisation of agriculture and
modernisation of machines and equipment in portfolio.

1.1.8. Assessment of Company's activity in terms of risk management. Risk management objectives and policies, hedging policies.

a). Description of Company's exposure to the price, credit, liquidity and cash flow risks

In the field of risk management, the main principles considered are: preparing the documents on the identification, measurement and control of risks associated to any potential decision, as well as improving the performance of Company's management in the context of defining, measuring and evaluating the consequences of adopting uncertain decisions.

The risk management policies of the Company are defined in such way as to ensure the identification and analysis of the risks that the Company is encountering, establishment of limits and adequate controls, as well as the monitoring of risks and compliance of the established limits.

The risk management policies and systems are permanently reviewed in order to reflect the amendments occurring in the market conditions and in the activity of the Company. The Company, through its standards and procedures for training and management, aims to develop an ordered and constructive control environment, within which each employee understands their roles and liabilities.

b). Description of policies and objectives of the Company regarding risk management

Mecanica Ceahlău SA (the Company) monitors the level of risks by means of policies undergoing implementation for the following risks identified:

Price risk
Credit risk
Liquidity risk
Market risk
Capital management

a. Price risk

The change of raw material price induces a variation of the product price which represents an important operational element of the Company, being a decisive factor in the increase of expenses and implicitly of prices of products made by the Company.

The management of this risk is carried out by:

diversification of portfolio of suppliers, which offers increased negotiation levers if the price of raw materials increases in some suppliers.
conclusion of long-term contracts, with fixed price clause.

b. Credit risk

Financial assets, that may expose the Company to the collection risk, are mainly trade receivables and liquid assets. The Company has policies aimed to assure that the sales are made to costumers with proper references on their creditworthiness.

The credit risk is the risk that the Company support a financial loss following the unfulfillment of the contractual liabilities by a client or a counterparty at a financial instrument, and this risk results mainly from trade receivables and financial investments.

The Company has a significant concentration of credit risk. The Company applies specific policies to make sure that the sale of products and services is carried out so that the commercial loan granted is adequate and monitors continuously the age of receivables.

In order to prevent the impact of the COVID-19 pandemic on the creditworthiness of customers and to limit the exposure to customers that could be seriously affected, the Company carefully monitors and periodically evaluates (with a higher frequency) their financial condition.

The financial flows and situations of receipts and payments for each partner are monitored and permanently controlled by maintaining a real connection with them, therefore we believe that this risk is low.

Cash and cash equivalents are placed only in top-rated banking institutions, considered to have a high solvency.

Credit risk, including the country risk in which the client operates, is managed by each business partner. When deemed necessary, are required specific credit mitigation tools - advance payments.

The Company has no significant exposure to a single partner and does not record a significant concentration of turnover on a single geographic area.

c. Liquidity risk

Is the risk that the Company could encounter difficulties in complying with the liabilities associated to financial debts which are reimbursed in cash. The approach of the Company on liquidity risk is to ensure, to the extent possible, that it hold at any time sufficient liquidities to face debts when these are due, both in normal conditions and in difficult conditions, without supporting significant losses or to compromise the reputation of the Company.

Generally, the Company makes sure that it holds sufficient cash to cover the forecasted operational expenses, including for the payment of the financial liabilities.

For the purpose of managing liquidity risk, cash flows are monitored and analysed weekly, monthly, quarterly, and annually to determine the expected level of net change in liquidity.

The Company's management does not estimate difficulties in honoring commitments to shareholders and obligations to third parties, the availability of present and future liquidity being in line with the limits imposed by regulations and sufficient to cover payments for the next period.

d. Market risk

The Romanian economy is changing, there is a lot of insecurity regarding the possible orientation of politics and economic development in the future. The Company management cannot foresee the changes which will take place in Romania and their effects on the financial situation, the operating results and cash flows of the Company.

d.1. Foreign currency risk

The Company is exposed to exchange rate risk by sales, purchases, liquid assets and its loans denominated in other currencies than the functional currency of the Company, yet the currency in which most of transactions are carried out is the Romanian leu.

The currency which exposes the Company to this risk is mainly EUR. The differences resulted are included in the global result statement and do not affect the cash flow until the liquidation of debt. As of 31st December 2019 the Company had cash and cash equivalences, commercial receivables, commercial debts and loans in foreign currency (EUR), the remaining financial assets and financial liabilities are denominated in RON.

d.2. Interest rate risk

The interest rate risk at fair value is the risk that the value of financial instruments fluctuates because of changes in the interest rate on the market. The income and cash flow of the Company cannot be affected by the fluctuation of interest rate on the market, because from the sensitiveness analysis determined for the interest-bearing loans that exist in balance at reporting date it is considered that their fair value does not significantly differ from book values.

e. Capital management

The objectives of the Company in the management of the capital are to ensure the protection and capability to reward its employees, to maintain an optimal structure of capitals in order to reduce capital costs.

The Company monitors the volume of the attracted capital based on the indebtedness degree. This rate is calculated as a ratio between gross debts and totals of capital. The net debts are calculated as a total of cash gross debts. The totals of capital are calculated at own capital to which net debts are added.

The Company's management believes that it takes all the necessary measures to achieve the Company's objectives on risk management, by:

preparing strategies to manage the liquidity crisis and setting measures to prevent possible liquidity crises;
constantly monitoring the liquidity;
forecasting the current liquidity;
daily monitoring the cash flows and assessing the effects on its creditors of the limited access to funds and possibility to increase operations in Romania.

1.1.9. Prospective elements on the Company's activity

a) Presentation and analysis of trends, elements, events or factors of uncertainty impacting or that are likely to impact the Company's liquidity as compared to the same period of the previous year

The liquidity of the Company depends on the investment programmes in agricultural machinery and tractors of farmers. These programmes are influenced by factors related to the European and governmental policies oriented to this sector of economy, which in order to become efficient needs financial support.

In the context of the COVID-19 pandemic, it is expected that there will continue to be a degree of uncertainty in the field in which the Company operates. The Company carefully monitors developments in the field in which it operates as well as in the economic environment in general, as well as the effects of economic measures applied at national and international level.

b) Presentation and analysis of the effects the current or anticipated capital expenditure may have on the Company's financial standing as compared to last year

Capital expenditures are expenditures to acquire fixed assets, for their development and modernization.

In 2020 capital expenses were recorded in amount of RON 699,277 for new equipment and modernisation of existing equipment.

c) Presentation and analysis of events, transactions, economic changes which may have a significant effect on the Company's revenues from its core business

The agricultural machinery market and agriculture in general are permanently subjected to high financing constraints and, therefore, farmers are exposed to a great vulnerability in terms of exposure to domestic and foreign risks.

2) TANGIBLE ASSETS OF THE COMPANY

2.1. Denomination of the sites and of the features of the main productive capacities owned by the Company

The production facilities and capacities of the Company are in the office of Piatra Neamț where the registered office of the Company is located, on 6 Dumbravei Street, Piatra Neamț, Neamț county, Romania.

The main sites owned by the Company are:

The site located in Piatra Neamț, str. Dumbravei nr. 6
enclosed surface = 141,248 sq.m., ground + buildings
built area = 49,214 sq.m., out of which:
- a) production space = 32,609.13 sq.m.,
- b) available space = 16,604.87 sq. m.

The site located in the town of Tg. Neamt (un-incorporated area), Valea Seacă field = 6,691 sq. m., available space 6,691 sq. m.

The site located in Baldovinesti commune, Braila County, enclosed surface = 5,278 sq. m, land

In the registered office all types of facilities are built for the good carrying out of production activity, according to the object of activity of the Company.

The production areas include industrial halls, technological test benches, areas for administrative and social activities. Also, the Company owns spaces for offices designed for technical and economic activities. All these areas are maintained in good condition.

2.2. Description and review of the wear degree of the Company's property

As of 31st December 2020 the Company owns tangible assets for the carrying out of activity in net amount of 17,916,718 lei, materialised in land, buildings, special constructions, installations, technological equipment, means of transport:

The fixed assets are listed in the table below, grouped by the classification code and by wear:

Group	Inventory value	Value of amortization and adjustments for depreciation	Residual value
Land	7,157,066	-	7,157,066
Constructions	5,939,359	73,654	5,865,705
Technical installations and vehicles	14,725,754	10,993,292	3,732,462
Rights of use assets	1,914,811	964,880	949,931
Furniture, office equipment	291,088	147,713	143,375
Tangible assets under execution	68,180	-	68,180
TOTAL	30,096,258	12,179,539	17,916,719

Group	Inventory value	Value of amortization and adjustments for depreciation	Residual value	Average wear (%)
Real estate investments	487,280	‐	487,280	‐
TOTAL	487,280	-	487,280	-

As of December 31, 2020, the Company has assets held for rental purposes:

The commercial properties rented to third parties on the basis of contracts valid for 12 months with the possibility of extension are located at the location in Piatra Neamț, str. Dumbravei no. 6.

2.3. Potential property issues related to the property right over the tangible assets of the Company

During 2020 there were no problems with the ownership right over the assets of the Company.

2.4 Other information regarding tangible assets

As at December 31, 2020, the Company determined fair values for land, buildings and special constructions, real estate investments and assets held for sale. The fair value valuation was performed by external, independent real estate appraisers, members of the National Association of Appraisers in Romania (ANEVAR) with recognized professional qualifications and experience in appraising all real estate segments. The methods used by the appraiser in determining the fair value were: the market value method by comparison for land and assets held for sale and the income capitalization method (income approach) for construction and real estate investments.

The outbreak of the new Coronavirus (COVID-19), declared by the World Health Organization as a "Global Pandemic" on March 11, 2020, has had a significant impact on global financial markets. Travel restrictions have been implemented by many countries. Market activity is affected in many sectors. At the valuation date, it was considered possible to grant a smaller share of previous offers in the market for comparison purposes in order to formulate an opinion on the value of the assets. Indeed, the current response to COVID-19 actually means that we are facing an unprecedented set of circumstances on which to base our views. Therefore, the valuation performed on 31 December 2020 is related to the conditions of material uncertainty of the valuation.

As at December 31, 2020, the Company holds for sale assets identified as follows:

a. Unincorporated land with a 6,600 sqm surface according to documents (6,691 sqm according to measurements), the "arable"category, located in the outskirts of the city of Targu Neamț, Valea Seaca area, Neamț county, identified with cadastral number 50718, registered in the Land Registry of Tg Neamț, under the number 50718.
b. The building located in Baldovinești Village, Vădeni city, Braila county, which is composed of:
- Incorporated land with a 5,278 sqm surface, identified with cadastral number 240, registered in the Land Registry under the number 71069, land 208, parcel 1354 of Vădeni town, category of use "building yards";
- Related construction

3. THE MARKET FOR THE SECURITIES ISSUED BY MECANICA CEAHLĂU SA

The summary of the consolidated structure of the owners of financial instruments.

As at 31 December 2020, the summary of the consolidated structure of the owners of the financial instruments is as follows:

	Number of shares	%
Evergent Investments S.A. (former SIF MOLDOVA S.A.) loc. BACAU Bacau County	175,857,653	73.3020
NEW CARPATHIAN FUND Other shareholders, of which:	48,477,938	20.2068
- legal entities - individuals	722,117 14,850,752	0.3010 6.1902
TOTAL	239,908,460	100.00

3.1. Romanian and foreign markets where the securities issued by Mecanica Ceahlău SA are traded

The shares of the Company Mecanica Ceahlău SA are only traded on the Bucharest Stock Exchange, symbol MECF II category.

3.2 The Company's policy related to dividends' pay-out

The policy related to payout for dividends focused both on satisfying the short-term interests of the shareholders and the institutional development on the medium and long term, such that a part of the net profit was earmarked for reserve, in order to create own resources needed for investments.

Mecanica Ceahlău SA capitalized the net profit for the financial exercises of 2004 – 2007, this option being in the interest of both the investors and the Company.

For the financial exercises 2010 and 2011 the achieved net profit was allocated to cover the losses incurred in the previous years.

For the year 2012, the Ordinary General Meeting of the Shareholders of April 29, 2013 approved pay-out in the amount of RON 1,439,450.76 as dividends, respectively RON 0.006 per share. From the total amount, on the date of December 31, 2013 dividends were paid in the amount of RON 1,394,574.96, respectively 96.88% of the total.

For the year 2013, the Ordinary General Meeting of the Shareholders approved the capitalization of the achieved net profit, this option being in the interest of both the shareholders and the Company.

For the year 2014, the Ordinary General Meeting of the Shareholders of April 17, 2015 approved paying out of the amount of RON 1,439,450.76 as dividends, respectively RON 0.006 lei per share.

For the year 2015, the Ordinary General Meeting of the Shareholders of April 25, 2016 approved paying out of the amount of RON 1,199,542.30 as dividends, respectively RON 0.005 per share.

For the year 2016, the Ordinary General Meeting of the Shareholders of April 26, 2017 approved paying out of the amount of RON 1,175,551.45 as dividends, respectively RON 0.049 per share.

In the year 2017 no dividends were granted.

For 2018, the Ordinary General Meeting of Shareholders from 11.04.2019 approved the distribution of the net profit realized to cover the losses from the previous years. No dividends were granted.

At the General Meeting of Shareholders on April 22, 2020, the Company's shareholders approved the distribution of a gross dividend of RON 0.04585/ share (total RON 10,999,803), related to the profit of the financial year 2019, the undistributed profit of 2018 and the realized surplus from revaluation reserves.

3.3. Description of any activity undertaken by the Company to purchase its own shares

Mecanica Ceahlău SA had never purchased its own shares.

3.4. Statement regarding the number and the nominal value of the shares issued by the parent Company and owned by the subsidiaries

Mecanica Ceahlău SA has no branches.

3.5. Bonds and/or other promissory notes issued by Mecanica Ceahlău SA

Mecanica Ceahlău SA did not issue bonds or other promissory notes.

4. MANAGEMENT OF THE COMPANY

4.1. The Company's managers

During the period 01.01.2020 - 31.12.2020, the Board of Directors is composed of 3 members as follows:

1. Trifa Aurelian‐Mircea‐Radu – graduate of the Politehnica University in Bucharest, Faculty of Aircrafts, line of study Electrical and on‐board Equipment and of the Institute for Public and Business Administration "ASEBUSS" Bucharest.

He has background experience in Private Equity/Venture Capital Investment Funds, Corporate Governance, Strategic Management, Company Restructuring and Privation.

Mr. Trifa Aurelian-Mircea-Radu has been in the position of President of the BD since November 24, 2017.

2. Ianculescu Carmen – Consultant in international business, graduate of the Romania‐American University in Bucharest. Other skills: Master's Degree in international business.

3. Eşanu Vasile Romeo ‐ engineer, graduate from the Polytechnic Institute of Iași, Faculty of Constructions, installations department. Financial Accounting Master's Degree from University of Bacovia, Faculty of Management Accounting and Informatics; Evaluation Expert ANEVAR. He was member of the board of directors during the period 2008-2013.

b. Agreements, understandings or family ties between the respective administrator and another person, whereby the respective person was appointed as administrator

No agreements, understandings or family ties are known between the respective administrator and another person whereby the respective person was appointed as administrator.

c. Participation of the administrators in the Company's capital

The members of the Board of Directors, currently in position, do not hold shares of Mecanica Ceahlău SA.

d. List of the persons affiliated to the Company

The Company affiliated persons are:

Evergent Investments S.A. (former SIF MOLDOVA S.A.)
New Carpathian Fund
Transport Ceahlau SRL

e. Description of any transaction exceeding EUR 50.000 of the nature mentioned in the art. 225 of the Law 297/2004

No transactions were identified, amounts due and receivable with Evergent Investments S.A. (former SIF MOLDOVA S.A.), other than the dividends due in the gross amount of RON 8,063,073.

No transactions were identified, amounts due and receivable with NEW CARPATHIAN FUND, other than the dividends due in the gross amount of RON 2,222,713.

The participating interests that the Company holds on 31 December 2020 to Transport Ceahlau SRL are presented as such:

	31 December	31 December
	2020	2019
Shares not listed on January 1	51,000	51,000
Adjustments for depreciation	51,000	51,000
Balance on 31 December	-	-

The main activity object of Transport Ceahlău SRL is the road transportation of goods, however the main share in the activity is held by general mechanical works.

The situation of movements of participation interests on 31st December 2020 is as follows:

			Participation percentage
	Purchase		31 December	31 December
	date	Sale date	2020	2019
Transport Ceahlau SRL	2004	-	24.28%	24.28%

During the year 2020 the Company did not have transactions with Transport Ceahlau SRL.

The situation of receivables and debts with Transport Ceahlau is as follows:

	31 December 2020	31 December 2019
Other receivables	131,817	131,817
Adjustment for other receivables	(113,817)	(113,817)
Other net receivables	-	-
Commercial debts	4,951	4,951

The Company applies the same internal policies in the contractual relationships with the affiliated entities as well as in the relationships with the other contractual partners with which the Company is not in special relationships.

4.2. Members of the executive management

As of 16.01.2018 the position of General Manager has been filled by Mr. Molesag Sorin, who prior to this date was Operational Manager. Mr. Sorin Molesag carried out the activity of operational manager based on Mandate Contract of 10.07.2014, is engineer by profession and has a professional experience in management positions of over 15 years.

Between 01.01.2020 - 30.04.2020, the position of Sales Director was held by Mr. Baptize Cornel. He carried out his activity based on the Mandate Contract from 01.05.2013 (extended on 01.05.2019). Mr. Botezatu Cornel is a graduate of the Politehnica Institute Iasi – Machine Building Department. Post graduate courses: "Management of the restructuring and development of economic agents" and "Business Management", certified "Project Manager"; He has been with the Company for 34 years, out of which 20 years in management positions.

Starting with 01.05.2020, the position of Sales Director is held by Mr. Moraru Ioan. Mr. Moraru Ioan is a graduate of the Ion Ionescu University of Agricultural Sciences and Veterinary Medicine from Brad, Iasi, Faculty of Agriculture. He has 23 years of professional experience in sales, starting with 01.05.2020 depending on the management.

As of 01.05.2018 the position of Financial Manager has been filled by Mrs.Chirila Oana. Mrs. Chirila Oana is graduate from the Faculty of Economics and Business Administration from "Alexandru Ioan Cuza" University of Iași, specialisation Management Accounting and Informatics, master's degree in European Economic-Financial Management. She has a professional experience of 10 years in economic profession; since 01.05.2018 she has had a management position.

a) Agreements, understandings or family ties between the persons belonging to the executive management and another person, whereby the respective person was appointed as a member of the executive management

No agreements, understandings or family ties are known between the persons belonging to the executive management and another person whereby the respective person was appointed as a member of the executive management.

b) Participation of the members of the executive management in the Company's capital

As at 31 December 2020, the structure of owners of financial instruments amongst the members of the executive management was as follows:

Name and first name	Number of holdings	Percentage (%)
Molesag Sorin	-	-
Botezatu Cornel	330	0.00014
Moraru Ioan	-	-
Chirila Oana	-	-

4.3. Litigations or administrative proceedings involving the administrators and the members of the executive management in the last 5 years

Subsequent to the checks made to the Registry of causes kept by the Law Practice, the following resulted:

In the last 5 years, the members of the Board of Directors have not been involved in any litigations, related to their activity in the Company; the Law Practice does not own any data related to possible administrative proceedings in which these five persons might have been involved.

As regards the executive management of the Company, they have not been involved in litigations, in the last five years, related to their activity in the Company. The Law Practice does not own any

data related to possible administrative proceedings in which the executive management might have been involved.

Other litigations

The Company is subject of a number of court actions resulted in the normal course of the development of the activity.

Besides the amounts already registered in these financial statements as provisions or adjustments for impairment of receivables and described in the notes, the amounts associated to other court actions will be recognized when obtaining an irrevocable definitive sentence/their collection.

The management estimates that the result of these lawsuits will not have impact on the financial position of the Company.

4.4. Elements of corporate governance

During the year 2020 and in the previous period, Mecanica Ceahlău SA carefully applied the OECD principles for Corporate Governance and the Code of Corporate Governance of the Bucharest Stock Exchange.

The Board of Directors consists of 3 members, a number that is adequate for the current and perspective needs of the Company. A president and a vice president of the Board of Directors were elected.

Since June 29, 2008 the Audit Committee was set up and in November 17, 2009 was set up the Committee for nomination and wages. Every time the componence of the Board of Directors was updated and/or completed, the componence of the consulting committees was updated.

According to the provisions of the Code of Corporate Governance of the Bucharest Stock Exchange, beginning with January 20, 2010, the position of Secretary General of the Board of Directors was instituted, dealing with the proper preparation of the reviews for the meetings of the Board of Directors and the general meetings of the shareholders, and with registering and monitoring the achievement of the resolutions taken subsequent to these reviews.

Both in 2020, as well as in the previous years, all the shareholders were treated equitably, promoting an effective and active communication with them.

The needed conditions were provided to inform the shareholders regarding the financial results and all the relevant aspects of the Company's activity, through the web page and through the secretary general of the Board of Directors.

Considering that about 20% of Company shares are held by shareholders who are based abroad, the materials of summoning and carrying out of general meetings of shareholders were posted on the Company website both in Romanian and English.

As a result of the Board of Directors' concern to harmonize the interests of the shareholders with that of the Company, in 2020 the participation of the shareholders in the general assemblies was of 93,5096% in terms of the total shares issued by the Company.

Regarding the reviewed subjects and the resolutions adopted in the general meetings of the shareholders in 2020, the current reports were prepared and published according to the applicable legal provisions. We mention in this respect that in the year 2020, there was only one ordinary general meeting of shareholders in which a number of 13 decisions were adopted, all of which were fulfilled. Information and reports were regularly presented in the meetings of the Board of Directors on the manner of fulfilling these decisions.

In order to review various aspects of the Company's activity, in 2020, the Board of Directors met in 16 working meetings. The executive directors participated in certain meetings and, depending on the meeting agenda, other persons were invited to participate.

On the agenda of the meetings of the Board of Directors, based on annual themes, the following analyses were written every month as follows:

in the field of manufacturing and service activity: achieving the targets for the previous month and forecast for the current month; the draft manufacturing program for the next month; implementation status of the second activity field;
in the trading field: achieving the sales plan for the previous month and forecast for the current month; the draft sales plan for the next month; providing the material base required for the next month's manufacturing plan; status of the litigations and of the sums involved in litigation at the end of the previous month, settling actions initiated and ongoing, results obtained and the recovered amounts;
in the economic-financial field: achievement of the monthly budget of costs and revenues and the costs and revenues budget for the next month;
in the field of internal control: submitting the auditing reports, according to the annual plan; the program for implementing of prevention and unitary control; status of achieving the resolutions of AGA and CA;

Quarterly, the Board of Directors analysed:

‐production field: allocation per each month of the manufacturing plan for the next quarter; achieving the objectives set in the Investment Plan, the Research and Development Plan, Equipment Repair and Maintenance Plan, in the previous quarter and the measures envisaged for the implementation of the programmes foreseen for the next quarter

trading field: allocation per each month of the sales plan for the next quarter; the status of the debts occurred in the trading relations; review of the structure of the finished products stock and the level of the stock needed depending on the season;
economic-financial field: quarterly reports for the quarters I and III; allocation per each month of the costs and revenues budget for the next quarter; structure of the production costs and the profitability of the sold goods in the previous quarter; registered costs and the value of the production for the orders closed in the previous quarter.

In 2020, on the agenda of the Board of Directors were also included: general management reviews, management of human resources in research, development and constructive and manufacturing design, biannual report for the first semester, the result of the patrimony inventory a.s.o.

All the meetings of the Board of Directors resulted in resolutions related to the reviewed subjects, resolutions that were included in the system for follow up and monitoring of the secretary general.

Monthly, through the follow-up and monitoring system of the secretary general of the CA, the Board of Directors was informed of the status of the resolutions made.

5. Information about transactions with key management staff

5.1. Members of Board of Directors

The members of the Board of Directors have the following rights according to administration contracts:

a) a remuneration under the form of a monthly indemnity;

b) participation to profit according to the provisions of resolution of the general meeting of shareholders and articles of incorporation.

The monthly remunerations of the members of the Board of Directors, approved by Resolution no.10/22.04.2020 of the Ordinary General Meeting of Shareholders, are:

Chairman of the Board of Directors 2,500 Euro net amount;
Members of the Board of Directors 1,250 Euro net amount.

