Vrancart SA

Annual / Quarterly Financial Statement • Feb 28, 2025

To,

The Financial Supervisory Authority The Bucharest Stock Exchange

Current report according to Financial Supervisory Authority Regulation no. 5/2018

Date of report: February 28th, 2025 Name of the issuing entity: VRANCART

Telephone/fax no.: 0237-640.800/0237-641.720 Tax Identification Number: RO 1454846 Trade Registry registration no.: J39/239/1991 Subscribed and paid-in share capital: RON 201,011,575.10 The regulated trading market: The Bucharest Stock Exchange

Registered office: Adjud, 17th Ecaterina Teodoroiu Street, Vrancea County

Major events to report:

VRANCART informs shareholders and investors that, in accordance with the Financial Reporting Calendar, the unaudited preliminary annual financial statements (individual and consolidated) for the financial year 2024, prepared in accordance with International Financial Reporting Standards - IFRS (O.M.F.P. no. 881/2012 and O.M.F.P. no. 2844/2016, with subsequent additions and amendments), with the provisions of Law no. 24/2017 and SFA Regulation no. 5/2018, may be consulted at the company's headquarters in Adjud, 17th Ecaterina Teodoroiu, Vrancea County or at the web address www.vrancart.ro, starting from February 28 th, 2025, from 06.00 PM.

Attached to this Current Report are the unaudited preliminary annual financial statements (individual and consolidated) for the financial year 2024, prepared in accordance with International Financial Reporting Standards – IFRS.

General Manager Nicu – Ciprian FEDOR

Translation for information purposes only

VRANCART S.A. PRELIMINARY STANDALONE FINANCIAL RESULTS

For the financial year ended on December 31, 2024

Note:

The Financial preliminary results presented in this document are issued on a standalone basis, being reported in accordance with the Order of the Minister of Public Finance no. 2844/2016 with all subsequent amendments, which is in accordance with the International Financial Reporting Standards (IFRS) adopted by the European Union.

The preliminary standalone financial results are not audited as this process is ongoing. As a result, the final and audited financial statements for the year 2024 may differ from these.

The functional and presentation currency is Romanian Leu (RON).

Table of contents

Standalone Statement of Financial Position
Standalone Statement of Comprehensive Income	4
Standalone Statement of Changes in Equity	5
Standalone Statement of Cash Flows	6
Notes to the Standalone Preliminary Financial Statements	7-8

Vrancart SA Standalone Statement of Financial Position

as of December 31 st , 2024

(all amounts in RON, unless otherwise specified)

	December 31st ,	December 31st ,
Nota	2024	2023
ASSETS
Tangible assets 5	423,011,121	364,630,582
Intangible assets	708,852	775,019
Goodwill	3,380,811	3,380,811
Financial Assets	62,587,328	62,587,328
Other non-current assets	32,824,177	13,750,286
Total non-current assets	522,512,289	445,124,026
Inventories 6	73,791,524	66,810,661
Assets held for sale	19,725,761	19,725,761
Trade receivables 7	83,623,082	67,913,133
Prepaid expenses	1,154,845	972,024
Prepayments for tangible assets	8,152,139	19,706,483
Receivable subsidies	3,884,271	7,112,867
Current profit tax receivable	-	835,908
Other receivables	2,505,966	3,240,953
Cash and cash equivalents	1,050,589	2,088,021
Total current assets	193,888,177	188,405,811
TOTAL ASSETS	716,400,466	633,529,837
EQUITY
Share capital 10	201,011,575	169,121,665
Reserves 10	178,914,329	179,304,246
Retained earnings	4,367,770	15,101,795
Total equity	363,488,801	363,527,706
LIABILITIES
Long-term loans 13	86,689,040	67,826,778
Long-term leasing liabilities	19,066,190	21,333,018
Long-term subsidies 16	31,825,414	8,761,341
Long-term debts to employees 15	920,509	444,379
Deferred profit tax liabilities	12,168,086	13,160,453
Other long-term liabilities	439,212	12,961
Total long-term liabilities	151,108,451	111,538,930
Trade payables 11	57,603,898	32,527,381
Short-term loans 13	101,412,440	62,541,116
Short-term bond loans	-	38,250,000
Short-term leasing liabilities	7,712,995	9,300,908
Short-term subsidies 16	2,805,360	1,361,714
Short-term debts to employees	4,821,776	5,979,709
Current profit tax liabilities	885,127	-
Other short-term liabilities 12	5,756,745	8,502,373
Total current liabilities	180,998,341	158,463,201
TOTAL LIABILITIES	332,106,792	270,002,131
TOTAL EQUITY AND LIABILITIES	716,400,466	633,529,837

