SIF Oltenia S.A.

Quarterly Report • Nov 14, 2017

SIMPLIFIED INTERIM FINANCIAL STATEMENTS AS OF SEPTEMBER 30th 2017

drawn up in accordance with Norm no. 39/2015 for the approval of the Accounting Regulations in accordance with the International Financial Reporting Standards applicable to the entities authorized, regulated and supervised by the Financial Supervision Authority of the Financial Instruments and Investments Sector

UNAUDITED

SOCIETATEA DE INVESTIȚII FINANCIARE OLTENIA S.A. SIMPLIFIED INTERIM FINANCIAL STATEMENTS AS OF SEPTEMBER 30^th 2017

Table of Contents

	Page
Simplified interim statement of profit or loss and of other items of the overall result
Simplified interim statement of the financial position	2
Simplified interim statement of the changes in stockholders' equity	-4
Simplified interim statement of the cash flows	5.
Selected explanatory notes to simplified interim financial statements	$6 - 22$

Simplified interim statement of profit or loss and of other items of the overall result as as of September 30th 2017

In RON	Note	30 September 2017	30 September 2016
Incomes
Income from dividends	5	55,704,319	44,106,676
Income from interest		53,641	44,666
Other operating income	6	1,381,632	42,792,020
Net gain from exchange rate differences		(387, 808)	(199, 745)
Net gain from the sale of assets	7	3,363,434	29,509,014
Costs
Fees and charges for administration and supervision	8	(1, 558, 222)	(1, 441, 873)
Other operating costs	9	(5,521,260)	(6,475,760)
Profit before taxing		53,035,736	108,334,998
Profit tax	10	(2,710,748)	(12, 444, 070)
Net profit for the financial year		50,324,988	95,890,928
Other items of the overall result
Net change in the reserve from the change in the fair value of the available-for-sale financial assets		79,695,484	(66, 246, 494)
The reserve related to the difference from the change in the fair value of the available-for-sale financial assets transferred in profit or loss, net of tax		(2,989,863)	(24, 667, 859)
Total overall result for the period		127,030,609	4,976,575
The result per share	21
Basic		0.0867	0.1653

The simplified interim financial statements have been approved by the Board of Directors on 13 November 2017 and they were signed in its name, by:

Assoc. Prof. PhD E. Tudor CIUREZU

Chairman/General Manager

ec. Elena Sichigea

Financial Manager

The notes from page 6 to page 22 are an integral part of these individual financial statements.

Simplified interim statement of the financial position drawn up
as of September $30^{\text{th}}$ 2017

In RON	Note	30 September 2017	31 December 2016
Assets
Cash and cash equivalents	11	15,675,530	3,509,197
Deposits placed with banks	12	32,338,393	24,466,476
Financial assets available for sale	13	1,693,491,132	1,578,803,318
Credits and receivables	14	1,890,687	13,427,910
Fixed tangible assets		10,972,135	11,373,395
Real estate investments	15	483,071	483,071
Other assets	16	401,484	347,473
Total assets		1,755,252,432	1,632,410,840
Liabilities
Dividends to pay		108,395,605	56,991,969
Fees and charges	17	154,521	5,246,637
Dererred tax liabilities	18	136,658,631	122,077,335
Other liabilities	19	5,966,144	18,899,845
Total liabilities		251,174,901	203,215,786
Stockholders' equity
Social capital	20	58,016,571	58,016,571
Effect of IAS 29 on Social Capital	20		631,852,524
Reserves constituted following the application of Law 133/1996	20	144,636,073	1,951,415,434
Retained earnings as a result of applying IAS 29 to equity and reserves	20		(2,438,631,885)
Legal reserves	20	11,603,314	11,603,314
Reserves from revaluation of available-for-sale financial assets	20	703,133,035	626, 427, 414
Other reserves		521,517,906	472,461,444
Reserves from revaluation of tangible assets		7,246,852	7,755,548
The result carried forward except for the result carried forward arising from the adoption of IAS 29 for the first time		7,598,792	7,023,313
Current profit		50,324,988	101,271,377
Total stockholders' equity		1,504,077,531	1,429,195,054
Total liabilities and stockholders' equity		1,755,252,432	1,632,410,840

The simplified interim financial statements have been approved by the Board of Directors on 13 November 2017 and they were signed in its name, by:

Assoc. Prof. PhD E. Tudor CIUREZU	ec. Elena Sichigea
Chairman/General Manager	Financial Manager

The notes from page 6 to page 22 are an integral part of these individual financial statements.

Simplified interim statement of the changes in stockholders' equity drawn up as of September 30^th 2017

$\sim$

	Inflated social capital	Reserves from the revaluation of fixed tangible assets	Legal reserves	Other reserves	Reserves from the revaluation of the available-for-sale financial assets	Other stockholders' equity items	The result carried forward as a result of applying IAS 29 to the social capital and reserves	Accumulated Profit	TOTAL
BALANCE ON JANUARY 1st 2017	689,869,095	7.755,548	11,603,314	2,423,876,878	629,489,094	(3,061,680)	(2,438,631,885)	108,294,690	1,429,195,054
OVERALL RESULT
Profit for the financial year								50,324,988	50,324,988
Other items of the overall result								508,696
1. Change in the reserve from the revaluation of fixed tangible assets, net of deferred tax		(508, 696)						365,140
2. Net change in the reserve from the change in the fair value of the available-for-sale financial assets					79,695,484				79,695,484
3. The reserve related to the difference from the change in the fair value of the available- for-sale financial assets transferred in profit or loss, net of tax					(2,989,863)				(2,989,863)
TOTAL OVERALL RESULT for the period		(508, 696)			76,705,621			50,833,684	127,030,609
Deferred tax related to the result carried forward revaluation surplus unachieved taxed								66,782	66,782
Other reserves $-$ own sources of funding				49,056,462				(49,056,462)
Result coverage carried over from the hyperinflation update	(631, 852, 524)			(1,806,779,361)			2,438,631,885
Transactions with shareholders directly recognized in equity
1. Dividends prescribed by law - transfer to the profit or loss account from other reserves
2. Dividends to pay for year 2016								(52, 214, 914)	(52, 214, 914)
TOTAL TRANSACTIONS WITH SHAREHOLDERS DIRECTLY RECOGNIZED IN EQUITY
BALANCE ON SEPTEMBER 30TH 2017	58,016,571	7,246,852	11,603,314	666,153,979	706,194,715	(3,061,680)	0	57,923,780	1,504,077,531