The denomination in lei will be made at Euro/RON exchange rate of BNR on payment date.

The payment of remuneration for participation in the net profit of the Company and the limits and conditions in which these payments will be made are set out in the resolution of the General Meeting of Shareholders.

The gross amounts given in the year 2020 to members of the Board of Directors according to the resolution of the General Meeting of Shareholders and administration contracts are:

The Board of Directors	Name	Mandate period	Amount – RON -
Chairman	Trifa Aurelian-Mircea-Radu	01.01. - 31.12.2020	248,224
Member	Eşanu Vasile Romeo	01.01. - 31.12.2020	124,107
Member	Ianculescu Carmen	01.01. - 31.12.2020	124,101
Total expenses with indemnity - gross amounts			496,432

In 2020 no prizes or supplementary bonuses were given to the members of the Board of Directors.

5.2. Executive Managers

For executive managers the monthly remunerations for the year 2020, approved by Resolution no.10/22.04.2020 of the Ordinary General Meeting of Shareholders, are:

General Manager 3,500 EUR net amount;
Sales Manager 10,000 lei net amount;
Financial Manager 10,000 lei net amount.

The denomination in lei will be made at Euro/RON exchange rate of RNB on payment date.

Depending on the realization of collective and individual performance indicators, at the end of year 2020, the Board of Directors can give variable remuneration to managers, but this remuneration is within the following limits:

a) Prizes in the limit of 5% of salary fund or indemnities earned, with integration in the Income and Expenses Budget approved by the Ordinary General Meeting of Shareholders
b) annual individual bonuses under the form of participation in benefit plans, at the maximum level of 9 wages, if the performance indicators established are fulfilled.

The gross amounts given to executive managers in 2020 according to the resolution of the General Meeting of Shareholders and management contracts are:

BOARD OF DIRECTORS' REPORT 2020

Management	Name	Mandate period	Amount – RON -
General Manager	Molesag Sorin	01.01. - 31.12.2020	358,734
Sales Manager	Botezatu Cornel	01.01.– 30.04.2020	72,718
Sales Manager	Moraru Ioan	01.05. - 31.12.2020	136,765
Financial Manager	Chirila Oana	01.01. - 31.12.2020	219,811
Total expenses with indemnity - gross amounts			788,028

During 2020 no prizes or supplementary bonuses were given to the managers.

6. THE ECONOMIC-FINANCIAL STATUS

The financial statements for the fiscal year ended as at 31 December 2020 are drawn up according to the Accounting Regulations compliant with the International Financial Reporting Standards approved by the Order of Minister of Public Finances no.2.844/2016.

The reporting currency in the financial statements is RON.

The economic and financial status as compared to the last three years is presented in Appendix 1.

a) Financial position as at 31.12.2020

Analytical indicators of the financial position statement which exceed 10% of total assets	Value (RON)	Percentage (%)
Land, land arrangements and constructions	13,022,771	24%
Inventory	22,103,732	41%
Commercial receivables	5,658,228	10%
Analytical indicators of the financial position statement which exceed 10% of total equity and debts
Reserves	7,440,280	14%
Subscribed and paid-up capital	23,990,846	44%
Carried-forward result	16,369,618	30%

b) Global result as at 31.12.2020

Analytical indicators from global result statement which exceed 20% of total turnover	Value (RON)	Percentage (%)
The cost of the goods sold	11,231,653	58%
Expenses with salaries, contributions and other assimilated expenses	6,464,126	34%

c) Cash – flow

As of 31 December 2020, the Company closed its operations with a positive treasury balance of RON 7,242,295.

The treasury flow as compared to the last three years is detailed in Appendix 2.

The method used to present cash flows is the direct method.

The cash flow structure as at 31 December 2020 is:

Net treasury at the beginning of exercise	21,433,259
Net treasury from operational activities	(3,152,715)
Net treasury from investments	240,605
Net treasury from financing operations	(11,245,105)
Effects of exchange rate variation on cash flow	(33,749)
Net treasury at the end of exercise	7,242,295

In the context of preparing cash flows:

cash flows are cash receipts and payments and cash equivalents;
cash includes cash and cash equivalents from banks and cashiers;
cash equivalents include deposits made with banks, CECs and promissory notes deposited with banks for collection.

Cash flows from transactions in foreign currency are recorded in the functional currency by applying to the value in foreign currency the exchange rate between the functional currency (leu) and the currency from the date of cash flow (date of payments and receipts).

Gains and losses arising from changes in foreign exchange rates are not cash flows. However, the effect of changes in the exchange rate on cash and cash equivalents held or due in foreign currency is reported in the statement of cash flows, but separately from cash flows from operations, investments and financing, in order to reconcile cash and cash equivalents. cash at the beginning and end of the reporting period.

The exploitation activity is the main cash generating activity of the Company.

Thus, in 2020:

the receipts from various clients and debtors were in the amount of RON 29,244,880;
payments to suppliers and various employees and creditors amounted to RON 26,946,187;
the payments of taxes to the State Budget were in the amount of RON 5,239,202.

The exploitation activity generated in 2020 a cash deficit of RON 3,152,715.

Payments for the acquisition of tangible and intangible assets amounted to RON 184,342.

The interest receipts related to the deposits placed at the banks amounted to RON 424,947.

The investment activity generated in 2020 a cash surplus amounting to RON 240,605.

Within the financing activity, the amount of RON 10,568,505 was paid, representing dividends due to the shareholders.

During 2020, the Company used the 200,000 euro credit facility, which it repaid until the end of the year.

The company repaid the installments related to the year 2020 for the investment loan and paid the debts related to the leasing contracts.

The financing activity generated in 2020 a cash deficit amounting to RON 11,245,105.

The level of cash and cash equivalents registered on 31.12.2020 is RON 7,245,062. The impact that the COVID-19 pandemic had on the company's activity during the reported period was not likely to significantly influence the company's financial performance, as it was able to honor in time all its commitments to shareholders and obligations to third parties. Management continues to have a reasonable expectation that the Company has sufficient financial resources to ensure financial stability.

d) Achieving the BVC and the objectives set for 2020

The realization degree of indicators from the Income and Expenses Budget for the year 2020 is analytically presented in Annex 3.

In synthesis, the realization degree of the main indicators is as follows:

				– RON –
No.	Indicator	BVC 2020	Achieved 2020	Percentage
1	Turnover	34,913,900	18,823,557	54%
2	Total revenues	35,481,901	19,492,785	55%
3	Total expenditures	(33,111,492)	(21,525,459)	65%
4	Net profit	2,000,409	(2,338,925)	-

Turnover related to the Income and Expenses Budget approved for 2020 was earned in proportion of 54%. The main causes which led to the no achievement of turnover according to budget were:

1. Unprecedented pandemic drought in most regions of the country (especially in the south and east);
1. Delayed subsidies, lack of government aid (eg disaster subsidies);
1. Lack of projects with European funds, sources of financing for farmers;
1. Financing through IFNs is very difficult;
1. Long overdue payments to farmers-suppliers of agricultural products;
1. Lack of liquidity for farmers;
1. Decreases in sales volumes for implements;
1. Fierce competition on the market, especially from Turkish and Polish equipment;
1. The economic uncertainty created by the covid-19 epidemic

The total revenues related to the BVC 2020 projection follow the turnover trend achieved in proportion of 55%.

The total expenses related to the projection of the BVC 2020 are realized in proportion of 65%.

The net result of 2020 is a loss in the amount of RON (2,338,925).

The total stocks are worth RON 22,103,732, an increase of 10% compared to 2019.

Trade receivables represent the amounts owed by customers related to settlements in their relations with products, goods sold and services provided on the basis of invoices.

Net trade receivables as of December 31, 2020 are in the amount of RON 5,658,228, a decrease of 43% compared to 2019 (December 31, 2019: RON 9,876,304) are considered fully performing.

Trade debts in the amount of RON 2,083,934 (December 31, 2018: RON 6,304,906) by 67% lower compared to the previous year.

Other debts in the amount of RON 1,104,351 (December 31, 2018: RON 1,216,853) by 9% lower compared to the previous year mainly include fiscal debts and debts regarding current social insurance that followed the decreasing trend of the average written number.

As of December 31, 2020, the company does not have fiscal debts and outstanding social insurance debts.

On December 31, 2020, the Company contracted an investment loan worth 420,000 euro for a period of 14 years through which a laser cutting equipment was purchased. The investment loan is guaranteed with the movable mortgage on the above mentioned property.

The net book value on December 31, 2020 is 205,268 euro.

Investment Credit	December 31, 2020	December 31, 2019
Long-term bank loans	706,983	981,035
Short term bank loans (up to 1 year)	292,548	287,135
Total loans	999,531	1,268,170

As at 31 December 2020 the Company has leasing contracts for leased property and leased equipment:

	December 31, 2020	December 31, 2019
Leasing debts between 1 – 5 years	655,600	309,919
Leasing debts below 1 year	227,412	186,693
Total leasing debts	883,012	496,612

The total provisions for risks and estimated expenses of 31st December 2020 are in amount of RON 943,641, grouped by categories and created for:

Provisions for risks and expenses	December 31, 2020	December 31, 2019
Provision benefits committed to retirement	230,518	274,847
Commissions for guarantees	76,872	59,028
Provision for the risk of return of products and merchandise	578,521	415,329
Other provisions	57,730	125,812
TOTAL	943,641	875,016

7. Information on the internal control

Internal control

For assurance of a responsible management from quality and environment point of view and control of all activities carried out in the Company and administration of associated risks we highlight the continuation of internal control development in the Company.

The assignments of fulfilment of Integrated Quality & Environment Management policies in direct connection with employees, customers and suppliers belong to the Department of Integrated Quality & Environment Management.

The specific assignments for supervision of accounting operations, especially the financial control systems and maintenance of a financial control system on the accounting transactions belong to the economic department. The internal accounting and financial control of the Company envisaged the assurance of an accounting management and the financial follow-up of activities to meet the objectives defined.

In terms of accounting regulations, the Company has in place:

the accounting policy manual;
keeping abreast with the changes of the accounting and tax legislation;
conducting specific checks on sensitive areas
identification and proper management of abnormalities;
adaptation of IT software to Company's needs;
compliance with the accounting rules;
ensuring the accuracy and completeness of accounting records;
compliance with the qualitative characteristics of the information contained in the financial statements so as to meet the needs of users.

Internal audit

Internal audit is the independent activity of objective assurance and counseling, designed to add value and improve the Company's operations, help the Company meet its objectives through a systematic and methodical approach that evaluates and improves the effectiveness of risk management, control and governance processes.

The internal audit activity is performed within Mecanica Ceahlau SA (the Company) as a distinct function and independent of the company's activities, by the internal audit department which is subordinated to the Board of Directors and the General Manager from an administrative point of view.

The assurance missions performed by the Internal Audit are of the following types: compliance audit (regularity) which aims to verify compliance with applicable laws, regulations, policies and procedures; performance audit (operational) which aims to verify the quality and adequacy of systems and procedures, critical analysis of the organizational structure, evaluation of the adequacy of methods, resources and achievement of results in relation to the established objectives and audit of the corporate governance system. which is exercised the management function for fulfilling the objectives of the organization.

The counselling missions performed by the Internal Audit within the limits of the internal audit standards and norms are of the following types: formal, planned counselling commitments materialized in a written document; respectively informal counselling commitments, routine activities such as: participation in standing committees, working groups or teams, time-limited projects, ad-hoc meetings and exchange of information and special counselling commitments or other extraordinary event or in a team designated to provide temporary support for the fulfilment of a special requirement.

The internal auditor reports to the directors, the Audit Committee and the Board of Directors on the purpose, authority, responsibility and performance of the internal audit activity in relation to the annual plan and on its compliance with the Code of Ethics and standards. Reporting includes significant aspects of risk and control, governance issues and other issues that require the attention of executive management and / or the Board of Directors.

Internal audit function: establishes, implements and maintains an annual and multi-annual audit plan for the examination and evaluation of the adequacy and efficiency of the internal control system and procedures of Mecanica Ceahlau SA; issues recommendations based on the results of the activity performed; monitors the implementation of the recommendations made and reports to the directors, the Audit Committee and the Board of Directors on the purpose, authority,

BOARID OF DTRECTO}IS'REPORT zOEO

responsibility and performance of the internal audit activity in retatic,n to the plan and on its compliance with the Code of Ethics ancl standards.

The ar:tivities carried out by the internal audit in 2O20

Based on the internal audit plan, the activities carried out in 2020 airned at: auditing the legal activity opened in 2019; compliance rruith the legal obligations of administration of the Industrial Park "ceahlau Park"; accounting for operations related to the estab ishment and payment of dividends; monitoring the progress made in implementing the internal audit recommendations; verificertion of compriance issues, at the request of the generar manager;

In addition to the activities presented, other non-audit activities were rsarried out which include: reviewing and updating the internal regulatory framework for the internal audit activity: the Internarl Audit charter and the Policy and Procedures Manual; strategic and annual planning of the internal audit activity; reporting on the internal audit activity, reviewtng and updating thr-, internal regulatory framework of the internal audit activity; administrative acuvities.

The internal auditors repoft directly to the Audit committee and the Board of Directors its; findings and proposals regarding the significant improvement of the internal controls. Based on the conclusions and recommendations forrnulated by the internal audit, the executive manaqement orderecl the necessary measures to manage the identified risks.

The obJectives and purpose of each internal audit mission, the opinion of the internal auditors, the conclusions, recommendations and the plan of measures for implementing the recommendations proposed or applied during the audit activity were included in the internal audit reports thar were presented to the Audit committee and the Board Administration.

The internal auditors monitor the progress made in implementing the rec,cmmendations and report to the executive management on comprliance with the deadlines set for lmplementation. Also, the internal auditors follow the establishment of measures by the auditeo structures to complete the implemr:ntation of the recommendations.

No situations have been identified in which the management decides not to take any measures to reduce the risks that are considered unacceptable for the company.

Appendix no. 1

A. ELEMENTS OF FINANCIAL STATEMENT

I. Assets representing 10% of total assets

	ly ic l in d ic fr f in ia l An t to a a a rs om an c i io t ta te t p os n s m en	2 0 1 7	2 0 1 8	2 0 1 9	2 0 2 0	%
	O S S S T T A L A E T	6 4, 1 2 4, 9 6 6	8 6 5, 1 7 4, 7 2	0, 9 0, 8 7 5 7 1	9 5 4, 5 2 1, 1 1
1.	ds d bu l d La i ing n a n s	1 6, 5 4 5, 6 8 2	1 3, 2 0 1, 7 8 7	1 2, 4 2 1, 1 9 6	1 3, 0 2 2, 7 7 1	2 4 %
2.	In to ve n ry	1 5, 9 0 8, 5 9 8	1 8, 4 7 6, 0 7 9	2 0, 1 6 2, 1 4 6	2 2, 1 0 3, 7 3 2	4 1 %
3.	l r b les Co ia iva m m er c ec e	1 4, 5 4 5, 9 5 1	1 1, 4 1 7, 2 2 1	9, 8 7 6, 3 0 4	5, 6 5 8, 2 2 8	1 0 %

II. Liabilities which exceed 10% of total equity and debts

	ly ic l in d ic fr f in ia l An t to a a a rs om an c i io t ta te t p os n s m en	2 0 1 7	2 0 1 8	2 0 1 9	2 0 2 0	d in % T O T A L P A S I V
	T O T A L E Q U I T Y A N D D E B T S	6 4, 1 2 4, 9 6 6	6 5, 4 7 1, 7 8 2	7 0, 9 5 0, 7 1 8	5 4, 5 2 1, 1 9 1
1.	lua Re ion Re t va se es rv	8, 9 3 7, 2 0 4	1 4, 7 6 1, 7 2 5	6, 9 8 3, 3 9 5	7, 4 4 0, 2 8 0	1 4 %
2.	Su bs i be d d i d- i l ta cr an p a up c ap	2 3, 9 9 0, 8 4 6	2 3, 9 9 0, 8 4 6	2 3, 9 9 0, 8 4 6	2 3, 9 9 0, 8 4 6	4 4 %
3.	Re ine d ing d he ta t ea rn s a n o es er ve s r r	1 4, 9 3 6, 1 1 6	1 5, 2 3 7, 2 2 7	2 9, 5 0 2, 2 1 8	1 6, 3 6 9, 6 1 8	3 0 %

B. GLOBAL RESULT

	ly ic l in d ic fr lo ba l r l An t to t a a a rs om g es u ta te t s m en	2 0 1 7	2 0 1 8	2 0 1 9	2 0 2 0	%
	G O S S O R T U R N V E R	2 9 8, 0 8 4 4, 4	3 3, 2 9 1 7, 5 4	3 0, 2 2 8, 1 7 1	9, 3 6 1 4 5, 5 4
1.	he f he ds l d T t o t c os g oo s o	2 2, 0 6 7, 8 6 5	1 7, 3 7 0, 7 8 5	1 8, 2 7 9, 3 0 5	1 1, 2 3 1, 6 5 3	5 8 %
2.	Ex i h lar ies i bu io d he t tr t t p en se s w sa co n ns a n o r , im i la d te ex p en se as s s	8, 8 3 0, 6 1 5	0, 2 9 7, 5 4 1	6, 8 6 9, 6 6 5	6, 6 2 6 4 4, 1	3 3 %

CASH FLOW STATEMENT

Appendix no. 2

r f isc al nd ed of be Fo 3 1s t D ye ar e as ec em r	20 17	20 18	20 19	20 20
Re ip fro d o the r d eb ts sto to ce m cu me rs an rs	48 19 1, 43 7 ,	40 01 9, 65 1 ,	35 92 2, 60 5 ,	29 24 4, 88 0 ,
lie loy bu dg d Pa ts to sta te et ym en pp em p ee an su rs, s, nd dit su ry cre ors	( 43 70 6, 10 8) ,	( 26 8, 73 7) 44 ,	( 34 40 1) 54 1, ,	( 32 18 38 9) 5, ,
sh fr loi tio ivi tie Ca ta ct om ex p n a s	48 4, 5, 32 9	( 08 6) 4, 24 9,	1, 38 1, 20 4	( 2, 94 0, 50 9)
Pro fit id tax pa	( 41 0, 95 3)	( 34 7, 74 4)	( 3, 27 2, 7) 71	( 21 2, 20 6)
h f ion Ne t c at as ro m op er s	07 37 6 4, 4,	( 59 6, 83 0) 4,	( 3) 1, 89 1, 51	( 3, 15 2, 71 5)
Ca sh fl fr in st nt ow om ve me s
lle d Int sts cte ere co	8, 32 2	8, 19 9	63 04 3 ,	42 94 4, 7
de f f d u Re tio nit mp n o un s	-	2, 87 7, 43 2	-	-
ed s f th ale of ibl Pro ta ts ce rom e s ng e a sse	-	15 1, 22 7	21 13 0, 78 9 ,	-
Pu rch f t ibl ts as e o an g e a sse	( 3, 67 9, 31 8)	( 35 1, 66 7)	( 64 0, 55 4)	( 2) 18 4, 34
Sh in ort -te stm ts rm ve en	( 1, 00 0, 00 0)	1, 00 0, 00 0	-	-
Ne h f inv t c tm ts as ro m es en	( 4, 67 0, 99 6)	3, 68 5, 19 1	20 3, 27 8 55 ,	24 0, 60 5
Ca sh fl fr fu nd ing tiv iti ow om ac es
Div ide nd aid s p	( 1, 12 6, 5) 45	( 96 )	( ) 10	( 10 56 8, 50 5) ,
Co lle s f lo lo cti -te on rom ng rm an s	91 78 9 1, 7,	-	-	-
lle s f sh lo Co cti ort -te on rom rm an s	-	-	1, 23 2, 98 6	96 3, 0 14
bu of loa Re im nt rse me ns	( 7) 15 8, 54	( 2) 28 0, 05	( 1, 51 5, 11 8)	( 26 61 2) 1, 5,
f f ial le de bts Pa t o ina ing ym en nc as	( 4) 15 7, 45	( 5) 22 3, 74	( 21 7, 35 4)	( 4) 34 3, 63
Int sts id ere pa	( 31 60 3) ,	( 42 00 2) ,	( 36 86 5) ,	( 4) 30 49 ,
h (u d in ) fu nd ing tiv iti Ne t c as se ac es	44 3, 73 0	( 89 5) 54 5,	( 53 6, 36 1)	( 24 10 5) 11 5, ,
t i ( de ) o f c h a nd sh iva len Ne t nc re as e cr ea se as ca -e qu	( 0) 15 2, 89	( 4) 1, 45 7, 53	18 12 5, 40 4 ,	( 5) 14 15 7, 21 ,
f 1 Ca sh d c h e iva len st Ja an as qu ce s a s o nu ary	5, 00 3, 00 4	4, 81 9, 73 9	3, 33 2, 29 3	21 43 3, 25 9 ,
Eff of ch ria tio h f low ts te ec ex an ge ra va n o n c as	( 30 37 5) ,	( 29 91 2) ,	( 24 43 8) ,	( 33 74 9) ,
sh nd sh uiv ale of be Ca 3 1s t D a ca eq nc es as ec em r	4, 81 9, 73 9	3, 33 2, 29 3	21 43 3, 25 9 ,	24 2, 29 7, 5

Appendix No. 3

REALIZATION DEGREE OF INCOME AND EXPENSES BUDGET 2020

I N D I C A T O R S	B U D G E T 2 0 2 0 ( R O N )	Re l ize d 2 0 2 0 a ( R O N )	Ac h ie t ve m en De B V C g re e ( % )
0	1	2	3
T he tu g ro ss rn ov er	3 6, 2 9 4, 9 0 0	1 9, 4 3 5, 6 5 4	5 4 %
Co iss ion d de ler nt to m m s g ra e a s	( 3 8 0 0 0 ) 1, 1,	( 6 2, 0 9 ) 1 7	% 4 4
1. Ne t t ur no ve r	3 4, 9 1 3, 9 0 0	8, 8 1 2 3, 5 5 7	5 4 %
he 2. 1 Ot at ing inc r o p er om e	4 0 8, 0 0 0	3 8 7, 1 8 9	9 5 %
in l, f w h ic h: 3. Op at to ta er g ex p en se s - o	( 3 2, 7 6 1, 4 9 2	( ) 2 1, 2 5 1, 7 7 1	6 5 %
) f s l d ds Co st a o o g oo	( ) 1 9, 6 2 4, 0 9 1	( ) 1 1, 2 3 1, 6 5 3	5 7 %
b ) Ex it h i l it ies ut p en se w	( 4 0 5, 4 1 1 )	( 3 8 1, 3 6 9 )	9 4 %
) A dm in ist ive d he ing t ot at c ra e xp en se s a n r o p er e xp en se s	( 2, 9 5 7, 1 3 6 )	( 2, 5 8 8, 6 5 0 )	8 8 %
d ) Ex it h lar ies i bu ion d he im i lar nt t ot p en se s w sa co s a n r s e xp en se s r ,	( 7, 8 3 0, 1 1 6 )	( 6, 4 6 4, 1 2 6 )	8 3 %
) d f v lue d b le d b le A j tm t o ing ta i int i ts e us en a re g ar ng an an g as se	( ) 1, 6 3 0, 1 2 3	( ) 1, 5 0 9, 0 1 7	9 3 %
f ) f / los fro lua Pr it t ion o s m re va	-	( ) 5 0, 9 5 2	0 %
f fro f c ) Pr it / los lue d j d is ion tm ts nt et g o s m va a us en o ur re a ss s a n p ro v s	( 3 1 4, 6 1 5 )	9 7 3, 9 9 6	-
4. Op in lt at er g re su	2, 5 6 0, 4 0 8	( 2. 0 4 1, 0 2 5 )	-
5. F ina ia l inc l - t ot nc om e a	1 6 0, 0 0 0	2 8 2, 0 3 8	1 7 6 %
6. F ina ia l e l to ta nc xp en se s -	( 3 5 0, 0 0 0 )	( 2 7 3, 6 8 8 )	7 8 %
in ia l r lt 7. F an es c u	( 9 0, 0 0 0 ) 1	8, 3 0 5	-
8. l in To ta co m e	3 8 9 0 5, 4 1, 1	9, 9 2, 8 1 4 7 5	% 5 5
9. l e To ta xp en se s	( 3 3, 9 2 ) 1 1 1, 4	( 2 2 9 ) 1, 5 5, 4 5	6 % 5
f it be fo io 1 0. Pr ta t o re xa n	2, 3 7 0, 4 0 9	( ) 2, 0 3 2, 6 7 5	-
f 1 1. Pr it ta o x	( ) 3 7 0, 0 0 0	( ) 3 0 6, 2 5 0	8 3 %
lt 1 2. Ne t r es u	2, 0 0 0, 4 0 9	( ) 2, 3 3 8, 9 2 5	-

