Vrancart SA

Management Reports • Apr 30, 2025

REPORT OF THE BOARD OF DIRECTORS

FOR THE FINANCIAL YEAR 2024

Name of the issuing entity: VRANCART S.A. Phone/Fax Number: 0237-640.800 / 0237-641.720 Unique registration code at Trade Register Office: 1454846 Serial number in the Register Trade: J39/239/1991 Subscribed and paid-up share capital: 201,011,575 lei The regulated market on which

Registered office: Adjud, str. Ec. Teodoroiu nr. 17, Vrancea

Trade issued securities: Bucharest Stock Exchange

TABLE OF CONTENTS

1. REVIEW OF THE ACTIVITY OF "VRANCART" S.A.

1.1.1. General information	4
1.1.2. Assessment of the Company's technical level	5
1.1.3. Evaluation of the technical-material supply activity (local sources, imports)	6
1.1.4. Evaluation of sales activity	6
1.1.5. Evaluation of issues related to the Company's employees/staff	8
1.1.6. Assessment of issues related to the impact of the issuer's core business
on the environment	8
1.1.7. Assessment of R&D activity	11
1.1.8. Evaluation of the Company's risk management activity	11
1.1.9. Elements of perspective regarding the Company's activity	12
1.1.10. Operating authorizations and certifications	13

2. TANGIBLE ASSETS OF THE COMPANY

2.1. Specification of the location and characteristics of the main capacities
production owned by the Company	14
2.2. Description and analysis of physical condition and usage level
of the Company's tangible assets	14
2.3. Clarification of potential problems related to the right of ownership
on the Company's tangible assets	15

3. THE MARKET OF SECURITIES ISSUED BY THE COMPANY "VRANCART"

3.1. Specifying the markets in Romania and other countries on which the
securities issued by the Company are traded	15
3.2. Description of the Company's dividend policy	15
3.3. Description of any activities of the Company, acquisition of its own shares	16
3.4. If the Company has subsidiaries, specifying the number and nominal value
shares issued by the parent company held by subsidiaries	16
3.5. If the company has issued bonds and/or other debt securities,
the presentation of how it fulfils its obligations to the holders of the
of such securities	16

4. MANAGEMENT OF THE "VRANCART" COMPANY

4.1. Company Directors	16
4.2. Executive management of the Company	17
4.3. Possible disputes or administrative procedures	17
5. CORPORATE GOVERNANCE
5.1. Compliance with the BVB Corporate Governance Code	18
5.2. Management of the Company	19
5.3. Respect for shareholders' rights	19
5.4. Transparency in communication	20
5.5. Financial reporting	20
5.6. Internal control and risk management	20
5.7. Conflict of interest and transactions with people involved	21
5.8. Corporate information regime	21
5.9. Social responsibility	21
5.10. Non-financial statement	22
6. FINANCIAL AND ACCOUNTING SITUATION
6.1. Statement of financial position	23
6.2. Statement of comprehensive income	24

6.3. Statement of cash flows 25

7. SUBSEQUENT EVENTS THAT OCCURRED AFTER

END OF FINANCIAL YEAR 26

1. REVIEW OF THE ACTIVITY OF "VRANCART" S.A.

1.1.1. General information

"VRANCART" was established according to Law 15/1990 in 1991, as a joint stock company with legal personality.

Overview

Company name	"VRANCART"
Company type	Joint stock company
	Adjud, Str. Ecaterina Teodoroiu nr. 17,
Address	Vrancea County, 625100
Phone/Fax	0237.640.800 / 0237.641.720
Registration number at the Trade Register Office	J39/239/1991
Unique Registration Code	1454846
Tax Identification Code	RO1454846
Paid-in share capital	201,011,575 lei
Nominal value of shares	0.10 lei/share
Number of shares	2,010,115,751

The company has its registered office in Adjud, str. Ecaterina Teodoroiu nr. 17, Vrancea county, with open work sites in the localities: Bucharest, Pantelimon, Chiajna, Călimănești, Sântana de Mureș, Iași, Ploiești, Sibiu, Brașov, Pitești, Timișoara, Bacău and Cluj.

The principal activity of "VRANCART" consists in the production and sales of the following:

• ✓ corrugated cardboard,
• ✓ corrugated cardboard packaging,
• ✓ papers for the manufacture of corrugated cardboard,
• ✓ hygienic-sanitary papers in various assortments,
• ✓ waste recycling equipment (sale, rental and maintenance),
• ✓ electricity from photovoltaic parks (self-consumption and sale).

Through the collection network, the Company collects its raw material (paper and cardboard waste), as well as other recyclable waste that is recovered from other partners.

In addition to the activities listed above, "VRANCART" SA also carries out activities to support basic activities (support activities): utility production (industrial water, treated water for thermal boilers, technological steam, wastewater treatment), mechanical and electrical maintenance, transportation (within the company and to customers) and others.

In the context of the invasion of Ukraine by the Russian Federation, we mention that Vrancart Company does not carry out physical operations on the territory of Ukraine, Russia or Belarus and does not have customers, suppliers, investors or creditors with operations in these countries. The sanctions imposed on Russia could have an impact to the same extent that the entire global business environment could be affected.

Although it is not possible to fully estimate the economic effects generated by the political crisis in the region, the Company considers that the good financial situation, access to financing and the markets on which it operates, are solid foundations for ensuring business continuity and for limiting the negative effects generated by the economic and political crisis, in general.

Elements of general evaluation:

a) gross accounting result 2024	(9,478) thousand lei
b) turnover	395,555 thousand lei
c) operational costs	411,783 thousand lei
d) liquidity at the end of the year	1,051 thousand lei

e) % of the market held (internal estimates & ARFCO)

Year 2024	Hygienic-sanitary papers	- 6 %
	Paper for cardboard	- 18 %
	Corrugated cardboard, total	- 13%, of which:

• Formats 35%
• Converting - 6%

1.1.2. Assessment of the Company's technical level

The basic production activities of "VRANCART" are organized into three distinct business lines managed on the basis of their own budgets, component parts of the general budget of the company, which produces products for three distinct markets, namely:

• the market for papers for the manufacture of corrugated cardboard;
• corrugated cardboard and corrugated packaging market;
• hygienic-sanitary paper market.

The evolution of the company's production by business lines is presented in the table below:

Business Lines	UM	2024	2023	2022
Paper for cardboard	To	79,235	69,597	87,010
Corrugated cardboard and packaging	to	65,565	59,222	69,655
Hygienic-sanitary papers	to	17,993	19,984	19,654

The share of each product category in the company's total turnover in the last 3 years is shown in the table below:

Business Lines	AT	2024	2023	2022
Paperboard Factory	%	11%	6%	9%
Corrugated Cardboard and Packaging Factory	%	65%	63%	63%
Sanitary Paper Factory	%	19%	23%	19%
Other activities	%	5%	8%	9%

The investments made in 2024, by groups of fixed assets, were:

Investments made	Value (lei)
Land, buildings and building arrangements	3,793,554
Technological equipment	86,340,299
Work appliances and installations	146,162
Means of transport and other fixed assets	3,626,318
Intangible assets	49,217
TOTAL	93,955,550

1.1.3. Evaluation of the technical-material supply activity

The main raw material of the paper mills in "VRANCART" is paper waste. It is purchased through their own collection centers or directly from generators/collectors.

The evolution of waste collection in the last 3 years is presented below:

Waste Procurement	AT	2024	2023	2022
	To	66,078	87,864	87,866
Purchases through collection centers	% of total purchases	49%	66%	59%
	To	69,124	44,996	61,793
Direct Procurement (Adjud)	% of total purchases	51%	34%	41%
	To	135,202	132,860	149,659
Total Purchases	%	100%	100%	100%

1.1.4. Valuation of sales activity

The evolution of deliveries of "VRANCART" products on each market segment in the last 3 years is presented in the table below:

Business Lines	AT	2024	2023	2022
Paperboard Factory	to	20,591	9,427	14,755
Corrugated Cardboard and Packaging Factory		61,572	59,128	70,040
Sanitary Paper Factory	to	14,372	17,352	17,853

Competition situation

On each market segment there are several manufacturers with products similar to those made at "VRANCART".

A. Four competitors operated on the corrugated cardboard paper market in Romania in 2024. The production capacities of the papermaking facilities based on the public statements of the producers, are:

Manufacturer	Annual production capacity (to/year)
Ambro (Rossmann Group)	155,000
DS Smith	200,000
Vrancart	100,000
CCH	80,000
Total	535,000

All factories use corrugated cardboard waste as raw material for the production of paper, with the exception of CCH, which also uses cellulose as raw material, and the products obtained are relatively similar in terms of characteristics and quality.

Most paper manufacturers also own corrugated cardboard and corrugated packaging factories, so most of their own paper production is for their own consumption.

Producers	2024	2023	2022
Vrancart	18%	15%	16%
Other manufacturers	82%	85%	84%
Total	100%	100%	100%

Evolution of market shares in Corrugated cardboard papers

Source: VRANCART estimates

B. In 2024, there were 9 competitors on the corrugated cardboard and corrugated packaging market, of which five have 2 factories each (Vrancart, Dunapack, DS Smith, Rossmann and Rondocarton).

The corrugated cardboard market is a regional market due to the high costs of long-distance transportation. It is a highly competitive market, and in Romania the consumer orientation is towards products with low prices and average quality.

The estimated production capacity of the 15 corrugated cardboard factories is over 750 thousand tons annually. The consumption of 2024 amounted to 468 thousand tons, (62% of the total production capacities) registering an increase in volumes expressed in tons of 9.6% compared to the previous year.

No. crt.	Manufacturer name	Production capacity (to/year) Estimate VNC
1	Rondocarton (2 factories)	160,000
2	Rossmann (2 factories)	120,000
3	Vrancart (2 factories)	120,000
4	Dunapack (2 factories)	120,000
5	DS Smith Group (2 factories)	80,000
6	VPK Salonta	60,000
8	Thimm Șura Mică	60,000
9	Europa Expres Iași	30,000
	TOTAL	750.000

Corrugated cardboard manufacturers in 2023 in Romania:

Source: VRANCART estimates

Producers	2024	2023	2022
Vrancart	13,2%	13,7%	15,9%
Other manufacturers	86,8%	86,3%	84,1%
Total	100%	100%	100%

Evolution of market shares of Corrugated cardboard and corrugated cardboard packaging:

Source: ARFCO estimates

C. On the sanitary paper market, with a market share of 6% in 2024, "VRANCART" remains one of the important manufacturers of sanitary paper in Romania.

Unlike the other competitors, Vrancart produces toilet paper only from paper waste and is the largest producer on the market, small quantities being produced by Comceh Călărași.

During 2019, one of the important producers, Petrocart Piatra Neamt, went into insolvency and stopped the production of sanitary toilet papers.

At the end of 2020, Vrancart acquired, through auction, the toilet-sanitary paper making machine from Petrocart, being recognized in the category of assets intended for sale. In January 2025, a contract for the sale of this equipment was signed.

New production capacities have appeared on the market, such as the one launched by the Pehart Tec Group, which invested 20 million euros, in the development of new production capacities, in order to increase the volume of exports, to make the production lines more energy efficient and to diversify the portfolio. (Source: https://www.zfcorporate.ro)

Evolution of market shares in Sanitary Toilet Papers

Producers	2024	2023	2022
Vrancart	6%	10%	10%
Other manufacturers	94%	90%	90%
Total	100%	100%	100%

Source: VRANCART estimates

1.1.5. Assessment of issues related to the Company's employees/staff

a) Specifying the number and level of education of the employees of the commercial company as well as the degree of unionization of the workforce;

The average number of staff in 2024 was 1,148 employees, of which:

• 269 higher education
• 448 secondary education
• 280 vocational schools
• 151 elementary school

Of the total number of employees, 132 are union members (there is only one union within the company).

The labor force turnover index during 2024 was 24% (number of employees leaving/average number of personnel x100).

b) Description of the relationships between the manager and the employees as well as of any conflicting elements that characterize these relationships.

There were no conflicting relations between the company's management and the employees.

1.1.6. Assessment of issues related to the impact of the issuer's core business on the environment. A summary description of the impact of the issuer's core activities on the environment as well as of any existing or expected litigation relating to the infringement of environmental protection legislation.

VRANCART S.A. has implemented an integrated quality-environment-health and occupational safety management system, recertified multi-site in September 2024 by Lloyd's Register England, Bucharest representative. The certified offices are: Vrancart S.A Adjud str. Ecaterina Teodoroiu, nr. 17 and the Adjud Work Point located in str. Revoluţiei, nr. 17.

The impact of the company's activity on the environment is permanently monitored through the implementation of the Environmental Management System and implicitly through compliance with the legislation in force and the INTEGRATED ENVIRONMENTAL PERMIT no. 1/18.03.2015 revised on 17.03.2025. According to the legislation in force, the INTEGRATED ENVIRONMENTAL PERMIT is valid only with an annual visa. The work point did not require an environmental permit.

In case of changes in the operating conditions (e.g. expansion of production capacities, investments to modernize technological flows), according to the legislation in force, the revision of the integrated environmental permit is requested. This was also the subject of the revision of the integrated environmental permit issued on 17.03.2025.

ENVIRONMENTAL FACTOR: AIR

The activity of VRANCART S.A. generates:

• hot air emissions (after the moist air from drying the paper is passed through absorption hoods), which are discharged through high-rise exhaust chimneys.
• emissions from combustion gases from technological steam generating boilers (Bosch and CTAT – hot reserve), 3 technological steam generators and manufacturing waste co-incineration plant, which are eliminated through high-rise chimneys.
• Emissions from manufacturing processes Diffused dust emissions from the handling of solid auxiliary materials and toilet paper processing.
• noise resulting from the operation of combustion and production plants.

Regarding greenhouse gas emissions, according to Order 1256/12.06.2020, on 06.07.2021 the Greenhouse Gas Emissions Authorization no. 145 was issued for the period 2021 - 2030. The allocation of CO2 emission certificates free of charge for the period 2021-2025, called "phase IV", has been obtained.

According to the requirements of the Integrated Environmental Permit, the following were carried out:

• determinations for the environment, in the production halls, carried out by DSP Vrancea
• determinations of the noise level at the boundary of the premises, carried out by ICEMENERG Bucharest (ISO 17025 accredited laboratory).

The results showed that the measured values are below the maximum permissible limits, as set by the applicable legislation in this domain.

During 2024, measurements were carried out for pollutants emitted by fixed sources, according to the Integrated Environmental Authorization, with ICEMENERG Bucharest (ISO 17025 accredited laboratory); The results were below the maximum permissible limits, imposed by the said authorization.

We consider that VRANCART's activity has an insignificant impact on the air environmental factor, and the level of air emissions falls into:

• G.D. no. 1218/2006 amended by GD no. 1/2012 and G.D. no. 355/2007 on establishing the minimum occupational health and safety requirements to ensure the protection of workers against the risks related to the presence of chemical agents
• G.D. no. 493/2006 on the minimum health and safety requirements regarding the exposure of workers to the risks generated by noise
• GD no. 1091/2006 on minimum health and safety requirements for the workplace.
• GD no. 1048/2006 on the minimum health and safety requirements for the use by workers of personal protective equipment at work.
• Order 462/1993 of the MAPPM for the approval of the technical conditions regarding the protection of the atmosphere and the Methodological Norms regarding the determination of the emissions of atmospheric pollutants produced by stationary sources.
• Law no. 104/2011 on ambient air quality, amended and amended by GD no. 336/2015 and GD no. 806/2016.
• Law 278/2013 on industrial emissions, amended and supplemented by GEO no. 101/2017.

ENVIRONMENTAL FACTOR: WATER

VRANCART S.A. holds the "Water Management Authorization no. 1/04.02.2008", revised on 04.11.2013 with validity 04.02.2017. In June 2017, the Water Management Authorization was renewed with no. 160/17.07.2017, valid for 17.07.2022. in 2022, the "Water Management Authorization no. 156/17.08.2022", valid 17.08.2027.

During 2024, the wastewater that was discharged from the VRANCART wastewater treatment plant into the Siret River fell within the limits imposed by the Water Management Authorization, revised, according to current monitoring and determinations carried out by ALS GLOBAL Ltd, Ploiesti (ISO 17025 accredited laboratory).

The "Plan for Preventing and Combating Accidental Pollution" is reviewed annually in accordance with Order no. 278/1997 of the MAPPM approving the Framework Methodology for the elaboration of plans for the prevention and combating of accidental pollution, which is transmitted to SGA Vrancea and ABA Bacău.

ENVIRONMENTAL FACTOR: SOIL

As one of the sources of soil pollution is poor waste management, clear rules have been established within the environmental management system to ensure compliance with the legal provisions on waste.

The manufacturing waste and paper sludge from the wastewater treatment plant are stored in the temporary landfill and co-incinerated in the company's own plant. The resulting technological steam is used to dehydrate the sludge in order to make its combustion more efficient.

The ash resulting from the co-incineration of our own technological waste is a non-hazardous waste. Since the commissioning of the waste co-incineration boiler in 2008, the resulting ash has been deposited in several concrete tanks. The obligation of the appropriate arrangement as well as of the final closure is according to the provisions of Ord. 757/2004.

According to the soil protection requirements of the "Integrated Environmental Permit", determinations of pollutant concentrations were carried out in November 2023 by ALS GLOBAL Ltd Ploiesti (ISO 17025 accredited laboratory). The results showed that the measured values are below the maximum permissible limits.

Controls were carried out from the Vrancea Environmental Guard, the Vrancea Environmental Protection Agency, the Siret Bacău Water Basin Administration and the Vrancea Water Management System. The findings were recorded in the control reports – no exceedances of the limits imposed by the regulatory acts for the quality indicators of treated water were reported, according to those presented in the Environmental Factor: Water, without violations of the legislation in force.

1.1.7. Assessment of R&D activity

The company participates as a partner in various research and development projects.

During 2019, the "Gheorghe Asachi" Technical University of Iași submitted a project for funding under the Program: PN-III-CERC-CO-PED-2016 with the title "Novel materials with optical properties for anti-counterfeiting paper" (OptiPaper). The objective of the project was to produce secure papers, and it was carried out over a period of 2 years. VRANCART was a partner in the project, approved in November 2020. The value of the project amounted to 653,850 lei, with 92% financing from the state budget. The project was completed at the end of 2022.

1.1.8. Assessment of the company's risk management activity

The Company's risk management policies are defined in such a way as to ensure the identification and analysis of the risks faced by the Company, the establishment of appropriate limits and controls, as well as the monitoring of risks and compliance with established limits. Risk management policies and systems are regularly reviewed to reflect changes in market conditions and in the Company's activities. The company, through its training and management standards and procedures, aims to develop an orderly and constructive control environment, within which all employees understand their roles and obligations.

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

• − credit risk
• − liquidity risk
• − market risk.

Credit risk is the risk that the Company will incur a financial loss as a result of the non-fulfilment of contractual obligations by its partners. The maximum exposure to credit risk was:

Book value	Dec 31st, 2024	Dec 31st, 2023	Dec 31st, 2022
Trade receivables and other
receivables	83,899,481	68,925,494	95,221,279
Restricted Cash	-	-	1,881,991
Cash and cash equivalents	1,050,589	2,088,021	1,288,888
Total	84,950,070	71,013,515	98,392,158

The Company hedges credit risk by developing and implementing relevant credit policies (e.g. each new customer is individually reviewed for creditworthiness before being offered the Company's standard payment and delivery terms; credit limits are set for each customer), customers who do not meet the conditions set by the Company may make transactions only with prepayment. Also, the Company has concluded with Coface Romania, a commercial receivables insurance policy, which gives it flexibility and agility in the development of existing business relationships but also of new ones.

Liquidity risk - The Company ensures that it has sufficient cash to cover operating expenses. The following table shows the residual contractual maturities of financial liabilities at the end of the reporting period, including estimated interest payments:

		Contractual	less than 1		over 5
December 31st, 2024	Book value	cash flows	year	1 - 5 years	years
Bank loans	188,101,480	206,940,013	108,282,203	78,724,480	19,933,330
Bonds	-	-	-	-	-
Leasing liabilities	26,779,185	29,686,470	8,859,129	20,089,604	737,737
Trade and other payables	70,425,666	70,425,666	69,065,945	1,359,721	-
Total	285,306,331	307,052,149	186,207,277	100,173,805	20,671,066

		Contractual	less than 1		over 5
December 31st, 2023	Book value	cash flows	year	1 - 5 years	years
Bank loans	130,367,894	143,533,037	26,706,963	116,826,075	-
Bonds	38,250,000	38,250,000	38,250,000	-	-
Leasing liabilities	30,633,926	30,694,276	9,361,258	21,333,018	-
Trade and other payables	47,466,803	47,466,803	47,009,463	457,340	-
Total	246,718,623	259,944,116	121,327,684	138,616,432	-

		Contractual	less than 1		over 5
December 31st , 2022	Book value	cash flows	year	1 - 5 years	years
Bank loans	136,444,154	148,309,381	62,223,135	86,086,247	-
Bonds	38,250,000	38,250,000	-	38,250,000	-
Leasing liabilities	23,419,723	24,419,723	7,718,425	15,068,656	1,632,642
Trade and other payables	63,183,246	63,183,246	62,635,054	548,191	-
Total	261,297,122	274,162,349	132,576,614	139,953,094	1,632,642

The management of "VRANCART" considers that it takes all necessary measures to support the sustainability and growth of the Company's business, in the current conditions, by:

• − constant monitoring of liquidity;
• − making short-term forecasts on net liquidity;
• − monitoring cash inflows and outflows (daily), assessing the effects on debtors, access to finance and the economic environment in Romania and the European area;
• − negotiating and contracting financing lines adapted to the Company's needs.

Market risk. The objective of managing this risk is to keep foreign exchange, interest rate and equity pricing exposures within acceptable parameters while optimizing the return on investment. To this end, the Company has at its disposal multi-currency and multi-option financing facilities, as well as interest rate swaps and currency hedging based on forward transactions with delivery and without delivery.

1.1.9. Elements of perspective regarding the Company's activity

Starting with 01.01.2025, the implementation of a new, state-of-the-art ERP system worth over 500 thousand euros, financed from bank credit and own contribution, meant to cover complex business needs, was completed. During 2025, 2 other important projects are underway, worth approximately EUR 5 million, aimed at improving corrugated paper production processes, consisting of a state-of-the-art technology, unique in Romania.

Although achieving them will require significant investment efforts as well as interruptions in the production flow (for the installation of new equipment), the Group expects its results to be above the level of the previous year, moving into a consistent positive area.

1.1.10. Operating authorizations and certifications

VRANCART SA has implemented in previous years an integrated Quality-Environment-Occupational Health and Safety Management system, certified by Lloyd's Register England, Bucharest representative. ISO certification takes into account multiple dimensions of the company's activity, from environmental safety to the protection and safety of personnel, to the technical availability of machinery and facilities involved in production processes and demonstrates the interest of management for the continuous improvement of the environmental, health and safety situation of the company.

The validity cycles for certificates are three years, with annual surveillance audits, in order to verify compliance with the requirements of ISO standards.

Between August and September 2024, the multi-site recertification audit of the three ISO management systems took place: quality, environment, occupational health and safety (headquarters and Adjud Work Site). During the audit, it was found that the processes are well kept under control. The system has a good level of compliance with the reference standards, which is why the recertification was obtained. The validity for ISO management system certificates is:

• a) The Certificate of Approval of the Quality Management System no. 10633861/12.09.2024, according to SR EN ISO 9001:2015 - valid until 13.09.2027;
• b) The Environmental Management System Approval Certificate no. 106338641/12.09.2024, according to SR EN ISO 14001:2015 - valid until 13.09.2027;

c) The Certificate of Approval of the Occupational Health and Safety Management System no. 10633862/12.09.2024, according to SR EN ISO 45001:2018 - valid until 13.09.2027.

Since 2014, VRANCART S.A. has also held the FSC Chain of Custody Management System certification for the recovery, processing and delivery of products obtained from recycled, mixed and pure materials according to FSC-STD-40-004/ FSC-STD-40-007 standards. The certificate is issued by the company TUV SUD on 20.09.2024 with validity 19.09.2029 and annual supervision. Starting with January 2023, the management of VRANCART S.A. has decided to extend the certification of the FSC Management System in a multi-site approach to the following locations:

• 1. Headquarters- location A:
  2. Location at the address: Adjud locality, 17 Ecaterina Teodoroiu Street,
  3. Industry: manufacture of toilet paper, corrugated paper, corrugated cardboard and corrugated cardboard confectionery.
• 1. Work point location B:
  2. Location at the address: Adjud, Str. Revoluţiei, nr. 17
  3. Field: manufacture of household and sanitary products, from toilet paper (rolls, towels).

At the 2023 annual audit, a good level of compliance with the standards chosen as a reference model was found. "VRANCART" operates in accordance with the provisions of:

• INTEGRATED ENVIRONMENTAL PERMIT no.1/18.03.2015, revised 14.04.2020, valid with annual visa.

- WATER MANAGEMENT AUTHORIZATION no. 156/17.08.2022", valid 17.08.2027. The value of the indicators is in accordance with NTPA 001/2005.

The general objectives of the ISO and FSC management systems have been included in the policies on quality, environment, health and occupational safety. In order to achieve the general objectives, specific process objectives have been established. On the www.vrancart.ro website you can find ISO, FSC certificates and related policies.

2. TANGIBLE ASSETS OF THE COMPANY

2.1. Specification of the location and characteristics of the main production capacities owned by the Company

The headquarters of "Vrancart" SA is located in the city of Adjud, Vrancea county where the following production capacities operate:

a) Corrugated cardboard manufacturing machine, with an existing production capacity of 80,000 tons/year;

b) The paper making machine for corrugated cardboard, with a production capacity of 100,000 tons/year, under the conditions of operation with 100% waste as raw material;

c) Hygienic-sanitary paper manufacturing machine, with a production capacity of 25,500 tons/year;

Land, buildings and equipment are recognized at the revalued value, which is the fair value at the revaluation date minus any depreciation accumulated thereafter and any accumulated impairment losses. The fair value shall be based on market price quotations, adjusted, where applicable, to reflect differences in the nature, location or condition of that asset, except for equipment for which the fair value has been determined on the basis of replacement cost.

The revaluations are carried out by specialized evaluators, members of ANEVAR. The last revaluation of the patrimony took place on 31.12.2022. Revaluation of property, plant and equipment shall be made with sufficient regularity so that the carrying amount does not differ materially from that which would be determined using the fair value at the balance sheet date.

The company has production points in Jiblea, Vâlcea county where a cardboard machine and processing machinery (box production) operates, as well as in Sântana de Mureș, Mureș county, where there is a corrugated cardboard transformation section (box production).

2.2. Description and analysis of the physical condition and usage level of the Company's assets

Property, plant and equipment shall be depreciated from the date on which they are available for use or are in working order and, for assets constructed by the entity, from the date on which the asset is completed and ready for use.

Depreciation is calculated using the straight-line method over the estimated useful life of the assets, as follows:

−	Construction	30-60 years
−	Equipment	2-16 years
−	Vehicles	4-8 years

− Furniture and other tangible assets 4-10 years

The technical condition of the production facilities is maintained by carrying out predictive and current maintenance works.

The degree of booked depreciation as of 31.12.2024 is as follows:

(all values are expressed in thousands of lei)

Tangible fixed assets	Revalued cost or value	Depreciation and amortization	Depreciation level
Special buildings and constructions	100,020	6,531	7%
Equipment and other fixed assets	366,176	93,839	26%

2.3. Specifying potential issues related to the ownership of the Company's tangible assets

A portion of the Company's tangible assets are mortgaged or pledged to secure loans taken from banks. The net book value of these pledged or mortgaged assets is RON 303,212 thousand as of 31.12.2024 (31.12.2023: RON 212,404 thousand). The net book value of fixed assets acquired through financial leasing is RON 3,446 thousand as of 31.12.2024 (31.12.2023: RON 181 thousand).

3. THE MARKET OF SECURITIES ISSUED BY THE COMPANY

3.1. Specification of the markets in Romania and other countries on which the securities issued by the Company are traded

The shares of "VRANCART" SA are listed on the Bucharest Stock Exchange, Standard category, with the ticker VNC, starting with July 15, 2005.

The shareholding structure as of 31.12.2024 is as follows:

▪	LION Capital	- 76.33%
▪	Pavăl Holding	- 17.35%
▪	Legal entities	- 2.92 %
▪	Individuals	- 3.40 %

3.2. Description of the Company's dividend policy.

The Company's dividend policy is issued by the Ordinary General Meeting of Shareholders. By Decision no. 4 of 27.04.2023, the Ordinary General Meeting of Shareholders decided to distribute dividends, from the net profit for the financial year ended December 31st, 2022, in the amount of RON 12,033,855, respectively a gross dividend of RON 0.01/share.

Year	Net Score	Legal reserve	Dividend	Developmen t Fund*	Covering the loss	Other destinations
2022	23,688,891	1,319,796	12,033,855	4,940,628	-	5,394,612
2023	5,629,023	308,173	-	5,320,850	-	-
2024	(11,436,365)	-	-	-	11,436,365	-

* These amounts represent tax facilities from which the Company benefited from the tax exemption related to the reinvested profit (art.22 of the applicable Tax Code).

The distribution of the company's profit for 2023 is within the competence of the Ordinary General Meeting of Shareholders.

3.3. Description of any activities of the company acquiring its own shares.

Since its establishment, "VRANCART" S.A. Adjud has not acquired or held its own shares for any period of time.

3.4. If the company has subsidiaries, specify the number and nominal value of the shares issued by the parent company held by the subsidiaries.

In January 2017, the company Rom Paper SRL, Brașov (Branch 1) was acquired. The procurement contract provided for the acquisition in three tranches, namely 70% (January 2017), 15% (June 2017) and 15% (June 2018), respectively. The acquisition contract has been finalized, so that on December 31st, 2024, Vrancart owns 100% of the shares. The company's main activity is the production and marketing of toilet paper products.

Vrancart Recycling SRL (Branch 2) was established in 2020, in August, and is a private company with Romanian capital, with a sole shareholder. The main activity of this subsidiary is the treatment and disposal of non-hazardous waste. The company has a number of 108 employees at the end of 2024. As of December 31st, 2024, the parent company holds 100% of the shares.

Ecorep Group SA (Branch 3) was established in 2020, in November, and is a private company with Romanian capital. The main activity of this subsidiary is the provision of services related to the implementation of the obligations regarding the extended producer responsibility for environmental objectives. The number of existing employees at the end of 2024 is 4 employees. As of December 31st, 2024, the parent company owns 99.6% of the shares.

3.5. If the company has issued bonds and/or other debt securities, the presentation of the way in which the company pays its obligations towards the holders of such securities.

In 2017, the company "VRANCART" S.A. issued bonds convertible into shares. By Decision no. 156/01.02.2017, the Financial Supervisory Authority approved the Prospectus for the issuance of bonds in the amount of RON 38,250,000, with interest rate Robor 3m+2%, maturity 7 years. On March 13th, 2017, the issuance process was completed by subscribing 100% of the issued bonds. The bonds were listed on the Bucharest Stock Exchange. On March 17th, 2024, the bonds were fully repaid, as well as the interest on the last payment coupon, and the Group is currently fully paid its obligations stipulated in the Issue Prospectus.

4. MANAGEMENT OF THE COMPANY

4.1. Company directors

a) Submission of the list of directors of the company and the following information for each director (name, surname, age, qualification, professional experience, position and seniority in office) on 31.12.2024:

1. Fedor Nicu Ciprian - 48 years old, lawyer, Chairman of the Board of Directors for 1 month and Chief Executive Officer for 9 months

2. Drăgoi Bogdan Alexandru - 45 years old, economist, member of the Board of Directors at "Vrancart", for 9 years

3. Mihailov Sergiu - 45 years old, economist, member of the Board of Directors at "Vrancart", for 7 years

4. Fercu Adrian - 48 years old, economist, member of the Board of Directors at "Vrancart", for 4 years

5. El Lakis Rachid - 28 years old, economist, member of the Board of Directors at "Vrancart", for 3 years. (b) any agreement, arrangement or family relationship between that administrator and another person by virtue of which that person has been appointed as administrator;

This is not the case.

c) the participation of the administrator in the company's capital;

Shareholders' participation in the company's capital as of 31.12.2024:

1. Fedor Nicu Ciprian	– 0 shares
2. Drăgoi Bogdan Alexandru	– 0 shares
3. Mihailov Sergiu	– 0 shares
4. Fercu Adrian	– 0 shares
5. El Lakis Rachid	– 0 shares

d) Remuneration policy

The company "VRANCART" SA has published a separate report on the remuneration policy, in accordance with the provisions of Article 107 of Law no. 24/2017 on issuers of financial instruments and market operations, republished, with subsequent amendments and completions. The separate report containing the remuneration policy is made available to the public, free of charge, on the Company's website www.vrancart.ro, for the period provided by law, being updated whenever changes occur.

e) the list of people affiliated to the Company

The Parties are considered to be related parties if one of the parties has the possibility of directly or indirectly controlling or significantly influencing the other party by holding or relying on contractual rights, family or other relationships, as defined in IAS 24 "Disclosure of Related Parties".

Related parties are considered to be the people who are part of the Board of Directors, as well as LION Capital SA, which is the majority shareholder, together with the other companies controlled by it.

4.2. Executive management of the company

a) The executive management of "Vrancart" S.A. as of 31.12.2024 was ensured by Mr. Nicu-Ciprian FEDOR, as Chief Executive Officer and Adrian Corneliu BECHEANU as Deputy Chief Executive Officer.

(b) any agreement, arrangement or family relationship between that person and another person as a result of which that person has been appointed as a member of the executive board.

• This is not the case.

c) The participation of the company's management members in the share capital.

• None of the management members of VRANCART owns shares.

4.3. Possible disputes or administrative procedures

For all people listed in 4.1. and 4.2. specifying any disputes or administrative procedures in which they have been involved, in the last 5 years, regarding their activity within the issuer, as well as those concerning the ability of that person to perform his/her duties within the issuer's business.

• This is not the case.

5. CORPORATE GOVERNANCE

5.1. Compliance with the Corporate Governance Code of the Bucharest Stock Exchange (CGC) The Board of Directors decided to voluntarily comply with the Corporate Governance Code of the Bucharest Stock Exchange (CGC), a decision ratified by the General Meeting of Shareholders on August 10th, 2011, on which occasion the Corporate Governance Regulation of "VRANCART" S.A. was also approved.

The company "VRANCART" S.A. as an issuer listed in the Standard BVB category, considers compliance with the corporate governance principles of the Corporate Governance Code of the Bucharest Stock Exchange. The shares of "VRANCART" S.A. are registered and traded, since 15.07.2005, at the Bucharest Stock Exchange quota, Standard category, having the symbol VNC. The activity of keeping the register of shareholders was and is carried out by "Depozitarul Central" S.A. according to contract no. 7270/07.03.2017.

At the company level, there are documents and rules specific to corporate governance that can be found in the company's "Articles of Incorporation", the Organizational and Functioning Regulations (R.O.F.), regulations and internal decisions, which describe the functions, competencies and responsibilities of the Board of Directors and the executive management.

On the company's website, respectively www.vrancart.ro, information on the corporate governance policy of "VRANCART" is disseminated:

• List of members of the Board of Directors and members of the executive management,
• Updated articles of incorporation.

In September 2015, the new Corporate Governance Code of the Bucharest Stock Exchange was adopted, which replaces the old code, being a set of principles and recommendations for companies admitted to trading, in order to create an attractive capital market at international level, a code to which our company has also adhered. Although the new code no longer expressly provides for the existence of the "Apply or Explain" statement, this mechanism is maintained, as it is an element that strengthens the confidence of shareholders and stakeholders in issuers, a mechanism through which clear, accurate and up-to-date information about compliance with corporate governance rules by listed companies is transmitted to the capital market.

The new Corporate Governance Code of the Bucharest Stock Exchange includes 34 recommendations to be fulfilled structured in 4 sections, of which our company meets 30 provisions.

Regarding the provisions that our company does not fulfill, in whole or in part, the company's management has taken the necessary steps to fulfill all the recommendations, the further progress made by the company in terms of compliance with the new C.G.C. will be reported to the capital market.

5.2. Management of the company

Board of Directors

The company "VRANCART" SA is managed by a board of directors (BoD) consisting of 5 members, elected by the General Meeting of Shareholders for a period of 4 years, with the possibility of being re-elected. The Board of Directors has decision-making powers regarding the management of the company in the interval between the general meetings, except for the decisions that the law or the Articles of Association of the company provide exclusively for the General Meeting of Shareholders.

The Board of Directors elects a president from among its members.

In the current mandate of the Board of Directors, elected by the General Meeting of Shareholders on 27.04.2022, on 31.12.2024 the Board of Directors is made up of non-executive members. The election of the members of the Board of Directors by the shareholders' vote in the General Meeting of Shareholders of 27.04.2022 was based on a transparent procedure, by making public the content of the candidacy file and the criteria for fulfilling the quality of director of a company. The term of office of the members of the Board of Directors is 4 years, according to the statutory provisions.

According to the legal provisions, the General Meeting of Shareholders approves the remuneration policy for directors and members of the executive management. According to the statutory provisions, the Board of Directors meets at least once every 3 months to monitor the company's activity.

The company "VRANCART" SA complies with the rules regarding the behavior and reporting obligations of the transactions with the shares issued by the company carried out on its own account by the administrators and other individuals involved, these rules being complied with by those concerned, in accordance with the regulations of the FSA, the specific rules themselves can be found in the Corporate Governance Regulation of "VRANCART" which entered into force during 2011.

The list of people with access to privileged information is permanently updated, a situation transmitted to the FSA. The obligation to notify the transactions carried out by the initiated persons is both personal and of the intermediaries, and the information is disseminated through the website of the Bucharest Stock Exchange.

Activity of the Board of Directors in 2024

During 2024, the Board of Directors of "VRANCART" S.A. met 27 times in accordance with the statutory provisions, the presence of the directors at the meetings being in accordance with the legal provisions.

The Chairman of the Board of Directors chaired all meetings in 2024. As a result of the meetings, 90 management decisions were adopted regarding the company's current activity.

5.3. Respect for shareholders' rights

The company "VRANCART" SA respects the rights of the shareholders by ensuring them fair treatment. For the General Meeting of Shareholders held in 2024, respectively 30.04.2024, details

regarding the conduct of the meeting were published in a dedicated section of the website of www.vrancart.ro – "For Shareholders": the convening notice of the General Shareholders' Meeting; the materials related to the agenda as well as any other information related to the topics of the agenda; the forms for voting by special proxy and postal ballot; the participation and voting procedures which ensures both the orderly and efficient conduct of the work of the General Meeting and the right of any shareholder to freely express his opinion on the issues under debate; decisions taken at the General Meeting of Shareholders and regarding the result of the vote.

For the financial year 2024, information on the financial calendar, current reports, quarterly reports, half-yearly report and annual report were posted on the website on time.

Within "VRANCART" SA there are two people specialized in the field of investor relations, this activity not requiring the existence of a specialized department in this regard within the company.

5.4. Transparency in communication

"VRANCART" SA attaches great importance to transparency in communication, taking into account the provision of continuous and periodic reporting, which includes all important aspects of the company's activity, recorded performance, etc.

Also, through the company's website, the company is presented both in terms of the activities carried out and in terms of the relationship with shareholders and investors. In the "For shareholders" section, information of interest to shareholders and investors is disseminated and current and periodic reports on the company's activity are presented, in Romanian and English.

5.5. Financial reporting

The financial statements for 2024 were prepared in accordance with the requirements of the Order of the Minister of Finance 2844 of 2016, for the approval of the Accounting Regulations in accordance with the International Financial Reporting Standards (OMFP 2844/2016) and provide a correct and realistic picture regarding the situation of assets, obligations, financial position and profit and loss account of "VRANCART".

In accordance with the legal provisions, the financial accounting statements were audited by PwC – independent financial auditor, appointed by the General Meeting of Shareholders of 27.04.2023 for a period of two years.

5.6. Internal control and risk management

The internal control regularly monitors and verifies the application of the new legal provisions incident to the company's activity, verifies compliance with the company's internal regulations that have been established by internal decisions and regulations, the completion of existing regulations or the inclusion of new regulations specific to the company's activity, the establishment or improvement of the company's internal procedures.

Within the company "VRANCART" there is an Internal Audit Department, which periodically audits the company's activities in order to provide relevant information on the performance of these activities, making recommendations for improving the activities, procedures and controls carried out. The internal audit activity is carried out based on the company's annual audit plan, which is approved by the Audit Committee, a committee established in accordance with the provisions of principle 13 of the CGC.

Within the Board of Directors of "VRANCART" there is an Audit Committee, which regularly examines the effectiveness of financial reporting, internal control, internal audit and the risk management system adopted by the company. The Audit Committee is made up exclusively of non-executive directors.

5.7. Conflict of interest and transactions with people involved

In order to identify and adequately resolve situations of conflict of interest, which stipulates that all investments or sales of securities will be made only in the interest of shareholders and not for other reasons, the Board of Directors has adopted within the Corporate Governance Regulation a standard procedure for resolving possible such situations. In the event of a conflict of interest between the interest of the company and the personal interest of a decision-maker (member of the Board of Directors) or decision-making employee (executive management), the solution is to withdraw the person concerned from that decision-making process.

Internal regulations prohibit employees from engaging in affiliate transactions that violate FSA regulations.

When a conflict of interest arises among the directors, they shall inform the Board of Directors about them and refrain from debating and voting on the respective matters, in accordance with the relevant legal provisions; these situations are recorded in the minutes of the meeting of the Board of Directors.

5.8. Corporate information regime

The standard procedure regarding the internal circuit and the disclosure to third parties of documents and information related to the issuer, which may influence the evolution of the market price of the securities issued by it, was regulated through the Corporate Governance Regulation. The people designated with attributions in this field shall periodically prepare briefings on the implications of the normative provisions on the management of inside information (as regulated in Law 24/2017 on issuers of financial instruments and market operations, republished, with subsequent amendments and completions) within "VRANCART" SA, as well as regarding the obligations of the initiated persons. The information is subject to the analysis and approval of the Board of Directors.

5.9. Social responsibility

The company "VRANCART" SA permanently carries out activities regarding the social responsibility of the company, every year directly or through specialized foundations/associations, supporting the disadvantaged categories in the local community where it operates.

The issuer is also directly involved in supporting sports, art and music events, as well as other social activities within the local community to which it belongs.

5.10. Non-financial statement

The company "VRANCART" SA has prepared a sustainability report for the Vrancart Group for the year 2024, which is our first such report based on the EU Corporate Sustainability Reporting Directive (CSRD). This report outlines our sustainable vision for a sustainable business and highlights our significant achievements in this area over the past year, while complying with the highest regulatory requirements as well as Chapter 7 of Order 2844/2016. The CSRD report prepared for 2024 will be made available to the public, on the Company's website www.vrancart.ro, before April 30, 2025.

6. FINANCIAL AND ACCOUNTING SITUATION

The individual financial statements are prepared by the Company in accordance with the requirements of the Order of the Minister of Finance 2844 of 2016, for the approval of the Accounting Regulations in accordance with the International Financial Reporting Standards (OMFP 2844/2016). International Financial Reporting Standards ("IFRS") are the standards adopted according to the procedure provided by Regulation (EC) no. 1.606/2012 of the European Parliament and of the Council of 19 July 2002 on the application of International Accounting Standards.

The individual financial statements are presented in accordance with the requirements of IAS 1 - "Presentation of financial statements".

The Company has adopted a liquidity-based presentation in the statement of financial position and a presentation of income and expenses by their nature in the statement of comprehensive income, considering that these presentation methods provide information that is credible and more relevant than that which would have been presented under other methods permitted by IAS 1.

Name of the indicator	UM	Dec 31st , 2024	Dec 31st , 2023	Dec 31st , 2022
General liquidity	Rap	1.03	1.06	1.36
Immediate liquidity	Rap	0.62	0.64	0.89
Inventory Rotation	Red/on	5	6	9
Debt collection	Days	76	59	66
Repayment of commercial debts	Days	52	28	32
Operating profitability	%	-1%	4%	7%
Gross Profit Rate	%	-2%	1,5%	5%

Summary table of financial performance indicators in the last 3 years

6.1. Situation of the financial position in the last 3 years

(RON)	Dec 31st , 2024	Dec 31st , 2023	Dec 31st , 2022
ASSETS
Tangible assets	423,011,121	364,630,582	376,041,514
Prepayments of tangible assets	8,152,139	19,706,483	1,864,753
Intangible assets	708,852	775,019	953,329
Goodwill	3,380,811	3,380,811	3,380,811
Financial assets	62,587,328	62,587,328	45,566,328
Other non-current assets	32,824,177	13,750,286	650,945
Total non-current assets	530,664,428	464,830,509	428,457,680
Inventories	73,791,524	66,810,661	61,279,453
Assets held for sale	19,725,761	19,725,761	-
Trade receivables	83,463,033	67,913,133	94,962,072
Prepaid expenses	1,154,845	972,024	1,666,742
Current corporate income tax receivable	-	835,908	-
Other receivables	6,390,237	10,353,820	14,980,360
Restricted Cash	-	-	1,881,991
Cash and cash equivalents	1,050,589	2,088,021	1,288,888
Total current assets	185,575,989	168,699,328	176,059,506
TOTAL ASSETS	716,240,417	633,529,837	604,517,186
EQUITY
Share capital	201,011,575	169,121,665	120,338,551
Share premiums	842,449	775,497	664,564
Revaluation reserves	103,936,472	104,393,341	106,393,534
Legal reserves	13,345,280	13,345,280	13,037,107
Other reserves	60,790,128	60,790,128	55,469,278
Retained earnings	4,209,322	15,101,795	24,754,468
Total equity	384,135,226	363,527,706	320,657,501
LIABILITIES
Long-term bond loans	-	-	38,164,800
Long-term bank loans	86,689,040	67,826,778	79,531,749
Long-term leasing liabilities	19,066,190	21,333,018	15,701,298
Long-term subsidies	31,825,414	8,761,341	7,207,890
Long-term debts to employees	920,509	444,379	440,169
Deferred corporate income tax liabilities	12,168,086	13,160,453	13,612,888
Provisions	439,212	12,961	108,022
Total long-term liabilities	151,108,451	111,538,930	154,766,816
Short-term trade payables	57,603,898	32,527,381	46,344,171
Short-term bank loans	101,412,440	62,541,116	56,912,405
Short-term bond loans	-	38,250,000	-
Short-term leasing liabilities	7,712,995	9,300,908	7,718,425
Short-term subsidies	2,805,360	1,361,714	1,826,984

Short-term debts to employees	4,821,776	5,979,709	6,885,073
Current corporate income tax liabilities	883,526	-	670,788
Other liabilities	5,756,745	8,502,373	8,735,023
Total current liabilities	180,996,740	158,463,201	129,092,869
TOTAL LIABILITIES	332,105,191	270,002,131	283,859,685
TOTAL EQUITY AND LIABILITIES	716,240,417	633,529,837	604,517,186

6.2. Statement of comprehensive income over the past 3 years

(RON)	2024	2023	2022
Sales income from customers agreements	395,555,449	412,011,096	525,252,258
Income from operating subsidies	408,956	12,922,747	3,421,768
Other income	12,861,998	10,041,467	11,721,911
Production inventory's changes	(960,268)	5,074,068	5,295,240
Raw materials and consumables expenses	(213,238,440)	(215,963,362)	(310,034,864)
Cost of goods sold	(13,153,158)	(13,612,863)	(23,465,836)
Third-party expenses	(34,692,284)	(37,466,894)	(44,299,954)
Labor expenses	(96,129,900)	(102,572,974)	(87,100,187)
Assets amortization and depreciation expenses	(42,064,249)	(39,836,284)	(31,090,782)
Other expenses	(12,505,011)	(13,604,750)	(14,083,008)
Operating result	(3,916,907)	16,992,250	35,616,548
Financial income	4,371,922	1,327,060	277,534
Financial expenses	(9,933,293)	(12,155,856)	(9,686,315)
Profit (loss) before tax	(9,478,278)	6,163,454	26,207,767
Corporate income tax expense	(1,958,087)	(534,431)	(2,518,876)
Profit (loss) for the year	(11,436,365)	5,629,023	23,688,891
Other comprehensive income
Changes in the reserve from the revaluation of property, plant and equipment, net of deferred tax	-	-	54,485,505
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	(11,436,365)	5,629,023	78,174,396

6.3. Situation of cash flows in the last 3 years

(RON)	2024	2023	2022
Cash flows from operating activity:
Cash receipts from customers	444,323,879	511,357,338	605,702,567
Cash paid to suppliers	(280,009,192)	(301,751,777)	(464,825,391)
Cash paid to employees	(60,346,078)	(71,912,777)	(58,414,086)
Cash paid to the state budget	(52,550,885)	(62,652,883)	(59,493,349)
Corporate income tax paid	(1,143,997)	(2,112,573)	(2,559,452)
Net cash flows from operating activities	50,273,727	72,927,328	20,410,289
Cash flows from investing activities:
Cash paid for the purchase of tangible and
intangible assets	(96,663,614)	(55,937,492)	(41,107,009)
Cash paid for purchases of financial assets	-	(17,021,000)	-
Loans to affiliates	(19,050,000)	(13,100,000)
Letters of credit for fixed asset acquisition	-	-	(1,881,991)
Proceeds from the sale of tangible assets	2,095,381	3,993,119	1,354,573
Interest received	1,738,906	7,041	3,257
Dividends received	2,500,000	-	-
Net cash flows from investing activities	(109,379,327)	(82,058,332)	(41,631,171)
Net cash flows from financing activities
Proceeds from loans	120,341,599	40,328,879	45,360,817
Loan repayments	(62,620,177)	(46,175,810)	(3,260,955)
Interest paid	(8,320,578)	(10,779,251)	(8,699,780)
Leasing payments	(10,631,130)	(10,209,182)	(7,715,515)
Leasing interest paid	(401,659)	(316,893)	(236,274)
Share capital increase	31,956,911	48,894,047	476,774
Bond redemption	(38,250,000)	-	-
Investment subsidies collected	25,993,202	-	-
Dividends paid	-	(11,811,653)	(4,952,235)
Net cash flows from financing activities	58,068,168	9,930,137	20,972,832
Net Increase/(Decrease) in Cash and Cash Equivalents	(1,037,432)	799,133	(248,050)
Cash and cash equivalents at the beginning of the financial year	2,088,021	1,288,888	1,536,938
Cash and cash equivalents at the end of the financial year	1,050,589	2,088,021	1,288,888

7. SUBSEQUENT EVENTS AFTER THE END OF THE FINANCIAL YEAR

Conclusion of the contracts for the capitalization of the assets held for the sale of Ungheni and Piatra Neamţ. The property in Ungheni was sold and collected in full in February, and for the one in Piatra Neamţ, an advance of EUR 1 million was received during February 2025.

The last installment of 10% of the subsidy from European PNRR funds related to the 20MWh Photovoltaic Park project, worth 2.9 million lei, was collected.

The balance of the support loan contracted from BRD for the financing of the 20MWh Photovoltaic Park project has been fully reimbursed.

The directors' report was approved by the Board of Directors of VRANCART SA.

SIGNATURES

The report will be signed by the authorized representative of the Board of Directors, by the Chief Executive Officer and by the Chief Financial Officer of the company.

Fedor Nicu-Ciprian

Chairman of the Board of Directors

Fedor Nicu-Ciprian Gabriel Coman

Chief Executive Officer Chief Financial Officer

Type text here

Translation for information purposes only

VRANCART S.A.

Stand Alone Financial Statements as of December 31st , 2024

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

Table of contents

Stand-alone Statement of Financial Position	1-2
Stand-alone Statement of Comprehensive Income	3
Stand-alone Statement of Changes in Equity	4-5
Stand-alone Statement of Cash Flows	6
Notes to the Stand-alone Financial Statements	7-55

Vrancart S.A. Stand-alone statement of financial position

for the financial year ended on December 31st , 2024

(all amounts in RON, unless otherwise stated)

	Note	December 31st , 2024	December 31st , 2023
ASSETS
Tangible assets	4	423,011,121	364,630,582
Prepayments for tangible assets		8,152,139	19,706,483
Intangible assets		708,852	775,019
Goodwill	5	3,380,811	3,380,811
Financial assets	5	62,587,328	62,587,328
Other non-current assets	6	32,824,177	13,750,286
Total non-current assets		530,664,428	464,830,509
Inventories	7	73,791,524	66,810,661
Trade receivables	9	83,463,033	67,913,133
Prepaid expenses		1,154,845	972,024
Current profit tax receivable		-	835,908
Other receivables	11	6,390,237	10,353,820
Cash and cash equivalents	10	1,050,589	2,088,021
		165,850,228	148,973,567
		19,725,761	19,725,761
Assets held for sale	8	185,575,989	168,699,328
Total current assets TOTAL ASSETS		716,240,417	633,529,837
EQUITY
Share capital	12	201,011,575	169,121,665
Share premiums	13	842,449	775,497
Revaluation reserves	13	103,936,472	104,393,341
Legal reserves	13	13,345,280	13,345,280
Other reserves	13	60,790,128	60,790,128
Retained earnings		4,209,322	15,101,795
Total equity		384,135,226	363,527,706
LIABILITIES
Long-term loans	17	86,689,040	67,826,778
Long-term leasing liabilities	16	19,066,190	21,333,018
Long-term subsidies	20	31,825,414	8,761,341
Long-term debts to employees	18	920,509	444,379
Deferred corporate income tax liabilities	19	12,168,086	13,160,453
Other long-term liabilities	15	439,212	12,961
Total long-term liabilities		151,108,451	111,538,930
Trade liabilities	14	57,603,898	32,527,381
Short-term loans	17	101,412,440	62,541,116
Short-term bond loans	17	-	38,250,000
Short-term leasing liabilities	16	7,712,995	9,300,908
Short-term subsidies	20	2,805,360	1,361,714
Short-term debts to employees	18	4,821,776	5,979,709
Current corporate income tax liabilities	19	883,526	-

Vrancart S.A. Stand-alone statement of financial position

for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

	Note	December 31st , 2024	December 31st , 2023
Other short-term liabilities	15	5,756,745	8,502,373
Total current liabilities		180,996,740	158,463,201
TOTAL LIABILITIES		332,105,191	270,002,131
TOTAL EQUITY AND LIABILITIES		716,240,417	633,529,837

The financial statements were approved by the Board of Directors on March 28th, 2025.

Nicu-Ciprian Fedor Gabriela Coman

Chief Executive Officer Chief Financial Officer

The notes from page 7 to page 55 are an integral part of the financial statements.

Vrancart S.A. Stand-alone statement of comprehensive income

as of December 31st , 2024

(all amounts in RON, unless otherwise stated)

	Note	2024	2023
Sales income from customers agreements	21	395,555,449	412,011,096
Income from operating subsidies		408,956	12,922,747
Other income	22	12,861,998	10,041,467
Production inventory's changes		(960,268)	5,074,068
Raw materials and consumables expenses	23	(213,238,440)	(215,963,362)
Cost of goods sold		(13,153,158)	(13,612,863)
Third-party expenses	24	(34,692,284)	(37,466,894)
Labor expenses	26	(96,129,900)	(102,572,974)
Assets amortisation and depreciation expenses	4	(42,064,249)	(39,836,284)
Other expenses	25	(12,505,011)	(13,604,750)
Operating result		(3,916,907)	16,992,250
Financial income	27	4,371,922	1,327,060
Financial expenses	27	(9,933,293)	(12,155,856)
Profit/(Loss) before taxation		(9,478,278)	6,163,454
Profit tax expenses	28	(1,958,087)	(534,431)
Profit/(Loss) for the year		(11,436,365)	5,629,023
Other elements of comprehensive income
Changes in the reserve from the revaluation of tangible assets, net of deferred tax		-	-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		(11,436,365)	5,629,023
Earnings per share	29
Base earnings per share		(0.0064)	0.0042
Diluted earnings per share		(0.0064)	0.0054

The financial statements were approved by the Board of Directors on March 28th, 2025.

Chief Executive Officer Chief Financial Officer Nicu-Ciprian Fedor Gabriela Coman

The notes from page 7 to page 55 are an integral part of the financial statements.

Type text here

Vrancart S.A. Statement of changes in equity

for the financial year ended on December 31st , 2024

(all amounts in RON, unless otherwise stated)

	Share capital	Revaluation reserves	Share premiums	Legal reserves	Other reserves	Retained earnings	Total equity
Balance as of January 1st, 2023	120,338,551	106,393,534	664,564	13,037,107	55,469,278	24,754,468	320,657,501
Comprehensive income for the
year
Net profit/loss for the year	-	-	-	-	-	5,629,023	5,629,023
Changes in the reserve from the revaluation of tangible assets, net of deferred tax	-	-	-	-	-	-	-
Total comprehensive income	-	-	-	-	-	5,629,023	5,629,023
Share capital increase	48,783,114	-	-	-		-	48,783,114
Distribution of dividends	-	-	-	-	-	(12,033,855)	(12,033,855)
Distribution of the legal reserve and other reserves	-	-	110,933	308,173	5,320,850	(5,248,034)	491,922
Transfer of the revaluation reserve to retained earnings following the sale/ decommissioning of tangible assets	-	(2,000,193)	-	-	-	2,000,193	-
Balance as of December 31st , 2023	169,121,665	104,393,341	775,497	13,345,280	60,790,128	15,101,795	363,527,706
Balance as of January 1st, 2024	169,121,665	104,393,341	775,497	13,345,280	60,790,128	15,101,795	363,527,706
Comprehensive income for the
year
Net profit/loss for the year	-	-	-	-	-	(11,436,365)	(11,436,365)
Changes in the reserve from the
revaluation of tangible assets, net of deferred tax	-	-	-	-	-	-	-
Total comprehensive income	-	-	-	-	-	(11,436,365)	(11,436,365)
Share capital increase	31,889,910	-	66,952	-		-	31,956,862
Distribution of dividends	-	-	-	-	-	-	-
Distribution of the legal reserve and other reserves	-	-	-	-	-	-	-

Vrancart S.A. Stand-alone statement of financial position

for the financial year ended on December 31st , 2024

(all amounts in RON, unless otherwise stated)

Transfer of the revaluation reserve to retained earnings the sale/ decommissioning of tangible assets	-	(456,869)	-	-	-	543,892	87,023
Balance as of December 31st , 2024	201,011,575	103,936,472	842,449	13,345,280	60,790,128	4,209,322	384,135,226

The financial statements were approved by the Board of Directors on March 28th, 2025.

Chief Executive Officer Chief Financial Officer Nicu-Ciprian Fedor Gabriela Coman

The notes from page 7 to page 55 are an integral part of the financial statements.

Vrancart S.A. Stand-alone statement of Cash Flows

for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

DIRECT METHOD

	Note	2024	2023
Cash flows from operating activities
Cash receipts from customers		444,323,879	511,357,338
Cash paid to suppliers		(280,009,192)	(301,751,777)
Cash paid to employees		(60,346,078)	(71,912,777)
Cash paid to the state budget		(52,550,885)	(62,652,883)
Corporate income tax paid		(1,143,997)	(2,112,573)
Net cash flows from operating activities		50,273,727	72,927,328
Cash flows from investment activities
Cash paid for the purchase of tangible and intangible assets	4	(96,663,614)	(55,937,492)
Cash paid for the purchase of financial assets	5	-	(17,021,000)
Letters of credit for the purchase of assets		-	-
Loans granted to affiliates	30	(19,050,000)	(13,100,000)
Proceeds from the sale of tangible assets		2,095,381	3,993,119
Interest received		1,738,906	7,041
Dividends received	30	2,500,000	-
Net cash flows from investment activities		(109,379,327)	(82,058,332)
Cash flows from financing activities
Proceeds from loans	17	120,341,599	40,328,879
Loan repayments	17	(62,620,177)	(46,175,810)
Interest paid		(8,320,578)	(10,779,251)
Payments for leasing	16	(10,631,130)	(10,209,182)
Leasing interest paid	16	(401,659)	(316,893)
Share capital increase	12	31,956,911	48,894,047
Bonds redemption	17	(38,250,000)	-
Investment subsidies collected	20	25,993,202	-
Dividends paid		-	(11,811,653)
Net cash flows from financing activities		58,068,168	9,930,137
Net increase/(decrease) of cash and cash equivalents		(1,037,432)	799,133
Cash and cash equivalents as at the beginning of the financial year	10	2,088,021	1,288,888
Cash and cash equivalents as at the end of financial year	10	1,050,589	2,088,021

Chief Executive Officer Chief Financial Officer Nicu-Ciprian Fedor Gabriela Coman

Type text here

The notes from page 7 to page 55 are an integral part of the financial statements.

1. The reporting entity

Vrancart S.A. ("the Company") is a joint-stock trade company operating in Romania under the provisions of Law no. 31/1990 on trade companies.

The company operates in the field of non-hazardous waste collection and recycling, in the paperboard and corrugated cardboard industry, as well as in the production of corrugated cardboard packaging and sanitary paper products. The Company has working points opened in the following cities: Bucharest, Pantelimon, Chiajna, Călimănești, Sântana de Mureș, Iași, Ploiești, Sibiu, Brașov, Pitești, Timișoara, Bacău and Cluj.

The Company's main object of activity is represented by the manufacture and trading of the following products:

• corrugated cardboard,
• corrugated cardboard packaging,
• paper used in the manufacturing of corrugated cardboard,
• various types of sanitary paper products,
• waste paper recycling equipment, including rental and maintenance services,
• electricity generated from photovoltaic parks, including for self-consumption.

The Company's shares are listed on the Bucharest Stock Exchange, Standard category, with the indicative VNC, starting from July 15th, 2005 and the Company posts its individual financial statements on its website www.vrancart.ro.

As of December 31st, 2024, the Company is owned 76.33% by Lion Capital SA, 17.35% by Pavăl Holding S.R.L. and 6.32% by other shareholders. The records of shares and shareholders is kept according to law by S.C. Depozitarul Central S.A. Bucharest.

2. Basis for preparation

(a) Statement of conformity

The individual financial statements are issued by the Company in accordance with the requirements of the Finance Minister Order no. 2844 of 2016, for the approval of the Accounting Regulations compliant with the International Financial Reporting Standards (OMFP 2844/2016). The International Financial Reporting Standards (IFRS) are the standards adopted according to the procedure provided by the (EC) Regulation no. 1.606/2012 of the European Parliament and of the Council of July 19th, 2002 on the application of the International Accounting Standards.

(b) Submission of financial statements

The financial statements are presented in accordance with the provisions of IAS 1 "Submission of financial statements". The Company adopted a presentation based on liquidity within its statement of financial position and a presentation of revenues and expenditures according to their nature within the statement of comprehensive income, considering that these presentation methods provide information that is credible and more relevant than the information that would have been presented based on other methods allowed by IAS 1.

(c) The functional and presentation currency

The Company's management considers that the functional currency, as defined by IAS 21 "The effects of exchange rate variation" is the Romanian leu (lei/RON). The individual financial statements are presented in lei, rounded to the closest amount in lei.

(d) Basis for preparation

The individual financial statements were prepared based on the historical cost, except for tangible assets in the category of land, constructions and technological equipment that are assessed using the revaluation model.

The accounting policies defined below were applied consistently for all the periods presented in these financial statements.

(d) Business continuity

These financial statements were prepared on a going concern basis, which means that the Company will continue in business for the foreseeable future. In order to assess the applicability of this assumption, management analyses forecasts of future cash inflows.

In 2024, the Company recorded a net loss of RON 11,463,365 (2023: a net profit of RON 5,629,023), and as of December 31st, 2024, the current assets exceeded the current liabilities by RON 4,579,249 (2023: RON 10,236,127).

The Company had a negative cash flow of RON 1,037,432 in 2024 (positive in 2023: RON 779,133) and it has no outstanding liabilities to the public budgets or to its private partners.

In the course of 2024, despite management's continued efforts to reduce production costs and operational expenses, to streamline operations, and to improve labor productivity, the Company's performance was significantly impacted by the constant increase in raw material prices. The purchase price of waste paper used for corrugated cardboard production rose by 35%, while the price of waste paper for sanitary paper increased by 41%. Additionally, the cost of paper purchased from third parties rose by 17%.

Labor costs also represented also additional pressure factor on the Company's profitability, following successive increases in the minimum wage from RON 3,000 (as of September 30, 2023) to RON 3,300 (+10% starting October 1, 2023), and subsequently to RON 3,700 (+12% starting July 1, 2024). The still high annual inflation rate of 5.1%, together with elevated interest rates, further contributed negatively to the Company's financial results in 2024.

Persistently high electricity and natural gas prices, coupled with the unexpected reduction of RON 7.1 million in subsidies under Government Emergency Ordinance (GEO) 138/2022 for electricity in 2023 and 2024, were major factors in the loss recorded as of December 31, 2024. Moreover, starting in December, the Company no longer benefited from the green certificate subsidy scheme.

During April–May 2024, the Company was forced to suspend operations due to highway A7 construction works, which required a temporary cutoff of electricity and gas supplies. This led to an unforeseen additional loss of RON 4 million. In August, another shutdown occurred due to the lack of electricity, as a result of connecting the photovoltaic park to the national dispatching and communications network. This generated an additional loss of over RON 1 million.

Throughout 2024, the Company discontinued several unprofitable activities and operational sites, which resulted in severance payments exceeding RON 1.5 million. The turnover tax introduced as of January 1, 2024, further deepened the Company's losses by an additional RON 3 million.

Pressure on sales prices, driven by customers' need to optimize their own costs and by intense market competition, made it impossible to fully pass on the increased production costs, inevitably affecting the Company's profitability.

Despite the negative impact on its financial position, the Company continued to operate under normal conditions throughout 2024. Certain business lines even outperformed the previous year and exceeded budget expectations. Furthermore, the Company successfully completed its planned investments, some of the largest and most complex in its long history, demonstrating both the sustainability of the business and its resilience to adverse market conditions.

The budget prepared by the Company's management and approved by the Board of Directors for the year 2025 indicates positive cash flows from operating activities, an increase in sales compared to 2024 and the recording of a significantly lower level of operating expenses, achieved through efficiency measures already implemented during 2024. As a result, profitability is expected, which will directly contribute to improved liquidity and will allow the Company to meet the contractual clauses undertaken in its agreements with the financing banks. The Company's management believes that the support received from the banks and shareholders will be sufficient for the Company to continue operating under normal conditions, based on the going concern principle.

In 2025, the Company entered into sale agreements for the assets held for sale, having already collected part of the proceeds from these contracts by the date of these financial statements (see Note 31).

Sales recorded in the first three months of 2025 are higher than those recorded in the same period of 2024 and are in line with the budgeted figures.

The management believes that the Company will be able to continue its activity in the foreseeable future and therefore the application of the going concern principle in the preparation of the financial statements is justified.

(e) The use of judgements and estimates

The preparation of the individual financial statements in accordance with the Public Finances Minister Order no. 2844/2016 requires the use by the management of some estimates, judgements and assumptions that affect the application of the accounting policies, as well as the reported value of assets, liabilities, revenues and expenditures. The judgements and assumptions associated to these estimates are based on the historical experience, as well as on other factors deemed reasonable in the context of these estimates.

The results of these estimates form the basis of the judgements relating to the accounting values of the assets and liabilities that cannot be obtained from other sources of information. The results obtained may be different from the values of the estimates.

The judgements and assumptions underlying these are regularly revised by the Company. The revisions of the accounting estimates are recognised during the period when the estimates are revised, if the revisions affect only that period, or during the period when the estimates are revised and the next periods if the revisions affect both the current period and the next periods.

The main estimates refer to:

• Estimates related to employee benefits presented in Note 3(l)
• Amortisation period of fixed assets presented in Note 3(c)
• Adjustments for the impairment of current assets presented in Note 3(i)
• Cash flow projections and WACC used in the impairment analyses of assets presented in Notes 4 and 5

(f) Comparative Information

The individual financial statements as of December 31, 2024, are comparable with those of the previous financial year. The presentation of certain note disclosures for the year ended on December 31, 2023, has been updated to ensure comparability with the current financial year's data.

3. Significant accounting policies

a. Transactions in foreign currencies

The operations expressed in foreign currencies are recorded in RON at the official exchange rate on the date of discounting of the transactions. The monetary assets and liabilities denominated in foreign currencies on the date of preparation of the accounting balance are converted into the functional currency at the exchange rate of that day.

The gains or losses from their discounting and from the conversion using the exchange rate as at the end of the financial year of monetary assets and liabilities denominated in foreign currencies are recognised in the statement of comprehensive income.

The exchange rates of the main foreign currencies were:

Foreign currency		December 31st ,	December 31st ,	Variation
		2024	20223
Euro (EUR)		4.9741	4.9746	-0.01%
American (USD)	dollars	4.7768	4.4958	+6.25%

b. Financial instruments

Non-derivative financial instruments

The Company recognises initially the financial assets (loans, receivables and deposits) on the date when they were initiated. All the other financial assets are initially recognised on the date of trading, when the Company becomes part of the contractual conditions of the instrument.