The simplified interim financial statements have been approved by the Board of Directors on 13 November 2017 and they were signed in its name, by:

Assoc. Prof. PhD E. Tudor CIUREZU

Chairman/General Manager

ec. Elena Sichigea

Financial Manager

$\sim$

The notes from page 6 to page 22 are an integral part of these individual financial statements.

page 3

$-$ RON $-$

Simplified interim individual statement of the changes in stockholders' equity drawn up as of September 30^th 2016

	Inflated social capital	Reserves from the revaluation of fixed tangible assets	Legal reserves	Other reserves	Reserves from the revaluation of the available-for-sale financial assets	Other stockholders' equity items	The result carried forward as a result of applying IAS 29 to the social capital and reserves	Accumulated Profit	TOTAL
BALANCE ON JANUARY 1st 2016	689,869,095	8,077,015	11,603,314	2,394,042,974	689,343,001	(3,061,680)	(2,438,631,885)	111,937,948	1,463,179,782
OVERALL RESULT
Profit for the financial year								95,890,928	95,890,928
Other items of the overall result
1. Change in the reserve from the revaluation of fixed tangible assets, net of deferred tax		240,377						240,377
2. Net change in the reserve from the change in the fair value of the available-for-sale financial assets					(66, 246, 494)				(66, 246, 494)
3. The reserve related to the difference from the change in the fair value of the available- for-sale financial assets transferred in profit or loss, net of tax					(24, 667, 859)				(24, 667, 859)
TOTAL OVERALL RESULT for the period		(240,377)			(90, 914, 353)			96,131,305	4,976,575
Deferred tax related to the result carried forward revaluation surplus unachieved taxed								14,364	14,364
Other reserves – own sources of funding				29,833,904				(29, 833, 904)
Transactions with shareholders directly recognized in equity
1. Dividends prescribed by law – transfer to the profit or loss account from other reserves
2. Dividends to pay for year 2015								(75, 421, 543)	(75, 421, 543)
TOTAL TRANSACTIONS WITH SHAREHOLDERS DIRECTLY RECOGNIZED IN EQUITY								(75, 421, 543)	(75, 421, 543)
BALANCE ON SEPTEMBER $30^{TH}$ 2016	689,869,095	7,836,638	11,603,314	2,423,876,878	598,428,648	(3,061,680)	(2,438,631,885)	102,828,170	1,392,749,178

The simplified interim financial statements have been approved by the Board of Directors on 13 November 2017 and they were signed in its name, by:

Assoc. Prof. PhD E. Tudor CIUREZU

Chairman/General Manager

ec. Elena Sichigea Financial Manager

The notes from page 6 to page 22 are an integral part of these individual financial statements.

page 4

RON-

Simplified interim individual statement of the cash flows drawn up on September 30th 2017

$-RON -$

Item Name	Reporting Period
	30.09.2017	30.09.2016
A	1	$\overline{2}$
Cash flows from operating activities
Returns from customers, other returns	503,789	635,013
Returns from sales of financial investments (shareholdings)	14,079,338	43,740,067
Payments for the purchase of shares	(35,016,626)	(12, 816, 936)
Payments to suppliers and employees, other payments	(5,140,117)	(5,871,400)
Payments to the state budget, social security budget and local budget	(2,065,007)	(2,261,940)
Interest received	42,036	41,468
Dividends received	53,315,249	42,091,421
Interest paid		$\blacksquare$
Profit tax paid	(4, 594, 343)	(2, 731, 354)
Returns from earthquake insurance	$\qquad \qquad \blacksquare$
Net cash from operating activities	21,124,319	62,826,339
Cash flows from investment activities
Payments for the acquisition of fixed tangible assets	(266,097)	(43,258)
Returns from the sale of fixed tangible assets	586,888
Net cash from investment activities	320,791	(43,258)
Cash flows from financing activities
Returns from the issue of shares	$\rightarrow$	$\blacksquare$
Returns from long-term loans
Payment of liabilities related to the financial leasing	$\blacksquare$
Dividends paid	(811, 279)	(984, 234)
Amounts advanced to the Central Depositary for		(54, 354, 500)
dividend payments
Dividend tax paid	(607, 170)	(1,905,174)
Net cash from financing activities	(1, 418, 449)	(57, 243, 908)
Net increase in treasury and cash equivalents	20,026,661	5,539,173
Cash and cash equivalents at the beginning of the reporting period	27,973,366	6,575,101
Cash and cash equivalents at the end of the
reporting period	48,000,027	12,114,274

The simplified interim financial statements have been approved by the Board of Directors on 13 November 2017 and they were signed in its name, by:

Assoc. Prof. PhD E. Tudor CIUREZU

Chairman/General Manager

ec. Elena Sichigea Financial Manager

The notes from page 6 to page 22 are an integral part of these individual financial statements.

page 5

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017 (all the amounts are expressed in RON, unless otherwise stated)

1. The Reporting Entity

Societatea de Investiții Financiare Oltenia S.A. (hereinafter referred to as "the Company") was established on 01.11.1996 in Craiova - Romania, under the provisions of Law No. 133/1996, a law for the transformation of the Private Property Funds into financial investment companies. The Company was established by transforming the V Oltenia Private Property Fund.