Appendix No. 4

STATUS OF COMPLIANCE WITH THE NEW CORPORATE GOVERNANCE CODE OF BVB

S f c l ia i h he is io f he f ta tu t t t te s o om p nc e p ro ns o n ew c or p or a g ov er na nc e o w v B V B	l ia Co m p nc e	No n l ia co m p nc e ia l t or p ar l ia co m p nc e	Re fo as on r n on l ia co m p nc e
io i b i l i ie Se t A Re t c n sp on s s -
l l he ha l l ha l d la lu d he ds ' A. 1. A t ies in te Bo t io inc ing t Bo c om p an s ve a n rn a ar re g u n ar f r fe fu f / i b i l i ies d he ke ion he Co d ha te t t t t t t rm s o e re nc e re sp on s a n nc s o m p an an y y l ies he he Ge l Pr inc ip les f h is Se ion t t t t ap p am on g o rs ne ra o c , ,	Y E S
A. 2. T he Bo d 's la ion ha l l inc lu de is io fo ing he f l ic t t ts ar re g u s p ro v ns r m an ag c on on in te t re s		P A R T I A L L Y	he du lu de d T Pr is t inc oc e re no he d 's la in t Bo Re t ion ar g u fo ly h Me ing i t as ur es r c om p w fo C G C i l l l low w De d l ine 3 1. 1 2. 2 0 2 1 a :
3. he d f ha l l ha lea f be A. T Bo D ire to t t ive ar o c rs s ve a s m em rs	O N		S h 2 2 0 ta t ing i t 4. 1 1. 1 7, r w he d f t Bo D ire to is ar o c rs d f be 3 co m p os e o m em rs
A. 4. T he j i f he Bo d f D ire ha l l n ho l d ive i ion In he ty t to t t t t m a or o ar o c rs s o an e xe cu p os f Pr iu las ies lea ive be f he Bo d f t t tw t t ca se o em m c s c om p an a s o no n- ex ec u m em rs o ar o , D ire ho l d be in de de Ea h in de de Bo d be ha l l f i le to t. t c rs s u p en n c p en n ar m em r s a h he he lec d lec d, l l a he h ta te t u is ina t io t te te is s m en p on no m n, w r e or re -e a s w e s w ne ve r ha d he lem ba d h h he / he de ha ta tu in ica t ing t in ts ic i t t s s c ng es m a e en se on w s c on s rs , he / he de de fo he f v f h / he ha d dg is in t t in ts iew is te j t. s p en n rm p o o o r c ra c r a n u m en	Y E S
A. 5. O he fe ion l r la ive ly d b l ig io f a Bo d t t t e ts t r p ro ss a e p er m an en ng ag em en an o a ns o ar be inc lu d ing ive d ive i ion in he Bo d f n f i t t t t t m em r, e xe cu a n no n- ex ec u p os s ar o on -p ro d be d los d he ha ho l de d be fo ies ins t i tu t io t isc to t inv to co m p an a n ns m us e s re rs an es rs re d du h / he da ina t ion ing is te no m a n r r m an	Y E S

f c l ia i h he is io f he f S ta tu t t t te s o om p nc e w p ro v ns o n ew c or p or a g ov er na nc e o B V B	Co l ia e m p nc	No l ia n- co m p nc e ia l t or p ar l ia co m p nc e	fo Re as on r n on l ia co m p nc e
6. be f he d ha l l p he d in fo io la d A. An t Bo t t Bo t te to y m em r o ar s re se n ar rm a n re a ny la ha ho l de ha d ly d ly, ha ha t io to t t o ire t in ire t t ing t re n a s re r wn s, c or c s re s re p re se n m or e n f he h 5 % t t ing ig ts o v o r		O N	ly, k do Cu t is rre n w or ne o n ha he la f ing t t ion c ng re g u o he d f Bo D ire t to ar o c rs , h lso inc lu de h is to t su c as a b l ig ion f he be t t o a o m em rs d l 3 2. 2 0 2 De ine 1. 1 1 a :
he ha l l de f he d, b le de A. 7. T Co ig te ta t Bo i to i m p an y s s na a s ec re ry o ar re sp on s p ro v he d. Bo t to t su p p or ar	Y E S
A. 8. T he f c i l l in fo he he lua ion f he ta te t o te t t t s m en or p or a g ov er na nc e rm r a ny e va o w w Bo d du d, le d by he Pr i de by he ina io i d, i f te t t o t t t te ar wa s c on c es n r n om n co m m e an f f l l s he ke d bs ha he Co irm t ive i ize t t c T a a w um m ar y m ea su re s a n su eq ue n ng es m p an y , ha l l ha l / de l fo lua he d he b d icy i ine t ing t Bo is ing t j t, i te ia s ve a p o g u r e va ar co m p r o ec cr r an he fre f he lua t t t ion q ue nc y o e va p ro ce ss		O N	he l l ke T Co i ta m p an y w ly h i to t m ea su re s c om p w f he is io C G C. t p ro ns o v De d l ine 3 1. 1 2. 2 0 2 1 a :
A. 9. T he ha l l inc lu de in fo io la d he te ta te t s t te to t c or p or a g ov er na nc e s m en rm a n re be f m ing f he Bo d d he i in he las ic ip io f t t t t te t t y t t nu m r o ee s o an om m es ea p n o ar c r, ar a he ( bs ) d f he d d he t in t t o t Bo t i t te m an ag er s p er so n, o r a en an a re p or ar an c om m es la d he te to t ir t iv i t ies re ac	Y E S
he ha l l lu de fo la d he A. 1 0. T te ta te t s inc in t ion te to t t c or p or a g ov er na nc e s m en rm a re e xa c be f de de be he d. in t m in t Bo nu m r o p en n em rs ar	S Y E
A. 1 1. T he Bo d f c ies fro Pr iu Ca ha fo d ina ion te to t ar o om p an m em m g or y s un a no m i d f n ive be ho i l l c he du f t te t t t co m m e co m p os e o on -e xe cu m em rs w w ar ry o u p ro ce re o , ina ion f n be in he d d i l l m ke da ion he d. t t Bo t to t Bo no m o ew m em rs ar an w a re co m m en s ar he f m be f n be de de T j i ty ina t ion i t te t in t. m a or o em rs o om c om m e m us p en n	he T Co m p an y is in da d S ta n r te ca g or y.

f c l ia i h he is io f he S ta tu t t t te s o om p nc e w p ro v ns o n ew c or p or a g ov er na nc e f B V B o	Co l ia m p nc e	No l ia n- co m p nc e ia l t or p ar l ia co m p nc e	fo Re as on r n on l ia co m p nc e
Se io B In l r is k d in l c l s t te t a te tr te c n rn a m an ag em en n rn a on o s m y –
he d ha l l s d h h lea be B. 1. T Bo t u i t ing i t te in ic t t o ar s e p an a u c om m e w a s ne m em r ha l l be de de he f in t n t ive In t Pr iu te s a n p en n on -e xe cu m an ag er c as e o em m ca g or y ies he d i ing i ha l l c is f a lea hr be d he t t t te t o t t t t co m p an om m e on ee m em an a u c s s s rs , j i f he d i ing i be ha l l be in de de ty t t t te t. m a or o a u c om m e m em rs s p en n	Y E S
he de f he d ha l l be de de B. 2. T i t o t i t ing i t te t ive in t p re s n a u c om m e s a n on -e xe cu p en n be m em r.	Y E S
B. 3. Am i i b i l i ies he d i ing i ha l l c du l ts t t t t te t a on g re sp on s a c om m e s on c n an nu a u , f he in l c l s t o t te tro te as se ss m en rn a on s m y	S Y E
he ha l l fo he f fe d le f he B. 4. T t s t t ive te t a ss es sm en cu s o n e c ne ss a n co m p ne ss o l a d fu he de f he k d l c l in te i t t io t t is t a in te tro rn a u nc n, a q ua cy o r m an ag em en n rn a on d by he d 's d l d f fe ts te t Bo i t ing i t te t im ine t ive re p or p re se n ar au c om m e, e ss a n e c ne ss h h h he de ls h he de f kn i t ic t t ive t i t t ic ien ies w w e xe cu m an ag em en a w c o r w ea es se s f f r i de i ie d du ing in l c l a d he io lev he t te tro t ta t t r ts to t n rn a on n p re se n n o e an ep or r Bo d. ar	S Y E
he d ha l l a he f l f la d he B. 5. T i t ing i t te t ic ts in te t r te to t a u c om m e s ss es s c on o re s e f he d f d h he f f l d tra t io t Co i ts iv is ion i t t i ia te t ies ns ac ns o m p an y an o s w a p ar	Y E S
he d ha l l a he f fe f he l c l B. 6. T i ing i ive in t t te t t t te tro a c om m e s ss es s e c ne ss o rn a on u f d he is k te t t s te sy s m an o m an ag em en s m r y	S Y E
he d i ing i ha l l m i he im lem ion f he l ly B. 7. T t t te to t ta t t a u c om m e s on r p en o g en er a d in l a d i in da ds he d i ing i ha l l r ive d te te t ta T t t te ac ce p rn a u g s n r a u c om m e s ec e a n he f he l a d t ts t in te i t ing te as se ss re p or o rn a u am	S Y E

S f c l ia i h he is io f he ta tu t t t te s o om p nc e p ro ns o n ew c or p or a g ov er na nc e w v f B V B o	l ia Co m p nc e	l ia No n- co m p nc e ia l t or p ar l ia co m p nc e	Re fo as on r n on l ia co m p nc e
fe B. 8. W he he Co de iew in i ia d by he d i ing t to ts t te t t ne ve re rs re p or or re s a r v u i he be fo l low d by io d ic ( lea l ba is ), t te t t ts t t o co m m e, m e p er re p or n an nu or y us a s a s d- ho ha be la fo de d he d. t t m t te to t Bo a c us r rw ar ar	Y E S
9. f he ha ho l de l l be d l m f B. No t i tre te in ia in te ne o s re rs w a a sp ec an ne r, rm s o d lu de d by he h he ha ho l de d tra t io ts t Co i t t ns ac ns a n ag re em en co nc m p an y w s re rs an he ir ia t te as so c s.	Y E S
B. 1 0. T he Bo d ha l l a do l icy he by ha f Co 's t a to t t a ar s p p o w re e ns ur e ny o m p an y io i h f he ies i h h ic h i ha los ies ha ing lue tra t t t t t t ns ac ns w an y o c om p an w w s c e v a v a , h he ha % f he f he Co ( d he la f l ig t 5 t t a ts t ing to t te t ina ia r n o n e ss e o m p an y ac co r s nc ), ha l l be d by he d bs lso f he t t Bo t to in io t re p or s a p p ro ve ar su eq ue n a c om p u ry o p n o d i t ing i t te au c om m e.	S Y E
B 1 1. T he in l a d i ha l l be du d by l ly d iv is ion ( he te ts te tru tu te t rn a s c on c a s c ra se p ar a u in l a d i ing de ), f he Co by h ir ing h ir d in de de te t tm t t t t rn a u p ar en o m p an y or a p en n t i ty en	S Y E
de h he fu f he l a d B. 1 2. In to iev ing t in t io t in te i t ing o r r e ns ur e ac m a nc ns o rn a u de h he d hr h he d tm t, t is t r t to t Bo t t i t ing i t te Fo p ar en m us ep or ar ou g a u c om m e. r f dm in is ive d i h in he b l ig io he i d tra t t t t t t to to a re as on s a n o a ns o m an ag em en m on r a n w du is ks h is d ire ly he l m t t r t t to t re ce r m us ep or c g en er a an ag er ,	S Y E

f c l ia i h he is io f he S ta tu t t t te s o om p nc e w p ro v ns o n ew c or p or a g ov er na nc e f B V B o	Co l ia m p nc e	No l ia n- co m p nc e ia l t or p ar l ia co m p nc e	fo Re as on r n on l ia co m p nc e
io d in d iv io Se t C Pr t t c n op er re w ar g an m o a n –
C. 1. T he Co ha l l p b l is h i in he ion l icy d ts te t p t t m p an s on rn e ag e re m un er a p o a n y u inc lu de in he l r la d he im lem ion f he t t a ta te t r te to t ta t t a nn ua ep or s m en e p en o io l icy in he ly d l p io d. t t re m un er a n p o a na ze an nu a er
he l ha l l be fo la d l low he ha ho l de T t io icy te in to t re m un er a n p o s rm u a m an ne r a s re rs de d he les d ha he ba f he f to ta t inc ip ts t t a t t t ion u n rs n p r a n ar g um en re se o re m un er a o he d be d f he l m l l a he be f he t Bo t t t ar m em rs an o g en er a an ag er as w e s m em rs o , d ire in he du l is T h is ha l l de i be he he to te t t s te t to t c ra a s m s sc m an ne m an ag e y r r d he de is io k ing la d ion de i l he t te to t to ta t ts p ro ce n n m re re m un er om p on en ss a c a a c , f he io f he l lec ive ( h l bo t t t t t o re m un er a n o c o m an ag em en su c as w ag es an nu a nu se s, , lon la d he ha lue k d be f d te inc t ive te to t in in i ts io g rm en s re s re v a ne p en s ns a n , , he ) d de be he les d ha lay he ba t to i t inc ip t io t t t is o rs an sc r s co p e, p r a n as su m p ns o n s f e h ( lu d he l p fo inc ing i ia in ing t t te ta to o ac co m p on en g en er a er rm an ce c p er a ny r r f v fy k in d ia b le ion ). Mo he ion l icy i he t t t t s t o ar re m un er a re ov er re m un er a p o m us p ec , du ion f he ive d ire d he dv d ice fo ion tra t t t t to t t t co n o e xe n an ce no es c ra cu c r a a r c sa d he l l a he l c f r k ta te in t tra t, t tu t io in ing s c on c as w e s e ve n a om p en sa n ca se o ev o ho i t t j t c w u us au se	Y E S
he ha l l p he lem f he T t o t io t t im ta t io t t ion re p or n re m un er a n s re se n p en n o re m un er a f l icy du ing he iew d io d he t t p o re e p er o ea r v y r.
An ha f e ing in he io l icy ha l l be b l is he d in t t c ng e o ss en ce o cc re m un er a n p o s p y ur r u du im he Co 's in t t te t p e e on m p an y rn e ag e.

S f c l ia i h he is io f he ta tu t t t te s o om p nc e w p ro v ns o n ew c or p or a g ov er na nc e f B V B o	l ia Co m p nc e	l ia No n- co m p nc e ia l t or p ar l ia co m p nc e	fo Re as on r n on l ia co m p nc e
Se io D A d d in lu hr h he la io i h he in t t t t t t to c n g va e ou g re ns w ve s rs –
he ha l l s la f f d he b l D. 1. T Co t u In to Re t io O ice in ica t ing to t ic m p an y s e p an ve s rs ns p u , lar he / t t a g e p er so n p er so ns
he l u de he fo d by he leg l p iza ion i Be i in io ire is ion t t t. t t t or o rg an a n s s rm a n re q a ro s, u v he Co ha l l inc lu de i bp ion de d ica d he la ion i h t ts t te to t t t m p an s o n e ag e a se c re s w y w he inv in Ro ia d in En l is h, in ing l l he lev in fo io f t to ta t t t es rs m an n an g c on a re an rm a n o , in fo inv inc lu d ing te t to re s r es rs : ,
he la les f du la d D. 1. 1. T in te t io t ic inc t ion te m a co rp or a re g u ns : a r o or p or a p ro ce re s re , he l m f he ha ho l de to t t ing t g en er a ee s o s re rs ;
fe f m f m f D. 1. 2. T he io l C Vs be bo d ies he Co t t p ro ss na o em rs o an ag em en o m p an y, he fe io l c i f he t tm ts t o r p ro ss na om m en o
Bo d be inc lu d ing ive d ive i io in he Bo d f t t t t ar m em rs e xe cu a n no n- ex ec u p os ns ar o , f c f D ire to ies i t ins t i tu t ion c rs o om p an o r n on -p ro s;	Y E S
d d ( ly, b l, l ) D. 1. 3. Cu t r ts io ic ts te i-a rre n ep or an p er re p or q ua r r nn ua an nu a ;
fo la d he l m f he ha ho l de D. 1. 4. In io ing t te to t t t rm a n re g en er a ee s o s re rs ;
D. 1. 5. In fo io la d t te to te ts rm a n re c or p or a e ve n ;
6. d da f a b le i de lev D. 1. Na ta t ta to t, t m es a n co n c o p er so n a p ro v on re q ue s re an , fo in t ion rm a ;
he 's ( fo he D. 1. 7. T Co ta t ion ta t io t inv to m p an y p re se n s e. g. p re se n ns r es rs , f q f ion ly l ), he ina ia l s ( ly, b i ta t te ts tc t ta te ts te p re se n o ua re su e nc m en q ua r r r r l, l ), d i ing d l r t ts ts an nu a an nu a au re p or an an nu a ep or

S f c l ia i h he is io f he ta tu t t t te s o om p nc e w p ro v ns o n ew c or p or a g ov er na nc e f B V B o	l ia Co m p nc e	l ia No n- co m p nc e ia l t or p ar l ia co m p nc e	fo Re as on r n on l ia co m p nc e
D. 2. T he Co i l l ha l icy fo ing l d iv i de ds he t a t m p an y w ve a p o r p ay o u nn ua n o r o r be f he ha ho l de he les f he l p he i ts to t T inc ip t t to t ne s re rs p r o a nn ua ay m en ha ho l de l l be b l he d he 's i is t Co in te t p s re rs w p u on m p an y rn e ag e.	S Y E
he ha l l a do fo l hs d ha D. 3. T Co t a t ing icy tw i t ta ing t t i t is m p an y s p re ca s p o no n , fo b l is he d T he ing l icy i l l be b l is he d he Co 's in t. t t te t p or n o re ca s p o p on m p an rn e u w u y p ag e.	Y E S
he les la d he l m f he ha ho l de ha l l n l he D. 4. T te to t t ing t t im i t t ru re g en er a ee s o s re rs s o f he ha ho l de he l m d he h t ic ip t io t in t t ing is ing t ir ig ts p ar a n o s re rs g en er a ee s a n ex er c r d f l l e fo he l he bs ha ho l de ' Mo i ica t ion i te in t ies t a t t t s s w n r rc e e ar s u eq ue n re rs ing t m ee	Y E S
he l a d l l w he l m f he ha ho l de D. 5. T te i to i i tn t t ing t e x rn a u rs w es s g en er a ee o s re rs he he ir d in h in t ts te t n re p or ar e p re se n su c m ee g s. w		O N	T he Co i l l ke ta m p an y w ly i h to t m ea su re s c om p w he f C G C. t is io p ro v ns o
he d l l p he l g l m f he ha ho l de D. 6. T Bo i t to t t ing t ar w re se n a nn ua en er a ee o s re rs a f f ho he in l c l a d ig i ica is ks t a t o t te tro t r t s te s ss es sm en rn a on n s n n m an ag em en s m s, r y l l a in ion la d bm i d fo lu ion he l te to t te t te t to t as e s o p s re m a rs su es o g en er a w r r ing t m ee	S Y E
l l f l a ly he l D. 7. An ia is t, ta t, t o ina ia t m i tn t y sp ec co ns u n ex p er r nc na s ay w es s g en er a f he ha ho l de ba d fro he d. d d t ing t ior inv i ta t ion t Bo Ac i te m ee o s re rs se on p r m ar cr e f j l is lso ic ip in he l m ing he ha ho l de ts t te t t t t ou rn a m ay a p ar a g en er a ee o s re rs ex ce p , fo he he he Bo d Pr i de de i de d i f fe ly t t t t c as e n ar es n c s re n r w	S Y E

S f c l ia i h he is io f he ta tu t t t te s o om p nc e p ro ns o n ew c or p or a g ov er na nc e w v f B V B o	l ia Co m p nc e	l ia No n- co m p nc e ia l t or p ar l ia co m p nc e	Re fo as on r n on l ia co m p nc e
fo D. 8. T he ly d he b i-a l r i l l inc lu de in ion bo h in te t ts t t q ua an nn ua ep or rm a r r w Ro ian d in En l is h, la d he ke fa ha in f lue he lev l o f s les te to t to t t t m an a n g re c rs nc e e a y , f he io l p f i he f i d he lev in d ica bo h fro t t t, t t p t a t t to t o o p er a na ro n e ro n o r r e an rs m on e , he d fro he te to t to t q ua r r a no r a n m on e y ea r a no r.	Y E S
l l o lea / fe h D. 9. On Co i ize t t tw t ing t in i t e m p an y w rg an a s o m ee s co n re nc e m ee g s w ly d he fo d h l l inv T in io ion i ts to t te an a s an es rs ev er ea rm a n p re se n on s uc oc ca s s w y y r. f be b l is he d in he inv la io io he Co 's in he t to t t t te t p t p es rs re n se c n o m p an rn e ag e on u y da f m ing / fe ing te t t o ee co n re nc e m ee	S Y E
0. Co fo f a d l l e D. 1 In ts iou t is t ic tu ion c as e a m p an y su p p or va r s rm s o r an cu ra xp re ss , du l o f d de he ts t iv i t ies t io ien t i ic t iv i t ies i t ir im t o sp or ac e ca na r s c ac a n co ns rs p ac ve r , he fe d he f he f in ing i ive Co i t t tu t t t t t o ts no va a re a n c om p e ne ss o m p an as p ar y de lop iss io d i i l l p b l is h i l icy la d i iv i in t m tra te t w ts te to ts t ty ve m en n an s g p o re a c y, u h f ie l d. su c	No t l ica b le ap p

MECANICA CEAHLAU S.A.