The classification depends on the nature and purpose of the financial instruments and it is determined at the time of the initial recognition. All the standard purchases or sales of financial assets are recognised and de-recognised on the trading date. Standard purchases or sales are purchases or sales of financial assets that require the delivery of the assets within a time interval established through a market regulation or convention.

Vrancart S.A. Notes to the stand-alone financial statements for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

The Company derecognises a financial asset only when the contractual rights on the cash flows generated by the assets expire or it transfers the financial asset and substantially all the rights and benefits of ownership of the asset to another entity. If the Company neither transfers, nor retains substantially all the risks and benefits related to the ownership and continues to control the transferred asset, the Company recognises its interest retained in the asset and the related liability for the amounts that it would have to pay. If the Company does not retain substantially all the risks and benefits related to the ownership of a transferred financial asset, then the Company will continue recognising the financial asset and also, will recognise the collateralised indebtedness for the collections received.

Upon the entire derecognising of a financial asset, the difference between the book value of the asset and the amount of the equivalent value received and to be received and the cumulated gains or losses that have been recognised in other comprehensive income items and cumulated in equity are recognised at profit or loss.

On the derecognising of a financial asset other than entirely (e.g. when the Company does not retain an option for the redemption of a part of a transferred asset or retains a residual interest that does not result in the retaining substantially of all the risks and benefits related to the ownership and the Company does not retain the control), the Company will allot the previous book value of the financial asset between the part that it continues to recognise under continuous implication and the part does it no longer recognises based on the fair values corresponding to those parts as at the transfer date.

The difference between the book value allotted to the part that is no longer recognised and the amount of the equivalent value received for the part that is no longer recognised and any cumulated gains or losses allotted that were recognised in other comprehensive income items are recognised at profit or loss. A cumulated gain or loss that was recognised in other comprehensive income items is allotted between the part that continues to be recognised and the part that is no longer recognised, based on the fair value corresponding to those parts.

Derivative financial instruments

Derivative financial instruments included in contracts are separated from the contracts and separately accounted for if that contract is not a financial asset and certain criteria are met.

Derivative financial instruments are initially recorded at fair value. Subsequently to their initial recognition, these are measured at fair value and the changes in this value are recognised in the profit and loss account.

As of December 31st, 2024 the Company hold derivative financial instruments in the form of conversion and reimbursement options related to loans from bonds issues, which are detailed in Note 17.

Receivables

Receivables are financial assets with fixed or determinable payments that are not traded on an active market. Such assets are initially recognised at fair value plus any directly attributable trading costs. Subsequently to the initial recognition, receivables are evaluated at amortised cost using the effective interest rate method. The Group applies the simplified IFRS 9 approach for measuring the expected credit losses, which uses a reduction for the losses expected over the lifetime for all trade receivables. Details on the modality to calculate impairment adjustments for trade receivables are included in note i. Impairment of assets.

Receivables include trade receivables and other receivables.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, current accounts and deposits with maturities of up to three months from the date of purchase, which are subject to an insignificant risk of change in their fair value and are used by the Company to manage short-term commitments.

Share capital – ordinary shares

Ordinary shares are classified as part of equity. The additional costs directly attributable to the issue of ordinary shares and share options are recognized as a reduction of equity at value net of tax effects.

Financial liabilities

Financial liabilities include financial leasing liabilities, interest-bearing bank loans, loans from bond issues, overdrafts and trade liabilities and other liabilities.

Loans are initially recognised at fair value less the costs incurred in relation to the operation in question. Subsequently, these are recorded at amortised cost. Any difference between the input value and the reimbursement value is recognised in the profit and loss account during the loans period, using the actual interest method.

Bonds – are evaluated at amortised cost. Details of loans from bond issues are presented in Note 17.

Financial instruments are categorised as liabilities or equity according to the substance of the contractual arrangement. Interests, dividends, gains or losses related to a financial instrument categorised as liability are reported as expense or income. The distributions to the holders of financial instruments categorised as equity are recorded directly at equity. Financial instruments are offset when the Company has a legal applicable right to offset and intends to discount either on a net basis, or to achieve the asset and extinguish the liability at the same time.

c. Tangible assets

(i) Recognition and evaluation

Tangible assets recognised as assets are initially evaluated at cost by the Company. The cost of a tangible assets element is formed of the purchase price, including non-recoverable taxes, after the deduction of any price reductions of commercial nature and any costs that can be directly attributable to bringing the asset to the location and under the conditions necessary for it to be used for the purpose intended by the management, such as: employee-related expenses resulting directly from the construction or purchase of the asset, the costs of site preparation, the initial delivery and handling costs, the costs related to erection and assembly, professional fees.

The cost of a tangible assets item built by the Company includes:

• the cost of materials and direct personnel-related expenses;
• other costs directly attributable to bringing the assets to the state necessary for the intended use;
• when the Company has the obligation to move the asset and to restore the corresponding space, an estimate of the costs for the disassembly and movement of items and for the restoration of the area where they have been capitalized.

When certain components of a tangible asset have different useful lifetime durations, they are accounted as different elements (major components) of tangible assets.

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

• − land;
• − buildings;
• − equipment, technical installations and machines;
• − vehicles;
• − other tangible assets.

Land, constructions and equipment are highlighted at revaluated value and this represents the fair value on the date of revaluation less any amortisation accumulated previously and any accumulated impairment losses.

Fair value is based on market prices quotations, adjusted, if necessary, to reflect the differences related to the nature, location or condition of that asset, except for the equipment for which fair value was determined based on the replacement cost.

The revaluations are performed by specialised assessors, members of the National Association of Authorized Assessors of Romania (ANEVAR). The last revaluation of patrimony took place on December 31st, 2022.

The revaluations of tangible assets are carried out with sufficient regularity, so that the book value does not differ substantially from the one that would be determined using the fair value as at the balance sheet date.

If the result of revaluation is an increase over the net book value, it is treated as follows: as an increase in the revaluation reserve shown in equity, if there has not been a previous decrease recognised as an expense in respect of that asset, or as income to offset the expense related to the decrease previously recognised for that asset.

If the result of revaluation is a decrease in the net book value, it shall be treated as an expense related to the full amount of the depreciation when no amount relating to that asset (revaluation surplus) is recognised in the revaluation reserve, or as a decrease in the revaluation reserve by the lesser of the amount of that reserve or the amount of the depreciation, and any uncovered difference shall be recognised as an expense.

The expenses related to the maintenance and repair of tangible assets are recognised by the Company in the statement of comprehensive income when incurred, and significant improvements to tangible assets, that increase their value or useful lifetime, or that significantly increase their capacity to generate economic benefits, are capitalised.

Vrancart S.A. Notes to the stand-alone financial statements for the financial year ended on December 31st , 2024

(all amounts in RON, unless otherwise stated)

(ii) Subsequent expenses

Subsequent expenses are capitalised only when they increase the value of the future economic benefits incorporated into the asset they are intended for. The expenses related to repairs and maintenance are recognised in the profit and loss account as they are incurred.

(iii) Depreciation

Tangible assets items are depreciated as of the date when they are available for use or are in operating condition and for the assets built by the entity, from the date when the asset is completed and ready for use.

Depreciation is calculated using the linear method over the estimated useful lifetime of the assets as follows:

−	Land improvements		3-10 years
−	Constructions		30-60 years
−	Equipment and other tangible assets	`	2-16 years

Land is not subject to depreciation.

Depreciation is usually recognised in the profit and loss account, except for the case when the amount is included in the book value of another asset.

The depreciation methods, the estimated useful lifetimes and the residual values are revised by the Company's management on every reporting date and are adjusted, if necessary.

(iv) The sale/ cassation of tangible assets

The tangible assets that are quashed or sold are removed from the balance sheet together with the corresponding cumulated depreciation. Any profit or loss resulting from such operation are included in the current profit or loss.

d. Rights of use (Leasing)

The company assesses whether a contract is or contains a lease, at the beginning of the contract. The Company recognises a right of use and a corresponding lease liability in respect of all leases in which it is a lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases for low value assets.

For these leases, the Company recognizes lease payments as an operating expense on a linear basis over the lease term.

The lease liability is initially evaluated at the current value of lease payments that are not paid at the lease commencement date, discounted using the implicit rate in the lease. If this rate cannot be easily determined, the Company uses the incremental borrowing rate. The lease payments included in the evaluation of the lease liability comprise the fixed lease payments and the purchase option exertion price, if the lessee is reasonably certain that it will exert its options, in the case of vehicles.

Following the application of IFRS 16 in the current financial year, the Company recognised the rights of use as assets, while increasing the total liabilities by the same amount.

The rights of use that the Company holds and records in accordance with IFRS 16 refer to buildings and land, vehicles and equipment. Details of the amounts of rights of use by the categories mentioned are given in Note 4.

Rights of use are stated at cost in accordance with IAS 16 and depreciated over the lease term.

The Company has chosen to present its rights of use resulting from the application of IFRS 16 along with the property, plant and equipment in the statement of financial position in accordance with IFRS 16, details of which are given in Note 4.

e. Intangible assets

(i) Recognition and evaluation

The intangible assets purchased by the Company that have determined useful lifetimes are evaluated at cost less the cumulated amortisation and the cumulated impairment losses.

(ii) Goodwill

Goodwill recorded by the Company is the result of its merger with the company Giant in 2016, in accordance with IFRS 3. Goodwill is not amortised, it is tested annually for impairment; details of impairment testing and the amount of impairment recorded are disclosed in Note 5.

(iii) Subsequent expenses

Subsequent expenses are capitalised only when they increase the value of the future economic benefits incorporated into the asset they are intended for. All the other expenses, including the expenses related to goodwill and the internally generated brands, are recognised at profit or loss when incurred.

(iv) Amortisation of intangible assets

Amortisation is calculated for the cost of the asset less the residual value. Amortisation is recognised at profit or loss using the linear method throughout the estimated useful lifetime for intangible assets, other than goodwill from the date of availability for use. The estimated useful lifetimes for the current period and for the comparative periods are as follows:

− Software applications 3 years

The amortisation methods, the useful lifetimes and the residual values are revised at the end of each financial year and are adjusted if necessary.

(v) EUA certificates

Vrancart is a company participating in the EU Emission Trading Scheme (ETS) in its 4th phase during the period 2021 - 2025. Under the programme, the company receives a number of EUA credits through the allocation programme, which are used to comply with the CO² emission obligations related to its activity.

The Company applies IAS 38 for their recognition. The cost of the allocated allowances being nil, they are only reflected off-balance sheet.

To the extent that the Company records any surpluses for allocated allowances, they may be sold by the Company, the income recorded on the sale being reflected in the "Other income" category - see Note 22.

f. Financial assets

Financial assets include the shares held in affiliated entities.

The Company chose to reflect in its individual financial statements the shares held in affiliated entities included in the scope of consolidation at cost less impairment losses in accordance with IAS 27.

g. Inventories

Inventories are evaluated at the lower of cost and net achievable value.

The net achievable value represents the estimated sale price during the normal performance of the activity less the estimated costs for completion and the costs necessary to perform the sale.

Raw materials are evaluated at purchase price including transportation, handling costs and net of trade discounts.

The cost of inventories is based on the first-in-first-out (FIFO) principle and includes the expenses incurred for the purchase of inventories, the production or converting costs and other costs incurred to bring the inventories in the current form and location.

In case of inventories manufactured by the Company and the production in progress, the cost includes the corresponding share of the administrative expenses related to production based on the normal operating capacity.

h. Assets held for sale

Non-current assets held for sale are recognised at the minimum value between the book value and the fair value less the selling costs.

The Company classifies a non-current asset (or group of assets) as held for sale if its (their) book value is covered mainly through a sale transaction rather than through continuous use. For this purpose, the asset (or group of assets) must be available for immediate sale in its (their) current condition, only under the usual and customary conditions of sale existing for such assets (or groups of assets), and the sale of the asset must be highly probable. Type text here

For the sale of the asset to be highly probable, the appropriate level of management must have prepared a plan to sell the asset (or group of assets), and an effective programme to identify the buyer and finalise the sale plan must have been initiated. Furthermore, the asset (or group of assets) must be sellable in an active market at a price that is reasonably related to current fair value. In addition, the sale is expected to qualify for recognition as a "finalised, completed sale" within 1 year from the date of classification.

i. Impairment of assets

The book values of the Company's assets of non-financial nature, other than the assets of the type of deferred taxes, are revised on each reporting date in order to identify the existence of impairment indicators. If there are such indicators, the recoverable value of those assets is estimated.

An impairment loss is recognised when the book value of the asset or of its unit generating cash exceeds the recoverable value of the asset or of the unit generating cash. A unit generating cash is the smallest identifiable group that generates cash and that has the ability to generate cash flows independently from other assets or groups of assets. Impairment losses are recognised in the statement of comprehensive income.

The recoverable value of an asset or of a unit generating cash represents the highest amount between the usage value and its fair value, less the costs for the sale of that asset or unit.

To determine the usage value, the future cash flows forecasted are updated using an update rate before taxation, reflecting the current market conditions and the specific risks of that asset.

Impairment losses recognised during the previous periods are evaluated on each reporting date in order to determine whether they have decreased or ceased to exist. Impairment loss is reproduced if a change in the estimated uses to determine the recoverable value has occurred.

Impairment loss is reproduced only if the book value of the asset does not exceed the book value that would have been calculated, net of amortisation and depreciation, if the impairment loss had not been recognised.

The Company has defined impairment adjustment policies for trade receivables and inventories, as follows:

Impairment adjustments for trade receivables

The Company analyses on an individual basis the need to record an impairment adjustment for the customers whose balances as at the year-end exceed RON 100,000 and that have either started court proceedings to recover their balances, or that have invoices overdue for more than one year, calculated for the oldest invoice of the balance. Also, the Company calculates a collective impairment adjustment for the risk of non-collection of receivables, using the impairment adjustment percentages established based on historical data.

For the customers whose balances do not meet the individual analysis criteria, a collective impairment adjustment is calculated, based on the division of their balances by length intervals, according to the maturity date for the oldest invoice of the balance. A percentage calculated based on the Company's historical experience on the degree of recoverability of overdue balances from each length interval used for analysis is allotted to each length interval.

In accordance with IFRS 9, the Company used the simplified approach for calculating ECL for trade receivables and contractual assets that did not contain a significant financing component.

The Group performed an analysis of impairment adjustments for trade receivables that took into account historical credit loss experience based on the evolution of debtors' arrears, adjusted to reflect the current conditions and estimates of future economic conditions.

Impairment adjustments for inventories

By the nature of its object of activity, the Company does not hold any perishable inventories or inventories posing a short-term expiry risk. The risk of impairment of inventories consists mainly of their destruction or deterioration as a result of unforeseen events, but may also result from inventories with a low market demand. The Company performs a regular assessment of inventories in order to identify the existence of any indications of their impairment, taking into consideration the following aspects:

• − For all categories of inventories older than 180 days, impairment adjustment is established after an individual analysis, for each product, performed by a commission formed of representatives of the sales and production departments;
• − For all finished products, the Company compares the cost of inventories with the sale prices less the distribution costs for the immediately following period, to present the inventories remained in balance at the minimum value between the production cost and the sale price less the distribution costs, according to the provisions of the policy (h).

j. Dividends to be distributed

Dividends are treated as a distribution of profit during the period when they were declared and approved by the General Meeting of the Shareholders. The dividends declared before the reporting date are registered as liabilities as at the reporting date.

k. Affiliated parties

Branches are entities controlled by the Group. Control is achieved where the parent company has the power to govern the financial and operating policies in order to obtain benefits from its activities.

The parties are considered to be affiliated if one of the parties has the possibility to control either directly or indirectly or to influence to a significant extent the other party by ownership or based on contractual rights, family relationships or other kind of relationships.

Affiliated parties also include the persons that are the main shareholders, the management and the members of the Board of Administrators and their family members. Details on related party transactions are disclosed in Note 30.

(all amounts in RON, unless otherwise stated)

l. Employee benefits

(i) Short-term benefits

The liabilities related to short term benefits given to employees are not updated and are recognised in the statement of comprehensive income as the related service is provided.

Short term benefits of employees include salaries, premiums and social security contributions.

(ii) Determined contribution plans

The Company makes payments on behalf of its own employees to the pension system in Romania, to health insurances and the unemployment fund during the progress of normal activity.

All of the Company's employees are members of the pensions system in Romania (a determined contribution plan of the State) and also have the legal obligation to contribute to it (by means of social contributions). All the related contributions are recognised in the profit or loss for the period when incurred. The Company has no additional liabilities.

The Company is not engaged in any independent pensions system; therefore, it has no liabilities in this respect. The Company is not engaged in any other system for post-retirement benefits. The Company does not have the obligation to provide subsequent services to former or current employees.

(iii) Long-term employee benefits

The Company's net liability in relation to the benefits corresponding to long-term services is represented by the amount of future benefits that the employees have earned in exchange of the services provided by them during the current period and in the previous periods.

The Company has the obligation to grant benefits to employees upon retirement, in accordance with the collective labour agreement.

m. Provisions

A provision is recognised if, after a previous event, the Company has a current legal or implied liability that can be credibly estimated, and it is likely that an outflow of economic benefits is required to extinguish the liability. Provisions are determined by updating the future forecasted cash flows using a rate before taxation that reflects the current market evaluations in relation to the value of money over time and the risks specific to the liability. The amortisation of the update is recognised as a financial expense.

n. Income

(i) The sale of goods

The company concludes agreements with its customers. These are usually framework-agreements establishing the payments terms, the delivery and acceptances conditions related to the goods sold, the parties' rights and obligations. The sale price of the goods is usually established for each order launched by the customer and accepted by the Company.

Vrancart S.A. Notes to the stand-alone financial statements for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

The shipment services related to the goods are usually included in the agreements for the sale of goods. If the Company transports the customer's goods, the transfer of ownership is made at the time of delivery of the goods at the place of completion of the shipment, depending on the conditions of delivery. Thus, these shipment services are not recognized as a separate performance obligation.

The income from the sale of goods is recognised when control is transferred to the customer.

The Company offers its customers the right to return the products sold if these fail to meet the quality conditions stated in the agreements concluded with the customers. The Company assesses the value related to such returns from customers and recognises these as an adjustment of income.

The Company concluded agreements with a part of its customers, usually great retailers, under which these undertake to provide a non-monetary counter performance in the form of services, including logistic services, as well as marketing and promotion services. These services are recognised as a reduction of the transaction price, as long as the following conditions are met:

• the customer provides a good or service which is distinct, separable from the other elements of the agreement;
• the fair value of such services can be reasonably determined;
• the actually paid amount does not exceed the fair value of such services.

The Company recognises a reduction of the transaction price for the services invoiced by great retailers for most of these services, as it does not hold the information required to credibly assess their fair value.

(ii) The provision of services

The revenues from the provision of services are stated in the accounting records as they are incurred. The provision of services includes the performance of works and any other operations that cannot be considered as deliveries of goods.

The stage of execution of the work is determined based on work progress reports which accompany the invoices, the reception protocols or other documents certifying the stage of completion of the services provided.

o. Financial income and expenses

Financial income includes the interest-related income corresponding to the funds invested and other financial income. Interest-related income is recognised at profit or loss based on accrual accounting, using the actual interest method.

Financial expenses include the expense related to the interest for loans and other financial expenses.

The currency exchange gains or losses related to the financial assets and liabilities are reported depending on currency exchange fluctuations: profit or loss.

The borrowing costs that are directly attributable to the purchase, construction or generation of eligible assets, that require a significant period of time to be ready for use or sale, are added to the cost of those assets until the assets are significantly ready for use or sale.

Financial income from the temporary investment of the specific loans obtained for the purchase or construction of eligible assets are deducted from the costs of loans that can be capitalised.

All the other borrowing costs are recognised in the consolidated profit or loss, where they are incurred.

p. Corporate income tax

The expenses related to corporate income tax include the current and deferred tax.

Profit tax is recognised in the statement of comprehensive income or in other items of comprehensive income if the tax is related to equity items.

(i) Current tax

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

For the financial year ended on December 31st, 2024, the profit tax rate was 16% (December 31st, 2023: 16%).

Starting with the 2024 fiscal year, Law 296 on certain fiscal and budgetary measures to ensure the long-term financial sustainability of Romania, issued on October 26, 2023, as subsequently amended and supplemented ("Law 296"), introduced a 1% revenue tax for entities with a turnover exceeding EUR 50 million in the previous fiscal year. This tax applies only if its value exceeds the amount of corporate income tax and is calculated based on total revenues, from which certain types of income are excluded, along with the value of assets under construction carried out during the year and the depreciation of assets acquired or produced during the year.

(ii) Deferred tax

Deferred tax is determined by the Company using the balance sheet method for those temporary differences occurring between the tax base for the calculation of tax for assets and liabilities and their book value, used for reporting purposes in the individual financial statements.

Deferred tax is calculated based on the taxation percentages that are expected to be applicable to the temporary differences at their resumption, under the legislation in force on the reporting date.

Deferred tax receivables and liabilities are offset only if there is the legal right to offset the current liabilities and receivables by the tax and if they are related to the tax collected by that tax authority for the same entity subject to taxation or for different tax authorities that want to discount the current tax-related receivables and liabilities by the tax using a net basis or the assets and liabilities in question are to be achieved simultaneously.

The receivables related to deferred tax are recognised by the Company only to the extent that it is likely to achieve future profits that can be used to cover the fiscal loss.

The receivables related to deferred tax are revised at each financial year end and are reduced to the extent that the related fiscal benefit is unlikely to be achieved. Additional taxes occurring out of the distribution of dividends are recognised on the same date as the obligation to pay the dividends.

q. Earnings per share

The Company presents the base and diluted earnings per share for ordinary shares. The base earnings per share are determined through the distribution of the profit or loss attributable to the Company's ordinary shareholders to the weighted average number of ordinary shares for the reporting period. The diluted earnings per share are determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of ordinary shares with the dilution effects generated by the potential ordinary shares.

r. Subsidies

Investment subsidies are initially recognised as deferred revenues, at fair value when there is the certainty that they will be received, and the Company will meet the related conditions. The subsidies that compensate the Company's expenses related to the cost of an asset are recognised in the statement of comprehensive income in "Other income" systematically throughout the useful lifetime of the asset, as the subsidised asset is amortised. The subsidies that compensate the expenses incurred by the Company are recognised in the statement of comprehensive income, in "Other income" systematically during the same periods when the expenses are recognised.

s. Contingent assets and liabilities

Contingent liabilities are not recognised in the financial statements. They are presented, except for the case when the likelihood of a resource outflow that represents economic benefits is removed. A contingent asset is not recognised in the financial statements, but it is presented when an inflow of economic benefits is almost certain.

t. Subsequent events

The financial statements reflect the events subsequent to the year end, that provide additional information on the Company's position on the reporting date or those indicating a potential breach of the business continuity principle (events leading to adjustments). The events subsequent to the year-end that do not represent events leading to adjustments are presented in notes when considered significant.

u. New standards and interpretations

The initial application of the new amendments to the existing standards in force for the current reporting period

The following amendments to the existing standards issued by the International Accounting Standards Board (IASB) and adopted by the EU are effective for the current reporting period:

(all amounts in RON, unless otherwise stated)

• Amendments to IAS 1 "Presentation of Financial Statements" – Classification of Liabilities as Current or Non-current with Covenants (effective for annual periods beginning on or after January 1, 2024),
• Amendments to IFRS 16 "Leases" – Lease Liability in a Sale and Leaseback (effective for annual periods beginning on or after January 1, 2024),
• Amendments to IAS 7 "Statement of Cash Flows" and IFRS 7 "Financial Instruments: Disclosures" – Supplier Finance Arrangements (effective for annual periods beginning on or after January 1, 2024).

The adoption of the new amendments to the existing standards did not have a significant impact on the Company's individual financial statements.

Standards and amendments to the existing standards issued by the IASB and adopted by the EU, but not yet effective

As at the date of approval of these consolidated financial statements, the following amendments to the existing standards issued by the IASB and adopted by the EU are not yet effective:

• Amendments to IAS 21 "The Effects of Changes in Foreign Exchange Rates" – These new requirements will apply to annual reporting periods beginning on or after January 1, 2025. Early application is permitted (subject to the endorsement process).
• Amendments related to "Classification and Valuation of Financial Instruments" Amendments to IFRS 9 "Financial Instruments" and IFRS 7 "Financial Instruments: Disclosures" applicable to annual reporting periods beginning on or after January 1, 2026, with early application permitted, subject to endorsement.
• IFRS 18 "Presentation and Disclosure in Financial Statements" – Replacing IAS 1, with a focus on updates to the statement of profit or loss, applicable from January 1, 2027.
• IFRS 19 "Subsidiaries without Public Accountability: Disclosures" A voluntary standard for eligible subsidiaries, applicable from January 1, 2027.

The Company has chosen not to adopt these amendments to the existing standards in advance of their effective dates. The Company is in the process of assessing the impact of these standards to the financial statements.

v. Fair value determination

Certain accounting policies and requirements for the submission of information by the Company require the determination of fair value for financial and non-financial assets and liabilities.

The Company has an established control framework on the evaluation at fair value. This includes an evaluation team that is responsible for the supervision of significant fair value evaluations, including the 3rd level fair values, and reports directly to the financial manager.

The evaluation team revises on a regular basis the unobservable entry data and the significant evaluation adjustments. If data provided by third parties, for example quoted prices, provided by brokers or by price establishment services is used, the evaluation team assesses whether this data complies with the requirements imposed by the International Financial Reporting Standards, including the level in the hierarchy of fair values where these evaluations should be categorised.

Upon the evaluation of assets or liabilities at fair value, the Company uses to the maximum extent possible observable market information. The hierarchy of fair value classifies the entry data for the evaluation techniques used to evaluate the fair value on three levels, as follows:

• 1 st level: quoted (unadjusted) price on identical active markets for assets or liabilities that the Company can access at the evaluation date;
• 2 nd level: entry data, other than quoted prices included in 1st level, that is observable for assets or liabilities, directly or indirectly;
• 3 rd level: unobservable entry data for assets or liabilities.

If the entry data for the fair value evaluation of an asset or liability can be classified on several levels of the fair value hierarchy, the evaluation at fair value is classified entirely at the same level of fair value hierarchy as the entry data with the lowest level of uncertainty that is significant for the entire evaluation.

The Company recognises the transfers between the levels of fair value hierarchy at the end of the reporting period when the modification took place.

Additional information on the hypotheses used for the evaluation at fair value are included in Note 3 (c) (i) for tangible assets.

Vrancart S.A. Stand-alone statement of Cash Flows for the financial year ended on December 31st , 2024

(all amounts in RON, unless otherwise stated)

4. Tangible assets

	Land and land improvements	Buildings and special constructions	Plant and other fixed assets	Tangible assets in progress	Total
Cost or re-evaluated value
As of January 1st, 2023	15,638,888	97,538,197	273,574,808	49,086,235	435,838,127
Purchases	657,615	338,762	204,201	33,416,766	34,617,344
Rights of use of leased assets	-	11,858,382	5,135,013	-	16,993,395
Transfers from assets in progress	1,274,592	23,752,700	24,079,248	(49,106,540)	-
Outflows	(1,033,017)	(1,980,807)	(4,693,611)	(16,698,276)	(24,405,711)
Outflows of assets related to rights of use	-	(373,586)	(138,318)		(511,904)
As of December 31st, 2023	16,538,077	131,133,649	298,161,340	16,698,175	462,531,242
Cumulated amortisation and impairment losses
As of January 1st, 2023	-	10,449,665	49,346,948	-	59,796,613
Depreciation expense	210,840	2,825,124	27,255,417	-	30,291,380
Depreciation expense for the rights of use of leased assets	-	5,444,095	3,843,197	-	9,287,293
Outflows	-	(659)	(1,097,088)	-	(1,097,747)
Outflows of assets related to rights of use	-	(274,064)	(102,816)	-	(376,880)
As of December 31st, 2023	210,840	18,444,161	79,245,658	-	97,900,659
Net book value
As of December 31st, 2023	16,327,237	112,689,488	218,915,682	16,698,175	364,630,582

for the financial year ended on December 31st , 2024

(all amounts in RON, unless otherwise stated)

	Land and land improvements	Buildings and special constructions	Plant and other fixed assets	Tangible assets in progress	Total
Cost or re-evaluated value
As of January 1st, 2024	16,538,077	131,133,649	298,161,340	16,698,175	462,531,242
Purchases		(6,031,346)	6,031,346	-	-
Rights of use of leased assets	-	-	569,657	94,720,382	95,290,039
Transfers from assets in progress	-	2,292,921	5,635,894	-	7,928,815
Outflows	-	3,793,554	89,543,122	(93,336,676)	-
Outflows of assets related to rights of use	-	-	(2,533,508)	-	(2,533,508)
As of December 31st, 2024	-	(8,812,583)	(5,458,297)	-	(14,270,880)
	16,538,077	122,376,195	391,949,554	18,081,882	548,945,708
Cumulated amortisation and impairment losses As of January 1st, 2024
Depreciation expense	210,840	18,444,161	79,245,658	-	97,900,659
Depreciation expense for the rights of use of leased assets	277,179	3,707,240	28,141,806	-	32,126,225
Outflows	-	4,865,773	4,957,169	-	9,822,942
Outflows of assets related to rights of use	-	-	(1,828,922)	-	(1,828,922)
As of December 31st, 2024	-	(7,859,488)	(4,226,829)	-	(12,086,317)
	488,019	19,157,686	106,288,882	-	125,934,587

Net book value As of December 31st, 2024 The main acquisitions of property, plant and equipment in 2024 consisted of the construction of a 20MW photovoltaic park aimed at ensuring partial independence from energy suppliers and mitigating exposure to energy price fluctuations. The commissioning date was December 1, 2024.

The net book value of fixed assets disposed of through sale and/or scrapping as of December 31, 2024, was RON 704,586 (December 31, 2023: RON 3,543,943).

The net carrying amount of fixed assets acquired through government grants received up to December 31, 2024, was RON 113,683,303 (December 31, 2022: RON 32,774,382).

A portion of the Company's property, plant and equipment is pledged or mortgaged to secure loans from banks. The net carrying amount of these pledged or mortgaged assets was RON 303,212 thousand as of December 31, 2024 (December 31, 2023: RON 212,404 thousand). The carrying amount of right-of-use assets under lease contracts is disclosed in Note 16.

Had land, buildings, and production lines not been revalued, their carrying amounts as of December 31, 2024, would have been as follows:

		Cumulated
		Cost	amortisation	Net book value
Land and land improvements		20,251,685	3,166,976	17,084,709
Constructions and	special
buildings		93,125,823	28,268,679	64,857,144
Production lines		468,185,822	252,522,582	215,663,240
Total		581,563,330	283,958,237	297,605,093

Revaluation

As of December 31, 2022, based on a report prepared by an independent authorized valuer, the Company recorded a revaluation surplus amounting to RON 64,849,738 for land and land improvements, buildings and special constructions, and production lines, as well as a net value increase of RON 4,348,870 recognized in income. The fair value of the revalued fixed assets was determined using the market comparison method where market data was available (IFRS 13 Level 2), and the depreciated replacement cost method where market data was not available (IFRS 13 Level 3). For the current year, the Company estimates that there are no significant changes in fair value. Additionally, there were no movements in the revaluation reserve that would affect the profit or loss or other comprehensive income.

The revaluation was accounted for using the accumulated depreciation elimination method.

Impairment Testing

As of December 31, 2024, the Company's management identified the existence of impairment indicators and impairment tests were performed.

The Company performed impairment testing for Vrancart with the assistance of a chartered appraiser and concluded that no further impairment needs to be recorded.

The Company determined the "value in use," as defined by IAS 36 – Impairment of Assets, as: "the present value of the future cash flows expected to be derived from an asset or a cashgenerating unit."

According to the analysis, there is only one cash-generating unit in Vrancart line of business (the corrugated cardboard packaging business). The input data used to estimate the value in use of the assets under test was as follows:

• Net cash flow these flows (the income and expenditure budget) were forecasted by the Company's representatives for the entire explicit forecast period, and for perpetuity, they were estimated by the appraiser by applying the 3% growth rate in perpetuity represented by the inflation forecast for RON on the long term by the National Bank of Romania.
• The discount rate and the capitalisation rate for residual value estimated by the appraiser. The discount rate was estimated by the weighted average cost of capital (WACC) by calculating each of its components and then, for verification, reference was also made to data found in the market for other manufacturers of similar products. Thus, the results identified in the Damodaran database at the European level, we found the average EBITDA margin between 12% - 16%. WACC (weighted average cost of capital) as of January 31st , 2024 was 11.16%.
• The change in net working capital estimated by the appraiser based on the working capital for the first forecast year, i.e. 4.2% of the estimated turnover in the explicit forecast period, and for the remainder of the forecast period, the level from the last explicit period was kept, i.e. 4.2%.

Accordingly, the value in use of the fixed assets related to the Vrancart business line, subject to the impairment test, was determined and was then compared to the net carrying amount.

A sensitivity analysis was performed to assess the impact on the value in use of the fixed assets. It was observed that a decrease in EBITDA of up to 3.5% would still result in a value in use that remains above or close to the carrying amount. Additionally, an increase in the working capital ratio to turnover of up to 8% (compared to the estimated 4.2%) would not have a negative impact. When applying the same sensitivity analysis to the discount rate (WACC), an increase in the WACC with 0.5% would still not result in a negative impact. Furthermore, if a perpetual growth rate ("g") of only 2% were applied instead of the estimated 3%, the value in use would remain above the carrying amount.

5. Financial assets

	December 31st , 2024	December 31st , 2023
Rom Paper SRL	28,866,728	28,866,728
Vrancart Recycling SRL	33,621,000	33,621,000
Ecorep Group SA	99,600	99,600
Total	62,587,328	62,587,328

Rom Paper SRL ("Branch 1") was established in 2002 and it is a Romanian privately-owned company, active in the field of production of tissue paper products, such as: napkins, folded towels, tissue paper, professional rolls, facial tissues and boxed tissues. The products are sold in 6 countries, both in Romania and abroad, through store chain (hypermarkets, supermarkets, cash and carry), but also through distributors.

Vrancart S.A. Notes to the stand-alone financial statements for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

On January 20th, 2017, we completed the acquisition of the majority stake (70%) of Rom Paper SRL. As of December 31st, 2023, the Group owned 100% of the shares in the company, as a result of the acquisition in June 2017 of another 15%, respectively, in June 2018 of the last tranche of 15% of the shares of Rom Paper SRL.

Vrancart Recycling SRL ("Branch 2") was established in August 2020, and it is a Romanian privately-owned company, having a sole shareholder. The main activity of this branch consists of the treatment and disposal of non-hazardous waste. The company is at the beginning of its activity and has a number of 108 employees as of December 31st, 2024 (2023: 89 employees).

Ecorep Group SA ("Branch 3") was founded in November 2020, and it is a Romanian privatelyowned company. The main activity of this branch consists of the provision of services regarding the implementation of the obligations regarding the extended liability of the producer for the environmental targets. The company has a number of 11 employees as of December 31st, 2024 (2023: 7 employees).

The Company analysed the need to establish some value adjustments in relation to the investments in branches and considered that such adjustments are not necessary.

The shareholding in Vrancart Recycling is relatively new and increased by a new investment during the financial year 2023. The company is in its early stages of operation, so at this time there are no indications of impairment that would require a test of these shareholdings.

The Company tested for impairment its shareholding in Rom Paper SRL, as well as the goodwill in the amount of 3,380,811 generated following the merger of the Company with Giant in 2016, and it was not necessary to record any impairment.

In the case of the Rom Paper SRL business line, there is only one cash generating unit (the business of manufacturing of tissue paper products). The input data for estimating the value in use of the assets under test is as follows:

• The net cash flow these flows (income and expenditure budget) were forecasted by the Company's representatives for the entire explicit forecast period, and for perpetuity, they were estimated by the appraiser by applying the 3% growth rate in perpetuity represented by the inflation forecast for RON on the long term by the National Bank of Romania.
• The discount rate and the capitalisation rate for residual value estimated by the appraiser. The discount rate was estimated by the weighted average cost of capital (WACC). In order to determine it, we calculated each of its components.
• In order to verify the EBITDA margins forecast by the client, the appraiser considered it appropriate to refer to data found in the market for other manufacturers of similar products. Thus, the results identified in the Damodaran database at European level, we found the average EBITDA margin between 12% - 16%.
• The change in net working capital estimated by the appraiser based on the NFR submitted by the client for the entire explicit forecast period, and for perpetuity, the client's estimated percentage of 9,8% for the last year of the explicit period was applied.

In the case of the investment in Rom Paper, the value in use of the financial asset – the Rom Paper participation – was determined at RON 71,594,160. This value was then compared to the net carrying amount of RON 28,866,728.

A sensitivity analysis was carried out to assess the impact on the value in use of the Rom Paper investment. It was observed that a decrease in EBITDA by any percentage up to 26% would still result in a value in use above or close to the carrying amount. Similarly, a working capital to turnover ratio of up to 28% (compared to the estimated 7%) would not result in a negative impact.

When applying the same sensitivity analysis to the discount rate (WACC), an increase in WACC up to approximately 16% would still not have a negative effect. Furthermore, applying a nil perpetual growth rate ("g") instead of the estimated 3% would still result in a value in use significantly higher than the carrying amount.

As the value in use exceeds the net carrying amount, there is no need to recognize an impairment loss.

In the case of the GIANT business line, the cash generating unit (Vrancart's corrugated cardboard packaging business). The input data for estimating the value in use of the assets under test is as follows:

• The net cash flow these flows (income and expenditure budget) were forecasted by the Company's representatives for the entire explicit forecast period, and for perpetuity, they were estimated by the appraiser by applying the 3% growth rate in perpetuity represented by the inflation forecast for RON on the long term by the National Bank of Romania.
• The discount rate and capitalisation rate for residual value estimated by the appraiser. The discount rate was estimated by the weighted average cost of capital (WACC). In order to determine it, we calculated each of its components. In order to verify the EBITDA margins forecast by the client, the appraiser considered it appropriate to refer to data found in the market for other manufacturers of similar products. Thus, the results identified in the Damodaran database at European level, we found the average EBITDA margin between 12% - 16%.
• The change in net working capital estimated by the appraiser based on the NFR submitted by the client for the entire explicit forecast period, and for perpetuity, the percentage of 15,4% estimated by the client for the last year of the explicit period was applied.

The value in use of the goodwill allocated to the GIANT business line, which was subject to an impairment test, was determined at RON 20,511,862. This value was then compared to the net carrying amount of RON 3,380,811.

A sensitivity analysis was performed to assess the impact on the value in use of the GIANT business line. It was observed that a decrease in EBITDA by any percentage up to 25% would still result in a value in use that remains above or close to the carrying amount. Additionally, a working capital to turnover ratio of up to 44% (compared to the estimated 15%) would not have a negative impact. When applying the same analysis to the discount rate (WACC), an increase in WACC up to approximately 16% would not negatively impact the value in use. Furthermore, replacing the estimated perpetual growth rate ("g") of 3% with a nil rate would still result in a value in use close to the carrying amount.

Since the value in use exceeds the net carrying amount, there is no need to recognize an impairment loss.

6. Other non-current assets

The Company granted to its branch Vrancart Recycling a financing line of RON 34 million, whose repayment due date is December 31st, 2031. The financing used by Vrancart Recycling as of December 31st, 2024 is RON 32,150,000. An interest rate equal to the 3-month Robor plus a margin of 2% is charged on the loan.

7. Inventories

	December 31st , 2024	December 31st , 2023
Raw materials and consumables	36,416,145	27,495,917
Finished products and goods	17,576,247	11,081,654
Production in progress	22,238,017	29,725,919
Down-payments for inventories	6,936	74,494
Adjustments for the impairment of inventories	(2,445,821)	(1,567,323)
Total	73,791,524	66,810,661

8. Assets held for sale

By Resolution No. 54/14.12.2023 and Resolution No. 55/14.12.2023, the Company's Board of Directors approved the reclassification of assets from two locations as held for sale, as follows:

• Piatra Neamț location tissue paper production line initially, the intention was to relocate the production line to Adjud, but as the costs of the special constructions are significant, it was decided to sell the asset.
• Ungheni, Mures location land and production hall the production centre was relocated to Santana de Mureș, in a rented space, as the location in Ungheni was insufficient to increase the production and storage capacity.

Asset category	book value
PIATRA NEAMȚ LOCATION
Technological line for tissue paper production	16,660,015
UNGHENI, MUREȘ LOCATION
The land in Ungheni and the related infrastructure	1,474,098
The production hall and the related installations	1,030,774
The dismountable tent	560,874
TOTAL	19,725,761

Vrancart S.A. Notes to the stand-alone financial statements for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

As of the date of approval of the financial statements, the Ungheni location had been sold, while a sale-purchase pre-contract had been signed for the Piatra Neamț location (see Subsequent Events).

9. Trade receivables

	December 31st ,	December 31st ,
	2024	2023
Trade receivables	87,614,266	73,096,976
Adjustments for the impairment of trade receivables	(4,151,233)	(5,183,843)
Total	83,463,033	67,913,133

Adjustments for the impairment of trade receivables	December 31st , 2024	December 31st , 2023
Balance as at the beginning of the year	5,183,843	5,230,034
New adjustments during the year	449,593	924,288
Cancellation of adjustments during the year	(1,482,203)	(970,479)
Balance as at the year end	4,151,233	5,183,843

10. Cash and cash equivalents

	December 31st ,	December 31st ,
	2024	2023
Current accounts at banks and other values	1,024,155	2,054,662
Petty cash	26,434	33,359
Total cash and cash equivalents	1,050,589	2,088,021

11. Other receivables

	December 31st ,	December 31st ,
	2024	2023
Other personnel-related receivables	1,449,831	684,798
Other receivables	1,021,084	1,752,343
Subsidies	3,884,271	7,112,867
Down-payments for services	35,051	42,431
Receivables related to the state budget	-	1,061,380
Adjustments for the impairment of other receivables	-	(300,000)
Total	6,390,237	10,353,820

12. Share capital Company's shareholding structure

December 31st , 2024	Number of shares	Amount (RON)	(%)
LION Capital SA	1,534,275,712	153,427,571	76.33%
Pavăl Holding SRL	348,786,406	34,878,641	17.35%
Other shareholders	127,053,633	12,705,363	6.32%
Total	2,010,115,751	201,011,575	100%
December 31st, 2023	Number of shares	Amount (RON)	(%)
LION Capital SA	1,286,197,217	128,619,722	76.05%
Pavăl Holding SRL	292,390,802	29,239,080	17.29%
Other shareholders	112,628,634	11,262,863	6.66%
Total	1,691,216,653	169,121,665	100%

By resolution dated January 25, 2024, the Extraordinary General Meeting of Shareholders approved a share capital increase. The capital increase procedure was finalized on September 2 nd , 2024. A total of 318,899,098 ordinary, registered shares with a nominal value of RON 0.1/share were subscribed, amounting to a total value of RON 31,956,862.07, of which RON 31,889,909.80 represents the total nominal value, and RON 66,952.27 represents the share premium.

Dividends

In 2024, Vrancart SA did not distribute dividends. Through the Decision no. 4 dated April 27th , 2023, the Ordinary General Meeting of the Shareholders decided to distribute dividends from the net profit of the financial year ended on December 31st, 2022, amounting to RON 12,033,855, respectively a gross amount of a dividend of RON 0.01/share.

13. Reserves

December 31st , 2024	December 31st , 2023
103,936,472	104,393,341
13,345,280	13,345,280
60,790,128	60,790,128
178,071,880	178,528,749

Legal reserves

According to the legal requirements, the Company sets up legal reserves in the amount of 5% of the recorded profit up to the level of 20% of the share capital. The amount of the legal reserve as of December 31st, 2024 is RON 13,345,280 (December 31st , 2023: RON 13,345,280). Legal reserves cannot be distributed to the shareholders. Other reserves comprise reserves from tax on reinvested profit and other reserves, established in accordance with the legal provisions in force.

Reserves from the revaluation of tangible assets

These reserves include the cumulated net changes of the fair values of the land, buildings, special constructions and of the technological equipment whose fair value is greater than historical cost. Revaluation reserves are presented at value net of the related deferred tax (16%).

The difference between the revaluation value and the net book value of tangible assets is shown in revaluation reserve as a separate sub-item under "Equity".

The revaluation surplus included in the revaluation reserve is transferred to retained earnings when this surplus represents an achieved gain. The gain is deemed to be achieved when the asset is retired from service following its sale or cassation. No part of the revaluation reserve may be distributed, directly or indirectly, unless the revalued asset has been revalued, in which case the revaluation surplus represents an actual achieved gain.

As of May 1st, 2009, due to changes in tax legislation, revaluation reserves recorded after January 1 st, 2004 become taxable as the fixed asset concerned is amortised. Consequently, the Company has recorded a deferred tax liability in respect of this revaluation difference, which is debited against the amount of the revaluation surplus recorded in revaluation reserves in respect of the fixed assets concerned.

Other reserves

Other reserves in the statement of changes in equity include reserves from tax facilities and other reserves. In 2023 the Company benefited from tax exemption on reinvested profits, as provided for in the Tax Code (art. 22).

`The value of the reserve established in 2023, related to reinvested profit, is RON 5,320,851, the balance of this reserve as of December 31st , 2023 being RON 60,589,500.

In 2024, since the Company recorded a loss, it was required, in accordance with the updated Fiscal Code, to calculate and pay the minimum corporate income tax (1%) from turnover.

for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

14. Trade liabilities

Short-term trade liabilities

	December 31st , 2024	December 31st , 2023
Trade liabilities	56,257,342	31,554,532
Advances collected for orders	1,346,556	972,489
Total	57,603,898	32,527,381

15. Other liabilities

	December 31st, 2024	December 31st , 2023
Debts to the state budget	4,229,926	4,667,824
Dividends to be paid	1,355,540	1,475,383
Other liabilities	171,279	2,359,166
Other short-term liabilities	5,756,745	8,502,373
Provisions for disputes	439,212	12,961
Other long-term liabilities	439,212	12,961

Provisions for disputes are estimated based on the likelihood that economic resources will need to be consumed in the future to extinguish this obligation.

Reconciliation of provisions for disputes	December 31st, 2024	December 31st , 2023
Balance as at the beginning of the year	12,961	22,822
Provisions set up during the year	431041	-
Provisions used during the year	(4,790)	(9,861)
Balance as at the year end	439,212	12,961

16. Lease liabilities

	December 31st, 2024	December 31st, 2023
Long-term leasing liabilities	19,066,190	21,333,018
Short-term leasing liabilities	7,712,995	9,300,908
Total liabilities under leasing agreements	26,779,185	30,633,926

The reconciliation of lease liabilities and rights of use recognised as a result of the application of IFRS 16 is presented in the following tables:

for the financial year ended on December 31st , 2024

(all amounts in RON, unless otherwise stated)

Equipment and other fixed assets	Buildings and special constructions	Leasing liabilities
10,312,885	20,321,041	January 1st, 2024 As of
7,498,727	(7,498,727)	Reclassifications
5,568,224	2,292,921	Debts set up under rental agreements
(1,246,407)	(938,155)	Derecognition of ceased lease liabilities
637,228	864,237	Interest and currency exchanges differences
(5,957,854)	(5,074,935)	Lease payments
16,812,803	9,966,382	December 31st, 2024, out of which: As of
		Long-term leasing liabilities
4,843,026	2,869,969	Short-term leasing liabilities
Equipment and other fixed assets	Buildings and special constructions	Leasing liabilities
		January 1st, 2023 As of
		Debts set up under rental agreements
		Derecognition of ceased lease liabilities
		Interest and currency exchanges differences
		Lease payments
		December 31st, 2023, out of which: As of
	11,969,777 9,519,693 5,390,176 (50,062) 193,496 (4,740,418) 10,312,885	7,096,413 13,900,030 11,858,382 (107,904) 456,190 (5,785,657) 20,321,041

	Buildings and special	Equipment and other	Total
Short-term leasing liabilities	4,896,989	4,403,919	9,300,908

special constructions	and other fixed assets	Total
12,964,500	9,852,620	22,817,120
11,858,382	5,135,013	16,993,395
(5,444,095)	(3,843,197)	(9,287,293)
(99,522)	(35,502)	(135,024)

Long-term leasing liabilities 15,424,053 5,908,966 21,333,019

for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

9,736,910	16,572,598	26,309,508
(938,157)	(1,246,407)	(2,184,563)
(4,865,773)	(4,957,169)	(9,822,942)
2,292,921	5,635,894	7,928,815
(6,031,346)	6,031,346	-
19,279,265	11,108,934	30,388,198

17. Loans

	December 31st , 2024	December 31st , 2023
Bank loans	79,709,290	58,847,028
Loans from bond issues	-	-
Other long-term loans	6,979,750	8,979,750
Total long-term loans	86,689,040	67,826,778

	December 31st, 2024	December 31st, 2023
Bank loans	101,254,966	62,395,806
Loans from bond issues	-	38,250,000
Other short-term loans	157,474	145,310
Total short-term loans	101,412,440	100,791,116

Bank loans	December 31st , 2024	December 31st , 2023
Initial balance	121,242,834	123,594,427
Draws	120,341,599	40,328,879
Reimbursements	(60,665,533)	(42,925,810)
Net currency exchange differences	45,356	245,338
Final balance	180,964,256	121,242,834

Bonds	December 31st, 2024	December 31st, 2023
Initial balance	38,250,000	38,250,000
Draws	-	-
Reimbursements	(38,250,000)	-
Net currency exchange differences	-	-
Final balance	-	38,250,000

for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

Other loans	December 31st, 2024	December 31st, 2023
Initial balance	9,125,060	12,849,726
Draws	-	-
Reimbursements	(2,000,000)	(3,250,000)
Interest	12,164	(474,666)
Final balance	7,137,224	9,125,060

						Principal in	Principal in
No.	Date of		Type of		Final	balance as of	balance as of
	granting of the	Currency	interest	Nature	maturity	December 31st ,	December 31st ,
	loan		(fixed/		date	2023 – RON	2022 – RON
			variable)			equivalent	equivalent
1	18/05/2022	RON	Variable	Overdraft	8-Aug-25	30,711,856	16,144,165
2	31/07/2022	EUR/ RON	Variable	Overdraft	20-Jan-26	2,509,124	382,330
3	08/07/2022	RON	Variable	Overdraft	19-Oct-25	29,015,245	2,021,021
4	26/12/2022	EUR	Variable	Overdraft	31-Dec-26	8,298,227	2,158,707
5	02/06/2023	EUR	Variable	Long term	31-Dec-27	1,122,762	1,497,166
6	20/12/2022	EUR	Variable	Long term	20-Jan-26	15,112,190	20,980,715
7	20/12/2022	EUR	Variable	Long term	15-Jan-26	-	4,208,800
8	28/12/2022	EUR	Variable	Long term	28-Dec-27	4,775,136	6,367,488
9	27/12/2022	EUR	Variable	Long term	27-Jul-24	-	742,971
10	21/12/2022	EUR	Variable	Long term	21-Dec-27	3,286,325	4,382,208
11	21/12/2022	EUR	Variable	Long term	21-Dec-27	7,073,170	9,431,842
12	21/12/2022	EUR	Variable	Long term	21-Dec-27	3,879,798	5,173,584
13	22/12/2023	EUR	Variable	Long term	31-Oct-30	5,348,152	-
14	21/12/2021	RON	Variable	Long term	20-Dec-26	835,593	5,785,900
15	23/10/2020	RON	Variable	Long term	23-Oct-25	789,474	1,736,842
16	19/12/2023	EUR	Variable	Long term	29-Jul-26	3,782,974	6,305,591
17	09/05/2018	RON	Variable	Long term	20-Apr-25	664,242	2,656,966
18	29/11/2017	RON	Variable	Long term	29-Nov-24	-	4,147,541
19	17/10/2023	EUR	Variable	Long term	30-Sep-29	2,947,527	-
20	12/10/2023	EUR	Variable	Long term	12-Oct-33	36,641,035	10,176,519
21	12/10/2023	RON	Variable	Long term	31-Mar-26	2,956,798	7,238,802
22	26/09/2019	RON	Variable	Long term	20-Sep-26	1,076,926	1,692,310
23	20/12/2020	RON	Variable	Long term	20-Dec-26	-	1,253,389
24	22/12/2023	EUR	Variable	Long term	30-Sep-33	20,137,703	6,267,996
25	29/10/2019	EUR	Fixed	Long term	20-Nov-24	-	489,981
	Total					180,964,256	121,242,834

The Company has agreed through the bank loans contracted to comply with a series of financial and non-financial conditions. The failure to comply with these conditions in the case of long-term loans may lead to early maturity and other penalties.

The vast majority of the financial covenants agreed with the financing institutions fall within the contractually agreed limits or are very close to these limits. Where applicable, waivers and/or letters of support have been issued, ensuring the continued availability of existing facilities, so that the Company continues to benefit from the full financial support of its banking partners.

Vrancart S.A. Notes to the stand-alone financial statements for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

The interest rate for loans in RON is determined as Robor + margin, with the final interest rate in the range of 6% - 7.5%. The interest rate for loans in EUR is determined as Euribor + margin, the final interest rate being in the range 2% - 4.7%.

As guarantee for its loans, the Company set up the following security interests in favour of banks: on its inventories of raw materials, finished and semi-finished products, on the balances of accounts opened with banks, on claims arising from present and future contracts and on its rights of claims arising from insurance policies covering the goods pledged as security. In addition, as of December 31st , 2024, tangible fixed assets are mortgaged in favour of banks (see Note 5).

Bonds

During the first months of 2017, the Company issued a number of 382.500 bonds with a nominal value of RON 100/bond. The bond issuance was entirely subscribed and the Company collected RON 38,250,000 from the bondholders.

The bonds were issued in two stages:

• in the first stage, to the Company's shareholders, proportionally to their shareholding in relation to the total number of shares;
• in the second stage, only the bonds not subscribed during the first stage, to qualified investors.

The interest rate is ROBOR 3 months, to which a margin of 2% p.a. is added, the interest payment being made on a quarterly basis. The bonds reach maturity on March 17th, 2024. The bonds may be reimbursed in advance by the Company at any time after 2 years from their issuance. Bonds may be converted into shares by the bondholders during each of the years between 2019 – 2023 at a price equal to the average share price in the past 12 months previous to the date when the conversion price is determined. The reimbursement can only be initiated if at least 10% of the bonds issued are requested to be converted into shares.

As of December 31st, 2023, LION Capital S.A. holds 96.4% of the bonds.

Reimbursement and conversion options are recognised as a single composed derivative financial instrument. This financial instrument is evaluated separately from bonds according to IFRS 9, as none of the options are strictly connected to the bond contract.

March 15th, 2024 marked the fifth exercise date for the bondholders' right to convert bonds into shares. Since the Company did not receive conversion notifications exceeding the threshold of 10% of the total bonds issued, no conversion took place.

On March 17th, 2024, the Company proceeded with the full repayment of the bonds, along with the interest related to the final coupon. As of that date, the Company has fully fulfilled its obligations stipulated in the Bond Issuance Prospectus.

(all amounts in RON, unless otherwise stated)

18. Debts to employees

	December 31st , 2024	December 31st , 2023
Payroll liabilities	2,170,808	2,533,705
Other payables to employees	2,650,968	3,446,004
Retirement benefits (long-term)	920,509	444,379
Total debts to employees	5,742,285	6,424,088

19. Liabilities or receivables related to deferred tax

Deferred tax is generated by the items detailed in the following tables:

Temporary differences

December 31st , 2024	Liabilities	Assets	Net
Tangible assets	84,271,330	-	84,271,330
Assets held for sale	1,765,655	-	1,765,655
Provision for inventories	-	2,445,821	(2,445,821)
Depreciation of receivables	-	4,151,233	(4,51,233)
Other receivables	-		-
Other liabilities	-	3,389,396	(3,389,396)
	86,036,985	9,986,450	76,050,535
Net temporary differences - 16% share			76,050,535
Liabilities related to deferred profit tax			12,168,086
December 31st, 2023	Liabilities	Assets	Net
Tangible assets	90,753,810	-	90,753,810
Provision for inventories	1,765,655	-	1,765,655
Depreciation of receivables	-	1,567,321	(1,567,321)
Other receivables	-	5,183,843	(5,183,843)
Other liabilities	-	300,000	(300,000)
	-	3,215,470	(3,215,470)
	92,519,465	10,266,634	82,252,831
Net temporary differences - 16% share			82,252,831
Liabilities related to deferred profit tax			13,160,453

for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

	December 31st , 2024	Credit/ (Expense)	December 31st , 2023
Deferred tax to be paid Tangible assets	(13,483,413)	1,037,197	(14,520,610)
Assets held for sale Deferred tax to be recovered	(282,505)	-	(282,505)
Provision for inventories Depreciation of receivables Other receivables	391,331 664,197 -	140,559 (165,218) (48,000)	250,772 829,415 48,000
Other liabilities	542,304 (12,168,086)	27,829 992,367	514,475 (13,160,453)

Deferred income tax is mainly generated by the revaluation of fixed assets that is not recognized for tax purposes, impairment adjustments for inventories, customers and provisions for employee benefits.

20. Investment Subsidies

Investment subsidies classified as short-term liabilities represents the part of the government subsidies received that will be recognised as income the following financial year. Deferred income categorised as long-term liabilities represents the part of the government subsidies received that will be recognised within periods of over 1 year.

The investment subsidies received, remained in balance, are presented in the table below:

	December 31st December 31st , 2024 , 2023
The Ministry of Economy and Research II	2,175,869	2,897,518
Innovation Norway - 1MW Park	2,198,305	2,329,548
The Ministry of Economy – 20MW park	25,872,863	-
The Environmental Fund Administration	2,093,733	2,254,785
Innovation Norway 1	170,933	231,069
Innovation Norway 2	2,051,908	2,332,926
Non-reimbursable financial aid for microenterprises	4,119	5,415
The European Bank for Reconstruction and Development	63,044	71,794
Total	34,630,774	10,123,055

The subsidy received from the Ministry of Economy and Research aims at financing the upgrade and development of the technological line for paper manufacturing and the nonreimbursable eligible amount was initially RON 18,500,000. The Company has completed the stage for the project monitoring in June 2018. The financing agreement included a series of indicators that had to be met by the end of the monitoring period. All the indicators were met.

Vrancart S.A. Notes to the stand-alone financial statements for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

The subsidy received from the Environmental Fund Administration was granted for endowments for the technological waste burning boiler and had an initial amount of RON 4,509,517. The monitoring period of this project was completed in 2013.

The subsidy received from EBRD is granted for energetic efficiency and it amounted to RON 477,767. The subsidy from Innovation Norway 1 refers to the extension of the collection centres and the subsidy from Innovation Norway 2 was granted for the increasing of the corrugated cardboard converting capacity. The Company requested and received through the Innovation Norway 2 project reimbursements in the amount of RON 3,111,923 as of December 31st, 2016, representing 70% of the total grant amount. For both projects financed with Norwegian funds, the monitoring period ended in 2020, respectively 2021.

The 20MW Photovoltaic Park Construction Project benefited from a European grant under the National Recovery and Resilience Plan (NRRP) in the amount of RON 29,953,720, aimed at "Supporting investments in new electricity generation capacities from renewable sources – wind and solar – with or without integrated storage facilities," approved by Order of the Minister of Energy No. 282/30.03.2022, as subsequently amended and supplemented, and in accordance with the provisions of the State Aid Scheme intended to support investments in new electricity generation capacities from renewable sources – wind and solar – with or without integrated storage facilities, approved by Order of the Minister of Energy No. 281/30.03.2022. The project was completed on November 30, 2024, and is currently in the monitoring period. The Company received in December 2024 the amount of RON 25,993,292 and the last tranche in February 2025 (see note 31).

21. Income from customer contracts

	2024	2023
Income from the sale of finished products	356,737,596	372,166,698
Income from the sale of goods	22,204,070	23,621,640
Income from services provided	15,939,253	16,126,810
Income from various activities	674,530	95,948
Total	395,555,449	412,011,096

The company recognizes its income on a point in time basis for the sale of finished products and goods, while its income from services rendered and other miscellaneous activities is recognized over time.

The Company's income includes mainly sales of goods, related to the production of the following types of goods:

• Paperboards
• Corrugated cardboard and packaging
• Tissue paper

The paperboards can be used as semi-finished products for the production of corrugated cardboard and packaging or sold as finished products to customers.

Vrancart S.A. Notes to the stand-alone financial statements for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

The Company's customers are mostly Romanian companies and exports hold a share of approximately 15% of the total sales. No client holds a significant share in the total sales of the Company.

Trade discounts granted represent both the amounts granted to customers as a discount for the volume of goods purchased, as well as reclassifications in accordance with IFRS 15, namely amounts invoiced by customers which are calculated as a percentage of the amount of the sales.

22. Other income

	2024	2023
Income from investment subsidies	1,485,483	1,274,177
Income from the trading of CO2 certificates	1,088,771	6,146,158
Income from compensations, fines and penalties	1,699,785	337,339
Income from rentals and royalties	838,278	672,034
Net profit from the sale of tangible assets	484,595	520,449
Value adjustments on trade receivables	947.987
Other operating income	6,317,099	1,091,310
Total	12,861,998	10,041,467

23.Raw materials and consumables expenses

2024	2023
103,683,343	83,632,584
39,531,013	44,461,666
7,575,384	8,307,948
55,912,041	72,968,878
6,536,659	6,592,286
213,238,440	215,963,362

During 2023, the expense related to gas consumption was included under fuel expenses. Starting from 2024, this expense has been recorded under utility expenses. For comparability purposes, the amount of RON 33,994,005 related to the year 2023 has been reclassified in the table above from fuel expenses to utility expenses.

24. Third-party expenses

	2024	2023
Maintenance and repairs expenses	3,491,565	5,020,873
Transportation of goods expenses	21,479,317	19,189,976
Waste recovery services provided	-	2,771,185

for the financial year ended on December 31st , 2024

(all amounts in RON, unless otherwise stated)

Total	34,692,284	37,466,894
Other third-party expenses	5,112,739	5,476,620
Security services expenses	2,149,554	1,802,902
Provision of services related to fulfilment of environmental objectives	876,973	982,640
Waste management services provided	1,582,136	2,089,237
Provision of services related to the operation of the Piatra Neamț production centre	-	133,461

25. Other expenses

	2024	2023
Commissions and fees expenses	552,688	1,024,557
Provision expenses	743,317	-
Expenses for rentals and royalties	404,151	764,903
Expenses with banking and similar services	366,500	706,967
Insurance premiums expenses	2,057,111	2,118,258
Expenses for other taxes, duties and similar payments	2,993,526	2,904,450
Donations granted	397,914	353,431
Business travel, secondment and transfers expenses	406,403	621,247
Postage and telecommunication fees	400,395	379,290
Entertainment, advertising and publicity expenses	290,137	363,035
Compensation, fines and penalties expenses	64,494	68,277
Impairment of inventories	878,498	141,155
Impairment of receivables	-	930,413
Personnel transportation expenses	1,174,681	1,470,939
Social benefits expenses according to the collective
labour agreement	1,281,000	1,350,601
Other operating expenses	494,196	407,226
Total	12,505,011	13,604,749

The total amount under fees and commissions includes financial audit services. The Company's auditor is PricewaterhouseCoopers Audit SRL. The fees for the audit of the individual and consolidated financial statements of Vrancart SA as at December 31, 2024, prepared in accordance with Order of the Ministry of Public Finance (OMFP) 2844/2016, as well as for the statutory financial audits of Rom Paper SRL, Vrancart Recycling SRL, and Ecorep Group SA as at December 31, 2024, prepared in accordance with OMFP 1802/2014, amounted to EUR 58,610 (excluding VAT).

Fees paid to the auditors for other assurance services amounted to EUR 4,000 (excluding VAT), representing fees for the procedures carried out in relation to the semi-annual report on related party transactions, prepared in accordance with Law 24/2017. Additionally, non-audit services were contracted and paid to the auditors in the amount of EUR 9,400, representing Agreed-Upon

Vrancart S.A. Notes to the stand-alone financial statements for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

Procedures related to the Project funded through the National Recovery and Resilience Plan (NRRP) – Component 6 – "Construction of Photovoltaic Park, Power Plant, Transformer Substation, Access Road, Security and Utilities."

26. Labor expenses

2024	2023
86,791,896	92,369,219
1,972,224	2,114,165
7,365,780	8,089,590
96,129,900	102,572,974

In 2024, the average number of employees of the Company was 1,148 (2023: 1,221).

27. Financial income and expenses

	2024	2023
Interest income	1,869,931	1,308,417
Dividends received	2,500,000	-
Other financial income	1,991	18,643
Total income	4,371,922	1,327,060
Interest expenses for loans	8,773,112	10,993,639
Interest expenses for leasing agreements	366,114	316,893
Currency exchange losses	781,198	838,928
Other financial expenses	12,869	6,396
Total expenses	9,933,293	12,155,856

28. Corporate income tax expense

	2024	2023
Current corporate income tax expenses	2,863,431	605,877
Deferred profit tax expenses	(905,344)	(71,446)
Total	1,958,087	534,431

for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

	2024	2023
Profit/(loss) before taxation	(9,478,278)	6,163,454
Tax in accordance with the statutory taxation rate of 16% (2022: 16%)	(1,516,524)	986,153
Effect onto the corporate income tax of the:
Legal reserve	-	(49,308)
Non-deductible expenses	-	5,119,763
Revenue-like items	5,610,239	-
Fiscal amortisation	(1,166)	(4,274,264)
Exemptions for sponsorships	(281,914)	(52,752)
Recording of temporary differences	(905,344)	(71,446)
Reinvested profit – tax credit	(947,204)	(1,123,715)
Corporate income tax	1,958,087	534,431

29. Earnings per share

The calculation of base earnings per share was made based on the profit attributable to ordinary shareholders and the weighted average number of ordinary shares:

	2024	2023
Profit attributable to ordinary shareholders	(11,436,365)	5,629,023
Weighted average number of ordinary shares	1,799,819,966	1,349,066,594
Base earnings per share	(0.0064)	0.0042

The diluted earnings per share are calculated on the assumption that the bonds would be fully converted, as follows:

	2023
(11,436,365)	5,629,023
-	2,841,280
(11,436,365)	8,470,303
1,799,819,966	1,349,066,594
-	228,358,209
1,799,819,966	1,577,424,803
(0.0064)	0.0054
	2024

30. Affiliated parties

The persons that are part of the Steering Board and the Board of Directors, as well as Lion Capital SA, which is the main shareholder, along with the other companies controlled by it are considered affiliated parties.

The list of people that were part of the Board of Directors as of December 31st, 2023:

Fedor Nicu Ciprian	and Chairman of the Board of Directors Chief Executive Officer
Drăgoi Bogdan Alexandru	Member of the Board of Directors
Mihailov Sergiu	Member of the Board of Directors
Fercu Adrian	Member of the Board of Directors
El Lakis Rachid	Member of the Board of Directors

Transactions with the key management personnel:

	2024	2023
Remuneration of the members of the Board of	3,371,111	3,948,718
Directors

The amounts mentioned include the total gross remuneration (fixed and variable) for the financial years 2023 and 2024 for all the members of the Board of Directors, as well as the total remuneration of the Chief Executive Officer.

Transactions with affiliated parties:

Affiliated party		Transactions in* 2024	Transactions in* 2023	Balance in 2024	Balance in 2023
Rom Paper/ branch	Supplier	340,814	360,331	54,104	100,312
Rom Paper/ branch	Customer	31,531,108	42,731,696	10,448,493	12,996,327
Vrancart Recycling	Supplier	5,563,746	6,757,874	416,858	1,278,701
Vrancart Recycling	Customer	2,259,043	2,504,578	1,263,113	70,863
Vrancart Recycling	Loan granted	29,050,000	30,100,000	32,150,000	13,100,000
Vrancart Recycling	Other debts	4,954,758	5,490,238	616,671	1,509,112
Ecorep Group SA	Customer	2,975,583	2,428,194	1,871,223	1,782,072
Ecorep Group SA	Supplier	874,281	1,071,083	114,894	167,827
SIF1 IMGB SA	Loan received	481,837	1,021,976	7,137,224	9,125,060
Biofarm S.A.	Customer	355,679	290,777	119,379	46,259
Biofarm S.A.	Supplier	1,409	1,121	770	-
LION Capital SA	Supplier	35	36	-	-
Bucur SA	Supplier	-	-	-	-
Ci-Co SA	Supplier	11,038	9,351	1,508	754
Sifi Cj Logistic SA	Supplier	128,687	137,688	13,834	5,761
Semtest Craiova SA	Supplier	69,547	177,431	-	17,689
Dedeman SRL	Supplier	1,571,442		137,903
Dedeman SRL	Customer	2,891,458		781,135

*Note: The values do not include VAT.

for the financial year ended on December 31st (all amounts in RON, unless otherwise stated)

Other operations:

Affiliated party		Transactions in 2024	Transactions in 2023	Balance in 2024	Balance in 2023
Lion Capital SA	Payment of dividends distributed during the year	-	9,086,125	-	-
Rom Paper	Receipt of dividends distributed during the year	2,500,000	-	-	-
ARIO Bistriţa	Debtor	-	-	-	300,000

31. Subsequent events

Conclusion of the sale agreements for the assets held for sale in Ungheni and Piatra Neamț:

• On January 23, 2025, a sale-purchase pre-contract was signed for the property located in Piatra Neamț, for which an advance payment of EUR 1 million was received in February 2025.
• On February 6, 2025, the sale-purchase contract for the Ungheni property was signed, and the full payment was collected during February.

