Cluj-Napoca

March 30 2015

SITUATII FINANCIARE INDIVIDUALE INDIVIDUAL FINANCIAL STATEMENTS

FOR THE PERIOD ENDING DECEMBER 31ST, 2014

Drawn-up according to the international reporting standards

Cuprins (Contents)

Situatia pozitiei financiare (Statement of financial position) ......................................................................................... 3

Situatia rezultatului global (Statement of comprehensive income) ................................ ................................5

Situatia fluxurilor de numerar (Statement of Cash-flow)................................................ ................................6

Situatia modificarilor capitalului propriu (Statement of changes in equity) ................... ................................8

CEMACON SA

Situatia pozitiei financiare

(Statement of financial position)

for the period ending December 31st, 2014

(for the period ended 31 December 2014) ACTIVE (ASSETS)

Active imobilizate

Non-current assets

31-Dec-14

LEI

31-Dec-13

LEI

Imobilizari corporale 11 116.490.340 114.888.514

Property, plant and equipment Investitii imobiliare - -

Investment property Imobilizari necorporale 12 216.166 206.560

Intangible Investitii in actiuni 14 200 -

Investments Alte active imobilizate 2.693.914 300.866

Other non-current assets

119.400.620 115.395.940

Active circulante Current assets

Stocuri 15 13.889.917 8.658.968

Inventories Creante comerciale si similare 16 6.567.750 7.511.743

Trade and other receivables Alte active financiare 1.051.380 -

Other financial assets

Numerar si echivalente numerar 27 12.338.661 6.902.535

Cash and cash equivalents

33.847.709 23.073.246

Active clasificate drept detinute In vederea

vinzarii 22 22.833.650 22.303.952 Assets classified as held for sale

TOTAL ACTIVE (TOTAL ASSETS) 176.081.978 160.773.138

DATORII (LIABILITIES)

DATORII CURENTE CURRENT LIABILITIES

Datorii comerciale si similare 17 6.349.126 29.207.985

Trade and other payables Imprumuturi 18 83.383.704 87.298.911

Loans and borrowings Subventii pentru investitii - -

Grants received Datorii privind impozitul pe profit Tax liability Provizioane 20 2.466.218 3.071.523

Provisions

CEMACON SA

Situatia pozitiei financiare

(Statement of financial position)

for the period ending December 31st, 2014

(for the period ended 31 December 2014)

92.199.047 119.578.418

Datoriile incluse In grupurile destinate cedarii

Liabilities directly associated with assets in disposal groups classified as held for sale

DATORII PE TERMEN LUNG

NON-CURRENT LIABILITIES

Datorii comerciale si similare

Non-current trade and other liabilities

Imprumuturi

Loans and borrowings

Subventii pentru investitii

Grants received

Impozit amanat

Deferred tax

Provizioane

Provisions

17

18

21

-

6 4 . 5 3 2 . 4 9 0

1 . 3 1 0 . 1 2 0

-

30.527.265

1.385.762

65.842.611 31.913.027

TOTAL DATORII (TOTAL LIABILITIES) 158.041.658 151.491.446

ACTIVE NETE (NET ASSETS) 18.040.321 9.281.692

CAPITAL SI REZERVE (EQUITY)

Capital social

Issued capital

Actiuni proprii

Own Shares

Prime legate de emiterea de actiuni

Share premium

Ajustari din retratare

Translation adjustments

Rezerve

Reserves

Rezultat reportat

Retained earnings

Interesele care nu controleaza

Non-controling interest

23

24

17.433.454

-

-

-

27.140.819

(26.533.953)

33.424.855

-

-

-

26.477.035

(50.620.198)

TOTAL CAPITALURI (TOTAL EQUITY) 18.040.320 9.281.693

All amounts in Lei, if not otherwise stated

CEMACON SA

Situatia rezultatului global (Statement of comprehensive income)

pentru anul incheiat la 31decembrie 2014 (for year ended 31 decembrie 2014)

Venituri din vanzari

Sales revenues

3

31-Dec-14

LEI

58.305.029

31-Dec-13

LEI

44.876.878

Alte venituri din exploatare 4 971.123 6.641.473

Other operating revenues

Variatia stocurilor

864.855 (839.734)

Change in inventories of FG & WiP

Materii prime si consumabile 15 (11.735.094) (9.770.419)

Raw material and consumables used

Cheltuieli de personal 6 (9.225.855) (6.837.943)