FINANCIAL STATEMENTS

For the financial year ended on December 31, 2020

DRAFTED IN COMPLIANCE WITH ORDER 2844 FROM 2016 FOR APPROVAL OF THE ACCOUNTING REGULATIONS ACCORDING TO THE INTERNATIONAL FINANCIAL REPORTING STANDARDS

STATEMENT OF FINANCIAL POSITION	2 – 3
STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME	4 – 5
STATEMENT OF CHANGES IN EQUITY	6 -7
STATEMENT OF CASH FLOWS	8
NOTES TO THE FINANCIAL STATEMENTS	9 – 51

MECANICA CEAHLAU S.A. STATEMENT OF FINANCIAL POSITION FOR THE FINANCIAL YEAR ENDED ON DECEMBER 31, 2020

RON	Note	December 31, 2020	December 31, 2019
Assets
Fixed assets
Land and land arrangements Constructions Technical installations and means of transport Other tangible assets Tangible assets in progress Tangible assets	13	7,157,066 5,865,705 3,732,462 143,375 68,180 16,966,788	6,818,853 5,602,343 4,388,032 134,553 444,245 17,388,026
Intangible assets
Other intangible assets		55,130	86,791
Concessions, patents, licenses, trademarks, rights and similar assets		4,825	7,583
Intangible assets	14	59,955	94.374
Investment property Assets representing rights of use of support	15	487,280	413,550
assets in leasing contracts	13	949,931	577,124
Total fixed assets		18,463,954	18,473,074
Current assets Assets classified as held for sale Inventories Trade receivables Other receivables Prepayments Financial assets at fair value through profit or loss Cash and cash equivalents	16 17 18 19 20 20	345,510 22,103,732 5,658,228 405,092 40,529 261,851 7,242,295	387,207 20,162,146 9,876,304 308,184 56,685 253,859 21,433,259
Total current assets		36,057,237	52,477,644
TOTAL ASSETS		54,521,191	70,950,718
Equities Share Capital Legal reserves Revaluation reserve Retained earnings and other reserve	21a 21c 21b	23,990,846 2,804,874 7,440,280 13,564,744	23,990,846 2,804,874 6,983,395 26,697,344
Total equity		47,800,744	60,476,459

MECAITIICA CEAHLAU S.A. STATEMENT OF FINANCIAL POSITION FOR TltE FINANCIAL YEAR ENDED ON DECEI4BER 31, ²⁰²⁰

	Nota	December 31, ZZOZO	December 31, ZO]16
Liabilities
Long-term liabilities Long-term bank loans Liabilities from leasing contracts Provision for pensions Liabilitiels regarding deferred profit tax	22 23 24 L2	70e,,983 655;,600 2:i0,518 7ctt,977 _	981,035 309,919 274,947 3t2J02
Total lclng-term liabilities		z,2glgJ'o7g	l,g7g,5o3
Currenlt liabilities
Short-terrm bank loans Liabilitiers from leasing contracts Commerclal debts Other dr-'bts	22 23 25 26	292,548 227,412 2.,093,934 1,r04,35t	287,t35 rdo,o9J 6,304,906
Provisions for risk and expenses	24	773,724	7,276,853 600,169
Total current liabilities		4,421L369	8,595,756
Total liilbilities		6,721rJ447	LO,474,259
Total equity and liabilities		54t5211,L9L	70,950,7'.8

The finerncial statements were authorized for approval 72, 2027 and were signed on its behalf by: by the Board of Directors on March

Molesag Ion Sorin, General Manager	Chirila Oana, Financial Managerr
	dr\ 'l

MECANICA CEAHLAU S.A. STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED ON DECEMBER 31, 2020

	Note	December 31, 2020	December 31, 2019
RON Revenue	5	18,823,557	29,500,719
Costs of materials and consumables		(11,231,653)	(18,279,305)
		7,591,904	11,221,414
Other operational revenues	6	387,189	426,762
Gain/loss from the sale of the assets held for sale		-	11,336,548
Expenses with utilities		(381,369)	(445,177)
Expenses with salaries and other personnel
expenses	7	(6,464,126)	(6,869,566)
Other administrative expenses	8	(2,142,951)	(2,465,234)
Other operational expenses	9	(445,699)	(614,073)
Expenses with amortization and impairment of
assets and leasing assets Gains / losses from revaluation of assets held for	13,14	(1,509,017)	(1,503,466)
sale		(33,561)	-
Gain/ loss from assets sales		-	(3,658)
Gain/ loss from revaluation of investment property		73,730	(8,293)
Gain/loss from revaluation of tangible assets		(91,121)	2,173
Adjustment of the value of current assets	17	1,042,620	(2,640,630)
Gain/Loss of provisions for risks and expenses	25	(68,624)	(299,861)
Total operational expenses		(10,020,118)	(14,847,785)
Net result – profit / (loss)		(2,041,025)	8,136,939
Interest incomes		274,047	225,791
Gains from revaluation of financial assets at fair
value through profit or loss		7,991	7,407
Interest expense and discounts granted		(174,215)	(169,106)
Losses from exchange rate differences		(99,473)	(107,225)
Financial net result	10	8,350	(43,133)
Result before tax		(2,032,675)	8,093,806

Revenue/ (expenses) with current and deferred income tax	11	(306,250)	(1,611,645)
Net profit /(loss) of period		(2,338,925)	6,482,161

MECANICA CEAHLAU S.A. STATEMENT OF PROFIT AND LOSS AND OTHER COMPREHENSIVE INCOME FOR THE FINANCIAL YEAR ENDED ON DECEMBER 31, 2O2O

Other comprehensive income
Deferred tax Revaluation of property, plant and equipment	(8'7,026) Trppee	4,500
Other comprehensive income
Total comprehensive income for the period
Attributable profit/ (loss)
Number of shares
Result per base share	(0.0097)	o.0270

The financial statements were authorized for approval by the Board of Directors on Marcn L2,2027 and were signed on its behalf by:

Molesag Ion Sorin, General Manager	Chirila Oana, Financial Manager
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MECANICA CEAHLAU S.A. STATEMENT OF CASH FLOW FOR TIHE FINANCIAL YEAR ENDED ON DECEMBER 31, 2O2O

Cash flows from operating activities	December 31, 2tP2O	December 31, zorg

Receipts from customers	29,906,549
Receipts from other debrors	338,332	35t6I4,4L7
Payments to suppliers	(23,O84,537)	308,188 (23,599,t25)
Payments to employees	(3,7t8,274)	(4,0t7,o20)
Payments to state budget	(5,239,202)	(6,826,811)
Payments to various creditors	(743,4?6)	(704.445\
Cash generated from operating activities	(2,94O,5t19)	t,38t,2o+
Paid corporate tax
	(272,2Q5)	(3,272,717\
Net cash generated from operations	(3,Lsz,v1Ls)	(1,891,513)
Cash flows from investment activities
Collected interest	424,1)47
Proceeds from the sale of tangible assets		63,043 2t,L30,789
Procurenrent of tangible assets	(r84,.3,Q)	(640.s54)
Net cash generated from investments	24O,605	20,553,278
Cash flows from financing activities
Collections from short-term toans	963,140	1,232,986
Reimbursement of loans	(L,265,61t2)	( 1,5 1 5,1 18)
Paid intelrest	(30,4514)	(36,865)
Paymenl[ of financial leasing debts	(343,6a14)	(2t7,354)
Dividencls oaid	( 10,s68, sos)	(10)
Net cash (used in) financing activities	(LL,245,LO.5)	(536,361)

Net increase/(decrease) of cash and cash equivalents	(L4,L57,2L5)	L8.,L25,4O4
Cash anrd cash equivalences as of the beginning of period	2t,433,2t59	3,932,293
Exchange rate differences	(33,749)	(24,438)
Cash and cash equivalences as of end of period	7,242,2115	21,433,259

The financial statements were authorized for approval by the Board of Directors on March 72, 202L and were signed on its behalf by:

Molesag Ion Sorin, General lVanager

Chirila Oana, Financial Manager

MECANICA CEAHLAU S.A. STATEMENT OF CASH FLOW FOR THE FINANCIAL YEAR ENDED ON DECEMBER 31, 2020

	December 31, 2020	December 31, 2019
Cash flows from operating activities
Receipts from customers	28,906,548	35,614,417
Receipts from other debtors	338,332	308,188
Payments to suppliers	(23,084,537)	(23,599,125)
Payments to employees	(3,718,214)	(4,011,020)
Payments to state budget	(5,239,202)	(6,826,811)
Payments to various creditors	(143,436)	(104,445)
Cash generated from operating activities	(2,940,509)	1,381,204
Paid corporate tax	(212,206)	(3,272,717)
Net cash generated from operations	(3,152,715)	(1,891,513)
Cash flows from investment activities
Collected interest	424,947	63,043
Proceeds from the sale of tangible assets	-	21,130,789
Procurement of tangible assets	(184,342)	(640,554)
Net cash generated from investments	240,605	20,553,278
Cash flows from financing activities
Collections from short-term loans	963,140	1,232,986
Reimbursement of loans	(1,265,612)	(1,515,118)
Paid interest	(30,494)	(36,865)
Payment of financial leasing debts	(343,634)	(217,354)
Dividends paid	(10,568,505)	(10)
Net cash (used in) financing activities	(11,245,105)	(536,361)
Net increase/(decrease) of cash and cash equivalents	(14,157,215)	18,125,404
Cash and cash equivalences as of the beginning of period	21,433,259	3,332,293
Exchange rate differences	(33,749)	(24,438)
Cash and cash equivalences as of end of period	7,242,295	21,433,259

The financial statements were authorized for approval by the Board of Directors on March 12, 2021 and were signed on its behalf by:

Molesag Ion Sorin, Chirila Oana, General Manager Financial Manager

1. REPORTING ENTITY

Mecanica Ceahlău SA ("the Company") is a company headquartered in Romania. The Company has its registered office in Piatra Neamț, 6 Dumbravei street, Neamț county, Romania.

The company operates according to the provisions of Law no.31/1990 for companies, further amended and supplemented.

According to Articles of Incorporation, the main field of activity of the Company is the manufacture of machines and machinery for agriculture and forestry exploitations.

The Company is managed by the Board of Directors, consisting of 3 members.

The shares of the Company are listed on the Bucharest Stock Exchange Quota, Standard category, with the MECF indicative.

The records of shares and shareholders are kept according to the law by S.C. Depozitarul Central S.A. Bucharest.

2. B(ASIS OF PREPARATION

a. Statement of compliance

The financial statements have been drafted by the Company in compliance with:

the criteria for recognition, measurement and evaluation compliant with the International Financial Reporting Standards adopted by the European Union ("IFRS");
Law no.82 of 1991 for accounting, republished and updated;
The provisions of the Order of the Ministry of Public Finances no. 2844/2016 for the approval of the Accounting Regulations in accordance with the International Financing Reporting Standards, applicable to the companies whose securities are admitted to trading on a regulated market, with the subsequent amendments and clarifications;

The financial statements for the year ended December 31, 2020 include the statement of financial position, the global result statement, the cash flow statement, the equity change statement and explanatory notes.

The comparative financial information is presented on December 31, 2019, both for the statement of financial position and for the equity change statement, cash flow statement, global result statement and explanatory notes.

The accounting records of the Company are kept in lei (symbol of national currency "RON").

The financial statements were authorized for approval by the Board of Directors on March 12, 2021.

b. Financial statements presentation

The financial statements are presented in accordance with the requirements of IAS 1 "Presentation of the financial statements". The company adopted a liquidity-based presentation in the statement of financial position and a presentation of revenues and expenses according to their nature within the overall result statement, considering that these presentation methods provide information that is credible and more relevant than what would be were presented based on other methods permitted by

IAS 1.

For consistency with the information from the current period, the Company can restate in the Statement of Financial Position, the Statement of Profit and Loss and Other Comprehensive Income, the Statement of Cash Flows and the Notes relating to, certain items for the comparative period.

These financial statements have been prepared on the basis of the going concern, which implies that the Company will continue its activity in the foreseeable future. The management of the Company considers that the Company will normally continue its activity in the future and, consequently, the financial statements have been prepared on this basis.

2. BASIS OF PREPARATION (to be continued)

c. Basis of the assessment

The financial statements were drafted according to the historical cost, excepting lands and buildings that are held at the reassessed value and of investment property that are held at fair value.

These financial statements were prepared for the use of persons that know the provisions of the International Financing Reporting Standards, applicable to companies whose securities are admitted to trading on a regulated market, approved by the Order of the Ministry of Public Finances 2844/2016.

These financial statements are not intended to present the financial position in accordance with accounting regulations and principles accepted in countries and jurisdictions other than Romania. Also, the financial statements are not intended to present the results of operations, cash flows and a complete set of notes to the financial statements in accordance with accounting regulations and principles accepted in countries and jurisdictions other than Romania. Therefore, the attached financial statements are not prepared for the use of persons who do not know the accounting and legal regulations in Romania, including the Order of the Minister of Public Finance no. 2844/2016 with subsequent amendments.

In consequence, these financial statements shall not be considered as the unique source of information by a potential investor or by another user.

d. Functional and presentation currency

The Company management considers that the functional currency, as it is defined by IAS 21 "Effects of exchange rate variation" is the Romanian leu ("RON"). The financial statements are presented in lei, rounded off to the nearest leu, this being the functional currency of the Company.

Foreign currency transactions are expressed in lei by applying the exchange rate from the date of the transaction. The monetary assets and liabilities expressed in foreign currency at the end of the period are expressed in lei at the exchange rate from that date. Gains and losses from differences of the exchange rate, achieved or not achieved, are registered in the Statement of the global result of the respective period.

e. Use of estimations and professional reasoning

The drafting of financial statements according to IFRS suggests the managements' using some financial estimates, judgments and hypothesis that affect the application of accounting policies as well as the reported value of assets, liabilities, revenue and expenses. The judgments and hypotheses associated to these estimates are based on historic experience as well as other factors considered to be reasonable within the context of these estimates. The results of these estimates lay at the base of the judgments regarding the accounting valuesof assets and liabilities that cannot be obtained from other information sources. The results obtained may vary from the values of the estimates.

The judgments and hypothesis that lay at their base are periodically revised. The revisions of accounting estimates are recognized in the period the estimates are revised, if the revision only affects that particular period, or in the period the estimate is revised and future periods, if the revision affects both the current and future periods.

Information and reasoning related to the application of accounting policies with the highest degree of uncertainty regarding the estimates, which have a significant impact on the amounts recognized in these annual financial statements, are included in Note 18 – Trade receivables.

The estimations and assumptions associated to these estimations are based on the historical experience, as well as other factors considered reasonable in the context of these estimations. The results of these estimations and hypotheses form the basis of judgments regarding the accounting values of assets and debts that may not be obtained from other sources of information.

2. BASIS OF PREPARATION (to be continued)

f. The impact of the COVID 19 epidemic on the Company's financial position and performance

The epidemic of corona virus ("COVID-19"), which had been declared a pandemic by the World Health Organization on March 11, 2020, significantly affected the economic environment, having multiple effects on all industries to a greater or lesser extent.

The business field of the company is production, marketing and sale of machines and equipment for agriculture activity, affected by both the coronavirus pandemic and the extreme drought (see Note 5 - Revenues).

In the context of safety measures, protection of the health of the population and declaration of emergency in Romania since March 16, 2020 and state of alert starting May 15, 2020, the option Mecanica Ceahlau was to implement the business continuity plan and take all necessary measures to prevent and combat effects of infection with the new coronavirus-Covid 19. For this purpose, they used both the company's own resources and the support solutions provided by the Romanian Government (See Note 7 - Expenditures on salaries, social contributions and other benefits).

In the context of the COVID-19 pandemic, it is expected that there will continue to be a degree of uncertainty in the field in which the company operates. The Company's management does not estimate difficulties in honoring commitments to shareholders and obligations to third parties, the availability of present and future liquidity being in line with the limits imposed by regulations and sufficient to cover payments for the next period.

The company's management has as permanent objectives the analysis of the future impact of the Covid-19 pandemic on the financial performance and the taking of adequate measures to reduce the related risks.

3. SIGNIFICANT ACCOUNTING POLICIES

Accounting policies have been consistently applied on all periods presented in the unconsolidated financial statement drafted by the Company.

a. Transactions in foreign currency

The operations expressed in foreign currency are recorded in lei at the official exchange rate communicated by the National Bank of Romania ("BNR") for the transaction date. Balances in foreign currency are converted in RON at the exchange rates communicated by NBR on December 31, 2020.

Gains and losses arising from the settlement of transactions in a foreign currency and from the translation of monetary assets and liabilities denominated in foreign currency are recognized in the income statement as part of the financial result.

Non-monetary assets and debts are expressed in the foreign currency that are assessed at fair value are converted in the functional currency at the exchange rate of the date in which the fair value was determined. The non-monetary elements that are assessed at historical cost in a foreign currency are converted using the exchange rate of the date in which the transaction was made.

Non-monetary assets and liabilities denominated in a foreign currency that are measured at fair value are translated into the functional currency at the exchange rate at the date on which the fair value was determined. Non-monetary items that are measured at historical cost in a foreign currency are translated using the exchange rate at the date of the transaction.

The exchange rates of the main foreign currencies according to BNR report are:

Currency	December 31, 2020	December 31, 2019	Variation:
Euro (EUR)	1:LEU 4.8694	1:LEU 4.7793	1,89%
American Dollar(USD)	1:LEU 3.9660	1:LEU 4.2608	(6,92%)

b. Cash and cash equivalents

Cash and cash equivalences include: the effective cash, current accounts, deposits at banks and collectable values (cheques and collected bills).

In the elaboration of cash flow statement as of December 31, 2020, respectively December 31, 2019 the Company considered as cash and cash equivalences: effective cash, current accounts at banks, deposits at banks and collected values (checks and cash receipts).

c. Financial assets and financial liabilities

An asset is a resource controlled by the entity as result of past events and from which it is foreseen that future economic benefits will result for the entity.

A liability represents a current obligation of the entity, resulted from past events, whose deduction is expected to determine an exit of resources by incorporating economic benefits from the entity.

(i) Classification of financial assets

According to IFRS 9, the financial assets are classified in one of the following categories:

Financial assets evaluated at fair value by the profit and loss account ("FVTPL"):
investments in administered funds (fund units);
participation interests in subsidiaries and associated entities (equity shares in Transport Ceahlau SRL).
Financial assets evaluated at depreciated cost:
customer receivables and other receivables.

The company classifies the financial instruments held in the following categories:

Financial assets evaluated at fair value by the profit and loss account ("FVTPL"):

An investment in a security must be evaluated at fair value by the profit and loss account, unless the management makes an irrevocable option, at initial recognition, for measurement at fair value by other elements of the global result.

The financial assets are classified in this category if they are purchased in view of trading.

An asset is held in view of trading if it cumulatively fulfils the following conditions:

It is held for sale and redemption in the near future;
At initial recognition it is part of a portfolio of financial instruments identified, which are managed together and for which there are proofs of a real recent pattern of profit follow-up on short term.

This category includes financial assets or financial liabilities held for trading and financial instruments designated at fair value by the profit and loss account at the initial recognition and includes investments in administered funds. These assets are mainly purchased to generate profit from shortterm price fluctuations.

Financial assets at fair value through the profit and loss account are recorded in the statement of financial position at fair value. A gain or loss on these instruments is recognized directly in the profit and loss account.

c. Financial assets and financial liabilities (to be continued)

Receivables

Receivables are non-derivated financial assets with fixed or determinable payments which are not quoted on an active market.

Receivables include commercial receivables and other receivables. They are mainly composed of customers and similar accounts which include invoices issued at nominal value and estimated receivables for services provided, but invoiced in the period that follows the end of period.

The company holds customers and similar accounts in view of collection of contractual cash flows. Therefore, they are classified as measured at amortised cost.

Final losses may vary from current estimates. Due to the inherent lack of information regarding the financial position of the customers and the lack of legal collection mechanisms, the estimates of probable losses are uncertain. However, the management of the Company has made the best estimate of the loss and considers that this estimate is reasonable in the given circumstances. In the estimation of losses, the Company also took into account the previous experience for a an individual and collective assessment, as presented in Note 3.i.(i). Trade receivables are recorded at the invoiced amount less adjustments for impairment of these receivables (see Note 3.i.(i)).

Trade receivables are recorded at the invoiced amount less adjustments for impairment of these receivables (see Note 3.i.(i)).

Financial debts

The Company initially recognizes debt instruments issued and the subordinated debt at the date of the transaction, when the Company becomes part of the contractual debt terms.

An entity must derecognise a financial liability (or a part of a financial liability) from the financial position statement when and only when it is liquidated - when the obligation specified in contract is extinguished or cancelled or expires.

These financial debts are initially recognized at fair value plus any directly attributable trading costs. Subsequent to initial recognition, these financial debts are measured at amortized cost.

Debts to suppliers and other debts, initially recorded at fair value and subsequently measured using the effective interest method, include the equivalent value of the invoices issued by the suppliers of products, works executed and services rendered.

(ii) Recognition

The assets and liabilities are recognised when the Company becomes a Party to the conditions of that instrument.

(iii) Compensations

The financial assets and liabilities are compensated and the net result is presented in the financial position statement only when there is a legal seting-off right and if there is the intention of their deduction on a net basis or if the Company intends to earn the asset and extinguish the liability simultaneously.

The income and expenses are presented with net values when this is allowe by the accounting standards or for the profit and loss resulted from a group of similar transactions such as those from the trading activity of the Company.

(iv) Measurement at depreciated cost

The depreciated cost of an financial asset or liability represents the value at which the financial asset or liability is measured at the initial recognition, less the principal payments, to which we add or deduct the depreciation cumulated until that time by using the effective interest method less the

c. Financial assets and financial liabilities (to be continued)

reductions related to impairment losses.

(v) Measurement at fair value

The fair value is the price which would be received as a result of sale of an asset or the price which would be paid to transfer a liability by a normal transaction between participants on the market at evaluation date (i.e. an exit price).

(vi) Identification and evaluation of impairment

Financial assets evaluated at depreciated cost:

The Company analyses at each reporting date if there is an objective clue by which a financial asset is impaired. A financial asset is impaired if and only if there are objective clues regarding the impairment appeared as a result of one or many events which took place after the initial recognition of the asset ("loss-generating event") and the loss-generating event or events have an impact on the future cash flows of the financial asset or the group of financial assets which can be credibly estimated.

If there are objective clues that an impairment loss of financial assets measured at depreciated cost has occurred, then the loss is measured as difference between the book value of asset and the discounted value of future cash flows by using the effective interest rate of financial asset at initial moment.

If a financial asset measured at depreciated cost has a variable interest rate, the discounted rate for evaluation of any impairment loss is the variable current interest rate specified in the contract.

The book value of an asset is reduced by the Company by using a provision account. The impairment losses are recognised in the profit and loss account.

If in the following period an event which took place after the recognition of impairment determines the reduction of impairment loss, the impairment loss recognised previously is carried forward by adjusting the provision account. The reduction of impairment loss is recognised in the profit and loss account.

(vii)Derecognition

The Company derecognizes a financial asset when the contractual rights to asset-generated cash flows expire or when the rights to receive the contractual cash flows of the financial asset are transferred, through a transaction where the risks and rewards of ownership of the financial asset are transferred significantly.

d. Tangible assets

(i) Recognition and measurement

The tangible assets recognised as assets are initially evaluated at cost by the Company. The cost of a tangible asset is composed of the purchase price, including the non-recoverable taxes, after the deduction of any price discounts of commercial nature to which we add any cost which can be directly attributed to bringing the asset in the location and in the necessary conditions so that it can be used for the purpose desired by the management, such as: expenses with employees which result directly from the building or purchase of the asset, the arrangement costs of site, initial delivery and handling costs, installation and assembling costs, professional fees.

The tangible assets are initially recognised at production cost if they are earned in own management regime.

The values of tangible assets of the Company as of December 31, 2020 and December 31, 2019 are detailed in Note 13.

3. SIGNIFICANT ACCOUNTING POLICIES (to be continued)

The tangible assets are classified by the Company in the following classes of assets of the same nature and with similar uses:

Land;
Constructions;
Technical installations and vehicles;
Furniture, office equipment;
Tangible assets under execution;
Tangible fixed assets under construction
Assets representing usage rights under a lease

The lands and constructions are highlighted at reevaluated value, which represents the fair value at reevaluation date less any depreciation accrued later and any accrued impairment losses.

The fair value is based on market price quotations, adjusted, if applicable, so that they reflect the differences related to nature, location or conditions of that asset.

The reevaluations are made by specialised appraisers, members of ANEVAR. The frequency of reevaluations is dictated by the dynamics of markets to which the lands and buildings owned by the Company belong.

The other categories of tangible assets are highlighted at cost less the accrued depreciation and the provision for impairment.

In the case of revaluation, the difference between fair value and historical cost value is presented in the revaluation reserve. If the result of a revaluation is an increase from net book value, then it is treated as follows:

o as an increase in the revaluation reserve if there was no prior decrease recognized as an expense related to that asset; or
o as an income to offset the expense previously recognized for that asset.

If the result of a revaluation is a decrease from net book value, then it is treated as follows:

o as an expense with the full amount of the impairment, when in the revaluation reserve no amount is recorded regarding that asset (revaluation surplus); or
o as a decrease in the revaluation reserve with the minimum of the value of that reserve and the value of the decrease, and any remaining uncovered difference is recorded as an expense.

(ii) Reclassification in Real estate investments

The Company reclassifies property, plant and equipment as real estate investment if and only if there is a change in use, evidenced by:

(a) the beginning of the use by the owner for a transfer in the category of Real estate investments in the category of real estate used by the owner;
(b) starting the improvement process in the prospect of sale, for a transfer in the category of Real estate investments in the stock category;
(c) the end of use by the owner for a transfer from the category of real estate used by the owner in the category of Real estate investments;
(d) the start of an operating lease with another party, for a transfer from the stock category to the real estate investment category.

(iii) Subsequent costs

The expenses with maintenance and repairs of tangible assets are recorded by the Company in the global result statement when they appear, and the significant improvements to tangible assets, which increase their value or their life or which significantly increase the capacity to generate economic benefits by them are capitalised.