On February 18th, 2025, the final tranche, representing 10% of the European NRRP grant related to the 20MWh Photovoltaic Park project amounting to RON 2.9 million was collected. On the same date, the outstanding balance of the bridge loan contracted with BRD for the financing of the 20 MWh Photovoltaic Park project in amount of RON 2,956,798 was fully repaid.

32. Financial risk management

Overview

The Company is exposed to the following risks related to the use of financial instruments:

• − credit risk;
• − liquidity risk;
• − market risk;
• − currency exchange risk.

These notes provide information on the Company's exposure to each of the abovementioned risks, the Company's objectives, policies and processes for the assessment and management of risk and the procedures used for capital management. Also, other quantitative information is included in these financial statements.

The Company's policies for risk management are defined so as to provide the identification and analysis of the risks that the Company is facing, the establishment of adequate limits and controls, as well as the monitoring of risks and the compliance with the limits established. The risk management policies and systems are regularly reviewed so as to reflect the changes occurred in the market conditions and the Company's activities.

The Company, through its training and management standards and procedures, aims at developing an orderly and constructive control environment where all the employees understand their roles and obligations.

(a) Credit risk

Credit risk is the risk that the Company incurs a financial loss as a result of a customer's failure to comply with its contractual obligations and this risk results mainly from the Company's trade receivables.

The book value of the financial assets represents the maximum exposure to credit risk. The maximum exposure to credit risk was:

Book value	December 31st , 2024	December 31st , 2023
Trade and other receivables	83,899,482	68,925,494
Restricted cash	-	-
Cash and cash equivalents	1,050,589	2,088,021
Total	84,950,071	71,013,515

The Company's exposure to credit risk is mainly influenced by the individual characteristics of each customer.

The management has established a credit policy according to which every new customer is analysed on an individual basis in terms of its trustworthiness before being granted the Company's standard payment and delivery conditions. Purchase limits are established for each individual customer. The customers that fail to meet the conditions established by the Company can make transactions with it only after making an advance payment.

The Company does not request collaterals for trade receivables and other receivables.

Within the process of estimation of receivables impairment adjustments, the Company uses an impairment model whose operating principle has not changed from the previous years, as this model reflects the requirements of the impairment model introduced by IFRS 9.

Impairment losses

Analysis of the number of days of delay for trade receivables and other receivables:

December 31st , 2024	Gross value	Depreciation
Current and outstanding receivables aged 0 to 30
days	75,026,013	-
Outstanding receivables aged 31 to 60 days	3,449,099	75,959
Outstanding receivables aged 61 to 90 days	1,747,877	39,327
Outstanding receivables aged 91 to 180 days	2,402,757	233,140
Outstanding receivables aged 181 to 360 days	235,208	118,429
Outstanding receivables aged more than 360 days	5,189,761	3,684,378
Total	88,050,715	4,151,233

for the financial year ended on December 31st , 2024 (all amounts in RON, unless otherwise stated)

December 31st, 2023	Gross value	Depreciation
Current and outstanding receivables between 0 and
30 days	44,871,975	306,084
Outstanding receivables between 31 and 60 days	4,105,313	28,584
Outstanding receivables between 61 and 90 days	782,592	12,716
Outstanding receivables between 91 and 180 days	2,037,845	751,963
Outstanding receivables between 181 and 360 days	661,052	603,103
Outstanding receivables for more than 360 days	21,650,559	3,481,393
Total	74,109,336	5,183,843

Provision percentages overview	December 31st , 2024	December 31st , 2023
Current and outstanding between 0 and 30 days	0.7%	0.7%
Outstanding between 31 and 60 days	0.7%	0.7%
Outstanding between 61 and 90 days	1.6%	1.6%
Outstanding between 91 and 120 days	19.4%	19.4%
Outstanding between 121 and 180 days	59.7%	59.7%
Outstanding between 181 and 9365 days	91.2%	91.2%
More than 365 days	100%	100%

(b) Liquidity risk

Liquidity risk is the Company's risk to face difficulties in meeting its obligations related to financial liabilities that are discounted in cash or through the transfer of another financial asset.

The Company's approach in managing liquidity consists of making sure, as far as possible, that it always has sufficient liquidities to pay its outstanding debts, both under normal conditions and under stress conditions, without bearing unacceptable losses or endangering the Company's reputation.

In general, the Company makes sure that it has sufficient cash to cover the operating expenses. The following table provides a presentation of the residual contractual maturities of financial liabilities as at the end of the reporting period, including the estimated payments of interests:

		Contractual	Less than 1		Over 5
December 31st, 2024	Book value	cash flows	year	1 - 5 years	years
Bank loans	188,101,480	206,940,013	108,282,203	78,724,480	19,933,330
Bonds	-	-	-	-	-
Lease liabilities	26,779,185	29,686,470	8,859,129	20,089,604	737,737
Trade liabilities and other liabilities	70,425,666	70,425,666	69,065,945	1,359,721	-
Total	285,306,331	307,052,149	186,207,277	100,173,805	20,671,066

The bonds with a total value of RON 38,250,000 matured on March 17, 2024.

for the financial year ended on December 31st , 2024

(all amounts in RON, unless otherwise stated)

December 31st, 2023	Book value	Contractual cash flows	Less than 1 year	1 - 5 years	Over 5 years
Bank loans	130,367,894	143,533,037	26,706,963	116,826,075	-
Bonds	38,250,000	38,250,000	38,250,000	-	-
Lease liabilities	30,633,926	30,694,276	9,361,258	21,333,018	-
Trade liabilities and other liabilities	47,466,803	47,466,803	47,009,463	457,340	-
Total	246,718,623	259,944,116	121,327,684	138,616,432	-

(c) Market risk

Market risk is the risk that the variation of market prices, such as the currency exchange rate, the interest rate and the price of equity instruments affect the Company's revenues or the value of the financial assets held. The purpose of market risk management is that of managing and controlling the exposures to market risk within acceptable parameters and at the same time of optimizing the profitability of investment.

Interest rate risk

(i) Risk exposure profile

As at the reporting date, the profile of exposure to the interest rate risk related to the interestbearing financial instruments held by the Company was:

Variable rate instruments	December 31st , 2024	December 31st , 2023
Bank loans	180,964,256	121,242,834
Loans from bond issues	-	38,250,000
Other loans	7,137,224	9,125,060
Debts related to leasing agreements	26,779,185	30,633,926
Total	214,880,665	199,251,820

(ii) Cash flows sensitivity analysis for variable interest rate instruments

A 1% increase of the interest rates during the current period would have led to a profit or loss reduction by RON 2,148,807 (RON 1,992,518 as of December 31st, 2023). This analysis requires that all the other variables, in particular the foreign currency exchange rates, remain constant.

A depreciation of the interest rates by 100 base points as of December 31st would have led to the same effect, but in the opposite sense, onto the amounts presented above, considering that all the other variables remain constant.

Fair values

Fair value is the price that would be received following the sale of an asset or the price that would be paid to transfer a liability through a normal transaction between the market participants as at the evaluation date. Financial instruments that are not accounted for at fair value in the statement of financial position include trade receivables and other receivables, cash and cash equivalents, loans, trade liabilities and other liabilities. The book values of the abovementioned financial instruments are approximates of their fair values.

(d) Currency exchange risk

The Company is exposed to the currency exchange risk due to sales, purchases and other loans that are expressed in a currency other than the functional currency, mainly Euro, but also American dollars.

December 31st , 2024	TOTAL	RON	EUR	USD	Other currencies
Trade receivables and other receivables	89,853,270	73,223,184	16,630,086	-	-
Cash and cash equivalents	1,050,589	770,664	270,391	3,753	5,781
Financial assets	90,903,859	73,993,848	16,900,477	3,753	5,781
Loans	188,101,480	55,343,195	132,758,285	-	-
Leasing liabilities	26,779,185	-	26,779,186	-	-
Trade liabilities and other
liabilities	69,505,157	51,431,191	17,727,700	346,266	-
Financial liabilities	284,385,822	106,774,387	177,265,170	346,266	-
Total net financial
assets/(liabilities)	(193,481,963)	(32,780,539)	(160,364,693)	(342,513)	5,781
					Other
December 31st , 2023	TOTAL	RON	EUR	USD	currencies
Trade receivables and other receivables	78,266,953	71,518,753	6,748,200	-	-
Cash and cash equivalents	2,088,021	2,060,820	20,735	682	5,784
Financial assets	80,354,974	73,579,573	6,768,935	682	5,784
Loans	130,367,894	35,944,632	94,423,262	-	-

The Company's exposure to currency exchange risk is presented in the following tables:

Total net financial assets/(liabilities)	(127,669,270)	(415,793)	(126,818,107)	(441,153)	5,784
	78,266,953	71,518,753	6,748,200	-	-
Financial liabilities	208,024,244	73,995,366	133,587,043	441,835	-
Trade liabilities and other liabilities	47,022,424	38,050,734	8,529,855	441,835	-
Leasing liabilities	30,633,926	-	30,633,926	-	-
Loans	130,367,894	35,944,632	94,423,262	-	-
Financial assets	80,354,974	73,579,573	6,768,935	682	5,784
Cash and cash equivalents	2,088,021	2,060,820	20,735	682	5,784
Trade receivables and other receivables	78,266,953	71,518,753	6,748,200	-	-

Sensitivity analysis

An increase by 10 percentage points of RON as of December 31st compared to the currencies presented would have led to an increase (reduction) of profit or loss as follows: December 31st , 2024: + RON 18,759,225 (December 31st, 2023: + RON 12,725,348). This analysis assumes that all the other variables, particularly the interest rates, remain constant.

A decrease by 10 percentage points of RON as of December 31st, 2023 compared to the other currencies would have led to the same effect, but in the opposite sense, of the amounts presented above, assuming that all the other variables remain constant.

(e) Risk related to taxation

The Romanian tax system is under consolidation and constantly changing, and there can be different interpretations of the authorities in relation to the fiscal legislation, that can generate additional taxes, duties and penalties. In the event that the state authorities find any violations of the Romanian legal provisions, these can lead, according to case, to: the confiscation of the relevant amounts, the imposing of additional tax obligations, the charging of fines, the charging of delay penalties (applied to the amounts to be paid). Therefore, the fiscal sanctions resulting from the violation of the legal provisions can result in significant amounts payable to the State.

The Romanian government has a great number of agencies authorized to perform the inspections of the companies operating on the Romanian territory. These inspections are similar to fiscal audits in other countries and may cover not only tax aspects, but other legal and regulatory aspects as well, that are of interest to these agencies. The Company may be subjected to tax inspections as new tax regulations are issued.

The amounts declared to the State for taxes and duties remain open for tax audit for five years. The Romanian tax authorities performed controls related to the calculation of taxes and fees until December 31st, 2020.

All the amounts owed to the State for taxes and duties were paid or registered as at the balance sheet date. The Company considers that it has paid entirely and in due time all the taxes, duties, penalties and penalty interests, when applicable.

Law no. 431/2023 transposes the provisions of Directive (EU) 2022/2523 (hereinafter referred to as "Pillar 2"), introducing in Romania a complex set of rules for the effective minimum taxation of 15% applicable to multinational enterprise groups and large-scale domestic groups with consolidated annual revenues of at least EUR 750 million in at least two of the four preceding financial years.

The Company is not subject to the Pillar 2 rules in 2024, as the minimum revenue thresholds were not met in two years of the applicable reference period.

Under Law no. 207/2015 on the Fiscal Procedure Code, and in the context of aligning with European and international directives and regulations, Country-by-Country Reporting (hereinafter "CbCR") was adopted.

The Company is not subject to the CbCR rules in 2024, as the minimum revenue thresholds were not met in two years of the applicable reference period.

(f) Transfer price

In accordance with the relevant fiscal legislation, the fiscal evaluation of a transaction with affiliated parties is based on the market price concept related to the transaction in question. Based on this concept, transfer prices must be adjusted so as to reflect the market prices that would have been established between non-affiliated entities that act independently, based on "normal market conditions".

It is likely that the tax authorities perform future verifications of the transfer prices, in order to determine whether those prices comply with the "normal market conditions" principle and that the taxable base of the Romanian taxpayer is not distorted.

(g) Business environment

The risk re-evaluation process performed during the period between 2007 and 2010 on the international financial markets affected to a significant extent the performance of these markets, including that of the financial market in Romania and led to the occurrence of an increasing uncertainty related to the future economic development.

The significant losses on the international financial market could affect the Company's ability to obtain new loans and to refinance the loans it already has on the terms and conditions of the previous transactions.

The Company's debtors can also be affected by the low level of liquidity, that could impair their ability to reimburse the outstanding debts. The worsening of the financial conditions under which the debtors conduct their business might also have an impact onto the management of cash flow forecasts and onto the evaluation of financial and non-financial assets depreciation. To the extent that the information was available, the management included revised estimates of future cash flows in its depreciation policy.

The fears that the worsening of the financial conditions might contribute in the future to the lowering of trust have led to common efforts from governments and central banks to adopt some measures to counteract the vicious circle of increasing risk aversion and to help in the reduction of financial crisis effects and, finally, to reinstate the operation under normal market conditions.

The management cannot foresee all the events that would have an impact onto the financial sector in Romania and therefore, what are the effects that they would have onto these financial statements, if the case.

The management cannot credibly estimate the effects of any future decrease in financial market liquidity, of the depreciation of financial assets influenced by the low level of liquidity of loan market, of the increase in currency volatility of the currency and of the stock markets onto the Company's financial statements.

The management considers that it is taking all the measures necessary to support the sustainability and development of the Company's businesses, under the current conditions, by:

• − constantly monitoring liquidity;
• − preparing short term forecasts on net liquidity;
• − monitoring the cash inflow and outflow (on a daily basis), assessing the effects onto debtors, of limited access to financing and onto the development of businesses in Romania.

(h) Capital adequacy

The Company's policy is to maintain a sound capital basis necessary in order to maintain the trust of investors, creditors and of the market and in order to support the Company's future development.

The Group's capital management objectives are as follows:

• To ensure the ability to continue as a going concern, i.e., to continue creating value for shareholders and benefits for other stakeholders.
• To maintain an optimal capital structure in order to reduce the cost of capital.

In order to maintain or adjust the capital structure, the Company may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares, or sell assets to reduce debt levels.

In line with financial practices, the Group monitors capital based on the following indicators:

• Total Equity
• Total Assets
• Equity Ratio, calculated as the ratio between total equity and total assets.

During 2024, the equity ratio remained at an optimal level of 54%, compared to 57% in 2023. A suitable capitalization level is considered to be above 30%.

The Company's equity includes share capital, various types of reserves, and retained earnings. The Company is not subject to any externally imposed capital requirements. However, certain financial covenants related to capitalization ratio (Equity Ratio) are agreed upon with some of the financing banks. As of December 31, 2024, the equity ratio was 54%, compared to the minimum contractual requirement of 45%.

Independent Auditor's Report

To the Shareholders of Vrancart SA

Report on the audit of the financial statements

Our Opinion

In our opinion, the financial statements give a true and fair view of the financial position of Vrancart SA (the "Company") as at 31 December 2024, and the Company's financial performance and cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the Order of the Minister of Public Finance no. 2844/2016 for the approval of the accounting regulations compliant with International Financial Reporting Standards and subsequent amendments (the "OMPF 2844/2016").

Our opinion is consistent with our additional report to the Audit Committee issued on 28 March 2025.

What we have audited

The Company's financial statements comprise:

• the standalone statement of financial position as at 31 December 2024;
• the standalone statement of comprehensive income for the year then ended;
• the statement of changes in equity for the year then ended;
• the standalone statement of cash flows for the year then ended; and
• the notes to the financial statements, comprising material accounting policy information and other explanatory information.

The financial statements as at 31 December 2024 are identified as follows:

•	Total equity:	lei 384,135,226;
•	Result for the year (loss):	lei (11,436,365).

The Company's registered office is in Romania, Vrancea, Adjud county, 17 Ecaterina Teodoroiu Street, and the Company's unique fiscal registration code is 1454846.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation EU No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC (the "Regulation 537/2014") and Law 162/2017 regarding statutory audit of annual financial statements and annual consolidated financial statements and regarding changes to other regulations and subsequent amendments (the "Law 162/2017"). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the financial statements section of our report.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

PricewaterhouseCoopers Audit S.R.L.

Ana Tower, 24/3 floor, 1A Poligrafiei Blvd, District 1, 013704 Bucharest, Romania EUID ROONRC.J40/17223/1993, fiscal registration code RO4282940, share capital RON 7,630 T: +40 21 225 3000, www.pwc.ro

This version of our report is a translation from the original, which was prepared in Romanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

Independence

We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the ethical requirements of the Regulation 537/2014 and the Law 162/2017 that are relevant to our audit of the financial statements in Romania. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the ethical requirements of the Regulation 537/2014 and the Law 162/2017.

To the best of our knowledge and belief, we declare that non-audit services that we have provided to the Company are in accordance with the applicable law and regulations in Romania and that we have not provided non-audit services that are prohibited under Article 5(1) of the Regulation (EU) 537/2014.

The non-audit services that we have provided to the Company in the period from 1 January 2024 to the date of issuing this report, are disclosed in Note 25 to the financial statements.

Our audit approach

Overview

Overall materiality:	Overall Company materiality lei 3,172,000, which approximate 0.8% of Revenue from contracts with customers.
Key audit matter	Recognition of revenue from contracts with customers

As part of designing our audit, we determined materiality and assessed the risks of material misstatement in the financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the financial statements as a whole, taking into account the structure of the Company, the accounting processes and controls, and the industry in which the Company operates.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Company materiality for the financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the financial statements as a whole.

This version of our report is a translation from the original, which was prepared in Romanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

Overall Company materiality	lei 3,172,000
How we determined it	0.8% of Revenue from contracts with customers
Rationale for the materiality benchmark applied	We chose Revenue from contracts with customers as the benchmark because, in our view, it is the most representative benchmark for the Company, due to the plans to increase of market share, through investments to capacities and transformation of the business already started few years ago. We chose significance at the level of 0.8% because based on our professional judgment it is within the acceptable quantitative thresholds of materiality.

Key audit matter

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

Key audit matter	How our audit addressed the key audit matter

Recognition of revenues from contracts with customers

In 2024 the Company recognized revenue from contracts with customers in the amount of lei 395,555,449, for which the accounting policies was described in notes 3n and the details were included in note 21 of the financial statements.

The Company generates revenue mainly from sales of finished goods and merchandise in the form of paperboards, corrugated cardboard and packaging and sanitary products.

Revenue is recognized when the control over goods is transferred to the buyer. Revenue is recognized at an amount equal to the transaction price (including the related discounts granted) resulting from the agreements signed with customers representing the consideration for the performance obligation performed.

Bearing in mind the importance of revenues item in the financial statements of the Company, as well as the susceptibility of the item to the risk of misstatement and the potential risk of fraud, we recognized that this is a key matter for our audit.

Our audit procedures included in particular:

• assessing compliance of the Company's accounting policies regarding the recognition of revenue from contracts with customers with the related financial reporting standards;
• understanding and assessing the internal control environment, including the IT environment, regarding the recognition, valuation and presentation of individual types of revenue;
• conducting, on a selected sample, efficiency tests of selected internal controls, in terms of correctness and accuracy of applied selling prices and compliance of the invoice with the order and with the shipping document;
• performing tests, for a selected sample, consisting of e.g., on confirmations of certain aspects of the transactions with customers or on verifying sales transactions against supporting documents (invoices, contracts with customers, shipping and payment received);

This version of our report is a translation from the original, which was prepared in Romanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

Key audit matter	How our audit addressed the key audit matter
	• analysing of trends in recognized revenue from contracts with customers and explaining of unusual variances;
	• verification, on a selected sample, of revenue recognition in the proper reporting period, considering Incoterms and other terms and conditions of contracts concluded with the Company's customers;
	• analysing of non-standard posting patterns in the transactions log in the audited year and considering the element of unpredictability when selecting the type, timing and extent of audit procedures;
	• assessment of the appropriateness of disclosures in the consolidated financial statements regarding revenues from contracts with customers.

Reporting on other information including the Administrators' Report

The Administrators are responsible for the other information. The other information comprises the Administrators' Report (but does not include the financial statements and our auditor's report thereon).

Our opinion on the financial statements does not cover the other information, including the Administrators' Report.

In connection with our audit of the financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the financial statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

With respect to the Administrators' Report, we considered whether it is consistent with the financial statements and whether the Administrators' Report was prepared in accordance with OMPF 2844/2016, Appendix 1, articles 15-19.

Based on the work undertaken in the course of our audit, in our opinion:

• the information given in the Administrators' Report for the financial year for which the financial statements are prepared is consistent with the financial statements;
• the Administrators' Report has been prepared in accordance with OMPF 2844/2016, Appendix 1, articles 15-19;

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

Responsibilities of management and those charged with governance for the financial statements

Management is responsible for the preparation of the financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European

Union and OMPF 2844/2016, and for such internal 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.

In preparing the financial statements, management is responsible for assessing the Company's ability 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 realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Company's financial reporting process.

Auditor's responsibilities for the audit of the financial statements

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 auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will 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.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify 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, intentional omissions, misrepresentations, or the override of internal control.
• Obtain an understanding of internal 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 internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• 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 ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements 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 auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern.
• Evaluate the overall presentation, structure 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.

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 internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all 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.

From the matters communicated with those charged with 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 auditor's 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 public interest benefits of such communication.

Report on other legal and regulatory requirements

Report on the compliance of the format of financial statements with the requirements of the European Single Electronic Format ("ESEF")

We have been engaged as part of our audit engagement letter by the Management of the Company to conduct a reasonable assurance engagement for the verification of compliance with the applicable requirements of the presentation of the financial statements of the Company for the year ended 31 December 2024 (the "Presentation of the Financial Statements").

Description of a subject matter and applicable criteria

The Presentation of the Financial Statements has been applied by the Management of the Company to comply with the requirements of Law 24/2017, Financial Supervision Authority Regulation 7/2021 and art. 3 of the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (the "ESEF Regulation"). The applicable requirements regarding the Presentation of the Financial Statements are contained in the ESEF Regulation.

The requirements described in the preceding sentence determine the basis for application of the Presentation of the Financial Statements and, in our view, constitute appropriate criteria to form a reasonable assurance conclusion.

Responsibility of the Management and those charged with governance

The Management of the Company is responsible for the Presentation of the Financial Statements that complies with the requirements of the ESEF Regulation.

This responsibility includes the designing, implementing and maintaining internal controls relevant for the preparation of the Presentation of the Financial Statements which is free from material noncompliance with the requirements of the ESEF Regulation.

Those charged with governance are responsible for overseeing the financial reporting process, which should also be understood as the preparation of financial statements in accordance with the format resulting from the ESEF Regulation.

Our responsibility

Our responsibility was to express a reasonable assurance conclusion whether the Presentation of the Financial Statements complies, in all material respects, with the ESEF Regulation.

We conducted our engagement in accordance with the International Standard on Assurance Engagements 3000 (R) – "Assurance Engagements other than Audits and Reviews of Historical Financial Information" ("ISAE 3000(R)"). This standard requires that we comply with ethical requirements, plan and perform procedures to obtain reasonable assurance whether the Presentation of the Financial Statements complies, in all material aspects, with the applicable requirements.

Reasonable assurance is a high level of assurance, but it does not guarantee that the service performed in accordance with ISAE 3000(R) will always detect the existing material misstatement (significant non-compliance with the requirements).

Quality control requirements

Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

We comply with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Summary of the work performed

Our planned and performed procedures were aimed at obtaining reasonable assurance that the Presentation of the Financial Statements complies, in all material aspects, with the applicable requirements and such compliance is free from material errors or omissions. Our procedures included in particular:

• obtaining an understanding of the internal control system and processes relevant to the application of the Electronic Reporting Format of the Financial Statements, including the preparation of the XHTML format;
• verification whether the XHTML format was applied properly;
• we verified whether the electronic format of the separate financial statements (XHTML) corresponds to the audited financial statements;

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.

Conclusion

In our opinion, based on the procedures performed, the Presentation of the Financial Statements complies, in all material respects, with the ESEF Regulation.

Reporting on report regarding information related to income tax

In accordance with OMPF 2844/2016, article 60^12, in connection with the audit of the financial statements for the financial year ended as at 31 December 2024, our responsibility is to state whether, for the previous financial year ended as at 31 December 2023, the Company had the obligation, in accordance with articles 60^2-60^6.8 of OMPF 2844/2016, to publish a report regarding information

related to income tax for the financial year ended 31 December 2023 and if this is the case, whether such report was published in accordance with 60^10 of OMPF 2844/2016.

The Company did not have the obligation to publish the report regarding information related to income tax.

Appointment

We were first appointed by Ordinary General Shareholders Meeting as auditors of Vrancart SA on 27 April 2023 for a period of two years. This is the second year of our appointment as auditors.

The engagement partner on the audit resulting in this independent auditor's report is Florin Deaconescu.

On behalf of PricewaterhouseCoopers Audit SRL Audit firm registered with the Public Electronic Register of financial auditors and audit firms under no FA 6

Refer to the original signed Romanian version

Florin Deaconescu Financial auditor registered with the Public Electronic Register of financial auditors and audit firms under no AF1524

Bucharest, 30 April 2025

CONSOLIDATED REPORT

OF THE BOARD OF DIRECTORS FOR THE FINANCIAL YEAR 2024

"VRANCART" GROUP OF COMPANIES

TABLE OF CONTENTS

1. ACTIVITY REVIEW

1.1.1. General information	4
1.1.2. Assessment of the technical level of the Group
1.1.3. Evaluation of the technical-material supply operations
1.1.4. Evaluation of sales activity	7
1.1.5. Assessment of issues related to Group employees/staff
1.1.6. Assessment of issues related to the impact of the issuer's core business
on the environment	9
1.1.7. Assessment of R&D activity	10
1.1.8. Evaluation of the Group's activity on risk management
1.1.9. Elements of perspective on the Group's activity

2. TANGIBLE ASSETS OF THE GROUP

2.1. Specification of the location and characteristics of the main capacities
production owned by the Group	13
2.2. Analysis of the physical condition and usage level of the Group's assets	13
2.3. Clarification of potential problems related to the right of ownership
on the Group's tangible assets	14

3. MARKET FOR SECURITIES ISSUED BY THE GROUP

3.1. Specification of the markets in Romania and other countries on which
securities issued by the Group are traded	14
3.2. Description of the Group's dividend policy	14
3.3. Description of any activities of the Group, acquisition
of its own actions	14
3.4. If the company has subsidiaries, the number and value of the
shares issued by the parent company held by subsidiaries	14
3.5. Where the Group has issued bonds and/or other debt securities,
the presentation of how it fulfils its obligations towards the holders of the
of such securities	15

4. GROUP MANAGEMENT

4.1. Group Directors	15
4.2. Group Executive Management	16
4.3. Possible disputes or administrative procedures	16
5. INTERNAL CONTROL AND RISK MANAGEMENT	16
6. SOCIAL RESPONSIBILITY	17
7. NON-FINANCIAL STATEMENT	17
8. FINANCIAL STATEMENTS
8.1. Consolidated statement of financial position	18
8.2. Consolidated statement of comprehensive income	19
8.3. Consolidated statement of cash flows	20
9. SUBSEQUENT EVENTS AFTER THE END OF FINANCIAL YEAR	21

1. ACTIVITY REVIEW

1.1.1. General information

The Vrancart Group ("the Group") includes the company Vrancart SA, with registered office in Adjud, str. Ecaterina Teodoroiu nr. 17, Vrancea County and its subsidiaries Rom Paper SRL ("Branch 1"), headquartered in Brasov, Soseaua Cristianului, nr. 30, Brasov County, Vrancart Recycling SRL ("Branch 2"), headquartered in Adjud, Ecaterina Teodoroiu Street, no. 17, Vrancea County and Ecorep Group SA ("Branch 3"), headquartered in Adjud, Ecaterina Teodoroiu Street, no. 17, Vrancea county.

The Group operates in the non-hazardous waste collection, recycling industry, paper production and corrugated board.

Elements of the Group's overall evaluation:

a) gross accounting result	(16,186) thousand lei
b) turnover	486,795 thousand lei
c) operational costs	505,214 thousand lei

d) % of the market held (internal estimates & ARFCO)

Year 2024	Sanitary Hygiene Papers Paper for cardboard Corrugated cardboard, total	- 14% - 18% - 13%, of which:
	• Formats	- 35%
	• Converting - 6%
e) liquidity at the end of the year	1,845 thousand lei

VRANCART SA

"VRANCART" was established according to Law 15/1990 in 1991, as a joint stock company with legal personality.

Company name	"VRANCART"
Company type	Joint stock company
	Adjud, 17 Ecaterina Teodoroiu Street,
Address	Vrancea County, 625100
Phone/Fax	0237.640.800 / 0237.641.720
Registration number at the Trade Register	J39/239/1991
Office
Unique Registration Code	1454846
Tax Identification Code	RO1454846
Paid-in share capital	201,011,575 lei
Nominal value of shares	0.10 lei/share
Number of shares	2,010,115,751

The company has its registered office in Adjud, 17 Ecaterina Teodoroiu Street, Vrancea county, with open work sites in the localities: Bucharest, Pantelimon, Chiajna, Călimănești, Sântana de Mureș, Iași, Ploiești, Sibiu, Brașov, Pitești, Timișoara, Bacău and Cluj.

The principal activity of "VRANCART" consists in the production and sales of the following:

• ✓ corrugated cardboard,
• ✓ corrugated cardboard packaging,
• ✓ papers for the manufacture of corrugated cardboard,
• ✓ hygienic-sanitary papers in various assortments,
• ✓ waste recycling equipment (sale, rental and maintenance),
• ✓ electricity from photovoltaic parks (self-consumption and sale).

Through the collection network, the company ensures the raw material (paper and cardboard waste) necessary for production, as well as other recyclable waste that is recovered from other partners.

In addition to the activities listed above, "VRANCART" also carries out activities to support basic activities (support activities): production of utilities (industrial water, treated water for thermal boilers, technological steam, wastewater treatment), mechanical and electrical maintenance, transport (within the company and to customers) and others.

In 2024, the average number of employees within the Group was 1,357 (2023: 1,433).

The Company's shares are listed on the Bucharest Stock Exchange, Standard category, with the identifier VNC, starting with July 15, 2005.

As of December 31, 2024, the Company is 76.33% owned by Lion Capital SA, 17.35% by Paval Holding SRL and 6.32% by other shareholders.

The record of shares and shareholders is kept in accordance with the law by Depozitarul Central S.A. Bucharest.

In the context of the invasion of Ukraine by the Russian Federation, we mention that the Vrancart Company does not carry out physical operations on the territory of Ukraine, Russia or Belarus and does not have customers, suppliers, investors or creditors with operations in these countries. The sanctions imposed on Russia could have an impact to the same extent that the entire global business environment could be affected.

Although it is not possible to fully estimate the economic effects generated by the political crisis in the region, the Company considers that the stable financial situation, access to financing and the markets in which it operates, are solid foundations for ensuring business continuity and for limiting the negative effects generated by the economic and political crisis, in general.

ROM PAPER SRL

Rom Paper SRL ("Branch 1") established in 2002, is a private company with Romanian capital, operating in the field of production of hygienic-sanitary items made of recycled paper and cellulose, such as: napkins, folded towels, toilet paper, professional rolls, cosmetic towels and canned napkins. The products made are sold both on the territory of Romania and in 6 other countries, through chain stores (hypermarkets, supermarkets, cash and carry), but also through distributors.

On January 20th, 2017, the acquisition process of the majority stake (70%) of Rom Paper SRL by Vrancart SA was completed. As of December 31st, 2023, Vrancart held 100% of the company's shares, following the acquisition in June 2017 of another 15%, respectively, in June 2018, of the last tranche of 15% of the shares of Rom Paper SRL.

The number of employees of the Branch on 31 December 2024 was 102 employees (31 December 2023: 112 employees).

VRANCART RECYCLING SRL

Vrancart Recycling SRL ("Branch 2") was established in 2020, in August, and is a private company with Romanian capital, with a sole shareholder. The main activity of this subsidiary is the treatment and disposal of non-hazardous waste. The company is at the beginning of its activity and has a number of 108 employees as of December 31, 2024 (December 31, 2023: 89 employees).

ECOREP GROUP SA

Ecorep Group SA ("Branch 3") was established in 2020, in November, and is a private company with Romanian capital. The main activity of this subsidiary is the provision of services regarding the implementation of the obligations related to the extended producer responsibility for environmental targets. The company is at the beginning of its activity. The number of existing employees on 31 December 2024 is 8 employees (31 December 2023: 7 employees).

1.1.2. Assessment of the technical level of the Group

The Group's core production activities are organized into three distinct business lines managed on the basis of their own budgets, which are part of the Group's general budget, which manufacture products for three distinct markets, namely:

• the market for papers for the manufacture of corrugated cardboard;
• corrugated cardboard and corrugated cardboard packaging market;
• the market for toilet paper products.

The evolution of production on these markets in the last 3 years is presented in the table below:

Business Lines	UM	2024	2023	2022
Paper for cardboard	to	79,235	69,597	87,010
Corrugated cardboard and packaging	to	65,565	59,222	69,655
Hygienic-sanitary papers	to	24,963	24,269	28,504

The share of each product category in the Group's total turnover in the last 3 years is shown in the table below:

Business Lines	AT	2024	2023	2022
Paper for cardboard	%	9%	6%	9%
Corrugated cardboard and packaging	%	50%	63%	63%
Hygienic-sanitary papers	%	34%	23%	19%
Other activities	%	7%	8%	9%

The investments made in 2024, by groups of fixed assets were:

Investments made	Value (lei)
Buildings and building arrangements	38,744,811
Technological equipment	214,133,734
Work appliances and installations	317,519
Vehicles for transportation and other fixed assets	3,969,580

Intangible assets	70,833
TOTAL	257,236,477

1.1.3. Evaluation of the technical-material supply activity

The main raw material of the paper mills in "VRANCART" is paper waste. It is purchased through its own collection centers or directly from generators.

The evolution of paper waste collection in the last 3 years is presented below:

Waste Procurement	AT	2024	2023	2022
Purchases through collection centers	To	66,078	87,864	87,866
	% of total purchases	49%	66%	59%
	To	69,124	44,996	61,793
Direct Procurement (Adjud)	% of total purchases	51%	34%	41%
Total acquisitions	To	135,202	132,860	149,659
	%	100%	100%	100%

1.1.4. Evaluation of sales activity

The evolution of the Group's product deliveries on each market segment in the last 3 years is presented in the table below:

Business Lines	AT	2024	2023	2022
Paper for cardboard	to	20,591	9,427	14,755
Corrugated cardboard and packaging	to	61,572	59,128	70,040
Hygienic-sanitary papers	to	22,107	25,195	26,890

Competition situation

On each market segment there are several manufacturers with products similar to those made at "VRANCART".

A. Four competitors operated on the corrugated cardboard paper market in Romania in 2024. The production capacities of the papermaking facilities, based on the public declarations of the producers, are:

Manufacturer	Annual production capacity (to/year)
Ambro (Rossmann Group)	155,000
DS Smith	200,000
Vrancart	100,000
CCH	80,000
Total	535,000

All factories use corrugated cardboard waste as raw material for the production of paper, with the exception of CCH, which also uses cellulose as raw material, and the products obtained are relatively similar in terms of characteristics and quality.

Most paper manufacturers also have corrugated cardboard and corrugated cardboard packaging factories, so most of their own paper production is intended for their own consumption.

Evolution of market shares in Corrugated cardboard papers

Producers	2024	2023	2022
Vrancart	18%	15%	16%
Other producers	82%	85%	84%
Total	100%	100%	100%

Source: VRANCART estimates

B. A number of 9 competitors were present on the corrugated cardboard and corrugated packaging market in 2024, of which five have 2 factories each (Vrancart, Dunapack, DS Smith, Rossmann and Rondocarton).

The corrugated cardboard market is a regional market due to the high costs of long-distance transportation. It is a highly competitive market, and in Romania the consumer orientation is towards products with low prices and average quality.

The estimated production capacity of the 15 corrugated cardboard factories is over 750 thousand tons annually. Consumption in 2024 amounted to 468 thousand tons, (62% of the total production capacities), registering an increase in volumes expressed in tons of 9.6% compared to the previous year.

Evolution of market shares in Corrugated cardboard and corrugated packaging

Producers	2024	2023	2022
Vrancart	13.2%	13.7%	15.9%
Other producers	86.8%	86.3%	84.1%
Total	100%	100%	100%

Source: ARFCO

Corrugated cardboard manufacturers in 2024 in Romania

No. crt	Manufacturer name	Production capacity (to/year)
1	Rondocarton (2 factories)	160,000
2	Rossmann (2 factories)	120,000
3	Vrancart (2 factories)	120,000
4	Dunapack (2 factories)	120,000
5	DS Smith Group (2 factories)	80,000
6	VPK Salonta	60,000
8	Thimm Sura Mica	60,000
9	Europa Expres Iaşi	30,000
	TOTAL	750,000

C. On the toilet paper market, with a market share of 14% in 2024, the "VRANCART Group" remains one of the important manufacturers of toilet paper in Romania.

Unlike the other competitors, Vrancart produces toilet paper only from paper waste and is the largest producer on the market, small quantities being produced by Comceh Călărași.

During 2019, one of the important producers, Petrocart Piatra Neamt, went into insolvency and stopped the production of sanitary toilet papers.

At the end of 2020, Vrancart acquired, through auction, the hygienic-sanitary paper making machine from Petrocart, being recognized in the category of assets for sale. In January 2025, a contract for the sale of this equipment was signed.

New production capacities have appeared on the market, such as the one launched by the Pehart Tec Group, which invested 20 million euros, in the development of new production capacities, in order to increase the volume of exports, to make the production lines more energy efficient and to diversify the portfolio. (Source: https://www.zfcorporate.ro)

Producers	2024	2023	2022
Vrancart	14%	14%	14%
High producers	86%	86%	86%
Total	100%	100%	100%

Source: VRANCART estimates

1.1.5. Assessment of Group employees/staff issues

a) Specifying the number and level of training of the company's employees as well as the degree of unionization of the workforce;

The average number of staff in 2024 was 1,357 employees, of which:

• 326 higher education
• 526 secondary education
• 316 vocational schools
• 189 elementary school

Of the total number of employees, 132 are union members (within the Group there is only one union, at the parent company).

The labor force fluctuation index during 2024 was 23% (number of employees leaving/average personal number x100).

b) Description of the relations between the manager and the employees as well as of any conflicting elements that characterize these relations.

There were no conflicting relations between the company's management and the employees.

1.1.6. Assessment of issues related to the impact of the issuer's core business on the environment

A summary description of the impact of the issuer's core activities on the environment as well as of any existing or expected litigation regarding the violation of environmental protection legislation.

VRANCART S.A. has implemented an integrated quality-environment-health and occupational safety management system, recertified multi-site in September 2024 by Lloyd's Register England, Bucharest representative. The certified offices are: Vrancart S.A Adjud at no. 17 Ecaterina Teodoroiu Street, and Adjud work site located at no. 17 Revolutiei Street.

The impact of the company's activity on the environment is permanently monitored through the implementation of the Environmental Management System and implicitly through compliance with the legislation in force and the INTEGRATED ENVIRONMENTAL PERMIT no. 1/18.03.2015 revised on 17.03.2025. According to the legislation in force, the INTEGRATED ENVIRONMENTAL PERMIT is valid only with the annual visa. The work point did not require an environmental permit.

In case of changes in the operating conditions (e.g. expansion of production capacities, investments to modernize technological flows), according to the legislation in force, the revision of the integrated environmental permit is requested. This was also the subject of the revision of the integrated environmental permit issued on 17.03.2025.

1.1.7. Evaluation of research and development activity

The company participates as a partner in various research and development projects.

During 2019, the "Gheorghe Asachi" Technical University of Iasi submitted a project for funding under the Program: PN-III-CERC-CO-PED-2016 with the title "Novel materials with optical properties for anti-counterfeiting paper" (OptiPaper). The objective of the project was to make secure papers, and it was carried out over a period of 2 years. VRANCART was a partner in the project, which was approved in November 2020. The value of the project amounted to 653,850 lei, with 92% financing from the state budget. The project was completed at the end of 2022.

1.1.8. Assessment of the Group's activity on risk management

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

• − credit risk;
• − liquidity risk;
• − market risk;
• − currency risk

The following provides information on the Group's exposure to each of the above-mentioned risks, the Group's objectives, policies and processes for risk assessment and management, and the procedures used for capital management. Other quantitative information is also included in these financial statements.

The Group's risk management policies are defined in such a way as to ensure the identification and analysis of the risks faced by the Group, the establishment of appropriate limits and controls, as well as the monitoring of risks and compliance with established limits. Risk management policies and systems are regularly reviewed to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop an orderly and constructive control environment, within which all employees understand their roles and obligations.

Credit risk is the risk that the Group will incur a financial loss as a result of the non-fulfilment of contractual obligations by its partners. The maximum exposure to credit risk was:

Book value	December 31, 2024 December 31, 2023	31 December 2022
Trade receivables and other
receivables	98,697,311	84,935,340	120,597,221
Cash and cash equivalents	1,845,212	2,823,519	3,563,830
Restricted Cash	-	-	1,881,991
Total	100,542,523	87,758,859	126,043,042

The Group covers credit risk by developing and implementing relevant credit policies (e.g. each new customer is individually analyzed from the point of view of creditworthiness before being offered the Group's standard payment and delivery terms; sales limits are set for each individual customer), customers who do not meet the conditions set by the Group can only transact with advance payment. It also has a Coface insurance policy to cover credit risk in relation to eligible customers, which gives it flexibility and agility in the development of existing business relationships but also new ones.

Liquidity risk - The Group ensures that it has sufficient cash to cover operating expenses. The following table shows the residual contractual maturities of financial liabilities at the end of the reporting period, including estimated interest payments:

		Contractual	less than 1		over 5
December 31st, 2024	Book value	cash flows	year	1 - 5 years	years
Loans	279,353,617	293,321,298	131,460,821	113,053,155	48,807,321
Bonds	-	-	-	-	-
Financial Leasing	31,704,330	31,704,330	8,710,139	22,994,192	-
Trade and other payables	87,720,043	87,720,043	86,360,322	1,359,721	-
Total	398,777,990	412,745,671	226,531,282	137,407,068	48,807,321

		Contractual	less than 1		over 5
December 31st, 2023	Book value	cash flows	year	1 - 5 years	years
Loans	245,368,034	263,365,537	103,377,103	145,152,965	14,835,470
Bonds	38,250,000	38,250,000	38,250,000	-	-
Financial Leasing	31,298,723	31,298,723	9,320,959	21,977,764	-
Trade and other payables	74,158,402	74,158,402	73,221,193	937,209	-
Total	389,074,954	407,072,457	224,169,050	168,067,937	14,835,470

December 31st, 2022	Book value	Contractual cash flows	less than 1 year	1 - 5 years	over 5 years
Loans	194,522,500	203,597,654	71,897,076	119,099,604	12,600,973
Bonds	38,250,000	38,250,000	-	38,250,000	-
Financial Leasing	24,064,469	24,064,469	7,718,425	14,713,402	1,632,642
Trade and other payables	88,546,934	88,546,934	87,918,343	628,591	-
Total	345,383,903	354,459,057	167,533,844	172,691,597	14,233,615

The Group's approach to liquidity management is to ensure, as far as possible, that it will always have sufficient liquidity to meet its outstanding obligations, both under normal and stressful conditions, without incurring unacceptable losses or jeopardizing the Group's reputation.

Management believes that it is taking all necessary measures to support the sustainability and growth of the Group's business, under current conditions, by:

• − constant monitoring of liquidity;
• − making short-term forecasts on net liquidity;
• − monitoring cash inflows and outflows (daily), assessing the effects on debtors, access to finance and the economic environment in Romania and the European area;
• − negotiating and contracting financing lines adapted to the Company's needs.

Market risk

The market risk is the risk that changes in market prices, such as the exchange rate, interest rate and price of equity instruments, will affect the Group's income or the value of the financial instruments held. The objective of market risk management is to manage and control market risk exposures within acceptable parameters and at the same time to optimize the return on investment.

Currency risk

The Group is exposed to currency risk due to sales, purchases and other loans that are denominated in a currency other than the functional one, primarily euros, but also US dollars.

December 31st, 2024	TOTAL	RON	EUR	USD	Other currencies
Trade receivables and
other receivables	98,697,311	81,780,292	16,917,019	-	-
Restricted Cash	-	-	-	-	-
Cash and cash equivalents	1,845,212	1,488,192	347,486	3,753	5,781
Financial Assets	100,542,523	83,268,484	17,264,505	3,753	5,781
Loans	279,353,617	64,721,090	241,632,527	-	-
Leasing debts	31,704,330	1,645,730	30,058,600	-	-
Trade and other payables	87,720,043	62,076,806	25,296,971	346,266	-
Financial liabilities	398,777,990	128,443,626	269,988098	346,266	-
Total net financial assets/(liabilities)	(298,235,467)	(45,175,142)	(252,723,593)	(342,513)	5,781

The Group's exposure to currency risk is presented in the following tables:

December 31st, 2023	TOTAL	RON	EUR	USD	Other currencies
Trade receivables and other receivables	74,408,633	67,348,104	7,029,958	30,571	-
Restricted Cash	-	-	-	-	-
Cash and cash equivalents	2,823,519	2,490,063	326,990	682	5,784
Financial Assets	77,232,152	69,838,167	7,356,948	31,254	5,784
Loans	245,368,034	43,883,066	201,484,968	-	-
Leasing debts	32,298,723	664,797	30,633,926	-	-
Trade and other payables	74,158,402	50,265,995	23,481,143	411,264	-
Financial liabilities	350,824,955	94,813,653	255,600,037	411,264	-
Total net financial assets/(liabilities)	(273,592,803)	(24,975,486)	(248,243,089)	(380,010)	5,784

December 31st, 2022	TOTAL	RON	EUR	USD	Other currencies
Trade receivables and other receivables	104,969,853	95,132,428	9,950,407	(112,982)	-
Restricted Cash	1,881,991	-	1,881,991	-	-
Cash and cash equivalents	3,563,830	2,046,610	1,514,998	1,408	815
Financial Assets	110,415,674	97,179,038	13,347,396	(111,574)	815
Loans	194,522,500	72,111,281	122,411,219	-	-
Leasing debts	24,064,469	943,704	23,120,765	-	-
Trade and other payables	88,546,934	63,155,792	25,145,606	245,536	-
Financial liabilities	307,133,904	136,210,777	170,677,590	245,536	-
Total net financial assets/(liabilities)	(196,718,230)	(39,031,739)	(157,330,194)	(357,110)	815

Sensitivity analysis

An appreciation of 10 percentage points of the RON currency on December 31st compared to the currencies presented would have led to an increase (decrease) in profit or loss as follows: December 31st, 2024: RON 25,272,359 (December 31st, 2023: RON 24,861,731). This analysis assumes that all other variables, particularly interest rates, remain constant.

The Group's management believes that it is taking all necessary measures to support the sustainability and growth of the business in the current conditions, by:

• − constant monitoring of liquidity;
• − making short-term forecasts on net liquidity;
• − monitoring cash inflows and outflows (daily), assessing the effects on debtors, access to finance and the economic environment in Romania and the European area.

1.1.9. Elements of perspective on the Group's activity

Starting with 01.01.2025, the implementation of a new, state-of-the-art ERP system worth over 500 thousand euros, financed from bank credit and own contribution, meant to cover complex business needs, was completed. During 2025, 2 other important projects are underway, worth approximately EUR 5 million, aimed at improving corrugated paper production processes, consisting of a state-of-the-art technology, unique in Romania.

Although their realization will involve significant investment efforts as well as interruptions of the production flow (for the installation of new equipment), the Group expects its results to be above the level of the previous year, moving into a consistent positive area.

2. TANGIBLE ASSETS OF THE GROUP

2.1. Specifying the location and characteristics of the main production capacities owned by the Group

The following production capacities operate within the Group:

a) Corrugated cardboard manufacturing machine, with an existing production capacity of 80,000 tons/year;

b) The paper making machine for corrugated cardboard, with a production capacity of 100,000 tons/year, under the conditions of operation with 100% waste as raw material;

c) The hygienic-sanitary paper manufacturing machine, with a production capacity of 25,500 tons/year;

Land, buildings and equipment are recognized at the revalued value, which is the fair value at the revaluation date minus any depreciation accumulated thereafter and any accumulated impairment losses. Fair value shall be based on market price quotations, adjusted, where applicable, to reflect differences in the nature, location or condition of that asset, except for the equipment for which fair value has been determined on the basis of replacement cost.

The re-evaluations are carried out by specialized evaluators, members of ANEVAR. The last revaluation of the patrimony took place on 31.12.2022.

Revaluation of property, plant and equipment shall be made with sufficient regularity so that the carrying amount does not differ materially from that which would be determined using the fair value at the balance sheet date.

2.2. Description and analysis of the degree of wear and tear of the Group's properties

Property, plant and equipment shall be depreciated from the date on which they are available for use or are in working order and, for assets constructed by the entity, from the date on which the asset is completed and ready for use.

Depreciation is calculated using the straight-line method over the estimated useful life of the assets, as follows:

−	Construction	30-60 years
−	Equipment	2-16 years
−	Vehicles for transportation	4-8 years
−	Furniture and other tangible assets	4-10 years

The technical condition of the production facilities is maintained by carrying out predictive and current maintenance works.

The degree of scriptural wear as of 31.12.2024 is as follows:

Degree of wear	Revalued cost or value	Depreciation and amortization	Depreciation level
Special buildings and constructions	177,389	20,931	12%
Equipment and other fixed assets	555,410	112,268	20%

2.3. Clarification of potential problems related to the ownership of the Group's tangible assets

Part of the Group's tangible assets are mortgaged or pledged to guarantee loans taken from banks. The net book value of these pledged or mortgaged assets is RON 451,584 thousand as of 31.12.2024 (31.12.2023: RON 311,125 thousand). The net book value of fixed assets acquired through financial leasing is RON 7,002 thousand as of 31.12.2024 (31.12.2023: RON 181 thousand).

3. MARKET FOR SECURITIES ISSUED BY THE GROUP

3.1. Specification of the markets in Romania and other countries on which the securities issued by the Group are traded

The shares of "VRANCART" SA are listed on the Bucharest Stock Exchange, Standard category, with the indicative VNC, starting with July 15th, 2005.

The shareholding structure as of 31.12.2024 is as follows:

▪	LION Capital	- 76.33%
▪	Pavăl Holding	- 17.35%
▪	Legal entities	- 2.92 %
▪	Individuals	- 3.40 %

3.2. Description of the Group's dividend policy

The Company's dividend policy is established by the Ordinary General Meeting of Shareholders. By Decision no. 4 of 27.04.2023, the Ordinary General Meeting of Shareholders decided to distribute dividends, from the net profit for the financial year ended December 31st, 2022, in the amount of RON 12,033,855, respectively a gross dividend of RON 0.01/share.

Year	Net Result	Legal reserve	Dividend	Development Fund*	Covering the loss	Other destinations
2022	23,688,891	1,319,796	12,033,855	4,940,628	-	5,394,612
2023	5,629,023	308,173	-	5,320,850	-	-
2024	(18,269,271)	12,220	-	-	18,257,051	-

* These amounts represent tax facilities from which the Company benefited from the tax exemption related to the reinvested profit (art.22 of the applicable Tax Code).

The distribution of the Group's profit is within the competence of the Ordinary General Meeting of Shareholders

3.3. Description of any activities of the Group to acquire its own shares

Since its establishment, the Group has not acquired or held any of its own shares at any time.

3.4. If the company has subsidiaries, specifying the number and nominal value of the shares issued by the parent company held by the subsidiaries

On January 19th, 2017, the acquisition process of the shares of Rom Paper SRL (Branch 1) was completed, an acquisition approved by the Ordinary General Meeting of Shareholders. The procurement contract provided for the acquisition in three annual installments of 70% (completed), 15% (completed) and 15% (completed in 2018). Following the acquisition, Vrancart owns 100% of the shares as of December 31st, 2024.

Vrancart Recycling SRL (Branch 2) was founded in 2020, in August, and is a private company with Romanian capital, with a sole shareholder. Vrancart holds 100% of the share capital of the subsidiary as of December 31st, 2024.

Ecorep Group SA (Branch 3) was established in 2020, in November, and is a private company with Romanian capital. Vrancart holds 99.6% of the shares as of December 31st, 2024.

3.5. If the Group has issued bonds and/or other debt securities, the presentation of the way the company pays its obligations towards the holders of such securities

In 2017, the company "VRANCART" S.A. Adjud issued bonds convertible into shares. By Decision no. 156/01.02.2017, the Financial Supervisory Authority approved the Prospectus for the issuance of bonds in the amount of RON 38,250,000, with Robor interest rate 3m+2%, maturity of 7 years. On March 13th, 2017, the issuance process was completed by subscribing 100% of the issued bonds. The bonds were listed on the Bucharest Stock Exchange. On March 17th, 2024, the bonds were fully repaid, as well as the interest on the last payment coupon, and the Group is currently fully paying its obligations stipulated in the Bond Issue Prospectus.

4. MANAGEMENT OF THE GROUP

4.1. Group Directors

a) Presentation of the list of directors of the company and the following information for each director (name, surname, age, qualification, professional experience, position and seniority in office) on 31.12.2024:

1. Nicu Ciprian Fedor - 48 years old, lawyer, Chairman of the Board of Directors for 1 month and Chief Executive Officer for 9 months

2. Drăgoi Bogdan Alexandru – 45 years old, economist, member of the Board of Directors at "Vrancart", for 9 years

3. Mihailov Sergiu - 45 years old, economist, member of the Board of Directors at "Vrancart", for 7 years

4. Fercu Adrian - 48 years old, economist, member of the Board of Directors at "Vrancart", for 4 years

5. El lakis Rachid - 28 years old, economist, member of the Board of Directors at "Vrancart", for 3 years.

b) any agreement, arrangement or family relationship between the respective administrator and another person due to which that person has been appointed administrator;

This is not the case.

c) the participation of the administrator in the capital of the company;

Shareholders' participation in the company's capital as of 31.12.2024:

• 1. Nicu Ciprian Fedor 0 shares
• 1. Drăgoi Bogdan Alexandru 0 shares
• 1. Mihailov Sergiu 0 shares
• 1. Fercu Adrian 0 shares
• 1. El Lakis Rachid 0 shares

d) Remuneration policy

The company "VRANCART" SA has published a separate report on the remuneration policy, in accordance with the provisions of Article 107 of Law no. 24/2017 on issuers of financial instruments. The separate report containing the remuneration policy is made available to the public, free of charge, on the Company's website www.vrancart.ro, for the period provided by law, being updated whenever changes occur.

e) the list of people affiliated to the Group

The Parties are considered to be related parties if one of the parties has the possibility of directly or indirectly controlling or significantly influencing the other party by holding or relying on contractual rights, family or other relationships, as defined in IAS 24 "Disclosure of Related Parties".

Related parties are considered to be the people who are part of the Board of Directors and the Board of Directors, as well as Lion Capital, which is the majority shareholder, together with the other companies controlled by it.

4.2. Executive management of the Group

a) The executive management of the Group as of 31.12.2024 was provided by Mr. Nicu-Ciprian FEDOR, as Chief executive Officer and Adrian Corneliu BECHEANU as Deputy Chief Executive Officer.

(b) any agreement, arrangement or family relationship between that person and another person as a result of which that person has been appointed as a member of the executive management;

• This is not the case.

c) Participation of the company's management members in the share capital

• None of the Group's management members own shares.

4.3. Possible disputes or administrative procedures

For all people listed in 4.1. and 4.2. specifying any disputes or administrative procedures in which they have been involved, in the last 5 years, regarding their activity within the issuer, as well as those concerning the ability of that person to fulfill his/her duties within the issuer.

• This is not the case.

5. INTERNAL CONTROL AND RISK MANAGEMENT

The Internal Control regularly monitors and verifies the application of the new legal provisions incident to the Group's activity, verifies compliance with the Group's internal regulations that have been established by internal decisions and regulations, the completion of existing regulations or the inclusion of new regulations specific to the economic activity, the establishment or improvement of the Group's internal procedures.

The general objectives of the internal audit for 2024 were focused in particular on risk management, as well as on the evaluation of the general system of controls implemented on transactions and/or flows.

The consolidated financial statements of the Vrancart Group for the financial year ended December 31st, 2024 were audited by PwC – independent financial auditor, appointed by the Ordinary General Meeting of Shareholders of 27.04.2023 for a period of two years.

The audit opinion expresses that the financial statements present a true and fair view, in all material respects, of the financial position, as well as of the comprehensive result and cash flows for the financial year ended December 31st , 2024 and is in accordance with the International Financial Reporting Standards adopted by the European Union.

6. SOCIAL RESPONSIBILITY

The "VRANCART" group of companies permanently carries out activities regarding the social responsibility of the company, every year directly or through specialized foundations/associations, supporting the disadvantaged categories in the local community where it operates.

The issuer is also directly involved in supporting sports, art and music events as well as other social activities within the local community to which it belongs.

7. NON-FINANCIAL STATEMENT

The "VRANCART" SA Group has prepared a sustainability report for 2024, which is the first such report based on the EU Corporate Sustainability Reporting Directive (CSRD). This report outlines our sustainable vision for a sustainable business and highlights our significant achievements in this area over the past year, while complying with the highest regulatory requirements as well as Chapter 7 of Order 2844/2016. The CSRD report prepared for 2024 will be made available to the public, on the Company's website www.vrancart.ro, before April 30, 2025.

8. FINANCIAL AND ACCOUNTING SITUATION

The consolidated financial statements are prepared by the Company in accordance with the requirements of the Order of the Minister of Finance 2844 of 2016, for the approval of the Accounting Regulations in accordance with the International Financial Reporting Standards (OMFP 2844/2016). International Financial Reporting Standards ("IFRS") are the standards adopted according to the procedure provided by Regulation (EC) no. 1.606/2012 of the European Parliament and of the Council of July 19th , 2002 on the application of International Accounting Standards.

Name of the indicator	UM	Dec 31st , 2024	Dec 31st , 2023	Dec 31st , 2022
General liquidity	Rap	0.96	0.92	1.50
Immediate liquidity	Rap	0.58	0.59	1.01
Inventory Rotation	Red/on	6	7	7
Debt collection	Days	69	54	62
Repayment of commercial debts	Days	54	41	42
Operating profitability	%	-1.11%	3.76%	6.20%
Gross Profit Rate	%	-3.33%	1.31%	4.23%

Synthetic table of financial performance indicators in the last 3 years

General and immediate liquidity as of 31.12.2024 were impacted by the repayment of the bond loan in the amount of RON 38,250,000.

The average duration of debt recovery continued to increase to 69 days compared to 54 days (2023) and 62 days (2022). Also, the average payment term of suppliers increased to 54 days, compared to 41 days in 2023 and 42 days in 2022. Inventory turnover decreased from 7 to 6 compared to the previous year. Profitability ratios depreciated as a result of the pressure on the decrease in sales prices, but also as a result of the increase in raw material and labor costs, moving into a negative area.

8.1. Consolidated financial position over the last 3 years

(RON)	Dec 31st , 2024	Dec 31st , 2023	Dec 31st , 2022
ASSETS
Tangible assets	639,493,054	552,107,867	425,202,360
Prepayments on tangible assets	8,152,139	23,363,024	37,053,636
Intangible assets	2,492,475	3,785,076	5,114,021
Other fixed assets	900,541	1,224,189	1,204,663
Goodwill	8,526,391	8,526,391	8,526,391
Total fixed assets	659,564,600	589,006,547	477,101,071
Inventories	85,375,917	76,630,055	81,370,713
Trade receivables	92,812,431	74,408,633	104,969,853
Prepaid expenses	1,292,579	1,054,817	4,483,704
Current corporate income tax receivable	-	835,908	-
Other receivables	2,000,609	10,526,706	15,627,368
Subsidies	3,884,271	-	1,881,991
Cash and cash equivalents	1,845,212	2,823,520	3,563,830
Assets held for sale	19,725,761	19,725,761	-
Total current assets	206,936,780	186,005,400	211,897,459
TOTAL ASSETS	866,501,380	775,011,947	688,998,530
EQUITY
Share capital	201,011,575	169,121,665	120,338,551
Reserves	179,609,956	179,992,645	176,252,881
Retained earnings	(9,300,660)	8,432,683	18,783,273
Non-controlling interests	(3,024)	(3,757)	(3,114)
Total equity	371,317,847	357,543,235	315,371,591
LIABILITIES
Long-term loans	156,806,674	140,955,586	125,981,209
Long-term leasing liabilities	22,994,191	21,977,764	16,346,044
Long-term bond loans	-	-	38,164,800
Long-term subsidies	77,812,199	13,137,193	11,735,050
Long-term debts to employees	920,509	444,379	440,169
Deferred corporate income tax liabilities	12,868,668	13,894,851	14,766,201
Other long-term liabilities	439,212	492,830	188,422
Total long-term liabilities	271,841,453	190,902,603	207,621,895

TOTAL EQUITY AND LIABILITIES	866,501,380	775,011,947	688,998,530
TOTAL LIABILITIES	495,183,533	417,468,712	373,626,939
Total current liabilities	223,342,080	226,566,109	166,005,044
Other liabilities	6,656,196	8,477,862	8,787,670
Current corporate income tax liabilities	890,611	92,996	680,223
Short-term debts to employees	5,928,386	7,072,857	7,646,369
Short-term subsidies	5,724,676	1,361,714	1,826,984
Short-term bond loans	-	38,250,000	-
Short-term leasing liabilities	8,710,139	9,320,959	7,718,425
Short-term loans	122,546,943	104,412,448	68,541,291
Short-term trade payables	72,885,129	57,577,273	70,804,082

8.2. Consolidated statement of overall income over the last 3 years

(RON)	2024	2023	2022
Sales income from customers agreements	486,795,338	500,299,036	607,354,159
Income from operating subsidies	408,956	12,922,747	3,421,768
Other income	12,325,123	10,248,680	13,763,542
Production inventory's changes	275,351	3,733,454	6,787,240
Raw materials and consumables expenses	(236,057,136)	(225,478,150)	(331,925,706)
Cost of goods sold	(45,069,441)	(54,073,764)	(56,152,237)
Third-party expenses	(47,529,758)	(47,561,802)	(53,262,802)
Labor expenses	(114,128,732)	(120,053,600)	(99,542,909)
Assets amortization and depreciation expenses	(48,488,831)	(42,988,971)	(34,976,920)
Other expenses	(13,939,664)	(18,234,873)	(17,785,815)
Operating result	(5,408,794)	18,812,757	37,680,320
Financial income	7,843	1,530,677	557,455
Financial expenses	(10,785,217)	(13,765,270)	(12,561,518)
Profit (loss) before tax	(16,186,168)	6,578,164	25,676,257
Corporate income tax expense	(2,083,103)	(1,155,779)	(2,729,364)
Profit (loss) for the year	(18,269,271)	5,422,385	22,946,893
- Related to the parent company	(18,270,004)	5,423,028	22,948,967
- Related to minority interests	733	(643)	(2,074)
Other comprehensive income
Changes in the reserve from the revaluation of property, plant and equipment, net of deferred tax	-	-	56,954,484
TOTAL COMPREHENSIVE INCOME FOR THE YEAR	(18,269,271)	5,422,385	79,901,377
- Related to the parent company	(18,270,004)	5,423,028	79,903,451
- Related to minority interests	733	(643)	(2,074)

8.3. Consolidated statement of cash flows over the past 3 years

(RON)	2024	2023	2022
Cash flows from operating activities
Cash receipts from customers	547,538,046	621,410,211	709,841,715
Cash paid to suppliers	(354,720,307)	(384,498,240)	(518,670,473)
Cash paid to employees	(70,697,618)	(81,926,320)	(68,137,816)
Cash paid to the state budget	(64,986,249)	(77,381,844)	(73,360,237)
Corporate income tax paid	(1,637,065)	(2,898,685)	(2,559,452)
Net cash flows from operating activities	55,496,807	74,705,122	47,113,737
Cash flows from investing activities
Cash paid for the purchase of tangible and	(134,001,873)	(144,411,984)	(87,942,311)
intangible assets
Letters of credit for the acquisition of fixed assets	-	-	(1,881,991)
Guarantees for obtaining authorization licenses	(149,962)	-	-
Proceeds from the sale of tangible assets	2,114,855	4,127,880	1,354,572
Interest received	1,717	7,331	3,257
Net cash flows from investing activities	(132,035,263)	(140,276,773)	(88,466,473)
Cash flows from financing activities
Proceeds from loans	137,255,249	101,562,320	154,568,756
Share capital increase	31,956,911	48,894,047	476,774
Leasing payments	(11,621,229)	(10,209,182)	(7,715,515)
Leasing interest paid	(415,399)	(316,893)	(236,274)
Bond redemption	(38,250,000)	-	-
Loan repayments	(101,822,103)	(51,116,389)	(90,657,661)
Interest paid	(13,172,005)	(12,170,909)	(8,936,054)
Dividends paid	-	(11,811,653)	(4,952,235)
Investment subsidies collected	71,628,724	-	-
Net cash flows from financing activities	75,560,148	64,831,341	42,547,791
Net increase/(decrease) in cash and cash	(978,308)	(740,312)	1,195,055
equivalents
Cash and cash equivalents at the beginning of the financial year	2,823,520	3,563,830	2,368,775
Cash and cash equivalents at the end of the financial year	1,845,212	2,823,520	3,563,830

9. SUBSEQUENT EVENTS AFTER THE END OF THE FINANCIAL YEAR

Conclusion of the contracts for the capitalization of the assets held for the sale of Ungheni and Piatra Neamț. The property in Ungheni was sold and collected in full in February, and for the one in Piatra Neamț, an advance of EUR 1 million was received during February 2025.

The last installment of 10% of the subsidy from European PNRR funds related to the 20MWh Photovoltaic Park project, worth 2.9 million lei, was collected.

The balance of the support loan contracted from BRD for the financing of the 20MWh Photovoltaic Park project has been fully reimbursed.

The directors' report was approved by the Board of Directors of VRANCART SA.

SIGNATURES

The report will be signed by the authorized representative of the Board of Directors, by the Chief Executive Officer and by the Chief Financial Officer of the company.

Fedor Nicu-Ciprian Chairman of the Board of Directors

Fedor Nicu-Ciprian Gabriel Coman

Chief Executive Officer Chief Financial Officer

VRANCART S.A.

Consolidated financial statements as of 31st December 2024

Issued in accordance with the Order of the Minister of Public Finance no. 2844/2016 for the approval of the Accounting Regulations in accordance with the International Financial Reporting Standards, applicable to companies whose securities are admitted for trading on a regulated market

Table of contents

Consolidated statement of financial position	1-2
Consolidated statement of comprehensive income	3
Consolidated statement of changes in equity	4-5
Consolidated cash flow statement	6
Notes to the consolidated financial statements	7-61

Vrancart SA Consolidated statement of financial position

for the financial year ended on December 31st , 2024

(all amounts in RON, unless otherwise stated)

	Note	2024	2023
ASSETS
Tangible assets	4	639,493,054	552,107,867
Prepayments for tangible assets		8,152,139	23,363,024
Intangible assets	5	2,492,475	3,785,076
Other fixed assets		900,541	1,224,189
Goodwill	5	8,526,391	8,526,391
Total non-current assets		659,564,600	589,006,547
Inventories	6	85,375,917	76,630,055
Trade receivables	8	92,812,431	74,408,633
Prepaid expenses		1,292,579	1,054,817
Current income tax receivable		-	835,908
Other receivables	10	2,000,609	10,526,706
Subsidies		3,884,271	-
Cash and cash equivalents	9	1,845,212	2,823,520
Total current assets excluding assets held for sale		187,211,019	166,279,639
Assets held for sale	7	19,725,761	19,725,761
Total current assets		206,936,780	186,005,400
TOTAL ASSETS		866,501,380	775,011,947
EQUITY
Share capital	11	201,011,575	169,121,665
Share premiums	11	842,449	775,497
Revaluation reserves	12	100,507,277	100,969,137
Legal reserves	12	13,659,100	13,646,880
Other reserves	12	64,601,130	64,601,130
Retained earnings		(9,300,660)	8,432,683
Total equity – Parent company		371,320,871	357,546,992
Non-controlling interests		(3,024)	(3,757)
Total equity		371,317,847	357,543,235
LIABILITIES
Long-term loans	17	156,806,674	140,955,586
Long-term leasing liabilities	16	22,994,191	21,977,764
Long-term bond loans	15	-	-
Long-term subsidies	20	77,812,199	13,137,193
Long-term debts to employees	18	920,509	444,379
Deferred corporate income tax liabilities Provisions	19 15	12,868,668 439,212	13,894,851 492,830
Total long-term liabilities		271,841,453	190,902,603
Trade liabilities	13	72,885,129	57,577,273
Short-term loans	17	122,546,943	104,412,448
Short-term leasing liabilities	16	8,710,139	9,320,959
		-	38,250,000
Short-term bond loans	17	5,724,676	1,361,714
Short-term subsidies	20
Short-term debts to employees	18	5,928,386 890,611	7,072,857 92,996
Current corporate income tax liabilities		6,656,196	8,477,862
Other short-term liabilities	14	223,342,080	226,566,109
Total current liabilities		495,183,533	417,468,712
TOTAL LIABILITIES
TOTAL EQUITY AND LIABILITIES		866,501,380	775,011,947

Vrancart SA Consolidated statement of financial position for the financial year ended 31st December 2024

(all amounts in RON, unless otherwise stated)

The financial statements were approved by the Board of Directors on March 28, 2025.