The Company is a collective investment institution operating under Law no. 31/1990 on the trading companies and Law no. 297/2004 on the capital market, with subsequent amendments and completions.

The Company is self-administered.

The Company has its registered office in Craiova, 1 Tufănele Street, postal code 200767, Dolj County, telephone 0251419335, fax 0251419340.

The Company is registered with:

• the Trade Register Office attached to Dolj Law Court, Registration Number J16/1210/1993, Taxpayer Identification Number 4175676, fiscal attribute RO;

The shares of the Company are listed according to the Bucharest Stock Exchange, the Premium category, with market symbol SIF 5, as from November 1^st 1999.

The Company's shareholders and shares records are kept by the Depozitarul Central S.A. București.

The depositing activity provided by legislation and C.N.V.M. / A.S.F. regulations is provided by Raiffeisen Bank S.A. - Bucharest Branch as from 22.01.2014, until such date, the depositing activity having been held by ING Bank NV Amsterdam - Bucharest Branch.

According to the articles of incorporation, the Company has the following scope of activity:

• to administer and manage the shares in the trading companies for which there were issued own shares, corresponding to the Ownership Certificates and the Nominal Privatization Coupons subscribed by citizens according to the provisions of Art. 4 Paragraph 6 of Law no. 55/1995;

• to manage its own securities portfolio and to invest in securities in accordance with the regulations in force;

• other similar and related activities, in accordance with the regulations in force, as well as the management of its own assets.

The subscribed and paid-up social capital is 58,016,571 RON, divided into 580,165,714 shares with a nominal value of 0.1 RON / share.

The main characteristics of the shares issued by the company are: ordinary, indivisible, nominative, of equal value, issued in a dematerialized form and granting equal rights to their holders.

The simplified interim financial statements drawn up on 30 September 2017 are not audited.

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017 (all the amounts are expressed in RON, unless otherwise stated)

2. Basis of drawing up a) Declaration of Conformity

According to the Norm no. 39/2015 issued by the Financial Supervisory Authority of the Financial Instruments and Investment Sector, entities authorized, regulated and supervised by the ASF of the Financial Instruments and Investments Sector, shall apply the international financial reporting standards adopted by the Union from the financial statements for the financial year 2015 ("IFRS") as official accounting regulations.

December 31, 2015 is the date of transition to IFRS as accounting basis, the date on which by restatement were made and recorded in accounting the operations determined by the transition from NSC Regulation no. 4/2011 to IFRS Accounting Regulations. Between 2011 and 2014, the Company prepared financial statements based on IFRS (restatement of statutory financial statements) that were audited and published.

The simplified interim financial statements prepared on 30 September 2017 were prepared in accordance with the requirements of IAS 34 "Interim Financial Statements" and should be read in conjunction with the separate financial statements for the year 2016 prepared in accordance with Standard no. 39/2015 for the approval of accounting regulations in accordance with International Financial Reporting Standards applicable to entities authorized, regulated and supervised by the Financial Supervision Authority of the Financial Instruments and Investments Sector

In accordance with the provisions of Regulation no. No 1606/2002 of the European Parliament and of the Council of the European Union of 19 July 2002 and of CNVM Decision no. 1176 / 15.09.2010, financial investment companies are required to prepare and submit to ASF consolidated annual financial statements in accordance with IFRS within 8 months of the close of the financial year. The consolidated financial statements of the S.I.F. Oltenia S.A. on 31.12.2016 were drafted, approved and made public on 06.09.2017. These can be consulted on the Company's website: www.sifolt.ro.

The Company's accounting records are denominated in RON.

b) Presentation of financial statements

The presentation adopted by the Company is based on the liquidity within the simplified interim individual statement of the financial position, and the disclosure of the income and costs has been made in relation to their nature within the simplified interim individual statement of profit or loss and other items of the overall result. The Company considers that such disclosures provide information that is more credible and relevant than what would have been disclosed under other methods permitted by IAS 1 "Presentation of Financial Statements".

c) Functional and Presentation Currency

The Company's management believes that the functional currency, as defined by IAS 21 "The Effects of Foreign Exchange Rates Variation", is the Romanian currency (RON or lei). The simplified interim financial statements are presented in RON, rounded to the nearest RON, the currency that the Company's management chose to be the presentation currency.

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017 (all the amounts are expressed in RON, unless otherwise stated)

2. Basis of drawing up (continued) d) Basis of Evaluation

The simplified interim financial statements are prepared based on the fair value convention for derived financial instruments, financial assets and liabilities at fair value through the profit or loss account, and the available-for-sale financial assets, except for those for which fair value cannot be determined in a credible way.

Other financial assets and liabilities as well as non-financial assets and liabilities are presented at amortized cost, re-valued or historical cost.

e) Using Estimates and Judgments

The preparation of the simplified interim financial statements in accordance with IFRS implies the management's use of estimates, judgments and assumptions that affect the application of the accounting policies as well as the reported amount of assets, liabilities, income and expenses.

The estimates and assumptions associated with these judgments are based on historical experience as well as on other factors considered to be reasonable in the context of these estimates.

The result of such estimates forms the basis of the judgments relating to the carrying amounts of assets and liabilities that cannot be obtained from other sources of information. The results obtained may differ from the estimates amounts.

The Company periodically reviews the estimates and assumptions underlying the accounting records. The revisions of the accounting estimates are recognized in the period in which the estimate is reviewed, if the review affects only that period, or in the period in which the estimate is reviewed and the future periods, if the review affects both the current period and future periods.

f) Changes in Accounting Policies

The accounting policies adopted are consistent with those used in the previous year.