(iv) Depreciation of tangible assets

Depreciation is calculated on a straight-line basis over their estimated useful life. The estimated useful life of the main groups of property, plant and equipment are as follows:

Asset	Years
Constructions	10 - 50
Technical installations and machinery	2 - 28
Other installations, vehicles, machinery and furniture	5 - 15

Assets in progress are not subjected to amortization.

Lands are not subjected to amortization. The land presented in the financial statements has been revalued by the Company in accordance with legal regulations. The information is presented in Note no.13 (i) (revaluation). If the carrying amount of an asset is greater than the amount to be recovered, the asset is impaired to its recoverable amount.

(v) Sale/ scrapping of tangible assets

Tangible assets that are scrapped or sold are eliminated from the balance with the proper accumulated amortization. Any profit or loss resulted from such an operation is included in the current

profit or loss account.

e. Intangible assets

(i) Recognition and assessment

The intangible assets which fulfil the recognition criteria from International Financial Reporting Standards are carried at cost less the cumulated depreciation and impairments.

(ii) Subsequent costs

Subsequent expenditure on intangible assets is capitalized only when it increases the future economic benefits generated by the asset to which it relates. Expenditure that does not meet these criteria is recognized as an expense when incurred.

(iii) Depreciation of intangible assets

Depreciation is recognized in the statement of comprehensive income based on the linear method over the estimated useful life of the intangible asset. Most of the intangible assets registered by the Company are computer programs. They are linearly amortized over a period of no more than 5 years.

f. Real estate investments

Real estate investments is property (land or a building — or part of a building) held by the Company to earn rentals or for capital appreciation or both, rather than for:

use in the production or supply of goods or services or for administrative purposes; or
sale in the ordinary course of business.

Some properties comprise a portion that is held to earn rentals or for capital appreciation and another portion that is held for use in the production or supply of goods or services or for administrative purposes.

If these portions can be sold separately (or leased out separately), the Company accounts for the portions separately. If the portions cannot be sold separately, the property is treated as Real estate investments only if an insignificant portion is held for use in the production or supply of goods or services or for administrative purposes.

(i) Recognition

Real estate investments shall be recognized as an asset when, and only when:

it is probable that the future economic benefits that are associated with the Real estate investments will flow to the Company;
the cost of the Real estate investments can be measured reliably.

(ii) Measurement

Initial measurement

A real estate investment is initially evaluated at cost, including the trading costs. The cost of a purchased real estate investment is composed of its purchasing price plus any directly attributed expenses (for example, professional fees for provision of legal services, ownership transfer taxes and other trading costs).

The values of tangible assets of the Company as of December 31, 2020 and December 31, 2019 are detailed in Note 15.

Subsequent Measurement

The Company's accounting policy on the subsequent measurement of Real estate investments is based on the fair value model. This policy is applied consistently for all Real estate investments. The fair value measurement of Real estate investments is conducted by valuators of the National Association of Romanian Valuators (ANEVAR). Fair value is based on market price quotations adjusted, if applicable, so as to reflect the differences in the nature, location or conditions of the respective asset. Such valuations are periodically revised by the Company's management.

Gains or losses from the change of the fair value of Real estate investments are recognized in the profit or loss corresponding to the period in which they occur.

The fair value of Real estate investments reflects the market conditions as at the balance sheet date.

(iii) Transfers

Transfers to or from Real estate investments are performed when and only when there is a change in the use of the asset.

To transfer an Real estate investments measured at fair value to property, plant and equipment, the implicit cost of the asset for the purpose of its subsequent registration shall be its fair value as at the date when the use is changed.

If a real estate property used by the Company becomes a real estate investment that will be recorded at fair value, the Company applies IAS 16 until the date of change of use. The Company must treat any difference from that date in the carrying amount of real estate in accordance with IAS 16 and its fair value as on a revaluation, in accordance with IAS 16.

(iv) Impairment

The same accounting policies are applied as for property, plant and equipment.

The carrying amount of an Real estate investments shall be derecognized on disposal or when the investment is definitely withdrawn from use and no future economic benefits are expected from its disposal.

The gain or loss arising from the disposal or sale of an Real estate investments shall be included in profit or loss when the property is disposed of or sold.

g. Assets held for sale

The Company will classify a fixed asset (or a group of assets) as held for sale if it is probable that it will generate benefits to the Company as a result of its disposal rather than following its continued use.

For this purpose, the asset (or the group of assets) must be available for immediate sale in its current state, and the sale of the asset must be of high degree of certainty.

In order for the sale of the asset to be highly probable, the appropriate management level must have drawn up a plan for the sale of the asset (or group of assets), and an effective program for identifying the buyer, as well as finalizing the sales plan.

Moreover, the asset (or group of assets) must be able to be sold on an active market at a price that is reasonably related to the fair value. In addition, it expects the sale to qualify for recognition as a " complete sale" within 1 year from the date of classification and the actions required to complete the sales plan reflect that it is a little significant changes to the plan are likely to be required or the plan to be withdrawn.

Assets that meet the criteria for being classified as held for sale are measured at the lowest of the carrying amount and fair value less costs to sell.

h. Inventory

Inventories are measured at the lower of cost and net realizable value.

The cost of interchangeable inventories is determined using the "first-in, first-out" (FIFO) formula.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion and the estimated costs necessary to make the sale.

Costs of finished products and semi-finished products include materials, direct labor, other direct costs and overhead costs related to production (based on operating activity). Net realizable value is the estimated sales price in ordinary transactions. Adjustments for stock impairment are recognized for those inventory that are slow, physically or morally worn. Inventories for which it could not be estimated whether in the immediate period they would be consumed or if those inventory represent safety inventory for certain installations are not subject to adjustment.

The amount of any reduction in the carrying amount of inventories to the net realizable value and all inventory losses are recognized as an expense in the period in which the write-down or loss occurs.

In accordance with the policy of establishing the value adjustment of current assets, the value adjustments for stocks are made:

global - depending on seniority and dynamics;
individually - based on the findings of the inventory commissions.

i. Impairment

The accounting value of Company's non-financial assets, other than inventory and receivables on the deferred tax, are reviewed at each reporting date to determine whether there is any evidence of impairment. An impairment loss is recognized if the carrying amount of an asset or a cash-generating unit exceeds the estimated recoverable amount.

The recoverable amount of an asset or a cash-generating unit is the maximum of the amount of use and fair value less costs to sell. In determining the value in use, expected future cash flows are updated to determine the present value, using a pre-tax discount rate that reflects current market assessments of the time value of money and asset specific risks. For impairment testing, assets that cannot be individually tested are grouped into the smallest asset group that generates cash inflows from continuous use and are largely independent of cash inflows generated by other assets or groups of assets ("cash-generating unit").

Impairment losses are recognized in the statement of comprehensive income. Impairment losses recognized in relation to cash-generating units are used first to reduce the carrying amount of goodwill allocated to the units, if any, and then pro-rata to reduce the carrying amount of other assets within the unit (group of units).

For all fixed assets, except for goodwill, impairment losses recognized in prior periods are measured at each reporting date to determine whether there is evidence that loss has decreased or is no longer present. An impairment loss is restated if there has been any change in the estimates used to determine the recoverable amount. An impairment loss is restated only to the extent that the carrying amount of the asset does not exceed the carrying amount that could have been determined, net of amortization, had no impairment been recognized.

(i) Financial assets (including receivables)

Adjustment for impairment of trade receivables is established when there is objective evidence that the Company will not be able to collect all amounts due according to the original terms.

The establishment of risk adjustments for the non-collection of trade receivables is made by including in the expense the amount of the need for risk adjustments for non-collection of trade receivables related to the invoices in the balance for which there is objective evidence that the Company will not be able to collect the amounts owed to it and as a result of applying the Expected Credit Loss model.

Classification: Company`s intention is to hold the receivables to collect the contractual cash flows. Therefore, they are classified as measured at amortised cost.

Measurement: The Company perfoms and individual and collective assessment for the recoverability of the trade and other receivables.

Individual analysis: The entity peforms indivually analsys of trade and other receivables recoverability based on the litigation status and days past due. For all customers in litigation and days past due over 180 days a risk provision of 100% from the gross value is booked.

Collective analysis: We have analyzed the list of all invoices issued during the years 2017-2020, and also all collections received by the Company during that time period.

We have added (allocated) to each transaction line the additional available details that we will use (such as Country Zone 1-6 of the client, type of customer).

As per the steps of IFRS 9 guideline for calculation of credit loss allowances for trade receivables with use of provision matrix, we have taken the following 4 steps:

The groups of receivables were divided by categories of shared credit risk characteristics.

We have considered the relevant grouping of customers by geographical area in Romania (according to the map in the worksheet "Map of Romania 's Areas). Further, we have grouped customers by their type (i.e. Final Customer, Lessor, or Distributor).

Through these groupings, the credit risk characteristics of customers will be more uniform within the determined categories for a more accurate calculation of expected future credit losses.

We have determined the period over which observed historical rate losses are appropriate.

There is no specific guidance in IFRS 9 on how far back the historical data should be evaluated. We have considered a period of the 3 previous years as relevant and reliable for the basis on which to observe the historical rate losses of the Company.

We have determined the historical loss rates.

We have calculated the total yearly credit sales of the Company for each of the analysed years. We have also calculated the collections for the sales of each year, and we have calculated the delay with which these were collected.

i. Impairment (to be continued)

We have split the collections in time categories - collected when Not Overdue (without delay), collected with delay of 1-30 days, collected with delay of 31-60 days, collected with delay of 61-90 days, collected with 90+ days delay.

Then, there are amounts remaining as not collected at all from the credit sales of these years - these are the historical credit losses.

We have applied the calculation process to each timeband . The historical loss rate for each timeband reflects the percentage of sales that reached at least the designated timeband that were never collected.

Forward looking macro-economic factors to adjust historical loss ratios for expected credit loss

The Company analysed the impact from PIB up to 2021, taking in consideration 3 scenarios for the evolution: pessimistic , baseline and optimistic.

The Company derecognizes a write-down of receivables previously constituted at the time of recovery wholly or in proportion to the amount recovered.

The determination of the amount of the adjustment for impairment of the trade receivables to be established is based on the estimates made in collaboration with the Law Office and on the basis of the policies mentioned under (i).

(ii) Non-financial assets

Tangible assets and other long-term assets are reviewed to identify impairment losses whenever events or changes in circumstances indicate that the carrying amount can no longer be recovered.

Impairment losses on non-financial assets are recognized in the statement of comprehensive income.

j. Employee benefits

(i) Determined contribution plans

The Company makes payments on behalf of its own employees to the Romanian state pension system, social insurances and unemployment fund, in the normal course of activity.

All employees of the Company are members and at the same time they have the legal obligation to contribute (through social contributions) to the Romanian state's pension system (a determined contribution plan of the state). All such contributions are recognized in the profit or loss account of the period when theyare made. The Company has no other additional obligations.

The Company is not engaged in any independent pension scheme and accordingly it has no other obligations. The Company is not involved in any retirement benefits scheme. The Company has no obligation to deliver ulterior services to the former or current employees.

Also, according to the Collective Labor Agreement, when fulfilling the legal conditions for retirement, respectively for uninterrupted seniority in the Company, employees are entitled to receive a reward.

(ii) Short-term benefits

The obligations with short-term benefits given to employees are not discounted and are recognised in the global result statement as the related service is delivered.

The short-term benefits of employees mainly include wages and bonuses. The short-term benefits of employees and contributions to social insurances are recognised in the financial statements of the Company when the services are delivered. The Company recognises a provision for the amounts that are expected to be paid with title of bonuses in cash on short term if the Company has now a legal or implicit obligation to pay those amounts as result of past services delivered by employees and if that given obligation can be credibly estimated.

j. Employee benefits (to be continued)

(iii) Benefits for termination of employment contracts

The company grants the following benefits to employees in the event of termination of the employment contract as a result of retirement, as follows:

o Employees retiring for old age, disability, partially early or early will receive an end-of-career reward as follows:

those with seniority in the Company of over 15 years, two average basic salaries negotiated on the Company;
those with seniority in the Company between 5 and 15 years, one basic average salary negotiated on the company;

o Employees retiring as a result of an accident or an event related to work and who have a seniority in the company of between 0 and 5 years will benefit from a basic salary negotiated on the company.

k. Provisions for risks and expenses

Provisions are recognized in the financial position statement when a liability is created for the Company connected to a past event and it is probable that in the future it will be necessary to spend some economic resources that extinguish this liability and a reasonable estimation of the liability value can be made.

Provisions for restructuring, litigation, and other provisions for risks and expenses are recognized when the Company has a legal or implicit obligation arising from a previous event, when it is probable that an outflow of resources will be required to settle the obligation and when a credible estimate of the amount of the obligation can be made. Restructuring provisions include the direct costs generated by the restructuring, i.e. those that are necessarily generated by the restructuring process and are not related to the continuous development of the company's business.

(i) Guarantees

Provisions for guarantees to customers are estimated by the Company based on the cost of repairs during the warranty period against the value of turnover in the previous financial year.

(ii) Employee benefits

The Company sets up provisions for the benefits of employees granted upon termination of the employment contract with retirement. Determination of the amount of the provision to be set up shall be made taking into account the provisions of the collective labor agreement of the Company valid at the date of provisioning.

(iii) Disputes

The Company sets up provisions for litigation if there is a legal or implicit obligation arising from a litigation in progress. Determining the amount of the provision to be established is based on the estimates made by the law firm.

(iv) Other provisions

The Company makes any other provision when the Company has a legal or implicit obligation arising from a previous event, when it is probable that an outflow of resources will be required to settle the obligation and when a credible estimate can be made as to the amount of the obligation.

Provisions for future operating losses are not recognized.

3. SIGNIFICANT ACCOUNTING POLICIES (to be continued)

l. Revenues recognition

Revenues from customer's agreements / from agreements with customers

The Company recognizes the revenues from customer's agreements when (or as long as) it fulfills an enforcement obligation by transferring a promised good or service (i.e. an asset) to a customer. An asset is transferred when (or as long as) the customer obtains control over that asset.

The company analyzed the main types of revenues applying the 5 steps method of IFRS 15:

Step 1: Identify the contracts with the clients;

Step 2: Identify the obligations resulting from these contracts;

Step 3: Determine the transaction price;

Step 4: Allocation of the transaction price to the obligations to be fulfilled;

Step 5: Revenue recognition upon completion / as the fulfillment of contractual obligations.

The table below provides information about the nature and timing of the enforcement obligation, including significant payment terms for the main revenue categories from the customer agreements:

Product type / service	The nature and timing of the enforcement obligation, including significant payment terms	Accounting policies for revenue recognition
Agricultural machinery and equipment (produced or distributed)	The customer obtains control over the product on the date of dispatch to the customer (or the purchase of the product from the company headquarter) or acceptance of the product (the date when the customer obtains the ability to determine the use of the products and gets all the benefits from them).The company is recognizing a debt, because this represents the moment when the right to counterperformance becomes unconditional.In general, the direct customer (or the distributor) pays an advance of 10-15%, paying the difference in installments (for a period of less than 1 year). Payment terms are generally 90-180 days from the date of issue of the invoice. The obligation to execute is fulfilled at a specific time.The commercial discounts granted to customers are based on their fulfilling certain annual sales values.Returns are not accepted as a rule except in exceptional cases and as a rule, returns involve changing a product purchased by the customer, with another.	The revenue is recognized on the date of dispatch to the customer (or purchase of the product from the company headquarters) and acceptance of the product.The income includes the amount invoiced for the sale of the products, excluding VAT), from which the commercial discounts granted to customers are deducted.The company applies the practical exemption from IFRS 15 para 63 on the basis of which it does not adjust the price of transactions with a financial component.As a practical solution, if the company receives short-term advances from customers, or for the recognized revenues, it does not adjust the amounts received or the revenues for the effects of a significant financing component, given that at the beginning of the contract it expects the period elapsed from the transfer. the goods until the collection will be under 1 year.The commercial discounts granted to the clients (including the expenses with the related provisions) are deducted from the revenues from the sale of the

		products.
Revenue from services	The services provided by the Company are generally related to the products provided (for example, agricultural machinery repair services after the warranty period has expired).Invoices for services are issued on the date of providing the services.Invoices are generally paid within a maximum of 30 days from the date of receipt by the customer.The execution obligation is fulfilled at a specific time.	The income is recognized during the period when the service is provided
Income from the rental of real estate investments	The company, as a lessor, rents its spaces to third parties, the service is prestart as the rental contract unfolds.Invoices are generally paid within a maximum of 30 days from the date of receipt by the customer.The execution obligation is fulfilled during the performance of the lease.	The revenues from the rents are generated by the real estate investments rented by the Company in the form of operational leases and are recognized in profit or loss on a linear basis, throughout the contract period. The company, as lessor, does not have leasing contracts classified as financial leasing.

m. Governmental subsidies

The subsidies from the government for the procurement of assets are recognized as deferred income and is allocated as a systematic and ration income the entire life of the asset.

n. Suppliers and similar accounts

Debts to suppliers and other debts, registered initially as fair value and then assessed using the method of effective interest rate, include the counter-value of the invoices issued by suppliers of products, performed works and provided services.

o. Income and expenses from interests

The income and expenses with interest are recognized in the status of global result through the effective interest method. The effective interest rate represents that rate which accurately updates the payments and cash collections forecast for the expected life span of the financial asset or liability (or, where the case be, for a shorter period of time) to the accounting value of the financial asset or liability.

p. Revenue and loss from exchage rate differences

Currency transactions are entered in the functional currency (leu) through the conversion of the amount in currency to the official exchange rate notified by Romania's National Bank valid on the transaction date.

On the reporting date, the monetary elements expressed in currency are converted using the closing exchange rate.

Rate differences that occur on the offset of the monetary elements or conversion of monetary elements at rates different from those they were converted in at their initial recognition (over the period), or in the prior financial statements, are recognized as loss or income in the profit or loss account, in the period when they occur.

q. Leasing Contracts as Lessee

Initial Recognition and Evaluation

On the date a contract is initiated, the Company evaluates whether that contract is, or includes a leasing contract. A contract is or contains a leasing contract if this contract awards the right to control the use of an asset identified for a certain period of time, in exchange for a consideration.

On the date the contracts starts to run, the Company, as lessee, recognizes an asset corresponding to the use right and a debt that stems from the leasing contract.

Initial evaluation of the asset corresponding to the use right

On the date the contract starts running, the Company, as a lessee evaluates at cost the asset corresponding to the use right.

Initial evaluation of the debt stemming from the leasing contract

On the running start date, the Company, as lessee, evaluates the debt stemming from the leasing contract to the updated value of the leasing payments that are not paid at that date. Leasing payments are updated using the implicit interest rate if that rate can be immediately determined. If this rate cannot be immediately determined, the Company uses its marginal loan rate.

The marginal loan rate of the Company is the interest rate that the Company should pay for a loan on a similar period, with a similarguarantee, the funds necessary to obtain an asset with a similar value with that corresponding to the use right in a similar economic environment.

Subsequent evaluation of the asset corresponding to the use right

Following the running start date, the Company, as a lessee, evaluates the asset corresponding to the use right using the cost-based model, that is, it evaluates the asset related to the right to use at cost, minus any accumulated depreciation and any accumulated impairment losses.

Subsequent evaluation of the debt stemming from the leasing contract

Following the running start date, the Company, as lessee evaluates the debt stemming from the leasing contract by increasing the accounting value to reflect the interest associated with the debt stemming from the leasing contract and reducing the accounting value to reflect the leasing payments made reflecting, if necessary, any changes in the lease contract.

The interest corresponding from the debt in a leasing contract for each period during the contract must be the value that produces a constant periodical rate of interest for the balance of the debt stemming from the leasing contract.

Following the running start date, the interest on the debt stemming from the leasing contract is reflected in profit or loss.

Exemptions from recognition

The company, as a lessee, chooses to apply the derogations allowed by IFRS 16:

o short-term leasing contracts; and
o leasing contracts for which the support asset has a small value.

Consequently, in case of short-term leasing contracts and in case of leases contracts where the support asset has a small value, the Company recognizes the leasing payments associated with these leasing contracts as an expense, using a linear basis for the entire duration of the leasing contract.

r. Contingents

Contingent debts are not recognized in the enclosed financial statements. These are presented if there exists the possibility of an outcome as resources that represent possible economic benefits, but not probable ones, and/or the value may be estimated in a credible way. A contingent asset is not recognized in the enclosed financial statements, but it is presented when an entry of economic benefits is probable.

s. Profit tax

The profit tax on December 31, 2020 includes current and deferred tax.

Current tax represents the tax that is to be paid or received for the taxable income or loss achieved during the year, using taxation percentages adopted or largely adopted on the reporting date, as well as any adjustment to the payment obligations of the profit tax associated to the previous years. The current tax to be paid includes also any fiscal receivable that arises from declaring dividends.

Deferred tax is recognized considering the temporary differences between the accounting value of the assets and debts used with the purpose of the financial reporting and the fiscal base used for the calculation of the tax. Deferred tax is not recognized for the following temporary differences:

initial recognition of the assets or debts arised in a transaction that is not a combination of undertaking and which do not affect the accounting or fiscal profit or loss;
Differences between the investments in jointly controlled branches or entities, to the extent in which is probable that these are not to be reassessed in the future; and
Taxable temporary differences resulted from the initial recognition of the trade fund.

Receivables and debts with deferred tax are compensated only if there exists the legal right to compensate debts and receivables with the current tax, and if these refer to the taxes asked by the same fiscal authority to the same entity, or a different taxable entity, but which intends to conclude a convention on the receivables and debts with the current tax on a net base or whose assets and debts from taxation are to be achieved simultaneously.

A receivable on the deferred tax is recognized for not-used fiscal losses, fiscal credits and deductible temporary differences, to the extent in which the achievement of taxable profits is probable, that will be available in the future and that will be used. Receivables on deferred tax are reviewed at each reporting date and are diminished to the extent in which it is not probable that a fiscal benefit will be achieved. The effect of the changes of fiscal rates on the deferred tax is recognized in the Statement of the global results, except the case in which it refers to the positions previously recognized directly in the own equities.

Profit tax is recognized in the financial statement of the global result or in other elements of the global result if the tax is associated to capital elements.

Current tax is the tax paid associated to the profit achieved in the current period, determined based on percentages applied in the date of the reporting and all the adjustments associated to the previous periods.

The current profit tax rate in Romania is of 16%.

The deferred tax is calculated based on the taxation percentages that are to be applied to the temporary differences when resuming them, based on the legislation in force at the reporting date.

t. Result per share

The Company presents the result per basic share for ordinary shares. The result per basic share is determined by dividing the profit or loss assignable to the ordinary shareholders of the Company by the number of ordinary shares related to reporting period.

u. Share Capital

Ordinary shares are recognized in the share capital. The Company recognizes the changes in the share capital in the conditions stipulated by the legislation in force and only after their approval by the General Meeting of Shareholders and registration with the Trade Register. Incremental costs directly assignable to an issue of ordinary shares are deducted from capital, net of taxation effects.

v. Dividends

Dividends are handled as a distribution of profit in the period when they have been declared and approved by the General Meeting of Shareholders.

w. Prescribed dividends

Dividends to pay not collected within 3 years from their declaration date become outdated according to the law. The prescribed dividends represent transactions with shareholders and are recognised in equity, in the reported result.

x. Principle of business continuity

The financial statements have been drafted based on the activity continuity principle that assumes that the Company will normally continue its activity in the predictable future, without entering into the impossibility to continue its activity and without its significant reduction. In order to assess the applicability of the presumption, the management analyzes the presumptions regarding the future cash entries. Based on these analyses, the management believes that the Company can continue its activity in the predictable future and thus, the application of the principle of business continuity in preparation the financial statements is justified.

y. Subsidiaries and associated entities

Subsidiaries are entities under the control of the Company. Control exists when, inter alia, the Company has the power to influence directly or indirectly the financial and operational policies of an entity to obtain benefits from its activity. At the evaluation of control we take into account the potential or convertible voting rights which are exercised at that time.

The associated entities are those companies in which the Company can exert a significant influence, but not control over the financial and operational policies.

The Company held at December 31, 2020 participation interests of 24,28% in Transport Ceahlau SRL. They are not consolidated because the size criteria according to which the consolidation obligation is established according to the laws in force are not fulfilled.