Chief Executive Officer Chief Financial Officer Nicu-Ciprian Fedor Gabriela Coman

The notes from page 7 to page 61 form an integral part of the financial statements.

Vrancart SA Consolidated statement of comprehensive income

as of 31st December 2024

(all amounts in RON, unless otherwise stated)

	Note	2024	2023
Sales income from customer agreements	21	486,795,338	500,299,036
Income from operating subsidies		408,956	12,922,747
Other income	23	12,325,123	10,248,680
Production inventory's changes		275,351	3,733,454
Raw materials and consumables expenses	24	(236,057,136)	(225,478,150)
Cost of goods sold		(45,069,441)	(54,073,764)
Third-party expenses	25	(47,529,758)	(47,561,802)
Labor expenses	27	(114,128,732)	(120,053,600)
Assets amortization and depreciation expenses	4	(48,488,831)	(42,988,971)
Other expenses	26	(13,939,664)	(18,234,873)
Operating result		(5,408,794)	18,812,757
Financial income	28	7,843	1,530,677
Financial expenses	28	(10,785,217)	(13,765,270)
Profit/(Loss) before taxation		(16,186,168)	6,578,164
Corporate income tax expense	29	(2,083,103)	(1,155,779)
Profit/(Loss) for the year		(18,269,271)	5,422,385
- Related to the shareholders of the Parent Company		(18,270,004)	5,423,028
- Related to non-controlling interests		733	(643)
Other comprehensive income
Changes in the reserve for the revaluation of property, plant and equipment, net of deferred tax		-	-
TOTAL COMPREHENSIVE INCOME FOR THE YEAR		(18,269,271)	5,422,385
- Related to the shareholders of the parent company		(18,270,004)	5,423,028
- Related to non-controlling interests		733	(643)
Earnings per share	30
Basic earnings per share		(0.0102)	0.0040
Diluted earnings per share		(0.0102)	0.0052

The financial statements were approved by the Board of Directors on March 28, 2025.

Chief Executive Officer Chief Financial Officer Nicu-Ciprian Fedor Gabriela Coman

The notes from page 7 to page 61 form an integral part of the financial statements.

Vrancart SA Consolidated statement of changes in equity

for the financial year ended 31st December 2024 (all amounts in RON, unless otherwise stated)

	Attributable to the shareholders of the parent company
	Share capital	Revaluation reserves	Share Premiums	Legal Reserves	Other reserves	Retained earnings	Non-controlling interests	Total equity
Balance as of January 1st, 2023	120,338,551	103,350,319	664,564	13,338,707	58,899,291	18,783,273	(3,114)	315,371,591
Comprehensive income for the period
Net profit/loss for the period	-	-	-	-	-	5,423,028	(643)	5,422,385
Other comprehensive income
Changes in the reserve from the revaluation of property, plant and equipment, net of deferred tax	-	-	-	-	-	-	-	-
Total comprehensive income for the period	-	-	-	-	-	5,423,028	(643)	5,422,385
Distribution of reserves	-	-	110,933	308,173	5,701,839	(6,120,945)	-	-
Transfer of the revaluation reserve to retained earnings following the sale/decommissioning of tangible assets, net of tax	-	(2,381,182)	-	-	-	2,381,182	-	-
Shareholder transactions
Dividend	-	-	-	-	-	(12,033,855)	-	(12,033,855)
Capital increase	48,783,114	-	-	-	-	-	-	48,783,114
Total shareholder transactions	48,783,114	-	-	-	-	(12,033,855)	-	36,749,259
Balance as of December 31st, 2023	169,121,665	100,969,137	775,497	13,646,880	64,601,130	8,432,683	(3,757)	357,543,235
Balance as of January 1st, 2024	169,121,665	100,969,137	775,497	13,646,880	64,601,130	8,432,683	(3,757)	357,543,235
Comprehensive income for the period
Net profit/loss for the period	-	-	-	-	-	(18,270,004)	733	(18,269,271)
Other comprehensive income
Changes in the reserve from the revaluation of property, plant and equipment, net of deferred tax	-	-	-	-	-	-	-	-
Total comprehensive income for the period	-	-	-	-	-	(18,270,004)	733	(18,269,271)
Distribution of reserves	-	-	-	12,220	-	(12,220)	-	-
Transfer of the revaluation reserve to retained earnings following the sale/decommissioning of tangible assets, net of tax	-	(461,860)	-	-	-	548,881	-	87,021
Shareholder transactions
Dividend	-	-	-	-	-	-	-	-
Capital increase	31,889,910	-	66,952	-	-	-	-	31,956,862
Total Shareholder Transactions	31,889,910	-	66,952	-	-	-	-	31,956,862
Balance as of December 31st, 2024	201,011,575	100,507,277	842,449	13,659,100	64,601,130	(9,300,660)	(3,024)	371,317,847

Vrancart SA Consolidated statement of changes in equity

for the financial year ended 31 December 2024 (all amounts are expressed in lei, unless otherwise specified)

Chief Executive Officer Chief Financial Officer Nicu-Ciprian Fedor Gabriela Coman

The notes from page 7 to page 61 form an integral part of the financial statements.

for the financial year ended 31st December 2024 (all amounts in RON, unless otherwise stated)

DIRECT METHOD

	Note	2024	2023
Cash flows from operating activities
Cash receipts from customers		547,538,046	621,410,211
Cash paid to suppliers		(354,720,307)	(384,498,240)
Cash paid to employees		(70,697,618)	(81,926,320)
Cash paid to the state budget		(64,986,249)	(77,381,844)
Corporate income tax paid		(1,637,065)	(2,898,685)
Net cash flows from operating activity		55,496,807	74,705,122
Cash flows from investment activities
Cash paid for the purchase of tangible and intangible assets		(134,001,873)	(144,411,984)
Guarantees for the granting of authorization licenses		(149,962)	-
Proceeds from the sale of tangible assets		2,114,855	4,127,880
Interest received		1,717	7,331
Net cash flows from investment activities		(132,035,263)	(140,276,773)
Cash flows from financing activities
Proceeds from loans		137,255,249	101,562,320
Share capital increase		31,956,911	48,894,047
Investment subsidies collected		71,628,724	-
Payments for leasing		(11,621,229)	(10,209,182)
Leasing interest paid		(415,399)	(316,893)
Bond redemption		(38,250,000)	-
Loan repayments		(101,822,103)	(51,116,389)
Interest paid		(13,172,005)	(12,170,909)
Dividends paid		-	(11,811,653)
Net cash flows from financing activities		75,560,148	64,831,341
(Decrease)/ Increase/ net of cash and cash equivalents		(978,308)	(740,310)
Cash and cash equivalents at the beginning of the financial year	9	2,823,520	3,563,830
Cash and cash equivalents at the end of the financial year	9	1,845,212	2,823,520

Nicu-Ciprian Fedor Gabriela Coman

Chief Executive Officer Chief Financial Officer

The notes from page 7 to page 61 form an integral part of the financial statements.

1. The reporting entity

The Vrancart Group ("the Group") includes the company Vrancart SA, with registered office in Adjud, str. Ecaterina Teodoroiu nr. 17, Vrancea County and its subsidiaries Rom Paper SRL ("Branch 1"), headquartered in Brașov, Șoseaua Cristianului, nr. 30, Brașov County, Vrancart Recycling SRL ("Branch 2"), headquartered in Adjud, Ecaterina Teodoroiu Street, no. 17, Vrancea County and Ecorep Group SA ("Branch 3"), headquartered in Adjud, Ecaterina Teodoroiu Street, no. 17, Vrancea county.

The consolidated financial statements of the Group for the financial year ended December 31, 2024 consist of the financial statements of Vrancart SA and its subsidiaries, which together form the Group.

Branch	Field of activity	Holding at December 31, 2024	Holding at December 31, 2023
Rom Paper SRL	Manufacture of napkins and sanitary products	100%	100%
Vrancart Recycling SRL	Treatment and disposal of non-hazardous waste	100%	100%
Ecorep Group SA	Business support services activities n.e.c.	99.6%	99.6%

The Group operates in the field of collection and recycling of non-hazardous waste, in the paper and corrugated cardboard industry, and in toilet paper.

VRANCART SA

Vrancart SA (the "Company") is a joint-stock company operating in Romania in accordance with the provisions of Law 31/1990 on commercial companies. The company has its registered office in Adjud, str. Ecaterina Teodoroiu nr. 17, Vrancea county. The company has open work points in the following localities: Bucharest, Pantelimon, Chiajna, Calimanesti, Sântana de Mures, Iași, Ploiesti, Sibiu, Brașov, Pitești, Timișoara, Bacău and Cluj.

The Company's object of activity consists in the production and marketing of the following products:

• corrugated cardboard,
• corrugated cardboard packaging,
• papers for the manufacture of corrugated cardboard,
• hygienic-sanitary papers in various assortments,
• waste recycling equipment (sale, rental and maintenance),
• electricity from photovoltaic parks (self-consumption and sale).

The Company's shares are listed on the Bucharest Stock Exchange, Standard category, with the indicative symbol VNC, starting with July 15, 2005. The Group publishes the consolidated financial statements on www.vrancart.ro. As of December 31st, 2024, the Company is 76.33% owned by Lion Capital SA, 17.35% by Pavăl Holding SRL and 6.32% by other shareholders. The record of shares and shareholders is kept in accordance with the law by Depozitarul Central S.A. Bucharest.

ROM PAPER SRL

Rom Paper SRL ("Branch 1") was established in 2002 as a private company with Romanian capital, operating in the field of production of hygienic-sanitary items made of recycled paper and cellulose, such as:

• napkins,
• folded towels,
• toilet paper,
• professional roles,
• cosmetic towels
• wipes in the box.

The products made are sold both on the territory of Romania and in 6 other countries, through retail chains (hypermarkets, supermarkets, cash and carry), but also through distributors, distinguishing themselves on store shelves both through their own brands "Mototol" and "Papely", as well as through the various private labels of its customers.

Rom Paper SRL is the result of the inorganic growth strategy of the Vrancart business, which on January 20, 2017 acquired the majority stake (70%) from the former owners. As of December 31, 2024, the Group held 100% of the company's shares, following the acquisition in June 2017 of 15%, and in June 2018 of the last tranche of 15%, of the shares of Rom Paper SRL.

VRANCART RECYCLING SRL

Vrancart Recycling SRL ("Filiala 2") was established in 2020, in August, and is a private company with Romanian capital, with a sole shareholder. The main activity of this subsidiary is the treatment and disposal of non-hazardous waste.

This company was established with the aim of developing the Group through a greenfield investment, worth over EUR 25 million, in adjacent areas of recycling and heat and electricity production, covering a wide variety of recoverable resources that it will sell or use internally as a result of the newly created synergies.

The investment was completed and received in full on 31.12.2024, starting with 2025 entering the operation phase with all business lines developed.

ECOREP GROUP SA

Ecorep Group SA ("Subsidiary 3") was established in November 2020, and is a private company with Romanian capital. The main activity of this subsidiary is the provision of services regarding the implementation of the obligations related to the extended producer responsibility for the environmental targets related to the packaging placed on the Romanian market.

The Group carries out a laborious and complex activity in areas such as the collection and recycling of non-hazardous waste, the paper and corrugated cardboard industry, respectively corrugated cardboard packaging, the production of hygienic-sanitary paper items, as well as the equipment for recycling paper and cardboard waste. Starting with 2024, the group produces electricity through a new 20MWh photovoltaic park, which it uses for domestic consumption, the excess being capitalized through sale.

The overwhelming share of paper used in the various production processes is obtained from the recycling of paper and cardboard waste, the Group making an essential contribution to the Romanian circular economy.

Main investments at Group level

Within Vrancart S.A., at the end of 2024, a 20MW photovoltaic park worth RON 77 million was completed and put into operation, financed by investment loans, own contribution and grant under Romania's National Recovery and Resilience Plan ("NRRP") worth RON 29 million. The project was built on a 39 ha plot of land, made viable and greened by the company in order to return it to the economic circuit. Another major project consists of the implementation, starting with 01.01.2025, of a new, state-of-the-art ERP system, worth over 500 thousand euros, financed from bank credit and own contribution, meant to cover complex business needs.

There are currently 2 other important projects underway, worth approximately EUR 5 million, aimed at improving the production processes of corrugated paper, consisting of a state-of-the-art technology, unique in Romania.

In Vrancart Recycling S.R.L. during the year 2024, an integrated waste recycling project was completed, representing a greenfield investment worth 27 million euros, financed through investment loans, own contribution and state aid in the amount of 8.3 million euros, with the main purpose of developing new recycling capabilities for waste collection, plastic and wood, but also a cogeneration station for the production of thermal energy (16.2 to/h) and electricity (1.2 MW/h), unique in Romania, in terms of the fact that it uses waste and residues resulting from technological processes.

At Rom Paper, at the beginning of 2024, an extensive project to modernize the facial wipes production lines was completed and implemented, by increasing productivity and energy efficiency, worth 4.7 million euros, financed through investment loans, own contribution and a grant obtained through Innovation Norway program worth 1.9 million euros.

2. Basis of preparation

(a) Declaration of conformity

The consolidated financial statements are prepared by the Group in accordance with the requirements of the Order of the Minister of Finance 2844 of 2016, for the approval of the Accounting Regulations in accordance with the International Financial Reporting Standards (OMFP 2844/2016). International Financial Reporting Standards ("IFRS") are the standards adopted according to the procedure provided by Regulation (EC) no. 1.606/2012 of the European Parliament and of the Council of 19 July 2002 on the application of International Accounting Standards.

(b) Presentation of financial statements

The financial statements are presented in accordance with the requirements of IAS 1 "Presentation of financial statements". The Group adopted a liquidity-based presentation in the statement of financial position and a presentation of income and expenses by their nature in the statement of comprehensive income, considering that these presentation methods provide information that is credible and more relevant than that which would have been presented under other methods permitted by IAS 1.

(c) Functional and presentation currency

The Group's management considers that the functional currency, as defined by IAS 21 "Effects of exchange rate variations", for each of the Group's companies is the Romanian leu (lei/RON). The consolidated financial statements are presented in lei, rounded to the nearest leu.

(d) Basis of Preparation

The consolidated financial statements have been prepared based on historical cost, except for property, plant and equipment in the category of land, buildings and technological equipment which are valued using the revaluation model.

The accounting policies defined below have been applied consistently for all periods presented in these financial statements. These financial statements were prepared based on the business continuity principle.

(e) Comparative situations

The consolidated financial statements as at 31 st December 2024 are comparable with those of the previous financial year. The presentation of information in certain notes as of 31st December 2023 has been updated in order to present data comparable to those of the current financial year.

(f) Business continuity

These financial statements have been prepared based on the principle of business continuity which implies that the Company will continue its activity for the foreseeable future. In order to assess the applicability of this presumption, management shall review forecasts of future cash inflows.

In 2024, the Group recorded a net loss of RON 18,269,271 (2023: a net profit of RON 5,422,385). As of December 31, 2024, net current assets were negative at RON 16,405,200 (December 31, 2023: RON 40,560,709).

During 2024, despite all the management's efforts to reduce production costs and operating expenses, to streamline the activity and to improve labor productivity, the Group's evolution was influenced by the constant increase in the price of basic raw materials. The purchase price of waste for corrugated cardboard paper increased by 35% and that of waste for toilet paper by 41%. Both corrugated and pure cellulose paper, purchased from third parties, became more expensive by 17%. The cost of labor also represented an additional stress factor on the Group's profitability, as a result of successive increases in the minimum wage from RON 3,000 (30.09.2023) to RON 3,300 (+10% as of 01.10.2023) and then to RON 3,700 (+12% as of 01.07.2024). The still high level of annual inflation of 5.1%, as well as interest rate values, also negatively affected the result in 2024. The still high prices of electricity and natural gas, in conjunction with the unexpected cut of RON 7.1 million from the subsidy according to GEO 138/2022 for electricity in 2023 and 2024, contributed massively to the loss recorded on 31.12.2024. Since December, the Group has not benefited from the subsidy for green certificates either. Between April and May 2024, the Group's activity had to be stopped because of construction works on the A7 highway, which required the temporary suspension of the electricity and natural gas supply, which generated an unexpected loss, an additional RON 4 million. In August, there was a new shutdown due to lack of electricity, following the connection of the 20MWh photovoltaic park to the national dispatching and communications network, which generated another loss of over RON 1 million.

During 2024, a series of unprofitable activities and work sites were abandoned, which generated compensatory payments of over RON 1.5 million. The turnover tax ruled as of 01.01.2024 only deepened the loss by RON 3 million.

The pressure on sales prices caused by the customers' need to optimize their own costs, but also by the fierce competition in the market, made it impossible to take over all the price increases, inevitably affecting the Group's profitability.

Although the financial situation was negatively impacted, the Group continued to operate throughout 2024 under normal conditions, managing on certain business lines to exceed the previous year and even the budgeted expectations, but also to complete the planned investments, some of the largest and most complex in its long history, which confirms the sustainability of the business, but also the Group's resilience to adverse changes in the market.

During 2024, the Group's performance was also impacted by the still high level of annual inflation (5.5%), as well as by interest rate values. Thus, the Group's sales were lower by 2.8% compared to the previous year and by 10% compared to the budget, mainly due to price decreases in all business segments.

However, Rom Paper continued to perform in a profitability area, Ecorep recorded its first year with a profit, Vrancart Recycling completed the investment process of developing new energy and recycling capabilities, and Vrancart S.A., even though it faced negative profitability, generated sufficient EBITDA to contribute to sustaining debt service and meeting financial indicators, while ensuring a solid financial balance at Group level.

Based on these performances and the strategy of developing new projects in the energy area and modernizing production capacities, in January 2024, the Extraordinary General Meeting of Shareholders of Vrancart approved the increase of the share capital by RON 32 million, an amount that was collected at the beginning of 2024 and to allow the completion of the group's strategic plans in optimal conditions.

The Group benefits from available credit facilities, both short-term and long-term, in line with the financing needs of current and investment activity as foreseen in the 2025 budget. Thus, as of 31.12.2024, the Group benefited from short-term financing facilities in lei and euros in the amount of RON 122 million, of which RON 89 million were used, and for investment projects it had financing available of another RON 43 million available.

The Group attaches great importance to profitability indicators, by streamlining operational processes, and liquidity, by making efficient use of resources.

The budget prepared by the Group's management and approved by the Boards of Directors for 2025 indicates positive cash flows from operating activities, an increase in sales compared to 2024 as well as a significantly lower level of operating expenses, resulting from efficiency measures already implemented during 2024. As a result, profitability is expected to improve, directly contributing to enhanced liquidity and enabling the Group to meet its contractual obligations with financing banks. The Group's management believes that the support received from banks and shareholders will be sufficient for the Company to continue its activity under normal conditions, based on the principle of business continuity.

In 2025, the Group entered into sales agreements for the assets held for sale, having already collected a portion of the proceeds from these contracts as of the date of these financial statements (see Note 32).

Sales in the first three months of 2025 exceeded those recorded in the same period of 2024 and are in line with the budgeted figures.

Management believes that the Group will be able to continue its activity for the foreseeable future and therefore the application of the business continuity principle in the preparation of financial statements is justified.

(g) Use of Material Estimates and Judgments

The preparation of consolidated financial statements in accordance with OMFP 2844 involves the use by management of estimates, judgments and assumptions that affect the application of accounting policies, as well as the reported value of assets, liabilities, income and expenses. The judgments and assumptions associated with these estimates are based on historical experience as well as other factors considered reasonable in the context of these estimates.

The results of these estimates form the basis for judgments regarding the carrying amounts of assets and liabilities that cannot be obtained from other sources of information. The results obtained may differ from the values of the estimates.

The judgments and assumptions underlying them are periodically reviewed by the Group. Revisions to accounting estimates are recognized during the period in which the estimates are revised, if the revisions affect only that period, or in the period in which the estimates are revised and future periods if the revisions affect both the current period and future periods.

Information on estimates, judgments and assumptions with a high risk of resulting in a material adjustment to the values of assets and liabilities as of December 31st, 2023 is included in the following notes:

The main estimates refer to:

• Cash flow and WACC projections used in the asset impairment analysis presented in Notes 4, 5
• Estimates of employee benefits presented in Note 3(l)
• Depreciation period of fixed assets presented in Note 3(d),(f)
• Adjustments for impairment of inventories disclosed in Note 3(i)
• Impairment adjustments to accounts receivable shown in Note 3(i)
• Impairment of goodwill presented in Note 3(i)

3. Significant accounting policies

a. The foundations of consolidation

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at 31 December 2024.

Control is obtained when the Group is exposed to or has rights to variable income from its involvement in the entity in which it has invested and has the ability to influence that income through its power over it.

Specifically, the Group controls an entity in which it has invested if and only if it has:

• Authority over the entity in which it has invested (e.g. existing rights that give it the current ability to direct its activities)
• Exposure or rights to variable income based on its interest in the entity in which it has invested
• The ability to use their authority over the entity in which they have invested to influence the amount of the investor's income.

In general, it is assumed that holding the majority of voting rights generates control. To support this assumption and where the Group does not hold a majority of voting rights or similar rights in an entity in which it has invested, the Group shall consider all data and circumstances when assessing whether it has authority over an entity in which it has invested, including:

• Contractual agreement(s) with the other voting holders in the entity in which it has invested
• Rights arising from other contractual commitments
• Voting rights and potential voting rights of the Group.

The group shall reassess whether or not it controls an entity in which it has invested if facts or circumstances indicate that there are changes in one or more of the three elements of control. The consolidation of a subsidiary begins when the Group gains control of the subsidiary and ceases when the Group loses control of the subsidiary. The assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date on which the Group gained control until the date on which the Group ceases to have control of the subsidiary.

Profit or loss and each component of other comprehensive income are attributed to the shareholders of the Group's parent entity and non-controlling interests, even if this results in a negative balance for non-controlling interests.

When necessary, adjustments are made to the financial statements of the subsidiaries in order to align their accounting policies with those of the Group. All assets and liabilities, equity, income, expenses and cash flows within the Group that relate to transactions between Group members are completely eliminated at consolidation.

(i) Entity combinations

Entity combinations are accounted for by the acquisition method at the date on which the Group gains control of the acquired entity. Control requires exposure to, or rights to the variable results of the entity in which the investment has been made, as well as the ability to influence those results by exercising authority over that entity.

The Group values goodwill at the date of the acquisition as follows:

• fair value of the consideration transferred, including
• the value of non-controlling interests in the acquired entity, including
• if that combination is carried out in stages, the fair value at the date of acquisition of the equity interest in the acquired entity, less
• Recognized net value (generally fair value) of identifiable assets acquired and liabilities assumed

The gain on an advantageous purchase is recognized immediately in the statement of profit or loss when the fair value of the consideration transferred is greater than the net recognized value of the identifiable assets acquired.

The transferred consideration does not include the amounts related to the termination of preexisting relationships between the Group and the acquired entity. Such amounts are generally recognized in the profit and loss account.

Transaction costs, other than those associated with the issuance of bonds or shares, related to combinations of entities are recognized in the profit and loss account when they occur.

Any contingent consideration due is measured at fair value at the date of acquisition. If the contingent consideration is classified as equity, then it is not revalued, and the settlement is accounted for in equity. Alternatively, subsequent changes in the fair value of the contingent consideration are recognized in the profit or loss account.

(ii) Subsidiaries

The subsidiaries are entities controlled by the Group. The financial statements of the subsidiaries are included in the consolidated financial statements from the moment the exercise of control begins until the moment of its cessation.

(iii) Loss of control

Upon loss of control, the Group recognizes the assets and liabilities of the subsidiary, any noncontrolling interests and other components of equity attributable to the subsidiary. Any surplus or deficit resulting from the loss of control is recognized in the profit and loss account. If the Group retains any interest in the former subsidiary, then this interest is measured at fair value from the date on which control is lost. Subsequently, this interest is accounted for by the equity method or as a financial asset, depending on the degree of influence retained.

Transactions eliminated on consolidation

Balances and transactions within the Group, as well as any unrealized income or expenses resulting from intra-Group transactions, are eliminated in their entirety in the consolidated financial statements. Unrealized losses are eliminated in the same way as unrealized gains, but only to the extent that there are no indications of impairment of the value transferred.

(iv) Non-controlling interests

The non-controlling interests are related to the minority stake held by third parties in Ecorep Group and resulted as a result of the capital contribution to the establishment of this subsidiary. The amounts attributable to these holdings, i.e. the proportion of equity held and the proportion of annual results, are presented separately in the financial statements.

b. Foreign currency transactions

Operations denominated in foreign currency are recorded in RON at the official exchange rate on the date of settlement of transactions. Monetary assets and liabilities recorded in foreign currency at the balance sheet date are converted into functional currency at the exchange rate of that day.

Gains or losses on their settlement and conversion using the exchange rate at the end of the financial year of monetary assets and liabilities denominated in foreign currency are recognized in the statement of comprehensive income.

The exchange rates of the main foreign currencies were:

Currency	December 31st , 2024	December 31st , 2023	Variation
Euro (EUR)	4.9741	4.9746	-0.01%

c. Financial instruments

Non-derivative financial instruments

The Group initially recognizes financial assets (loans, receivables and deposits) at the date they were initiated. All other financial assets are initially recognized at the trading date, when the Group becomes part of the contractual terms of the instrument.

The classification depends on the nature and purpose of the financial assets and is determined at the time of initial recognition. All standard purchases or sales of financial assets are recognised and unrecognised at the date of trading. Standard purchases or sales are the purchases or sales of financial assets that require the delivery of assets within a time frame set by regulation or convention in the market.

The group recognises a financial asset only when contractual rights to cash flows from assets expire or when it transfers the financial asset and, substantially, all risks and rewards associated with title to the asset to another entity. If the Group neither transfers nor substantially retains all of the risks and rewards associated with title and continues to control the transferred asset, the Group recognises its retained interest on the asset and the associated liability for the amounts it would have to pay. If the Group does not retain substantially all the risks and rewards associated with the title to a transferred financial asset, then the Group continues to recognise the financial asset, and also recognises collateralised indebtedness for the proceeds received.

On the derecognition of a financial asset in its entirety, the difference between the carrying amount of the asset and the amount of the consideration received and receivable and the cumulative gain or loss that had been recognised in other items of comprehensive income and accumulated in equity is recognised as profit or loss.

On the derecognition of a financial asset other than in full (e.g. when the Group does not retain an option to redeem part of a transferred asset or withholds residual interest that does not result in the retention of substantially all the risks and rewards related to the title and the Group does not retain control). The group allocates the past carrying amount of the financial asset between the party that continues to recognise under continuous involvement and the party that no longer recognises based on the fair values corresponding to those parties at the transfer date.

The difference between the carrying amount allocated to the defendant that is no longer recognized and the amount of consideration received for the part that is no longer recognized and any cumulative allocated gain or loss that has been recognized in other items of comprehensive income is recognized as profit or loss. A cumulative gain or loss that has been recognized in other comprehensive income is allocated between the part that continues to be recognized and the part that is no longer recognized, based on the fair value corresponding to those parts.

A financial asset is classified as at fair value through the profit or loss account if it is classified as held for trading or if it is so designated at initial recognition. Financial assets are designated as measured at fair value through the profit or loss account if the Group manages these investments and makes buy or sell decisions on a fair value basis in accordance with the investment and risk management strategy described in the Group's documentation. Attributable trading costs are recognized in the profit or loss account at the time they are incurred. Financial instruments at fair value through the profit or loss account are measured at fair value and subsequent changes, which take into account any dividend income, are recognized in the profit or loss account.

If the Group has the intention and ability to hold the debt instruments to maturity, then these financial assets may be classified as held-to-maturity investments. Financial assets held to maturity are initially recognized at fair value plus directly attributable transaction costs. After initial recognition, financial assets held to maturity are measured at amortized cost using the effective interest method, minus the amount of impairment losses.

Held-to-maturity financial assets include debt instruments.

Derivatives

Derivatives included in contracts are segregated from the contract and accounted for separately if that contract is not a financial asset and certain criteria are met.

Derivatives are initially recorded at their fair value. After initial recognition, they are measured at their fair value, and changes in this fair value are recognized in the statement of profit or loss.

The Group held derivatives in the form of conversion and repayment options attached to bond loans and detailed in Note 17, which were repaid in full on 31.12.2024.

Trade Receivables

Trade receivables are financial assets with fixed or determinable payments that are not listed on an active market. Such assets are initially recognized at fair value plus any directly attributable transaction costs. After initial recognition, receivables are measured at amortized cost using the effective interest method. The Group applies the simplified IFRS 9 approach to measuring expected credit losses, which uses a lifetime expected loss discount for all trade receivables. Details on how to calculate impairment adjustments for trade receivables are included in note i. Impairment of assets.

Cash and cash equivalents

Cash and cash equivalents comprise cash balances, current accounts and deposits with maturities of up to three months from the date of acquisition, and which are subject to an insignificant risk of change in their fair value and which are used by the Group in the management of its short-term commitments.

Available-for-sale financial assets

Available-for-sale financial assets are non-derivative financial assets that are designated as available-for-sale. Available-for-sale financial assets are initially recognized at fair value plus any directly attributable transaction costs. After initial recognition, they are measured at cost less any impairment losses.

Share capital – ordinary shares

Common shares are classified as part of equity. Additional costs directly attributable to the issuance of ordinary shares and stock options are recognized as a reduction in equity to net value from tax effects.

Financial liabilities

Financial liabilities include financial leasing obligations, interest-bearing bank loans, bond loans, overdrafts and trade debts and other debts. For each item, the accounting policies for recognition and measurement are set out in this note.

The loans are initially recognized at fair value, less the costs incurred on the transaction. Subsequently, they are recorded at amortized cost. Any difference between the entry value and the repayment amount is recognized in the profit and loss account over the period of the loans, using the effective interest method.

Financial instruments are classified as liabilities or equity according to the substance of the contractual arrangement. Interest, dividends, gains and losses on a financial instrument classified as liability are reported as expense or income. Distributions to holders of financial instruments classified as equity are recorded directly in equity. Financial instruments are cleared when the Company has an applicable legal right to offset and intends to settle either on a net basis or realize the asset and extinguish the obligation simultaneously.

d. Tangible fixed assets

(i) Recognition and evaluation

Property, plant and equipment recognized as assets are initially measured at cost by the Group. The cost of an item of property, plant and equipment consists of the purchase price, including sunk taxes, after deduction of any price reductions of a commercial nature and any costs that can be directly attributed to bringing the asset to the location and condition necessary for it to be used for the management's intended purpose, such as: employee expenses that result directly from the construction or acquisition of the asset, site arrangement costs, initial delivery and handling costs, installation and assembly costs, professional fees.

The cost of a tangible asset built by the Group includes:

• the cost of materials and direct personnel expenses;
• other costs directly attributable to bringing the assets to the stage required for the predetermined use, and
• when the Group is obliged to move the asset and restore the related space, an estimate of the costs of dismantling and moving the elements and restoring the space in which they have been capitalized

When certain components of a tangible asset have different useful lives, they are accounted for as distinct items (major components) of tangible assets.

Property, plant and equipment are classified by the Group into the following asset classes of the same nature and with similar uses:

• − land;
• − buildings;
• − equipment, technical installations and machinery;
• − transportation vehicles;
• − other tangible assets.

Land, buildings and technological equipment are recorded at the revalued value, which is the fair value at the revaluation date minus any depreciation accumulated thereafter and any accumulated impairment losses.

The fair value shall be based on market price quotations, adjusted, where applicable, to reflect differences in the nature, location or condition of that asset, except for equipment for which the fair value has been determined on the basis of replacement cost.

The re-evaluations are carried out by specialized evaluators, members of ANEVAR.

Revaluation of property, plant and equipment shall be made with sufficient regularity so that the carrying amount does not differ materially from that which would be determined using the fair value at the balance sheet date.

If the result of the revaluation is an increase in net carrying amount, then it is treated as an increase in the revaluation reserve presented in equity, if there was no previous decrease recognised as an expense in respect of that asset, or as income offsetting the expense with the decrease previously recognized in respect of that asset.

If the result of the revaluation is a decrease in the net carrying amount, it shall be treated as an expense with the full amount of impairment when an amount relating to that asset (revaluation surplus) is not recorded in the revaluation reserve or as a decrease in the revaluation reserve by the lesser of the value of that reserve and the amount of the decrease, and any difference left uncovered is recorded as an expense.

Expenses related to the maintenance and repairs of tangible assets are recorded by the Company in the statement of comprehensive income when they occur, and significant improvements made to tangible assets, which increase their value or lifespan, or which significantly increase their ability to generate economic benefits, are capitalized.

Advances paid for the acquisition of fixed assets, in balance at the end of the financial year, are presented within current assets, as their settlement is generally expected to happen in the next 12 months.

(ii) Subsequent expenses

Subsequent expenditure is capitalized only when it increases the value of the future economic benefits embodied in the asset for which it is intended. Repair and maintenance expenses are recognized in the profit or loss account as they are incurred.

(iii) Depreciation

Property, plant and equipment shall be depreciated from the date on which they are available for use or are in working order and, for assets constructed by the entity, from the date on which the asset is completed and ready for use.

Depreciation is calculated using the straight-line method over the expected useful life of the assets, as follows:

−	Land development	3-10 years
−	Construction	30-60 years
−	Equipment and other tangible assets	2-16 years

The land is not subject to depreciation.

Depreciation is generally recognized in the statement of profit or loss, unless the amount is included in the carrying amount of another asset.

The depreciation methods, the estimated useful lives as well as the residual values are reviewed by the Group at each reporting date and adjusted, if necessary.

(iv) Sale/scrapping of tangible assets

Property, plant and equipment that is scrapped or sold are removed from the balance sheet together with the corresponding cumulative depreciation. Any profit or loss resulting from such a transaction is included in the current profit or loss.

e. Rights of use (Leasing)

The company assesses whether a contract is or contains a leasing contract at the beginning of the contract. The Company acknowledges the right of use and an appropriate lease liability in respect of all leases in which it is a lessee, with the exception of short-term leases (defined as leases with a lease period of 12 months or less) and leases for low-value assets.

For these leases, the Company recognizes the lease payments as an operating expense on a straight-line basis during the lease period.

The lease debt is initially measured at the present value of the lease payments that are not paid at the start date of the contract, discounted using the default rate in the lease. If this rate cannot be easily determined, the Company uses the incremental borrowing rate. The lease payments included in the valuation of the lease debt comprise the fixed lease payments and the exercise price of the purchase options, if the lessee is reasonably certain that he will exercise the options, in the case of vehicles.

Following the application of the provisions of IFRS 16 in the current financial year, the Company recognized rights of use in assets, at the same time as the increase in total liabilities of the same value.

The rights of use that the Company owns and registers in accordance with IFRS 16 relate to buildings and land, cars and equipment. The details of the values of the rights of use by the mentioned categories can be found in Note 16.

The rights of use are presented at cost in accordance with IAS 16 and impaired over the life of the lease.

The Company has chosen to present the rights of use resulting from the application of IFRS 16 together with the tangible assets in the statement of financial position, according to IFRS 16, the breakdown of which is presented in Note 4.

f. Intangible assets and goodwill

(i) Recognition and evaluation

Intangible assets acquired by the Group and with determined useful lives are measured at cost minus cumulative depreciation and impairment losses.

(ii) Goodwill

The goodwill recorded by the Company comes from the acquisition of Giant in 2016, according to IFRS 3 and from the acquisition of Rom Paper SRL. The goodwill is not depreciated, it is tested annually for impairment, details regarding goodwill, the impairment test and the value of the impairments recorded are presented in Note 5.

(iii) Trademarks and trade relationships

Trademarks and commercial relationships are recorded in the intangible asset accounts at the contribution value or acquisition cost, as the case may be. They are recognized at the date of the acquisition of subsidiaries, based on the estimate of their fair value at the date of acquisition of the subsidiary by authorized valuers.

(iv) Subsequent expenses

Subsequent expenditure is capitalized only when it increases the value of the future economic benefits embodied in the asset for which it is intended. All other expenses, including goodwill expenses and internally generated brands, are recognized as profit or loss at the time they are incurred.

(v) Depreciation of intangible assets

Depreciation is calculated for the cost of the asset minus the residual value. Depreciation is recognized in profit or loss using the straight-line method for the estimated useful life for intangible assets, other than goodwill, from the date they are available for use.

Depreciation is calculated using the straight-line method over the estimated useful life of the assets, as follows:

−	Customer Service	2-10 years
−	Trademarks	7-10 years
−	Other intangible assets	2-4 years

Depreciation methods, useful lives and residual values are reviewed at the end of each financial year and are adjusted if necessary.

(v) Emission Certificates European Union Allocation (EUA)

Vrancart is a participating company in the EU Emission Trading Scheme (ETS) program in phase 4 for the period 2021 – 2025. According to the program, the Company receives through the allocation program a number of EUA certificate credits used to comply with the obligations related to the CO2 emissions related to the activity.

The company applies IAS 38 for their recognition. The cost of the allocated certificates being zero, they are reflected only off-balance sheet.

To the extent that the Company records a surplus for the allocated certificates, they may be sold by the Company, the income recorded at the time of the sale being reflected in the category of "Other income".

g. Inventories

Inventories are valued at the lesser of cost to net realizable value

Net realizable value is the estimated selling price in the normal course of business minus the estimated costs for completion and the costs necessary to complete the sale.

Raw materials are valued at the purchase price, including shipping, handling costs, and net of trade discounts.

The cost of inventory is based on the first-in, first-out (FIFO) principle and includes expenses incurred for the acquisition of inventory, production or processing costs, and other costs incurred to bring inventories to their current form and location.

In the case of inventories produced by the Company and those in production, the cost includes the corresponding share of the administrative expenses related to production based on normal operating capacity.

h. Assets held for sale

Long-term assets held for sale are recognized at the minimum of carrying amount to fair value less costs of sale.

The Company classifies a fixed asset (or group of assets) as held for sale if its carrying amount is hedged primarily as a result of a sale transaction rather than as a result of continued use. To that end, the asset (or group of assets) must be available for immediate sale in its current state, exclusively under existing ordinary and current selling conditions for such assets (or groups of assets), and the sale of the asset must be highly certain.

In order for the sale of the asset to be highly probable, the appropriate level of management must have drawn up a plan for the sale of the asset (or group of assets), and an effective program to identify the buyer as well as to finalize the sale plan must also have been initiated. Moreover, the asset (or group of assets) must be able to be sold on an active market at a price that is reasonably linked to current fair value. In addition, the sale is expected to qualify for recognition as a "completed sale, complete" within 1 year from the date of classification.

i. Impairment of assets

The carrying amounts of the Group's assets that are not of a financial nature, other than deferred tax assets, are reviewed at each reporting date to identify the existence of impairment indices. If such indicia exist, the recoverable amount of those assets shall be estimated.

An impairment loss is recognized when the carrying amount of the asset or its cash-generating unit exceeds the recoverable amount of the asset or cash-generating unit. A cash-generating unit is the smallest identifiable cash-generating group that independently of other assets and groups of assets has the ability to generate cash flows. Impairment losses are recognized in the statement of comprehensive income.

The recoverable amount of a cash-generating asset or unit is the greater of its value in use and its fair value, less the costs for the sale of that asset or units.

For the purpose of determining the value in use, the expected future cash flows are discounted using a pre-tax discount rate that reflects current market conditions and the risks specific to that asset.

Impairment losses recognized in prior periods are measured at each reporting date to determine whether they have diminished or no longer exist. The impairment loss is reversed if there has been a change in the estimates used to determine the salvage value.

The impairment loss is recognized only if the carrying amount of the asset does not exceed the carrying amount that would have been calculated, net of depreciation and amortization, if the impairment loss had not been recognized.

The Group has defined impairment adjustment policies for trade receivables and inventories as follows:

Impairment adjustments for trade receivables

The Group individually analyzes the need to register a depreciation adjustment for customers whose balances at the end of the year exceed RON 100,000 and who have either initiated procedures for recovering balances in court, or have a number of days of delay in the due date of invoices of more than one year, calculated for the oldest invoice in the balance. The Group also calculates a collective impairment adjustment for the risk of non-collection of receivables, using the impairment adjustment percentages established on the basis of historical data.

For customers whose balances do not meet the individual analysis criteria, a collective impairment adjustment is calculated, based on the division of their balances by age intervals, depending on the due date for each invoice in the balance. Each seniority interval shall be allocated a percentage calculated on the basis of the Group's historical experience of the recoverability of expired balances in each seniority interval used for the analysis.

In accordance with IFRS 9, the Company used the simplified approach to calculate estimated credit losses (ECLs) for trade receivables and contractual assets that did not contain a significant funding component. The Group carried out an analysis of trade receivables impairment adjustments that took into account the experience of historical credit losses based on the evolution of borrowers' arrears, adjusted to reflect current conditions and estimates of future economic conditions.

Impairment adjustments for inventories

Due to the nature of its object of activity, the Group does not hold perishable stocks or stocks that pose a risk of expiry in the short term. The risk of depreciation of inventories consists mainly of their destruction or deterioration as a result of unforeseen events, but it can also result from stocks with low market demand.

The Group shall carry out a periodic assessment of the inventories in order to identify the existence of indications of their depreciation, considering the following aspects:

• − For stocks whose age exceed 180 days, the depreciation adjustment is established following an individual analysis, for each product, carried out by a commission composed of representatives from the sales and production departments.
• − For all finished products, the Group compares the cost of inventories with the selling prices minus the distribution costs in the immediately following period, in order to present the remaining stocks in the balance at the minimum between the cost of production and the selling price minus the distribution costs, as provided for in policy (g).

j. Dividends to be distributed

Dividends are treated as a distribution of profit during the period in which they have been declared and approved by the General Meeting of Shareholders. Dividends declared before the reporting date are recorded as obligations on the reporting date.

k. Related parties

The subsidiaries are entities controlled by the Group. Control is obtained where the parent company has the power to govern financial and operational policies in order to derive benefits from its activities. The consolidated financial statements include the financial statements of the parent company and of the entities controlled by the parent company (its subsidiaries) from the time the exercise of control begins until the moment of its termination.

Related parties are those parties who have, through property, contractual rights, family or other relationships, the ability to directly or indirectly control or significantly influence the other party. Affiliated parties also include individuals who are the main shareholders, management and members of the board of directors and members of their families.

l. Employee benefits

(i) Short-term benefits

Obligations with short-term benefits granted to employees are not updated and are recognised in the statement of comprehensive income as the related service is provided.

Short-term employee benefits include salaries, bonuses, and social security contributions.

(ii) Determined contribution plans

The Group makes payments on behalf of its employees to the Romanian State pension system, health insurance and the unemployment fund, in the course of normal activity.

All employees of the Group are members and also have the legal obligation to contribute (through social contributions) to the pension system of the Romanian State (a plan of determined contributions of the State). All related contributions are recognized in profit or loss for the period when they are made. The Group has no other additional obligations.

The Group is not employed in any independent pension scheme and therefore has no further obligations in this regard. The Group is not employed in any other post-retirement benefits scheme. The Group has no obligation to provide further services to former or current employees.

(iii) Long-term employee benefits

The Group's net long-term service benefits obligation is the amount of future benefits that employees have earned in exchange for their services in the current and previous periods.

The parent company has the obligation to grant employees benefits on the date of retirement, according to the collective labor agreement. The Group uses actuarial experts to calculate the provision for long-term benefits in each financial reporting period.

m. Provisions

A provision is recognized if, as a result of a previous event, the Group has a present legal or implied obligation that can be credibly estimated, and it is likely that an outflow of economic benefits will be necessary to extinguish the obligation. Provisions are determined by discounting expected future cash flows using a pre-tax rate that reflects current market valuations of the time value of money and debt-specific risks. The depreciation of the update is recognized as a financial expense.

n. Income

(i) Sale of goods

The Group concludes contracts with its customers. These are usually framework contracts that set out the terms of payment, the terms of delivery and acceptance of the goods sold, the rights and obligations of the parties. The selling price of the goods is usually set for each order placed by the customer and accepted by the Company.

Transportation services related to goods are usually included in contracts for the sale of goods. If the Group transports the goods to the customer, the transfer of ownership is made at the time of delivery of the goods to the place of completion of the transport, depending on the delivery conditions. Those transport services are not recognized as a separate performance obligation.

Proceeds from the sale of goods are recognized when control is transferred to the customer.

The Group offers its customers the right to return the products sold if they do not meet the quality conditions specified in the contracts with customers. The Group assesses the value of such customer returns and recognizes them as a revenue adjustment.

The group has concluded contracts with some of its customers, generally large retailers, through which they promise a non-monetary consideration in the form of services, including logistics services and marketing and promotion services. These services are recognized as a reduction in the transaction price, as long as the following conditions are not met:

• the customer delivers a good or service that is distinct, separable from the other elements of the contract
• the fair value of these services can be reasonably determined
• the actual amount paid does not exceed the fair value of these services

The Group recognizes a reduction in the transaction price for services invoiced by large retailers for most of these services, as it does not have the information necessary to reliably assess their fair value.

(ii) Provision of services

The income from the provision of services shall be recorded in the accounts as they are performed. The provision of services includes the execution of works and any other operations that cannot be considered supplies of goods.

The main categories of services provided by the Group to third parties consist of the recovery through recycling of eco-bonus waste, maintenance and repair services for recycling equipment (Vrancart SA), taking over the extended responsibility of importers and producers for packaging waste placed on the Romanian market (Ecorep). Ecorep provides the services of taking responsibility for the fulfillment by its customers of the obligations towards the Environmental Fund based on the operating license no. 14 of 2021 issued by the Ministry of the Environment.

The stage of execution of the work is determined on the basis of work situations accompanying the invoices, acceptance reports or other documents attesting to the stage of performance of the services provided.

o. Financial income and financial expenses

Financial income includes interest income on invested funds and other financial income. Interest income is recognized as profit or loss on an accrual basis using the effective interest method.

Financial expenses include interest expense related to loans and other financial expenses.

Gains and losses on foreign exchange differences on financial assets and liabilities are reported based on currency fluctuations: gain or loss.

Borrowing costs, directly attributable to the acquisition, construction or realization of eligible assets, assets that require a significant period of time to be ready for use or sale, shall be added to the cost of those assets until the assets are significantly prepared for the scope of use or sale.

The financial income from the temporary investment of the specific indebtedness obtained for the acquisition or construction of the eligible assets shall be deducted from the costs of the loans that can be capitalized.

All other borrowing costs are recognized in the consolidated profit or loss in which they are incurred.

p. Corporate income tax

Corporate income tax expenses include current tax and deferred tax.

Corporate income tax is recognized in the statement of comprehensive income or in other items of comprehensive income if the tax is related to capital items.

(i) Current tax

The current tax is the tax payable on the profit made in the current period, determined on the basis of the percentages applied at the reporting date and all adjustments related to the previous periods.

For the financial year ended December 31st, 2024, the corporate income tax rate was 16% (December 31st, 2023: 16%).

Starting with the 2024 fiscal year, Law 296 on certain fiscal and budgetary measures to ensure Romania's long-term financial sustainability, issued on October 26, 2023, as subsequently amended and supplemented ("Law 296"), introduced a 1% turnover tax for entities with a turnover exceeding EUR 50 million in the previous fiscal year. This tax is applied only if its value exceeds the amount of the corporate income tax and is calculated based on total revenues, from which certain types of income are excluded, along with the value of assets under construction completed during the year and the depreciation of assets acquired or produced in the same year.

(ii) Deferred tax

The deferred tax is determined by the Group using the balance sheet method for those temporary differences that arise between the tax base for calculating the tax on assets and liabilities and their carrying amount, used for reporting in the consolidated financial statements.

Deferred corporate income tax is not recognized for temporary differences that arise at the initial recognition of goodwill.

The deferred tax is calculated on the basis of the tax percentages that are expected to be applicable to temporary differences upon their resumption, based on the legislation in force at the reporting date.

Deferred tax receivables and liabilities are only offset if there is a legal right to offset current tax receivables and receivables and if they relate to tax collected by the same tax authority for the same taxable entity or for different tax authorities but wishing to settle current tax receivables and liabilities using a net basis or the related assets and liabilities will be realized simultaneously.

The deferred tax claim is recognized by the Group only to the extent that future profits are likely to be realized that can be used to cover the tax loss.

The deferred tax claim is reviewed at the end of each financial year and is reduced to the extent that the related tax benefit is unlikely to be realized. Additional taxes arising from the distribution of dividends are recognized on the same date as the obligation to pay dividends.

(iii) Tax exposures

In determining the amount of current and deferred taxes, the Group takes into account the impact of uncertain tax positions and the possibility of additional taxes and interest accruing.

This assessment is based on estimates and assumptions and may involve a number of reasoning regarding future events. New information may become available, thereby leading the Group to change its reasoning regarding the accuracy of estimating existing tax liabilities; Such changes in tax liabilities have an effect on tax expenditure during the period in which such a determination is made.

q. Earnings per share

The Group presents basic and diluted earnings per share for ordinary shares. Basic earnings per share are determined by dividing the profit or loss attributable to the Group's ordinary shareholders by the weighted average number of ordinary shares for the reporting period. Diluted earnings per share are determined by adjusting the profit or loss attributable to ordinary shareholders and the weighted average number of common shares with the dilutive effects generated by the potential common shares.

r. Government subsidies

The investment grants are initially recognized as deferred income at fair value when there is certainty that they will be received, and the Group will comply with the associated conditions. Subsidies that compensate the Group for the cost of an asset are recognized in the statement of comprehensive income under "Other income" systematically over the useful life of the asset, as the subsidized asset is depreciated. Subsidies that offset expenses incurred by the Group are recognized in the Statement of Comprehensive Income, in "Operating Grant Income" on a systematic basis in the same periods in which the expenses are recognized and are presented under Other Receivables, in the Statement of Financial Position, when they are settled in the next financial year.

s. Contingent assets and liabilities

Contingent liabilities are not recognized in the financial statements. They are presented unless the possibility of an outflow of resources representing economic benefits is remote. A contingent asset is not recognized in the financial statements but is presented when an inflow of economic benefits is likely.

t. Subsequent events

The financial statements reflect events subsequent to the end of the year, events that provide additional information about the Group's position at the reporting date or those that indicate a possible breach of the business continuity principle (events that cause adjustments). Post-year-end events that are not adjustment events are disclosed in the notes when they are considered significant.

u. New standards and interpretations

Initial application of new amendments to existing standards in force for the current reporting period

The following amendments to the existing standards issued by the International Accounting Standards Board (IASB) and adopted by the EU are in force for the current reporting period:

• ➢ Amendments to IAS 1 "Presentation of Financial Statements" – Long-term liabilities with financial indicators (applicable for annual periods beginning on or after January 1st , 2024),
• ➢ Amendments to IFRS 16 "Leases" Lease liabilities in a sale and leaseback transaction (applicable for annual periods beginning on or after January 1st, 2024),
• ➢ Amendments to IAS 7 "Statement of Cash Flows" and IFRS 7 "Financial Instruments" – Vendor Financing Arrangements (applicable for annual periods beginning on or after January 1st, 2024)

The adoption of the new amendments to the existing standards did not have a significant impact on the Company's individual financial statements.

Standards and amendments to existing standards issued by the IASB and adopted by the EU but not yet in force

As of the date of approval of these individual financial statements, the following amendments to the existing standards have been issued by the IASB and adopted by the EU are not yet in force:

• ➢ Amendments to IAS 21 " Effects of foreign exchange rate fluctuations " These new requirements will apply for annual reporting periods beginning on or after January 1st , 2025. Early application is allowed (subject to the validation process).
• ➢ Amendments to "Classification and Measurement of Financial Instruments" Amendments to IFRS 9 "Financial Instruments" and IFRS 7 "Financial Instruments: Disclosures" applicable for annual reporting periods beginning on or after January 1st , 2026, with early application permitted, subject to the validation process.
• ➢ IFRS 18, "Presentation and Description in Financial Statements" – which replaces IAS 1, with a focus on updates to the statement of profit or loss effective January 1st , 2027.
• ➢ IFRS 19, "Non-Public Liability Subsidiaries: Disclosures" is a voluntary standard for eligible subsidiaries with effect from January 1st, 2027.

The Company has chosen not to adopt these amendments to existing standards prior to the actual effective dates. The Company is currently assessing the impact of these standards on the financial statements.

v. Determination of fair values

Certain accounting policies and disclosure requirements by the Group require determination of fair value, for both financial and non-financial assets and liabilities.

The group has an established control framework over fair value measurement. It includes an assessment team that is responsible for overseeing significant fair value assessments, including Level 3 fair values, and reports directly to the CFO.

The valuation team regularly reviews unobservable inputs and significant valuation adjustments. If data provided by third parties is used, such as quoted prices, provided by brokers or through pricing services, the valuation team shall consider whether such data meets the requirements of IFRS, including the level in the fair value hierarchy into which such valuations should be classified.

When measuring assets or liabilities at fair value, the Group uses market-viewable information to the extent possible. The fair value hierarchy classifies the inputs for the valuation techniques used to measure fair value into three levels, as follows:

• Level 1: quoted (unadjusted) price on active markets for identical assets or liabilities that the Group can access at the valuation date;
• Level 2: inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly;
• Level 3: Unobservable input data for the asset or debt.

If the inputs for measuring the fair value of an asset or liability can be classified on more than one level of the fair value hierarchy, the fair value measurement shall be classified entirely at the same level of the fair value hierarchy as the entry date with the lowest level of uncertainty that is material for the entire measurement.

The group recognizestransfers between levels of the fair value hierarchy at the end of the reporting period in which the change occurred.

Additional information about the assumptions used in fair value measurement is included in Note 3 (d) (i) for property, plant and equipment.

4. Tangible fixed assets

As of December 31st, 2022, based on reports prepared by authorized appraisers, the Group recorded a revaluation surplus for land and land developments, constructions and special buildings and production lines in the amount of RON 67,259,732 and a net increase in value of RON 4,248,609 (in revenues). The fair value of the fixed assets subject to the revaluation was determined by applying the market comparison method, where market information exists, respectively by the net replacement cost method. Prior to this revaluation, the last revaluation of those categories of tangible assets took place on 31st December 2019.

The approaches applied in the assessment as of December 31st, 2022, respectively the main inputs used were:

• Approach by market comparisons for vacant land (or considered as vacant), for movable property with an active market. The input data was the areas and average prices for the respective locations;
• Income approach for the Călimănești, Ungheni, Chiajna and Pantelimon sites. The input data was the estimated rents, respectively the surfaces;
• Cost approach for all valued fixed assets, which have a high degree of specialization, the replacement cost was started, adjusted for inflation/exchange rate and the depreciation percentage;

The values obtained through the cost approach were subjected to the test of economic depreciation.

In order to record the valuation results in the accounting, the method of cancelling the accumulated depreciation was used.

Depreciation tests

As of December 31, 2024, the management of the Company's identified the existence of impairment indicators, and impairment tests were performed.

For the purpose of testing the impairment of fixed assets, the Group has identified 3 cashgenerating units: Vrancart S.A., Rom Paper SRL and Vrancart Recycling SRL.

Vrancart Recycling is a project under investment and has not been tested for depreciation because the machines are new.

On December 31st, 2024, the Company carried out the impairment test for Vrancart, with the help of an authorized valuer and concluded that there is no need to record any additional impairment.

The Company determined the value in use, as defined by IAS 36 – Impairment of Assets, as: "the present value of the future cash flows expected to be derived from an asset or a cash-generating unit."

According to the analysis, in the case of the Vrancart business line there is only one cashgenerating unit (the corrugated cardboard packaging production business). The inputs used to estimate the value in use of the assets tested were:

• Net cash flow these flows (income and expenditure budget) were forecast by the Company's representatives for the entire explicit forecast period, and for perpetuity they were estimated by the appraiser by applying the 3% perpetual growth rate represented by the long-term inflation forecast in lei by the National Bank of Romania.
• Discount rate and capitalization rate for residual value estimated by the valuer. The discount rate was estimated by the weighted average cost of capital (WACC) by calculating each component of it and then for verification it was also related to the data found in the market for other producers of similar products. Thus, the results identified in the Damodaran database at European level, we find the average EBITDA margin between 12% - 16%. WACC (weighted average cost of capital) as of 31.12.2024 was 11.16% (11.58% as of 31.12.2023).

• The change in net working capital – estimated by the appraiser based on the working capital for the first forecast year, respectively - 4.2% of the estimated turnover in the explicit forecast period, and for the rest of the forecast period the related level for the first year of the explicit period was maintained, respectively 4.2%.

Thus, the use value of the fixed assets related to the Vrancart business line was determined and was then compared with the net book value.

Applying the sensitivity analysis to the impact generated on the value of use of fixed assets, we observe that at a decrease in EBITDA by up to 3.5%, the value in use remains above or close to the book value, while the share of working capital in turnover of up to 8% (estimated 4.2%) will not generate a negative impact. If we apply the same analysis to the discount rate (WACC), an increase with 0.5% will not have a negative impact. If we apply the perpetual growth rate ("g") of only 2% instead of the estimated 3%, we also see that the value in use will be above the book value.

In the case of Rom Paper, the impairment test also showed that the value in use is significantly higher than the net book value as of December 31st, 2024, consequently there is no need to recognize an economic impairment.

Part of the Group's tangible assets are mortgaged or pledged to guarantee loans taken from banks. The net book value of these pledged or mortgaged assets is RON 451,584 thousand as of 31.12.2024 (31.12.2023: RON 311,125 thousand). The value of the rights of use related to the assets held through leasing contracts is presented in Note 16.

If the land, buildings and production lines had not been revalued, their value on 31st December 2024 would have been as follows:

	Cost	Amortization Cumulative	Net book value
Land and land development	23,338,197	3,166,976	20,171,221
Constructions and special
buildings	140,704,764	30,854,230	109,850,534
Production Lines	633,177,591	265,545,036	367,632,555
Total	797,220,552	299,566,242	497,654,310

Vrancart SA Notes to the consolidated financial statements

for the financial year ended 31st December 2024

(all amounts in RON, unless otherwise stated)

	Land and land development	Special buildings and constructions	Equipment and other fixed assets	Tangible assets in progress	Total
Cost pr revalued value
As of January 1st, 2023	19,158,120	110,900,063	289,816,762	67,766,267	487,641,212
Purchases	657,615	338,762	234,094	173,642,995	174,873,466
Rights of use of leased assets (note 16)	-	11,858,382	5,135,013	-	16,993,395
Transfers from assets in progress	1,274,592	23,752,700	53,587,283	(78,614,575)	-
Outflows	(1,033,017)	(1,980,807)	(4,974,239)	(16,698,276)	(24,686,339)
Outflows of assets related to rights of use	-	(373,586)	(138,318)	-	(511,904)
As of December 31st, 2023	20,057,310	144,495,514	343,660,595	146,096,411	654,309,830
Cumulated amortization and impairment losses
As of January 1st, 2023	-	11,532,481	50,906,371	-	62,438,852
Depreciation expense	210,840	3,086,809	28,859,134	-	32,156,783
Depreciation expense for the rights of use of leased assets (note 16)	-	5,444,095	3,843,197	-	9,287,292
Outflows of assets related to rights of use	-	(274,723)	(1,406,251)	-	(1,680,974)
As of December 31st, 2023	210,840	19,788,662	82,202,451	-	102,201,953
Net book value
As of December 31st, 2023	19,846,470	124,706,852	261,458,134	146,096,411	552,107,867

Vrancart SA Notes to the consolidated financial statements

for the financial year ended 31st December 2024

(all amounts in RON, unless otherwise stated)

5	Land and land development	Special buildings and constructions	Equipment and other fixed assets	Tangible assets in progress	Total
Revalued cost or value
As of January 1st, 2024	20,057,310	144,495,514	343,660,595	146,096,411	654,309,830
Purchases	-	-	610,861	127,363,257	127,974,118
Rights of use of leased assets (note 16)	-	2,946,800	4,717,387	-	7,664,187
Transfers from assets in progress	-	38,744,811	214,392,313	(253,137,124)	-
Outflows	-	-	(2,614,221)	-	(2,614,221)
Outflows of assets related to rights of use	-	(8,797,643)	(5,356,219)	-	(14,153,862)
As of December 31st, 2024	20,057,310	177,389,482	555,410,716	20,322,544	773,180,052
Cumulative amortization and impairment losses
As of January 1st, 2024	210,840	19,788,662	82,202,451	-	102,201,953
Depreciation expense	277,179	4,010,003	30,412,291	-	34,699,473
Depreciation expense for the rights of use of leased assets (note 16)	-	4,991,414	5,422,948	-	10,414,362
Outflows	-	-	(1,893,972)	-	(1,893,972)
Outflows of assets related to rights of use	-	(7,859,488)	(3,875,330)	-	(11,734,818)
As of December 31st, 2024	488,019	20,930,591	112,268,388	-	133,686,998
Net book value
As of December 31st, 2024	19,569,291	156,458,891	443,142,328	20,322,544	639,493,054

The main acquisitions of tangible assets in 2024 at the parent company consisted of the construction of a 20MW photovoltaic park to ensure partial independence from suppliers and energy price fluctuations. At Vrancart Recycling, the cogeneration plant was completed and put into operation.

The non-depreciated value of fixed assets withdrawn as a result of the sale and/or scrapping as of December 31st, 2024 was RON 720,242 (31.12.2023: RON 3,626,247).

The net book value of fixed assets acquired through government subsidies received until December 31, 2024 is RON 284,615,014 (31.12.2023: RON 62,005,876).

5. Intangible assets and goodwill

in lei	Customer Service	Trademarks	Other fixed assets	Total intangible assets	Commercial Fond
Cost
As of January 1st, 2024	6,133,926	3,094,411	4,612,111	13,840,448	8,526,391
Purchases	-	-	70,833	70,833	-
Transfers from assets in progress	-	-	-	-	-
Outflows	-	-	(342,540)	(342,540)	-
As of December 31st, 2024	6,133,926	3,094,411	4,340,404	13,568,741	8,526,391
Accumulated depreciation and impairment losses
As of January 1st, 2024	4,618,237	2,166,087	3,271,045	10,055,369	-
Depreciation expense	573,338	309,441	480,353	1,363,132	-
Outflows	-	-	(342,235)	(342,235)	-
As of December 31st, 2024	5,191,575	2,475,528	3,409,163	11,076,266	-
Net book value As of December 31st, 2024	942,351	618,883	931,241	2,492,475	8,526,391

in lei	Customer Service	Trademarks	Other fixed assets	Total intangible assets	Commercial Fond
Cost
As of January 1st, 2023	6,133,926	3,094,411	4,437,207	13,665,544	8,526,391
Purchases	-	-	174,904	174,904	-
Transfers from assets in progress	-	-	-	-	-
Outflows	-	-	-	-	-
As of December 31st, 2023	6,133,926	3,094,411	4,612,111	13,840,448	8,526,391
Accumulated depreciation and impairment losses
As of January 1st, 2023	3,986,672	1,856,646	2,708,202	8,551,520	-
Depreciation expense	631,565	309,441	562,843	1,503,849	-
Outflows	-	-	-	-	-
As of December 31st, 2023	4,618,237	2,166,087	3,271,045	10,055,369	-
Net book value
As of December 31st, 2023	1,515,689	928,324	1,341,066	3,785,079	8,526,391

Intangible assets

Customer relationships and trademarks were recognized on the basis of a purchase price allocation report drawn up by an authorized appraiser employed by Vrancart SA. The fair value of these intangibles is based on detailed business plans of Rom Paper SRL, which include estimates of the future evolution of key indicators, such as revenues and margins at customer level or royalty rates for brands, as well as the choice of an appropriate discount rate.

The lifespans of the customer relationships recognized following the acquisition of Rom Paper SRL are between 6 and 10 years. They are estimated based on the remaining duration of deliveries to them, and correlated with the turnovers generated by those customers (customers with higher shares in turnover will collaborate for a longer period with Rom Paper SRL than those with smaller shares), as well as in relation to the lifespans of trademarks.

The lifespan for purchased trademarks is 10 years, estimated based on the analysis of the following determining factors: (1) the existence of market demand for products made and sold under these brands; (2) the average period of licensing agreements for trademarks used in paper production; (3) the remaining useful life of machinery that is used in the production of paper and other underlying assets; and (4) the term of legal protection of the trademark, which may be renewed for a further period of 10 years upon expiry.

These lifetimes are based on the Group's estimate of the period over which these intangible assets are expected to generate future economic benefits.

Goodwill

The goodwill recorded by the Company comes from the acquisition of Giant (merged with Vrancart S.A.) according to IFRS 3 procedures and from the acquisition of Rom Paper SRL.

The goodwill related to the subsidiary Giant Prodimpex SRL was taken over following the merger at the value recognized at the date of the acquisition in 2016, respectively RON 3,380,811.

The goodwill related to the acquisition of Rom Paper SRL was recognized on the date of completion of the acquisition of 70% of the shares of Rom Paper SRL, on January 20th, 2017, at the value of RON 5,145,580.

There are no impairments related to goodwill, given that the revenues, results and net assets taken over are in line with the Group's expectations.

The Company tested for impairment the goodwill from the acquisition of Rom Paper SRL, as well as the goodwill in the amount of 3,380,811 generated as a result of the Company's merger with Giant, and it was not necessary to record any impairment.

In the case of the Rom Paper SRL business line, there is only one cash-generating unit (the business of producing paper products). The input data for estimating the use value of the assets under test are:

• Net cash flow - these flows (income and expenditure budget) were forecast by the Company's representatives for the entire explicit forecast period, and for perpetuity they were estimated by the appraiser by applying the perpetual growth rate of 3% represented by the long-term inflation forecast in lei by the National Bank of Romania.

• Discount rate and capitalization rate for residual value – estimated by the valuer. The discount rate was estimated using the weighted average cost of capital (WACC). To determine it, each component of it was calculated.

In order to verify the EBITDA margins forecast by the Company, the evaluator considered it appropriate to refer to the data found in the market for other producers of similar products. Thus, the results identified in the Damodaran database at European level, we find the average EBITDA margin between 12% - 16%.

• Variation of the net working capital – estimated by the appraiser based on the NFR submitted by the client for the entire explicit forecast period, and for perpetuity the percentage of 8.8% estimated by the client for the last year of the explicit period was applied.

In the case of the GIANT business line the cash-generating unit (the corrugated cardboard packaging production business). The input data for estimating the use value of the assets under test are:

• Net cash flow these flows (income and expenditure budget) were forecast by the Company's representatives for the entire explicit forecast period, and for perpetuity they were estimated by the appraiser by applying the perpetual growth rate of 3% represented by the long-term inflation forecast in lei by the National Bank of Romania.
• Discount rate and capitalization rate for residual value estimated by the valuer. The discount rate was estimated using the weighted average cost of capital (WACC). To determine it, we calculated each component of it. In order to verify the EBITDA margins forecast by the client, the evaluator considered it appropriate to refer to the data found in the market for other producers of similar products. Thus, the results identified in the Damodaran database at European level, we find the average EBITDA margin between 12% - 16%.
• Variation of the net working capital estimated by the appraiser based on the NFR submitted by the client for the entire explicit forecast period, and for perpetuity the percentage of 15.4% estimated by the client for the last year of the explicit period was applied.