3. Significant Accounting Policies

The accounting policies applied to these simplified interim financial statements are consistent with those from the financial statements as at 31 December 2016 and have been consistently applied for all the periods presented in these simplified interim financial statements.

According to the Norm no. 39/2015 for the approval of the Accounting Regulations in accordance with International Financial Reporting Standards applicable to entities authorized, regulated and supervised by the Financial Supervision Authority of the Financial Instruments and Investment Sector, starting with the annual financial statements for the financial year 2015, the Company applies the International Reporting Standards Financials adopted by the European Union as official accounting regulations.

To this end, in 2016, the Company prepared interim financial reports in accordance with the requirements of IAS 34 "Interim Financial Statements".

Selected explanatory notes to simplified interim financial statements as of September $30^{th}$ 2017 (all the amounts are expressed in RON, unless otherwise stated)

4. Financial Assets and Liabilities

$\sim$

Accounting Classifications and Fair Values

The carrying amounts and fair values of financial assets and liabilities are presented on 30.09.2017, as follows:

$\hat{I}n$ RON	Available for sale	Amortized Cost	Net carrying amount	Fair value
Cash and cash equivalents	$\blacksquare$	15,675,530	15,675,530	15,675,530
Deposits placed with banks		32,338,393	32,338,393	32,338,393
Available-for-sale financial assets	1,693,491,132		1,693,491,132	1.693,491.132
Investments held up to due date
Other financial assets		2,292,171	2,292,171	2,292,171
Total financial assets	1,693,491,132	50,306,094	1,743,797,226	1,743,797,226
Dividends to pay		108,395,605	108,395,605	108,395,605
Other financial liabilities		5,966,144	5,966,144	5,966,144
Total financial liabilities		114,361,749	114,361,749	114,361,749

The carrying amounts and fair values of financial assets and liabilities are presented on 31.12.2016, as follows:

In RON	Available for sale	Amortized Cost	Net carrying amount	Fair value
Cash and cash equivalents		3,509,197	3,509,197	3,509,197
Deposits placed with banks		24,466,476	24,466,476	24,466,476
Available-for-sale financial assets	1,578,803,318		1,578,803,318	1,578,803,318
Investments held up to due date
Other financial assets		13,775,383	13,775,383	13,775,383
Total financial assets	1,578,803,318	41,751,056	1,620,554,374	1,620,554,374
Dividends to pay		56,991,969	56,991,969	56,991,969
Other financial liabilities		18,899,845	18,899,845	18,899,845
Total financial liabilities		75,891,814	75,891,814	75,891,814

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017 (all the amounts are expressed in RON, unless otherwise stated)

5. Income from dividends

The income from dividends is registered at gross amount. Dividend taxing rates for the period ended on 30.09.2017 are of 5% and zero (30.09.2016: 5% and zero).

The income from dividends, mainly, by contributors, is as follows:

$ \hat{\mathit{In}}~\mathit{RON} $	30 septembrie	30 septembrie
	2017	2016
BRD-GROUPE SOCIETE GENERALE S.A. Bucuresti	11,203,197	5,673,819
OMV PETROM S.A. Bucuresti	10,582,504
S.N.T.G.N. TRANSGAZ S.A. Medias	8,518,836	4,993,904
C.N.T.E.E. TRANSELECTICA S.A.	6,346,251	9,974,878
S.N.G.N. ROMGAZ S.A.	5,927,605	4,189,668
ANTIBIOTICE S.A.	3,690,653	1,891,190
BANCA TRANSILVANIA S.A.	2,458,861	13,473,250
B.T. ASSET MANAGEMENT S.A.	1,999,969
UNIVERS S.A. Rm. Valcea	1,862,435	886,449
SANTIERUL NAVAL ORSOVA S.A.	581,463
TURISM FELIX S.A. Băile Felix	488,211	538,715
FLAROS S.A. Bucuresti	475,799
BURSA DE VALORI BUCURESTI S.A.	353,120	333,328
IAMU BLAJ S.A.	320,329	313,169
MERCUR S.A. Craiova	284,192
EXIMBANK S.A. Bucuresti	164,693	1,281,822
TURISM S.A. Pucioasa	101,060	85,901
PROVITAS S.A. Bucuresti	82,577
ELBA S.A. Timisoara	80,212	106,113
S.E. ELECTRICA S.A. Bucuresti	70,248	210,905
DEPOZITARUL CENTRAL S.A. Bucuresti	59,271	48,542
CONTACTOARE S.A. Buzau	27,295	38,212
RELEE S.A. Medias	24,696	47,884
S.I.F. MOLDOVA S.A. Bacau	842	18,927
TOTAL	55,704,319	44,106,676

SOCIETATEA DE INVESTIȚII FINANCIARE OLTENIA S.A.
Selected explanatory notes to simplified interim financial statements
as of September 30^th 2017
(all the amounts are expressed in RON, unless otherwise stated)

6. Other operating income

In RON	September 30th 2017	September 30 th 2016
Financial income from adjustments for impairment of financial assets	196,796
Income from provisions for depreciation of current assets	1845	1,640
Other operating income	1,164,995	42, 265, 476
Other financial income	17.996	19,337
Other income from provisions		505,567
Total	1.381,632	42,792,020

7. Net gain from the sale of assets

In RON	September 30th 2017	September $30th$ 2016
Income from the sale of the available-for-sale financial assets	15,344,014	43,886,567
The carrying amount of the ceded available-for-sale financial assets	11,980,580	14,377,553
Net gain from the sale of financial assets	3,363,434	29,509,014