FEDOR Nicu-Ciprian COMAN Gabriela

Chief Executive Officer Chief Financial Officer

(all amounts in RON, unless otherwise specified)

	2024	2023
Sales income from customers agreements 17	396,553,776	412,683,130
Income from operating subsidies	408,956	12,922,747
Other income 18	12,023,720	9,369,433
Production inventory's changes	(960,268)	5,074,068
Raw materials and consumables expenses	(213,238,440)	(215,963,361)
Cost of goods sold	(13,153,158)	(13,612,864)
Third-party expenses	(34,692,284)	(37,466,894)
Labor expenses 20	(96,129,900)	(102,572,974)
Assets amortization and depreciation expenses 5	(42,064,249)	(39,836,284)
Other expenses 19	(12,505,011)	(13,604,750)
Operating result	(3,756,858)	16,992,250
Financial Income 21	4,371,922	1,327,060
Financial expenses 21	(9,933,293)	(12,155,856)
Profit / (Loss) before taxation	(9,318,229)	6,163,455
Income / (Expense) for corporate income tax 22	(1,959,688)	(534,431)
Profit / (Loss) for the year	(11,277,917)	5,629,024
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	(11.277.917)	5.629.024

FEDOR Nicu-Ciprian COMAN Gabriela Chief Executive Officer Chief Financial Officer

Vrancart SA Standalone Statement of Changes in Equity

as of December 31st, 2024 (all amounts in RON, unless otherwise specified)

	Share Capital	Revaluation reserves	Other reserves	Retained earnings	Total equity
Balance as of January 1st , 2024	169,121,665	104,393,341	74,910,905	15,101,795	363,527,706
Comprehensive income for the period
Net profit/loss for the period	-	-	-	(11,277,917)	(11,277,917)
Changes in the reserve from revaluation of tangible assets, net of deferred tax	-	-	-	-	-
Total comprehensive income	-	-	-	(11,277,917)	(11,277,917)
Share capital increase	31,889,910	-	66,952	-	31,956,862
Dividends distributed	-	-	-	-	-
Distribution of legal reserves and other reserves	-	-	-	-	-
Transfer of the revaluation reserve to retained earnings following the sale/decommissioning of tangible assets	-	(456,869)	-	543,892	87023
Balance as of December 31st , 2024	201,011,575	103,936,472	74,977,857	4,367,770	384,294,674

FEDOR Nicu-Ciprian COMAN Gabriela

Vrancart SA Standalone Statement of Cash Flows as of December 31st, 2024

(all amounts in RON, unless otherwise specified)