6. Inventories

	December 31,	December 31,
	2024	2023
Raw materials and consumables	45,090,824	35,180,722
Finished products and goods	21,686,163	14,589,729
Products in Progress	22,238,017	29,725,919
Advances paid for stocks	11,936	74,494
Inventory impairment adjustments	(3,651,023)	(2,940,809)
Total	85,375,917	76,630,055

7. Assets held for sale

By decision no. 54/14.12.2023 and decision no. 55/14.12.2023, the Board of Directors of the parent company decided to reclassify the assets of 2 locations, as intended for sale, as follows:

• Piatra Neamt location tissue paper production line initially, the intention was to relocate to Adjud, but since the costs of special constructions are significant, it was decided to sell the asset.
• Ungheni location, Mureș land and production hall the production center moved to Sântana de Mureș, in a rented space, as the Ungheni location was insufficient to increase the production and storage capacity.

Asset Category	Book value
LOCATION PIATRA NEAMT
Tissue paper production line	16,660,015
LOCATION: UNGHENI MUREȘ
Ungheni land and related infrastructure	1,474,098
Production hall with related systems	1,030,774
Removable tent	560,874
TOTAL	19,725,761

On the date of approval of the financial statements, 28.03.2025, the Ungheni Mureș location was sold, and an advance in the amount of EUR 1,000,000 was received for the equipment in Piatra Neamt.

8. Trade receivables

	December 31st , 2024	December 31st , 2023
Customers	97,723,474	79,866,554
Customers – invoices to be issued	(514,798)	(74,851)
Adjustments for impairment of receivables – customers	(4,396,245)	(5,383,070)
Total	92,812,431	74,408,633

Adjustments for impairment of receivables – customers	December 31st , 2024	December 31st , 2023
Balance at the beginning of the period	5,383,070	5,483,989
New adjustments in the period	554,328	1,038,758
Reversing period adjustments	(1,541,152)	(1,139,677)
Balance at the end of the period	4,396,246	5,383,070

9. Cash and cash equivalents

	December 31st , 2024	December 31st , 2023
Bank current accounts and other securities	1,817,704	2,789,338
Cash in the cashier	27,508	34,181
Total cash and cash equivalents	1,845,212	2,823,519

10. Other claims

	December 31st , 2024	December 31st , 2023
Other claims in relation to personnel	1,587,672	780,294
Other claims	444,910	1,000,856
VAT to be recovered	(67,696)	490,894
Suppliers-debtors	35,723	364,762
Other claims related to the state budget	-	1,077,033
Subsidies to be received	3,884,271	7,112,867
Impairment adjustments for other receivables	-	(300,000)
Total	5,884,880	10,526,706

11. Share capital

Group shareholding structure

December 31st, 2024	Number of shares	Amount (lei)	(%)
LION Capital SA	1,534,275,712	153,427,571	76.33%
Pavăl Holding SRL	348,786,406	34,878,641	17.35%
Other shareholders	127,053,633	12,705,363	6.32%
Total	2,010,115,751	201,011,575	100%
	Number of
December 31st, 2023	shares	Amount (lei)	(%)
LION Capital SA	1,286,197,217	128,619,722	76.05%
Pavăl Holding	292,390,802	29,239,080	17.29%
Other shareholders	112,628,634	11,262,863	6.66%
Total	1,691,216,653	169,121,665	100%

By the Decision of 25.01.2024, the Extraordinary General Meeting of Shareholders decided to increase the share capital. On September 2nd , 2024 the share capital increase procedure was completed. A total of 318,899,098 ordinary registered shares were subscribed, with a nominal value of RON 0.1/share, with a total value of RON 31,956,862.07, of which RON 31,889,909.80 represents the total nominal value, and RON 66,952.27 represents the share premium.

Dividend

In 2024, Vrancart SA did not distribute dividends. By Decision no. 4 of 27.04.2023, the Ordinary General Meeting of Shareholders decided to distribute dividends, from the net profit for the financial year ended December 31st, 2022, in the amount of RON 12,033,855, respectively a gross dividend of RON 0.01/share.

12. Reserves

	December 31st , 2024	December 31st , 2023
Revaluation reserves	100,507,277	100,969,137
Legal reserves	13,659,100	13,646,880
Other reserves	64,601,130	64,601,130
Total reserves	178,767,507	179,217,148

Legal reserves

According to the legal requirements, legal reserves are constituted in the amount of 5% of the profit recorded up to the level of 20% of the share capital. The value of the legal reserve as of December 31st, 2024 is RON 13,659,100 (December 31st, 2023: RON 13,646,880). Legal reserves cannot be distributed to shareholders.

Reserves from the revaluation of property, plant and equipment

These reserves comprise the cumulative net changes in the fair values of land, buildings, special constructions, and technological equipment for which their fair value is greater than the historical cost. The revaluation reserves are presented at the net value of the related deferred tax (16%)

The difference between the revaluation value and the net carrying amount of property, plant and equipment is presented in the revaluation reserve as a separate sub-item under 'Equity'.

The revaluation surplus included in the revaluation reserve is transferred to the retained earnings when this surplus represents a realized gain. The gain is considered to have been realized at the time of the decommissioning of the fixed asset as a result of its sale or scrapping. No part of the revaluation reserve may be distributed, directly or indirectly, unless the revalued asset has been revalued, in which case the revaluation surplus represents an actual realized gain.

Starting with May 1, 2009, as a result of the changes in the tax legislation, the revaluation reserves recorded after January 1, 2004 become taxable to the extent of the depreciation of the respective fixed asset. Consequently, the Company recorded a deferred tax liability related to this revaluation difference, which is debited from the amount of the revaluation surplus recorded in revaluation reserves related to those fixed assets.

Other reserves

Other reserves mainly include reserves built up for tax facilities, from accounting profits. During 2024, the Company did not benefit from tax exemption on reinvested profit, according to the provisions of the Fiscal Code (art. 22) because it paid the minimum tax related to the turnover. The value of the reserve constituted in 2023, related to the reinvested profit, is RON 5,320,851, the balance of reserves as of December 31st, 2024 being RON 64,601,130 (December 31st, 2023: RON 64,601,130).

13.Trade payables

	December 31,	December 31,
Short-term trade liabilities	2024	2023
Trade payables	71,287,916	56,604,424
Advances received	1,597,213	972,849
Total	72,885,129	57,577,273

14. Other liabilities

	December 31, 2024	December 31, 2023
State budget liabilities	5,083,385	5,688,042
Dividends payable	1,355,540	1,475,383
Other liabilities	217,271	1,314,437
Other short-term liabilities	6,656,196	8,477,862

15. Provisions

Provisions for litigation are estimated according to the likelihood that in the future it will be necessary to consume economic resources to extinguish this obligation.

	December 31st , 2024	December 31st , 2023
Provisions for litigation	439,212	492,830
Provisions	439,212
Reconciliation of provisions for litigation	December 31st , 2024	December 31st , 2023
Balance at the beginning of the period	492,830	103,222
Provisions made during the period	431,041	399,469
Provisions used during the period	(484,659)	(9,861)
Balance at the end of the period	439,212	492,830

16. Leasing liabilities

	December 31st , 2024	December 31st , 2023
Long-term leasing liabilities	22,994,191	21,977,764
Short-term leasing liabilities	8,710,139	9,320,959
Total leasing liabilities	31,704,330	31,298,723

The reconciliation of leasing liabilities and rights of use recognized as a result of the application of IFRS 16 is presented in the following tables:

Leasing liabilities	Special buildings and constructions	Equipment and other fixed assets	Total
As of January 1st, 2024	20,352,897	10,945,825	31,298,723
Transfers	(7,498,727)	7,498,727	-
Acquisitions	2,946,800	9,960,314	12,907,114
Outflows	(938,155)	(1,480,895)	(2,419,051)
Interest rate and exchange rate differences	864,237	1,162,779	2,027,016
Leasing payments	(5,244,273)	(6,865,198)	(12,109,471)
On 31st December 2024, of which:	10,482,779	21,221,551	31,704,330
Long-term leasing liabilities	7,475,903	15,518,288	22,994,191
Short-term leasing liabilities	3,006,876	5,703,263	8,710,139

Leasing liabilities	Special buildings and constructions	Equipment and other fixed assets	Total
As of January 1st, 2023	13,931,887	10,132,583	24,064,469
Acquisitions	11,858,382	5,410,227	17,268,609
Outflows	(107,904)	(50,062)	(157,966)
Interest rate and exchange rate differences	456,190	193,496	649,686
Leasing payments	(5,785,657)	(4,740,418)	(10,526,075)
As of December 31st, 2023, of which:	20,352,897	10,945,825	31,298,723
Long-term leasing liabilities	15,455,909	6,521,855	21,977,764
Short-term leasing liabilities	4,896,989	4,423,970	9,320,959

Vrancart SA Notes to the consolidated financial statements

for the financial year ended 31st December 2024 (all amounts in RON, unless otherwise stated)

Rights of use	Special buildings and constructions	Equipment and other fixed assets	Total
As of January 1st, 2023	11,843,492	10,480,461	22,323,953
Acquisitions	11,858,382	5,135,013	16,993,395
Net Outflows	(99,522)	(35,502)	(135,024)
Amortization	(5,444,095)	(3,843,197)	(9,287,292)
As of January 1st, 2024	18,158,257	11,736,775	29,895,032
Acquisitions	2,946,800	4,717,387	9,676,054
Net Outflows	(938,155)	(1,480,889)	(2,419,044)
Amortization	(4,991,414)	(5,422,948)	(10,414,362)
Net values as of December 31st, 2024	15,175,488	9,550,325	24,725,813

17. Loans

	December 31st, 2024	December 31st, 2023
Bank loans	149,778,648	131,975,836
Loans from related parties	7,028,026	8,979,750
Total long-term loans	156,806,674	140,955,586
Bank loans	122,389,469	104,267,138
Bond loans	-	38,250,000
Loans from related parties	157,474	145,310
Total short-term loans	122,546,943	142,662,448

Bank loans	December 31st, 2024	December 31st, 2023
Initial Balance	236,242,974	181,672,774
Drawdown	137,255,249	101,562,320
Refunds	(99,822,103)	(47,866,389)
Net exchange rate differences	(1,508,003)	874,760
Final balance	272,168,117	236,242,974

Loans from related parties	December 31st, 2024	December 31st, 2023
Initial Balance	9,125,060	12,849,726
Drawdown	-	-
Refunds	(2,000,000)	(3,250,000)
Interest	60,440	(474,666)
Sold final	7,185,500	9,125,060

Bonds	December 31st, 2024	December 31st, 2023
Initial Balance	38,250,000	38,164,800
Conversion option	-	85,200
Refunds	(38,250,000)	-
Sold final	-	38,250,000

The group agreed through the bank loans contracted to comply with a number of financial and nonfinancial conditions. Failure to comply with these conditions in the case of long-term loans may lead to the declaration of early maturity and other sanctions.

The interest rate for loans in RON is determined as Robor + margin, the final interest rate being in the range of 6% - 7.5%.

The interest rate for loans in EUR is determined as Euribor + margin, the final interest rate being in the range of 2% - 4.7%.

In order to guarantee the loans, the Group has provided the following security interests in favor of the banks: on the stock of raw materials, finished products and semi-finished products, on the balances of the accounts opened with banks, on the claims arising from present and future contracts and on the rights arising from the insurance policies relating to the assets brought as collateral. Also, as of December 31, 2024, tangible assets are mortgaged in favor of banks.

Loan details:

Crt. No.	Date of loan granting	Currency	Interest rate (fixed/variable)	Nature	Final maturity date	Principal outstanding as of 31.12.2024 – RON equivalent	Principal outstanding as of 31.12.2023 - RON equivalent
1	31/07/2022	EUR/RON	Variable	Overdraft	20/01/2026	2,509,124	382,330
2	09/05/2018	RON	Variable	Investment loan	20/04/2025	664,242	2,656,966
3	12/10/2023	EUR	Variable	Investment loan	12/10/2033	36,641,035	10,176,519
4	12/10/2023	RON	Variable	Investment loan	31/03/2026	2,956,798	7,238,802
5	29/11/2017	RON	Variable	Investment loan	29/11/2024	-	4,147,541
6	17/10/2023	EUR	Variable	Investment loan	30/09/2029	2,947,527	-
7	26/12/2022	EUR	Variable	Overdraft	31/12/2026	8,298,227	2,158,707
8	08/07/2022	EUR/RON	Variable	Overdraft	19/10/2025	29,015,245	2,021,021
9	20/12/2022	EUR	Variable	Investment loan	20/01/2026	15,112,190	20,980,715
10	20/12/2022	EUR	Variable	Investment loan	15/01/2026	-	4,208,800
11	28/12/2022	EUR	Variable	Investment loan	28/12/2027	4,775,136	6,367,488
12	27/12/2022	EUR	Variable	Investment loan	27/07/2024	-	742,971
13	21/12/2022	EUR	Variable	Investment loan	21/12/2027	3,286,325	4,382,208
14	21/12/2022	EUR	Variable	Investment loan	21/12/2027	7,073,170	9,431,842
15	21/12/2022	EUR	Variable	Investment loan	21/12/2027	3,879,798	5,173,584
16	22/12/2023	EUR	Variable	Investment loan	31/10/2030	5,348,152	-
17	23/08/2021	EUR	Variable	Investment loan	29/07/2026	3,782,974	6,305,591
18	23/10/2020	RON	Variable	Investment loan	23/10/2025	789,474	1,736,842
19	18/05/2022	RON	Variable	Overdraft	08/08/2025	30,711,856	16,144,165
20	20/12/2020	RON	Variable	Investment loan	20/12/2026	-	1,253,389
21	02/06/2023	EUR	Variable	Investment loan	31/12/2027	1,122,762	1,497,166
22	21/12/2021	RON	Variable	Investment loan	20/12/2024	835,593	5,785,900
23	26/09/2019	RON	Variable	Investment loan	20/09/2026	1,076,926	1,692,310
24	22/12/2023	EUR	Variable	Investment loan	30/09/2033	20,137,703	6,267,996
25	29/10/2019	EUR	Fixed	Investment loan	20/11/2024	-	489,981
26	18/08/2022	EUR/RON	Variable	Overdraft	19/10/2025	4,665,264	5,871,040
27	27/12/2021	EUR/RON	Variable	Letter of Credit	19/10/2025	3,558,230	-
28	18/12/2018	RON	Variable	Investment loan	15/12/2028	2,176,125	2,720,074
29	26/07/2022	EUR	Variable	Investment loan	26/03/2031	11,104,966	11,157,071
30	26/07/2022	EUR	Variable	Investment loan	30/04/2024	-	8,586,595

(all amounts in RON, unless otherwise stated)

Crt. No.	Date of loan granting	Currency	Interest rate (fixed/variable)	Nature	Final maturity date	Principal outstanding as of 31.12.2024 – RON equivalent	Principal outstanding as of 31.12.2023 - RON equivalent
31	27/12/2021	RON	Variable	Investment loan	27/12/2025	1,000,764	2,001,528
32	14/02/2019	RON	Variable	Investment loan	16/02/2024	-	162,681
33	06/11/2019	RON	Variable	Investment loan	05/11/2029	2,472,549	2,975,564
34	19/08/2022	EUR	Variable	Overdraft	19/08/2023	-	363,175
35	21/12/2022	EUR	Variable	Overdraft	21/12/2023	2,482,451	574,706
36	28/05/2021	EUR	Variable	Investment loan	30/06/2025	-	23,144,515
37	28/05/2021	EUR	Variable	Investment loan	31/12/2031	63,743,511	57,443,191
	Total					272,168,117	236,242,975

In their overwhelming majority, the financial indicators agreed with the financing institutions fall within the agreed contractual limits or are very close to these limits. Where applicable, waivers and/or letters of support and maintenance of existing facilities are issued, so that the Company/Group continues to benefit from the full financial support of its banking partners.

Bonds

In the first part of 2017, the parent company issued a number of 382,500 bonds at a nominal value of RON 100/bond. The bond issue was fully subscribed, the Company receiving RON 38,250,000 from the bondholders.

The bonds were issued in two stages:

• in the first stage, to the shareholders of the Parent Company, in proportion to their share ownership in relation to the total number of shares;
• in the second stage, only those not subscribed in the first stage, to qualified investors.

The interest rate was ROBOR at 3 months, to which was added a margin of 2% p.a., the interest payment being made quarterly. The bonds were due on March 17th, 2024. The bonds could be repaid early by the parent company at any time after 2 years from the date of their issue. The bonds could be converted into shares by bondholders in each of the years 2019-2023 at a price equal to the average share price of the last 12 months prior to the date on which the conversion price was set. The repayment could only be initiated if a minimum of 10% of the bonds issued were requested to be converted into shares.

As of December 31, 2023, Lion Capital SA held 96.4% of the bonds.

The redemption and conversion options are recognized as a single compound derivative financial instrument. This financial instrument is measured separately from the bonds in accordance with IFRS 9, as none of the options are closely related to the bond contract.

February 15th, 2024 was the sixth deadline for exercising the right to convert bonds into shares. As the parent company did not receive notifications regarding the exercise of the conversion right, which cumulatively exceeded the threshold of 10% of the total issued bonds, the conversion of the securities did not take place.

On March 17th, 2024 the full repayment of the bonds took place, as well as the interest related to the last payment coupon, currently the Company paying in full the obligations stipulated in the Bond Issuance Prospectus.

18.Debts to employees

	December 31st , 2024	December 31st , 2023
Payroll liabilities	2,807,367	3,156,129
Other payables to employees	3,121,019	3,916,728
Retirement benefits (long term)	920,509	444,379
Total debts to employees	6,848,895	7,517,236

19. Deferred tax debts or receivables

The deferred income tax is mainly generated by the revaluation of fixed assets that is not recognized for tax purposes, impairment adjustments for inventories, customers and provisions for employee benefits.

Temporary differences

December 31st, 2024	Liabilities	Assets	Net
Tangible assets	90,240,667	-	90,240,667
Assets held for sale	1,765,655	-	1,765,655
Impairment of inventories	-	3,651,023	(3,651,023)
Impairment of receivables	-	4,380,319	(4,380,319)
Other receivables	-		-
Other liabilities	-	3,545,803	(3,545,803)
	92,006,322	11,577,145	80,429,177
Net temporary differences - 16% rate	80,429,177
Deferred corporate income tax liabilities	12,868,668

December 31st, 2023	Liabilities	Assets	Net
Tangible fixed assets	97,610,917	-	97,610,917
Assets held for sale	1,765,655	-	1,765,655
Stock Provision	-	2,940,809	(2,940,809)
Impairment of receivables	-	5,383,070	(5,383,070)
Other claims	-	300,000	(300,000)
Other debts	-	3,909,876	(3,909,876)
	99,376,572	12,533,755	86,842,818
Net temporary differences - 16% rate			86,842,818
Deferred corporate income tax liabilities			13,894,851

Vrancart SA Notes to the consolidated financial statements

for the financial year ended 31st December 2024 (all amounts in RON, unless otherwise stated)

	December 31st , 2024	Credit/ (Expense)	December 31st , 2023
Tax deferred from payment
Tangible fixed assets	(14,438,507)	1,179,240	(15,617,747)
Assets held for sale	(282,505)	-	(282,505)
Tax deferred to be recovered
Stock Provision	584,164	113,635	470,529
Impairment of receivables	700,851	(160,440)	861,291
Other claims	-	(48,000)	48,000
Other debts	567,329	(58,251)	625,580
	(12,868,668)	1,026,184	(13,894,852)

20. Advance income

Advance income classified as short-term liabilities is the portion of government subsidies received that will be recognized as income in the next financial year. Advance income classified as longterm debts is the portion of government subsidies received that will be recognized in periods of more than 1 year.

The table below shows the received investment subsidies remaining in the final balance:

	December 31st , 2024	December 31st , 2023
Ministry of Economy Park 20MW	25,872,863	-
Ministry of Economy and Research II	2,175,869	2,897,518
Environment Fund Administration	2,093,733	2,254,785
Innovation Norway Parc 1MW	2,198,305	2,329,548
Innovation Norway 1	170,933	231,069
Innovation Norway 2	2,051,908	2,332,926
European Bank for Reconstruction and Development	4,119	5,415
National Agency for SMEs	63,044	71,794
Non-reimbursable loans - MINIMIS 2160	175,516	200,001
Non-reimbursable loans - 5IMM/213/6/2015	281,197	321,368
Recycling project with state aid	39,860,320	2,939,860
FMC Promo Equipment	3,385	-
Innovation Norway 3	8,585,683	914,622
Total	83,536,875	14,498,907

The 20MW Photovoltaic Park Construction Project benefited from a grant funded through the NRRP (National Recovery and Resilience Plan) in the amount of RON 28,953,720. The purpose of the grant was to "support investments in new electricity generation capacities from renewable energy sources wind and solar with or without integrated storage facilities," approved by Order of the Minister of Energy no. 282/30.03.2022, as subsequently amended and supplemented, and in accordance with the provisions of the State Aid Scheme aimed at supporting investments in the installation of new electricity generation capacities from renewable energy sources wind and solar with or without integrated storage facilities, approved by Order of the Minister of Energy no. 281/30.03.2022. The project was completed on November 30th, 2024, and is currently in the monitoring period. The Group received an amount of RON 25,993,292 in December 2024, with the final installment collected in February 2025 (see Note 32).

The subsidy received from the Ministry of Economy and Research aims to finance the modernization and development of the technological line for paper manufacturing, the eligible nonreimbursable value being in the initial amount of 18,500,000 lei. The parent company completed the monitoring phase of the project in June 2018.

The financing contract included a number of indicators that had to be met by the end of the monitoring period. All indicators have been achieved.

The subsidy received from the Environmental Fund Administration consists of equipment for the Technological waste combustion boiler and had an initial value of 4,509,517 lei. The monitoring period of this project ended in 2013.

The subsidy received from the EBRD is for energy efficiency and was worth 477,767 lei. The Norway 1 subsidy relates to the expansion of collection centers, and the Norway 2 subsidy to the increase of converting capacity into corrugated cardboard. The parent company requested and received for the Norway project 2 reimbursements in the amount of RON 3,111,923 as of December 31st, 2016, representing 70% of the total grant. For both projects with Norwegian funds, the parent company was in the monitoring period until 2020 and 2021, respectively.

The 5IMM/213/6/2015 subsidy represents European funds allocated in 2015 through the Centre Regional Development Agency, for the purchase of equipment by Rom Paper SRL, with a total value of 6,324,932 lei, of which 3,794,959 lei represents the value of the subsidy received. The financing contract includes a series of indicators that have been met at the end of the 5-year monitoring period.

The recycling project through state aid named "Greenfield investment for the establishment of a recycling and waste recovery unit in Adjud, Vrancea County" benefited from a state aid in the amount of 40,438,999 lei based on G.D. 807/2014. The project was completed in December 2024 when the last tranche of 37,340,363 was received and is in the monitoring period.

The project "Highly innovative solution for reducing paper waste and creating a positive environmental impact" is a non-reimbursable financing scheme granted by Innovation Norway (3) for the acquisition of new production lines. The financed value is EUR 1,852,000, representing 40% of the value of the project. In 2022, an advance of EUR 185,000 was collected, the difference of EUR 1,667,000 being collected in February 2024. The project has already passed the first phase of monitoring.

The management considers that it will not encounter difficulties in fulfilling all the conditions attached to the subsidy contracts until the end of the subsidy monitoring period.

21.Revenue from customer agreements

	2024	2023
Income from the sale of finished products	410,742,978	418,383,109
Income from the sale of goods	63,922,466	73,012,205
Income from services rendered	23,198,568	22,456,620
Income from miscellaneous activities	1,907,462	391,281
Commercial discounts granted	(12,976,136)	(13,944,179)
Total	486,795,338	500,299,036

The Group's revenues include revenues from customer contracts, mainly sales of goods, related to the production of the following types of goods:

• Paper for cardboard
• Corrugated cardboard and packaging
• Hygienic-sanitary papers

The Group's customers are generally Romanian companies, with exports accounting for approximately 15% of total sales. No customer is significant in terms of share in the Group's total sales.

The commercial discounts granted represent both amounts granted to customers as a discount for the volume of goods purchased, and amounts invoiced by customers that are calculated as a percentage of the value volume of sales.

VRANCART VRANCART ECOREP Rom Paper Adjustments Consolidated S.A. Recycling Group S.A. S.R.L. Group Total fixed assets 530,664,428 162,443,652 13,044 52,914,305 (86,470,829) 659,564,600 Total current assets 185,575,989 2,030,103 2,285,208 31,790,593 (14,745,113) 206,936,780 TOTAL ASSETS 716,240,417 164,473,755 2,298,252 84,704,898 (101,215,941) 866,501,380 EQUITY 384,135,226 22,326,965 (1,007,910) 22,530,704 (56,667,138) 371,317,847 Total debts per Long term 151,108,451 136,394,915 - 29,079,600 (44,548,803) 271,841,453 Total current liabilities 180,996,740 5,751,875 3,306,162 33,094,593 192.710 223,342,080 TOTAL EQUITY AND LIABILITIES 716,240,417 164,473,755 2,298,252 84,704,898 (101,215,941) 866,501,380

22.Presentation of indicators by segments:

Vrancart SA Notes to the consolidated financial statements for the financial year ended 31st December 2024

(all amounts in RON, unless otherwise stated)

	VRANCART	VRANCART	ECOREP	Rom Paper	Adjustments	Consolidated
	S.A.	Recycling	Group S.A.	S.R.L.		group
Income	408,826,403	7,377,600	10,588,059	116,031,488	(43,294,133)	499,529,417
Change in stocks	(960,268)	550,831	-	684,788	-	275,351
Cost of goods and raw materials	(226,391,598)	(2,690,371)	(11,700)	(88,847,147)	36,814,239	(281,126,577)
Marja Bruta	181,474,537	5,238,061	10,576,359	27,869,129	(6,479,894)	218,678,191
Operating expenses	(141,327,195)	(9,337,481)	(10,263,445)	(19,515,430)	6,845,397	(175,598,154)
EBITDA	38,147,342	(4,099,420)	312,914	8,353,699	365,502	43,080,037
Depreciation and amortization expenses of fixed assets	(42,064,249)	(1,361,018)	(53,673)	(3,535,692)	(1,474,199)	(48,488,831)
EBIT	143,113	(5,460,438)	259,241	4,818,006	(1,108,696)	(5,408,794)
Financial Result	(3,916,907)	(1,041,163)	(14,849)	(1,557,727)	(2,602,265)	(10,777,374)
EBT	(5,561,371)	(6,501,600)	244,392	3,260,279	(3,710,961)	(16,186,169)
Corporate income tax expense	(1,958,097)	-	-	(407,157)	282,141	(2,083,103)
Profit for the year	(11,436,365)	(6,501,600)	244,392	2,853,122	(3,428,820)	(18,269,272)

23.Other income

	2024	2023
Income from investment subsidies	2,594,686	1,425,485
Revenue from sales trading CO2 certificates	1,088,771	6,146,158
Royalty income, management locations and rents	-	630,896
Income from compensation, fines and penalties	1,699,785	337,339
Net gain from the sale of property, plant and
equipment	484,593	520,492
Other operating income	6,457,288	1,188,311
Total	12,325,123	10,248,681

24. Raw materials and consumables expenses

	2024	2023
Raw materials expenses	124,961,479	91,726,058
Consumables and ancillary materials expenses	39,906,522	44,798,847
Fuel expenses	7,736,766	8,430,949
Utilities expenses	56,905,238	73,930,010
Spare parts expenses	6,547,131	6,592,286
Total	236,057,136	225,478,150

During 2023, the expense related to the gas consumption of the Parent Company was included in fuel expenses, starting with 2024 this expense was recorded as expenses related to utilities. For comparability, the amount of RON 33,994,005 for 2023 was reclassified in the table above from fuel expenses to utility expenses.

25. Third-party expenses

	2024	2023
Maintenance and repair expenses	3,635,910	5,142,822
Transportation of goods expenses	27,915,713	24,488,769
Other third-party expenses	15,978,135	17,930,212
Total	47,529,758	47,561,803

26. Other expenses

	2024	2023
Commissions and fees expenses	560,210	1,352,600
Expenses for rentals and royalties	814,281	1,985,994
Expenses with banking and similar services	566,797	969,836
Insurance premium expenses	2,522,975	2,356,773
Expenses for other taxes, duties and similar
payments	3,498,919	3,363,075
Donations granted	397,914	353,431
Business travel, secondment and transfers expenses	477,985	733,501
Postage and telecommunications fees	535,264	476,638
Entertainment, advertising and publicity expenses	555,481	546,632
Compensation, fines and penalties expenses	83,363	78,803
Impairment of inventory	710,214	602,155
Impairment of receivables	(986,824)	2,017,321
Other operating expenses	4,203,085	3,398,114
Total	13,939,664	18,234,873

The total expenses related to commissions and fees also include financial audit services. The company's auditor is PricewaterhouseCoopers Audit SRL. The fees for the audit of the individual and consolidated financial statements of Vrancart SA as of December 31st, 2024, prepared in accordance with MFP Order 2844/2016 and for the audit of the statutory financial statements of Rom Paper SRL, Vrancart Recycling SRL and Ecorep Group SA as of December 31st, 2024, prepared in accordance with OMFP 1802/2014, are in the amount of 58,610 Euro (excluding VAT).

The fees for other insurance services paid to the auditors amounted to 4,000 Euro (excluding VAT), representing the fees paid to the audit firm for the procedures performed by it regarding the semiannual report on transactions with related parties, prepared in accordance with Law 24/2017. In addition, non-audit services worth 9,400 Euros were contracted and paid to the auditors for Agreed Procedures regarding the Project financed by the National Recovery and Resilience Plan (PNRR) – Component 6 – "Construction of Photovoltaic Park, Power Plant, Post Transformation, Access Road, Security and Utilities".

27. Personnel expenses

	2024	2023
Salary expenses	103,118,127	109,054,501
Insurance and social protection expenses	2,467,591	2,459,626
Meal vouchers granted	8,543,014	9,202,194
Total	114,128,732	120,716,321

In 2024, the average number of employees in the Group was 1,246 (2023: 1,433).

28. Financial income and expenses

	2024	2023
Interest income	1,717	1,192,659
Income from exchange rate differences	-	198,578
Other financial income	6,126	139,441
Total income	7,843	1,530,678
Interest expense on loans	9,090,516	12,166,582
Leasing interest expenses	781,513	649,686
Expenses from exchange rate differences	854,147	939,981
Other financial expenses	59,041	9,021
Total expenses	10,785,217	13,765,270

29. Corporate income tax expense

	2024	2023
Current income tax expenses	3,270,588	1,475,550
Deferred corporate income tax expenses/(revenues)	(1,187,485)	(319,771)
Total	2,083,103	1,155,779
	2024	2023
Loss / Profit before tax	(16,186,168)	6,578,164
Tax according to the statutory tax rate of 16% (2023: 16%)	(2,589,787)	1,052,506
The effect on corporate income tax of:
Legal reserve	(1,955)	(49,308)
Non-deductible expenses	72,848	6,287,602
Fiscal depreciation	(65,616)	(4,614,221)
Revenue-like items	7,144,171	-
Exemptions for sponsorships	(341,869)	(219,604)
Recording of temporary differences	(1,187,485)	(177,481)
Reinvested profit – tax credit	(947,204)	(1,123,715)
Corporate income tax total	2,083,103	1,155,779

30. Earnings per share

The calculation of the basic earnings per share was made based on the profit attributable to ordinary shareholders and the weighted average number of ordinary shares:

	2024	2023
Profit attributable to ordinary shareholders	(18,270,004)	5,423,028
Weighted average number of ordinary shares	1,799,819,966	1,349,066,594
Basic earnings per share	(0.0102)	0.0040

The diluted earnings per share is calculated in the event that the bonds would be fully converted, as follows:

	2024	2023
Profit attributable to ordinary shareholders	(18,270,004)	5,423,028
Adjustment on interest on bonds and tax effect	-	2,841,280
Profit attributable to ordinary shareholders – adjusted	(18,270,004)	8,264,308
Weighted average number of ordinary shares	1,799,819,966	1,349,066,594
Potential shares from bond conversion	-	228,358,209
Weighted average number of ordinary shares
adjusted	1,799,819,966	1,577,424,803
Diluted earnings per share	(0.0102)	0.0052

31. Related parties

Related parties are considered to be the persons who are part of the Board of Directors and the Board of Directors, as well as Lion Capital SA, which is the majority shareholder, together with the other companies controlled by it.

List of persons who were part of the Board of Directors of the parent company as of December 31st , 2024:

Fedor Nicu-Ciprian	General Manager and Chairman of the Board of Directors
Drăgoi Bogdan Alexandru	Member of the Board of Directors
Mihailov Sergiu	Member of the Board of Directors
Fercu Adrian	Member of the Board of Directors
El Lakis Rachid	Member of the Board of Directors

The company's share holdings related to key management personnel are shown below:

As of December 31, 2024: not the case
As of December 31, 2023: not the case

List of people who were part of the Management of the Rom Paper branch on December 31st, 2024:

Fedor Nicu-Ciprian	Administrator
Mihailov Sergiu	Administrator
Minea Alexandru-Lucian	Administrator

List of people who were part of the Management of the Vrancart Recycling branch on December 31st, 2024:

Fedor Nicu-Ciprian	Administrator
Mihailov Sergiu	Administrator
Fercu Adrian	Administrator

List of persons who were part of the Board of Directors of the Ecorep Group SA subsidiary as of December 31st, 2024:

Constantin Cristea	Chairman of the Board of Directors
Claudia Nicola	Member of the Board of Directors
Dumitrache Mariana	Member of the Board of Directors

Related Party Transactions:

Related Party		Transactions * 2024	Transactions * 2023	Balance 2024	Balance 2023
Biofarm S.A.	Client	483,479	290,777	119,379	46,259
Biofarm S.A.	Provider	1,409	1,121	770	-
SIF1 IMGB SA	Loan	481,837	1,021,976	7,137,224	9,125,060
LION Capital SA	Provider	-	36	-	-
Ci-Co SA	Provider	-	9,351	-	754
Sifi Cj Logistic SA	Provider	127,687	137,688	13,834	5,761
Semtest Craiova	Provider
S.A.		69,547	177,431	-	17,689
ARIO Bistrița	Debtor	-	-	-	300,000
Dedeman SRL	Provider	2,131,751	-	153,432	-
Dedeman SRL	Client	8,594,430	-	1,820,523	-

*Note: Values do not include VAT.

Other operations:

Related Party		Transactions 2024	Transactions 2023	Balance 2024	Balance 2023
SIF Banat Crișana SA	Payment of dividends distributed during the year	-	9,086,125	-	-
Rom Paper	Receipt of dividends distributed during the year	2,500,000
ARIO Bistrița	Debtor	-	-	-	300,000

Transactions with key management personnel:

	2024	2023
Remuneration of the members of the Board of	3,671,497	4,148,718
Directors

The amounts mentioned include the total remuneration (fixed and variable), in gross amount.

32. Events after the balance sheet date

Conclusion of the contracts for the recovery of the assets held for sale in Ungheni and Piatra Neamț:

• On January 23rd, 2025, a preliminary sale-purchase contract was signed for the location in Piatra Neamț, for which an advance of EUR 1 million was received during February 2025.

• On February 6th, 2025, the sale-purchase contract for the property in Ungheni was signed, the value being fully collected in February.

On February 18th, 2025 the last installment of 10% of the subsidy from European PNRR funds related to the 20MWh Photovoltaic Park project, worth 2.9 million lei, was collected. On the same date, the balance of the support loan contracted from BRD for the financing of the 20MWh Photovoltaic Park project value of RON 2,956,798 was fully reimbursed.

33. Financial risk management

Overview

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

• − credit risk
• − liquidity risk
• − Market risk
• − currency risk

These notes set out information on the Group's exposure to each of the risks mentioned above, the Group's objectives, policies and processes for risk assessment and management, and the procedures used for capital management. Other quantitative information is also included in these financial statements.

The Group's risk management policies are defined in such a way as to ensure the identification and analysis of the risks faced by the Group, the establishment of appropriate limits and controls, as well as the monitoring of risks and compliance with established limits. Risk management policies and systems are regularly reviewed to reflect changes in market conditions and the Group's activities. The Group, through its training and management standards and procedures, aims to develop an orderly and constructive control environment, within which all employees understand their roles and obligations.

(a) Credit risk

Credit risk is the risk that the Group will incur a financial loss as a result of a customer's default on contractual obligations and this risk results mainly from the Group's trade receivables.

The carrying amount of financial assets represents the maximum exposure to credit risk. The maximum exposure to credit risk was:

Book value	December 31st , 2024	December 31st , 2023
Trade receivables and other receivables	98,697,311	84,935,339
Cash and cash equivalents	1,845,212	2,823,519
Restricted Cash	-	-
Total	100,542,523	87,758,858

The Group's exposure to credit risk is mainly influenced by the individual characteristics of each client.

Management has established a credit policy whereby each new customer is individually reviewed for creditworthiness before being offered the Group's standard payment and delivery terms. Purchase limits are set for each customer. Customers who do not meet the conditions set by the Group can only transact with it with advance payment.

The Group does not require collateral for trade receivables and other receivables.

In the process of estimating impairment adjustments to receivables, the Group uses an impairment model whose operating principle is unchanged from previous years, as this model reflects the requirements of the impairment model introduced by IFRS 9.

The Group establishes an impairment adjustment that represents its estimates of losses on trade receivables, other receivables and investments. The main components of this adjustment are a specific loss component related to significant individual exposures and a collective loss component constituted for groups of similar assets corresponding to losses that have been incurred but have not yet been identified. The collective loss adjustment is determined on the basis of historical data on payments made for similar financial instruments.

Impairment losses

Analysis of the number of days of delay for trade receivables and other receivables:

December 31, 2024	Gross value	Depreciation
Current and outstanding receivables aged 0 to 30
days	88,797,625	-
Outstanding receivables aged 31 to 60 days	4,081,935	75,959
Outstanding receivables aged 61 to 90 days	1,948,737	49,368
Outstanding receivables aged 91 to 180 days	2,616,038	273,127
Outstanding receivables aged 181 to 360 days	267,034	130,970
Outstanding receivables aged more than 360 days	5,382,187	3,866,821
Total	103,093,556	4,396,245

December 31, 2023	Gross value	Depreciation
Current and outstanding receivables aged 0 to 30
days	60,679,305	306,084
Outstanding receivables aged 31 to 60 days	4,188,470	28,584
Outstanding receivables aged 61 to 90 days	793,844	12,719
Outstanding receivables aged 91 to 180 days	2,104,440	757,169
Outstanding receivables aged 181 to 360 days	836,593	688,810
Outstanding receivables aged more than 360 days	21,715,758	3,889,704
Total	90,318,410	5,383,070

(b) Liquidity risk

Liquidity risk is the Group's risk of encountering difficulties in meeting the obligations associated with financial liabilities that are settled in cash or through the transfer of another financial asset.

The Group's approach to liquidity management is to ensure, as far as possible, that it will always have sufficient liquidity to meet its outstanding obligations, both under normal and stressful conditions, without incurring unacceptable losses or jeopardizing the Group's reputation.

In general, the Group ensures that it has sufficient cash to cover operating expenses.

The following table shows the residual contractual maturities of financial liabilities at the end of the reporting period, including estimated interest payments:

December 31st, 2024	Book value	Contractual cash flows	less than 1 year	1 - 5 years	over 5 years
Loans	279,353,617	293,321,298	131,460,821	113,053,155	48,807,321
Bonds	-	-	-	-	-
Financial leasing	31,704,330	31,704,330	8,710,139	22,994,192	-
Trade and other payables	87,720,043	87,720,043	86,360,322	1,359,721	-
Total	398,777,990	412,745,671	226,531,282	137,407,068	48,807,321

		Contractual	less than 1
December 31st, 2023	Book value	cash flows	year	1 - 5 years	over 5 years
Loans	245,368,034	263,365,537	103,377,103	145,152,965	14,835,470
Bonds	38,250,000	38,250,000	38,250,000	-	-
Financial leasing	31,298,723	31,298,723	9,320,959	21,977,764	-
Trade and other payables	74,158,402	74,158,402	73,221,193	937,209	-
Total	389,074,954	407,072,457	224,169,050	168,067,937	14,835,470

Financial liabilities also include the bond loans described in Note 17.

(c) Market risk

Market risk is the risk that changes in market prices, such as the exchange rate, interest rate and price of equity instruments, will affect the Group's income or the value of the financial instruments held. The objective of market risk management is to manage and control market risk exposures within acceptable parameters and at the same time to optimize the return on investment.

Interest rate risk

(i) Risk exposure profile

At the reporting date, the interest rate risk exposure profile of interest-bearing financial instruments held by the Group was:

	December 31st ,	December 31st ,
Variable Rate Tools	2024	2023
Bank loans	272,168,117	236,242,974
Other loans	7,185,500	9,125,060
Bond loans	-	38,250,000
Payables related to leasing contracts	31,704,330	31,298,723
Total	311,057,947	314,916,757

(ii) Cash flow sensitivity analysis for floating interest rate instruments

An increase in interest rates by 1% at the reporting date would have led to a decrease in profit or loss by RON 3,110,579 (RON 3,149,168 as of 31.12.2023). This analysis assumes that all other variables, particularly exchange rates, remain constant.

A depreciation of interest rates by 100 basis points on December 31 would have led to the same effect, but in the opposite direction, on the amounts presented above, considering that all other variables remain constant.

Fair value

Fair value is the price that would have been received as a result of the sale of an asset or the price that would be paid to transfer a liability through a normal transaction between market participants at the valuation date. Financial instruments that are not accounted for at fair value in the statement of financial position include trade receivables and other receivables, cash and cash equivalents, loans, trade payables and other liabilities. The carrying amounts of the above-mentioned financial instruments approximate their fair values.

(d) Currency risk

The Group is exposed to currency risk due to sales, purchases and other loans that are denominated in a currency other than the functional one, primarily euros, but also US dollars.

The Group's exposure to currency risk is presented in the following tables:

December 31st, 2024	TOTAL	RON	EUR	USD	Other currencies
Trade receivables and other receivables	98,697,311	81,780,292	16,917,019	-	-
Restricted Cash	-	-	-	-	-
Cash and cash equivalents	1,845,212	1,488,192	347,486	3,753	5,781
Financial assets	100,542,523	83,268,484	17,264,505	3,753	5,781
Loans	279,353,617	64,721,090	214,632,527	-	-
Leasing liabilities	31,704,330	1,645,730	30,058,600	-	-
Trade and other payables	87,720,043	62,076,806	25,296,971	346,266	-
Financial liabilities	398,777,990	128,443,626	269,988,098	346,266	-
Total net financial assets/(liabilities)	(298,235,467)	(45,175,142)	(252,723,593)	(342,513)	5,781
December 31st, 2023	TOTAL	RON	EUR	USD	Other currencies
Trade receivables and other receivables	74,408,633	67,348,104	7,029,958	30,571	-
Restricted Cash	-	-	-	-	-
Cash and cash equivalents	2,823,519	2,490,063	326,990	682	5,784
Financial Assets	77,232,152	69,838,167	7,356,948	31,254	5,784
Loans	245,368,034	43,883,066	201,484,968	-	-
Leasing debts	32,298,723	664,797	30,633,926	-	-
Trade and other payables	74,158,402	50,265,995	23,481,143	411,264	-
Financial debts	350,824,955	94,813,653	255,600,037	411,264	-

Sensitivity analysis

An appreciation of 10 percentage points of the EUR currency on December 31 compared to the currencies presented would have led to an increase (decrease) in profit or loss as follows: December 31st, 2024: -25,272,359 lei (December 31, 2023: -24,861,731 lei). This analysis assumes that all other variables, particularly interest rates, remain constant.

A depreciation of EUR by 10 percentage points on 31 December 2024 compared to the other currencies would have led to the same effect, but in the opposite direction, on the amounts presented above, considering that all other variables remain constant.

(e) Taxation risk

The tax system in Romania is being consolidated and constantly changing, and there may be different interpretations of the authorities in relation to the tax legislation, which can give rise to additional taxes, fees and penalties. If the state authorities discover violations of the legal provisions in Romania, they may determine, as the case may be: the confiscation of the amounts in question, the imposition of additional tax obligations, the application of fines, the application of late payment increases (applied to the actual remaining payment amounts). Therefore, the tax penalties resulting from violations of the legal provisions can reach significant amounts to be paid to the State.

The Romanian Government has a significant number of agencies authorized to carry out the control of companies operating on the territory of Romania. These controls are similar to tax audits in other countries and can cover not only tax issues, but also other legal and regulatory issues that are of interest to these agencies. The Group may be subject to tax audits as new tax regulations are issued.

The amounts declared to the State for taxes remain open to tax audits for five years. The Romanian tax authorities carried out controls regarding the calculation of taxes and duties until December 31st, 2020 in the case of the Parent Company and until September 30th, 2020 in the case of the Rom Paper SRL Subsidiary.

All amounts due to the State for taxes have been paid or recorded at the balance sheet date. The Group considers that it has paid on time and in full all its fees, taxes, penalties and penalty interest, to the extent applicable.

By Law no. 431/2023, the provisions of Directive (EU) 2022/2523 (hereinafter referred to as "Pillar 2") are transposed, introducing a complex system of rules in Romania for the effective minimum taxation of 15% for multinational enterprise groups and large national groups with consolidated annual revenues of at least €750 million, in at least two of the four preceding financial years. The group is not subject to the Pillar 2 rules in 2024 as the minimum revenue thresholds were not met in two years of the applicable reference period.

Through Law no. 207/2015 on the Fiscal Procedure Code, in the context of compliance with European and international directives and regulations, the Country-by-Country Reporting (hereinafter referred to as "CbCR") is adopted. The group is not subject to the CbCR rules in 2024 as the minimum revenue thresholds were not met in two years of the applicable reference period.

(f) Transfer pricing

In accordance with the relevant tax law, the tax valuation of a transaction with related parties is based on the concept of the market price of that transaction. On the basis of this concept, transfer pricing must be adjusted to reflect market prices that would have been set between entities between which there is no affiliate relationship and acting independently, on the basis of "normal market conditions".

Transfer pricing checks are likely to be carried out in the future by the tax authorities in order to determine whether those prices comply with the principle of 'normal market conditions' and that the tax base of the Romanian taxpayer is not distorted.

(g) Business environment

Management cannot predict all events that would have an impact on the financial sector in Romania and, consequently, what effects they would have on these financial statements, if any. Management cannot credibly estimate the effects on the Group's financial statements of any future decline in financial market liquidity, devaluation of financial assets affected by weak credit market liquidity and increased volatility of currency and equity markets.

The management believes that it is taking all necessary measures to support the sustainability and growth of the Group's business, under current conditions, by:

• − constant monitoring of liquidity;
• − making short-term forecasts on net liquidity;
• − monitoring cash inflows and outflows (daily), assessing the effects on borrowers, limited access to finance and business growth in Romania.

(h) Capital adequacy

The Group's policy is to maintain a solid capital base necessary to maintain the confidence of investors, lenders and the market and to support the future development of the entity.

The Group's capital management objectives consist of:

• Ensuring that business continuity is maintained, i.e. to continue to produce value for shareholders and benefits for other stakeholders
• Maintaining an optimal capital structure in order to reduce the cost of capital

For the purpose of maintaining or adjusting the capital structure, the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce the level of indebtedness.

In line with financial practices, the Group monitors capital based on the following indicators:

• Equity Total
• Total Assets
• Equity ratio calculated as the ratio between total equity and total assets

During 2024, the equity ratio was 43%, compared to 46% in 2023. An appropriate level of capitalization is considered to be above 30%.

The Group's equity includes share capital, various types of reserves and retained earnings. The Group is not subject to significant externally imposed capital requirements. There are certain requirements agreed with some of the financing banks in terms of the capitalization ratio (Equity ratio), which as of 31.12.2024 was 43% (the contractual requirement being min. 45%).

Independent Auditor's Report

To the Shareholders of Vrancart SA

Report on the audit of the consolidated financial statements

Our Opinion

In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial position of Vrancart SA (the "Company") and its subsidiaries (together – the "Group") as at 31 December 2024, and the Group's consolidated financial performance and consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards as adopted by the European Union and the Order of the Minister of Public Finance no. 2844/2016 for the approval of the accounting regulations compliant with International Financial Reporting Standards and subsequent amendments (the "OMPF 2844/2016").

Our opinion is consistent with our additional report to the Audit Committee issued on 28 March 2025.

What we have audited

The Group's consolidated financial statements comprise:

• the consolidated statement of financial position as at 31 December 2024;
• the consolidated statement of comprehensive income for the year then ended;
• the consolidated statement of changes in equity for the year then ended;
• the consolidated statement of cash flows for the year then ended; and
• the notes to the consolidated financial statements, comprising material accounting policy information and other explanatory information.

The consolidated financial statements as at 31 December 2024 are identified as follows:

• Total consolidated equity:	lei 371,317,847;
---------------------------------	------------------

• Result for the year (consolidated loss): lei (18,269,271)

The Company's registered office is in Romania, Vrancea county, Adjud, 17 Ecaterina Teodoroiu Street, and the Company's unique fiscal registration code is 1454846.

Basis for opinion

We conducted our audit in accordance with International Standards on Auditing (ISAs), Regulation EU No 537/2014 of the European Parliament and of the Council of 16 April 2014 on specific requirements regarding statutory audit of public-interest entities and repealing Commission Decision 2005/909/EC (the "Regulation 537/2014") and Law 162/2017 regarding statutory audit of annual financial statements and annual consolidated financial statements and regarding changes to other regulations and subsequent amendments (the "Law 162/2017"). Our responsibilities under those standards are further described in the Auditor's responsibilities for the audit of the consolidated financial statements section of our report.

PricewaterhouseCoopers Audit S.R.L. Ana Tower, 24/3 floor, 1A Poligrafiei Blvd, District 1, 013704 Bucharest, Romania EUID ROONRC.J40/17223/1993, fiscal registration code RO4282940, share capital RON 7,630 T: +40 21 225 3000, www.pwc.ro

This version of our report is a translation from the original, which was prepared in Romanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.

Independence

We are independent of the Group in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants (IESBA Code) and the ethical requirements of the Regulation 537/2014 and the Law 162/2017 that are relevant to our audit of the consolidated financial statements in Romania. We have fulfilled our other ethical responsibilities in accordance with the IESBA Code and the ethical requirements of the Regulation 537/2014 and the Law 162/2017.

To the best of our knowledge and belief, we declare that non-audit services that we have provided to the Group are in accordance with the applicable law and regulations in Romania and that we have not provided non-audit services that are prohibited under Article 5(1) of the Regulation (EU) 537/2014.

The non-audit services that we have provided to the Group, in the period from 1 January 2024 to the date of issuing this report, are disclosed in Note 26 to the consolidated financial statements.

Our audit approach

Overview

As part of designing our audit, we determined overall materiality and assessed the risks of material misstatement in the consolidated financial statements. In particular, we considered where management made subjective judgements; for example, in respect of significant accounting estimates that involved making assumptions and considering future events that are inherently uncertain. As in all of our audits, we also addressed the risk of management override of internal controls, including among other matters, consideration of whether there was evidence of bias that represented a risk of material misstatement due to fraud.

Materiality

The scope of our audit was influenced by our application of materiality. An audit is designed to obtain reasonable assurance whether the consolidated financial statements are free from material misstatement. Misstatements may arise due to fraud or error. They are considered material if individually or in aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of the consolidated financial statements.

Based on our professional judgement, we determined certain quantitative thresholds for materiality, including the overall Group materiality for the consolidated financial statements as a whole as set out in the table below. These, together with qualitative considerations, helped us to determine the scope of our audit and the nature, timing and extent of our audit procedures and to evaluate the effect of misstatements, both individually and in aggregate on the consolidated financial statements as a whole.

Overall Group materiality	lei 3,830,000
How we determined it	0.8% of Consolidated Revenue from contracts with customers
Rationale for the materiality benchmark applied	We chose Revenue from contracts with customers as the benchmark because, in our view, it is the most representative benchmark for the Group, due to the plans to increase of market share, through investments to capacities and transformation of the business already started few years ago. We chose significance at the level of 0.8% because based on our professional judgment it is within the acceptable quantitative thresholds of materiality.

Key audit matter

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

Key audit matter	How our audit addressed the key audit matter
Recognition of revenue from contracts with

customers

In 2024 the Group recognized revenue from contracts with customers in the amount of RON 486,795,338 for which the accounting policies was described in notes 3n and the details were included in note 21 of the consolidated financial statements.

The Group generates revenue mainly from sales of finished goods and merchandise in the form of paperboards, corrugated cardboard and packaging, sanitary products and tissue paper.

Revenue is recognized when the control over goods is transferred to the buyer. Revenue is recognized at an amount equal to the transaction price (including the related discounts granted) resulting from the agreements signed with customers representing the consideration for the performance obligation performed.

Bearing in mind the importance of revenues item in the consolidated financial statements of the

Our audit procedures included in particular:

• assessing compliance of the Group's accounting policies regarding the recognition of revenue from contracts with customers with the related financial reporting standards;
• understanding and assessing the internal control environment, including the IT environment, regarding the recognition, valuation and presentation of individual types of revenue;
• conducting, on a selected sample, efficiency tests of selected internal controls, in terms of correctness and accuracy of applied selling prices and compliance of the invoice with the order and with the shipping document;
• performing tests, for a selected sample, consisting of e.g., on confirmations of certain aspects of the transactions with customers

This version of our report is a translation from the original, which was prepared in Romanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

Group, as well as the susceptibility of the item to the risk of misstatement and the potential risk of fraud, we recognized that this is a key matter for our audit.

or on verifying sales transactions against supporting documents (invoices, contracts with customers, shipping and payment received);

• analysing of trends in recognized revenue from contracts with customers and explaining of unusual variances;
• verification, on a selected sample, of revenue recognition in the proper reporting period, considering Incoterms and other terms and conditions of contracts concluded with the Group's customers;
• analysing of non-standard posting patterns in the transactions log in the audited year and considering the element of unpredictability when selecting the type, timing and extent of audit procedures;
• assessment of the appropriateness of disclosures in the consolidated financial statements regarding revenues from contracts with customers.

How we tailored our Group audit scope

We tailored the scope of our audit in order to perform sufficient work to enable us to provide an opinion on the consolidated financial statements as a whole, taking into account the structure of the Group, the accounting processes and controls, and the industry in which the Group operates.

We performed audit tests for the Company and also for its subsidiaries in order to obtain sufficient audit evidence considering the materiality level, the Group's size and structure.

Reporting on other information including the Administrators' Consolidated Report

The Administrators are responsible for the other information. The other information comprises the Administrators' Consolidated Report, the Consolidated Sustainability Report and the Remuneration Report (but does not include the consolidated financial statements and our auditor's report thereon).

Our opinion on the consolidated financial statements does not cover the other information including the Administrators' Consolidated Report, the Consolidated Sustainability Report and the Remuneration Report.

In connection with our audit of the consolidated financial statements, our responsibility is to read the other information identified above and, in doing so, consider whether the other information is materially inconsistent with the consolidated financial statements, or our knowledge obtained in the audit, or otherwise appears to be materially misstated.

With respect to the Administrators' Consolidated Report, we considered whether it is consistent with the consolidated financial statements and whether the Administrators' Consolidated Report, excluding the requirements for the information on the sustainability reporting on which the separate assurance report on the sustainability reporting has been issued by other practitioner on 16 April 2025, was prepared in accordance with OMPF 2844/2016, Appendix 1, articles 26-28.

This version of our report is a translation from the original, which was prepared in Romanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

Based on the work undertaken in the course of our audit, in our opinion:

• the information given in the Administrators' Consolidated Report for the financial year for which the consolidated financial statements are prepared is consistent with the consolidated financial statements;
• the Administrators' Consolidated Report, excluding the requirements for the information on sustainability reporting, has been prepared in accordance with OMPF 2844/2016, Appendix 1, articles 26-28.

In accordance with Law no. 24/2017 regarding issuers of financial instruments and market operations, republished, and subsequent amendments ("Law 24/2017") our responsibility is to verify whether the Remuneration report contains the information required by Law 24/2017, article 107, alignments (1) and (2).

With respect to Remuneration Report, we read the Remuneration Report in order to determine whether this contains the information required by Law 24/2017, article 107 alignments (1) and (2). We have nothing to report in this regard.

In addition, in light of the knowledge and understanding of the Group and its environment obtained in the course of the audit, we are required to report if we have identified material misstatements in the Administrators' Consolidated Report, the Consolidated Sustainability Report and in the Remuneration report. We have nothing to report in this regard.

Responsibilities of management and those charged with governance for the consolidated financial statements

Management is responsible for the preparation of the consolidated financial statements, that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the European Union and OMPF 2844/2016, and for such internal control as management determines is necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, management is responsible for assessing the Group's ability 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 Group or to cease operations, or has no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group's financial reporting process.

Auditor's responsibilities for the audit of the consolidated financial statements

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs will 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 consolidated financial statements.

As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional scepticism throughout the audit. We also:

• Identify and assess the risks of material misstatement of the consolidated 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, intentional omissions, misrepresentations, or the override of internal control.

• Obtain an understanding of internal 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 Group's internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and related disclosures made by management.
• 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 Group's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the consolidated financial statements 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 auditor's report. However, future events or conditions may cause the Group to cease to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements represent the underlying transactions and events in a manner that achieves fair presentation.
• Plan and perform the group audit to obtain sufficient appropriate audit evidence regarding the financial information of the entities or business units within the Group as a basis for forming an opinion on the consolidated financial statements. We are responsible for the direction, supervision and review of the audit work performed for the purpose of the group audit. We remain solely responsible for our audit opinion.

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 internal control that we identify during our audit.

We also provide those charged with governance with a statement that we have complied with relevant ethical requirements regarding independence, and communicate with them all 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.

From the matters communicated with those charged with governance, we determine those matters that were of most significance in the audit of the consolidated financial statements of the current period and are therefore the key audit matters. We describe these matters in our auditor's 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 public interest benefits of such communication.

Report on other legal and regulatory requirements

Report on the compliance of the presentation of consolidated financial statements with the requirements of the European Single Electronic Format ("ESEF")

We have been engaged as part of our audit engagement letter by the Group to conduct a reasonable assurance engagement for the verification of compliance with the applicable requirements of the presentation of the consolidated financial statements of the Group for the year ended 31 December 2024 in the digital files tmstdYWbHHcJwUM= (the "Presentation of the Consolidated financial statements").

This version of our report is a translation from the original, which was prepared in Romanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

Description of a subject matter and applicable criteria

The Presentation of the Consolidated financial statements has been applied by the Management to comply with the requirements of Law 24/2017, Financial Supervision Authority Regulation 7/2021 and art. 3 and 4 of the Commission Delegated Regulation (EU) 2019/815 of 17 December 2018 supplementing Directive 2004/109/EC of the European Parliament and of the Council with regard to regulatory technical standards on the specification of a single electronic reporting format (the "ESEF Regulation"). The applicable requirements regarding the Presentation of the Consolidated financial statements are contained in the ESEF Regulation ("applicable requirements").

The requirements described in the preceding sentence determine the basis for application of the Presentation of the Consolidated financial statements and, in our view, constitute appropriate criteria to form a reasonable assurance conclusion.

Responsibility of the Management and those charged with governance

The Management is responsible for the Presentation of the Consolidated financial statements that complies with the requirements of the ESEF Regulation. This responsibility includes the selection and application of appropriate markups in XBRL using ESEF taxonomy and designing, implementing and maintaining internal controls relevant for the preparation of the Presentation of the Consolidated financial statements which is free from material noncompliance with the requirements of the ESEF Regulation.

Those charge with governance are responsible for overseeing the financial reporting process, which should also be understood as the preparation of consolidated financial statements in accordance with the format resulting from the ESEF Regulation.

Our responsibility

Our responsibility was to express a reasonable assurance conclusion whether the Presentation of the Consolidated financial statements complies, in all material respects, with the ESEF Regulation.

We conducted our engagement in accordance with the International Standard on Assurance Engagements 3000 (R) - Assurance Engagements other than Audits and Reviews of Historical Financial Information (ISAE 3000(R)). This standard requires that we comply with ethical requirements, plan and perform procedures to obtain reasonable assurance whether the Presentation of the Consolidated financial statements complies, in all material aspects, with the applicable requirements. Reasonable assurance is a high level of assurance, but it does not guarantee that the service performed in accordance with ISAE 3000 (R) will always detect the existing material misstatement (significant non-compliance with the requirements).

Quality management requirements and professional ethics

Our firm applies International Standard on Quality Management 1, which requires the firm to design, implement and operate a system of quality management including policies or procedures regarding compliance with ethical requirements, professional standards and applicable legal and regulatory requirements.

We comply with the independence and other ethical requirements of the International Code of Ethics for Professional Accountants (including International Independence Standards) issued by the International Ethics Standards Board for Accountants, which is founded on fundamental principles of integrity, objectivity, professional competence and due care, confidentiality and professional behaviour.

Summary of the work performed

Our planned and performed procedures were aimed at obtaining reasonable assurance that the Presentation of the Consolidated financial statements complies, in all material aspects, with the

This version of our report is a translation from the original, which was prepared in Romanian language. All possible care has been taken to ensure that the translation is an accurate representation of the original. However, in all matters of interpretation of information, views or opinions, the original language version of our report takes precedence over this translation.

applicable requirements and such compliance is free from material errors or omissions. Our procedures included in particular:

• obtaining an understanding of the internal control system and processes relevant to the application of the Electronic Reporting Format of the Consolidated financial statements, including the preparation of the HTML format and marking up the consolidated financial statements;
• verification whether the XHTML format was applied properly;
• evaluating the completeness of marking up the consolidated financial statements using the XBRL markup language according to the requirements of the implementation of electronic format as described in the ESEF Regulation;
• evaluating the appropriateness of the Group's' use of XBRL markups selected from the ESEF taxonomy and the creation of extension markups where no suitable element in the ESEF taxonomy has been identified; and
• evaluating the appropriateness of anchoring of the extension elements to the ESEF taxonomy.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.

Conclusion

In our opinion, based on the procedures performed, the Presentation of the Consolidated financial statements complies, in all material respects, with the ESEF Regulation.

Reporting on report regarding information related to income tax

In accordance with OMPF 2844/2016, article 60^12, in connection with the audit of the consolidated financial statements for the financial year ended as at 31 December 2024, our responsibility is to state whether, for the previous financial year ended as at 31 December 2023, the Group had the obligation, in accordance with articles 60^2-60^6.8 of OMPF 2844/2015, to publish a report regarding information related to income tax for the financial year ended 31 December 2023 and if this is the case, whether such report was published in accordance with 60^10 of OMPF 2844/2016.

The Company did not have the obligation to publish the report regarding information related to income tax.

Appointment

We were first appointed by Ordinary General Shareholders Meeting as auditors of Vrancart S.A. on

27 April 2023 for a period of two years. This is the second year of our appointment as auditors.

The engagement partner on the audit resulting in this independent auditor's report is Florin Deaconescu.

On behalf of PricewaterhouseCoopers Audit SRL Audit firm registered with the Public Electronic Register of financial auditors and audit firms under no FA 6

Refer to the original signed Romanian version

Florin Deaconescu

Financial auditor registered with

the Public Electronic Register of financial auditors and audit firms under no AF1524

Bucharest, 30 April 2025

Vrancart Group SUSTAINABILITY CONSOLIDATED REPORT

2024

• 0 -

Content

	Greetings	-	3 -
		General introduction -	4 -
		The highlights of 2024 -	7 -
1.	General disclosures – ESRS2- 8 -
	1.1.	Basis for preparation-	8 -
	1.2.	Sustainability Governance - 12 -
	1.3.	Strategy & Business Model - 18 -
	1.4.	Double Materiality Assessment including stakeholders
		engagement - 27 -
2.		Environmental information - 34 -
	2.1.	EU Taxonomy - 34 -
	2.2.	E1 – Climate change- 43 -

	2.3.	E2 – Pollution - 55 -
	2.4.	E3 – Water and marine resources- 62 -
	2.5.	E4 – Biodiversity and ecosystems - 67 -
	2.6.	E5 – Resource use and circular economy- 71 -
3.		Social information- 83 -
	3.1.	S1 – Own workforce - 83 -
	3.2.	S2 – Workers in the value chain- 92 -
4.		Governance information- 95 -
	4.1.	G1 – Business conduct- 95 -
5.		Indices- 98 -
	5.1.	Appendix I. – ESRS disclosure requirements - 98 -
5.2.		Appendix II. – List of datapoints in cross-cutting and topical standards that derive from other EU legislation - 102 -
	5.3.	EU Taxonomy Templates - 114 -

List of Figures

Figure 1. Group structure-	4 -
Figure 2. Products -	5 -
Figure 3. Turnover-	6 -
Figure 4. Locations-	6 -
Figure 5. Employees / Location -	7 -
Figure 6. Uncertainty and estimation table-	7 -
Figure 7. Management structure Error! Bookmark not defined.
Figure 8. Risks Error! Bookmark not defined.
Figure 9. Due diligence - 24 -
Figure 10. Value chain - 26 -
Figure 11. Stakeholders Error! Bookmark not defined.
Figure 12. Material topics- 40 -
Figure 13. KPI assessment- 42 -
Figure 14. Turnover, CAPEX, OPEX- 43 -
Figure 15. Climate change IROs - 47 -
Figure 16. Energy mix- 50 -
Figure 17. Scope 3 categories GHG emissions -	51 -
Figure 18. Scope 3 categories- 55 -
Figure 19. Pollution IROs - 59 -
Figure 20. Air pollutants - 60 -
Figure 21. Water pollutants -	62 -

Figure 22. Water and marine resources IROs Error! Bookmark not
defined.
Figure 23. Water consumption Error! Bookmark not defined.
Figure 24. Facilities located in water-stress areas- 67 -
Figure 25. Biodiversity IROs- 69 -
Figure 26. Fragile biodiversity zones - 71 -
Figure 27. Resource use IROs- 78 -
Figure 28. Inflow material quantity - 79 -
Figure 29. Used materials for packaging- 80 -
Figure 30. Recyclable content in products - 81 -
Figure 31. FSC Certificates - 81 -
Figure 32. Quantity of waste - 81 -
Figure 33. Recycled and non-recycled waste - 83 -
Figure 34. Own workforce IROs- 89 -
Figure 35. Age distribution of employees - 89 -
Figure 36. Employees based on their contract duration - 90 -
Figure 37. Social protection measures that Vrancart Group offers - 90 -
Figure 38. Gender distribution graph - 91 -
Figure 39. Work related accidents - 92 -
Figure 40. Workers in the value chain IROs- 95 -
Figure 41. Business conduct IROs - 95 -

Greetings

"Dear Readers,

It is with great pride that I present to you the 2024 sustainability report of the Vrancart Group, which is our first one following the EU's Corporate Sustainability Reporting Directive (CSRD). This report encapsulates our enduring vision for a sustainable business and highlights our significant achievements in this domain over the past year, while complying with the highest regulatory requirements.

With a legacy spanning over 45 years, the Vrancart Group has firmly established itself as a leading producer of paper and cardboard in Romania. Our rich history and tradition underscore our commitment to long-term strategic thinking, with sustainability at the forefront of our objectives.

Our mission remains steadfast: to be the foremost recycler of cellulose-based materials in Romania. We are guided by core principles that include customer satisfaction, integrity in our partnerships, professionalism, employee and shareholder welfare, workplace safety, environmental stewardship, and the responsible use of resources. These principles are not just aspirational; they have tangible, medium- and long-term impacts on the communities we serve.

Sustainability for the Vrancart Group is more than a regulatory requirement; it is a perpetual commitment. We take immense pride in our role as stewards of nature, diligently recycling materials across Romania. Our dedication to environmental sustainability is unwavering, and we are confident that our efforts will ensure a cleaner, healthier environment for future generations.

In 2024, we continue to innovate and enhance our sustainability practices, integrating cutting-edge technologies and fostering a culture of continuous improvement. Our goal is to not only meet but exceed the expectations of our stakeholders, contributing positively to the global sustainability agenda.

Thank you for your continued support and trust in the Vrancart Group. Together, we are building a sustainable future."

Nicu-Ciprian Fedor

General introduction

The Group

Vrancart Group was originally founded in 1977 as the Vrancea Cellulose and Paper Plant, the company transitioned into Vrancart S. A. in 1992 and is listed on the Bucharest Stock Exchange. As of December 31, 2024, the group is owned 76% by LION Capital SA (formerly SIF Banat - Crișana SA), 17% by Paval Holding SRL, and 7% by other shareholders.

Vrancart Group operates on the Romanian market through its companies – Vrancart S.A., Rom Paper, Vrancart Recycling and Ecorep Group. The main activities of the subsidiaries:

• Vrancart S.A. and Rom Paper the companies produce corrugated cardboard, paper, tissue paper and associated products
• Vrancart Recycling and Ecorep the companies focus their activity on recycling raw materials, ensuring circularity among operations

Figure 1. Group structure

From the point of sustainability, Vrancart S.A has the most significant impact.

Our products

Over the years, Vrancart Group has grown into one of Romania's leading manufacturers specialized in corrugated cardboard, paper strips for tubes, and various sanitary paper products. For more than 45 years, Vrancart Group has supplied high-quality, locally produced goods while maintaining a strong commitment to sustainability.