8. Fees and charges for administration and supervision

In RON	September 30th	September 30 th
	2017	2016
Costs on fees due to SSIF for share transactions	7.452	109,915
Costs on fees due for shareholder register services	107,345	108,900
Costs on fees with the depositary company	227,902	184,959
BVB costs	24,990	25,200
Costs on taxes due to capital market entities (ASF)	1,095,022	923,717
Costs on the audit fee		10,121
Other costs on fees and taxes	95,511	79,061
Total	1,558,222	1,441,873

9. Other operating costs

In RON	September 30th	September 30th
	2017	2016
Costs on fees and taxes	169,973	306,789
Costs on salaries and other staff costs	4,132,477	5,227,771
Costs on amortization, provisions and value adjustments	325,428	365,838
Costs on external benefits	893,382	575,362
Total	5,521,260	6,475,760

$page\;11$

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017

(all the amounts are expressed in RON, unless otherwise stated)

9. Other operating costs (continued)

Costs on salaries and assimilated costs

In RON	September 30 th	September 30th
	2017	2016
Costs on salaries	3,296,262	3,790,965
Costs on insurance and social protection	836,215	899,491
Other costs on salaries according to court decisions	$\blacksquare$	537,315
Total	4, 132, 477	5,227,771

	September 30 th	September 30 th
	2017	2016
Staff with mandate contract	2	$\overline{2}$
Employees with higher education	33	32
Employees with secondary education	12	13
Employees with general education	4	5
Total	51	52

Within other operating costs there are included staff costs, costs on other fees and taxes, costs on amortization, provisions and value adjustments, external service costs.

In the period ended on 30.09.2017 the average number of employees was of 48 (30.09.2016: 50), and the number of employees registered on 30.09.2017 was of 49 (30.09.2016: 50).

The indemnities granted during the period ended on 30.09.2017 to the administrative bodies, executive bodies and key staff, representing salary rights amounted to 1,179,143 RON (30.09.2016: 1,624,387 RON).

The company makes payments to institutions of the Romanian State for the pensions of its employees.

All employees are members of the Romanian pension scheme. The Company does not operate any other retirement scheme or retirement benefits, and therefore it has no other pension obligations. Moreover, the Company is not obliged to provide additional benefits to the employees after retirement.

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017
(all the amounts are expressed in RON, unless otherwise stated)

10. Profit tax

Reconciliation of profit before taxing with the profit tax cost in the profit or loss account

In RON	September 30 th	September 30th
	2017	2016
Current income tax	322,478	10,428,815
Dividends tax	2,388,270	2,015,255
Cost on the deferred profit tax
Total profit tax recognized in the fiscal year result	2,710,748	12,444,070
Profit before taxing	53,035,736	108,334,998
Tax according to statutory quota of 16%	8,485,718	17,333,600
The effect on profit tax of:
Non-deductible costs	1,242,795	407,416
Non-taxable incomes	(9,403,535)	(7,309,901)
Dividend taxation rate	2,388,270	2,015,255
Amounts representing sponsorship under the law	(2,500)	(2,300)
Records and resumption of temporary differences
Profit tax	2,710,748	12,444,070

11. Cash and cash equivalents

In RON	September 30th	December $31st$
	2017	2016
Cash at the cash desk	5.137	8,510
Current accounts at banks	15,635,850	3,483,254
Cash equivalents	34,543	17,433
Total cash and cash equivalents	15,675,530	3,509,197

12. Deposits placed with banks

In RON	September 30 th	December $31st$
	2017	2016
Bank deposits at sight	32,324,497	24.464.169
Attached receivables	13.896	2,307
Total deposits placed with banks	32,338,393	24.466.476

13. Financial assets

Available-for-sale financial assets $\bullet$

In RON	September 30th	December 31 st
	2017	2016
Shares valued at fair value	1,683,979,259	1,569,695,067
Shares valued at cost	6,721,546	6,721,546
Units at fair value	2,790,327	2,386,705
Total	1,693,491,132	1,578,803,318
		page 13

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017 (all the amounts are expressed in RON, unless otherwise stated)

13. Financial assets (continued)

The movement of the available-for-sale financial assets in the reporting periods ended on 30.09.2017 and 31.12.2016 is presented in the following table:

In RON	Shares valued at fair value	Shares valued at cost	Units	Total
1 January 2016	1,647,958,291	18,419,537	2,301,191	1,668,679,019
Reclassifications 2016	9,627,292	(9,627,292)
during Net change the period	(6, 542, 036)	(2,321,878)		(8,863,914)
Impairment losses	(11,020,326)	۰	(247, 407)	(11, 267, 733)
Change in fair value	(70, 328, 154)	251,179	332,921	(69,744,054)
31 December 2016	1,569,695,067	6,721,546	2,386,705	1,578,803,318
Net change during the period	22,266,058			22,266,058
Impairment losses	26,049			26,049
Change in fair value	91,992,085		403,622	92,395,707
30 September 2017	1,683,979,259	6,721,546	2,790,327	1,693,491,132

On 30.09.2017 and 31.12.2016, in the category of shares valued at the fair value, there are mainly included the value of the shares held at the following issuers: OMV PETROM SA Bucharest, BRD -Groupe Societe Generale, BANCA TRANSILVANIA SA Cluj Napoca, CNTEE TRANSELECTRICA SA Bucharest, SNTGN TRANSGAZ SA Medias, ARGUS SA Constanta, ANTIBIOTICE SA Iași, S.N.G.N. ROMGAZ S.A. Medias.

The hierarchy of fair values

$\ddot{\phantom{0}}$

For the calculation of fair value, the Company uses the following hierarchy of methods:

• Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities.

• Level 2: entries other than the quoted prices included in Level 1 that are observable for assets or liabilities, either directly (e.g., prices) or indirectly (e.g., derived from prices).