DIRECT METHOD

	2024	2023
Cash-flows from operating activities
Cash receipts from customers	444,323,879	511,357,338
Cash paid to suppliers	(278,279,255)	(297,097,126)
Cash paid to employees	(61,652,313)	(71,912,777)
Cash paid to the state budget	(52,550,885)	(66,454,010)
Corporate income tax paid	(1,143,997)	(2,112,573)
Net cash flows from operating activities	50,697,429	73,780,852
Cash flows from investment activities
Cash paid for the purchase of tangible and intangible assets	(96,663,614)	(55,937,492)
Cash paid for the purchase of financial assets	-	(17,021,000)
Loans granted to affiliates	(19,050,000)	(13,100,000)
Proceeds from the sale of tangible assets	2,095,381	3,993,119
Interest collected	1,738,906	896,416
Dividends collected	2,500,000	-
Cash flows from investment activities	(109,379,327)	(81,168,957)
Cash flows from financing activities
Proceeds from loans	120,341,599	38,944,828
Loans repaid	(63,043,879)	(45,645,282)
Bonds repaid	(38,250,000)	-
Subsidies collected	25,993,202	-
Payments for leasing	(10,631,130)	(10,209,182)
Interests for leasing	(401,659)	(316,893)
Capital increase	31,956,911	48,894,047
Interest paid	(8,320,578)	(11,668,627)
Dividends paid	-	(11,811,653)
Net cash flows from financing activities	57,644,466	8,187,238
Net increase/ (decrease) of cash and cash equivalents	(1,037,432)	799,133
Cash and cash equivalents at the financial year beginning	2,088,021	1,288,888
Cash and cash equivalents at the financial year end	1,050,589	2,088,021

FEDOR Nicu-Ciprian COMAN Gabriela

Vrancart SA Notes to the Preliminary Standalone Financial Statements

as of December 31st, 2024

Vrancart SA (hereinafter referred to as "the Company") is a joint-stock company operating in Romania in accordance with the provisions of Law 31/1990 on commercial companies.

The Company operates in the field of collection and recycling of non-hazardous waste, the paper and corrugated cardboard industry, the production of corrugated cardboard packaging, as well as hygienic-sanitary paper. The Company has operational units in the following locations: Bucharest, Pantelimon, Chiajna, Călimănești, Sântana de Mureș, Iași, Ploiești, Sibiu, Brașov, Pitești, Timișoara, Bacău, and Cluj.

The Company's business activity consists of the production and commercialization of the following products:

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

The Company's shares are listed on the Bucharest Stock Exchange, Standard category, under the ticker VNC, starting from July 15, 2005. As of December 31, 2024, the Company is owned 76.33% by Lion Capital SA, 17.35% by Pavăl Holding SRL, and 6.32% by other shareholders. The record of shares and shareholders is maintained under legal provisions by Depozitarul Central S.A. Bucharest.

Throughout 2024, despite management's efforts to reduce production costs and operational expenses, increase efficiency, and improve labor productivity, the Company's performance was significantly affected by the continuous rise in raw material prices. The purchase price of wastepaper for corrugated cardboard increased by 35%, while wastepaper for hygienic-sanitary paper rose by 41%. Additionally, paper purchased from third parties became 17% more expensive.

The cost of labor also exerted additional pressure on the Company's profitability due to successive increases in the minimum wage, from 3,000 RON (September 30th, 2023) to 3,300 RON (+10% as of October 1st, 2023), and subsequently to 3,700 RON (+12% as of July 1st, 2024). The still high annual inflation rate of 5.1%, as well as interest rate levels, also negatively impacted the Company's 2024 results.

Persistently high energy and gas prices, combined with the unexpected reduction of 7.1 million RON from the OUG 138/2022 subsidy for electricity in 2023 and 2024, significantly contributed to the loss recorded as of December 31st, 2024. From December onward, the Company also ceased to benefit from green certificate subsidies.

During April-May 2024, the Company had to halt its operations due to construction work on the A7 highway, which required a temporary suspension of electricity and gas supply, leading to an additional loss of 4 million RON. In August, another shutdown occurred due to a lack of electricity supply, following the connection of the photovoltaic park to the national dispatch and communication network, which generated an additional loss of over 1 million RON.

Throughout 2024, the Company also discontinued certain unprofitable activities and operational units, resulting in compensatory payments exceeding 1.5 million RON. The turnover tax, introduced from January 1st, 2024, further deepened losses by 3 million RON.

The pressure on sales prices, driven by customers' need to optimize their costs, as well as by fierce market competition, made it impossible to fully pass on all cost increases, inevitably affecting the Company's profitability.