These are different categories of products we produce and deliver:

Figure 2. Products

Our 2024 turnover distribution shows the dominant role that corrugated cardboard has in our overall revenue, as it represents 244.07 million RON from the total 396.53 million RON. Tissue paper equals to 70.29 million RON and paperboard to 42.93 million RON. This shows how important our corrugated cardboard-producing subsidiaries are to our group-wide activities.

T U R NO VER B R EA KDO W N P ER P R O DU C T IO N ST R EA M (R O N)

TOTAL TURNOVER 2024: 486.795.338

Figure 3. Turnover

Our locations

Vrancart Group is headquartered in Adjud, Vrancea county, where we have our cardboard-producing facilities. Our tissue paper-producing subsidiary, Rom Paper, is however located in Brasov. Besides these two locations, we have waste collection centers spread out throughout Romania: Bucharest (2 centers), Iași, Focșani, Ploiești, Botoșani, Sibiu, Constanța, Arad, Brașov, Pitești, Timișoara, Bacău, Cluj, Craiova, Baia Mare, Târgu Mureș, and Brăila. Additionally, we have two production centers in Călimănești and Santana de Mureș, specializing in corrugated cardboard and cardboard packaging production.

Figure 4. Locations

We have several employees working for us in all of our locations. The location with the most employees is Vrancea.

County	No. of Employees
Mureș	42
Vâlcea	78
București - Ilfov	59
Bacău	11
Brașov	112
Cluj	10
Iași	12
Argeș	18
Prahova	16
Sibiu	10
Timișoara	14
Vrancea	864
Total	1246

Figure 5. Employees / Location

We serve both domestic and international markets, offering a diverse range of products tailored to the needs of businesses and consumers alike. There was no change in the product structure during the reporting year. Vrancart Group products are distributed through hypermarkets, supermarkets, cash & carry outlets, and various distributors. These products cater to a wide range of industries, including HORECA, furniture, automotive, construction, and food production.

1 Integrated quality, environment, occupational health and safety management system policy : Link

We are aware of the environmental effects that our operations may have on the environment and communities. As a result, we aim to deliver the highest quality products, while keeping a safe environment. 1 Our commitments to high quality and economic circularity are reflected in our daily operation. Integrated Quality management system ensures that we can provide the highest quality to our consumers.

The highlights of 2024

• Improving results in Scope 1 emissions in comparison to 2023
• Preparing the first Scope 3 calculation
• Plans for supplier evaluation

Installation of solar panels and a cogeneration plant

1. General disclosures – ESRS2

1.1. Basis for preparation

BP-1 – General basis for preparation of the sustainability statement

Vrancart, as a manufacturing company, is committed to transparently presenting its sustainability-related impacts, aspirations, and results. Demonstrating this commitment, the group has already prepared a sustainability report following the GRI guidelines in 2023. With the evolution of global standards and regulatory requirements, Vrancart Group is now presenting its 2024 Sustainability Consolidated Report (referred to as "CSRD report") in accordance with CSRD requirements.

When preparing the CSRD-compliant sustainability report, the group involved in the reporting is Vrancart Group therefore the sustainability statement has been prepared on a consolidated basis, including all our subsidiaries in the scope of this report.

During the first CSRD reporting year Vrancart Group's focus is on adhering to mandatory requirements, however in the following years the voluntary datapoints are planned to be gradually integrated as well. In certain cases, we need to report the fact of actual data limitations and calculation based on estimations. Comparisons are made only if the figures were disclosed in previous years and the data structure is comparable to the requirements of ESRS. Voluntary data points are included only if the necessary data is available. In several instances,

Vrancart Group leverages the phased-in requirements provided by ESRS. We have provided a list in Appendix III.

The double materiality analysis is an ongoing process, shaped and potentially influenced by changes in the Group's strategy, business model, value chain, and overall operating context. Over time, the double materiality analysis may also be affected by any newly adopted sector-specific standards applicable to the Group. It is possible that the double materiality analysis does not capture all impacts, risks, opportunities, or items of note that each stakeholder might consider material in their own assessment.

The report contains limited information on the value chain, leveraging the provision in ESRS1 for the initial three CSRD reporting periods. This information is intended to be progressively gathered starting from 2025, based on the insights gained during this period.

Policies, targets, and actions are reported for material topics. If these are not yet available, this is explicitly stated. The report comprehensively covers the entire consolidated group:

• Vrancart S.A.
• Rom Paper
• Vrancart Recycling
• Ecorep

In the analysis, the group's upstream and downstream value chain were included on a high level to map the scope of the group 's operations and, consequently, the extent of its environmental and social impact.

The group has not omitted any information corresponding to intellectual property, innovation or know-how and neither has exercised its related rights under articles 19a(3) and 29a(3) of Directive 2013/34/EU.

BP-2 – Disclosures in relation to specific circumstances

This report results from a more advanced approach and deeper analysis of Vrancart Group's ESG impacts. This evolution primarily stems from the fact that CSRD reporting standards have become imperative for Vrancart Group since the last reporting period. Compared to GRI, CSRD demands a more profound understanding of the effects of companies and a more detailed reporting practice from each undertaking.

The main changes compared to last year include:

• A double materiality analysis has been conducted, resulting in slight changes in the material topics.
• The basis for the possible material topics is provided by ESRS.
• The entire report follows the structure of the ESRS.
• The time horizons regarding sustainability matters have been aligned with CSRD, which means:
  • o short-term: 1-3 years
  • o mid-term: 3-5 years
• o long-term: over 5 years
• Several metrics are used in the same manner as the last reporting year; however, following the CSRD requirements, some must be upgraded and completed.
• Comparison of metrics and indicators between the report of the prior reporting year and the current one can be limited due to the fundamental changes in requirements. Therefore, comparisons are only made where possible, where the definition and scope of metrics were aligned with the ESRS requirements or required only minor adjustments. As a development action, Vrancart Group aims to provide a better comparison in the report of 2025, where the reporting standard will remain consistent.

Vrancart Group uses estimates and assumptions in both financial and sustainability reporting, particularly where direct data is unavailable. These estimates affect key metrics related to value chain impacts, resource efficiency, and regulatory compliance. Vrancart Group relies on indirect sources such as industry benchmarks and supplier data for metrics like Scope 3 carbon emissions, raw material usage efficiency, and waste management rates. In developing this sustainability statement, no restatement of the 2023 data was necessary and no major or material errors were found. In our sustainability statement, when disclosing metrics, we mostly do not rely on estimations. We either use factual data or outline a development action where measurements are not yet available. The quantification of greenhouse gas (GHG) emissions is subject to significant inherent measurement uncertainty due to the incomplete scientific knowledge used in

determining emission factors and the values applied to combine emissions from different gases. The quantification of greenhouse gases is inevitably exposed to considerable uncertainty arising from both scientific and estimation factors.

Estimation uncertainty can arise because of:

• the inherent uncertainty in quantifying inputs, such as activity data and emission factors, that are used in mathematical models to estimate emissions (measurement uncertainty);

• the inability of such models to precisely and accurately characterize under all circumstances the relationships between various inputs and the resulting emissions (model uncertainty); and

• the fact that uncertainty can increase as emission quantities with different levels of measurement and calculation uncertainty are aggregated (aggregation uncertainty).

Area where estimates or un	Source of estimate or uncertainty	Explanation
certainties have occurred
Materiality Assessment	Human Rights: Assessing the likelihood and severity of impacts on human rights.	The current impacts were assessed based on their maximum likelihood, while human rights impacts were prioritized according to their severity.
	Physical and transition risks have not yet been detailed, but they were taken into account at a broad level during the DMA process.	In our discussions and evaluations of climate change mitigation and adaptation, we considered potential impacts at a broader scale, including flooding, tem perature changes, and extreme weather events.
	Estimating the Significance of Impacts: The value chain perspective and internal opera tions were given equal weighting, each con tributing 50% to the assessment.	At present, our insight into the value chain and sup pliers remains limited
	Stakeholder engagement: We assumed that a stakeholder with expertise in ESG would com plete the questionnaire to ensure informed responses	We identified a group of stakeholders based on a preliminary analysis, selecting those with the great est influence, direct engagement, and significance in sustainability considerations.
Carbon footprint	Uncertainty in the case of Scope 3, especially in Scope 3-2. Capital goods is much higher - 40%- due to the usage of spent-based method, spend-based emission factors.	More details are in the relevant section, in E1- Cli mate change, Scope 3
Climate change	In case of financial investments for the future, the uncertainty is significant.	The estimations were prepared internally using benchmark data, publicly available prices and own operation data by our internal experts and were not asked to be approved by the board.

Figure 6. Uncertainty and estimation table

1.2. Sustainability Governance

Our Group and Management

According to the articles of incorporation, the group is managed under an integrated management framework, with corporate governance structures represented by the Board of Directors and the Executive Management.

The Board of Directors of the group consists of five members elected by the general assembly of shareholders for a four-year term, with the possibility of reelection. The election process is conducted transparently, and the removal of Board members is exclusively decided by the General Assembly during extraordinary meetings. The Board includes 5 members (1 executive and 4 non-executive members) ensuring balanced leadership within the company.

The 5 members of the board are : Nicu-Ciprian Fedor, Bogdan Dragoi, Sergiu Mihailov, Adrian Fercu, Rachid El Lakis2 . The Chairman of the board is Nicu-Ciprian Fedor, CEO of Vrancart Group, who has been an executive director in Vrancart Group since 2024. The directors are selected based on their skills and experience, providing diverse knowledge for the group. However, there is room for improvement in

2 In case of the board of directors the following metrics are presented: diversity: 100% male, 0% female, independence: 0% of the board members are independent. We do not consider other diversity aspects.

gender diversity, as there are currently no female members on the board.

The Board of Directors is entrusted with setting the strategic direction of the group and ensuring its long-term success. They are responsible for maintaining compliance with corporate governance standards and overseeing the implementation of policies. Additionally, they evaluate and manage risks associated with the group 's operations to safeguard its interests.

The Group do not have a Remuneration Committee. The remuneration of the board members is decided and approved at the yearly general assembly. The decisions of the assembly are publicly available on our website.

Figure 7. Management structure

Audit Committee, subordinate to the Board, monitors the effectiveness of financial reporting, internal control, and risk management (related and unrelated to ESG as well). This committee is composed of non-

executive directors, including at least one member specialized in accounting or auditing. The Audit Committee plays a crucial role in maintaining the integrity of the group 's operations. They ensure that internal controls are in place to safeguard the group 's assets and the integrity of financial reporting. They also monitor compliance with legal and regulatory requirements. Regular audits are conducted to assess the effectiveness of internal controls and risk management processes, ensuring the group 's operations are both efficient and compliant. The Audit Committee is responsible for overseeing the impacts, risks and opportunities and verifying the compliance with CSRD and other sustainability requirements.

As of 2024, the executive leadership of the Group is provided by Mr. Nicu-Ciprian Fedor as Chief Executive Officer, appointed by the Board of Directors. The primary objective of the Board in the medium and longterm is to ensure a balance between the continuity of operations under optimal conditions and shareholder satisfaction, considering the specific characteristics of Vrancart Group and the macroeconomic context.

The Executive Management team is tasked with handling the day-to-day operations of the group, ensuring that business activities align with the strategic goals set by the Board. They manage the group 's financial performance, including budgeting, financial reporting, and ensuring financial stability. Furthermore, they oversee employee management, encompassing recruitment, training, and maintaining a productive work environment.

The Board is considering plans on the medium-term to establish an advisory committee composed of its members in the upcoming financial

year, responsible for conducting investigations and making recommendations in areas such as audit, CSRD reporting, director remuneration, nomination of candidates for executive positions, and the establishment of internal rules. The remuneration policy for directors and executives, as well as profit sharing, is determined by the Board based on economic performance, performance criteria, and responsibilities defined in the annual budget, subject to approval by the General Assembly (AGA).

Information regarding corporate governance, including the list of Board members, executive leadership, the group 's articles of incorporation, and internal regulations, is available on the group 's website.

The Rom Paper subsidiary has its own Board of Directors, which is subordinate to the Group's leadership. This Board consists of five members who manage operations in accordance with the group 's policies and strategic directions.

The representation of the employees is the responsibility of the relevant senior / manager.

Our expertise

As sustainability gains prominence on a global scale, its significance within the group's operations and daily activities is also intensifying. The senior management will establish a dedicated committee which will prioritize ESG-related issues, diligently monitor associated risks, and seamlessly integrate environmental, social, and governance considerations into their everyday strategic thinking.

While the members of our administrative, management and supervisory bodies do not possess specific training or certification in sustainability topics, we are committed to enhancing our understanding of ESG issues therefore our experts and colleagues contribute to the group 's annual Consolidated Sustainability Report (CSRD report) and share their insights and knowledge with senior management. Additionally, management is highly involved in most projects, ensuring active participation and oversight.

The responsibilities of administrative, management and supervisory bodies related to the material impacts, risks and opportunities are not yet defined. Our SICMS³ manager is responsible for a wide range of activities; for instance, managing the safe disposal of waste and advises the management any legally-binding measures that need to be taken regarding protecting the environment, among many others. She has years' worth of experience in this domain, making her an incredibly important colleague that helps design and implement our environmental commitments successfully. Additionally, our HR Director continuously monitors the market and evaluates opportunities for the leadership team to participate in sustainability-related conferences and seminars, with the aim of deepening their knowledge and commitment. In 2024 our management participated at the event ''Waste Management in the Circular Economy - Conclusions 2024, Forecasts 2025'', organized by INFOMEDIU EUROPA Magazine and the Federation of Intercommunity Development Associations (FADI), in partnership with the Ministry of Environment, Waters and Forests (MMAP), as a Vrancart representative.

We have also been to events organized by Green Report, the National Environmental Administration, AFM, at Green Energy Expo-Romenvirontec-The International Environmental Forum in Bucharest 2024 and at various networking meetings organized by professional associations of manufacturers that place packaging on the market in Romania as well as professional associations in the field of packaging waste management.

As the CSRD report of 2024 is the first of its kind in the operation of Vrancart, the knowledge of the standard and overall sustainability is yet to be expanded. The missing sustainability knowledge is to be identified by materiality topics. We are planning on taking the following steps:

• Competency assessment regarding sustainability in general
• Matching the knowledge and expertise with material ESG topics
• Identifying uncovered material topics
• Training plan to close the gaps
• Implementation of possible incentive schemes (as currently no incentive schemes or remuneration policies are linked to sustainability matters for the management). We are considering developing annual compensation based on climate change achievements starting from the Financial Year 2026.

While there are areas for improvement in ESG-related knowledge, the leadership team possesses outstanding industry experience, having

³ Integrated quality, environment management system

accumulated extensive knowledge over several years. As mentioned previously, our SICMS manager is more than capable of taking on the environmental considerations specific to Vrancart Group's operations. She is leading our commitments to a circular economy, as she possesses substantial experience in environmental management.

The CEO has decades-long, proven experience in the logistics and FMCG sectors, while Bogdan Dragoi is an expert economist and former finance minister and presidential advisor. He is the chairman of Lion Capital, the majority shareholder of Vrancart Group. Sergiu Mihailov has been an administrator in Vrancart Group since 2018, and is also an executive in SAI Muntenia Invest SA, an investment management group. Adrian Fercu has decades' long experience in the banking sector and is also a member of the investment committee of Paval Holdings, the second biggest shareholder of Vrancart Group. Rachid el Lakis is vice president of board of directors of Lion Capital.

They are thoroughly familiar with the characteristics and unique demands of the Romanian market. To ensure the group meets international standards most effectively, we continuously collaborate with both Romanian and international partners.

General Risk Management

For a sustainable business model, management must ensure that regular risk management is conducted. We have a well-established annual risk assessment process, the framework of which follows the requirements of ISO4 . When it comes to risks, we follow a standard process.

• 1. Risk identification is conducted by interviewing experts, analyzing the history of previous risks, and using standardized checklists.
• 1. Risk assessment is based on two main criteria: the probability of risk occurring and its impact on the organization's objectives.
• 1. We implement control measures to reduce the probability and/or impact of risks which may include mitigation plans.

To obtain the ISO certificate a risk and opportunity analysis is prepared by a third party audit company, where the ESG risks are also listed, however they are not in the focus.

In 2024, seven main categories of risks were identified; financial, operational, legal and regulatory, reputational, strategic, IT security and supplier related.

⁴ ISO 14064, ISO 14001, ISO 9001, ISO 11108, ISO 45001

Category	Risk	Mitigation strategy	Controls
		Closely monitoring cash flows and expenses.	Implementing a financial control system, such
	Capital shortage, currency fluctuations, budget	Creating a financial reserve fund for difficult times.	as regular audits.
Financial risk	overruns, difficulties in collecting receivables.	Diversifying income sources to reduce dependence on a	Using financial forecasting tools to assess
		single source.	economic risks.
Operational	Disruptions to daily activities, staff errors, equipment failures, lack of a business continuity plan.	Creating clear procedures and ongoing employee training. Maintaining high-quality equipment and technology. Developing a Business Continuity Plan (BCP).	Regular testing of equipment and backup systems. Evaluation and audit procedures to detect potential operational weaknesses.
Legal / Regulatory	Non-compliance with legislation, litigation, legislative changes affecting the business.	Collaborating with legal advisors to stay up to date with legislative changes. Implementing internal policies and procedures to comply with regulations.	Regular monitoring of relevant legislation. Creating a compliance department to ensure that all regulations are complied with.
		Building and maintaining a positive image through	Proactive and reactive PR strategies to respond
	Negative public perception of the group, scandals,	transparent communication.	quickly to crises. Constant monitoring of public sentiment
Reputational	poor customer relationship management.	Implementing customer complaints and feedback
		management system.	through surveys and social media.
Strategic	Failure to adapt to changing market trends, leading to a loss of competitive advantage.	Continuous assessment of competition and market trends.	Implementing a process to review strategic plans and adapt them based on performance. Regular feedback from sales and marketing teams to assess market reactions.
IT security	Data breach resulting from a cyber-attack, compromising sensitive customer / partner information.	Investing in cybersecurity and using new technologies. Training employees to identify and prevent cyber-attacks.	Continuous audit processes to develop cyber security.
Supplier related	Delivery delays, low quality of products/services, dependence on a single supplier.	Diversifying suppliers to reduce the risk of supply disruption. Constantly monitoring supplier performance and compliance with quality standards.	Conclusion of clear contracts with well-defined terms and conditions. Periodic assessments and audits of supplier performance.

Figure 8. Risks

Such risks can arise from Vrancart Group 's own operations, business model, or the extensive network in which it operates. Due to the broad range of potential risks, regular review and management of these risks are indispensable parts of our work, not only during reporting periods but throughout the entire year.

Risk management related to sustainability and reporting

There is no formal or centralized process in place for ESG risk management and ESG reporting related internal control. It is conducted in an ad hoc manner. Currently we identified risks and opportunities following the requirements of the ESRS on a management workshop. The exact process is discussed in the Double Materiality Assessment Chapter. Otherwise the focus is on the risks and opportunities required by ISO audits. In these assessments ESG risks are also listed but not distinguished. ESG risk management on a high level is needed for environmental authorization. Currently no specific policy on risk management is available.

Our SICMS Manager is responsible for sustainability matters in general. However, we have not yet appointed a dedicated individual for ESG risk management. Currently, each manager is responsible for the ESG risks pertinent to their respective departments. These risks can be strategic, operational, financial, or regulatory related, and their impact on the group's business must be assessed. During risk identification procedures several sources can be used, we mainly rely on the experience and knowledge of our internal experts.

After identifying risks, the group assesses them based on their likelihood of occurrence and their impact. This assessment process may involve using risk analysis tools and evaluating the consequences on long-term sustainability. Risks are prioritized based on their relative importance and the group's ability to manage them.

Internal communication and adequate information given to senior management is a key for our success. Based on the identified risks, we present periodic reports for management, executive, or supervisory bodies regarding the aforementioned findings. These reports are intended to inform management and supervisory bodies about the current state of activities, identify potential problems, and propose corrective measures, conducting internal audits, and implementing ongoing risk monitoring mechanisms.

During 2024, through our double materiality assessment process we identified our material impacts, risks and opportunities (IROs).

Although circular economy is monitored by our management as it is part of our code business, staring with 2025 we will implement a more specific communication and follow up of the identified IROs.

However during the 2024 CSRD implementation process the administrative, management and supervisory bodies were informed about the IROs.

Statement on Due Diligence

Due Diligence is performed in an ad hoc manner using best practices and legal or third party requirements (e.g. ISO). As the process is conducted irregularly, no specific responsible is appointed. The responsible for the process is always the manager affected by the screening. Due Diligence processes are mainly conducted regarding investment opportunities. We have a yearly evaluation, where business strengths and weaknesses are analyzed and ESG exposure on a high level is also taken into consideration. The board is always informed verbally or through email about the status of due diligence processes; we do not track BOD meetings using formal documentation, such as minutes.

	The core elements of due diligence	References
		ESRS 2 GOV-2
a)	Embedding due diligence in governance, strategy and	ESRS 2 GOV-3
	business model	ESRS 2 SBM-3
b)		ESRS 2 GOV-2
		ESRS 2 SBM-2
	Engaging with affected stakeholders	ESRS 2 IRO-1
		ESRS 2 MDR-P
		ESRS S1-2
		ESRS 2 IRO-1
c)	Identifying and assessing negative impacts on people	ESRS 2 SBM-3
	and the environment	ESRS S1-3, S2-3
	Taking actions to address negative impacts on people	ESRS 2 MDR-Aapplicable
d)	and the environment	to ESRS E1, E2, E3, E4, S1
		MDR-T applicable to
e)	Tracking effectiveness of these efforts	ESRS E1, E2, E3, E5, S1

Figure 9. Due Diligence

1.3. Strategy & Business Model

Thanks to the strong strategic direction provided by the management, there have been no significant changes in the core business and main strategic directions of our group in recent years. In 2024, we registered an impressive 486 795 338 RON revenue, proving how robust our business model is.

Our group operates in the manufacturing industry and generates all its revenue within this sector. The following are key components of our operations:

• Pallet Repair Line: This line is dedicated to repairing and refurbishing pallets to extend their lifecycle and reduce waste.
• Polyethylene Flakes Production Line: This line processes plastic collected through collection centers to produce polyethylene flakes. This process is in its early stages, and represents a small percentage of revenue and activity.
• Molding Line: This line produces products made from waste paper pulp, contributing to our recycling and sustainability efforts.
• Waste Cogeneration Boiler: This boiler utilizes waste materials to generate energy, improving our energy efficiency and reducing our environmental footprint.

Our strategic goal is to bring value to the lives of our customers while striving to achieve a more environmentally and socially sustainable operation. Our strategic goals have yet to be broken down to the operational level, but we can state that we aim to be environmentally

conscious across our entire value chain, in all geographical locations, and positively affecting our entire customer base and other stakeholders. During the reporting year, we did not articulate any specific, measurable, and time-bound sustainability-related strategic goals. We are assessing our status in terms of sustainability by preparing annual reports and monitoring our sustainability-related measurements.

Vrancart Group serves a wide range of customers, from large retailers and manufacturers to SMEs. The group adapts to market requirements and offers customized solutions for environmentally friendly packaging. Our main customers are:

• Retail and FMCG Industry: This includes manufacturers and distributors of food, beverages, cosmetics, and other consumer goods, as well as supermarkets, retail chains, and manufacturers of packaged goods.
• Logistics and Transport Industry: Companies in this sector need sustainable packaging to protect goods during transport. This category includes courier service providers, carriers, and ecommerce companies.
• Industrial Manufacturers: This group comprises companies from various sectors such as automotive, electronics, and industrial consumer goods. It includes factories, exporters, and distributors.
• End Consumers of Tissue Products: This category includes retail stores and individual consumers, supermarket chains, and distributors of hygiene products.

• International Customers: These are companies from neighboring countries and the EU that are interested in sustainable solutions. This category also includes external partners in retail and logistics.

Vrancart Group maintains strong relationships with its customers by focusing on customer orientation, offering personalized solutions, and ensuring quality and innovation. The group values long-term relationships and provides technical and logistical support, emphasizing sustainability and responsibility in all its interactions.

Some new types of customers signify greater challenges to our operations, as their needs are slightly different from the traditional customers. Based on the assessment, customers who prefer environmentally friendly or sustainable products, those interested in transparency regarding the supply chain and environmental impact, business partners who support green and social innovations, and customers who participate in recycling or responsible consumption initiatives are gaining increasingly greater bargaining power, stronger market positions, and becoming more relevant. As we aim to use recycled materials and be environmentally conscious, these customers are likely to account for an increasing proportion of our consumer base. This poses new challenges to our operations and strategy, which we need to address. Currently, we do not have explicit goals to specifically meet the needs of these consumers, but as the pressure grows, we will review the necessity of setting precise targets.

The main sustainability challenges ahead are in connection with climate change and waste management. To avoid having negative impacts on the climate we need to use more advanced technologies, report on our

footprints, monitor our emissions, which pose a great pressure on the Group. As a manufacturer waste management is another crucial topic, including circularity, where we aim to be one of the most effective companies. The strategy does not include targeted mitigation measures regarding these sustainability topics.

Business model

Our group is focusing on the B2B market with a great network of partners, suppliers and other stakeholders. Being a paper manufacturing group, sustainability and recycling are in our core values. The operational process at Vrancart Group involves several key stages and actors, each contributing to the efficient and sustainable production of recycled paper and corrugated cardboard products.

Collection and Purchase of Raw Materials: The process begins with the collection and purchase of recyclable waste materials such as paper and cardboard. Vrancart Group has its own system for collecting wastepaper, cardboard, and other recyclable materials. Additional inputs are collected (energy, water, and other auxiliary materials), to receive the output of this stage, which is pre-processed recycled raw materials.

The group collaborates with networks of collectors, local authorities, companies, and recycling centers to ensure a constant flow of raw materials. Vertical integration in recycling activities reduces costs and ensures a steady supply.

• Recyclable Paper: Collected from commercial customers, recycling collectors, recycling centers, and internal production streams.
• Cellulose Fiber: Purchased from cellulose suppliers or other sources, with a special emphasis on using recycled fiber to reduce the need for extracting natural resources.
• Energy: Sourced from electricity suppliers and investments in renewable energy sources, such as solar panels and a cogeneration plant.
• Water: Utilized through a water treatment plant and water recycling technologies in the production process to reduce consumption from natural sources.
• Human Resources: Continuous professional training of employees and attracting talents with expertise in recycling and sustainable production.
• Infrastructure and Equipment: Advanced industrial equipment for paper recycling and the production of corrugated cardboard products. The logistics infrastructure, including warehouses and transportation, is essential for product distribution.

Sorting and Processing of Recyclable Materials: Vrancart Group uses modern equipment for sorting, processing, and transforming recyclable materials into raw materials for the production of paper and cardboard.

The output of this stage is recycled paper pulp, which is usable in production.

Production of Recycled Paper and Corrugated Cardboard: The recycled paper pulp, along with water, glues, and other auxiliary materials, is used to produce recycled paper rolls and corrugated cardboard sheets.

Conversion and Manufacturing of Finished Products: Semi-finished materials, such as recycled paper and corrugated cardboard, along with packaging materials, are converted into customized corrugated cardboard packaging and tissue products for end consumers.

Quality Control: Both semi-finished and finished products undergo quality control to ensure they meet the required standards. The output of this stage is products approved for delivery.

Distribution and Delivery: Finished products are then distributed and delivered to customers or distributors using logistics resources. The output is products delivered on time.

Internal Recycling and Waste Management: Production waste is managed through internal recycling processes, resulting in recycled materials for reuse and treated waste.

With this approach we expect to reach sustainability, operational efficiency, economic growth and innovation, while creating value to our stakeholders:

• Customers: Customized products, competitive pricing, and sustainability.
• Investors: Consistent performance, solid market position, and growth opportunities.
• Employees: Secure jobs and career opportunities.
• Community and Environment: Positive ecological impact and community involvement.

Value Chain

Looking at the operational process, its several complex elements, and the numerous participants involved throughout the value chain, it can be declared that Vrancart Group has a significantrole and responsibility.

Vrancart Group has a strategic role on the Romanian paper manufacturing market as one of the leaders in Circular Economy. The group emphasizes a circular economy, reducing dependence on natural resources by using recycled materials. Vrancart Group's integrated position within the value chain places it at the forefront of the circular economy, ensuring the reuse of resources and the reduction of waste.

Vrancart Group serves as a key link within the value chain, bridging the recycling sector with production and consumption. The group facilitates the seamless flow of recycled materials and finished products, ensuring efficiency and sustainability.

Some of the most important supplier categories of our group are:

Suppliers of Recyclable Waste (Paper and Cardboard):

• Companies specialized in the collection and sorting of recyclable waste.
• Local and municipal authorities for the selective collection of waste in communities.
• Retailers, manufacturers, and other companies that generate large quantities of paper and cardboard waste.
• Recycling centers that provide pre-sorted and prepared materials for processing.

Suppliers of Utilities and Auxiliary Materials:

• Electricity, natural gas, and water are necessary for production processes.
• Auxiliary materials used in the manufacturing process, such as glues, ink, and other chemicals for packaging and cardboard products.

Suppliers of Equipment and Technologies:

• Machinery for recycling, paper, and packaging production.
• Advanced technologies to improve the efficiency and sustainability of processes.

Vrancart Group maintains long-term collaborations with its suppliers, supporting the circular economy through consistent audits and quality monitoring. This ensures that all materials and processes meet the group 's high standards for sustainability and efficiency.

Besides the upstream value chain, the downstream value chain is a critical part of the operation as well. The group has a well-developed distribution network that ensures prompt delivery of products both nationally and internationally.

To ensure reliable distribution, our group utilizes several distribution channels to avoid disruptions.

Direct Distribution:

• Vrancart Group uses its own transport and logistics fleet, allowing for direct distribution without intermediaries. This approach offers flexibility in managing personalized orders and urgent deliveries.

Distribution Through Intermediaries:

• The group collaborates with distributors and logistics partners for product delivery. This strategy increases geographical coverage and enhances the efficiency of logistics operations.

Distribution Through Retail Networks:

• Tissue products, such as toilet paper and paper towels, are distributed through supermarket and hypermarket chains. This helps to strengthen our brand and increase sales volume for products intended for household consumption.

Export and International Distribution:

• Vrancart Group engages in export and international distribution either directly or through local partners. This contributes to diversifying the customer base and reducing dependence on the local market.

Vrancart Group emphasizes integration and collaboration with its distribution channels. The group leverages digitalization and logistics efficiency to ensure flexibility and adaptability. Distribution channels are tailored to meet the diverse requirements of customers, regardless of the volume or frequency of orders.

Figure 10. Value chain

Collaborations with different distributors optimize delivery to customers and improve customer satisfaction. We are also trying to support our clients until our products' end of life by providing consulting services on product use and packaging recycling.

It is critical to highlight the importance of our value chain, as mentioned earlier by showcasing the key aspects of our operations. Therefore, when preparing our sustainability statement, we also took into account the main actors in both our upstream and downstream value chain.

Stakeholder engagement

We have a large network of suppliers, distributors, customers and other stakeholders. When it comes to stakeholder engagement, we need to distinguish two categories: internal and external stakeholders.

The most important internal stakeholders are the employees – including administrative, management and supervisory bodies – and the owner of the group. Their ideas, expectations and needs are usually easier to channel into the strategy and operation of Vrancart Group as we have permanent, active communication with them. We also maintain strong relationships with our external stakeholders: investors, customers, suppliers, distributors, (and other relevant field expert⁵ s). With creditors, local communities and relevant field experts, no formal engagement is implemented.

⁵ Experts from universities or professional organizations

Engagement with stakeholders happens via day-to-day work, however, in case of any concerns Vrancart Group operates grievance processes to gain information from any internal or external stakeholders. Of course, our colleagues are always open to discuss e.g. sustainability matters with their associates. SMB 2-45 After escalating the feedback to the management, the decision is made if any amendments are required in the strategy. In 2024 no such changes were made. SMB 2-45 There is no formal process to channel in the views and interests of the stakeholders to our business model or strategy.

Stakeholder group	Purpose and engagement channels	Examples of how outcomes are taken into account
Customers	Meeting the growing demand for sustainable packaging by developing eco-friendly corrugated cardboard and paper products.	Expansion of recyclable and biodegradable product lines, certification of products to meet environmental standards.
Employees	Ensuring a safe and efficient work environment while fostering innovation and sustainability in operations.	Implementation of energy-efficient production processes, waste reduction programs, and employee training on sustainability.
Suppliers & Recycling Partners	Strengthening partnerships with waste collection and recycling companies to enhance raw material recovery and circular economy practices.	Increased use of recycled paper in production, optimization of waste collection networks, and investment in new recycling technologies.
Regulators & Public Authorities	Ensuring compliance with environmental regulations and aligning business practices with national and EU sustainability policies.	Implementation of emission reduction measures, waste management improvements, and adherence to green certifications.
Investors	Maintaining transparency on sustainability efforts and securing funding for eco-friendly innovations.	Access to green financing, investments in renewable energy, and improved CSRD reporting to attract responsible investors.
Creditors, Local communities, Field experts	No formal engagement is implemented

Figure 11. Stakeholders

1.4. Double Materiality Assessment including stakeholders engagement

In 2024, we decided to prepare a more mature materiality assessment than in 2023, as this year's analysis follows the double materiality principle. Due to regulatory changes, we have established our impact, risk and opportunity gathering methodology alongside the double materiality process.

We have conducted the double materiality assessment, and we have validated the results with the field experts and management, using the following approach:

• The recommendations were prepared based on expert opinions, and benchmarks analysis.
• Workshops were conducted with internal experts, primarily via Teams, where the approach and suggestions were presented for all the participants—typically in a PowerPoint presentation format.
• Once the presentation was complete, it was ensured that all aspects were clear before seeking feedback and agreement on the recommendations.
• Following the approval, that part was considered validated and accepted.
  • o If someone did not agree, either changes were made or, if changes were not advisable (e.g., due to legal requirements), the constraints were explained, and we worked towards a consensus.
• Following the workshops, the presentations and any necessary documents were saved for further review. This allowed us to raise any additional concerns or questions. If no further comments were added, the results were considered validated and final.
• We provided written feedback and validated the whole process as well for audit purposes.

The field experts were chosen based on the main ESRS topics, so that all possible topics can be covered.

The identification and oversight of impacts, risks, and opportunities are currently the responsibility of the project team included in the double materiality process. This is primarily to ensure legal compliance and to disseminate and strengthen fundamental ESG knowledge within our organization. During the operational implementation, our group 's experts (HR, Procurement, Finance, Operation, Quality etc.) are involved in various subtopics. However, it is important to highlight that the precise delineation of impact and responsibility areas into formal regulations is still pending. After clarifying the processes and relevant expertise, the review and enhancement of our regulations are part of our short-term plan.

Material topics – with relevant impacts, risks and opportunities – were identified based on regulatory requirements, expert insights, and benchmark analysis of relevant ESG themes. Regarding benchmark analysis we assume that the chosen companies have a similar operational background and understanding of legal requirements. Other assumptions related to the IRO-s were that internal experts and stakeholders understood and added their ideas and answers based on

their best knowledge. Our methodology was largely aligned with EFRAG's implementation guidelines and approved by the executive committee. ESRS 1 outlines over 90 potential topics, which were meticulously narrowed down to 23 relevant topics through a review of competitors and relevant market actors. We have considered the standards of ISSB regarding Pulp&Paper Products and Containers&Packaging sectors, however we concluded that the topics and metric listed in these documents are all covered by ESRS.

The narrowed down list of 23 ESRS topics were evaluated based on their impact and financial materiality, considering factors such as scope, probability, and remediability. Impacts were assessed both qualitatively and quantitatively across Vrancart Group's operations and value chain.

Impact assessment

Impacts were pre-assessed by experts then Vrancart Group's stakeholders validated the results. When evaluating the impacts it was important to score the inherent impact, which means before any mitigation actions. Also, we considered the impact occurrence on the short-, medium-, and long turn defined by the ESRS. In many cases it is possible that the impact is relevant in all the time horizons which were indicated in our Double Materiality Assessment excel file. For example, in case of climate-related impacts, those are usually considered to be material on long-term, while the own workforce related impacts are more common to be relevant on the short term as well.

First, we collected the impacts then decided if those are actual or potential. For actual negative impacts, materiality is based on the severity of the impact, while for potential negative impacts it is based on the severity and likelihood of the impact. Severity includes scale, scope and remediability. It is important to highlight that in the case of a potential negative human rights impact, the severity of the impact takes precedence over its likelihood. Fortunately, no sever impacts on human rights were identified. For positive impacts also the scale, scope – and in case of potential impact, the likelihood – aspects were considered.

A scoring system ranging from 0 to 3 was employed to classify the impacts based on the above mentioned aspects. Impacts were classified as material if the score was over 2 points.

Financial assessment

We have identified risks and opportunities related to all the relevant topics then evaluated them one by one using likelihood and magnitude as main aspects. A sustainability matter was considered material from a financial perspective if it triggers or could reasonably be expected to trigger material financial effects - escalating costs or generate savings or increased revenue.

The financial assessment was conducted with the active involvement of the experts and field representatives of the group where the impact and financial dependencies were discussed. A scoring system ranging

from 0 to 3 was employed to classify the IROs⁶ , ensuring a holistic understanding of their effects on the organization and its stakeholders. Scores were aggregated to classify topics as material if they surpassed defined thresholds (over 2 points).

The final list of 17 (sub-subtopic level) material topics will serve as the cornerstone for Vrancart Group 's 2024 integrated sustainability report under the CSRD.

For our metrics, if not stated otherwise, it is to be understood that they have not been validated by an external body other than the assurance provider.

Stakeholder validation involved mapping relevant stakeholders – both internal and external – and soliciting feedback through customized questionnaires. We assume that our methodology for selecting stakeholders has enabled us to identify the most relevant individuals to collaborate on the double materiality analysis. Furthermore, we believe that these stakeholders have completed the questionnaire to the best of their knowledge. The feedback corroborated the relevance of the

existing material topics, with some adjustments made to reflect stakeholder perspectives.

The materiality matrix underscores key sustainability topics for Vrancart, combining input from internal teams and external stakeholders. The value chain analysis encompasses upstream activities such as raw materials sourcing and internal recycling, core production processes, and downstream distribution and delivery. The business model accentuates sustainable sourcing practices, operational efficiency, and stakeholder benefits, aiming for a positive ecological impact and community involvement.

Vrancart Group's double materiality assessment for its 2024 CSRD report provides a thorough evaluation of significant sustainability topics. By integrating impact and financial materiality, the assessment ensures a comprehensive understanding of the issues that are paramount to Vrancart Group's operations and stakeholders. The final list of 17 material topics, validated by stakeholders, will guide Vrancart Group's sustainability endeavors and reporting, emphasizing sustainable practices and long-term value creation.

⁶ Impact, Risk, Opportunity

	ESRS Topic name	Impact	7 +/-	Risk/opportunity	Materiality	People / environment	Time horizon	Value chain
E1	Climate change mitigation	Energy-intensive processes contribute to higher greenhouse gas emissions if non-renewable energy sources are mostly used The extraction and processing of raw materials often require significant energy, typically from fossil fuels, leading to high greenhouse gas (GHG) emissions The transportation of finished products to markets can result in substantial GHG emissions.	-	With the development of new energy sources, renewable energy sources and other innovative solutions available on the market, Vrancart Group has the opportunity to reduce CO2 emissions	Double materiality	Natural environment	Mid to long-term	Own operation, Upstream
E1	Energy	High energy use mostly relies on fossil fuels, leading to the depletion of non renewable resources like coal, oil, and natural gas	-	As a manufacturer, Vrancart Group needs consistent energy coverage for seamless operation. Energy scarcity may result in partial or total plant shutdown. With the development of new energy sources, renewable energy sources and other innovative solutions available on the market, Vrancart Group has the opportunity to use green energy and increase the consumption from these sources which may result lower energy costs.	Double materiality	Natural environment	Short to long term	Own operation
E2	Pollution of air	Emissions from production/supply/distribution include particulate matter and volatile organic compounds, degrading air quality and affecting human health	-	Non-material	Impact materiality	Natural environment	Medium to long term	Own operation
E2	Pollution of water	Wastewater from production/supply/downstream activities contains harmful chemicals, potentially contaminating local water sources, harming aquatic ecosystems and biodiversity	-	Non-material	Impact materiality	Natural environment	Medium to long term	Own operation Up- and downstream

⁷ Overall direction of the topic considering the impacts

E3	Water consumption	The group requires significant water for production processes, impacting local water resources and contributing to regional water stress	-	Implementing water-saving technologies or recycling water can reduce costs and improve environmental performance	Double materiality	Natural environment	Short to long term	Own operation
E3	Water withdrawals	Vrancart Group withdraws water from local sources, potentially depleting freshwater reserves and affecting nearby ecosystems or water availability if not properly discharged	-	Implementing water-saving, monitoring technologies or recycling water can reduce costs and improve environmental performance	Double materiality	Natural environment	Short to long term	Own operation Downstream
E3	Water discharges	Wastewater discharges from production processes may contain pollutants, negatively affecting water quality and aquatic life downstream	-	Contaminated discharges could result in increased water taxes or legal penalties, especially in water-stressed areas	Double materiality	Natural environment	Short to long term	Own operation
E4	Impacts on the extent and condition of ecosystems	Ecosystems may be harmed by pollution, land-use changes, and resource depletion, leading to reduced biodiversity and ecosystem functionality	-	Non-material	Impact materiality	Natural environment	Medium to long term	Own operation Upstream
E5	Resource inflow	While Vrancart Group uses recycled materials, its operations still generate non-recyclable waste, which may contribute to environmental pollution and strain on waste disposal systems Waste mitigation and reduction on environmental impact by reusing and recycling materials within its operations, through incorporating recycled materials into production and minimizing waste,	- +	Dependence on raw material suppliers could lead to price volatility or supply shortages, disrupting production Increasing the use of recycled materials helps stabilize supply chains and reduce dependency on external suppliers, boosting competitiveness and profits	Double materiality	Natural environment	Medium to long term	Own operation
E5	Resource outflow	The production process results in waste streams, including paper offcuts and materials that are not fully recyclable.	-	Non-material	Financial materiality	Natural environment	Medium to long term	Own operation
E5	Waste: circular economy	Vrancart Group's operations still generate non-recyclable waste, which may contribute to environmental pollution and strain on waste disposal systems.	-	The main opportunity in waste management for Vrancart Group can be in circularity and circular economy principles. By focusing on circularity, the costs can be reduced	Double materiality	Local communities Natural environment	Short to long term	Own operation Up- and downstream

		Waste mitigation and reduction on environmental impact by reusing and recycling materials within its operations, through incorporating recycled materials into production and minimizing waste.
S1	Secure employment	Providing stable employment opportunities strengthens workforce loyalty and creates a sense of security, fostering long-term organizational growth	+	Non-material	Impact materiality	Employees	Short to long term	Own operation
S1	Health and safety	Neglecting health and safety risks can lead to accidents, illnesses, and reduced employee morale, impacting productivity and reputation	-	Non-material	Impact materiality	Employees	Short to long term	Own operation
S1	Collective bargaining	Enabling collective negotiations ensures fair agreements, enhancing alignment with employee needs and boosting morale	+	Collective agreements can result in improved labor relations and can reduce turnover rate.	Financial materiality	Employees	Short to long term	Own operation
S2	Health and safety	Insufficient safety measures or hazardous working conditions may lead to workplace injuries, impacting worker well-being and operational efficiency	-	Non-material	Impact materiality	Workers in the value chain	Short to long term	Up- and downstream
G1	Corporate culture	A positive corporate culture fosters transparency, trust, and collaboration, leading to better business performance, employee satisfaction, and alignment with ethical practices	+	Fostering a positive and transparent work culture can improve employee engagement, productivity, and retention	Impact materiality	Employees	Short to long term	Own operation
G1	Whistleblow er procedure	Supporting whistle-blowers ensures that employees can report unethical practices without fear of retaliation, promoting integrity and accountability within the group	+	Non-material	Impact materiality	Employees	Short to long term	Own operation Up- and downstream

Figure 12. Material topics

In most cases, sub-topic categories have been used as their granularity is generally understandable and easy to analyze. In some instances, it was necessary to consider sub-sub-topics independently to gain a better perspective and score the topic with its possible IROs more precisely. The current and anticipated effects of the material impacts, risks and opportunities on the business model, value chain, strategy decision-making and financial position have not been analyzed. We plan to incorporate this aspect into our strategic meetings in the shortterm. The resilience of our strategy and business model is yet to be analyzed as well.

Vrancart Group addresses the disclosure requirements and data points from the ESRS Topical Standards for relevant sub-subtopics, as the materiality analysis was conducted at this level. To link material topics with disclosure requirements, EFRAG's guidance on ID 177.

2. Environmental information

2.1. EU Taxonomy

EU Taxonomy: Sustainable investments framework

Regulation EU 2020/852, known as the EU Taxonomy, introduces a common classification system to identify environmentally sustainable economic activities. This framework is essential as it promotes transparency, consistency, and sustainability across economic sectors, guiding investments towards environmental protection. It thus contributes to the EU's goal of achieving a sustainable and climate-neutral economy.

According to this regulation, companies required to report non-financial information under Articles 19a or 29a of Directive 2013/34 must include information on sustainable economic activities.

Environmental objectives

The EU Taxonomy focuses on six essential environmental objectives for sustainability and combating climate change:

• Climate change mitigation
• Climate change adaptation
• Sustainable use and protection of water and marine resources
• Transition to a circular economy
• Pollution prevention and control
• Protection and restoration of biodiversity and ecosystems

Regulation in detail

The European Union has issued Delegated Regulations to establish the technical criteria and detailed requirements for environmentally sustainable activities.

• Delegated Regulation 2021/2139, amended by Delegated Regulation 2022/1214, sets the technical criteria for the first two environmental objectives.
• Commission Delegated Regulation 2023/2486 of June 27, 2023, supplements Regulation (EU) 2020/852 by setting the technical screening criteria to determine the conditions under which an economic activity qualifies as substantially contributing to the sustainable use and

protection of water and marine resources, the transition to a circular economy, pollution prevention and control, or the protection and restoration of biodiversity and ecosystems, and to determine whether that economic activity causes significant harm to any of the other environmental objectives.

• Amended Delegated Regulation 2021/2178 specifies the presentation of information and the methodology for compliance with reporting obligations on sustainable economic activities.

Economic activities are classified into three EU Taxonomy compliance categories:

• Taxonomy-aligned: Substantially contribute to one environmental objective and do not significantly harm others, meeting technical criteria.
• Taxonomy-eligible: Described in the delegated regulations, regardless of meeting all technical criteria.
• Non-eligible: Not described in the delegated regulations

Compliance with legal requirements

According to EU Regulation 2020/852 and Commission Delegated Regulation (EU) 2023/2486 of June 27, 2023, supplementing Regulation (EU) 2020/852 of the European Parliament and of the Council, companies must report sustainable economic activities based on their eligibility and alignment with environmental objectives.

The Vrancart Group will report on the proportions of eligible and non-eligible activities according to the requirements of Regulation 2020/852.

For the fiscal year 2023, we did not report information about activities aligned with the EU Taxonomy. However, starting with the Sustainability Report for the fiscal year 2024, we will include details about the Group's activities that are eligible and aligned with the taxonomy's technical criteria and requirements.

EU Taxonomy for Vrancart

Eligibility assessment

Eligibility means a standard assessment confirming that an economic activity is included in the EU Taxonomy's delegated regulations. In this context, an activity is considered eligible if it is described in these regulations.

In the case of Vrancart, activities related to the transition to a circular economy are particularly relevant and make a substantial contribution. It is worth mentioning that activities aiming for climate change mitigation could also be considered under sector (5.) Water supply, sewerage, waste management and remediation. However, despite the significant reduction in GHG emission via recycling, and the more lenient requirements of the

activities for mitigation, we have considered the transition to a circular economy as our main subject of our environmental contribution as recycling materials is in the core of our business model, processes and value creation.

For paper recycling and manufacturing mostly from secondary materials, Vrancart Group's eligible activities may be split between two activities contributing to the transition to a circular economy as the following:

• (CE 2.3.) Collection and transport of non-hazardous and hazardous waste
  • o Waste management activities until own sites including collection and transport of paper
• (CE 2.7.) Sorting and material recovery of non-hazardous waste
  • o Waste management activities on own sites including sorting and recovery of paper
  • o Production of high quality secondary raw materials for e.g. paperboard, tissue paper and corrugated cardboard products

Sustainable manufacturing activities were previously reported under (C 5.3.) Preparation for re-use of end-of-life products and product components. The reassessment to (CE 2.7.) Sorting and material recovery of non-hazardous waste has been made based on the following:

• 1. Sector classification of the given activities: As (1.) Manufacturing does not include activities related to paper, Vrancart Group activities are considered under (2.) Water supply, sewerage, waste management and remediation rather than (5.) Services.
• 1. Activity definition: (CE 2.7.) Sorting and material recovery of non-hazardous waste sorting or recovery of non-hazardous waste streams into high quality secondary raw materials – is fitting for Vrancart Group' secondary raw material production. (C 5.3.) Preparation for re-use of endof-life products and product components, on the other hand, does not mention paper production as included in the potential business activities.

Manufacturing activities of Vrancart Group are not directly included in the EU Taxonomy as (1.) Manufacturing sector only covers plastic packaging goods and electrical and electronic equipment. This leads to the need to distinguish between outputs of Vrancart Group that can be considered as secondary materials as they include further processing or modifications for end-users and outputs that are considered as end products.

In general, the secondary material category is considered eligible for (CE 2.7.) Sorting and material recovery of non-hazardous waste, while the end product category is considered non-eligible, as those cannot be declared as raw materials. This means that EU Taxonomy only partially covers the sustainability performance and contribution of Vrancart.

Eligibility KPI calculation

For the Turnover KPI, this general approach has been applied when assessing the revenue of our companies:

• Denominator: Consolidated turnover of the Vrancart Group, including all 3rd party sales according to the financial statements
• Numerator: Sum of turnover resulting from eligible activities
  • o (CE 2.3.) Collection and transport of non-hazardous and hazardous waste
    • Waste management activities including collection and transport of paper
    • ➢ 3rd PTY sales related to collected waste (Vrancart) throughout national network of waste collection centers
  • o (CE 2.7.) Sorting and material recovery of non-hazardous waste
    • Waste management activities including sorting and recovery of paper
    • Production of high quality secondary raw materials
    • ➢ Includes environmental responsibility takeover services (Ecorep) and recycling services (Vrancart & Vrancart Recycling) with intra-group sales eliminated on consolidation
    • ➢ Paperboard (K25): the items sold are products made from recycled materials not intended for final use, including only 3rd PTY sales (no adjustments are necessary)
    • ➢ Tissue paper (HIG): the items sold are products made from recycled materials not intended for final use, including only 3rd PTY sales (no adjustments are necessary)
    • ➢ Cardboard (CO Adjud, CO VLC & CO Tg M): the items sold are products made from both recycled & non-recycled materials
      • The proportion of recycled materials used in production is the basis to determine the share of sales from goods made with recycled materials
      • Products designed both for further use (cardboard sheets) and for end-use (cardboard boxes)
      • Only products designed for further processing were included in 2.7 (no consolidation adjustments are necessary)

In case of the CAPEX KPI, the general approach has been further differentiated to exclude investments from eligibility that are not directly connected to the EU Taxonomy activities, meaning they do not directly contribute to the sustainability performance, but only provide a platform or support for the core business activities leading to sustainability contribution, even though they are essential for the business as usual. This is true for the generally utilized or administrative investments, such as offices and other buildings for administration, equipment, infrastructure, general or administrative software, etc. All growth of investments for these assets has been considered non-eligible.

For the eligibility, EU Taxonomy activity-related growth of investments for the two identified activities has been considered eligible on the basis of direct contribution to the core business activities including facility lands and buildings, machinery, equipment, infrastructure, manufacturing tools, productional licenses, production software, etc. The investments of the given assets have been further split between the two identified EU Taxonomy activities.

Furthermore, as we are keen on reducing our GHG emissions and making our processes more environmentally friendly, an extensive investment has been made in the form of a photovoltaic solar power park. As the electricity production is dedicated for own waste management and recycling processes, energy consumption does not lead to 3rd party sales, making the investment only relevant for the CAPEX KPI. It is worth mentioning that these assets are mostly relevant in the year of the incurred investments cost.

In addition, transportation activities have also been included in the CAPEX KPI based on the vehicle-related long-term leasing costs. For the CAPEX KPI, this extended approach has been applied when assessing the growth of investments of our companies:

• Denominator: Increases in the Group's total tangible and intangible assets according to the financial statements
• Numerator: Sum of increase from eligible activities
  • o (CE 2.3.) Collection and transport of non-hazardous and hazardous waste
    • Investments directly related to collection and transport of paper
  • o (CE 2.7.) Sorting and material recovery of non-hazardous waste
    • Investments directly related to sorting and recovery of paper
    • Investments directly related to production of high quality secondary raw materials
    • ➢ Relocation of the collection center is included
  • o (CCM 4.1.) Electricity generation using solar photovoltaic technology
    • Investments directly related to PV park establishment
  • o (CCM 6.5.) Transport by motorbikes, passenger cars and light commercial vehicles
    • ➢ Long-term leases related to vehicles

Regarding the OPEX KPI, EU Taxonomy has a specific definition for the inclusion of operating costs, as it shall only cover direct non-capitalized costs that relate to research and development, building renovation measures, short-term lease, maintenance and repair, and any other direct expenditures relating to the day-to-day servicing of assets of property, plant and equipment by the undertaking or third party to whom activities are outsourced that are necessary to ensure the continued and effective functioning of such assets.

From an operating cost perspective, only maintenance costs have been acknowledged relevant and material to be included in the KPI. Since these costs are hardly differentiable, the CAPEX eligibility ratio has been applied to maintenance costs connected to the activities, with maintenance costs connected to end products or other non-eligible operations previously excluded.

For the OPEX KPI, this corresponding approach has been applied when assessing the operating costs of our companies:

• Denominator: Total maintenance costs of the Group
  • o The figures are extracted from the company's P&L statement, designed for management purposes.
• Numerator: Sum of maintenance costs eligible activities
  • o (CE 2.3.) Collection and transport of non-hazardous and hazardous waste
    • Maintenance costs directly related to collection and transport of paper
  • o (CE 2.7.) Sorting and material recovery of non-hazardous waste
    • Maintenance costs and services directly related to sorting and recovery of paper
    • Maintenance costs and services directly related to production of high quality secondary raw materials

To prevent double counting in the allocation of Turnover, Capex, and Opex across economic activities, we applied a clear and consistent methodology:

• Each revenue and cost item were allocated to a single economic activity based on its main purpose, ensuring clear separation between activities.
• Capex and Opex were attributed directly to specific projects or operational functions.
• Intra-group transactions were eliminated during consolidation to ensure only external revenues and costs were included in the KPIs.

KPIs Assessment	Turnover	CAPEX	OPEX
(CE 2.3.)	Collection and transport of waste
(CE 2.7.)	Sorting and recovery of waste
	Secondary material production
(CCM 4.1.)	-	Photovoltaic	-
		solar park
(CCM 6.5.)		Vehicle leasing
		(long-term)

Figure 13. KPI assessment

Alignment assessment in general

Alignment involves a detailed analysis on activity level, where the substantial contribution to the given environmental objective is defined uniquely for each activity by meeting the Technical Screening Criteria (TSC). Beyond that, each activity must also ensure that it does not significantly harm any of the other environmental objectives by meeting its general or unique Do No Significant Harm (DNSH) requirements.

An activity may be declared aligned under the EU Taxonomy if it meets both its relevant TSC and DNSH requirements. If alignment to any criterion cannot be achieved in a documented manner, the activity is considered eligible, but non-aligned – there is no option for reporting partial alignment.

Technical Screening Criteria

Through thorough assessment, it has been concluded that TSC criteria may be met for both of the relevant eligible activities.

For activities relevant to (CE 2.3.) Collection and transport of non-hazardous and hazardous waste, requirements for the purpose of collection and transport and the segregation of waste and monitoring of key performance indicators must be satisfied. Moreover, collection via municipal waste streams must also conform to the relevant criteria to ensure organized and safe management of such waste streams.

We adhere to these requirements as the aim of our operations for source segregated and separate collection of waste is to prepare the inputs for reuse or recycling to the highest level technologically possible. From municipal waste streams, in connection and contract with local authorities and municipalities, we collect waste via supervised collection points, ensuring high level of separate collection and low rates of contamination. The performance of our operations – both for residential and commercial waste - is monitored and managed through publicly available KPIs, one of this being the ratio of recycled materials of collected waste.

For activities relevant to (CE 2.7.) Sorting and material recovery of non-hazardous waste, requirements for the origin of the feedstock material, material recovery, proper management of waste and quality of secondary raw materials must be fulfilled.

We comply via separately collected and transported waste, including commingled fractions throughout our operations, with key performance indicators for conversion rates defined and tracked; while utilizing ISO standards and best practice technologies to make sure our secondary raw materials are high-quality outputs that are ideal substitutions for virgin materials. It is worth highlighting that even though the activity only requires a conversion rate of at least 50 % in terms of weight, all collected materials that are suitable for recycling is processed, resulting that all outputs reported for this activity are recycled.

Do No Significant Harm criteria

Regarding the DSNH criteria, most of our compliance may be demonstrated. It is worth underlining our extensive water management in place for the environmental goal of sustainable use and protection of water and marine resources, with criteria for pollution prevention and control and for protection and restoration of biodiversity and ecosystems also addressed.

Nevertheless, as we are only in the preparation phase of conducting a fitting physical climate risk assessment, alignment to the criteria for climate change adaptation cannot be declared. For more details, please see part Climate risks of this report.

As previously mentioned, alignment may only be declared if sufficient documentation may be provided to ensure alignment. Consequently, as the physical climate risk assessment is an overarching DNSH criteria for all EU taxonomy activities that directly contribute to any of the other five environmental goals, we cannot report alignment for any of our eligible activities. It is noteworthy that this may not indicate that our operations do not contribute to the transition to a circular economy nor that they would significantly harm any of the other goals. Yet, from a documentation aspect, compliance is yet to be demonstrated in order to publish alignment for EU Taxonomy.

Planned progress

For 2025, we focus on two part for developing our EU Taxonomy compliance:

• 1. to enhance data quality both for increased calculation precision and to be able to differentiate between further activities, especially general activities including vehicles and buildings
• 1. to be compliant with both of the frameworks of CSRD and EU Taxonomy, we plan on progressing forward with alignment with focus on the physical climate risk assessment to evaluate relevant risks, establish corrective or preventive measures where necessary and be adaptive to the upcoming climate change that may affect us.

EU Taxonomy KPIs for Vrancart

	Turnover		CAPEX		OPEX
	(RON)		(RON)		(RON)
(CE 2.3.)	17 213 397	3,5%	57 915	0,0%	582 219	4,0%
(CE 2.7.)	226 045 977	46,4%	32 435 629	24,9%	10 824 352	74,3%
(CCM 4.1.)	-	-	79 974 937	61,3%	-	-
(CCM 6.5)	-	-	3 417 659	2,6%	-	-
Non-eligible	243 535 963	50,1%	14 520 842	11,1%	3 153 098	39,1%
Total	486 795 338	100%	130 406 983	100%	14 559 669	100%

Figure 14. Turnover, CAPEX, OPEX

2.2. E1 – Climate change

Material IROs

ESRS	Topic name	Impact	Risk / Opportunity
E1	Climate change mitigation	Energy-intensive processes contribute to higher greenhouse gas emissions if non-renewable energy sources are mostly used The extraction and processing of raw materials often require significant energy, typically from fossil fuels, leading to high greenhouse gas (GHG) emissions The transportation of finished products to markets can result in substantial GHG emissions.	With the development of new energy sources, renewable energy sources and other innovative solutions available on the market, Vrancart Group has the opportunity to reduce CO2 emissions
E1	Energy	High energy use mostly relies on fossil fuels, leading to the depletion of non-renewable resources like coal, oil, and natural gas	As a manufacturer, Vrancart Group needs consistent energy coverage for seamless operation. Energy scarcity may result in partial or total plant shutdown. With the development of new energy sources, renewable energy sources and other innovative solutions available on the market, Vrancart Group has the opportunity to use green energy and increase the consumption from these sources which may result lower energy costs.

Our Approach and Policies

Vrancart Group emphasizes recycling and the use of renewable energy sources to minimize its carbon footprint and enhance energy efficiency, as – being a manufacturing group – it acknowledges its significant climate impact. One of the most critical issues for such enterprises is addressing climate change challenges and optimizing energy usage. The climate related impacts, risks and opportunities were identified following the process described in the Double materiality assessment

chapter, where the main affected stakeholders, time horizons were considered. Therefore, we are reducing our environmental impact through various initiatives in waste processing, energy consumption, and distribution.

The first step towards a more environmentally conscious operation is the implementation of specific policies. Currently we do not have a

policy directly addressing climate change and energy, which is aligned with the requirements of ESRS. With our SICMS⁸ Policy we are trying to highlight the importance of reasonable resource utilization and environmental protection, yet we do not have specific commitment to climate change mitigation and energy usage including renewable energy. Sustainability is gaining more and more attention within our group, formalizing our commitments were not prioritized, this is why we lack certain policies. We plan to implement a policy addressing climate change in the mid-term.

Besides this policy we are planning to implement a comprehensive and structured training program, as right now we are engaging with informal discussions with our workforce to encourage them to be aware of sustainability-related issues. During the program the focus will be on climate change in general and its effects on our operation and energy efficiency and usage, and also how our colleagues can contribute to a more sustainable operation. However, we have no official planes approved yet in the topic. The program is planned to cover the own workforce, first focusing on Vrancart S.A. In case of a successful program the extension of the training to the other subsidiaries will be examined. The program is planned to be started in 2027 and further development to be implemented after the pilot year. We are gradually incorporating sustainability into our resource- and risk management policies as well.

We have an annual energy audit conducted by a third party to evaluate our energy consumption, efficiency, and identify development opportunities. The result of these audits is to be compliant with regulatory requirements and also we get a high level conclusion on how to be more energy efficient for example:

• Performing necessary maintenance and cleaning work on energy-consuming equipment.
• Introducing energy consumption accounting at points of consumption that are of interest.
• Considering energy consumption when making purchasing decisions.
• Adapting light intensity to needs.
• Using efficient systems to detect unsealed areas and conducting periodic tests and repair programs.

The scope of this action is the own operation of Vrancart S.A in Adjud.

Climate risks

Climate risk management is handled in our risk management processes and we are still planning to further develop it. Climate risks are integrated into the organization's overall risk assessment framework. This includes identifying, assessing, and prioritizing risks relative to

⁸ Integrated quality, environment management system

others, considering their likelihood, potential impact, and the organization's capabilities to manage them.

All members of the organization are aware of the impact of climate change on their activities mainly because of active informal communication. Interdepartmental collaboration is crucial, involving relevant departments to integrate climate factors into decisions. This includes informal discussions with the employees, developing an effective internal communication framework, and ensuring transparency towards external stakeholders. The monitoring of the progress related to sustainability initiatives is overseen by the board. The performance regarding the climate change topic of the members of the management, administrative or supervisory bodies is not reflected in any incentive schemes and no climate-related considerations are factored into their remuneration.

At a conceptual level we distinguish – based on TCFD recommendations – two main categories of climate related risks: physical and transition risks. The distinction is Physical risks are direct impacts of climate change on daily activities, includes the increase in the frequency and intensity of extreme weather events (storms, floods, droughts, etc.). Assessing physical risks involves identifying vulnerable areas in the supply chain or in the business's own operations. Transition risks are risks associated with the transition to a greener economy, including changes in government regulations, the evolution of the carbon market, or rising costs for natural resources. Changes in government regulations or environmental policy (e.g., carbon taxes) may influence operational costs and business strategies.

For now we do not possess an exhaustive list of risks using physical and transition risk categorization, as in the reporting year no resilience analysis was conducted. Therefor the exposure and vulnerability to climate related physical and transition risks are not yet evaluated. To prepare the list and incorporate it better into our already listed risk collection, the first step will be a resilience analysis and climate scenario analysis to better understand our surroundings. We started to work on a resilience analysis which is in an initial phase where we analyze the impact of our activities on environmental factors such as water, air, soil, resource consumption and GHG emissions. After listing the risks, the anticipated financial effects can be quantified.

We confirm that we will re-evaluate this sub-topic once the analysis is completed, in accordance with the requirements of the standard, to ensure continuous improvement and alignment with evolving standards.

In the short-term, we are anticipating rising energy costs. Environmental regulations can also increase operating expenses, thus negatively impacting planned investments. We consider this financial liability to be of moderate magnitude, as it is possible to postpone new projects or redirect funds to initiatives that adapt to climate change risks or opportunities.

In the medium-term, we expect increased demand for ecological products and investments in green technologies that could generate savings in production costs and increase income. This would encourage investments and/or the elimination of polluting processes.

In the long-term, the effects of climate change on infrastructure may lead to the need to revise investment plans, including investments in protective infrastructure or the relocation of activities to safer locations. There could also be the abandonment of locations exposed to climate risks. Increased insurance costs due to climate risks may require adjustments to financial strategy and investment plans, to allocate additional resources to protect assets or, in some cases, the abandonment of riskier projects. This financial pressure is considered to be of low magnitude. Investment plans remain largely unchanged as only minor adjustments may be necessary, such as implementing more efficient technologies.

Vrancart Group is going to address climate related financial risks by identifying the risks correctly, integrating climate risks into the overall business strategy, investing in sustainable technologies and accessing green finance and adopting greater transparency through reporting on climate impact.

Energy mix

While Vrancart Group's business model has the potential to contribute positively to the reduction of climate change, we have considerable responsibility to reduce our impact through our manufacturing processes and emissions throughout the whole value chain. Paper manufacturing is a high climate impact sector. As the whole operation is in this sector the total net revenue of 2024 – 486 795 338 RON – is originated from high climate impact activity.

For the energy mix table, we have used conversion factors to calculate total energy consumed for sources such as diesel fuel and natural gas, for example. Diesel consumption was converted to mass using the ANRE-defined (link) density of 0.845 kg/L, with energy content calculation based on 1 ton of diesel equating to 11.80445 MWh, following the ton of oil equivalent (toe) method provided by the Min. of Energy (link). For natural gas, volume (m³) was converted to MWh using a factor of 0.0108, while propane (kg) was converted using 50.4 MJ/kg, with the final energy values expressed in MWh using 1 MJ= 0.0002777778 MWh. Electricity consumption was assessed considering the energy mix of suppliers, as outlined in their 2023 energy labels, ensuring a precise evaluation of emissions and energy mix.

Energy consumption and mix	2024
Fuel consumption from coal and coal products (MWh)	0
Fuel consumption from crude oil and petroleum products (MWh)	14 320
Fuel consumption from natural gas (MWh)	123 230.43
Fuel consumption from other fossil sources (MWh)	206.9
Consumption of purchased or acquired electricity, heat, steam, and cooling from fossil sources (MWh)	20 306.37
Total fossil energy consumption (MWh)	158.063,7
Share of fossil sources in total energy consumption (%)	79.3%
Consumption from nuclear sources (MWh)	6 722.29
Share of consumption from nuclear sources in total energy consumption (%)	3.3%
Fuel consumption for renewable sources, including biomass (also comprising industrial and municipal waste of biologic origin, biogas, renewable hydrogen, etc.) (MWh)	78.36
Consumption of purchased or acquired electricity, heat, steam, and cooling from renewable sources (MWh)	26 693.82
The consumption of self-generated non-fuel renewable energy (MWh)	7 743.13
Total renewable energy consumption (MWh)	34 515.31
Share of renewable sources in total energy consumption (%)	17.4%
Total energy consumption (MWh)	199 301.3
Non-renewable energy production	0
Renewable energy production	8 868.41
Total energy consumption from activities in high climate impact sectors per net revenue from activities in high climate impact sector (MWh/ million RON)	409,4

Figure 16 . Energy mix

Paper manufacturing is a high climate impact sector, so all the revenue is generated in it. Which means the relevant net revenue is 486 795 338 RON. The energy intensity is 409.4 MWh / million RON.

Scope 1

For the corporate carbon footprint calculation regarding the year of 2024, the control-based method – the operational control approach was used.

The gross Scope 1 GHG emissions were 26 746.09 tCO2eq in the reporting year. 86% of the Scope 1 GHG emissions is originated from regulated emission trading schemes, as Vrancart S.A. is under the scope of EU Emission Trading Scheme and these emissions have been validated through this reporting process.

Scope 2 location-based & Scope 2 market-based

Scope 2 emissions were determined based on the ESRS, the GHG Protocol Corporate Standard9 and the GHG Protocol Scope 2 guidance10 . For the corporate carbon footprint calculation regarding the year 2024, the control-based method was used, specifically the operational control

approach. Calculations were performed based on GHG Protocol method; activity data were multiplied by emission factors.