• Level 3: evaluation techniques largely based on unobservable items. This category includes all instruments for which the evaluation technique includes elements that are not based on observable data and for which the unobservable input parameters can have a significant effect on the instrument evaluation. This category includes instruments that are valued based on the quoted prices for similar instruments but for which there must be done adjustments largely based on unobservable data or estimates to reflect the difference between the two instruments.

In RON	September 30 th 2017	December 31 st 2016
Level 1	916,811,426	798,866,813
Level 2	118,199,684	232,554,156
Level 3	658,480,022	547,382,349
Total	1,693,491,132	1,578,803,318

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017 (all the amounts are expressed in RON, unless otherwise stated)

13. Financial assets (continued)

The fair value evaluation of the equity shares held on 30.09.2017 was carried out as follows:

• for the securities quoted and traded during the period ended on 30.09.2017, the market value was determined by taking into account the quotation from the last trading day (the quotation for closing on the main capital market for level 1, and for level 2 there were taken into account the quotations for the shares traded during the last 30 trading days);

• for the securities quoted that did not have any transactions in the last 30 trading days of 2017, and for the unquoted securities, the market value was determined according to the issuers' own capital;

• for the securities related to the trading companies under insolvency or reorganization, the evaluation is done at zero value:

• for the shareholdings at OPCVM, the value taken into account was the last unit value of the net asset, calculated and published.

14. Credits and receivables

In RON	September 30 th	December $31st$
	2017	2016
Commercial receivables	538,259	1,194,644
Debtors	1,498,317	12,381,045
Receivables related to the state budget and social security budget	805.842	805,849
Other receivables	1.536	1,484
Adjustments for impairment of receivables	(953, 267)	(955, 112)
TOTAL	1,890,687	13,427,910

15. Real estate investments

	September 30 th	December $31st$
In RON	2017	2016
Balance at the beginning of the reporting period	483,071	438,571
Sales of real estate investment
Acquisition of real estate investments
Real estate investments evaluation	-	44500
Balance at the end of the reporting period	483,071	483,071

The last revaluation of the real estate investments held was done on 31.12.2016. The revaluation differences were recorded in the profit or loss account. The revaluation was carried out by the authorized ANEVAR evaluator.

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017 (all the amounts are expressed in RON, unless otherwise stated)

13. Financial assets (continued)

The movement of the available-for-sale financial assets in the reporting periods ended on 30.09.2017 and 31.12.2016 is presented in the following table:

In RON	Shares valued at fair value	Shares valued at cost	Units	Total
1 January 2016	1,647,958,291	18,419,537	2,301,191	1,668,679,019
Reclassifications 2016	9,627,292	(9,627,292)
during change the Net. period	(6,542,036)	(2,321,878)		(8,863,914)
Impairment losses	(11,020,326)		(247, 407)	(11, 267, 733)
Change in fair value	(70, 328, 154)	251,179	332,921	(69, 744, 054)
31 December 2016	1,569,695,067	6,721,546	2,386,705	1,578,803,318
the Net. during change period	22,266,058			22,266,058
Impairment losses	26,049			26,049
Change in fair value	91,992,085	$\qquad \qquad \blacksquare$	403,622	92,395,707
30 September 2017	1,683,979,259	6,721,546	2,790,327	1,693,491,132

On 30.09.2017 and 31.12.2016, in the category of shares valued at the fair value, there are mainly included the value of the shares held at the following issuers: OMV PETROM SA Bucharest, BRD -Groupe Societe Generale, BANCA TRANSILVANIA SA Cluj Napoca, CNTEE TRANSELECTRICA SA Bucharest, SNTGN TRANSGAZ SA Medias, ARGUS SA Constanta, ANTIBIOTICE SA Iași, S.N.G.N. ROMGAZ S.A. Mediaş.

The hierarchy of fair values $\bullet$

For the calculation of fair value, the Company uses the following hierarchy of methods:

• Level 1: quoted (unadjusted) prices in active markets for identical assets and liabilities.

• Level 2: entries other than the quoted prices included in Level 1 that are observable for assets or liabilities, either directly (e.g., prices) or indirectly (e.g., derived from prices).

• Level 3: evaluation techniques largely based on unobservable items. This category includes all instruments for which the evaluation technique includes elements that are not based on observable data and for which the unobservable input parameters can have a significant effect on the instrument evaluation. This category includes instruments that are valued based on the quoted prices for similar instruments but for which there must be done adjustments largely based on unobservable data or estimates to reflect the difference between the two instruments.

In RON	September 30 th 2017	December 31 st 2016
Level 1	916,811,426	798,866,813
Level 2	118,199,684	232,554,156
Level 3	658,480,022	547,382,349
Total	1,693,491,132	1,578,803,318

Selected explanatory notes to simplified interim financial statements
as of September $30^{th}$ 2017

(all the amounts are expressed in RON, unless otherwise stated)

18. Deferred tax liabilities (continued)

In RON	Assets	Liabilities	Net	Tax
31 December 2016
Fair value evaluation of the available-for- sale financial assets	620,532,111		620,532,111	99,285,138
Revaluation of fixed tangible assets	9,232,795		9,232,795	1,477,247
The result carried forward representing the untaxed revaluation reserves made	1,772,247		1,772,247	283,560
The result carried forward representing the untaxed revaluation reserves unmade	3,755,326		3,755,326	600,855
The result carried forward representing the untaxed revaluation reserves unmade - real estate investments	359,751		359,751	57,560
Differences in the change in the fair value of the available-for-sale financial assets -
free of charge shares in the balance	108, 195, 592		108, 195, 592	17,311,295
Legal reserves	11,603,314		11,603,314	1,856,530
Other reserves – dividends prescribed according to AGOA decision from
23.04.2005	6,551,528		6,551,528	1,048,244
Other reserves	980,658		980,658	156,906
TOTAL	762,983,322		762,983,322	122,077,335