The Company identified the following affiliated parties:

Evergent Investments S.A. (former SIF MOLDOVA S.A.) Parent company NEW CARPATHIAN FUND Significant shareholder Transport Ceahlau SRL Affiliated company

z. Reporting on segments

A segment is part of the Company that involves in activity segments that may obtain incomes and register expenses (including incomes and expenses corresponding to transactions with other parties of the same entity), whose operation results are followed regularly by the management of the Company in order to make decisions regarding the resources that are to be allocated to the segment and to evaluate its performances and for which distinctive financial information is available. The company does not detain geographical segments or of significant activity according to IFRS 8 "Operational segments" and does not have a management and internal reporting structure divided on segments.

Entity Nature of the relationship

The main incomes described in Note 5 are all related to the main objects of activity of the company (the incomes from the sale of finished products, goods and services represent the main activity of the company and they all are analysed by its management).

aa. Applicable accounting policies

Standards new or modified and interpretations brought to the standards that have came into force in the current year

The following standards, amendments of exisitng standards and interpretations issued by the International Accounting Standard Board - "IASB" and adopted by the European Union ("EU") that have came into force in the current year, are applicable to the Company:

Amendments to IAS 1 "Presentation of Financial Statements" and IAS 8 "Accounting Policies, Changes in Accounting Estimates and Corrections of Errors" - definition of materiality (applicable for annual periods beginning on or after 1 January 2020) - approved by the EU on November 29, 2019.
Amendments to IFRS 9 "Financial Instruments", IAS 39 "Financial Instruments: Recognition and Measurement" and IFRS 7 "Financial Instruments: Disclosures" - Reform of the interest rate benchmark (applicable for annual periods beginning on or after 1 January 2020) ) approved by the EU on 15 January 2020.

The Company considers that the adoption of these amendments did not have a significant impact on its annual financial statements.

The following amendments to the existing standards issued by the IASB and adopted by the EU up to the date of authorization of these financial statements are not yet in force:

Amendments to IFRS 9 "Financial Instruments", IAS 39 "Financial Instruments: Recognition and Measurement" and IFRS 7 "Financial Instruments: Disclosures", IFRS 4 "Insurance Contracts" and IFRS 16 "Leasing" - Phase Two (for annual periods beginning on or after 1 January 2021) - approved by the EU on 13 January 2021.

The Company considers that the adoption of these amendments will not have a significant impact on their own annual financial statements.

Standards new or modified and interpretations brought to the standards in force issued by IASB not yet adopted by EU

On the date of authorization of the present financial statements, IFRS, as adopted by the EU do not significantly differ from the regulations adopted by IASB with the exception of the following standards, amendments and interpretations whose application has not yet been approved by the EU until the date of authorization of these financial statements:

Amendments to IAS 1 "Presentation of Financial Statements" classification of debt as current and long-term (applicable for annual periods beginning on or after 1 January 2023);
Amendments to IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" Onerous Contracts - The cost of performing the contract (applicable for annual periods beginning on or after January 1, 2022);
Amendments to IFRS 10 "Consolidated financial statements" and IAS 28 "Investment in associated and joint ventures" – sale or asset contribution between an investor and and the associated entity or joint venture ( the date of entry into force postponed indefinitely);

Amendments to IAS 16 "Property, plant and equipment" - Property, plant and equipment - Revenue before expected use (applicable for annual periods beginning on or after 1 January 2022);

Amendments to IAS 37 "Provisions, Contingent Liabilities and Contingent Assets" Onerous Contracts - The cost of performing a contract (applicable for annual periods beginning on or after January 1, 2022);
Annual improvements to IFRS standards 2018-2020, IFRS 9 "Financial Instruments", IFRS 16 "Leases" and IAS 41 "Agriculture") (applicable for annual periods beginning on or after 1 January 2022.

The Company estimates that the adoption of these standards and amendments of existent standards will not have a significant impact on the annual financial statements in the year when they will first be applied.

4. DETERMINATION OF THE FAIR VALUE

Certain accounting policies of the Company and requirements for the presentation of the information require the determination of the fair value both for the financial assets and debts as well a for the non-financial ones. Fair values were determined with the purpose of the assessment and/or presentation of information based on the methods below described. When appropriate, additional information on the hypotheses used in determining the fair value are presented in the notes specific for that certain asset or debt.

The fair value represents the prices that would be received following the sale of an asset or the price that would be paid to transfer a debt by a normal transaction between the participants at the market, at the date of the assessment, regardless if this price is observable or estimated used a direct assessment technique. In the estimation of the fair value of an asset or a debt, the Company takes into consideration the characteristics of the asset or debt that the participants at the market would take into consideration for the determination of the price of the asset or the debt, at the date of the assessment. The fair value with purposes of assessment and/or presentation in the financial statements is determined on such a base, except for the assessments that are similar to the fair value, but do not represent the fair value, such as the net achievable value in IAS 2 or the use value in IAS 36.

Additionally, for purposes of financial reporting, the assessments at fair value are classified in Level 1, 2 or 3. depending on the degree in which the information necessary for the determination of the fair value are observable and the importance of this information for the Company, as follows:

Level 1 Information listed prices (unadjusted), on active markets, for assets and debts identical with those that the company assesses;
Level 2 Information information, other than the prices listed included in Level 1, that are observable for the assessed asset or debt, directly or indirectly; and
Level 3 Information information unobservable for the asset or debt .

As at December 31, 2020, the Company determined fair values for Land, Buildings and special constructions, real estate investments and assets held for sale. The fair value valuation was performed by external, independent real estate appraisers, members of the National Association of Appraisers in Romania (ANEVAR) with recognized professional qualifications and experience in appraising all real estate segments. The methods used by the appraiser in determining the fair value were: the market value method by comparison for land and assets held for sale and the income capitalization method (income approach) for construction and real estate investments.

The outbreak of the new Coronavirus (COVID-19), declared by the World Health Organization as a "Global Pandemic" on March 11, 2020, has had a significant impact on global financial markets. Travel restrictions have been implemented by many countries. Travel restrictions have been implemented by many countries. Market activity is affected in many sectors. At the valuation date, it was considered possible to grant a smaller share of previous offers in the market, for comparison purposes, in order to formulate an opinion on the value of the assets. Indeed, the current response to COVID-19 actually means that we are facing an unprecedented set of circumstances on which to base our views. Therefore, the valuation performed on 31 December 2020 is related to the conditions of material uncertainty of the valuation.

5. REVENUE

	December 31, 2020	December 31, 2019
Gross sales of goods Commissions granted to dealers	19,230,024 (612,097)	30,228,171 (1,351,126)
Net turnover from sales of goods	18,617,927	28,877,045
Sales of residual goods Services rendered	113,173 92,457	525,584 98,090
Total net turnover	18,823,557	29,500,719

The gross turnover of the Company as of December 31, 2020 is of RON 19,435,654 (December 31, 2019: RON 30,851,845), of which RON 182,189 for export (December 31, 2019: RON 239,515) and RON 19,253,465 for domestic (December 31, 2019: RON 30,612,330).

For the realisation of this sales volume the Company granted sales bonuses (commissions) according to contracts in force in amount of RON 612,097 as of December 31, 2020, respectively RON 1,351,126 as of December 31, 2019, resulting in a net turnover in the amount of RON 18,823,557 as of December 31, 2020, respectively RON 29,500,719 as of December 31, 2019. The sales bonus commission granted to distributors according to contracts in force represents a variable consideration which the company estimated and recognised in transaction price on December 31, 2020, respectively on December 31, 2019.

6. OTHER OPERATIONAL REVENUES

	December 31,	December 31,
	2020	2019
Revenue from indemnities and penalties	15,851	4,278
Revenue from rental of real estate investments	294,437	299,701
Other operating incomes	76,901	122,783

Other operational revenues	387,189	426,762

7. EXPENSES WITH SALARIES AND OTHER PERSONNEL EXPENSES

	December 31, 2020	December 31, 2019
Salaries expenses	4,900,250	5,249,090
Expenses with salary contributions	126,623	151,211
Expenses with unused vacation leave	10,521	5,644
Expenses with granted vouchers	232,002	304,787
Other benefits to employees	21,260	112,482
Expenses with indemnity of Board of Directors members	496,432	487,051
Expenses with indemnity of executive management	788,028	715,065
Revenue from operating subsidies for the payment of personnel	(110,990)	(155,764)
Total	6,464,126	6.869.566
Average number of employees	101	121

Expenditure on salaries, allowances, contributions and other similar expenses includes expenses on salaries, allowances and other benefits, as well as related contributions, of employees, members of the Executive Management and the Board of Directors.

The short-term benefits granted to employees are recognized as expenses at the time of rendering the services.

7. EXPENSES WITH SALARIES AND OTHER PERSONNEL EXPENSES (to be continued)

The Company created provisions for benefits of employees granted at the cessation of employment contract with the retirement according to the provisions of Collective Employment Contract valid on December 31, 2020, the information is presented in Note 24 Provisions "Benefits of employees".

In order to protect employees against infection with the new coronavirus COVID-19, the Company has implemented a General Plan of measures on specific rules, which is an integral part of the Prevention and Protection Plan in order to improve safety and health conditions for the year 2020.

The protection measures applied have helped in most cases to eliminate the risk of occurrence and development of outbreaks of infection within the Company.

Given that the production of agricultural machinery and equipment decreased, the company's decision was to keep the production capacities unaffected and to maintain its staff and qualifications and the partial use of the support measures offered by OUG132/2020, namely the measure of the reduced work program.

The company benefited from the measure in September and November 2020. Within the program, the company received a salary subsidy of RON 64,866.

8. OTHER ADMINISTRATIVE EXPENSES

	December 31, 2020	December 31, 2019

Expenses with maintenance and repairs	140,410	107,909
Expenses with royalties, leases and rents	14,345	10,583
Expenses with insurance premiums	80,206	76,830
Expenses with professional training	2,143	1,668
Protocol, advertising and publicity expenses	68,338	76,246
Expenses with transport of goods and staff	324,064	400,981
Expenses with travels, secondments and transfers	91,609	165,589
Postal and telecommunication taxes expenses	45,780	40,291
Expenses with banking and similar services	140,904	89,198
Expenses with internal and external audit services	134,405	233,945
Other expenses with services provided by third parties	1,100,747	1,261,994
Total	2,142,951	2,465,234

9. OTHER OPERATING EXPENSES

	2020	2019
Expenses with taxes, duties and assimilate	324,746	403,079
Penalties	18,333	38,509
Other operating expenses	102,620	172,485
Total	445,699	614,073

December 31,

10. FINANCIAL REVENUES AND EXPENSES

	December 31, 2020	December 31, 2019
Interest income	274,047	225,791
Net gain on financial assets	7,991	7,407
Financial revenues total	282,038	233,198
Interest expenses Net foreign exchange loss Expenses on discounts granted	68,494 99,473 105,721	55,504 107,225 113,602
Financial expenses total	273,688	276,331
Net financial result	8,350	(43,133)

10. FINANCIAL REVENUES AND EXPENSES (to be continued)

Financial revenues are recognized in the Statement of Profit and Loss and Other Comprehensive Income under an accrual-based accounting system using the effective interest rate method.

The net gains relating to financial assets held at fair value through the profit and loss account is an increase in the value of the owned fund units, pursuant to the valuation as at December 31, 2020.

Financial expenses include the interests and discounts granted, as well as the foreign exchange losses. Gain and losses from exchange rate differences are reported on a net basis. The value of foreign exchange gains as of December 31, 2020 is of RON 24,741 (December 31, 2019: RON 44,924) while the value of foreign exchange losses is RON 124,214 (December 31, 2019: RON 152,149).

11. PROFIT TAX

Profit tax	December 31, 2020	December 31, 2019
Current income tax expense (Income) / Expense with deferred tax	- 306,250	2,009,737 (398,092)
TOTAL	306,250	1,611,645
	December 31, 2020	December 31, 2019
Profit/loss before tax from continuous operations	(2,032,675)	8,093,806
Tax using the Company's domestic tax rate	-	1,295,009
Tax effect of: Non-deductible expenses Tax-exempt income Tax deductions	- - -	737,138 (355,752) (64,750)
Other deferred tax expenses Profit tax	306,250 306,250	1,611,645

12. DEFERRED TAX ASSETS AND LIABILITIES

Liabilities regarding deferred profit tax are represented by the profit tax, payable in future accounting periods, concerning the taxable temporary differences. The tax rate used to determine the deferred profit tax is provided in the fiscal regulations applicable at the date of drafting up the financial statements, specifically 16%.

As at December 31, 2020, deferred tax receivables were recognized for those provisions in the balance that were non-deductible at the time of calculating the current profit tax.

Receivables and debts on deferred tax are given to the following elements:

Debts regarding deferred profit tax as at December 31, 2020 are generated by the elements detailed in the following table:

	ASSETS	LIABILITIES	NET
Tangible assets	-	1,157,710	1,157,710
Provisions and adjustments Reserves from revaluation of tangible	9,974,184	-	(9,974,184)
assets	-	12,889,605	12,889,605
Reserves from tax facilities	-	339,223	339,223
Total	9,974,184	14,386,538	4,412,354
Temporary net differences Liabilities regarding deferred			4,412,354
profit tax (at 16% rate)			705,977

12. DEFERRED TAX ASSETS AND LIABILITIES (to be continued)

Debts regarding deferred profit tax as at December 31, 2019 are generated by the elements detailed in the following table:

	ASSETS	LIABILITIES	NET
Tangible assets	-	978,573	978,573
Provisions and adjustments Reserves from revaluation of	11,709,105	-	(11,709,105)
tangible assets	-	12,345,694	12,345,694
Reserves from fiscal facilities	-	339,223	339,223
Total	11,709,109	13,663,490	1,954,385
Temporary net differences Liabilities regarding deferred			1,954,385
profit tax (at 16% rate)			312,702

13.TANGIBLE ASSETS AND RIGHTS OF USE OF ASSETS

	nd La s	ch nic al Te ins lla tio ta ns d an me an s of tr t an sp or	Fu itu rn re , ui t eq pm en of fic e	Pr ty op er Co al rp or ing ru nn	As ts se tin re pr es en g ig ht s i us ag e r n lea sin g nt cts co ra	l To ta
CO ST
be Ba lan De r 3 1, 20 18 ce o n ce m	13 25 9, 74 1 ,	16 05 9, 70 4 ,	22 6, 49 7	25 5, 08 2	-	29 80 1, 02 4 ,
hts of As ts tin ig se rep res en g r us e	-	-	-	-	46 7, 86 4	46 7, 86 4
Ba lan De be r 3 1, 20 18 *r ta te d ce o n ce m es	13 25 9, 74 1 ,	16 05 9, 70 4 ,	22 6, 49 7	25 5, 08 2	46 7, 86 4	30 26 8, 88 8 ,
ed Fix ts inp uts se as	96 89 0 ,	22 4, 71 1	12 5, 72 3	54 7, 08 2	-	99 4, 40 6
Inc s f lua tio rea se rom re va n	6, 67 3	-	-	-	-	6, 67 3
d f d a Dis ixe ts po se sse	-	( 3) 43 7, 37	( 9) 1, 55	( 9) 35 7, 91	( 9) 30 79 ,	( 0) 82 7, 65
Re cla ific ati tin ig hts he s t ts to e t ss on o a sse rep res en g r us de rly lea ing ts in sin tra cts un as se g c on	-	/ ( 85 1, 22 3)	-	-	85 1, 22 3	-
Re cla ific ati he ld for le to ts ss on as se sa	( 31 5, 70 7)	-	-	-	-	( 31 5, 70 7)
ific Re cla ati to al tat e i tm ts ss on re es nv es en	( 62 70 7) ,	-	-	-	-	( 62 70 7) ,
Ba lan De be r 3 1, 20 19 ce o n ce m	12 98 4, 89 0 ,	14 99 5, 81 9 ,	35 0, 66 1	44 4, 24 5	1, 28 8, 28 8	30 06 3, 90 3 ,
CU MU LA TE D DE PR EC IA TI ON
Ba lan De be r 3 20 18 *r d 1, ta te ce o n ce m es	-	10 62 6, 49 5 ,	21 4, 01 2	-	-	10 84 0, 50 7 ,
De cia tio pre n e xp en se s	49 7, 89 0	74 9, 18 3	3, 65 5	-	21 4, 55 1	1, 46 5, 27 9
cla ific hts he Re ati s t ts tin ig to e t ss on o a sse rep res en g r us	-	( 52 4, 00 0)	-	-	52 4, 00 0	-
de rly ing in lea sin ts tra cts un as se g c on lat de ela ted tflo Cu ive cia tio to mu pre n r ou ws	-	( 9) 42 1, 43	( 9) 1, 55	-	( 38 7) 21 ,	( 38 5) 45 0,
Ba lan De be r 3 1, 20 19 ce o n ce m	49 7, 89 0	10 43 0, 23 9 ,	21 6, 10 8	-	71 1, 16 4	11 85 5, 40 1 ,
IM PA IR ME NT A DJ US TM EN TS
Ba lan De be r 3 1, 20 18 *r d ta te ce o n ce m es	57 95 4 ,	19 7, 27 6	-	-	-	25 5, 23 0
Ad ju tab lis he d d uri th stm ts en es ng e y ea r -b ks of ad fro Wr ite ju stm ts im irm t ac en m pa en	7, 85 0 -	- ( 8) 19 72 ,	- -	- -	-	7, 85 0 ( 8) 19 72 ,
Ba lan De be r 3 1, 20 19 ce o n ce m	80 65 4 ,	8 17 7, 54	-	-	-	24 3, 35 2
Ba lan De be r 3 1, 20 18 *r d ta te ce o n ce m es	78 13 20 1, 7 ,	5, 23 5, 93 3	48 12 5 ,	08 25 5, 2	-	18 28 70 5, 7 ,
Ba lan De be r 3 1, 20 19 ce o n ce m	12 42 1, 19 6 ,	38 8, 4, 03 2	13 4, 55 3	44 4, 24 5	57 7, 12 4	17 96 5, 15 0 ,

13. TANGIBLE ASSETS AND RIGHTS OF USE OF ASSETS

CO ST	La nd nd s a bu ild ing s	Te ch nic al ins ta lla tio nd ns a f t rt me an s o ra ns po	Fu itu rn re , ui t eq pm en of fic e	Fix ed ts as se ibl ta ng e de un r ion ut ex ec	As ts se ti re pr es en ng u sa ge rig ht s i n lea sin g nt cts co ra	To l ta
Ba lan De be r 3 20 19 1, ce o n ce m	12 98 89 0 4,	99 81 9 14 5,	35 0, 66 1	24 44 4, 5	28 8, 28 8 1,	30 06 3, 90 3
ed Fix ts inp uts as se	, 3, 00 45 5	, 19 2 41 ,	26 24 1 ,	18 6 75 ,	62 6, 52 3	, 20 0, 36 1, 7
Inc s f lua tio rea se rom re va n	77 3, 69 0	-	-	-	-	77 3, 69 0
ed tflo Fix ts as se ou ws	-	( 28 9, 7) 47	( 85 81 4) ,	( 25 1) 45 1,	-	( 82 2) 6, 54
De fr lua tio cre as es om re va n	( 10 6, 63 6)	-	-	-	-	( 10 6, 63 6)
lat de al Cu ive cia tio mu pre n r ev ers	( 8, 4) 1, 00 52	-	-	-	-	( 8, 4) 1, 00 52
Ba lan De be r 3 1, 20 20 ce o n ce m	13 09 6, 42 5 ,	14 72 5, 75 4 ,	29 1, 08 8	68 18 0 ,	1, 91 4, 81 1	30 09 6, 25 8 ,
AC CU MU LA TE D DE PR EC IA TI ON
Ba lan De be r 3 1, 20 19 ce o n ce m	49 7, 89 0	10 43 0, 23 9 ,	21 6, 10 8	-	71 1, 16 4	11 85 5, 40 1 ,
De cia tio pre n e xp en se s	51 0, 63 4	69 4, 70 8	17 41 9 ,	-	25 3, 71 6	1, 47 6, 47 7
Cu lat ive de cia tio al mu pre n r ev ers	( 1, 00 8, 52 4)	-	-	-	-	( 1, 00 8, 52 4)
lat de ela ted tflo Cu ive cia tio to mu pre n r ou ws	-	( 7) 28 9, 47	( 4) 85 81 ,	-	-	( 1) 37 5, 29
Ba lan De be r 3 1, 20 20 ce o n ce m	-	10 83 5, 47 0 ,	14 7, 71 3	-	96 4, 88 0	11 94 8, 06 3 ,
IM PA IR ME NT A DJ US TM EN TS
Ba lan De be r 3 20 19 1, ce o n ce m	80 65 4 ,	8 17 7, 54	-	-	-	24 3, 35 2
Ad ju tab lis he d d uri th stm ts en es ng e y ea r	85 0 7,	-	-	-	-	85 0 7,
-b ks of ad fro Wr ite ju stm ts im irm t ac en m pa en	-	( 6) 19 72 ,	-	-	-	( 6) 19 72 ,
Ba lan De be r 3 1, 20 20 ce o n ce m
AC CO UN TI NG V AL UE S	73 65 4 ,	82 2 15 7,	-	-	-	23 1, 47 6
Ba lan De be r 3 1, 20 19 ce o n ce m	12 42 1, 19 6 ,	4, 38 8, 03 2	13 4, 55 3	44 4, 24 5	57 7, 12 4	17 96 5, 15 0 ,
Ba lan De be r 3 1, 20 20 ce o n ce m	13 02 2, 77 1 ,	3, 73 2, 46 2	14 3, 37 5	68 18 0 ,	94 9, 93 1	17 91 6, 71 9 ,

13. TANGIBLE ASSETS AND RIGHTS OF USE OF ASSETS (to be continued)

Impairment losses recognized in profit or loss were classified as expenses under depreciation and amortization of fixed assets.

During 2020, the acquisitions, mainly included fixed assets specific to the company's activity (presses and devices needed in the production process), the video surveillance system was received and the Steyr Parts store was opened.

During 2020, the Company disposed of a number of 52 fully depreciated property, plant and equipment, which no longer brought any benefit.

As at 31 December 2020, the Company had pledged non‐current assets in favour of financial institution with a net carrying amount of RON 3,021,638 (31 decembrie 2019: RON 3,141,395).

At December 31, 2020, the Company analyzed the existence of impairment indicators for the fixed assets in management. As a result of the procedures performed, the management of the Company considers that at this date there were no indicators of impairment.

(i) Revaluations

On 31 December 2005, all assets in the property of the Company were re-valued in accordance with the regulations in effect at that time, based on a report drawn up by an independent assessor. The assessments were based on fair value, respectively the closest as value of the transactions on that date. The re-valuation surplus was recognized as a reassessment reserve in the equity.

On 31 December 2007, the Company has reassessed the tangible assets - group: "Buildings", based on a report drawn up by an independent assessor, member of ANEVAR. The assessments were based on fair value, respectively the closest as value of the transactions and the inflation index on that date. The re-valuation surplus was recognized as a reassessment reserve in the equity.

On 31 December 2010, the Company has reassessed the tangible assets - group: "Buildings" of the Company by an own commission of specialists and reviewed by as assessor, ANEVAR member. The reassessment focused on the adjustment of the net book values of tangible assets in the "Buildings" group to their fair value, that is the closest in value to the transactions at that date, considering their physical condition and market value. The re-valuation surplus was recognized as a reassessment reserve in the equity. The decrease that compensates the previous increase of the same asset is diminished from the previously established reserve; all the other decreases are recognized as cost in the Statement of the global result.

On 31 December 2013, the Company has reassessed the tangible assets - group: "Buildings" of the Company were reassessed by an independent assessor, member of ANEVAR. The reassessment focused on the adjustment of the net book values of tangible assets, special buildings and constructions, to their fair value. The reassessment surplus was recognized as a reassessment reserve in the equity, respectively as an income if, pursuant to a previous reassessment, a reassessment expense was recorded. The decrease that compensates the previous increase of the same asset is diminished from the previously established reserve; all the other decreases are recognized as cost in the Statement of the global result.

On 31 December 2018, the Company has reassessed the tangible assets - group: "Constructions" and "Land" based on a report drawn up by an independent valuer, ANEVAR member. The evaluation is according with international valuation standards. The reevaluation aimed at adjustment of net book values of tangible assets, lands, buildings and special constructions at fair value. The methods used by the appraiser in determining the fair value were: the method of market comparison for land and the net replacement cost for buildings.