Within the Scope 2 category, emissions from the use of purchased electricity are relevant only (100%). For market-based approach, GHG emissions are calculated based on the emissions of our contractual partners from whom we buy electricity, using the emission factors relevant for the electricity suppliers of Vrancart Group.

For the location-based method, emissions were calculated according to the average energy production emission factors for the region, using average data for Romania.

The gross location-based Scope 2 GHG emissions were 9 251,55 tCO2eq. The gross market-based Scope 2 GHG emissions were 13 110,15 tCO2eq in 2024. On the contractual instruments regarding Scope 2, we do not have the information aligned with the requirements of ESRS.

Scope 3

¹⁰ Scope 2 Guidance | GHG Protocol

⁹ Corporate Standard | GHG Protocol

Vrancart Group GHG emissions	2024
Scope 1 gross GHG emission (tCO2e)	26 746.09
Scope 1 emissions from regulated emission trading schemes	86%
Scope 2 location-based GHG emission (tCO2e)	9 251.55
Scope 2 market-based GHG emission (tCO2e)	13 110.15
Significant Scope 3 GHG emissions	368 127.47
Scope 3-1 Purchased goods and services	184 990.63
Scope 3-2 Capital goods	9 457.27
Scope 3-3 Fuel and energy related activities	3 572.87
Scope 3-4 Upstream transportation and distribution	1 990.18
Scope 3-5 Waste generated in operations	7538.45
Scope 3-9 Downstream transportation and distribution	3 923.93
Scope 3-12 End-of-life treatment of sold products	156 654.13
Excluded Scope 3 subcategories	Justification of exclusion
Scope 3-6 Business travel	Not material for Vrancart Group, emissions are expected to be insignificant in size.
Scope 3-7 Employee commuting	Not material for Vrancart Group, emissions are expected to be insignificant in size.
Scope 3-8 Upstream leased assets	Emissions from leased vehicles are calculated in Scope 1 according to the operational control approach.
Scope 3-10 Processing of sold products	Calculation is not possible at the moment because of missing information about how customers process the products. Processing is mainly cutting and printing, which represents low emissions.

Scope 3-11 Use of sold products	The emissions are expected to be insignificant in size. The use of sold paper products doesn't generate significant emissions.
Scope 3-13 Downstream leased assets	Not material for Vrancart Group, emissions are expected to be insignificant in size.
Scope 3-14 Franchises	Not applicable, as it's not part of the activity.
Scope 3-15 Investments	Not applicable, because we do not have investments outside of the Group
Total GHG emission (location based) (tCO2e)	404 125.11
Total GHG emission (market-based) (tCO2e)	407 983.71

Figure 17. GHG emissions

GHG emissions intensity are calculated using the total GHG emissions and the net revenue of 2024, which is 486 795 338 RON:

• Location based: 830,166 tCO2e/ million RON
• Market based: 838,093 tCO2e/ million RON

Scope 3 GHG emissions were not measured within our value chain. The calculation of Scope 3 emissions is not based on primary data (0%) obtained from our suppliers but based on average data method, spend-based method, distance-based method and waste-type specific method.

Scope 3 significant categories	Reporting boundaries considered
	All upstream emissions of purchased goods and services	For the material products – average data
Scope 3-1 Purchased goods and services		method, for immaterial products and
		purchased services – spend-based method
Scope 3-2 Capital goods	All upstream emissions of purchased capital goods	Spend-based method
Scope 3-3 Fuel and energy related	All upstream emissions of purchased fuels; All upstream
activities	emissions of energy consumed in a T&D system	Average data method
Scope 3-4 Upstream transportation and	Transportation emissions of purchased goods between
distribution	direct (Tier 1) suppliers and Vrancart Group	Distance-based method
	Disposal and treatment of waste generated in Vrancart
Scope 3-5 Waste generated in operations	Group's operations in the reporting year	Waste-type specific method
	Transportation and distribution of products sold
Scope 3-9 Downstream transportation	between the point of sale by Vrancart Group and its	Distance-based method
and distribution	direct (Tier 1) customer.
Scope 3-12 End-of-life treatment of sold products	Waste disposal and treatment of products sold	Waste-type specific method

Figure 18. Scope 3 categories

Emission factors applied do not separate the percentage of biomass or biogenic CO2Financial leased vehicles are considered as purchased capital goods. Since we have sold wastes last year, those items were considered under Scope 3-12 end-of-life-treatment of sold products. We assumed one shipment per invoice and diesel truck as means of transport. The materials are calculated with 60% of recycling and 40% disposal in landfills under the end-of-life treatment of sold products subcategory.

The emission factors were always selected based on the given activity data, and for waste, the selected emission factor also reflects the treatment method. The most accurate, geographically relevant emission factors were used for Scope 3 calculation, as much as these could be available. Emission factors were used from Base-empreinte, Climatiq (BEIS, OpenIO-Canada), Climfoot and DEFRA.

As we prepared our first carbon footprint calculation for all the 3 scopes in 2024, we cannot compare the data with the results of previous years. It will be comparable from now on, using the results of 2024 as the baseline.

Transition plan

We have not implemented an official green transition plan yet, as we are planning to develop our sustainability reporting skills and our methodology to provide a more reliable data foundation for our target baseline.However, we have already started working on a transition plan that includes specific measures to reduce greenhouse gas emissions and integrate circular economy principles. By collecting our existing actions and targets, we will be able to analyze the gaps that need to be filled for a more sustainable operation. To prepare a transition plan we will need a deeper analysis on the topic, which we have not been able to conduct yet, including screening business activities exposed to climate change, mapping climate sensitive assets, scenario analysis, listing transition and physical risks with evaluation, analysis of transition events. We believe that our existing actions and objectives serve as a strong foundation for this work. The plan will be finalized and adopted by 31.12.2026, and will include clear objectives, actions and deadlines for achieving carbon neutrality by 2050.

Actions and targets

Our operations reflect our approach towards climate change topics. We address climate change mitigation and adaptation through energy efficiency and renewable energy usage. However, we have not yet articulated specific actions or targets that comply with the requirements of ESRS 1 11 .

Analyzing the impact of climate change at each annual strategy review is essential. After assessing the impacts, we will develop plans to adapt to climate change and reduce greenhouse gas emissions. These plans are designed to minimize the risks identified and reduce vulnerability to climate change. First, we need to set out goals then plan the actions to reach them.

Our general goals are:

• Transition to renewable energy sources: Replacing fossil fuels with renewable or low-carbon energy sources.
• Changing behavior: Promoting responsible energy consumption.
• Transition to less polluting fossil fuels (e.g. natural gas instead of coal)
• Investments in energy-saving technologies (e.g. LED lighting, energy management systems).

We are in progress with setting measurable, time-bound targets but these are not yet compliant with the ESRS 1 requirements12 . We do not track the effectiveness of our policies and actions yet.

¹¹ Not fully in compliance with ESRS standards

¹² Not fully in compliance with ESRS standards

In alignment to our goals, we have integrated an improved drum pulper system. As a result, we aim to decrease:

• the wastepaper consumption by 3 % (using K2513),
• steam consumption by 2%,
• electricity consumption by 3%
• and industrial water consumption by 4%.

We have not calculated the expected GHG emission reduction originated from our actions, yet, but we are planning to have specific GHG reduction targets for which the monitoring will be indispensable.

When it comes to development actions, a board decision on financing is required. In 2024, all major investment decisions were related to the financial risks and opportunities for the use of renewable resources. For further information, please refer to the taxonomy section. In these instances, the success of the action was highly dependent on the favorable decision regarding financing. However, in most cases, human resources are more critical than financial support. No decarbonization levers were identified to be mapped for the actions.

A stable energy supply is key for our daily operation. This stability can be provided by diversifying our energy sources, and the shift towards renewable sources can contribute to decarbonizing our operation as well. The installation of photovoltaic panels at the end of 2024 and a cogeneration plant serves this purpose. By installing the cogeneration plant - in 2024 - within the VNC R with steam delivery in the VNC, operating costs in the paper and cardboard production departments are reduced. The cogeneration was installed in 2024 but it was only a test phase, no proper cogeneration took place, steam delivery will start from 2025. Also, gas consumption is planned to be reduced by obtaining thermal energy in the plant.

We recognize the risks and opportunities in our activities. When it comes to non-reusable waste, such as plastic fragments, wood and sludge from paper fibers, Vrancart Group will utilize its cogeneration boiler – from 2025 – to convert these materials into energy, reducing gas consumption and reinforcing its sustainability efforts. Rising energy costs may pressure profit margins, while investments in renewables could lower long-term expenses and improve cash flow. Additionally, growing consumer demand for sustainable products presents a revenue opportunity, collectively influencing costs, investments, and overall financial performance.

We reorganized and optimized our production processes in the last quarter of 2024 to integrate more environmentally friendly solutions and reduce resource consumption. We always try to prioritize lowemission technologies, this is why we allocated additional resources for research and development of green technologies and energy-efficient solutions.

¹³ K25 = specific paper machine, that is utilized for producing various paper products, including corrugated cardboard, paperboard, and tissue paper

We never stop searching for possible modernization of equipment to improve energy efficiency and reduce emissions. We recognize that our carbon footprint is generated mainly during the manufacturing of purchased goods, to reduce environmental impact we need to ensure that our materials are handled efficiently, inputs are reduced and optimized and recycling is further enhanced.

Vrancart Group is not only implementing new technologies but adapting the organizational structure as well. The group invests in employee education and in developing an organizational culture focused on sustainability, which directly influences business strategies and management decisions.

To enhance emission reduction efforts, Vrancart Group implemented an energy consumption monitoring system, as it has integrated measuring meters that assess consumption of energy or natural gas for each machine and equipment. This system supports the estimation of Scope 1 and Scope 2 emissions, as it calculates electricity use and natural gas consumption. As Vrancart S.A. is the group's largest emitter, the company prioritizes GHG emissions calculations, focusing on Scope 1, 2 emissions from stationary combustion sources. In 2024, Vrancart S.A. achieved a 4% reduction in Scope 1 CO₂ emissions compared to 2023, driven by increased energy independence, the integration of renewable energy, and process optimizations that improved efficiency and reduced costs.

After implementing new solutions, we started to communicate our actions and results transparently. We developed effective communication channels, such as websites, newsletters, and social media platforms, to inform the public about measures taken in

response to climate change and to obtain continuous feedback from stakeholders.

In addition to our current actions, we have further plans for the future:

• Short-term: We implement further energy efficiency measures and reduce resource consumption, with access to sustainable financing.
• Medium-term: We modernize infrastructure, adjust product portfolio and explore green innovations.
• Long-term: We decommission old assets, develop sustainable products and ensure retraining of the workforce and ensure continuous access to green financing to support strategic changes.

These measures will help to build a sustainable business model, reduce our emissions, access to better funds and strengthen stakeholder satisfaction.

Vrancart Group does not have carbon credit or internal carbon pricing schemes and is not planning on obtaining any. The carbon price is applied in the financial statements only to the income obtained from the sale of surplus emission certificates, according to international quotations. As previously stated, we already have several actions to tackle climate change, but we do not run any GHG elimination or storage projects.

2.3. E2 – Pollution

Material IROs

ESRS	Topic name	Impact
E2	Pollution of air	Emissions from production/supply/distribution include particulate matter and volatile organic compounds, degrading air quality and affecting hu man health
E2	Pollution of water	Wastewater from production/supply downstream activities contains harmful chemicals

Figure 19. Pollution IROs

Introduction

As Vrancart Group is operating in a high climate impact sector – manufacturing – pollution is an important factor to analyze. As a result of the materiality assessment, air and water pollution are material for the group, based on our emissions and daily operation. The exact methodology of the scoring is detailed in the Double Materiality Chapter. For this financial year, we have not yet developed a detailed consultation process over our pollution mitigation policy with our shareholders, although we aim to implement one by next financial year. Vrancart Group is committed to minimizing air and water pollution through sustainable practices in its paperboard and cardboard manufacturing processes. We actively reduce emissions by investing in cleaner technologies14 while aiming to be compliant with environmental standards (however currently we do not have formal monitoring for this matter). Given our significant water usage, we prioritize wastewater purification – by filtrating the water - to prevent contamination and preserve natural resources. By continuously improving our pollution management strategies, we strive to protect the environment while maintaining efficient and responsible operations.

Our Approach and Policies

Vrancart Group do not have a separate, specific policy addressing pollution; however, our Integrated Quality, Health, Safety and Environment (HSE) Policy and training plans have an indirect link to this topic. The Integrated Quality System mandates high-quality operations that do not pollute the

¹⁴ e.g.: renewable energy, water treatment system, pollution control technologies, waste management etc.

environment. Meanwhile, the environmental component of the HSE policy promotes environmentally conscious practices aimed at reducing our negative impacts on the surroundings. In the policies design and execution, we rely on local and international regulations to ensure compliance.

The policies specifically address commercial operations at our Adjud location. It considers the needs and interests of other key stakeholder groups, including clients, suppliers, and authorities. To promote transparency, stakeholders can consult the policies whenever necessary by reaching out to our colleagues or representatives.

The implementation of the policies is overseen at the highest organizational level. The number of incidents and non-compliance cases serve as good indicators of the success of our policy implementation, so this data is monitored regularly. Our General Director holds ultimate responsibility for ensuring its success, demonstrating the strategic importance of this initiative within our organization. We have not yet implemented a formal monitoring mechanism for tracking the success of the implementation of policies. The emission data and the lack of non-compliance events serv as an indicator of our success.

We do not have a policy regarding pollution matters, however our yearly Environmental evaluation includes this topic as well. The main polluting part of our activity is the production process; however, we have invested in treatment processes to keep the pollution levels within the permitted parameters. Integrated Quality, Health, Safety and Environment (HSE) Policy of Vrancart Group also specifically addresses the prevention of unwanted incidents and emergency situations by setting safety standards and measures and by clarifying the steps to be taken in the event of an accident. This policy aims to safeguard both the environment and public health through a comprehensive set of measures and strategies, preventing incidents and minimize overall negative impact. These include:

• Incident prevention measures such as risk assessments, maintenance of equipment and infrastructure, and control of manufacturing processes.
• Emergency and intervention plan featuring clear protocols for rapid response, simulations, and drills.
• Monitoring systems designed to ensure continuous oversight and effectiveness.
• Training and education initiatives to enhance preparedness and awareness across all levels of the organization.

Recognizing the broader regulatory landscape, we anticipate that the objectives and measures outlined in the EU Action Plan, as well as the revisions to existing directives, will influence our pollution mitigation policy. To adapt to these changes, we are committing to investments in modernization and technology upgrades, alongside the continued optimization of our transport system.

In alignment with the EU Action Plan, we also aim to reduce our pollution footprint by prioritizing investments in modernized and

efficient technologies while maintaining our efforts to optimize transportation systems.

Besides the policies we obtain ISO certificates which prove our commitment to managing pollution:

• ISO 14001
• EMAS ecological certificate

Targets and Actions

The scope of our action does not cover our upstream or downstream value chain. Currently no more information on our actions is available in line with ESRS requirements15 .

In 2024 we concentrated on improving our sustainability related measuring skills to be able to take steps to mitigate air and water pollution. This was the first step towards setting targets. Target setting regarding pollution is a mid-term plan for our group, after gathering enough historical data to track the improvements and analyze problems. In 2024 no targets were set for air pollution.

Our main actions for 2024 are the photovoltaic panels and the cogeneration plant, which integrated environmental authorization is set for May 2025. These were implemented at our Adjud facility, funded through non-reimbursable PNRR funds. Although these actions have major effects on climate change and the reduction of GHG emissions, they also have a connection to the reduction of air pollution. We are committed to improving the environmental performance of our installations through the adoption of pollution-reducing technologies and annual environmental audits.

Regular training programs are conducted for all personnel involved in the processes affecting the environmental performance of the industrial installations.

We currently have a wastewater treatment plant in place that mitigates water pollution. Looking ahead, we plan to:

• Modernize the treatment plant to reduce the risk of accidental pollution further.
• Automate the monitoring of air and water quality parameters to improve response times and maintain high environmental standards.

These future actions will be supported by dedicated investment. Funded through non-reimbursable PNRR funds we will invest in a drum pulper, and the automation of air and water parameter monitoring. Our actions do not cover our upstream or downstream value chain. Currently no more information on our actions is available in line with ESRS requirements.

¹⁵ Not fully in compliance with ESRS standards

Measurements

Vrancart Group monitors pollution in compliance with EU BREF standards. Periodic tests and laboratory studies ensure accurate pollutant quantities and compliance with environmental requirements. These tests include independent laboratory analyses, following the Integrated Environmental Authorization, and comply with SR EN 14181:2015. Pollutant quantities are measured and reported at the Vrancart Adjud facility level; the environmental permits for the other Vrancart Group members do not enforce monitoring emissions at these facilities. Air pollutant quantities are measured semi-annually and is provided at group-level, we do not have a further breakdown at subsidiary level.

Nr. crt.	Source/Pollution equipment	Chimney	Polluant	Maximum legal ad missible value (mg/Nmc)	Measured value Semester 1 (mg/Nmc)	Measured value Semes ter 2 (mg/Nmc)
	Cleaver Brocks boiler		Dust	5,00	2,50	2,000
		A1	CO	100,00	68,00	52,000
1			NOx	350,00	172,00	178,000
			SO2	35,00	11,00	3,000
			O2	-	8,35	10,220
			Dust	5,00	2,00	1,600
			CO	100,00	34,00	42,000
2	Clayton nr.1 boiler	A2	NOx	350,00	95,00	134,000
			O2	-	8,57	8,250
			SO2	35,00	0,00	0,000
			Dust	5,00	2,20	2,200
	Clayton nr.2 boiler	A3	CO	100,00	72,00	16,000
3			NOx	350,00	134,00	129,000
			O2	-	7,50	6,680
			SO2	35,00	0,00	0,000
		A4	HCI	26,21	14,20	9,600
	Boiler co-incineration of manufacturing waste		HF	4,24	2,08	1,680
			TOC	42,42	8,80	5,400
4			Cd+Tl	0,05	0,04	0,027
			Hg	0,05	0,01	0,018
			Sb+ As+ Pb+ Cr+ Co+ Cu+ Mn+ Ni+ V	0,50	0,288	0,328
	Clayton nr.3 boiler	A5	Dust	5,00	1,80	1,000
			CO	100,00	38,00	4,000
5			NOx	350,00	145,00	128,000
			O2	-	5,90	8,480
			SO2	35,00	4,00	0,000
	Bosch boiler	A5	SO2	35,00	2,00	4,000
			Dust	5,00	1,50	1,200
6			CO	100,00	2,00	1,000
			O2	-	1,92	2,720
			NOx	350,00	65,00	75,000

Figure 20. Air pollutants

Air pollutant measurements are carried out using the following methodologies:

• Monitoring: Results are obtained through monitoring performed by the accredited RENAR laboratory, part of ICEMENERG Bucharest, with the data compiled in testing reports.
• Measurement Process:
  • 1. Identification of emission sources.
  • 1. Selection of measurement techniques, including specialized sensors to detect pollutant concentrations.
  • 1. Use of international and local standards, such as ISO 14064, for greenhouse gas measurements.
• Main affected areas: Adjud facility

Water pollutant quantities are measured daily at our own laboratory within the water treatment facility and annually at an accredited thirdparty facility.

Name of pollutant	Minimum and maximum monthly values	Legal Limits
pH	7.75 – 8.13	6.5 – 8.5
Suspended solids	7.4 – 14.8 mg/L	60 mg/L
CCOCr	36,9 – 53,8 mgO2/L	125 mgO2/L
CBO5	12 – 22 mg/L	25 mg/L

	0.003 – 0.006	0.3 mg/L
Phenol index	mg/L
	0.022 – 0.056
Total phosphorus	mg/L
Total nitrogen	0.44 – 1.57 mg/L	15 mg/L
Biodegradable
synthetic anionic	0.06 – 0.14 mg/L	0.5 mg/L
detergents
Fixed residue	258 – 312 mg/L	2000 mg/L
Ammoniacal	0.035 – 0.42 mg/L	3 mg/L
nitrogen (NH4+)
	0.039 – 0.095	2 mg/L
Nitrites (NO2-)	mg/L
Nitrates (NO3-)	1.68 – 6.18 mg/L	37 mg/L
Substances		20 mg/L
extractable with	1.08 – 2.04 mg/L
organic solvents

Figure 21. Water pollutants

We have available information on water pollution only for Vrancart S. A. at out Adjud facility, which is also the group's biggest emitter. Out of all our operational sites, only the Adjud facility is not located in a high water stress area, based on WRI Aqueduct. As water pollution is only relevant at the Adjud site, we confirm that 0% of our total pollutant emissions in water occur in high water stress areas.

Water quality monitoring is done as follows:

• Self-Monitoring: Conducted through Vrancart Group's own laboratory at the wastewater treatment plant.

• Annual Control: Third-party accredited laboratories perform annual control analyses, as required by local regulations (A.I.M. 1/18.03.2015, revised on 14.04.2020).
• Testing Reports: The analysis is carried out by ALS Life Sciences Romania – Environmental Laboratory, Ploiești, and the results are documented in testing reports.
• Main affected areas: Adjud facility

Through these methodologies and procedures, Vrancart Group ensures continuous monitoring of its pollution emissions, maintaining compliance with legal limits and environmental standards. We perform the monitoring regularly, however comparing data with previous years is not a common practice, we do not have analysis on the changes over the years either related to air or water pollution.

Incidents related to pollution

While no non-compliance incidents with the Industrial Emission Council have been reported, we actively manage environmental and human safety risks associated with industrial processes:

• Air Pollution: Our industrial facilities emit mainly greenhouse gases that can pollute the air, such as carbon dioxide (CO2). The emission of other non-GHG gases such as nitrogen oxides (NOx), sulfur dioxide (SO2), carbon monoxide (CO) and different fine particles, etc. occur as well.
• Water Pollution: The group properly manages the water treatment station to ensure that discharges into the receiving environment are safe, without affecting drinking water quality, surface waters, or harming aquatic ecosystems.

Water pollution could also emerge in connection with waste management. Our wastewater treatment plant operates within legal limits, and our measured pollutant emissions are within the allowed thresholds.

2.4. E3 – Water and marine resources

Material IROs

ESRS	Topic name	Impact	Risk / Opportunity
E3	Water consumption	The group requires significant water for production processes, impacting local water resources and contributing to regional water stress	Implementing water-saving technologies or recycling water can reduce costs and improve environmental performance
E3	Water withdrawals	Vrancart Group withdraws water from local sources, poten tially depleting freshwater reserves and affecting nearby eco systems or water availability if not properly discharged	Implementing water-saving, monitoring technologies or recy cling water can reduce costs and improve environmental per formance
E3	Water discharges	Wastewater discharges from production processes may con tain pollutants, negatively affecting water quality and aquatic life downstream	Contaminated discharges could result in increased water taxes or legal penalties, especially in water-stressed areas

Figure 22. Water and marine resources IROs

Introduction

Water management is crucial to Vrancart Group's operations, as paperboard and cardboard manufacturing heavily relies on water resources. Therefore, Vrancart Group focuses on safeguarding water reserves to prevent depletion, adhering to environmental standards for processing and purifying industrial water, and ensuring efficient use and safe return of water to the environment. With water becoming increasingly scarce globally, it is essential for companies to swiftly implement responsible water management practices to maintain safe hydraulic standards and ensure long-term industrial activity. We have assessed our impacts, risks and opportunities related to the topic following the methodology described in the Double Materiality Chapter and using the WRI Aqueduct tool. Out of all our operational sites, only the Adjud facility is not located in a high water stress area, based on WRI Aqueduct. Adjud site is located in a low water stress territory.

Our approach and policies

Our Integrated Quality and Health, Safety and Environment (HSE) Policy addresses the environmental impact caused by operations regarding water use. These policies represent a cornerstone of our environmental responsibility strategy and serve as a guide for reducing our impact on the environment.

The water management relevant objective of the HSE Policy is to efficiently utilize water sources and reduce the risk of producing environmental accidents. To ensure its effectiveness, we monitor progress through daily checks at our water treatment plant, monthly checks through national water administration and annually through the tertiary RENAR-accredited group. This policy covers our water management approaches, aspirations and requirements.

The HSE Policy is focused on all the activities and operations that occur on-site and aims to reduce consumption. Specifically, it addresses commercial operations at our Adjud location. The policy extends to the upstream and downstream value chains, and it considers the needs and interests of other key stakeholder groups, including clients, suppliers, and authorities.

The implementation of this policy is overseen by the CEO and the Board of directors; they hold ultimate responsibility for ensuring its establishment and successful implementation, demonstrating the strategic importance of this initiative within our organization.

In the policy's design and execution, we rely on third-party standards and initiatives to ensure compliance with best practices, we have considered the interests of our most important stakeholders when establishing this policy, engaging them to understand their perspectives and needs. To promote transparency, the policy is available for stakeholders to consult whenever necessary.

Our policy promotes efficient water use by avoiding water leakage and reducing consumption through water treatment plant installations.

While our commitment undertakes the design of our products and services to reduce water-related sustainability issues; it does not examine the possibilities of reducing water use in hydrologically sensitive areas in either our own operations, or along the value chain, despite the fact that we operate in areas that are at risk hydrologically .

Other than these mentioned policies we do not have a water management policy which would specifically address the water management, sourcing, prevention and abatement of water pollution or treatment. However, we have detailed technical documentations on water purification. Our internal water purification regulations present the intricate operations through which we purify the industrial water used, in order to safely discharge it back into the environment. Our operations include three types of water purification: mechanical, chemical and biological.

• Mechanical: self-cleaning grates (separate insoluble solids from water).

• Chemical: 1) de-sanding units (remove sand); 2) pumping stations (ensures pressure for water to flow through purification stages); 3) distributor tank (also makes sure circulation of water) 4) suspended settlers (allow suspended solids to settle out of water); 5) sludge umping station (left-over sludge is being managed and transported.
• Biological: 1) aeration basin (introduces oxygen to support microbial activity); 2) sludge pumps (left-over sludge is being managed and transported); 3) secondary decanters (withholds suspended solids)

We do not address water management in high water stress areas as previous regulations did not require this distinction. We have just analyzed our sites from this point of view in 2024. However as this is a critical topic, we are going to implement either a separate policy addressing water consumption in high water stress areas or include it in a group level water management policy, specifically mentioning these locations. This is going to be done in 2025.

Targets and Actions

We aim to minimize our impact on the environment and the associated risk by our water use, by monitoring water parameters before discharging processed water back into the environment. Our proposed path entails tracking our water consumption, monitoring environmental factors and reducing consumption through modernization of water treatment plants

We comply with regulatory requirements: measuring and optimizing water consumption is a basic action which must be done. Our objective is always to comply with the regulatory expectations and also to set internal targets for ourselves as for now we do not have quantified targets. Our objective will be measured in meter cubes of reduced water consumption for our paper and cardboard production operations.

We have already developed a high-level action plan regarding water use. External and internal stakeholders took part in the development of this process:

• Local and regional authorities: We work with government agencies to ensure that our policies comply with legal regulations. We also benefit from their expertise in water resources management. The cooperation is based on legal requirements (regulatory inspection). We monitor the results of the analysis.
• Employees of the organization: We involve employees from different departments in our water management initiatives, making sure that everyone is aware of their importance and actively contributes to the implementation of measures. The involvement happens informally by active internal communication and based on personal interest.

Currently, we have defined three main areas where we expect our action plan to improve our water management practices and help set exact targets, as follows:

• Tracking water consumption.
• Monitoring environmental factors.
• Modernizing the water softening station.

The expected results from each action plan initiative are, respectively:

• Reduction of water consumption. This will pave the way for reducing installation-related costs.
• Respecting the environmental parameters according to NTPA 001 standards. This will prevent penalties to be paid due to not respecting environmental regulations handed out by Environmental Ministry-authorized agencies.
• Operation of equipment and installation according to appropriate and safety technical standards. This will help us reduce the maintenance period of machines using water from the new softener plant.

Although most sites are in medium-high water stress areas, current water management actions or targets are not yet location-specific. Vrancart aims to introduce site-based actions and targets once local consumption data is consolidated. We aim to develop our monitoring and set targets with actions starting from 2026.

In 2024 financial resources were allocated for OPEX to finance enhanced practices, specifically through purification and monitoring to maintain

water quality within established standards. To support this objective, "green" loans were secured for financing.

In the upcoming financial reporting year, Vrancart Group aims to implement automated monitoring systems, ensuring our unwavering commitment to operating within environmental guidelines.

We do not account for our partners' activities along the value chain.

Our actions have already led to a significant decrease in water use before 2024, by installing advanced water treatment plants, overall reducing our consumption of water. We would like to continue this best practice in the future as well.

Although we cannot completely avoid the use of water due to the specific characteristics of our field, we are striving to reduce our water consumption by maintaining our equipment at the highest operational levels to prevent any leakage caused by technical faults. Additionally, we are taking steps towards capturing and purifying water.

Measurements

Water consumption (m3 )	2024
Total water consumption	2 178 698,7516 mc
Total water consumption in areas at wa ter risk, including areas of high-water	43 57417 mc
stress
Total water recycled and reused	0
Total water basin storage	000 mc18 17
Total water withdrawals	4 106 013,75 mc
Total water discharges (in Siret river)	1 927 315 mc
Water intensity (m3 /mRON.)	4 475,5919

Our data is available on a consolidated. The biggest consumption happens at Vrancart S.A in Adjud, which is a low water-stress area, while the consumption in water-risk areas represents 2% of the total consumption at Vrancart Group level according to internal estimates. Starting from 2025 we are going to provide a more detailed data on our water usage, showing the amount consumed in high water stress areas. Our consumption of water is for industrial use and the main sources of water consumption are the following: K25 machine, toilet paper processor, Fosfber cardboard machine, cardboard manufacturing, Bosch steam boiler, steam generator boiler, sludge press, wastewater treatment plant. 2% of all our water consumption derives from office use. On a monthly basis, we read and measure the water meters from all users, and the consumed volume is determined by calculating the

¹⁶ Consumption happens during the manufacturing. We cannot provide more context on consumption.

Facility location	Water stress	Physical Risk Quantity	Drought risk
Adjud, Vrancea	Low (<10%)	Low-Medium (1-2)	Medium-High (0.6-0.8)
Brașov, Brașov	Medium-High (20- 40%)	High (3-4)	Medium-High (0.6-0.8)
Călimănești, Vâlcea	Medium-High (20- 40%)	High (3-4)	Medium-High (0.6-0.8)
Santana, Mures	Medium-High (20- 40%)	High (3-4)	Medium-High (0.6-0.8)

Figure 23. Water consumption Figure 24. Facilities located in water-stress areas

difference, after which we add the values in the registry and keep track of all areas of significant use of industrial water.

Vrancart Group does not have any water leakage during withdrawal, which shows the efficiency of our processes. We monitor closely these numbers through up-to-date water meters technology. However, in the unlikely scenario of water leakage, we have taken steps to add 1000 m³ capacity reservoir, in order to safely deposit leaked water.

¹⁸ We do not have a database to analyze the change of total water stored. ¹⁹ Exchange rate of 28.03.2025

¹⁷ 2% of total water consumption

2.5. E4 – Biodiversity and ecosystems

Material IROs

ESRS	Topic name	Impact
E4	Impacts on the extent and condition of ecosystems	Ecosystems may be harmed by pollution, land-use changes, and resource depletion, leading to reduced biodiversity and ecosystem functionality

Figure 25. Biodiversity IROs

Introduction

Vrancart Group recognizes the vital role of biodiversity and healthy ecosystems in maintaining environmental balance and sustainable industrial operations. Our activities, including raw material sourcing and waste management, are carefully managed to minimize impacts on natural habitats. We prioritize responsible forestry practices, pollution reduction, and habitat conservation to protect biodiversity and ensure ecological resilience. By integrating sustainable land use and environmental protection into our operations, Vrancart Group remains committed to preserving ecosystems while maintaining responsible production practices.

Our Approach and Policies

Vrancart Group currently lacks a specific policy addressing biodiversity impacts, risks, and opportunities. Given the nature of our core operations and the proximity to Natura 2000 areas, it is crucial to consider the potential negative impacts on biodiversity. These impacts were identified on a high level following the methodology described in the Double Materiality Chapter. The Integrated Quality Policy contain relevant sections that, by focusing on reducing pollution, emissions, and ensuring proper waste management, can help mitigate the likelihood of activities that are harmful to biodiversity. During the annual Risk Assessment, biodiversity related concerns are taken into account as well. The conservation of the biosphere is not integrated into our strategy.

When considering the topic we listed our sites and examined where the impact on biodiversity can be material. As a conclusion we can state that only Vrancart S.A in Adjud is operation near sensitive areas. Although our impact on biodiversity is limited, operating near Natura 2000 areas has the potential to have a negative impact on the biosphere. Pollution (water, air or noise) can negatively affect our surroundings. To our knowledge, our operations do not threaten endangered species. Considering this position we did not implement a transition plan, but monitoring our impact on biodiversity is among our top sustainability priorities. Based on the results of the monitoring, we do not exclude the potential need to implement such a plan, for which the first step would be a detailed analysis of our transition and physical risks, along with an assessment of whether these are systemic. These analyses have not been conducted yet.

Targets and Actions

Vrancart Group has not defined any direct targets or actions related to biodiversity, which would be in line with the ESRS requirements, as the group 's daily activities have a marginal effect on it.20 The topic is closely monitored due to the fact that the photovoltaic panels are situated near environmental protection zone.

Our actions related to pollution, water consumption, energy efficiency and waste management, however, have a direct impact on the biodiversity conservation as well. Also, our sites are fenced and intervention on the ecosystem is limited. We regularly measure the

state of the environment and implement management practices to ensure that the impact on the ecosystem remains minimized. We do not use biodiversity offsets, though the possibility of such actions could be further investigated. In the long term, mapping potentially affected communities will be a target, along with their involvement in discussions about shared biological resources and ecosystems, to achieve a better sustainability assessment of the topic. However, no specific plan has been adopted yet.

Regarding biodiversity we consider the following factors:

• Ecosystem stability: It is assumed that local ecosystems are relatively stable and able to support the group 's activities without us damaging it.
• Regulations and standards: It is assumed that environmental regulations and international standards will remain constant during the assessment period and that the group will comply with these requirements.
• Resilience: The group is considered to have the ability to implement effective mitigation measures and to adapt quickly to changes in the regulatory requirements or environmental conditions.
• Long-term impact: It is assumed that the effects of current activities on biodiversity will be similar for the foreseeable future, even anticipating changes in environmental policies or environmental conditions.

²⁰ Not fully in compliance with ESRS standards

Measurements

Vrancart Group operates in areas that are not in direct proximity to fragile biodiversity zones, as our facilities in Adjud are situated about 2 km from a protected area. Additionally, there have been no changes to the status of protected areas due to the group's activities in 2022 or 2023, and no new areas have been impacted in 2024.

	Zone 1	Zone 2
Geographic Location	ROSPA0071 - Lunca Siretului Inferior (Special Avifauna Protection Area)	ROSAC0162 - Lunca Siretului Inferior (Special Conservation Area)
Protected Area Description	The ROSPA0071 - Lunca Siretului Inferior Special Avifauna Protection Area is designated under Government Decision 1284/2007, which declares special avifauna protection areas as part of Romania's European ecological network Natura 2000. This decision was later amended by Government Decision 971/2011	The ROSAC0162 - Lunca Siretului Inferior Special Conservation Area is established under Government Decision 47/2024, which amends Annexes 1 and 2 of Government Decision 685/2022. This decision concerns the establishment of protected natural areas and the declaration of special conservation areas as part of Romania's European ecological network Natura 2000
Surface or underground	Surface	Surface
Business Activity Location	Approximately 2 km from the Vrancart S.A. Adjud industrial platform	Approximately 2 km from the Vrancart S.A. Adjud industrial platform
Activity Type21	Vrancart Paper and Cardboard Production Factory; Vrancart Recycling	Vrancart Paper and Cardboard Production Factory; Vrancart Recycling
Area Affected	1 MW photovoltaic park = 16,729.44 sqm 20 MW photovoltaic park = 61,718.46 sqm Vrancart S. A. location - Active industrial site = 225,824.28 sqm	Vrancart Recycling site area = 30,888 sqm
Ecosystem Type	Land / Fresh water	Land/ Fresh water
Protection Type	Special Protection Area under Natura 2000	Special Protection Area under Natura 2001

Figure 26. Fragile biodiversity zones

²¹ Pallet recycling line, sorting of non-hazardous recyclable waste, packaging plastic waste recovery line by transforming it into PE flakes, molding line

In order to be more conscious regarding these territories, possible measures to assess the quality of the affected ecosystem could be developed in the future.

2.6. E5 – Resource use and circular economy

Material IROs

ESRS	Topic name	Impact	Risk / Opportunity
E5	Resource inflow	The process still requires significant energy, water, raw material and transportation for material sourcing, contributing to environmental strain	Dependence on raw material suppliers could lead to price volatility or supply shortages, disrupting production Increasing the use of recycled materials helps stabilize supply chains and reduce dependency on external suppliers, boosting competitiveness and profits
E5	Resource outflow	The production process results in waste streams, including paper offcuts and materials that are not fully recyclable	Streamlining production processes and minimizing loss of material can improve cost efficiency and reduce environmental impact
E5	Waste: circular economy	Vrancart Group's operations still generate non-recyclable waste, which may contribute to environmental pollution and strain on waste disposal systems. Waste mitigation and reduction on environmental impact by reusing and recycling materials within its operations, through incorporating recycled materials into production and minimizing waste	The main opportunity in waste management for Vrancart Group can be in circularity and circular economy principles. By focusing on circularity, the costs and the environmental footprint can be reduced

Figure 27. Resource use IROs

Introduction

Vrancart Group's sustainability commitment emphasizes the importance of circular economy. Given the intensive use of water, energy and raw material such as cellulose, our group's commitment to minimizing our environmental footprint is reflected in our adopted policies and procedures relating to circularity. To this end, we have already discussed our objectives regarding efficient use of energy and water purification practices. We would also like to provide information on our engagement in recycling and reusing raw material to ensure resource conservation. A circular business plan (which considers responsible resource management), as opposed to a linear one, is the key to ensuring long-term industrial practices while safeguarding the environment.

Our approach and policies

Our group is committed to designing and implementing our circular business plan which will reduce dependence on virgin resources, and enhance material efficiency. Our circular business plan will prioritizes a closed-loop recycling practice, reintegrating our waste products in our production process which will decrease waste and cut operating costs, however no financial resource have been allocated to this matter. Our circular business plan is not yet a formally approved document. Additionally, we have innovated our products with an eco-design in mind, allowing us to have a high degree of recycling material in our products. These are the crucial building blocks for our operations, which will improve further our circularity model.

Vrancart S.A. has strategically placed 19 collection centers to optimize the operation of non-hazardous waste generators, ensuring efficient recycling processes. These centers are equipped with modern equipment and a qualified workforce to facilitate the collection and recycling of waste. Over the past seven years, VRANCART S.A. has invested more than 60 million euros in developing production lines for corrugated cardboard, hygienic-sanitary papers, and a national network of waste collection centers.

Vrancart S.A. has demonstrated continuous involvement in environmental activities by developing collection, recycling, production, and service capacities, becoming a key player in providing integrated services to give new life to packaging waste.

These elements highlight VRANCART Group's commitment to a circular business model, responsible resource management that supports the transition from a linear model to a circular economy.

In order to improve our circular business model, we need to outline the primary areas wherein we may have a negative and positive impact upon the environment:

• Waste processing into raw materials: This process represents a potential risk, as it proper waste management results in higher costs, due to increase in CAPEX. Additional costs may result from fines.
• Final production: Despite initial high capital goods costs, our circular business plan represents an important opportunity to decrease our operating costs in the long-run, while minimizing our carbon footprint and our impact on the environment. We have already integrated our waste management process into our production operations and have invested in water purification plants to mitigate our water-related impact.
• Distribution to customers: The transport of finished products, especially over long distances, can generate significant CO₂ emissions, this representing a potential risk. .

We have a waste management policy called PO 05 "Waste and Packaging Management". The policy outlines the management of both non-hazardous and hazardous waste (although we do not have any hazardous waste), as well as packaging, within Vrancart S.A. It encompasses the entire waste lifecycle, including collection, storage, transportation, contracting for recycling or reuse, and final disposal.

Aligned with system procedures PS-1422 and PS-1823, the policy ensures a structured approach to waste management. To maintain oversight and compliance, the company actively monitors waste generation and recovery through monthly and annual reports. The policy does not address the sourcing of materials. The policy applies to all sectors within Vrancart S.A. where waste and packaging are generated. To ensure safe and efficient handling, temporary waste storage is conducted in specialized, well-marked areas. The policy's responsibilities are assigned to the Head of Department SICMS-SPP24.

Resource inflow relates to resources that enters the undertaking's facilities. Resource outflow means resource that leaves the undertaking's facilities. Waste is any substance or object which the holder discards, intends or is required to discard.

Vrancart S.A.

• Resource inflow: Vrancart S.A. utilizes recycled and recovered raw materials with 88% of their inputs being recycled materials.
• Resource Outflow: The company manufactures paper for corrugated cardboard, sanitary papers, and corrugated cardboard packaging.

Rom Paper

• Resource Inflow: Rom Paper employs virgin cellulose to produce sanitary papers.
• ²² PS-14: Product handling, packaging, storage, and delivery

• Resource Outflow: The company produces a range of sanitary paper products for both household and industrial use.

Vrancart Recycling

• Resource Inflow: Vrancart Recycling handles a diverse array of recoverable resources, including paper, cardboard, plastic, and wood.
• Resource Outflow: The company processes these materials into recycled products or trades them.

Ecorep

• Resource Inflow: Ecorep is an OIREP that takes extended producer responsibility and intermediates the collection and recycling of waste, including packaging, electrical and electronic equipment and batteries.
• Resource Outflow: It supports the circular economy by ensuring the traceability of waste, ensuring correct collection, treatment and recycling in order to reintegrate materials back into the economic cycle.

For all the subsidiaries the aim is to reduce waste generation and improve waste management practices, focusing on recycling and proper disposal.

In our daily operation we focus on improving the quality of environmental factors, through efficient use of resources and increasing the degree of recovery and valorization of both

²³ PS-18: Product measurement and monitoring

²⁴ SICMS-SPP: Integrated quality, environment, occupational health and safety management system

technological and generated waste. As we have already discussed the general risks and opportunities, it is important to present the monitoring processes that we have developed to keep track of our impacts. We have implemented automated monitoring procedures which keep track of our emissions and water purification levels on a regular basis, while yearly we have RENAR-accredited third-party monitoring, ensuring a comprehensive monitoring process and procurement or inventory data.

Compliance with third-party standards is ensured through adherence to recognized standards and certifications, including:

• ISO 14001 (Environmental Management)
• ISO 9001 (Quality Management)
• FSC Certification (Sustainable Forestry)

Our policies do not address our partners along the upstream/downstream value chain, however we consider the interests of our stakeholders, including customers, suppliers, and regulatory authorities by being actively in contact with them and channeling in their feedback and concerns if needed. Our integrated management system policy is readily available online (link), while our waste management policy dissemination is carried out in accordance with the Distribution List at the Management Representative and is available upon request . We collaborate with stakeholders, including customers, suppliers, business partners, and authorities, however there is no formal process implemented for these consultations.

Targets and Actions

We are committed to sustainability by transitioning from virgin raw materials to recycled materials in paper and cardboard production, achieved through efficient recycling processes. These aspirations are reflected in our operations but are not outlined in any policies. This includes the recycling of paper, cardboard, and wood packaging, reducing waste, maximizing resource efficiency, and supporting a circular economy. We acquire FSC-accredited inflow material, while also developing initiatives for a better resource outflow and waste management. Our targets and actions are not yet aligned with the requirements of ESRS, therefore our targets are not related specifically to circular material use or design, minimization of primary raw materials or reversal of depletion of stock of renewable resources, or at least these links have not been identified. 25

Our waste management is structured around the waste hierarchy, focusing on prevention, preparation for reuse, recycling, energy recovery, and safe disposal. We are deeply committed to minimizing our resource use and we can observe this in our recycling operations. We are committed to maximizing the potential of our produced waste to be a resource and promoting circular economy.

• Prevention: We optimize resource use to reduce waste generation. Resource efficiency is enhanced through circular practices. Preventive maintenance minimizes water system

²⁵ Not fully in compliance with ESRS standards

losses, and this is important since we aim to have no water spillage.

• Preparation for Reuse: We repair and refurbish materials wherever possible. At Vrancart Recycling, recovered pallets are reused or repaired, with unusable waste incinerated.
• Recycling: Paper and cardboard waste are fully recycled into new products by at least a 70% recycling rate. We aim to reduce reliance on primary raw materials (eg. virgin wood).
• Energy Recovery: Non-recyclable residues from sorting are used for thermal energy production. The cogeneration boiler burns non-recyclable waste, generating energy and steam.
• Disposal: We ensure environmentally safe waste disposal methods. Any waste that cannot be recycled, nor incinerated, will be safely disposed of in safely regulated landfills, which have a liquid filtering system and .

Our goal is to minimize waste, prioritize reuse, repair, and remanufacture over recycling and disposal. We focus on value retention, such as maintaining, repairing, and renovating materials, and recycling pallets and in-house parts. More specific targets are yet to be developed, so the data of 2024 will serve as a baseline for future monitoring. The focus is on durability, disassembly, reparability, and recyclability. This extends material life and reduces the need for new resources. Cross-selling within our group companies (Rom Paper, Ecorep, Vrancart Recycling) optimizes resource use, as prevents deterioration of goods over shorter transportation distances. The subsidiaries on Vrancart Group collaborate to a great extent to enhance

each other's activities. Thanks to this collaboration, we have successfully integrated in the production circuit paper and cardboard waste, as Ecorep and Vrancart Recycling provide recycled raw material to our manufacturing facilities at Vrancart S. A. and Rom Paper. Recycling, reuse, and extended producer responsibility practices reintegrate materials into production, reducing waste.

We integrate eco-design concepts, viewing waste as a resource and evaluating end-of-life product management.

Our waste processing is divided into 4 stages:

• 1) alignment to regional and local legislation,
• 2) suitable infrastructure,
• 3) processing stages,
• 4) monitoring and control.

We acknowledge potential negative impacts in waste collection, raw material processing, production, and distribution, all of which may contribute to carbon emissions despite our best efforts to reduce waste and increase energy efficiency. Vrancart Group extends pallet lifecycles through repair and recycling. Vrancart Group operates non-hazardous waste collection centers and uses waste to fuel cogeneration plants, reducing gas consumption.

We aim to meet global recycling standards, with targets set for packaging. This target refers to Ecorep activity, which has set specific waste recovery targets for packaging placed on the market in 2024, including 70% recycling rate for paper and cardboard goods. These targets are measured annually and aligned with national regulations. We aim to comply with these targets every year from 2025. The scope

of our objectives refers to all facilities within Romania, ranging from production to collector and recycler. Our objectives are based on traceability assessments, which are recorded on digital platforms. Stakeholder involvement was assured by establishing regulation-based targets. In our operation we use wooden pallets (99%) and plastic (1%). Our aim is to recover all wooden pallets from our clients, as based on their condition, these can be reused. The ones in deteriorated condition are examined and repaired if possible. Our plan that those pallets which cannot be reused are going to be used as input for our cogeneration plant. The progress will be measured after, from 2026, which will serve as a base year.

We focus on the recyclability of materials, particularly fiber length in recycled cardboard, which depreciates through every recycling round. At the end of their life cycle, they are eliminated in sludge, treated and incinerated. These cyclical parameters are established based on the technological flux and equipment efficiency.

Our general objectives blend mandatory and voluntary goals driven by legislation and market factors, aiming to reduce raw material costs and increase profitability. For example, a mandatory goal discharged water quality, as promulgated by law No. 107/1996, outlining the water protection framework. For waste management, we have undertaken several key actions in the reporting year. For example, we have invested into an improved drum pulper system and the automation of air and water quality monitoring. We aim to decrease technological costs, residuals and water consumption. We train the entirety of our workforce on resource and waste management practices, meaning our employees are more than prepared to mitigate and improve the following impacts of our operations:

• Waste reduction: Vrancart Group is committed to reducing waste-related operations, through our circularity and recycling activities. We aim to maintain and improve our 88% recyclability rate.
• Resource use: Understanding and minimizing the risks related to the depletion of natural resources is essential. The group's investments in recycling will reduce material costs and help reduce our impact onto the environment. For example, through our incineration procedure we produce sustainable energy
• Green products and services: The growing demand for green and sustainable products drives the group to develop more environmentally friendly solutions, thus reducing its ecological footprint.
• Transport and distribution processes: Our downstream transportation strategy prioritizes efficient logistics and optimized packaging to minimize material waste, ensuring that products reach their destinations with reduced excess materials and improved recyclability.

Investments were made in the drum pulper system and automated monitoring of air and water parameters, optimizing consumption by reducing residues and making the purification process more efficient.

These initiatives are set to continue with an expected timeline by the end of Q3 2025and we will assess the progress of these activities on a monthly tracking of utility consumption and waste paper.

To support these efforts, we have allocated resources for capital expenditures (CAPEX) for the drum pulper system and wastewater treatment automation, as well as operational expenditures (OPEX) for water treatment, as previously mentioned; please read the taxonomy chapter for further information. Future funding needs, including green loans for new technologies, are also under consideration. These actions reflect our current progress in waste

management, while we remain focused on further developing our resource inflow and outflow strategies in the near future. Our targets support our policy as a whole, no specific link has been identified.

Measurements

The main products and materials that result from our production process, that are designed according to circular principles, are pallets, paper, and cardboard. Reusability, Repairability, Disassembly and Refurbishment contribute to the production of pallets, while recycling enables the creation of paper and cardboard. In alignment with these circular strategies, our products maintain a recycled content rate of 88% which reinforce our commitment to sustainability and resource efficiency. Using recycled and recyclable materials provides the legally

expected durability of our products. For example, ISO 11108 defines chemical permanence and mechanical resistance to wear. During our production we use technical and biological materials.

Inflow material quantity	Vrancart Group	Classification
Cellulose	8 014 tons	biological
Paper	12 759 tons	biological
Packaging (cardboard boxes)	1 073 tons	biological
Wood	317 tons	biological
Water	2 135 979 mc	biological
Pallets	0.784 tons	technical
Chemicals	6 207 tons	technical
Stretch film	52 tons	technical
Waste (plastic)	3 633 tons	secondary
Waste (cardboard)	111 028 tons	secondary
Waste (paper)	19 572 tons	secondary
Waste (wood)	2 198 tons	secondary
Total FSC certified material	136 172 tons	biological
Total biological materials	154 963 tons	biological
% of biological materials that are sustainably sourced	88%	-
Weight of secondary reused or recycled components	136 432 tons	secondary
% of secondary reused or recycled components	82%	-
Total weight of products and technical and biological materi als	164 856 tons	-

Figure 28. Inflow material quantity

The machineries used for production are K25, Fosber machine, corrugated cardboard confectionary, tissue paper confectionary.

Total weight of materials used packaging	Vrancart Group	Transferred to Ecorep	Classification
Paper and cardboard	146.482 tons	146.48 tons	technical
Wood	2867.183 tons	2696.29 tons	biological
Plastic	105.61 tons	105.61 tons	technical
of which PET	25.886 tons	25.88 tons	technical
Metal	19.71 tons	19.71 tons	technical
Total	3138.986 tons	2968.09 tons	-

Figure 29. Used materials for packaging

Vrancart facilitates the inter-group transfer of materials with Ecorep to optimize resource efficiency, ensuring that recyclable materials and production waste are effectively managed and reintegrated into the value chain in alignment with circular economy principles.

During our manufacturing process we only use wastepaper as secondary recycled material.

Vrancart plans to implement traceability and reporting processes aligned with the cascading principle by 2025.

The recycling of plastic waste from our packaging is mainly done by our clients. While we regather the wooden pallets from our customers, it is not the case regarding plastic foils. Vrancart Group subsidiaries hold FSC certificates26 which prove the dedication towards the procurement of sustainable materials. Up to 88% of the materials in our products are recyclable (ensure post-consumption recyclability), which reduces reliance on virgin pulp and helps mitigate supply chain volatility risk.

²⁶ FSC Public Dashboard

Outflow material quantity	Vrancart Group	Classification
Cellulose	8 014 tons	biological
Paper	12 759 tons	biological
Packaging (cardboard boxes)	1 073 tons	biological
Wood	317 tons	biological
Pallets	0.784 tons	biological
Stretch film	52 tons	technical
Nails	16 tons	technical
Waste (plastic)	3 633 tons	secondary
Waste (cardboard)	111 028 tons	secondary
Waste (paper)	19 572 tons	secondary
Waste (wood)	2 198 tons	secondary

Figure 30. Recyclable content in products

The rate of recyclable content in products and their packaging 95.26%.

Subsidiary	FSC	Valid
Vrancart S.A.	yes	2029, 2030
Rom Paper	yes	2026

Figure 31. FSC Certificates

In line with our commitment to sustainability, all non-hazardous waste that is not sent to landfill is almost entirely recycled on-site.

The waste generated originates from the trade and industry sectors, maintaining a consistent composition of materials. The waste primarily consists of plastics and metals.

Waste quantity data is obtained through the direct method, where collected materials are weighed using industrial scales. This approach ensures accurate determination of waste quantities without relying on estimations. The main assumptions include that waste is collected and weighed without losses and that there are no significant changes in mass during transport or handling. This method guarantees the accuracy of the reported data. As of 2024, no hazardous or radioactive waste has been recorded.

Waste related information	Vrancart Group (to)
Waste generated	22 791
Hazardous waste diverted from disposal	16
Hazardous waste diverted from disposal due to other recovery operations	16
Non-hazardous waste diverted from disposal	18 414
Non-hazardous waste diverted from disposal due to preparation for reuse	0
Non-hazardous waste diverted from disposal due to recycling	8 142
Non-hazardous waste diverted from disposal due to other recovery operations	0
Non-hazardous waste directed to disposal	10 727
Non-hazardous waste directed to incineration	10 271
Non-hazardous waste directed to disposal by landfilling	456
Non-hazardous waste directed to disposal by other disposal operations	0
Non-recycled waste	14 649
Percentage of non-recycled waste	64%

Figure 33. Recycled and non-recycled waste

We avoid double-counting our reused and recycled material. The data is factual, we do no estimations regarding resource inflow, outflow and waste.

We believe that our data regarding resource inflow, outflow and waste can be further developed to have better quality data with a complete breakdown, therefore we plan to use the data from 2025 to monitor our progress related to this topic.

We also believe that, as the waste management topic (including all the resource flows) is among our top priorities, our policies and actions should also address it directly following the requirements of ESRS. We have not implemented such policies and actions as they were not required to be formalized, and our operation has always testified to have a circularity based approach. We are going to start working on these matters from 2025.

3. Social information

3.1. S1 – Own workforce

Material IROs

ESRS	Topic name	Impact	Risk / Opportunity
S1	Secure employment	Providing stable employment opportunities strengthens work force loyalty and creates a sense of security, fostering long-term organizational growth	Non-material
S1	Health and safety	Neglecting health and safety risks can lead to accidents, ill nesses, and reduced employee morale, impacting productivity and reputation	Non-material
S1	Collective bargaining	Enabling collective negotiations ensures fair agreements, en hancing alignment with employee needs and boosting morale	Collective agreements can result in improved labor relations and can reduce turnover rate.

Figure 34. Own workforce IROs

Introduction

Vrancart Group's consideration for the welfare of its own workforce is vital for promoting sustainable corporate practices. It focuses on key social priorities, including secure employment, collective bargaining and health and safety, ensuring inclusive and safe workplaces. By emphasizing secure employment, the policy encourages stability and fairness for our employees. It focuses on collective bargaining safeguards workers' rights to negotiate fair wages and conditions, while its attention to health and safety prioritizes employee well-being. Social materiality policies are a crucial tool for transparency, helping businesses align their social impact with sustainability goals and build trust with stakeholders.

Our approach and policies

Vrancart Group is committed to improving workforce by maintaining and enhancing occupational health and safety systems at all levels and providing secure employment to all employees. We have more policies in place regarding the workforce:

• Health, Safety and Environment Policy: prioritizing well-being, accident prevention
• HR Policy: general working conditions, workers' rights and obligations
• Integrated Quality: regulatory compliance
• Management policy: social responsibility and human rights

Secure employment, from our point of view, cannot be fully separated from health and safety. A safe workplace contributes to the wellbeing of our employees. Therefore, the emphasis is on the health and safety requirements. However, our high-level goals regarding retention rate prove the dedication towards secure employment. To reduce material negative impacts on our workforce we have not yet implemented specific actions or targets, like no lay-off policies, limits on renewing temporary contracts, employer provision of social protection where state provision is lacking.

We are aligned to international instruments regarding human rights, as we obtained certificates, such as ISO 45001 (Occupational Health and Safety) certificate.

The policies are overseen by the General Director. The policies' scope includes employees of tertiary companies working within Vrancart Group facilities. The policy design aligns with third-party, internationally recognized standards and incorporates stakeholder needs. The policies are accessible online or upon request.

Human rights commitments address child and forced labor, human trafficking, discrimination, health, safety, collective bargaining, fair wages, and working hours. Vrancart Group invests in employees by providing training, promoting competence-based advancement, and encouraging personal initiatives. Additionally, the group strives to improve the quality of life for present and future generations.

The accident prevention policy, ensuring safety through reducing risks, raising health awareness, monitoring employee health via medical check-ups equipment maintenance, which will improve productivity and enhance working conditions. Superior management oversees implementation, details being included in the labor convention. The policies have positively impacted safety and working conditions, aligning with strict labor protection laws. Vrancart Group is also working to address the inclusion of socially vulnerable groups within the workforce, as we understand that people with special characteristics working in special circumstances or engaged in special activities may be exposed to greater risks.

Anti-discrimination commitments along with all the new policies related to the workforce are regularly communicated via the website and written updates. Our policies oppose discrimination based on ethnicity,

gender, color, sexual orientation, age, belief, disability, social background and political conviction. For this reporting year, we have not yet developed special inclusion plans for especially vulnerable employers. This being said, our aim is to include our entire workforce within anti-discrimination procedures, as our policies are implemented at a group level, the personnel being encouraged and having access to mechanisms that allow them to report any violations to management.

In line with these commitments, our approach to employment, training, and promotions is driven by qualification, competence, and experience, ensuring that equal opportunity procedures apply across all levels, including senior management. To reinforce our anti-discrimination efforts, employees receive dedicated training on these policies. Furthermore, we actively support stakeholders with physical disabilities by adjusting the work environment for their benefit, such as providing easier access points within our facilities. Additionally, our job evaluation processes are designed to prevent the exclusion of vulnerable groups, reinforcing our commitment to an inclusive and equitable workplace.

Transparency is maintained through records of employment, training, and promotions, along with competence-development. Complaint mechanisms and continuous communication ensure discrimination concerns are addressed. Secure employment is guaranteed by providing a stable and inclusive workplace. Besides legal obligations no extra policies are in force. We are currently not planning on implementing new policies related to secure employment to remediate our negative impacts as they are monitored and handled according to regulatory requirements. Although, we are striving to improve the conditions for our employees for which further action might be initiated.

Lastly, Vrancart Group encourages employees to raise concerns through official communication channels, ensuring swift management action.

Targets and Actions

Vrancart Group has set high level employment related actions and objectives for 2024., however these are not fully aligned with the requirements of the ESRS.27 We are committed to achieving annual targets. The following objectives relate to clear procedures that inform our team how to respond to negative impacts and encourage positive impacts.

The goal is to further improve staff retention by reducing employee turnover, with priority given to critical roles requiring specific qualifications. Our own workforce is not included directly in setting our targets, however we engaged pro-actively with them to track the performance of these policies. In light of any recommendations to improve our procedures, we analyze their feedback and implement accordingly. The target for 2025 reporting year is measured against 2024's employee structure. The objective for the upcoming year is to maintain a workforce retention rate of 85% or higher, ensuring stability and continuity within our team compared to 2024 levels. This goal

²⁷ Not fully in compliance with ESRS standards

reflects our commitment to employee engagement, talent retention, and fostering a productive work environment. In 2024, no stakeholder complaints were recorded. Other stakeholders are engaged in setting targets through consultations and materiality analyses. All objectives align with in-effect policies and standards.

Methodology alternative: Our goal-setting process ensures that targets are clear, measurable, and aligned with our broader sustainability and operational commitments. By establishing well-defined benchmarks, we create a foundation for continuous improvement and long-term success.

Vrancart Group is committed to taking numerous steps to fulfill the objectives set, however these actions are formulated on a higher level, not as detailed as it is required by ESRS Securing the wellbeing and satisfaction of the workforce – as their welfare and safety is a priority and represent the future of this group – is a must for our group. Currently no specific resource is allocated to manage our material impacts on the workforce.

Among these preventive actions, you will find the following: In the production and logistics sector, our action plan is to implement rigorous preventive maintenance programs, including regular inspections and interventions, to ensure the optimal performance and reliability of machinery and equipment in both production and transportation operations. This will increase our employees' safety standards.

• Reassess occupational health and safety risks (SSM) in response to changes in activities, workflows, or organizational restructuring. This will inform our management exactly what conclusive, additional protective measures we need to implement and how to establish appropriate and specialized intervention protocols for workplace accidents.

• Enhancing monitoring systems and intervention strategies to safeguard employee health.

Among the actions undertaken by Vrancart Group to ensure a positive impact upon our workforce are:

• Providing additional life insurance coverage and preventative medical benefits to enhance employee well-being and financial security.
• Track and evaluate the effectiveness of workforce risk assessment actions by monitoring key performance indicators, analyzing pre- and post-intervention data, and adjusting strategies based on feedback. Regular benchmarking and reporting ensure alignment with organizational goals and industry standards.
• The process of identifying necessary actions to address potential negative impacts on the workforce begins with risk assessment studies, which identify hazards and evaluate their severity and likelihood. Based on these findings, prevention and protection plans are developed, incorporating safety protocols and training.

We ensure that our actions and practices do not lead to negative effects by:

• Respecting labor rights, maintaining procurement transparency, protecting employee data, providing ongoing training, fostering continuous dialogue with employees, and regularly monitoring and evaluating our actions.
• Once we will be able to implement a transition plan, our aim is to better understand its effects on our workforce and how to minimize the negative consequences and provide a just transition to all the employees.

If tensions and issues do arise, we approach these situations by evaluating the impact and analyzing the risks, integrating these insights into our internal policies, adopting flexible regulatory policies and, most importantly, through negotiation and dialogue. Upon risk occurrence, our top and middle management levels are directly involved in solving them immediately.

When recruiting and hiring personnel we raise awareness among the new colleagues regarding their tasks, competencies, and responsibilities related to SICMS and FSC within VRANCART S.A.

Grievance process and engagement

Our workforce has access to official channels of communication in order to share concerns to the management that should be addressed. E-mail

and written complaints are all accessible. We encourage and often communicate with our employees to have their complaints reported to management. HR department is in charge of monitoring stakeholders' concerns and promptly respond to any raised issues (regarding discrimination, labour rights, human right etc).

Our workforce is aware of these procedures and trusts our internal processes of resolving any raised concerns. An analysis of our monthly turnover rate proves to show the efficiency of our management systems. The mechanisms of third-party agencies are accessible to all employees, as they can access governmental regulatory procedures mentioned in the legal requirements register within SICMS-SPP28 department.

Vrancart Group ensures its communication channels are legitimate by maintaining accountability, fairness, and stakeholder trust. These channels are accessible, well-known to stakeholders and operate with clear procedures and indicative timelines

Stakeholders are provided reasonable access to information, advice, and expertise through these channels. Transparency is ensured by sharing sufficient information with complainants and addressing public interest where appropriate. Outcomes align with internationally recognized human rights standards.

Vrancart Group uses insights from the channels to support continuous learning, improving processes and preventing future impacts. The

²⁸ Integrated Quality, Environmental, Occupational Health and Safety Management System. This system integrates ISO 9001 for quality management,

ISO 14001 for environmental management and OHSAS 18001 for occupational health and safety.

group prioritizes dialogue with complainants to reach mutually agreed solutions rather than imposing outcomes unilaterally.

Workforce engagement occurs through representatives, primarily via CSSM29 meetings, which inform employees and integrate their feedback into decision-making. Feedback is recorded during quarterly meetings and addressed in subsequent sessions.

Engagement happens at both organizational and lower levels, involving middle and top management. Information is centralized through steps like data collection, organization, analysis, reporting, and continuous feedback. Resources allocated include time, funding, personnel, and equipment.

Effectiveness is assessed through retention rates, interviews, continuous feedback, and performance appraisals. Employees are informed of feedback impact via meetings and internal reporting.

The Chief Executive Officer ensures engagement takes place and informs the group strategy. Agreements with workers' representatives, outlined in the Internal Rules and Collective Bargaining Agreement, respect their rights and support legal compliance. Elected employee representatives are involved in changes to these agreements.

²⁹ CSSM = Health and Safety Committee.

Measurements

In 2024 100% of our 1246 permanent employees were covered by collective labor agreements and obligatory safety management system.

Age	Employees
<30	87 (7%)
30-50	559 (45%)
>50	600 (48%)
Total	1246

Figure 35. Age distribution of employees

Contract by duration	Women	Men
Permanent	459	763
Temporary	4	20
Total	463	783

Figure 36. Employees based on their contract duration

Social protection measures30	Answer
Against loss of income due to illness (state or company benefit)	Yes
Unemployment	Yes
Work-related accidents and disabilities	Yes
Loss of income due to maternity leave	Yes
Retirement	Yes

Figure 37. Social protection measures that Vrancart Group offers

Figure 38. Gender distribution graph

³⁰ Social protection measures are regulated by local law, no additional measures are taken

We pay particular attention to the health and safety of our employees; 100% of our employees are covered by the health and safety management system.

Accidents at work31	2024
Total number of hours worked by employees	2 357 114
Number of workplace accidents recorded	3
Rate of work-related accidents	127,27
Number of days lost due to accidents at work	95
Rate of recorded workplace accidents	1,2732

Figure 39. Work related accidents

All the accidents have been investigated by the Investigation Committee, which is led by the chief investigator and contains usually two more members. All members of the committee are appointed by the Ministry of Labor. As a result of the investigation, Vrancart Group was not accused of any misconduct and not required to pay any penalties, howeverthe employees got a warning. In the reporting year no (0)fatalities were recorded at the workplace.

³¹ We currently do not have information on external employees

³² Represents the number of respective cases per one million hours worked

3.2. S2 – Workers in the value chain

Material IROs

ESRS	Topic name	Impact
S2	Health and safety	Insufficient safety measures or hazardous working conditions may lead to workplace injuries, impacting worker well being and operational efficiency

Figure 40. Workers in the value chain IROs

Introduction

Vrancart Group is committed to maintaining safe and equitable working conditions for employees along its value chain. We are aware that focusing on our workforce does not exclude us from the social responsibility of taking a stance against any abuse that workers of our partners along the value chain may suffer from. As long as Vrancart Group's operations are concerned, social corporate responsibility should extend well-beyond our on-site operations. Below we outline our policies, targets and progress towards ensuring that everybody connected to Vrancart, from upstream to downstream, has their rights respected.

Our approach and policies

Our primary objective is to ensure a fair, sustainable and responsible working environment throughout the value chain by addressing concerns about workers' rights, safety and working conditions, stringently complying with legal and ethical standards. We are well aware that our understanding and commitment of the value chain need to be developed. Our current sustainability related policies do not extend to the value chain. Vrancart Group currently does not have a policy, guideline or process applied for cooperation and engagement with workers in the supply chain in terms of impacts.

Our policy which better covers the value chain and articulates specific responsibilities and possibilities to the actors in the value chain is the Code of Ethics and Integrity. However, this policy only related to the secure employment of the value chain workers, while their health and safety is still not managed by our policies. The Code of Ethics and Integrity is mandatory and applies directly to all people working for Vrancart Group companies: employees, directors under contract and members of the Board of Directors. All these people must be aware of and comply with the provisions of this Code, encourage compliance and report potential violations. We also expect anyone acting on behalf of the Vrancart Group, including consultants, agents, suppliers and business partners, to adhere to the standards of the Code of Ethics and Integrity.

The grievance process for the value chain is mainly regulated by this policy as well. Vrancart Group informs its partners about the policy and grievance procedure. Additionally, Vrancart Group maintains active contact with its partners, providing opportunities for informal conversations. During these

interactions, Vrancart Group colleagues can remind partners about the basics of the policy and procedures (e.g. process, next steps, operational background, escalation levels, confidentiality, remedy, retaliation etc.) if necessary. The handling of these reports does not differ from the one regarding the own workforce.