Vrancart SA Notes to the Preliminary Standalone Financial Statements as of December 31st, 2024

Despite the negative financial impact, the Company continued to operate normally throughout 2024, managing to exceed the previous year's performance and even budgeted expectations in certain business segments. Moreover, the Company successfully completed its planned investments, some of which were among the largest and most complex in its long history, confirming both the sustainability of the business and the Company's resilience to adverse market changes.

The economic and financial indicators on December 31st, 2024 are presented as follows:

Indicator	Calculation Formula	UM	Result
Current liquidity Indicator	Current Assets/Current liabilities	rate	1,07
Indebtedness indicator	Borrowed Capital /Share Capital x 100		56*
	Borrowed Capital/Employed Capital x 100	%	40*
Customer rotation period	Average trade receivables/Turnover x 360	days	81
Fixed assets turnover rate	Turnover/Fixed Assets	rate	0,76

* Borrowed capital includes lines of credit, short-term and long-term bank loans and credits, short-term and long-term lease liabilities and bond issued loans.

FEDOR Nicu-Ciprian COMAN Gabriela

Translation for information purposes only

VRANCART S.A. PRELIMINARY CONSOLIDATED FINANCIAL RESULTS

For the financial year ended on December 31, 2024

Note:

The Financial preliminary results presented in this document are consolidated results, being reported in accordance with the Order of the Minister of Public Finance no. 2844/2016 with all subsequent amendments, which is in accordance with the International Financial Reporting Standards (IFRS) adopted by the European Union.

The preliminary consolidated financial results are not audited as this process is ongoing. As a result, the final and audited financial statements for the year 2024 may differ from these.

The functional and presentation currency is Romanian Leu (RON).

Table of contents

Consolidated Statement of Financial Position
Consolidated Statement of Comprehensive Income	4
Standalone Statement of Changes in Equity	5
Standalone Statement of Cash Flows	6
Notes to the Standalone Preliminary Financial Statements	7-10

Vrancart SA Consolidated Statement of Financial Position

as of December 31st, 2024

(all amounts in RON, unless otherwise specified)

	December 31st ,	December 31st ,
Nota	2024	2023
ASSETS
5 Tangible assets	639,505,600	552,107,867
Intangible assets	2,492,475	3,785,076
Goodwill	8,526,391	8,526,391
Other non-current assets	900,541	1,224,189
Total non-current assets	651,425,007	565,643,523
6 Inventories	85,375,917	76,630,055
Assets held for sale	19,725,761	19,725,761
Trade receivables 7	91,036,449	74,408,633
Prepaid expenses	1,292,579	1,054,817
Prepayments for tangible assets	8,152,139	23,363,024
Receivable subsidies	3,884,271	7,112,867
Current profit tax receivable	-	835,908
Other receivables	1,988,109	3,413,839
9 Cash and cash equivalents	1,845,212	2,823,520
Total current assets	213,300,437	209,368,424
TOTAL ASSETS	864,725,444	775,011,947
EQUITY
10 Share capital	201,011,575	169,121,665
Reserves 10	179,597,736	179,992,645
Retained earnings	(8,426,150)	8,432,682
Total equity – mother company	372,183,161	357,546,992
Non-controlling Interests	(3,024)	(3,757)
Total equity	357,180,137	357,543,235
LIABILITIES
Long-term loans 13	155,170,179	140,955,586
Long-term leasing liabilities	20,158,109	21,977,764
16 Long-term subsidies	80,041,451	13,137,193
15 Long-term debts to employees	920,509	444,379
Deferred profit tax liabilities	12,175,228	13,894,851
Other long-term liabilities	439,212	492,830
Total long-term liabilities	268,904,688	190,902,603
11 Trade payables	65,923,072	57,577,273
13 Short-term loans	121,361,672	104,412,448
Short-term bond loans	8,268,948	9,320,959
Short-term leasing liabilities	-	38,250,000
16 Short-term subsidies	3,495,424	1,361,714
Short-term debts to employees	5,915,886	7,072,857
Current profit tax liabilities	892,212	92,996
Other short-term liabilities 12	17,783,405	8,477,862
Total current liabilities	223,640,619	226,566,109
TOTAL LIABILITIES	492,545,307	417,468,712
TOTAL EQUITY AND LIABILITIES	864,725,444	775,011,947