The reassessment surplus was recognized as a revaluation reserve in the equity, respectively as an income if, pursuant to a previous revaluation, a revaluation expense was recorded. The decrease which compensates the previous increase of the same asset is reduced from the previously made reserve; all the other decreases are recognised as cost in the Statement of Profit and Loss and Other comprehensive income.

On December 31, 2020, the fixed assets were revalued - the group: "Constructions" and "Lands" based on a report prepared by an external, independent real estate appraiser, member of the National

13. TANGIBLE ASSETS (to be continued)

Association of Appraisers in Romania (ANEVAR) with recognized professional qualifications and experience in evaluation of all real estate segments. The valuation complies with the international valuation standards. The revaluation aimed at adjusting the net book values of property, plant and equipment, land, buildings and special constructions to fair value. The methods used by the appraiser

in determining the fair value were: the market value method by comparison for land and the income capitalization method (income approach) for buildings.

The revaluation surplus was recognized as a revaluation reserve in equity, respectively as income if, as a result of a previous revaluation, a revaluation expense was recorded. The decrease that compensates the previous increase of the same asset is diminished from the previously constituted reserve; all other decreases are recognized as a cost in the statement of comprehensive income.

14. INTANGIBLE ASSETS

Brevets,
licenses and	Other
trademarks	assets	Total

528,327	879,856	1,408,183
-	9,196	9,196
528,327	889,052	1,417,379

248,792	754,953	1,003,745
92,489	47,308	139,797
341,281	802,261	1,143,542

269,195	-	269,195
(89,732)	-	(89,732)
179,462	-	179,463
10,340	124,903	135,243
7,583	86,791	94,374

COST

	Brevets, licenses and trademarks	Other assets	Total
Balance on December 31, 2019
Purchases	528,327	889,052	1,417,379
Intangible assets outflows	-	9,999	9,999
Balance on December 31, 2020	-	(51,216)	51,216
	528,327	847,835	1,376,162
DEPRECIATION AND DEPRECIATION LOSS
Balance on December 31, 2019	341,281	802,261	1,143,542
Depreciation during the year	92,489	41,660	134,149
Cumulative depreciation related to outputs	-	(51,216)	51,216
Balance on December 31, 2020	433,770	792,705	1,226,475

DEPRECIATION ADJUSTMENTS

14. INTANGIBLE ASSETS (to be continued)

179,463	-	179,463
-	-	-
(89,731)	-	89,731
89,732	-	89,732

ACCOUNTING VALUES

Balance on December 31, 2019	7,583	86,791	94,374
Balance on December 31, 2020	4,825	55,130	59,955

Intangible assets as at December 31, 2020, at the net value of RON 59,955 (December 31, 2019: 94,374 RON), represent the unamortized part of licenses, technological documentation and computer programs used.

During 2020, the Company disposed of 23 fully depreciated intangible assets, which did not bring any benefit.

Impairment losses recognized in profit or loss were classified as depreciation and amortization.

Amortization of intangible assets

The amortization period for intangible assets is limited to 10 years.

15. REAL ESTATE INVESTMENTS

	December 31, 2020	December 31, 2019
Net value	487,280	413,550
	December 31, 2020	December 31, 2019
Balance on	413,550	430,636
Increases/Reclassifications in Real estate investments	-	62,707
Reductions/Reclassifications in assets held for sale Fair value modifications	- 73,730	(71,500) (8,293)
Balance on December 31	487,280	413,550

Real estate investments are investments properties (lands, buildings) owned by the company with the purpose of lending them, by operational leasing or for the increase of their value.

Commercial properties are leased to third parties on the basis of contracts valid for 12 months with the possibility of extension.

Certain properties also include a part that is owned for leasing purposes and another part owned for the production of goods, provision of services or for administrative purposes. In case that the part owned for leasing purposes does not occupy a significant share, the property continues to be treated as a tangible asset,

The company uses the fair value method, as presented in note 3, item f. "Real estate investments".

The value of rental income as of December 31, 2020 was RON 294,437 (December 31, 2019: RON 299,701). The commercial properties owned by the company are mainly leased to some industrial companies (plastics producers and metal parts) companies that were not significantly affected by the COVID-19 pandemic.

15. REAL ESTATE INVESTMENTS (to be continued)

The monthly rent was invoiced according to the contracts in force and there were no requests to postpone the rent payment.

The company did not make significant repairs and had no other costs with real estate investments as at December 31, 2020.

The valuation at fair value of real estate investments was performed by an external, independent real estate appraiser, member of the National Association of Appraisers in Romania (ANEVAR) with recognized professional qualifications and experience in appraising all real estate segments. The measurement of the fair value of the real estate investment was made using the income capitalization method.

16. ASSETS HELD FOR SALE

	December 31,	December 31,
	2020	2019

Balance on December 1	387,207	12,015,414
Purchases/ Reclassifications	-	387,207
Sales	-	(12,015,414)
Changes in fair value	(41,697)	-
Balance on December 31	345,510	387,207

As at December 31, 2020, the Company holds for sale assets identified as follows:

a. Unincorporated land with a 6,600 sqm surface according to documents (6,691 sqm according to measurements), the "arable"category, located in the outskirts of the city of Targu Neamț, Valea Seaca area, Neamț county, identified with cadastral number 50718, registered in the Land Registry of Tg Neamț, under the number 50718;
b. The building located in Baldovinești Village, Vădeni city, Braila county, which is composed of:
- Incorporated land with a 5,278 sqm surface, identified with cadastral number 240, registered in the Land Registry under the number 71069, land 208, parcel 1354 of Vădeni town, category of use "building yards";
- Related construction

The valuation at fair value was performed by an external, independent real estate appraiser, member of the National Association of Appraisers in Romania (ANEVAR) with recognized professional qualifications and experience in appraising all real estate segments. The revaluation aimed at adjusting the net book values of the assets held for sale at fair value. The method used by the appraiser in determining the fair value was: the market value method. The evaluator considered the potential impact of the COVID-19 epidemic.

17. INVENTORIES

	December 31, 2020	December 31, 2019

Raw materials and materials	1,124,321	1,256,496
Work in progress	321,686	247,002
Semi-finished goods	68,252	68,507
Finished goods	14,639,195	13,104,519
Goods purchased for resale	5,950,278	5,485,622

Inventory at net value	22,103,732	20,162,146

As of December 31, 2020, the value of the adjustments for the depreciation of stocks is of RON 830,602 (December 31, 2019 of RON 870,206).

Inventories in amount of RON 980,000, represented by finished goods (agricultural machinery) are pledged in favour of financing banks.

18. TRADE RECEIVABLES

	December 31, 2020	December 31, 2019
Trade receivables - stages 1 and 2 Adjustments for impairment of trade receivables	5,289,099	10,778,334
- stage 1 and 2	(573,748)	(1,636,120)
Net trade receivables, stages 1 and 2	4,715,351	9,142,214
Trade receivables - stage 3 Adjustments for impairment of trade receivables	7,588,676	7,340,905
- stages 3	(6,645,799)	(6,606,815)
Net trade receivables, stage 3	942,877	734,090
Net trade receivables	5,658,228	9,876,304

The fair value of the trade receivables reflects their value except for the adjustments from impairment.

On December 31, 2020, the net trade receivables amounting to RON 5,658,228 (December 31, 2019: RON 9,876,304) are considered performing in full.

On December 31, 2020, the Company has received from customers promissory notes and cheques in amount of RON 283,655 (December 31, 2019 in amount of RON 58,498) according to the contract clauses.

On December 31, 2020, are established impairments of trade receivables in total amount of RON 7,219,547 (December 31, 2019: RON 8,242,935), Impairments have been recognized both due to the fact that there is no clear evidence that these receivables will be recovered, as well as based on the application of the Expected Credit Loss model in accordance with IFRS 9.

Assessed individually:

The entity peforms individually analsys of trade receivables recoverability based on the litigation status and days past due. For all customers in litigation and days past due over 180 days a provision of 100% from the gross value is booked.

The seniority structure of trade receivables at the reporting date was:

	Impairment December 31, 2020	Gross value December 31, 2020	Impairment December 31, 2019	Gross value December 31, 2019
Due for over 180 days	6,645,799	7,588,676	6,606,815	7,340,905
Assessed collectively:
	Impairment December 31, 2020	Gross value December 31, 2020	Impairment December 31, 2019	Gross value December 31, 2019
Undue	61,445	2,974,181	973,748	8,800,942
Due for 0 to 30 days	33,614	669,750	35,027	902,639
Due for 31 to 60 days	67,977	660,220	74,667	112,864
Due for 61 to 90 days	73,762	477,011	53,383	184,353
Due for over 90 days	336,949	507,937	499,295	777,536

573,748 5,289,099 1,636,120 10,778,334

19. OTHER RECEIVABLES

	December 31,	December 31,
	2020	2019
Different debitors	145,623	143,922
Other receivables (bank interest, contributions and VAT)	110,327	208,148
Tax recoverable	282,137	69,931
Adjustment for other receivables - miscellaneous debtors	(132,995)	(113,817)
Total	405,092	308,184

The fair value of the other receivables reflects their value except for the adjustments from impairment.

The entity peforms indivually analsys of sundry debtors recoverability based on the litigation status and days past due. For all customers in litigation and days past due over 180 days a risk provision of 100% from the gross value is booked.

In order to cover the risk of non-recovery of certain categories of receivables - various debtors, the Company registered adjustments for the depreciation of various debtors in the amount of RON 132,995.

	Impairment	Gross value	Impairment	Gross value
	December	December 31,	December 31,	December 31,
	31, 2020	2020	2019	2019
Due for over 180 days	132,995	132,995	113,817	113,817

20. CASH, CURRENT ACCOUNTS, BANK DEPOSITS AND FINANCIAL ASSETS AT FAIR VALUE

(i) Cash and current accounts

	December 31, 2020	December 31, 2019
Cash	13,024	12,020
Current bank accounts	2,232,038	2,622,812
Cash and current accounts - gross value	2,245,062	2,634,832

The current accounts opened with banks are permanently at the Company's disposal

Available cash in amount of RON 2,144,514 is pledged in favour of financing banks.

(ii) Bank deposits

	December 31,	December 31,
	2020	2019
Fixed term bank deposits	5,000,000	18,800,000
Expected credit loss related to bank deposits	(2,767)	(1,573)
Total bank deposits	4,997,233	18,798,427

The bank deposits are permanently available for the Company and are not restricted.

(iii) Financial assets at fair value through the profit and loss account

	December 31, 2020	December 31, 2019
Financial assets - fund units	261,851	253,859
Securities of Transport Ceahlau SRL	51,000	51,000
Adjustment of fair value of securities	(51,000)	(51,000)
Total	261,851	253,859

20. CASH, CURRENT ACCOUNTS, BANK DEPOSITS AND FINANCIAL ASSETS AT FAIR VALUE (to be continued)

As of December 31, 2020, the company holds investments in fund units, at fair value, as follows:

Fund type	Fund management company	Number of fund units	Value of fund units
Open-end investment
fund BT OBLIGATIUNI	BT Asset Management	13,591	261,851

In 2020, the fund units held at BT Asset Management valued at fair value through other elements of the overall result registered an increase (the change in fair value being in the sense of increase) of RON 7,991.

21. CAPITAL AND RESERVES

a. Share Capital

Subscribed and paid-in share capital on December 31, 2020	RON 23,990,846
Number of subscribed and paid-in shares on December 31, 2020	239,908,460 shares
Nominal value of one share	RON 0.10
Characteristics of the issued shares, subscribed and paid-in	Ordinary, nominative, dematerialized

The securities of the Company (shares) are registered and traded in the category Standard of Bucharest Stock Exchange. All shares have the same voting right.

As of December 31, 2020, the share capital of the Company was not modified, meaning its increase or decrease.

The share capital registered on as of December 31, 2020 is of RON 23,990,846.

The Company's shareholder structure is the following:

December 31, 2019	Number of shares	Amount (RON)	%
Evergent Investments S.A. (former SIF MOLDOVA S.A.)	175,857,653	17,585,765	73.3020
NEW CARPATHIAN FUND Other shareholders, of which:	48,477,938	4,847,794	20.2068
- legal entities	803,720	80,372	0.3350
- individuals	14,769,149	1,476,915	6.1562
TOTAL	239,908,460	23,990,846	100.00


	Number	Amount
December 31, 2020	of shares	(RON)	%
Evergent Investments S.A. (former SIF MOLDOVA S.A.)	175,857,653	17,585,765	73.3020
NEW CARPATHIAN FUND	48,477,938	4,847,794	20.2068
Other shareholders, of which: - legal entities - individuals	722,117 14,850,752	72,212 1,485,075	0.3010 6.1902

21. CAPITAL AND RESERVES (to be continued)

b. Reserves

	December 31, 2020	December 31, 2019
Reserves from the re-valuation of tangible assets	8,922,092	8,378,181
Deferred tax related to unrealised revaluation reserve	(1,481,812)	(1,394,786)
Total	7,440,280	6,983,395
	31 decembrie	31 decembrie
	2020	2019
Retained earnings representing the realized revaluation reserve surplus - gross	3,967,513	3,967,513
Deferred tax from realized and non taxable revaluation reserve	(634,802)	(634,802)
Retained earnings representing the realized revaluation reserve surplus - net	6,683,395	14,847,573
Profit/loss carried forward	(2,338,925)	3,035,726
Other reserve	5,887,563	5,481,334
TOTAL	13,564,744	26,697,344

c. Legal reserves

The company distributes at legal reserves 5% from the profit before taxation, up to the limit of 20% of the share capital. These amounts are deducted from the tax base for calculating the corporate tax. The value of the legal reserve as of December 31, 2020 is RON 2,804,874 (December 31, 2019: RON 2,804,874).

The legal reserves cannot be distributed to the shareholders.

d. Dividends

e. Result per share

The result per share is calculated by dividing the net profit attributable to the company's shareholders on December 31, 2020 in the amount of (RON 2,338,925) (December 31, 2019: RON 6,482,161) to the number of ordinary shares in circulation of 239,908,460 shares (December 31 2019: 239,908,460 shares).

Profit distributable to ordinary shareholders	December 31, 2020	December 31, 2019
Profit for the period Number of ordinary shares	(2,338,925) 239,908,460	6,482,161 239,908,460
Gains per share	(0.0097)	0.0270

22. LOANS

This note supplies information on the contractual terms of the loans carrier of interests of the Company, assessed at amortized cost.

	December 31, 2020	December 31, 2019
Long-term bank loans	706,983	981,035
Short term bank loans (up to 1 year)	292,548	287,135
Loans	999,531	1,268,170

22. LOANS (continued)

The tables below present detailed information regarding the loans contracted by the Company on December 31, 2020 and December 31, 2019:

December 31, 2020

Credit type	Loan balance (RON)	Account currency	Annual interest rate (%)			The final maturity of the loan
Investment	999,531	EUR	EURIBOR +2,5%	6	months	20/05/2024
Credit facility	-	EUR	EURIBOR +1,85% per year	at 3	months	28/02/2021
Total	999,531

December 31, 2019

Credit type	Loan balance (RON)	Account currency	Annual (%)	interest	rate	The final maturity of the loan
Investment	1,268,170	EUR	EURIBOR +2,5%	6	months	20/05/2024
Credit facility	-	EUR	EURIBOR +1,85% per year	at 3	months	28/02/2020
Total	1,268,170

As of December 31, 2020, the Company has an ongoing investment credit in the amount of EUR 420,000 for a period of 14 years for the procurement of a cutting equipment with laser

As of December 31, 2020, the Company has a loan granted by Banca Comerciala Romana S.A. used to finance the current activity in the amount of EUR 200,000. As at 31 December 2020 the loan was not used.

The Company's non-current assets, inventories and cash pledged in favour of financing banks are presented in Notes 13, 17 and 20.

23. LIABILITIES FROM LEASING CONTRACTS

	December 31, 2020	December 31, 2019
Long-term debt
Leasing agreements related debts (between 1 year and 5 years)	655,600	309,919
Total long-term debt	655,600	309,919
Short term debts
Debts arising from leasing contracts	227.412	186.693
Total short-term debt	227,412	186,693
Total financial leasing debts	883,012	496,612

The company has leases having as object mainly means of transportand and spaces for sale and offices.

24. PROVISIONS FOR RISK AND EXPENSES

	Other provision	Benefits of employees	Total
Balance on December 31, 2019	600,169	274,847	875,016
Provisions created during the period	222,908	-	222,908
Provisions released during the period	109,954	44,329	154,283
Balance on December 31, 2020	713,123	230,518	943,641
Long-term	-	230,518	230,518
Current	713,123	-	713,123

GUARANTEES

The provisions for guarantees in the amount of RON 76,872 on December 31, 2020 (December 31, 2019: RON 59,028) were established taking into account the expenses related to the service activity for the agricultural machines in the warranty period.

Employee benefits

Provisions amounting to RON 230,518 on December 31, 2020 (December 31, 2019: RON 274,847) are established for benefits granted to employees at the termination of the employment contract together with retiring following certain provisions of the collective employment contract.

Other provisions

Other provisions existing in balance on December 31, 2020 represent:

‐ Provisions for the non-granted rights according to the contracts concluded in the amount of RON 57,730 (December 31, 2019: RON 125,812);
‐ Provision for return risk for products and goods in the amount of RON 578,521 (December 31, 2019: RON 415,329).

25. TRADE DEBTS

	December 31, 2020	December 31, 2019
Trade debts - short-term debts	1,850,585	6,057,681
Investment suppliers	-	18,229
Suppliers - Invoices to be received	233,349	228,996
Total	2,083,934	6,304,906

26. OTHER DEBTS

	December 31,	December 31,
	2020	2019
Social insurances and other taxes	453,413	398,400
Dividends to be paid	311,899	86,971
Other debts – advance	45,161	68,392
Other creditors, (VAT and quarantees)	293,878	663,090
Total	1,104,351	1,216,853

Dividends not paid within 3 years from the date of declaration are prescribed by law, except for the amounts seized by the tax authorities.

At the General Meeting of Shareholders on April 22, 2020, the Company's shareholders approved the prescription of dividends related to the financial years 2012, 2014 and 2015 established by the AGOA of April 29, 2013, April 17, 2015, respectively 25 April 25, 2016, not collected until of August 17, 2019. Income from prescription dividends amounting to RON 60,585 was registered.

27. FINANCIAL INSTRUMENTS

General presentation

The company is exposed to the following risks from the use of the financial instruments:

Credit risk
Liquidity risk
Market risk

These notes represent information on the exposure of the Company to each of the risks above mentioned, objectives of the Company for the assessment and management of the risk and the procedures used for the management of the capital.

General framework for risk management

The risk management policies of the company are defined in such way as to ensure the identification and analysis of the risks that the company is encountering, establishment of limits and adequate controls, as well as the monitoring of risks and compliance of the established limits.

The internal auditor of the Company performs standards and ad-hoc missions to review controls and procedures for the management of risks, their results being presented to the Management Board.

a. Credit risk

The treatment of the counter-party risk is based on internal and external success factors of the Company.

Financial assets, that may expose the Company to the collection risk, are mainly trade receivables and liquid assets. The company has policies aimed to assure that the sales are made to costumers with proper references on their creditworthiness. The net value of the receivables for adjustments for impairment represents the maximum amount exposed to the collection risk. The situation of receivables by age is presented in Note 18, Receivables.

The credit risk is the risk that the Company supports a financial loss following the non-fulfillment of the contractual obligations by a client or a counter-party on a financial instrument, and this risk results mainly from trade receivables and financial investments of the Company.

The company has a significant concentration of credit risk. The company applies specific policies to make sure that the sale of products and services is carried out so that the commercial loan granted is adequate and monitors continuously the age of receivables.

Cash and cash equivalents are placed only in top-rated banking institutions, considered to have a high solvency.

Exposure to credit risk

The accounting value of the financial assets represents the maximal exposure to credit risk. The maximal exposure to the risk credit on the date of the reporting was:

27. FINANCIAL INSTRUMENTS (continued)

	December 31, 2020	December 31, 2019
Net trade receivables	5,658,228	9,876,304
Other receivables	405,092	308,184
Securities and bank deposit	261,851	253,859
Cash and cash equivalents	7,242,295	21,433,259
	13,567,466	31,871,606

The company has no significant exposure to a single partner and does not record a significant concentration of turnover on a single geographic area.

On the internal market, the Company has collaborated with a number of 20 distributors from the entire country, the most important ones being located preponderantly in the agricultural area.

On the foreign market, the sales volume was achieved in proportion of 1% of the turnover. In this market, the connection with traditional customers who know and promote the company's products is maintained. The credit risk, including the country risk in which the client operates, is managed on each business partner. When it is considered necessary, specific instruments to reduce the credit risk are requested, respectively receipts from customers, before the delivery of the goods. These are presented in the financial statements as Other debts, advances received.

The company has established a credit policy according to which every new client is analyzed individually from the point of view of reliability and in certain cases references are requested supplied by banks before being contracts of firm sales are concluded.

For the purpose of monitoring the risk credit associated to the clients, these are grouped depending on the characteristics of the credit risk, taking into account their classification as legal or natural persons, internal or external clients, seniority, due dates and the existence of certain previous financial difficulties. The clients classified as having a high risk are monitored, following the future sales to be made based in advance payments or using certain banking instruments to guarantee collections.

The policy of the company is to offer service for the products supplied in a guarantee period of 24 months.

On December 31, 2020 net accounting value of the cash and cash equivalents, suppliers and clients, commitments and short-term debts approximated their fair values due to short term due dates.

b. Liquidity risk

Generally, the Company ensures that it holds sufficient cash to cover the foreseen operational expenses, including for the payments of its financial obligations.

For the purpose of managing liquidity risk, cash flows are monitored and analyzed weekly, monthly, quarterly, and annually to determine the expected level of net change in liquidity.

27. FINANCIAL INSTRUMENTS (continued)

(ii) Liquidity risk (continued)

Exposure to liquidity risk:

The due dates of the financial assets and debts are the following:

December 31, 2020	Book value	0 – 12 months	More than 1 year
Financial assets
Cash and cash equivalents	7,242,295	7,242,295	-
Financial assets evaluated at fair value by profit and loss account	261,851	261,851	-
Trade receivables and other receivables	6,063,321	6,063,321	-
Total financial assets	13,567,467	13,567,467	-
Financial liabilities
Investment credit	(999,531)	(292,548)	(706,983)
Leasing liabilities	(883,012)	(227,412)	(655,600)
Commercial debts and other debts	(3,188,285)	(3,188,285)	-
Total financial liabilities	(5,070,828)	(3,708,246)	(1,362,583)
NET	8,496,638	9,859,221	(1,362,583)
December 31, 2019	Book value	0 – 12 months	More than 1 year

Financial assets Cash and cash equivalents	21,433,259	21,433,259	-
Financial assets evaluated at fair value	253,859	253,859	-
by profit and loss account Trade receivables and other receivables	10,184,488	10,184,488	-
Total financial assets	31,871,606	31,871,606	-

Financial liabilities
Investment credit	(1,268,170)	(287,135)	(981,035)
Leasing liabilities Commercial debts and other debts	(496,612) (7,521,759)	(186,693) (7,521,759)	(309,919) -
Total financial liabilities	(9,286,541)	(7,995,587)	(1,290,954)
NET	22,585,065	23,876,019	(1,290,954)

iii. Market risk

The Romanian economy is in continuous development, with a lot of uncertainly on the possible orientation in politics and economic development in the future. The company management cannot foresee the changes which will take place in Romania and their effects on the financial situation, the operating results and cash flows of the company.

iv. Exchange rate risk

The company is exposed to foreign currency risk through the sale, procurement, availability and loans that are denominated in other currencies than the functional currency of the Company, however, the company in which most of the transactions are performed is RON.

Exposure to exchange rate risk:

The currency that exposes the company to this risk is mainly EUR. The differences resulted are included in the global result statement and do not affect the cash flow until the liquidation of debt. The Company holds on December 31, 2020 cash and cash equivalents, trade receivables and trade debts in foreign currency, the rest of the financial assets and financial debts are denominated in RON.