19. Other liabilities

In RON	September 30 th	December 31 st
	2017	2016
Staff liabilities	682,723	988,527
Commercial liabilities	221,450	244,383
Guarantees received	1,494	1,494
Various creditors	12.477	15
Provisions for risks and costs	5,048,000	5,048,000
Income recorded in advance - shares		12,617,426
Total other liabilities	5,966,144	18,899,845

20. Capital and reserves

Social capital

The social capital structure is presented below:

In RON	Number of	Number of	Amount
	shareholders	shares	(RON)	$(\%)$
30 September 2017
Resident natural persons	5,747,851	237,874,613	23,787,461	41.00
Non-resident natural persons	1.807	2,241,380	224,138	0.39
Total natural persons	5,749,658	240,115,993	24,011,599	41.39
Resident legal persons	225	232,527,387	23,252,739	40.08
Non-resident legal persons	46	107,522,334	10,752,233	18.53
Total legal persons	271	340,049,721	34,004,972	58.61
Total 30 September 2017	5,749,929	580,165,714	58,016,571	100.00

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017

(all the amounts are expressed in RON, unless otherwise stated)

20. Capital and reserves (continued)

a) Social capital (continued)

	Number of shareholders	Number of shares	Amount (RON)	(%)
31 December 2016
Resident natural persons	5.752,643	250, 564, 376	25,056,437	43.19
Non-resident natural persons	1.797	2,511,680	251,168	0.43
Total natural persons	5,754,440	253,076,056	25,307,605	43.62
Resident legal persons	247	217,404,868	21,740,487	37.47
Non-resident legal persons	52	109,684,790	10,968,479	18.91
Total legal persons	299	327,089,658	32,708,966	56.38
Total 31 December 2016	5,754,739	580,165,714	58,016,571	100.00

The social capital according to the Articles of Incorporation of the Company is of 58,016,571 RON divided into 580,165,714 shares with the nominal value of 0.1 RON and it is the result of the direct subscriptions made to the Company's social capital and by the conversion into shares of the amounts due as dividend under Law no. 55/1995 and under Law no. 133/1996. On September 30^th 2017, the number of shareholders was 5.749.929 (31 December 2016: 5.754.739).

The shares issued by the Company are traded on the Bucharest Stock Exchange since November 1999. The shares and shareholders records are held by the Central Depositary S.A. Bucharest. All the shares are ordinary, they were subscribed and are paid in full on September 30^th 2017 and December 31^st 2016. All the shares have the same voting rights and have a nominal value of 0.1 RON / share. The number of shares authorized to be issued is equal to that of the issued shares.

The reconciliation of the determined social capital according to IFRS with the one according to the Articles of Incorporation is the following:

In RON	September $30th$ 2017	December 31 st 2016
Statutory social capital	58,016,571	58,016,571
The effect of applying IAS 29 (hyperinflation) to capital	$\overline{\phantom{0}}$	631,852,524
Social capital renegotiated	58,016,571	689,869,095

b) Reserve constituted according to Law no. 133/1996

The reserve related to the initial portfolio was established following the application of Law no. 133/1996, as the difference between the value of the portfolio and the subscribed share capital of the Company. These reserves are treated as premium contribution. Reconcierea of the reserve related to the initial portfolio according to the IFRS with that applied according to accounting regulations up to the date of application of ASF Regulation no. 39/2015 is presented below:

În RON	September 30th 2017	December 31st 2016
Reserves from the application of Law no. 133/1996	144,636,073	144,636,073
The effect of applying IAS 29 on reserve constituted after applying Law no. $133/1996$ (hyperinflation)		1.806.779.361
Reserves from the application of Law no. 133/1996 - restated	144,636,073	1,951,415,434

The initial reserve was updated to hyperinflation, amounting to 1,806,779,361 lei.

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017 (all the amounts are expressed in RON, unless otherwise stated) 20. Capital and reserves (continued)

b) Reserve constituted according to Law no. 133/1996 (continued)

The effect of hyperinflation on the social capital amounting to 631,852,524 lei and on the reserve constituted according to the Law no. 133/1996 in the amount of 1,806,779,361 lei was recorded in the retained earnings from the first adoption of IAS 29 "Financial reporting in hyperinflationary economies", resulting in a loss from hyperinflation in the amount of 2,438,631,885 lei.

The loss from the update to hyperinflation under IAS 29, reflected in the financial statements of 2015 and 2016, was subject to approval at the OGAS on 04.04.2017 to be covered under the provisions of Art. 91 and art. 92 of Norma ASF nr. 39/2015, from other items of equity, namely those that have been hyperinflation listed above. According to the Decision no. 3 par. 2 of the AGOA of 04.04.2017, the loss from the hyperinflation update was covered according to the above proposal. The coverage in question does not change the level of equity and does not affect the Company's profit and loss account.

c) Legal reserves

Legal reserves are constituted as required by law in the amount of 5% of the profits recorded in accordance with accounting regulations applicable to the level of 20% of the share capital, according to the articles of association.

Legal reserve value on 30.09.2017 is of 11,603,314 lei (31.12.2016: 11.603.314 lei).

In the financial year 2016 and on 30.09.2017 the Company has not established legal reserves from the profit, which reached 20% of the share capital.

Legal reserves can not be distributed to shareholders.

d) Reserves from revaluation of financial assets available for sale

The reserve includes the cumulative net change in fair values of financial assets available for sale, the date of their classification in this category until their derecognition or impairment. Deferred tax related to these reserves is recorded on equity and inferred reserves of measuring financial assets available for sale.

e) Dividends

At the GOMS dated 04.04.2017, two variants of distribution of the net profit for the financial year 2016 were approved for approval, none of the two proposed options being approved.