FEDOR Nicu-Ciprian COMAN Gabriela

Chief Executive Officer Chief Financial Officer

(all amounts in RON, unless otherwise specified)

	2024	2023
Sales income from customers agreements 17	486,955,387	500,299,036
Income from operating subsidies	408,956	12,922,747
Other income 18	12,327,114	10,248,680
Production inventory's changes	275,351	3,733,454
Raw materials and consumables expenses	(236,057,136)	(225,478,150)
Cost of goods sold	(45,069,441)	(54,073,764)
Third-party expenses	(47,529,758)	(47,561,802)
Labor expenses 20	(114,128,732)	(120,053,600)
Assets amortization and depreciation expenses 5	(48,489,491)	(42,988,971)
Other expenses 19	(13,941,340)	(18,234,873)
Operating result	(5,249,090)	18,812,757
Financial Income 21	5,852	1,530,677
Financial expenses 21	(10,772,480)	(13,765,270)
Profit / (Loss) before taxation	(16,015,719)	6,578,164
Income / (Expense) for corporate income tax 22	(1,391,264)	(1,155,779)
Profit / (Loss) for the year	(17,406,983)	5,422,385
- for the mother company	(17,407,716)	5,423,028
- for non-controlling interests	733	(643)
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	(17,406,983)	5,422,385
- for the mother company	(17,407,716)	5,423,028
- for non-controlling interests	733	(643)

FEDOR Nicu-Ciprian COMAN Gabriela

Vrancart SA Consolidated Stetement of Changes in Equity

as of December 31st, 2024

(all amounts in RON, unless otherwise specified)

	Share Capital	Revaluation reserves	Other reserves	Retained earnings	Non-controlling interests	Total equity
Balance as of January 1st, 2024	169,121,665	100,969,137	79,023,508	8,432,682	(3,757)	357,543,235
Comprehensive income for the period
Net profit/loss for the period	-	-	-	(17,407,715)	733	(17,406,982)
Changes in the reserve from revaluation of tangible assets, net of deferred tax	-	(461,860)	-	548,884	-	87,023
Total comprehensive income	-	(461,860)	-	(16,858,831)	733	(17,319,959)
Share capital increase	31,889,910	-	66,952	-	-	31,956,862
Dividends distributed	-	-	-	-	-	-
Distribution of legal reserves and other reserves	-	-	-	-	-	-
Balance as of December 31st , 2024	201,011,575	100,507,277	79,090,459	(8,426,150)	(3,024)	372,180,137

FEDOR Nicu-Ciprian COMAN Gabriela

(all amounts in RON, unless otherwise specified)

DIRECT METHOD

	2024	2023
Cash-flows from operating activities
Cash receipts from customers	547,538,046	621,410,211
Cash paid to suppliers	(352,990,370)	(377,721,090)
Cash paid to employees	(72,003,853)	(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 activities	55,920,509	81,482,272
Cash flows from investment activities
Cash paid for the purchase of tangible and intangible assets	(134,001,873)	(144,411,986)
Warranties for the granting of authorization licenses	(149,962)	-
Proceeds from the sale of tangible assets	2,114,855	4,127,880
Interest collected	1,717	7,331
Cash flows from investment activities	(132,035,263)	(140,276,775)
Cash flows from financing activities
Proceeds from loans	137,255,249	99,973,188
Loans repaid	(102,245,805)	(60,929,289)
Bonds repaid	(38,250,000)	-
Payments for leasing	(11,621,229)	(10,209,182)
Leasing interest paid	(415,399)	(316,893)
Capital increase	31,956,911	48,894,047
Investment subsidies collected	71,628,724	-
Interest paid	(13,172,005)	(7,546,025)
Dividends paid	-	(11,811,653)
Net cash flows from financing activities	72,636,446	58,054,193
Net increase/ (decrease) of cash and cash equivalents	(978,308)	(740,310)
Cash and cash equivalents at the financial year beginning	2,823,520	3,563,830
Cash and cash equivalents at the financial year end	1,845,212	2,823,520