Customers, suppliers and other third parties who wish to raise an ethical concern can contact the Group Ethics and Integrity Officer who is responsible for escalating the questions or concerns to the relevant manager. In the near future, we will review the expansion of the grievance process to include health and safety concerns. Additionally, since our own workforce is covered by a Health and Safety Management System, we are considering the possibility of extending certain elements of this system to our value chain workers. The effectiveness of the channels is not yet monitored formally, any assessment and monitoring are currently done informally and in an ad hoc manner.

Apart from the grievance procedure, the interests and views of stakeholders are not yet integrated into the policy, strategy-making, or daily operations of the Group. Currently, no specific actions are being taken to address the significant impacts and risks within the supply chain. In 2025, our primary goal will be to review whether it is possible and necessary to supplement our regulations to include value chain workers as currently the impacts on the value chain workers are not reflected in our strategy, business model or policies.On the long-term it will be our aim to examine the role that our strategy and business model may play in creating, exacerbating or mitigating significant material impacts on value chain workers.

Additionally, we aim to gain a deeper understanding of our value chain and, consequently, our partners. Being conscious of sustainability topics, we are striving to comply with the new EU regulations to the best of our ability. With the new Directive, CSDDD, coming into force alongside CSRD, we aim to prepare ourselves to better adapt to these requirements.

In 2024, we decided on starting a questionnaire in 2025, as part of due diligence to gather more information on our value chain. We have not yet started the process of implementing the questionnaire, as we have just started to gather the topics to be covered in it, so for now we have no approval from our board.

We aim to cover the material topics. The main topics in the questionnaire should be:

• Environment:
  • o Scope 1,2 (possibly 3)
  • o Transition plan and related targets
• Social
  • o Code of Ethics and human rights

• o Information on the value chain's workforce
• Governance
  • o Grievance processes
  • o Policies regarding sustainability

The exact topics of this questionnaire are going to be formulated in 2025 to be fully compliant and to collect all the information required by ESRS S2. This questionnaire aims to help us better understand our value chain by analyzing the positive and negative impacts on different groups of workers. The first step involves distinguishing the various types of value chain workers based on their main characteristics, followed by linking and evaluating the impacts we have on them. We will examine workers separately in the downstream and upstream segments of the value chain, differentiating between manual labor and office/professional workers. Then we would proceed with the possible remedies for the negative impacts.

For now, we know that we do not operate at any geographical locations where child or forced labor would be a significant risk, however other risks can arise along the value chain which must be monitored as they can be widespread.

Since there are currently no relevant policies, processes, and measures in place, more specific goals related to the secure employment or health and safety of the supply chain workers cannot be formulated.

4. Governance information

4.1. G1 – Business conduct

Material IROs

ESRS	Topic name	Impact	Risk / Opportunity
G1	Corporate culture	A positive corporate culture fosters transparency, trust, and collaboration, leading to better business performance, em ployee satisfaction, and alignment with ethical practices	Fostering a positive and transparent work culture can im prove employee engagement, productivity, and retention
G1	Whistleblower procedure	Supporting whistle-blowers ensures that employees can re port unethical practices without fear of retaliation, promot ing integrity and accountability within the group	Non-material

Figure 41. Business conduct IROs

Introduction

As a major employer, Vrancart Group faces daily financial, technical, commercial, and ethical challenges. Given the environmental impact of our operations, the working conditions of our employees, and the high professional and sustainable standards we need to uphold for all our stakeholders, a healthy corporate culture is essential. This approach provides guidance to our employees and helps maintain fruitful relationships with our stakeholders. Most importantly, we want to ensure an environment in which our employees feel safe, and any violations to be dealt with fairly.

Our approach and policies

Our business conduct policy addresses issues such as:

• Conflict of Interest: Avoiding situations where personal interests might conflict with duties to the group.
• Non-discrimination: Prohibiting practices that disadvantage people based on age, ethnicity, gender or disability.
• Communication with the media: Ensuring that only designated employees communicate with the media and authorities.
• Political Activities: Prohibit political activities within the group and support for candidates for public office.
• Whistleblower protection: Employees are encouraged to report any misconduct without fear of retaliation.

The objective of this policy is to mitigate risks related to unethical behavior, conflicts of interest, discrimination and unauthorized communication. Our "Public interest whistleblower protection policy"33 addresses the rights and responsibilities and the risk of retaliation against whistleblowers. By promoting ethical behavior, the policy enhances the group's reputation, fosters a positive work environment and ensures compliance with legal and regulatory requirements.

The Code of Ethics and Integrity contains the main topics of human rights which are required to be respected by all the actors coming in contact with Vrancart Group.

Our board of directors is the highest organizational level that is responsible for implementing our corporate governance policies and making them available to stakeholders for consultation upon request. Our policies consider issues such as accounting conduct, GDPR, whistleblowers and issues of integrity. In our report, we will have a closer look at whistleblower safety procedures and issues related to integrity. Currently we do not have a separate policy in line with United Nations Convention against Corruption and have not made any plans on implementing new policies regarding this topic.

Vrancart Group is also committed to ensure safe and open reporting practices, also known as a whistleblower process. We are subject to legal requirements with regard to protection of whistleblowers. Our whistleblower policy commits our ethics officer to investigate and file a report upon warning of any business misconduct. Depending on the conclusion of this report, an appropriate plan of action is agreed upon by the responsible parties within Vrancart S.A. .

The Vrancart Group condemns corruption in any form and ensures that employees who report ethical incidents do not suffer any harm. We do not consider corruption a material risk, therefore we do not have an analysis on the functions who are at higher risk of corruption and bribery.

Reporting helps prevent and address instances of ethical violations. The Group provides the necessary mechanisms and ensures that sanctions cannot be made against an employee who uses the reporting procedure in good faith. The whistleblower processes are detailed in the Code of Ethics and Integrity as well as the newly implemented (approved by the

³³ "Politica privind protecția avertizorilor în interes public"

Board of Directors on 28th of December 2024) "Public interest whistleblower protection policy"34 . The policy will be effective from March 1, 2025 and is relevant for Vrancart S.A. The Ethics and Integrity officer is responsible for taking care of the concerns raised.

If any internal or external stakeholder raises a concern to the Ethics and Integrity Officer, the following steps will be taken according to the document:

• 1. Receiving and Recording: The Ethics and Integrity Officer will receive and record the concern. All concerns are registered and centralized electronically.
• 1. Analysis and Reporting: The Officer will analyze the concern and report it to the General Director.
• 1. Initiating Disciplinary Procedures: If the concern involves a potential violation of the Code of Ethics and Integrity, the Officer will notify the General Director and the Human Resources Department. They may propose initiating a preliminary disciplinary investigation against the person or persons potentially responsible for the violation.
• 1. Periodic Reporting: The Officer will periodically report the centralized concerns to the Group's management and propose measures to reduce and eliminate cases of non-compliance with the Code of Ethics and Integrity.
• 1. Training and Communication: The Officer will organize periodic training sessions (upon request or necessity, but at least once a year) on ethics and integrity and communicate regularly with all the employees. At the trainings the Code of Ethics and Integrity is presented with its aim and main points.

The document emphasizes that the Vrancart Group condemns corruption in any form and ensures that employees who report ethical incidents in good faith will not suffer any prejudice. The reporting of ethical incidents is encouraged to prevent and address violations of the group's ethical principles and to investigate business conduct incidents.

Actions and Targets

Being a major employer of the region, we would like to emphasize the importance of a healthy and compliant corporate culture. We focus on human rights all along our value chain and own operation. Our aim is to keep the good practices and if needed further develop them.

We adopted a hierarchical structure to include clear responsibilities in the field of sustainability and environmental, social protection. The ethics officer and department managers are responsible for ensuring that employees understand and adhere to the group's ethical principles. This helps establish and further develop our corporate culture. The warning procedures cover the following topics: business conduct, discrimination, harassment, corruption, fraud, misconduct or professional negligence.

Any form of retaliation of whistleblowers, such as demotion, harassment, threats or suspensions of contracts, are prohibited in Vrancart Group. In case of failure to comply with these requirements, Vrancart Group risks legal consequences or fines. We aim to keep the compliance issues at a minimum level.

³⁴ "Politica privind protecția avertizorilor în interes public"

5. Indices

5.1. Appendix I. – ESRS disclosure requirements

Code of ESRS	Name of ESRS standard	Code of Disclosure Requirement	Name of Disclosure Requirement	Page
	General disclosure	BP-1	General basis for preparation of sustainability statements	8, 9, 25
		BP-2	Disclosures in relation to specific circumstances	9, 29-32
		GOV-1	The role of the administrative, management and supervi sory bodies	12-14, 17, 27
		GOV-2	Information provided to and sustainability matters ad dressed by the undertaking's administrative, manage ment and supervisory bodies	17, 29-32
		GOV-3	Integration of sustainability-related performance in incen tive schemes	14
		GOV-4	Statement on due diligence	17
ESRS 2		GOV-5	Risk management and internal controls over sustainabil ity reporting	14, 16
		SBM-1	Strategy, business model and value chai	4, 7, 18-21
		SBM-2	Interests and views of stakeholders	24,
		SBM-3	Material impacts, risks and opportunities and their inter action with strategy and business model	16, 26, 29-32
		IRO-1	Description of the process to identify and assess material impacts, risks and opportunities	8, 16, 26, 28
		IRO-2	Disclosure requirements in ESRS covered by the under taking's sustainability statement	26, 33
	Climate change	ESRS 2 GOV-3	Integration of sustainability-related performance in incen tive schemes	46, 47
		E1-1	Transition plan for climate change mitigation	45, 52
		ESRS 2 SBM-3	Material impacts, risks and opportunities and their inter action with strategy and business model	53
ESRS E1		IRO-1	Description of the processes to identify and assess mate rial climate-related impacts, risks and opportunities	43, 45, 46, 52
		E1-2	Policies related to climate change mitigation and adapta tion	43, 52
		E1-3	Actions and resources in relation to climate change poli cies	52, 53

		E1-4	Targets related to climate change mitigation and adapta tion	52
		E1-5	Energy consumption and mix	46-48
		E1-6	Gross Scopes 1, 2, 3 and Total GHG emissions	48-51
		E1-7	GHG removals and GHG mitigation projects financed through carbon credits	54
		E1-8	Internal carbon pricing	54
		E1-9	Anticipated financial effects from material physical and transition risks and potential climate-related opportuni ties	45, 52
		IRO-1	Description of the processes to identify and assess mate rial pollution-related impacts, risks and opportunities	55
		E2-1	Policies related to pollution	55-57
		E2-2	Actions and resources related to pollution	57
ESRS E2	Pollution	E2-3	Targets related to pollution	n/a
		E2-4	Pollution of air, water and soil	57-60
		E2-5	Substances of concern and substances of very high con cern	N/A35
		E2-6	Anticipated financial effects from pollution-related im pacts, risks and opportunities	Phased-in, not dis closed
	Water and marine resources	IRO-1	Description of the processes to identify and assess mate rial water and marine resources-related impacts, risks and opportunities	63
		E3-1	Policies related to water and marine resources	64, 65
ESRS E3		E3-2	Actions and resources related to water and marine re sources	65, 67
		E3-3	Targets related to water and marine resources	64, 65
		E3-4	Water consumption	67
		E3-5	Anticipated financial effects from water and marine re sources-related impacts, risks and opportunities	Phased-in, not dis closed
ESRS E4	Biodiversity and ecosystems	E4-1	Transition plan and consideration of biodiversity and eco systems in strategy and business model	68
		SBM-3	Material impacts, risks and opportunities and their inter action with strategy and business model	68-70
		IRO-1	Description of processes to identify and assess material biodiversity and ecosystem-related impacts, risks and op portunities	68-70
		E4-2	Policies related to biodiversity and ecosystems	68

³⁵ Not applicable, not material

		E4 - 3	Actions and resources related to biodiversity and ecosys tems	6 8
		E4 - 4	Targets related to biodiversity and ecosystems	6 8
		E4 - 5	Impact metrics related to biodiversity and ecosystems change	6 9
		E4 - 6	Anticipated financial effects from biodiversity and ecosys tem-related risks and opportunities	Phased -in, not dis closed
ESRS E5		IRO - 1	Description of the processes to identify and assess mate rial resource use and circular economy-related impacts, risks and opportunities	71
		E5 - 1	Policies related to resource use and circular economy	7 2 - 7 5
		E5 - 2	Actions and resources related to resource use and circu lar economy	7 5, 7 7
	Resource use and circular economy	E5 - 3	Targets related to resource use and circular economy	7 4 - 7 6
		E5 - 4	Resource inflows	7 7, 7 8
		E5 - 5	Resource outflows	7 6, 7 8, 81
		E5 - 6	Anticipated financial effects from resource use and circu lar economy-related impacts, risks and opportunities	Phased -in, not dis closed
ESRS S1	Own workforce	SBM - 2	Interests and views of stakeholders	8 4
		SBM - 3	Material impacts, risks and opportunities and their inter action with strategy and business model	8 4
		S1 - 1	Policies related to own workforce	8 4 - 8 5, 8 7 -91
		S1 - 2	Processes for engaging with own workforce and workers' representatives about impacts	8 9
		S1 - 3	Processes to remediate negative impacts and channels for own workforce to raise concerns	8 5, 8 7, 8 8
		S1 - 4	Taking action on material impacts on own workforce, and approaches to managing material risks and pursuing ma terial opportunities related to own workforce, and effec tiveness of those actions	8 3 - 8 7
		S1 - 5	Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities	8 5 - 8 6
		S1 - 6	Characteristics of the undertaking's employees	Phased -in, not dis closed
		S1 - 7	Characteristics of non -employees in the undertaking's own workforce	Phased -in, not dis closed
		S1 - 8	Collective bargaining coverage and social dialogue	8 9
		S1 - 9	Diversity metrics	8 9
		S1 -10	Adequate wages	N/A
		S1 -11	Social protection	90

		S1-13	Training and skills development metrics	N/A
		S1-14	Health and safety metrics	84, 89, 91
ESRS S2		SBM-2	Interests and views of stakeholders	93, 94
		SBM-3	Material impacts, risks and opportunities and their inter action with strategy and business model	93, 94
		S2-1	Policies related to value chain workers	93
		S2-2	Processes for engaging with value chain workers about impacts	93
	Workers in the value chain	S2-3	Processes to remediate negative impacts and channels for value chain workers to raise concerns	94, 95
		S2-4	Taking action on material impacts on value chain workers, and approaches to managing material risks and pursuing material opportunities related to value chain workers, and effectiveness of those action	94
		S2-5	Targets related to managing material negative impacts, advancing positive impacts, and managing material risks and opportunities	94
ESRS G1		IRO-1	Description of the processes to identify and assess mate rial impacts, risks and opportunities	95
	Business conduct	G1-1	Business conduct policies and corporate culture	96, 97
		G1-2	Management of relationships with suppliers	N/A
		G1-3	Prevention and detection of corruption and bribery	N/A
		G1-4	Incidents of corruption or bribery	N/A
		G1-5	Political influence and lobbying activities	N/A
		G1-6	Payment practices	N/A

5.2. Appendix II. – List of datapoints in cross-cutting and topical standards that derive from other EU legislation

Disclosure Requirement and related datapoint	23 ) SFDR ( reference	24 ) Pillar 3 ( reference	Benchmark 25 ) Regulation ( reference	EU 26 ) Climate Law ( reference	Reference in the document (page)
ESRS 2 GOV-1 Board's gender diversity paragraph 21 (d)	Indicator number 13 of Table #1 of Annex 1		Commission Delegated Regulation (EU) 2020/1816 ( 27 ) , Annex II		11
ESRS 2 GOV-1 Percentage of board members who are independent paragraph 21 (e)			Delegated Regulation (EU) 2020/1816, Annex II		11
ESRS 2 GOV-4 Statement on due diligence paragraph 30	Indicator number 10 Table #3 of Annex 1				18
ESRS 2 SBM-1 Involvement in activities related to fossil fuel activities paragraph 40 (d) i	Indicators number 4 Table #1 of Annex 1	Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation 28 ) (EU) 2022/2453 ( Table 1: Qualitative information on Environmental risk and Table 2: Qualitative information on Social risk	Delegated Regulation (EU) 2020/1816, Annex II		Not applicable
ESRS 2 SBM-1 Involvement in activities related to chemical production paragraph 40 (d) ii	Indicator number 9 Table #2 of Annex 1		Delegated Regulation (EU) 2020/1816, Annex II		Not applicable

ESRS 2 SBM-1 Involvement in activities related to controversial weapons paragraph 40 (d) iii	Indicator number 14 Table #1 of Annex 1		Delegated Regulation (EU) 2020/1818 ( 29 ) , Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II		Not applicable
ESRS 2 SBM-1 Involvement in activities related to cultivation and production of tobacco paragraph 40 (d) iv			Delegated Regulation (EU) 2020/1818, Article 12(1) Delegated Regulation (EU) 2020/1816, Annex II		Not applicable
ESRS E1-1 Transition plan to reach climate neutrality by 2050 paragraph 14				Regulation (EU) 2021/1119, Article 2(1)	52
ESRS E1-1 Undertakings excluded from Paris-aligned Benchmarks paragraph 16 (g)		Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book-Climate Change transition risk: Credit quality of exposures by sector, emissions and residual maturity	Delegated Regulation (EU) 2020/1818, Article12.1 (d) to (g), and Article 12.2		8
ESRS E1-4 GHG emission reduction targets paragraph 34	Indicator number 4 Table #2 of Annex 1	Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics	Delegated Regulation (EU) 2020/1818, Article 6		52

ESRS E1-5 Energy consumption from fossil sources disaggregated by sources (only high climate impact sectors) paragraph 38	Indicator number 5 Table #1 and Indicator n. 5 Table #2 of Annex 1				47
ESRS E1-5 Energy consumption and mix paragraph 37	Indicator number 5 Table #1 of Annex 1				47
ESRS E1-5 Energy intensity associated with activities in high climate impact sectors paragraphs 40 to 43	Indicator number 6 Table #1 of Annex 1				47
ESRS E1-6 Gross Scope 1, 2, 3 and Total GHG emissions paragraph 44	Indicators number 1 and 2 Table #1 of Annex 1	Article 449a; Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 1: Banking book – Climate change transition risk: Credit quality of exposures by sector, emissions and residual maturity	Delegated Regulation (EU) 2020/1818, Article 5(1), 6 and 8(1)		48-50
ESRS E1-6 Gross GHG emissions intensity paragraphs 53 to 55	Indicators number 3 Table #1 of Annex 1	Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 Template 3: Banking book – Climate change transition risk: alignment metrics	Delegated Regulation (EU) 2020/1818, Article 8(1)		50
ESRS E1-7 GHG removals and carbon credits paragraph 56				Regulation (EU) 2021/1119, Article 2(1)	54

ESRS E1-9 Exposure of the benchmark portfolio to climate-related physical risks paragraph 66			Delegated Regulation (EU) 2020/1818, Annex II Delegated Regulation (EU) 2020/1816, Annex II	Phased-in requirement
ESRS E1-9 Disaggregation of monetary amounts by acute and chronic physical risk paragraph 66 (a) ESRS E1-9 Location of significant assets at material physical risk paragraph 66 (c).		Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraphs 46 and 47; Template 5: Banking book - Climate change physical risk: Exposures subject to physical risk.		Phased-in requirement
ESRS E1-9 Breakdown of the carrying value of its real estate assets by energy efficiency classes paragraph 67 (c).		Article 449a Regulation (EU) No 575/2013; Commission Implementing Regulation (EU) 2022/2453 paragraph 34;Template 2:Banking book -Climate change transition risk: Loans collateralised by immovable property - Energy efficiency of the collateral		Phased-in requirement
ESRS E1-9 Degree of exposure of the portfolio to climate- related opportunities paragraph 69			Delegated Regulation (EU) 2020/1818, Annex II	Phased-in requirement
ESRS E2-4 Amount of each pollutant listed in Annex II of the E PRTR Regulation (European Pollutant Release and	Indicator number 8 Table #1 of Annex 1 Indicator number 2 Table #2 of Annex 1 Indicator number 1			59-60

Transfer Register) emitted to air, water and soil, paragraph 28	Table #2 of Annex 1 Indicator number 3 Table #2 of Annex 1
ESRS E3 - 1 Water and marine resources paragraph 9	Indicator number 7 Table #2 of Annex 1		6 3
ESRS E3 - 1 Dedicated policy paragraph 13	Indicator number 8 Table 2 of Annex 1		6 4 - 6 5
ESRS E3 - 1 Sustainable oceans and seas paragraph 14	Indicator number 12 Table #2 of Annex 1		Not applicable
ESRS E3 - 4 Total water recycled and reused paragraph 28 (c)	Indicator number 6.2 Table #2 of Annex 1		6 7
ESRS E3 - 4 Total water consumption in 3 per net revenue on own m operations paragraph 29	Indicator number 6.1 Table #2 of Annex 1		6 7
ESRS 2 - SBM 3 - E4 paragraph 16 (a) i	Indicator number 7 Table #1 of Annex 1		68 -70
ESRS 2 - SBM 3 - E4 paragraph 16 (b)	Indicator number 10 Table #2 of Annex 1		68 -70
ESRS 2 - SBM 3 - E4 paragraph 16 (c)	Indicator number 14 Table #2 of Annex 1		68 -70

ESRS E4 - 2 Sustainable land / agriculture practices or policies paragraph 24 (b)	Indicator number 11 Table #2 of Annex 1		6 8
ESRS E4 - 2 Sustainable oceans / seas practices or policies paragraph 24 (c)	Indicator number 12 Table #2 of Annex 1		Not applicable
ESRS E4 - 2 Policies to address deforestation paragraph 24 (d)	Indicator number 15 Table #2 of Annex 1		6 8
ESRS E5 - 5 Non -recycled waste paragraph 37 (d)	Indicator number 13 Table #2 of Annex 1		81
ESRS E5 - 5 Hazardous waste and radioactive waste paragraph 39	Indicator number 9 Table #1 of Annex 1		81
ESRS 2 - SBM3 - S1 Risk of incidents of forced labour paragraph 14 (f)	Indicator number 13 Table #3 of Annex I		8 4
ESRS 2 - SBM3 - S1 Risk of incidents of child labour paragraph 14 (g)	Indicator number 12 Table #3 of Annex I		8 4
ESRS S1 - 1	Indicator number 9 Table #3 and Indicator		8 4

Human rights policy commitments paragraph 20	number 11 Table #1 of Annex I
ESRS S1 - 1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 21		Delegated Regulation (EU) 2020/1816, Annex II	8 4
ESRS S1 - 1 processes and measures for preventing trafficking in human beings paragraph 22	Indicator number 11 Table #3 of Annex I		8 4
ESRS S1 - 1 workplace accident prevention policy or management system paragraph 23	Indicator number 1 Table #3 of Annex I		8 6
ESRS S1 - 3 grievance/complaints handling mechanisms paragraph 32 (c)	Indicator number 5 Table #3 of Annex I		8 7
ESRS S1 -14 Number of fatalities and number and rate of work - related accidents paragraph 88 (b) and (c)	Indicator number 2 Table #3 of Annex I	Delegated Regulation (EU) 2020/1816, Annex II	91

ESRS S1 -14 Number of days lost to injuries, accidents, fatalities or illness paragraph 88 (e)	Indicator number 3 Table #3 of Annex I		91
ESRS S1 -16 Unadjusted gender pay gap paragraph 97 (a)	Indicator number 12 Table #1 of Annex I	Delegated Regulation (EU) 2020/1816, Annex II	85 -86
ESRS S1 -16 Excessive CEO pay ratio paragraph 97 (b)	Indicator number 8 Table #3 of Annex I		85
ESRS S1 -17 Incidents of discrimination paragraph 103 (a)	Indicator number 7 Table #3 of Annex I		84 -85
ESRS S1 -17 Non -respect of UNGPs on Business and Human Rights and OECD Guidelines paragraph 104 (a)	Indicator number 10 Table #1 and Indicator n. 14 Table #3 of Annex I	Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818 Art 12 (1)	88
ESRS 2 - SBM3 – S2 Significant risk of child labour or forced labour in the value chain paragraph 11 (b)	Indicators number 12 and n. 13 Table #3 of Annex I		92 - 9 4
ESRS S2 - 1 Human rights policy commitments paragraph 17	Indicator number 9 Table #3 and Indicator n. 11 Table #1 of Annex 1		92 - 9 4
ESRS S2 -1 Policies related to value chain workers paragraph 18	Indicator number 11 and n. 4 Table #3 of Annex 1		92 - 9 4

ESRS S2 -1Non -respect of UNGPs on Business and Human Rights principles and OECD guidelines paragraph 19	Indicator number 10 Table #1 of Annex 1	Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1)	92 - 9 4
ESRS S2 - 1 Due diligence policies on issues addressed by the fundamental International Labor Organisation Conventions 1 to 8, paragraph 19		Delegated Regulation (EU) 2020/1816, Annex II	92 - 9 4
ESRS S2 - 4 Human rights issues and incidents connected to its upstream and downstream value chain paragraph 36	Indicator number 14 Table #3 of Annex 1		92 - 9 4
ESRS S3 - 1 Human rights policy commitments paragraph 16	Indicator number 9 Table #3 of Annex 1 and Indicator number 11 Table #1 of Annex 1		92 - 9 4
ESRS S3 - 1 non -respect of UNGPs on Business and Human Rights, ILO principles or OECD guidelines paragraph 17	Indicator number 10 Table #1 Annex 1	Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1)	Not material
ESRS S3 - 4 Human rights issues and incidents paragraph 36	Indicator number 14 Table #3 of Annex 1		Not material

ESRS S4 -1 Policies related to consumers and end -users paragraph 16	Indicator number 9 Table #3 and Indicator number 11 Table #1 of Annex 1		Not material
ESRS S4 - 1 Non -respect of UNGPs on Business and Human Rights and OECD guidelines paragraph 17	Indicator number 10 Table #1 of Annex 1	Delegated Regulation (EU) 2020/1816, Annex II Delegated Regulation (EU) 2020/1818, Art 12 (1)	Not material
ESRS S4 - 4 Human rights issues and incidents paragraph 35	Indicator number 14 Table #3 of Annex 1		Not material
ESRS G1 - 1 United Nations Convention against Corruption paragraph 10 (b)	Indicator number 15 Table #3 of Annex 1		95 - 9 7
ESRS G1 - 1 Protection of whistle - blowers paragraph 10 (d)	Indicator number 6 Table #3 of Annex 1		95 - 9 7
ESRS G1 - 4 Fines for violation of anti - corruption and anti -bribery laws paragraph 24 (a)	Indicator number 17 Table #3 of Annex 1	Delegated Regulation (EU) 2020/1816, Annex II)	95 - 9 7
ESRS G1 - 4 Standards of anti - corruption and anti - bribery paragraph 24 (b)	Indicator number 16 Table #3 of Annex 1		95 - 9 7

Appendix III. – List of phased-in disclosure requirements

Disclosure requirement	Full name of the disclosure requirement	Phase-in or effective date (including the first year)
ESRS 2 SBM-1	Strategy, business model and value chain	The undertaking shall report the information prescribed by ESRS 2 SBM-1 paragraph 40(b) (breakdown of total revenue by significant ESRS sector) and 40(c) (list of additional significant ESRS sectors) starting from the application date specified in a Commission Delegated Act to be adopted pursuant to article 29b(1) third subparagraph, point (ii), of Directive 2013/34/EU.
ESRS 2 SBM-3	Material impacts, risks and opportunities and their interaction with strategy and business model	The undertaking may omit the information prescribed by ESRS 2 SBM-3 paragraph 48(e) (anticipated financial effects) for the first year of preparation of its sustainability statement. The undertaking may comply with ESRS 2 SBM-3 paragraph 48(e) by reporting only qualitative disclosures for the first 3 years of preparation of its sustainability statement, if it is impracticable to prepare quantitative disclosures.
ESRS E1-9	Anticipated financial effects from material physical and transition risks and potential climate-related opportunities	The undertaking may omit the information prescribed by ESRS E1-9 for the first year of preparation of its sustainability statement. The undertaking may comply with ESRS E1-9 by reporting only qualitative disclosures for the first 3 years of preparation of its sustainability statement, if it is impracticable to prepare quantitative disclosures
ESRS E2-6	Anticipated financial effects from pollution-related impacts, risks and opportunities	The undertaking may omit the information prescribed by ESRS E2-6 for the first year of preparation of its sustainability statement. Except for the information prescribed by paragraph 40 (b) on the operating and capital expenditures occurred in the reporting period in conjunction with major incidents and deposits, the undertaking may comply with ESRS E2-6 by reporting only qualitative disclosures, for the first 3 years of preparation of its sustainability statement.
ESRS E3-5	Anticipated financial effects from water and marine resources-related impacts, risks and opportunities	The undertaking may omit the information prescribed by ESRS E3-5 for the first year of preparation of its sustainability statement. The undertaking may comply with ESRS E3-5 by reporting only qualitative disclosures, for the first 3 years of preparation of its sustainability statement.
ESRS E4-6	Anticipated financial effects from biodiversity and ecosystem-related impacts, risks and opportunities	The undertaking may omit the information prescribed by ESRS E4-6 for the first year of preparation of its sustainability statement. The undertaking may comply with ESRS E4-6 by reporting only qualitative disclosures, for the first 3 years of preparation of its sustainability statement.
ESRS E5-6	Anticipated financial effects from resource use and circular economy-related impacts, risks and opportunities	The undertaking may omit the information prescribed by ESRS E5-6 for the first year of preparation of its sustainability statement. The undertaking may comply with ESRS E5-6 by reporting only qualitative disclosures, for the first 3 years of preparation of its sustainability statement.

ESRS S1-7	Characteristics of nonemployee workers in the undertaking's own workforce	The undertaking may omit reporting for all datapoints in this Disclosure Requirement for the first year of preparation of its sustainability statement.
ESRS S1-11	Social protection	The undertaking may omit the information prescribed by ESRS S1-11 for the first year of preparation of its sustainability statement
ESRS S1-12	Percentage of employees with disabilities	The undertaking may omit the information prescribed by ESRS S1-12 for the first year of preparation of its sustainability statement.
ESRS S1-13	Training and skills development	The undertaking may omit the information prescribed by ESRS S1-13 for the first year of preparation of its sustainability statement.
ESRS S1-14	Health and safety	The undertaking may omit the data points on cases of work-related ill-health and on number of days lost to injuries, accidents, fatalities and work-related ill health for the first year of preparation of its sustainability statement The undertaking may omit reporting on nonemployees for the first year of preparation of its sustainability statement.
ESRS S1-15	Work-life balance	The undertaking may omit the information prescribed by ESRS S1-15 for the first year of preparation of its sustainability statement.

5.3. EU Taxonomy Templates

Proportion of TURNOVER from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024

	Substantial contribution criteria		('Does Not Significantly Harm)		DNSH criteria
Economic Activities (1)	Code) (2)	Turnover (3)	2024 (4) year of Turnover, Proportion	Change Mitigation (5) Climate	Adaptation (6) Change Climate	Water (7)	(8) Pollution	economy (9) Circular	ecosystems (10) Biodiversity and	Climate change mitigation (11)	climate change (12) Adapting to	marine resources (13) and Water	(14) Pollution	(15) economy Circular	ecosystems (16) and Biodiversity	(17) safeguards Minimum	Taxonomy- aligned (A.1.) or -eligible (A.2.) turnover 2023 (18)	Category enabling activity (19)	Category transitional activity (20)
A. TAXONOMY-ELIGIBLE ACTIVITIES		RON	টাই	বিৎ	પ્રદ	ਰ ਦੇ		টাই	৪২	I/N	I/N	I/N	I/N	I/N	I/N	I/N	টাং	E
A1. Environmentally sustainable activities (Taxonomy-aligned)	N/A	0	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
A2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)		243 259 375	50%
Collection and transport of non-hazardous and hazardous waste	CE 2.3.	17 213 397	4%														8%
Sorting and material recovery of non-hazardous waste	CE 2.7.	226 045 977	46%														n/a
Preparation for re-use of end-of-life products and product components 1	CE 5.3.	n/a	n/a														76%
Total (A1. + A2.)		243 259 375	50%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES		243 535 963	50%

Proportion of CAPEX from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024

	Substantial contribution criteria		('Does Not Significantly Harm)		DNSH criteria
Economic Activities (1)	Code) (2)	CAPEX (3)	2024 (4) of CAPEX, year Proportion	Climate Change Mitigation (5)	Change Adaptation (6) Climate	Water (7)	Pollution (8)	(9) economy Circular	(10) ecosystems and Biodiversity	change mitigation (11) Climate	change (12) Adapting to climate	(13) and marine resources Water	Pollution (14)	Circular economy (15)	Biodiversity and ecosystems (16)	Minimum safeguards (17)	Taxonomy- aligned (A.1.) or -eligible (A.2.) CAPEX 2023 (18)	Category enabling activity (19)	Category transitional activity (20)
		RON	ଟ୍ଟନ	80	ar	ਾ ਦੇ	ರ್ಕೆ	ರ್ಕ		I/N	I/N	1/N	I/N	I/N	I/N	1/N	്ലെ	E	T
A. TAXONOMY-ELIGIBLE ACTIVITIES
A1. Environmentally sustainable activities (Taxonomy-aligned)	N/A	0	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
A2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)		115 886 141	89%
Collection and transport of non-hazardous and hazardous waste	CE 2.3.	57 915	0%														8%
Sorting and material recovery of non-hazardous waste	CE 2.7.	32 435 629	25%														n/a
Electricity generation using solar photovoltaic technology	CCM 4.1.	79 974 937	61%														n/a
Transport by motorbikes, passenger cars and light commercial vehicles	CCM 6.5.	3 417 659	3%														n/a
Preparation for re-use of end-of-life products and product components 2	CE 5.3.	n/a	n/a														69%
Total (A1. + A2.)		115,886,141	89%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES		14 520 842	11%
TOTAL /A DI

					Substantial contribution criteria				('Does Not Significantly Harm)	DNSH criteria
Economic Activities (1)	Code) (2)	OPEX (3) RON	year 2024 (4) of OPEX, Proportion ar	Mitigation (5) Change Climate ్లోక్	Change Adaptation (6) Climate 8	Water (7) 8	Pollution (8) ರ್ಕೆ	Circular economy (9) ಕೀ	ecosystems (10) Biodiversity and ರೀ	Climate change mitigation (11)	Adapting to climate change (12)	(13) and marine resources Water	Pollution (14)	(15) economy Circular	(16) ecosystems and Biodiversity	safeguards (17) Minimum	Taxonomy- aligned (A.1.) or -eligible (A.2.) OPEX 2023 ଧିହ	Category (enabling activity) E	Category (transitional activity) T
A. TAXONOMY-ELIGIBLE ACTIVITIES										I/N	I/N	I/N	I/N	I/N	I/N	I/N
A1. Environmentally sustainable activities (Taxonomy-aligned)	N/A	0	0%	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a	n/a
A2. Taxonomy-eligible but not environmentally sustainable activities (not Taxonomy-aligned activities)		11 406 571	78%
Collection and transport of non-hazardous and hazardous waste	CE 2.3.	582 219	4%														1%
Sorting and material recovery of non-hazardous waste	CE 2.7.	10 824 352	74%														n/a
Preparation for re-use of end-of-life products and product components 3	CE 5.3.	n/a	n/a														5%
Total (A1. + A2.)		11 406 571	78%
B. TAXONOMY-NON-ELIGIBLE ACTIVITIES		3 453 098	22%
TOTAL (A + B)		14 559 669	100%

Proportion of OPEX from products or services associated with Taxonomy-aligned economic activities – disclosure covering year 2024

	Proportion of Turnover / Total Turnover		Proportion of CAPEX / Total CAPEX		Proportion of OPEX / Total OPEX
	Taxonomy-aligned per objective	Taxonomy-eligible per objective	Taxonomy-aligned per objective	Taxonomy-eligible per objective	Taxonomy-aligned per objective	Taxonomy-eligible per objective
CCM	0%	0%	0%	64%	0%	0%
CCA	0%	0%	0%	0%	0%	0%
WTR	0%	0%	0%	0%	0%	0%
CE	0%	50%	0%	25%	0%	78%
PPC	0%	0%	0%	0%	0%	0%
Blo	0%	0%	0%	0%	0%	0%

Proportion of EU Taxonomy KPIs by objectives

Independent Limited Assurance Report*

(*This represents a non-official English translation of the original audit report issued in Romanian language)

To: The Shareholders of S.C. Vrancart S.A.

Limited assurance conclusion

• 1. We have conducted a limited assurance engagement on the accompanying Consolidated Sustainability Report approved on 15th of April 2025 of the Vrancart group ("the Group"), prepared for the period from 01 January 2024 to 31 December 2024 by S.C. Vrancart S.A. ("the Company"), with social premises registered in Romania, Adjud, 17 Ecaterina Teodoroiu Street, Vrancea District, Fiscal Identification Number RO1454846, Trade Register number J39/239/1991.
• 1. Based on the procedures we have performed and the evidence we have obtained, nothing has come to our attention that causes us to believe that the Group Consolidated Sustainability Report for the period from 01 January 2024 to 31 December 2024 is not prepared, in all material respects, in accordance with the applicable statutory sustainability reporting framework foreseen in the Ministry of Finance Order 2844/2016 (with subsequent amendments and updates) that approves the Accounting regulations compliant with the International Financial Reporting Standards, including:
  2. compliance with the European Sustainability Reporting Standards ("ESRS"), including the fact that the double materiality assessment process carried out by the Group to identify the information reported in the Consolidated Sustainability Report (the "Process") is in accordance with the description set out in section Double Materiality Assessment including stakeholders engagement;

and

compliance of the EU Green Taxonomy disclosures detailed in the Section 2.1. EU Taxonomy and Section 5.4. EU Taxonomy Templates of the Consolidated Sustainability Report with the applicable reporting requirements of Article 8 of Regulation (EU) 2020/852 (the "Green Taxonomy Regulations")

Basis for conclusion

1. We conducted our limited assurance engagement in accordance with ISAE 3000 (Revised) "Assurance Engagements other than Audits or Reviews of Historical Financial Information". The procedures in a limited assurance engagement vary in nature and timing from, and are less in extent compared to, a reasonable assurance engagement. Consequently, the level of assurance obtained in a limited assurance engagement is substantially lower than the assurance that would have been obtained had a reasonable assurance engagement been performed.

Our responsibilities under this standard are further described in the Auditor responsibility section of our report.

We believe that the evidence we have obtained is sufficient and appropriate to provide a basis for our conclusion.

Emphasis of matter

1. We draw attention to section Basis for Preparation of the Consolidated Sustainability Report where it is mentioned that the double materiality assessment Process is an on-going exercise that responds to

and may trigger changes in the Group's strategy, business model, activities, value chain and general operating contexts. The double materiality assessment Process may also be impacted in time by sector-specific standards to be adopted. The double materiality assessment Process may not include every impact, risk and opportunity or additional entity-specific disclosure that each individual stakeholder may consider important in its own particular assessment. Our conclusion is not modified in this respect.

• 1. As described in section Disclosures in relation to specific circumstances of the Consolidated Sustainability Report, GHG emissions quantification is subject to significant inherent measurement uncertainty because of incomplete scientific knowledge used to determine emissions factors and the values to combine emissions of different gases. Greenhouse gas quantification is unavoidably subject to significant inherent uncertainty as a result of both scientific and estimation uncertainty. Estimation uncertainty can arise because of:
  2. the inherent uncertainty in quantifying inputs, such as activity data and emission factors, that are used in mathematical models to estimate emissions (measurement uncertainty);
  3. the inability of such models to precisely and accurately characterize under all circumstances the relationships between various inputs and the resulting emissions (model uncertainty); and
  4. the fact that uncertainty can increase as emission quantities with different levels of measurement and calculation uncertainty are aggregated (aggregation uncertainty).

Our conclusion is not modified in this respect.

Other matters – comparative information

1. Our assurance engagement does not extend to information in respect of earlier periods. Our conclusion is not modified in respect of this matter.

Responsibility for the Consolidated Sustainability Report

• 1. The Directors of the Company are responsible for designing, implementing and maintaining a Process to identify the information reported in the Consolidated Sustainability Report in accordance with the ESRS and for disclosing this Process in the Consolidated Sustainability Report. This responsibility include:
  2. understanding the context in which the Group's activities and business relationships take place and developing an understanding of its affected stakeholders;
  3. the identification of the actual and potential impacts (both negative and positive) related to sustainability matters, as well as risks and opportunities that affect, or could reasonably be expected to affect, the Group's financial position, financial performance, cash flows, access to finance or cost of capital over the short-, medium-, or long-term;
  4. the assessment of the materiality of the identified impacts, risks and opportunities related to sustainability matters, by selecting and applying appropriate thresholds; and
  5. developing methodologies and making assumptions that are reasonable in the circumstances.

The Directors of the Company are further responsible for the preparation of the Consolidated Sustainability Report, in accordance with the statutory sustainability reporting framework, including:

• compliance with the European Standards for Reporting on Sustainability (ESRS);
• preparing the Green Taxonomy disclosures of the Consolidated Sustainability Report, in compliance with Article 8 of EU Regulation 2020/852 (the "Green Taxonomy Regulation"); and

• designing, implementing and maintaining such internal controls that are necessary to enable the preparation of the Consolidated Sustainability Report that is free from material misstatement, whether due to fraud or error; and
• the selection and application of appropriate sustainability reporting methods and making assumptions and estimates about individual sustainability disclosures that are reasonable in the circumstances.

Those charged with governance are responsible for overseeing the sustainability reporting process.

Inherent limitations in preparing the Consolidated Sustainability Report

• 1. Estimates, approximations and forecasts used in preparing and presenting the Consolidated Sustainability Report are subject to significant inherent uncertainty. The selection by management of different but acceptable estimation, approximation or forecasting techniques, could have resulted in materially different amounts or disclosures being reported. For the avoidance of doubt, the scope of our engagement and our responsibilities will not involve us performing work necessary for any assurance on the reliability, proper compilation, or accuracy of the prospective information.
• 1. In determining the disclosures in the Consolidated Sustainability Report, the Directors of the Company interpret undefined legal and other terms. Undefined legal and other terms may be interpreted differently, including the legal conformity of their interpretation and, accordingly, are subject to uncertainties.
• 1. Certain metrics reported within the Consolidated Sustainability Report may be subject to inherent limitations, for example, value chain information relating to emissions data provided by third parties. Where estimated, approximated or forecast information is provided by third parties in respect of value chain information, it is likely that such information may not be verified or benchmarked in full.
• 1. The nature of the sustainability matters, and the absence of consistent external standards, allow for different, but acceptable, measurement methodologies to be adopted, which may result in variances between entities. The adopted measurement methodologies may also impact the comparability of sustainability matters reported by different organizations, and from year to year within an organization, as methodologies develop

Auditor responsibility

1. Our responsibility is to plan and perform the assurance engagement to obtain limited assurance about whether the Consolidated Sustainability Report is free from material misstatement, whether due to fraud or error, and to issue a limited assurance report that includes our conclusion.

Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence decisions of users taken on the basis of the Consolidated Sustainability Report as a whole. As part of a limited assurance engagement in accordance with ISAE 3000 (Revised) we exercise professional judgement and maintain professional scepticism throughout the engagement.

• 1. Our responsibilities in respect of the Consolidated Sustainability Report, in relation to the Process, include:
  2. Obtaining an understanding of the Process, but not for the purpose of providing a conclusion on the effectiveness of the Process, including the outcome of the Process;
  3. Designing and performing procedures to evaluate whether the Process is consistent with the Group's description of its Process, as disclosed in the Consolidated Sustainability Report.
• 1. Our other responsibilities in respect of the Consolidated Sustainability Report include:

• Obtaining an understanding of the Group's control environment, processes, and information systems relevant to the preparation of the Consolidated Sustainability Report, but not evaluating the design of particular control activities, obtaining evidence about their implementation or testing their operating effectiveness;
• Identifying disclosures where material misstatements are likely to arise, whether due to fraud or error;
• Designing and performing procedures responsive to disclosures in the Consolidated Sustainability Report where material misstatements are likely to arise. 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, intentional omissions, misrepresentations, or the override of internal control.

Our independence and quality management

• 1. We are independent towards the Company and the Group in accordance with the International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants (IESBA Code) and in accordance with other ethical requirements relevant in Romania, including Law 162/2017 (as subsequently amended), for our limited assurance engagement on the Consolidated Sustainability Report and we have fulfilled our other ethical responsibilities in accordance with the IESBA Code.
• 1. Our firm applies the International Standard on Quality Management 1 ("ISQM1") and, accordingly, maintains a comprehensive system of quality management, including documented policies and procedures regarding compliance with ethical requirements, professional standards, and applicable legal and regulatory requirements.

Summary of the work performed

1. A limited assurance engagement involves performing procedures to obtain evidence about the Consolidated Sustainability Report. The nature, timing and extent of procedures selected depend on professional judgement, including the identification of disclosures where material misstatements are likely to arise, whether due to fraud or error, in the Consolidated Sustainability Report.

In conducting our limited assurance engagement, with respect to the Process, we:

• Obtained an understanding of the Process by:
  • performing inquiries to understand the sources of the information used by management (e.g. stakeholder engagement, business plans and strategy documents); and
  • inspecting and examining the Group's internal documentation of its Process;

and

• Evaluated whether the evidence obtained from our procedures about the Process of the Group was consistent with the description of the Process set out in the Consolidated Sustainability Report.
• 1. In conducting our limited assurance engagement, with respect to the Consolidated Sustainability Report, our main procedures consisted in:
  2. Organizing interviews with Group employees and collaborators involved in the preparation of the Consolidated Sustainability Report in order to understand the relevant systems, processes and internal control procedures that support the collection of the data presented in the Consolidated Sustainability Report,
  3. Evaluated whether significant information obtained through the process of identifying the information required to be disclosed in the Consolidated Sustainability Report is included in the Consolidated Sustainability Report;

• Evaluated whether the structure and the presentation of the Consolidated Sustainability Report is in accordance with the European Standards for Reporting on Sustainability (ESRS);
• We conducted interviews with the relevant individuals and performed limited analytical procedures, such as recalculation and reconciliation on a selection of specific disclosures in the Consolidated Sustainability Report;
• We performed detailed procedures on a sample basis on selected disclosures in the Consolidated Sustainability Report by comparing them with various supporting documentation and information sources, such as reports to the authorities or internal Group databases;
• We conducted interviews to obtain an understanding of the methods used to make significant estimates and forecast information and how these methods were applied;
• Obtained an understanding of the process to identify taxonomy-eligible and taxonomy-aligned economic activities and the corresponding disclosures in the Consolidated Sustainability Report.

We have also performed other procedures that we considered necessary depending on the circumstances.

Restrictions of use

1. This report is provided solely for the purpose described in the first paragraph and is addressed to the Shareholders of the Company. By issuing this report, we assume no liability for any other scope or to any other party that may have access to our report. Our engagement was carried out so that we can report to the Shareholders of the Company the matters that we are required to report in an independent limited assurance report, and for no other purpose. This report refers only to the matters mentioned above and does not relate to other reports of the Company or the Group.

Bucharest, 16th of April 2025

Răzvan Butucaru

Auditor registered in the Public Electronic Register under no. 2680 / 2008

On behalf of: FORVIS MAZARS ROMANIA SRL

Audit firm registered in the Public Electronic Register under no. 699 / 2007

4B Ing. George Constantinescu street, 5th floor, Globalworth Campus, Building B Bucharest, Romania Tel: +031 229 2600

DECLARATION

The undersigned, Nicu – Ciprian FEDOR, as Chairman of the Board of Directors/General Manager of VRANCART, and Gabriela COMAN, as Economic Director of VRANCART, a Romanian legal entity, with registered office in Adjud, 17th Ecaterina Teodoroiu Street, Vrancea County, registered at the Trade Register Office of the Vrancea Court under the number J39/239/1991, Unique Registration Code 1454846, being aware of the provisions of art. 326 of the Penal Code regarding false statements, we declare that, to the best of our knowledge, the individual and consolidated Financial Statements for the year 2024 have been prepared in accordance with the International Financial Reporting Standards - I.F.R.S. (Order of the Ministry of Public Finance no. 881/2012 and Order of the Ministry of Public Finance no. 2844/2016), that they give a true and fair view of the financial position and of the overall result of the Company, and that the Report of the Board of Directors includes a fair analysis of the development and performance of the Company, as well as a description of the main risks and uncertainties specific to the business.

April 29th, 2025

Nicu – Ciprian FEDOR – Chairman of the Board of Directors / General Manager

Gabriela COMAN – Economic Director

REMUNERATION REPORT

FOR ADMINISTRATORS AND EXECUTIVE DIRECTORS VRANCART S.A.

RELATED TO 2024

1. INTRODUCTION

This Remuneration Report (hereinafter referred to as the "Report") for the directors (directors and executive directors) of VRANCART (hereinafter referred to as the "Company"), prepared in accordance with the Company's Remuneration Policy, aims to present a clear and objective picture of the remuneration and/or benefits granted by the Company to its managers during the financial year 2024.

The Remuneration Report is prepared by the Company in accordance with the provisions of Law no. 24/2017 on issuers of financial instruments and market operations, republished, as subsequently amended and supplemented, and will be put to a vote at the Ordinary General Meeting of Shareholders of the Company on April 29th/30th, 2025, with the opinion of the shareholders having an advisory role.

Subsequently, the Report will be published and will be made available to the public for a period of 10 years, on the Society's website – www.vrancart.ro.

2. REMUNERATION REPORT AND REMUNERATION POLICY

The Company's Remuneration Policy was approved by the Board of Directors on March 26th, 2021, by the Ordinary General Meeting of Shareholders on April 27th, 2021 and entered into force on May 1st, 2021.

It describes the general framework for the determination of remuneration within the Company's management and sets out clear principles, designed to demonstrate the alignment of the interests of the decision-makers in the Company, with the interests of shareholders and other parties involved (e.g. employees or the general public).

By applying the Remuneration Policy, the Company aims to ensure consistency between the remuneration offered and its business strategy, risk policies, values and objectives on different time scales, the complexity of the operations carried out, the internal organizational dimensions and structures or of the Group of affiliates that it controls.

The Remuneration Report highlights the applicability during the financial year 2024 of the guidelines of the Remuneration Policy.

3. COMPANY'S MANAGERS

The Company is managed in a unitary manner by a Board of Directors consisting of 5 (five) members, appointed for a period of 4 (four) years. The General Manager of the Company is appointed on the basis of a mandate contract. The Deputy General Manager of the Company is also appointed on the basis of a mandate contract.

The duties of the Board of Directors, the General Manager and the Deputy General Manager are provided for in the Company's Articles of Incorporation, the mandate contracts, as well as in the general and special legal provisions applicable, as the case may be.

Crt.	First Name/Last Name	Function	Previous term	Current
No.				mandate
1.	Ionel – Marian CIUCIOI	Non-Executive Director/Chairman st (January 1 , 2024 – November 30th , 2024)	April 27th , 2018 – April 27th , 2022	April 27th , 2018 – November 30th , 2024
2.	Nicu - Ciprian FEDOR	Deputy Director General (September 19th , 2023 – March 31st , 2024) Managing Director Provisional Executive		September 19th , 2023 - March 31st , 2024 st April 1 , 2024 - April 27th , 2026 December 1st ,
		Director/ Provisional Chairman of the Board of Directors (December 1st , 2024 – st December 31 , 2024)		2024 - until the date of the Ordinary General Meeting of Shareholders
3.	Nicolae – Paul DUMITRESCU	Managing Director (September 19th , 2023 - March 31st , 2024)		September 19th , 2023 - March 31st , 2024

During 2024, the Company's Directors were:

4.	Adrian – Corneliu BECHEANU	Deputy Director General		November 1st , 2024 – October 31st , 2028
5.	Bogdan – Alexandru DRĂGOI	Non-executive director	April 27th , 2018 – April 27th , 2022	April 27th , 2022 – April 27th , 2026
6.	Sergiu MIHAILOV	Non-executive director	April 27th , 2018 – April 27th , 2022	April 27th , 2022 – April 27th , 2026
7.	Adrian FERCU	Non-executive director	April 27th , 2018 – April 27th , 2022	April 27th , 2022 – April 27th , 2026
8.	Rachid EL LAKIS	Non-executive director	April 27th , 2018 – April 27th , 2022	April 27th , 2022 – April 27th , 2026

During 2024, Mr. Nicolae – Paul DUMITRESCU held the position of General Manager of the Company, with executive duties delegated by mandate contract, between January 1 st , 2024 and March 31st , 2024.

During 2024, Mr. Nicu – Ciprian FEDOR held the position of Deputy General Manager of the Company, with executive duties delegated by mandate contract, between January 1 st , 2024 and March 31st , 2024.

During 2024, Mr. Nicu – Ciprian FEDOR held the position of General Manager of the Company, with executive duties delegated by mandate contract, between April 1 st , 2024 and December 31 st , 2024. His mandate as General Manager is valid until April 27th , 2026.

During 2024, Mr. Adrian – Corneliu BECHEANU held the position of Deputy General Manager of the Company, with executive duties delegated by mandate contract, between November 1st , 2024 and December 31 st , 2024. His mandate as Deputy General Manager is valid until October 31st , 2028.

3. REMUNERATION OF MANAGERS

In 2024, the remuneration of the Company's managers was fixed, variable and nonfinancial, as follows:

• a. The members of the Board of Directors benefit from:
• i. a fixed monthly remuneration, established by the Ordinary General Meeting of Shareholders,
• ii. of variable remuneration, within the maximum limit established by the Ordinary General Meeting of Shareholders,
• iii. do not benefit from non-financial benefits,
• b. The General Manager benefits from:
  • i. a fixed monthly remuneration, based on the mandate contract,
• ii. a variable annual remuneration, approved by the Board of Directors, depending on the Company's performance in the respective financial year, and within the maximum limit established by the Ordinary General Meeting of Shareholders,
• iii. of non-financial benefits, as follows: company car, computer technology, telephone, medical insurance.
• c. The Deputy Director General benefits from:
  • i. a fixed monthly remuneration, based on the mandate contract,
  • ii. a variable annual remuneration, approved by the Board of Directors, depending on the Company's performance in the respective financial year
  • iii. of non-financial benefits, as follows: company car, computer technology, telephone, medical insurance.

Crt.	First Name/Last	Function	Fixed annual	Variable annual
No.	Name		remuneration, net	remuneration, net
1.	Ionel – Marian CIUCIOI	President	132,000 lei	276,000 lei
2.	Nicu – Ciprian FEDOR	Deputy Director General	75,000 lei
		Managing Director	288,600 lei
		President	12,000 lei	15,000 lei
3.	Bogdan – Alexandru DRĂGOI	Non-executive director	144,000 lei	75,000 lei
4.	Sergiu MIHAILOV	Non-executive director	144,000 lei	75,000 lei
5.	Adrian FERCU	Non-executive director	144,000 lei	75,000 lei
6.	Rachid EL LAKIS	Non-executive director	144,000 lei	75,000 lei
7.	Nicolae – Paul DUMITRESCU	Managing Director	112,500 lei	150,000 lei
8.	Adrian – Corneliu BECHEANU	Deputy Director General	30,000 lei	5,000 lei

In 2024, some of the members of the Company's management received additional remuneration for the qualities held at other subsidiary companies in the Group, as follows:

• Mr. Ionel Marian CIUCIOI also received net remuneration in the amount of 2,500 lei from a subsidiary of the Company.
• Mr. Sergiu MIHAILOV also received net remuneration in the amount of RON 48,000 from two other subsidiaries of the Company.
• Mr. Adrian FERCU also received net remuneration in the amount of RON 48,000 from two other subsidiaries of the Company.
• Mr. Nicolae Paul DUMITRESCU also received net remuneration in the amount of RON 7,569 from a subsidiary of the Company.
• Mr. Nicu Ciprian FEDOR also received net remuneration in the amount of RON 69,657 from three other subsidiaries of the Company.

In 2024, there were no increases in the fixed remuneration of the members of the Company's Board of Directors.

With regard to other remunerations of the directors received from the companies of the Group, they are detailed in the Report issued by the majority shareholder LION CAPITAL S.A., a Romanian legal entity, with its registered office in Arad, 35A Calea Victoriei, Arad County, registered at the Trade Register Office attached to the Court of Arad under no. J02 / 1898 / 1992, Unique registration code 2761040.

The Company's policy in relation to all its directors does not provide for benefits related to supplementary pension or early retirement schemes, with respect to the recovery of variable remuneration or with respect to shares or the granting of stock options.

In relation to the remuneration of managers in the last 5 years, the following can be observed:

• ➢ Between 2020 and 2024, the fixed remuneration of the members of the Board of Directors did not change.
• ➢ Between 2020 and 2021, the fixed remuneration of the General Manager did not change. In 2022, the fixed remuneration of the General Manager increased by 18.5% compared to the previous year, and during 2023 the fixed remuneration changed between September and December, when it decreased by 22%.
• ➢ In 2024, the fixed remuneration of the General Manager decreased by 5% compared to the previous year.

In the same period, the remuneration of the Company's employees, respectively the average gross monthly salary per Company, increased according to the table below:

Indicator	2020	2021	2022	2023	2024
Average gross monthly salary value (Lei)	4,414	4,958	5,666	6,383	7,370
Evolution of
average gross	+4%	+12%	+14%	+13%	+15%
salary ("%" vs.
Previous year)

Compared to what is presented in the Report, there were no derogations or deviations from the Remuneration Policy when implementing it.

4. COMPANY PERFORMANCE

During 2024, the Company's evolution was influenced by the increase in purchase prices for the main raw materials, the elimination of important energy subsidies, in the context in which electricity and natural gas tariffs remained at a high level, the negative impact of the electricity supply shutdown, as a result of the works on the A7 motorway and the connection of the photovoltaic park to the national dispatching network. Also, the legislation of the turnover tax, the still high level of annual inflation, as well as the values of interest rates contributed negatively. The labor cost represented, in turn, a stress factor on the Company's profitability, as a result of the successive increases in the minimum wage. The pressure on sales prices, caused by the customers' need to optimize their own costs, but also by the fierce competition in the market, made it impossible to take over all the price increases, inevitably affecting the Company's profitability.

Indicator	2020	2021	2022	2023	2024
Turnover (thousand lei)	286,477	387,018	526,032	412,683	396,554
Turnover evolution (%)	-5%	+35%	+36%	-22%	-4%
EBITDA (RON thousands)	57,592	47,813	66,707	56,829	38,307
Evolution of EBITDA (%)	+0,4%	-17%	+40%	-15%	-33%
Company net profit (RON thousands)	18,534	9,869	23,689	5,629	-11,278
Evolution of the company's net profit (%)	-17%	-44%	+140%	-76%	-300%

Centralization with the Company's results

5. FINAL PROVISIONS

This Remuneration Report was prepared by the Company in accordance with the provisions of Law no. 24/2017 on issuers of financial instruments and market operations, republished, as subsequently amended and supplemented, and will be submitted to the vote at the Ordinary General Meeting of Shareholders of the Company on April 29th/30th , 2025, with the shareholders' opinion having an advisory role.

In its next Remuneration Report, for the year 2025, the Company will specify how the shareholder vote was expressed and implemented.

The remuneration report for 2023 was approved by the shareholders at the Ordinary General Meeting of Shareholders of the Company on April 29th, 2024.

This Remuneration Report was approved by the Board of Directors of the Company at its meeting on March 28th, 2025.

Nicu – Ciprian FEDOR Gabriela COMAN Chairman of the Board of Directors Economic Director

VRANCART

STATUS OF COMPLIANCE WITH THE PROVISIONS OF THE CORPORATE GOVERNANCE CODE OF THE BUCHAREST STOCK EXCHANGE

No.	The provisions of the Corporate Governance Code of the Bucharest	Compliance
Crt.	Stock Exchange	status	EXPLANATIONS
		YES/NO
	Section A – Responsibilities
A.1	All companies must have an Internal Regulations of the Board that	YES
	include the terms of reference/responsibilities of the Board and the
	key management functions of the company, and that apply, among
	other things, the General Principles in this section.
A.2	Provisions for the management of conflicts of interest should be	YES
	included in the Council Regulation.
A.3	The Board of Directors must consist of at least five members.	YES
A.4	The majority of the members of the Board of Directors must not have
	an executive function. At least one member of the Board of Directors	YES
	must be independent in the case of companies in the Standard
	Category. Each independent member of the Board of Directors must
	submit a declaration at the time of his nomination for election or re
	election, as well as when any change in his statute occurs, indicating
	the elements on the basis of which he is considered to be independent
	in terms of his character and judgment.

No. Crt.	The provisions of the Corporate Governance Code of the Bucharest Stock Exchange	Compliance status YES/NO	EXPLANATIONS
Section A – Responsibilities
A.5	Other relatively permanent professional commitments and obligations of a member of the Board, including executive and non executive positions on the Board of non-profit companies and	YES

	institutions, must be disclosed to potential shareholders and investors prior to nomination and during his or her term of office.
A.6	Any member of the Board shall submit to the Board information regarding any relationship with a shareholder who directly or indirectly holds shares representing more than 5% of all voting rights.	YES
A.7	The Society shall appoint a Secretary of the Board responsible for supporting the work of the Board.	YES
A.8	The Corporate Governance Statement will inform whether an assessment of the Board has taken place under the leadership of the Chair or the nominating committee and, if so, will summarise the key actions and changes resulting from it. The company must have a policy/guide on the evaluation of the Board comprising the purpose, criteria and frequency of the evaluation process.	NOT	The Board of Directors annually presents the Activity Report for the previous year at the Ordinary General Meetings of Shareholders, the activity of the Board being analyzed by the General Meeting of Shareholders.

No. Crt.	The provisions of the Corporate Governance Code of the Bucharest Stock Exchange	Compliance status YES/NO	EXPLANATIONS
	Section A – Responsibilities
A.9	The corporate governance statement must contain information on the number of meetings of the Board and committees during the last year, the participation of the directors (in person and in absentia) and a report by the Board and committees on their activities.	YES
A.10	The corporate governance statement must contain information regarding the exact number of independent members of the Board of Directors.	YES
A.11	The Board of Premium Companies shall establish a nomination committee consisting of non-executive members, which shall lead the nomination process for new members to the Board and make recommendations to the Board. The majority of the members of the Nominating Committee must be independent.	N/A	This provision is recommended to be applied by companies in the Premium Category. Within Vrancart S.A., the tasks that would be incumbent on a Nomination Committee are assumed by the entire Board of Directors.
Section B – Risk Management System and Internal Control
B.1	The Board shall establish an Audit Committee in which at least one	YES

member shall be an independent non-executive director. A majority of

	the members, including the Chairperson, must have demonstrated that they have appropriate qualifications relevant to the functions and responsibilities of the Committee. At least one member of the Audit Committee must have proven and appropriate auditing or accounting
	experience.
B.2	The Chair of the Audit Committee shall be an independent non -	YES
	executive member.
B.3	As part of its responsibilities, the Audit Committee shall conduct an	YES
	annual assessment of the Internal Control system.
B.4	The assessment shall take into account the effectiveness and comprehensiveness of the internal audit function, the adequacy of the	YES
	risk management and internal control reports submitted to the
	Board's Audit Committee, the timeliness and effectiveness with which
	executive management addresses deficiencies or weaknesses
	identified as a result of internal control, and the submission of relevant
	reports to the Board.

B.5	The Audit Committee must assess conflicts of interest in relation to the	YES
	transactions of the company and its subsidiaries with related parties.
B.6	The Audit Committee shall assess the effectiveness of the internal	YES
	control system and the risk management system.
B.7	The Audit Committee shall monitor the application of legal standards	YES
	and generally accepted internal auditing standards. The Audit
	Committee must receive and evaluate the reports of the internal audit
	team.
B.8	Whenever the Code mentions reports or analyses initiated by the	YES
	Audit Committee, they must be followed by periodic (at least annually)
	or ad -hoc reports, which must subsequently be submitted to the
	Board.
B.9	No shareholder may be accorded preferential treatment over other	YES
	shareholders in connection with transactions and agreements entered
	into by the company with their shareholders and affiliates.
B.10	The Board shall adopt a policy to ensure that any transaction of the
	Company with any of the companies with which it has close relations
	the value of which is equal to or greater than 5% of the Company's net	YES

	assets (according to the latest financial report) is approved by the Board following a binding opinion of the Board's Audit Committee.
B.11	Internal audits must be carried out by a structurally separate division (internal audit department) within the company or by hiring an independent third party.	YES
B.12	In order to ensure the performance of the core functions of the internal audit department, it must report functionally to the Board through the Audit Committee. For administrative purposes and as part of management's obligations to monitor and mitigate risks, it must report directly to the Chief Executive Officer.	YES

No. Crt.	The provisions of the Corporate Governance Code of the Bucharest Stock Exchange	Compliance status YES/NO	EXPLANATIONS
	Section C – Fair reward and motivation
C.1	The company must publish on its website the Remuneration Policy and include in the Annual Report a statement on the implementation of the remuneration policy during the annual period under analysis. The remuneration policy must be formulated in such a way as to allow shareholders to understand the principles and arguments underlying the remuneration of the members of the Board and the Chief Executive Officer. Any material changes to the Remuneration Policy must be published in a timely manner on the company's website.	YES

No. Crt.	The provisions of the Corporate Governance Code of the Bucharest Stock Exchange	Compliance status YES/NO	EXPLANATIONS
	Section D – Adding Value through Investor Relations
D.1	The company must organize an Investor Relations service – indicating
	to the general public the responsible person/persons or the
	organizational unit. In addition to the information required by the legal	YES
	provisions, the company must include on its website a section

	dedicated to Investor Relations, in Romanian and English, with all
	relevant information of interest to investors, including:
	D.1.1. The main corporate regulations: the articles of association, the
	procedures regarding the general meetings of shareholders;
	D.1.2. professional CVs of the members of the company's management
	bodies, other professional commitments of the members of the
	Board, including executive and non-executive positions on the boards
	of directors of companies or non-profit institutions;
	D.1.3. Current reports and periodic reports (quarterly, half-yearly and
	annual);
	D.1.4. Information regarding the general meetings of shareholders;
	D.1.5 Information on corporate events;
	D.1.6. Name and contact details of a person who will be able to
	provide, upon request, relevant information;
	D.1.7. Company presentations (e.g. investor presentations, quarterly
	results presentations, etc.), financial statements (quarterly, half
	yearly, annual), audit reports and annual reports.
D.2	The Company will have a policy regarding the annual distribution of	NOT	The company does not have a distinct policy
	dividends or other benefits to shareholders.		regarding the distribution of dividends, this
	The principles of the annual distribution policy to shareholders will be		attribution falling within the competence of the
	published on the company's website.		General Meeting of Shareholders, which aims to
			maintain a balance between the distribution of
			dividends and the strategic needs of the company.

No. Crt.	The provisions of the Corporate Governance Code of the Bucharest Stock Exchange	Compliance status YES/NO	EXPLANATIONS
	Section D – Adding Value through Investor Relations
D.3	The Company will adopt a policy in relation to forecasts, whether they are made public or not. The forecast policy will be published on the company's website.	NOT	The Company does not have a separate policy on forecasts, but they are made known to shareholders and investors through the Income and Expenditure Budget and the Investment Plan, which are subject to the approval of the General Meeting of Shareholders each year, which are published on the Company's website.

D.4	The rules of the General Meetings of Shareholders shall not limit the participation of shareholders in the general meetings and the exercise of their rights. The changes to the rules will enter into force at the earliest, starting with the next shareholders' meeting.	YES
D.5	The external auditors will be present at the General Meeting of Shareholders, when their reports are presented at these meetings.	YES	The company has always taken the necessary steps to have external auditors participate in the meetings of the General Meetings of Shareholders, in which the audit reports are presented.
D.6	The Board will present to the Annual General Meeting of Shareholders a brief assessment of the internal control and material risk management systems, as well as opinions on matters subject to the decision of the General Meeting.	YES
D.7	Any specialist, consultant, expert or financial analyst may participate in the Shareholders' Meeting based on a prior invitation from the Board. Accredited journalists may also participate in the General Meeting of Shareholders, unless the Chairman of the Board decides otherwise.	YES
D.8	The quarterly and half-yearly financial reports will include information in both Romanian and English on the key factors influencing changes in sales, operating profit, net profit and other relevant financial indicators, both quarter-on-quarter and year-on-year.	YES

No. Crt.	The provisions of the Corporate Governance Code of the Bucharest Stock Exchange	Compliance status YES/NO	EXPLANATIONS
Section D – Adding Value through Investor Relations
D.9	A company will hold at least two meetings/conference calls with	YES
	analysts and investors each year. The information presented on these
	occasions will be published in the Investor Relations section of the
	company's website on the date of the meetings/teleconferences.
D.10	If a company supports various forms of artistic and cultural	YES
	expression, sports, educational or scientific activities and considers
	that their impact on the innovative character and competitiveness of

the company is part of its development mission and strategy, it will
publish the policy on its activity in this field.

CHAIRMAN OF THE BOARD OF DIRECTORS

Nicu – Ciprian FEDOR

March 28th, 2025