27. FINANCIAL INSTRUMENTS (to be continued)

Sensitivity analysis

1 EUR = 4.8694	1 RON	TOTAL
10,257	7,232,038	7,242,295
	261,851	261,851
2,205	6,061,116	6,063,321
12,462	13,555,004	13,567,466
EUR (1EUR = 4,8698)	RON 1RON	TOTAL
(999,531)	-	(999,531)
(883,012)	-	(883,012)
(820,384)	(2,367,901)	(3,188,285)
(2,702,928)	(2,367,901)	(5,070,829)
	EUR	RON

December 31, 2019	EUR 1 EUR = 4.7793	RON 1 RON	TOTAL
Cash and cash equivalents Financial assets evaluated at fair value by profit and loss account	25,899 -	21,407,360 253,859	21,433,259 253,859
Trade receivables and other receivables	2,115	10,182,373	10,184,488
Total financial assets	28,014	31,843,592	31,871,606
December 31, 2019	EUR 1 EUR = 4.7793	RON 1 RON	TOTAL
Bank loans	(1,268,170)	-	(1,268,170)
Leasing liabilities	(496,612)	-	(496,612)
Commercial debts and other debts	(4,259,190)	(3,262,569)	(7,521,759)
Total financial liabilities	(6,023,972)	(3,262,569)	(9,286,541)

The Company did not conclude hedging contracts with regards to the bonds in foreign currency or exposure to the interest rate risk.

The impact on the Company profit of a change of +/-5% of exchange rate RON/EUR, on December 31, 2020, all the other variables remaining constant, is ± RON 134,523 (December 31, 2019: RON 299,798).

c. Capital management

The objectives of the company in the management of the capital are to ensure the protection and capability to reward its employees, to maintain an optimal structure of capitals in order to reduce capital costs.

The company monitors the volume of the attracted capital based on the indebtness degree. This rate is calculated as a ratio between gross debts and totals of capital. The net debts are calculated as a total of cash gross debts. The totals of capital are calculated at own capital to which net debts are added.

27. FINANCIAL INSTRUMENTS (to be continued)

	December 31, 2020	December 31, 2019
Financial liabilities	5,070,828	9,286,541
Cash and cash equivalents Financial assets evaluated at fair value by profit and loss	7,242,295	21,433,259
account	261,851	253,859
Net financial liability	(2,433,318)	(12,400,577)
Equity	47,800,744	60,476,459
Indicator of the net debt	(0.05)	(0.21)

28. COMMITMENTS AND CONTINGENTS

(a) Taxation

The taxation system in Romania is in a phase of consolidation and harmonization with the European legislation. However, there still are different interpretations of the tax legislation. In certain situations, the tax authorities may treat differently certain aspects, proceeding to the calculation of certain taxes and additional taxes and interests and late payment penalties (0,05% per day). In Romania, the fiscal exercise remains open for fiscal verification for 5 years. The management of the Company considers that the tax obligations included in these financial statements are adequate.

(b) Commitments

As at December 2020 the Company had a letter of bank guarantee issued related to the main supplier of goods, CNHI International, as follows:

Bank	Beneficiary	Value	Currency:	Issuing date	Due date
Banca Transilvania	CNHI International SA	300,000	Euro	16/02/2016	15/07/2021

(c) Concluded insurances

On December 31, 2020, the Company has concluded insurance policies for tangible assets.

(d) Legal proceedings

The company is subject of a number of court actions resulted in the normal course of the development of the activity.

Besides the amounts already registered in these financial statements as adjustments for impairment of receivables and described in the notes, the amounts associated to other court actions will be recognized when obtaining an irrevocable definitive sentence/their collection.

The management estimates that the result of these lawsuits will not have impact on the financial position of the Company.

(e) Quality-Environment Compliance Program

The company has implemented the Integrated Management System "Quality-Environment", certified by the external auditor TÜV THÜRINGEN for ISO 9001: 2008 and ISO 14001: 2004. The certificate is for the application of the demands according to the reference standards and it was proved and attested according to the certification standards.

29. AFFILIATED PARTIES

Evergent Investments S.A. (former SIF MOLDOVA S.A.) is a majority shareholder at Mecanica Ceahlau SA, holding 73.3020 % of the total of shares. The company is part of the consolidation perimeter of Evergent Investments S.A..

NEW CARPATHIAN FUND is a significant shareholder at Mecanica Ceahlau SA, holding 20.2068% of the total of shares.

Details about other affiliated parties with which Mecanica Ceahlau entered in trade relationships: Transport Ceahlau SRL.

Parties affiliated to the Company and the relationships with these are presented below:

Entity Nature of the relationship

Evergent Investments S.A. Parent company NEW CARPATHIAN FUND Significant shareholder

Transport Ceahlau SRL Affiliated company

No transactions, amounts owed or to be received were identified with Evergent Investments S.A. (former SIF MOLDOVA S.A.), other than the rightful dividends, amounting (gross) RON 8,063,073.

No transactions, amounts owed or to be received were identified with NEW CARPATHIAN FUND, amounting (gross) RON 2,222,713.

The participating interests that the company holds on December 31, 2020 in Transport Ceahlau SRL are presented as such:

	December 31,	December 31,
	2020	2019
Shares unquoted on January 1, 2020	51,000	51,000
Purchases	-	-
Disposals	-	-
Adjustments for depreciation	51,000	51,000
Balance on December 31, 2020	-	-

The main activity object of Transport Ceahlău SRL is the road transportation of goods, however the main share in the activity is held by general mechanical works.

The statement of movements of equity securities on December 31, 2020 is the following:

			Participation percentage
			December	December 31,
	Purchase date	Sale date	31, 2020	2019
Transport Ceahlau SRL	2004	-	24.28%	24.28%

Information on the transactions with affiliated parties

As of December 31, 2020, the Company had no transactions with Transport Ceahlau SRL.

The situation of receivables and debts with Transport Ceahlau is as follows:
	December 31,	December 31,
	2020	2019
Other receivables	113,817	113,817
Adjustment for other receivables	(113,817)	(113,817)
Commercial debts	4,951	4,951
TOTAL	4,951	4,951

The company applies the same internal policies in the contractual relationships with the affiliated entities as well as in the relationships with the other contractual partners with which the company is not in special relationships.

FOR TIHE FINANCIAL YEAR ENDED ON DECEMBER 3 MECANICA CEAHLAU S.A. NOTE\$ TO THE FINANCIAL STATEMENTS

29. IIFFILIATED PARTIES (to be continued)

Transerctions with the key management personnel

Key ernployees are considered:

Dl liorin Molesag -General Manager
D-na Oana Chirilia -Economic Director
Dl llotezatu Cornel Sales Director period 01.01 -30.04.2020
Dl lvloraru Ioan Sales Director period O]-Os -3L.LZ.2O2O

Loans granted to directors

The company did not grand advances, credits or loans to the members of the management and supervision bodies on December 3t, 2020.

Benefi'ts of the key management personnel

The salary rights of the directors are established by the Management Board according to the legal provisions and the management contracts.

a) G)ranted salary rights

	December 31,2O2A	December 31, 2019
Executive Team	788,02E	7t5,065
Members of the Board of Directors	496,432	487.O5r
TOTAL	L,284,46A	L 2O2,LL6
b) Blalance on
	December 31,2020	December 3L,2OL9
Executi'ye Team	65,24L	?q 71?
Members of the Board of Directors
TOTAL	65,24r	35,7L3

30. EVENTS AFTER THE REPORTING DATE

On February 12, 202L, the Romanian Government approved the decision on extending the alert status by another 30 days, being the tenth period of 30 days (consecutive) since Romania is on alert. Romania entered the state of alert on May 15,2020 after two months in which the state of emergency was in fbrce, decreed by the President of Romania on March t6,2020.

In the r:ontext of the COVID-19 pandemic, it is expected that there will continue to be a degree of uncertainty in the field in which the company operates. The company carefully, monitors developments in the field in which it operates as well as in the economic environment in general, as well as the effects of economic measures applied at national and international level.

The cornpany's management has as permanent objectives the analysi:; of the future impact of the Covid-19 pandemic on the financial performance and the taking of adequate measures to reduce the related risks.

The financial statements were authorized for aoorovar of Directors on March L2, 2O2L and were signed on its behalf by:

Molesag Ion Sorin, General Manager

al nager

STATEMENT

According to the provisions of Law 24/20017 and Regulation 5/2018 of the ASF, the undersigned Sorin Ion Molesag – General Manager and Oana Chirila – Financial Director, responsible with the drafting of the Financial Statement on December 31, 2020, we declare the following:

The Financial Statements on December 31, 2020 were drafted in accordance with the International Financial Reporting Standards ("IFRS") adopted by the European Union, in accordance with the requirements of Romanian accounting rules regulated by the Accounting Law no. 82/1991 republished and updated, of the Order 2844 of 2016 on the approval of the Accounting Regulations in compliance with the International Financial Reporting Standards;.
The Financial Statements on December 31, 2020 offer an accurate and conform image with the reality of assets, obligations, financial positions, profit and loss account, the company develops its activity in continuity conditions;
The Report of the Management Board consists of an accurate analysis of the development and performances of the company, as well as a description of the main risks and uncertainties specific to the developed activities:
We do not have knowledge, at the date of this statement, of other information, events, circumstances that could significantly alter the above made statements;

This statement was made today, 12.03.2021, at the headquarters of Mecanica Ceahlau SA,

Sorin Ion MolesagOana Chirila

GENERAL MANAGER FINANCIAL DIRECTOR,

KPMG Audit SRL Vivido Business Center Str. Alexandru Vaida Voevod, Nr. 16 Clu~Napoca, 400267,Jud. CI~ Romania Tel: +40 (372) 377 900 Fax: +40 (753) 333 800 w ww.kpmq.ro

lrilBIJBnclent Auclrtor s· Reoor-t

To the Shareholders of Mecanica Ceahlau S.A.

Piatra Neamt Dumbrave1 Street, no. 6, Nedmt County, Roman ia Un1que Reg1st1 at1 on C.ode: 2045262

1. We have audited the financial statements of Mecanica Ceahlau S.A. ("the Company"). which comprise the statement of financial position as at 31 December 2020, the statements of profitor loss and other comprehensive income, changes in equity and cash flows for the year then ended, and notes, comprising significant accounting policies and other explanatory information.
1. The financial statements as at and for the year ended 31 December 2020 are identified as fol lows:
Net assets{Total equity:

• Net loss for the year:

Lei 47,800,744 Lei -2,338,925

In our opinion, the accompanying financial statements give a true and fair view of the financial position of the Company as at 31 December 2020, and of its financial performance and its cash flows for the year then ended in accordance with the Order of Minister of Public Finance No. 2844/2016 for approval of accounting regulations in accordance with International Financial Reporting Standards ("OMPF no. 2844/2016").
We conducted our aud it in accordance with International Standards on Auditing (" ISAs"), Regulation (EU) no. 537/2014 of the European Parliament and of the Council ("the Regulation") and Law no. 162/2017 ("the Law"). Our responsibilities under those standards and regulations are further described in the Auditors' Responsibilities for the Audit of the Financial Statements section of our report. We are independent of the Company in accordance with International Ethics Standardb 4

lJl)i l J!; 1 11 l 1 '! ~ ¹1 III lifl1,'' lllli [~;·, 1!1 ,l 1 w "11•. I111H ·U t>. ;.; ·1<1 "!: 11 111;;1'\1" J: 1 ·1 IT 1•' ) • 1[ !l1l~ l1 1 ·[·il ;;l 1· 1 J' "'1 j1( tp'j /llWIIIU ~ bll1K1!10Vt:flldl ll ,;

^'TRANSLATOR'S EXPLANATORY NOTE: The above translation of the auditors' report is provided as a free translauon from Romanian which is the official and binding version.

Board for Accountants International Cade of Ethics for Professional Accountants (including lnternationallndependence Standards) ("IESBA Cade") together w ith the ethical requirements that are relevant to aur audit of the financial statements in Romania, including the Regulation and the Law and we have fulfi lled aur other ethical responsibilities in accordance with these requirements and the IESBA Cade. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for aur opinion.

Key Audit !~~ .

Key audit matters are those matters that, in aur professional judgment, were of most significance in aur audit of the financial statements of the current period. These matters were addressed in the context of aur audit of the financial statements as a whole, and in forming aur opinion thereon, and we do not provide a separate opinion on these matters .

. . . . Revenue- Lei 18,823,557 for the year ended 31 December 2020 (Lei 29,500,719 for the year ended 31 December 2019)

See Note 31. ("Revenue from contracts with customers") and Note 5 ("Revenue") to the financial statements.

The key audit matter	How the matter was addressed in our audit
The Company earns revenues primarily from the sale of finished products and trading goods, including equipment for the agricultura! industry.	Our audit procedures included, among others: Updating aur understanding of and evaluating the Company's revenue recognition process, and testing related interna! controls, in particular the controls associated with estimating sales bonus and recognition of revenue in the correct period;
While application of revenue recognition principles of the relevant financial reporting standards may be complex, in the Company's case the majority of sa les arrangements are standard and straightforward. However, certain complexity is associated with the following factors :
	Assessing the Company's revenue recognition policy for compliance with relevant provisions of the financial reporting standards;
Significant uncertainty associated with estimating the amount of contract consideration, in particular as regards variable consideration in the form of	lnspecting sales contracts with customers, on a sample basis, for key sales transaction terms, including the terms of delivery and acceptance and any variable consideration arrangements;
discounts provided to the customers; Judgement required in determination at which point in time control transfers to the customer, and thus a given performance obligation is satisfied, with the shipping terms of the arrangement as relevant consideration.	Obtaining externa! confirmations for a sample of sa les transactions (invoices) for the year ended 31 December 2020, and also for outstanding trade receivable balances as at that date, directly from customers;
	Tracing a sample of revenue transactions recognised in December 2020 from the sales
We identified the recognition of revenue as a key audit matter because of the above factors, as well as the tact that revenue is one of the Company's key performance indicators, and also, management incentive plans are based on achieving certain revenue-related targets. Therefore there is an inherent risk of	ledger to supporting evidence, 1ncluding, among others, invoices, delivery notes, customer acceptance and, where applicable, payment documents;

r manipulation of the tim ing of recognition of 1 revenue by management, particula rl y given the judgment required in respect of certain aspects of revenue recognition, as discussed above. Accordingly, the area required our increased attention in the audit. For a sample of customer contracts, challenging the accuracy and completeness of customer bonuses recognized by means of: o inspection of the relevant terms in the sales contracts; o using contractual bonus rates and annual turnover data derived from sales ledger, performing an independent estimate of the amount of bonuses the customers were entitled for in 2020; o comparing our own estimate to the bonuses recognized in the financial statements; lnspecting credit notes recorded after the financial year end and evaluating whether the related adjustments to revenue had been recorded in the appropriate financial period; lnspecting underlying documentation fo r manual journal entries relating to revenue raised during the year and also for selected sales transactions in December 2020 and January 202 1 meeting specific risk-based criteria, and making corroborating inquiries of the relevant personnel to understand the nature of the entries; Examining whether the Company's revenue recognition-related disclosures in the financial statements appropriately include and describe the relevant quantitative and qualitative information required by the applicable financial J reporting framework.

. ' .

The Board of Directors is responsible for the preparation and presentation of other information. The other information comprises the Board of Directors' Report, but does not include the financial statements and our auditors' report thereon .

Our opinion on the financial statements does not cover the other information and, except to the extent otherwise explicitly stated in our report, we do not express any form of assurance conclusion thereon.

In connection with our audit of the financial statements, our responsibi lity is to read the other information and, in doing so, cons ider whether the other information is materially inconsistent w ith the financial statements or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

With respect to the Board of Directors' Report we read and report whether the Board of Directors' Report is prepared, in ali material respects, in accordance with OMPF no. 2844/2016, articles 15- 19 of the accounting regulations in accordance with International Financial Reporting Standards.

Based solely on the work required to be undertaken in the course of the audit of the financial statements, in our opinionl;l(

a) The information given in the Board of Directors' Report for the financial year for which the financial statements are prepared is consistent, in ali material respects, with the financial statements;
b) The Board of Directors' Report has been prepared, in ali material respects, in accordance with OMPF no. 2844/2016, articles 15 - 19 of the accounting regulations in accordance with 1 nternational Financial Reporting Standards.

In addition, in light of the knowledge and understanding of the Company and its environment obtained in the course of our audit we are required to report if we have identified material misstatements in the Board of Directors' Report. We have nothing to report in this regard .

. .

1. Management is responsible for the preparation of financial statements that give a true and fair view in accordance with OMPF no. 2844/2016 and for such interna! control as management determines is necessary to enable the preparation of financial statements that are free from material misstatement, whether due to fraud or error.
1. In preparing the financial statements, management is responsible for assessing the Company's abi lity to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless management either intends to liquidate the Company or to cease operations, or has no rea li stic alternative but to do so.
1. Those charged w ith governance are responsible for overseeing the Company's financial reporting process.
1 O. Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditors' report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance w ith ISAs w ill always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.
1. As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional skepticism throughout the audit. We also:
2. ldentify and assess the risks of material misstatement of the financial statements, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentiona! omissions, misrepresentations, or the override of interna! control.
3. Obtain an understanding of interna! control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company's interna! control.
4. Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
5. Conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast significant doubt on the Company's abi lity to continue as a going concern. lf we conci ude that a material uncertainty exists, we are required to draw attention in our auditors' report to the related disclosures in the financial statement ~~

or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditors' report. However, future events or conditions may cause the Company to cease to continue as a going concern.

Evaluate the overall presentation, structu re and content of the financial statements. including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
1. We communicate with those charged with governance regarding, among other matters, the planned scope and timing of the audit and significant audit findings, including any significant deficiencies in interna! control that we identify during our audit.
1. We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them ali relationships and other matters that may reasonably be thought to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
1. From the matters communicated with those charged w ith governance, we determine those matters that were of most significance in the audit of the financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditors' report unless law or regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that a matter should not be communicated in our report because the adverse consequences of doing so would reasonably be expected to outweigh the publ ic interest benefits of such communication.

R8UUI t Oll utl181 L8bidl ami 8~LII CJ ^lJl v RtjlJLIII ¹¹¹ 1ll ^~

1. We were appointed by the General Shareholders' Meeting on 9 May 2019 to audit the financial statements of Mecanica Ceahlau S.A. for the year ended 31 December 2020. Our total uninterrupted period of engagement is 2 years, covering the periods ending 31 December 2019 to 31 December 2020.
1. We confirm that:
2. our audit opinion is consistent w ith the additional report presented to the Audit Committee of the Company, which we issued on the same date as the date of issuance of this independent auditors' report. We also remained independent of the audited entity in conducting the audit.
3. we have not provided to the Company the prohibited non-audit services (NASs) referred to in Article 5(1) of EU Regulation (EU) No 537/2014/ 4

The engagement partner on the audit resulting in this independent auditors' report is MI HALI HORA TIU MIHAI.

Refer to the original signed Romanian version

For and on behalf of KPMG Audit S.R.L.:

MIHALI HORATIU MIHAI

registered in the electronic public register of financial auditors and audit firms under no AF3354

Cluj-Napoca, 15 March 2021

Autoritatea pentru Supravegherea Publică a Activităţii de Audit Statutar (ASPAAS)

Auditor financiar: MI HALI HORA TIU MIHAI

Registrul Public Electronic: AF3354

KPMG Audit SRL

registered in the electronic public register of financial auditors and audit firms under no FA9

Autoritatea pentru Supravegherea Publică a Activităţii de Audit Statutar (ASPAAS)

Firma de audit: KPMG AUDIT S.R.L. Registrul Public Electronic: FA9

AI Terminal

Mecanica Ceahlau

2335_10-k_2021-04-27_2f107605-c47e-40d8-bbf8-5ec786d79794.pdf

Board of Directors' Report 2020

1) ANALYSIS OF COMPANY'S BUSINESS

1.1. a) Description of the Company's core business

1.1. b) Stating the date of the Company incorporation

1.1.c) Description of any merger or significant reorganisation of the Company during the fiscal year

1.1. d) The impact of the COVID 19 epidemic on the financial position and performance of the Company

1.1. e) Description of procurement and/or alienation of assets

e). 1 Procurement

e). 2 Alienation

1.1.f. Description of main outcome of assessing the Company operations

1.1.1. Items of general assessment

a) Profit/(loss)

b) Turnover

1. Negative effects of drought

2. The negative effects of the COVID-19 epidemic

In 2020 the Company earned Other Incomes as follows:

c) Costs

d) Market share held

e) Liquidity (available funds in account etc.)

1.1.2 Assessment of the technical level of the Company

Description of the main products manufactured and goods distributed

a). The main outlets for each product or service and distribution methods

b). The weight of each product category in total turnover for the last 3 years

c. New products considered for which a substantial volume of assets will be used in the next financial year, as well as the development stage of these products

I. I. The main directions in view of diversification of the product supply in 2020 were:

II. The main directions in order to diversify the offer of products in the year 2021 were:

1.1.3 Evaluation of technical-material supply activity (local sources, imported sources)

1.1.4. Assessment of sales

a) Description of the evolution of sales on the internal and/or external market and the medium and long‐ term perspectives for sales

b) Description of the competitive status in the Company's line of business, of the market share of Company's products or services and of the main competitors

c) Description of any significant dependence of the Company on a single customer or group of customers whose loss would have a negative impact on the revenue of the Company

1.1.5. Assessment of aspects related to the Company employees/personnel

a) Specifying the number and degree of unionization of the labor force

b) Description of the relationships between managers and employees and of any conflictual elements characterizing these relationships

1.1.6. Assessment of aspects related to the impact of the Company's main activity on the environment.

1.1.7. Assessment of the research and development activity

1.1.8. Assessment of Company's activity in terms of risk management. Risk management objectives and policies, hedging policies.

a). Description of Company's exposure to the price, credit, liquidity and cash flow risks

b). Description of policies and objectives of the Company regarding risk management

a. Price risk

b. Credit risk

c. Liquidity risk

d. Market risk

d.1. Foreign currency risk

d.2. Interest rate risk

e. Capital management

1.1.9. Prospective elements on the Company's activity

b) Presentation and analysis of the effects the current or anticipated capital expenditure may have on the Company's financial standing as compared to last year

c) Presentation and analysis of events, transactions, economic changes which may have a significant effect on the Company's revenues from its core business

2) TANGIBLE ASSETS OF THE COMPANY

2.1. Denomination of the sites and of the features of the main productive capacities owned by the Company

2.2. Description and review of the wear degree of the Company's property

2.3. Potential property issues related to the property right over the tangible assets of the Company

2.4 Other information regarding tangible assets

As at December 31, 2020, the Company holds for sale assets identified as follows:

3. THE MARKET FOR THE SECURITIES ISSUED BY MECANICA CEAHLĂU SA

The summary of the consolidated structure of the owners of financial instruments.

3.1. Romanian and foreign markets where the securities issued by Mecanica Ceahlău SA are traded

3.2 The Company's policy related to dividends' pay-out

3.3. Description of any activity undertaken by the Company to purchase its own shares

3.4. Statement regarding the number and the nominal value of the shares issued by the parent Company and owned by the subsidiaries

3.5. Bonds and/or other promissory notes issued by Mecanica Ceahlău SA

4. MANAGEMENT OF THE COMPANY

4.1. The Company's managers

During the period 01.01.2020 - 31.12.2020, the Board of Directors is composed of 3 members as follows:

b. Agreements, understandings or family ties between the respective administrator and another person, whereby the respective person was appointed as administrator

c. Participation of the administrators in the Company's capital

d. List of the persons affiliated to the Company

e. Description of any transaction exceeding EUR 50.000 of the nature mentioned in the art. 225 of the Law 297/2004

4.2. Members of the executive management

a) Agreements, understandings or family ties between the persons belonging to the executive management and another person, whereby the respective person was appointed as a member of the executive management

b) Participation of the members of the executive management in the Company's capital

4.3. Litigations or administrative proceedings involving the administrators and the members of the executive management in the last 5 years

Other litigations

4.4. Elements of corporate governance

5. Information about transactions with key management staff

5.1. Members of Board of Directors

MECAITIICA CEAHLAU S.A. STATEMENT OF FINANCIAL POSITION FOR TltE FINANCIAL YEAR ENDED ON DECEI4BER 31, ²⁰²⁰