FEDOR Nicu-Ciprian COMAN Gabriela Chief Executive Officer Chief Financial Officer

Vrancart SA Notes to the Preliminary Consolidated Financial Statements as of December 31st, 2024

The Vrancart Group ("the Group") includes the company Vrancart SA, with registered office in Adjud, str. Ecaterina Teodoroiu no. 17, Vrancea county and its branches Rom Paper SRL ("Branch 1"), with headquarters in Brașov, Șoseaua Cristianului, no. 30, Brașov county, Vrancart Recycling SRL ("Branch 2"), with headquarters in Adjud, Ecaterina Teodoroiu street, no. 17, Vrancea county and Ecorep Group SA ("Branch 3"), with headquarters in the town of Adjud, Ecaterina Teodoroiu street, no. 17, Vrancea county.

The preliminary consolidated financial statements of the Group for the financial year ending on December 31, 2024 are generated from the preliminary financial statements of Vrancart SA and its subsidiaries, which together form the Group.

Branch	Activity domain	Ownership as of December 31st , 2024	Ownership as of December 31st, 202
Rom Paper SRL	Manufacture of table napkins and sanitary products	100%	100%
Vrancart Recycling SRL	Treatment and disposal of non-hazardous waste	100%	100%
Ecorep Group SA	Business support service activities n.e.c.	99.6%	99.6%

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's registered office is located in Adjud, Ecaterina Teodoroiu Street, No. 17, Vrancea County. The Company has operational units in the following locations: Bucharest, Pantelimon, Chiajna, Călimănești, Sântana de Mureș, Iași, Ploiești, Sibiu, Brașov, Pitești, Timișoara, Bacău, and Cluj.

The Company's business activity consists of the production and commercialization of the following products:

• Corrugated cardboard
• Corrugated cardboard packaging
• Papers for the production of corrugated cardboard
• Hygienic-sanitary papers in various assortments
• Wastepaper recycling equipment (sales, rental, and maintenance)
• Electricity from photovoltaic parks (self-consumption and sale)

Vrancart SA Notes to the Preliminary Consolidated Financial Statements as of December 31st, 2024

The Company's shares are listed on the Bucharest Stock Exchange, Standard category, under the ticker VNC, starting from July 15, 2005. The Group publishes consolidated financial statements on www.vrancart.ro. As of December 31, 2024, the Company is owned 76.33% by Lion Capital SA, 17.35% by Pavăl Holding SRL, and 6.32% by other shareholders. The record of shares and shareholders is maintained under legal provisions by Depozitarul Central S.A. Bucharest.

ROM PAPER SRL

Rom Paper SRL ("Subsidiary 1") was founded in 2002 as a private Romanian-owned company, operating in the production of hygienic-sanitary products made from recycled paper and cellulose, including:

• Napkins
• Folded towels
• Toilet paper
• Professional rolls
• Cosmetic towels
• Boxed tissues

The products are sold both in Romania and in six other countries, through retail chains (hypermarkets, supermarkets, cash & carry) and distributors, standing out on store shelves through its own brands "Mototol" and "Papely", as well as various private label brands of its clients.

Rom Paper SRL is the result of Vrancart's inorganic growth strategy, which, on January 20th, 2017 acquired a 70% majority stake from the former owners. By December 31st, 2024, the Group had acquired 100% ownership, following the purchase of an additional 15% in June 2017 and the final 15% stake in June 2018 for the Rom Paper shares.

VRANCART RECYCLING SRL

Vrancart Recycling SRL ("Subsidiary 2") was established in August 2020 as a private Romanianowned company with a sole shareholder. The primary activity of this subsidiary is the treatment and disposal of non-hazardous waste.