The GOMS of September 6, 2017 decided the distribution of the net profit for the financial year 2016 in the amount of $101,271,376.81$ lei, as follows:

• dividends in the amount of 52,214,914.26 lei (51.56% of the net profit), respectively a gross dividend per share of 0.09 lei:

• reserve fund in the amount of 49,056,462.55 lei (48.44% of the net profit) for the redemption of a number of own shares. The Company will carry out a Redemption Scheme in accordance with the applicable legal framework, in order to reduce the share capital by canceling them. The Board of Directors of the company will convene, organize and conduct the EGMS for approval of the conditions for the realization of the share repurchase program.

Minimum price per share: 1.5 lei

Maximum price per share: 2.5 lei

Duration of the program: maximum 12 months from the date of publication of the decision in the Official Gazette of Romania Part IV.

Selected explanatory notes to simplified interim financial statements as of September 30^th 2017

(all the amounts are expressed in RON, unless otherwise stated)

21. The result per share

In RON	September 30 th	September 30 th
	2017	2016
Profit attributable to ordinary shareholders	50,324,988	95,890,928
Weighted average number of ordinary shares	580, 165, 714	580, 165, 714
Result per basic share	0.0867	0.1653

22. Guarantees received

The Company has no guarantees received.

23. Environmental quotas

The Company has not recorded any provision for future environmental costs. The management does not consider the costs associated with these items to be significant.

24. Transfer price

The Romanian tax legislation contains rules on transfer prices between affiliates since 2000.

The current legislative framework defines the "market value" principle for transactions between affiliates as well as the methods of transfer pricing. As a result, the tax authorities are expected to initiate thorough transfer prices checks in order to ensure that the fiscal result is not distorted by the effect of the prices charged in the relationships with the affiliated persons.

The Company cannot quantify the result of such verification.

25. Affiliated parties

Parties are considered to be affiliated if one party has the ability to control the other party or to exercise significant influence over it in making financial or operating decisions. The Company identified in the course of the business the following affiliated parties:

a) Branches

According to the legislation in force, the Company holds control in a number of 11 issuers on 30.09.2017 (31.12.2016: 11 issuers). All the branches of the Company are based in Romania. For these ones, the Company's holding percentage is not different from the percentage of the number of votes held.

The branches and the holding percentages are:

Selected explanatory notes to simplified interim financial statements

as of September 30^th 2017 (all the amounts are expressed in RON, unless otherwise stated)

25. Affiliated parties (continued)

a) Branches (continued)

Company name	Percentage held by SIF on 30.09.2017 $-$ % –	Percentage held by SIF on 31.12.2016 $-$ % –
ALIMENTARA S.A. SLATINA	52.24	52.24
TURISM PUCIOASA S.A. DAMBOVITA	69.22	69.22
PROVITAS S.A BUCURESTI	70.28	70.28
UNIVERS S.A. RM VALCEA	73.75	73.75
CONSTRUCTII FEROVIARE S.A. CRAIOVA	77.50	77.50
FLAROS S.A. BUCURESTI	81.04	81.04
ARGUS S.A. CONSTANTA	86.20	86.20
GEMINA TOUR S.A. RM VALCEA	88.29	88.29
MERCUR S.A. CRAIOVA	97.86	93.37
VOLTALIM S.A. CRAIOVA	99.19	99.19
COMPLEX HOTELIER DAMBOVITA S.A. TARGOVISTE	99.94	99.94

b) Associated entities

On 30.09.2017 the Company held equity shares of over 20% but not more than 50% of the social capital in a number of 8 issuers (31.12.2016: 8 issuers). All these companies are based in Romania. For them, the percentage of ownership by the company is not different from the percentage of the votes held.

The Company does not have any associated entities on 30.09.2017 and 31.12.2016.

c) Transactions with affiliated parties during the interim reporting period

During the interim reporting period, the Company has subscribed and paid on 09.01.2017 a number of 6,000,000 new shares worth 15,000,000 lei by exercising its preference right at Mercur SA Craiova.

d) Key management staff

Board of Directors:

September 31st 2017

Members of the Board of Directors: Tudor Ciurezu - President, Cristian Busu - Vice President, Anina Radu, Radu Hanga, Ana Barbara Bobircă, Nicolae Stoian, Carmen Popa,

Superior management: Tudor Ciurezu - General Manager, Cristian Busu - Deputy General Manager.

December $31^{st}$ 2016

Members of the Board of Directors: Tudor Ciurezu - President, Anina Radu - Vice President, Cristian Busu, Victor Capitanu, Nicolae Stoian, Carmen Popa, Paul - George Prodan. Superior management: Tudor Ciurezu - General Manager, Anina Radu - Deputy General Manager.

The Company does not have any contracted obligations regarding the payment of pensions to the former members of the Board of Directors and the Management Board and therefore it does not have accounted any commitments of such nature.

The Company has not granted any credits or advance money (except for travel advance money in the interest of service, legally justified) to the members of the Board of Directors and the Management Board and it has not any commitments of this kind.

The Company did not receive and did not grant any guarantees in favour of any affiliated party.

Selected explanatory notes to simplified interim financial statements as of September $30^{th}$ 2017 (all the amounts are expressed in RON, unless otherwise stated)

26. Court actions

On 30.09.2017 there were 27 litigations in court. The company was active in 17 litigations, passive in 4 litigations, in 2 litigations it acted as intervener, 4 cases being in insolvency proceedings.

In most of the litigations in which the Company has the status of plaintiff, the subject of litigations is the annulment/declaration of nullity of some decisions of the general meetings of shareholders in the companies within the portfolio.

27. Events after the balance sheet date

Does not exist.

Assoc. Prof. PhD E. Tudor CIUREZU

ec. Elena Sichigea

Chairman/General Manager

Financial Manager