This company was founded as part of the Group's greenfield investment strategy, with an investment exceeding EUR 25 million, aiming to expand into adjacent recycling and energy production sectors. The project is designed to recover a wide variety of resources, which will either be commercialized or used internally due to the newly created synergies.

The investment was fully completed and received by December 31st, 2024, and starting from 2025, the company will enter its operational phase, utilizing all its developed business lines.

ECOREP GROUP SA

Ecorep Group SA ("Subsidiary 3") was founded in November 2020 as a private Romanian-owned company. The core activity of this subsidiary is the provision of services related to the implementation of Extended Producer Responsibility obligations for environmental targets associated with packaging placed on the Romanian market.

The Group carries out complex and large-scale operations in various fields, including the collection and recycling of non-hazardous waste, the paper and corrugated cardboard industry, the production of corrugated cardboard packaging, the manufacture of hygienic-sanitary paper products, and the development of paper and cardboard recycling equipment. Starting in 2024, the Group has produced electricity through a newly commissioned 20MWh photovoltaic park, using the energy for internal consumption, while selling the surplus.

A significant portion of the paper used in various production processes is sourced from recycled paper and cardboard waste, positioning the Group as a key contributor to Romania's circular economy.

Despite the management's efforts to reduce production costs, optimize operational expenses, and improve productivity, the Group's performance in 2024 was heavily impacted by rising raw material costs. The purchase price of wastepaper for corrugated cardboard increased by 35%. The cost of wastepaper for hygienic-sanitary paper rose by 41%. Both corrugated cardboard paper and virgin cellulose paper purchased from third parties became 17% more expensive. Additionally, labor costs placed further pressure on profitability due to minimum wage increases +10% from October 1, 2023 (from 3,000 RON to 3,300 RON) and +12% from July 1, 2024 (from 3,300 RON to 3,700 RON). Other negative financial impacts included 5.1% annual inflation and high interest rates, further affecting financial performance. High energy and gas prices, compounded by the unexpected reduction of 7.1 million RON in energy subsidies (OUG 138/2022) for 2023-2024. Loss of green certificate subsidies starting from December 2024. Temporary operational shutdowns on April-May 2024 when operations were halted due to A7 highway construction, requiring a temporary suspension of electricity and gas supply, causing a 4 million RON loss. On August 2024 another shutdown occurred due to the connection of the photovoltaic park to the national dispatch and communication network, resulting in over 1 million RON in losses.

The Group also discontinued unprofitable activities and closed non-performing operational units, leading to compensatory payments of over 1.5 million RON. The turnover tax, implemented from January 1, 2024, further deepened losses by 3 million RON.

Fierce market competition and customer-driven cost optimizations prevented the full transfer of rising costs into sales prices, inevitably affecting the Group's profitability.

Despite financial setbacks, the Group successfully operated throughout 2024 under normal conditions. Some business lines surpassed 2023's performance and even exceeded budget expectations. Moreover, the Group finalized planned investments, some of which were among the largest and most complex in its history, reaffirming the sustainability of the business and the Group's resilience to adverse market conditions.

Vrancart SA Notes to the Preliminary Consolidated Financial Statements as of December 31st, 2024

The economic and financial indicators on December 31st, 2024 are presented as follows:

Indicator	Calculation Formula	UM	Result
Current liquidity Indicator	Current Assets/Current liabilities	rate	0,95
Indebtedness indicator	Borrowed Capital /Share Capital x 100	%	82*
	Borrowed Capital/Employed Capital	%	48*
	x 100
Customer rotation period	Average trade receivables/Turnover	days	61
	x 360
Fixed assets turnover rate	Turnover/Fixed Assets	rate	0,75

* Borrowed capital includes lines of credit, short-term and long-term bank loans and credits, short-term and long-term lease liabilities and bond issued loans.

FEDOR Nicu-Ciprian COMAN Gabriela

Chief Executive Officer Chief Financial Officer