Personnel Expenses Amortizare si deprecieri (5.491.679) (5.055.030)

Depreciation and amortisation expenses Cercetare si dezvoltare - -

Research and development Alte cheltuieli din exploatare 5 (27.756.433) (26.206.693)

Other operating expenses Profit / (Pierdere) din exploatare 5.931.946 2.808.532

Profit / (Loss) from operation

Venituri / (costuri) financiare nete 7 (8.952.395) (10.028.944) Finance cost

Partea din profitul aferent entitãtilor asociate

- -

Income from associates Profit / (Pierdere) inainte de impozitare (3.020.449) (7.220.412)

Profit before tax Cheltuieli cu impozite 8 1.447.960 685.274

Profit / (Pierdere) (1.572.489) (6.535.138)

Profit after tax

Reevalurea imobilizarilor corporale 1.818.849 29.318

Impozit Amanat Aferent Diferentelor din reevaluare (940.380) (85.468)

Total alte elemente ale rezultatului global 878.469 (56.150)

Total other elements of other comprehensive income

Total rezultat global (694.020) (6.591.288)

Comprehensive income total

All amounts in Lei, if not otherwise stated

CEMACON SA

Situatia fluxurilor de numerar (Statement of Cash-flow)

pentru anul incheiat la 31decembrie 2014 (for year ended 31 decembrie 2014)

Fluxuri din activitati de exploatare 31-Dec-14 31-Dec-13

Cash flow from operating activities LEI LEI

Incasari de la clienti 66.108.313 52.654.489

Customer encashments Plati catre furnizori (47.750.283) (33.738.925)

Supplier payments Plati catre angajati (4.529.700) (3.351.461)

Payments to employees Dobanzi platite - -

Interest Paid Plati impozite si taxe (11.879.434) (10.271.852)

Tax Payments Impozit pe profit platit - -

Income Tax Paid Incasari din asigurari 23.563 49.011

Inssurance encashments Plati de asigurari (261.298) (168.888)

Insurrance payments Alte incasari - 243.428

Other Encashments

Trezoreria neta din activitati de exploatare 1.711.161 5.415.802

Cash from operating activities

Fluxuri de trezorerie din activitati de investitii

Cash flow from investing activities

Plati pentru achizitionarea de actiuni Payments for aquiring shares Plati pentru achizitionarea de imobilizari corporale (3.614.834) (452.251)

Payments for aquiring assets Incasari din vanzarea de imobilizari corporale 306.374 2.250

Encashments from sold assets Dobanzi incasate 51.694 45.755

Encashments from interest Dividende incasate - -

Encashment from dividends

Trezoreria neta din activitati de investitie (3.256.766) (404.246)

Cash from inveting activities

Fluxuri de trezorerie din activitati de finantare

Cash flow from financing activities

Incasari din aport de capital 7.694.683 -

Encashments form share capital increase

CEMACON SA

Situatia fluxurilor de numerar (Statement of Cash-flow)

pentru anul incheiat la 31decembrie 2014 (for year ended 31 decembrie 2014)

Incasari din imprumuturi

Encashments form loans

2.237.630 -

Plata datoriilor aferente leasing-ului financiar (754.040) (785.703)

Payments for financial lease Rambursari credite (2.207.396) (44.555)

Loan Reimbursments Dividende platite si dobanzi bancare platite - -

Dividends paid and bank interest paid

Trezoreria neta din activitati de finantare 6.970.877 (830.258)

Cash from financing activities

Crestere /scadere neta de numerar 5.425.272 4.181.298

Net increase/decrease in cash and cash equivalents

Numerar si echivalente de numerar la inceputul

perioadei

6.913.389 2.721.237

Cash and cash equivalents at beginning of period

Numerar si echivalente de numerar la sfarsitul perioadei 12.338.661 6.902.535

Cash and cash equivalents at end of period All amounts in Lei, if not otherwise stated

CEMACON SA Situatia modificarilor capitalului propriu

(Statement of changes in equity) pentru anul incheiat la 31decembrie 2014

(for year ended 31 decembrie 2014)

31-Dec-12 35.501.598 - 23.604.532 1.142.146 1.700.933 (33.182.009) - (2.162.210) (10.665.606) 15.939.384

Rezultatul global curent - - - - - (6.535.138) - - - (6.535.138)

Current global result

Alocari rezerva legala - - - - - - - - - -

Legal reserves distribution

Erori contabile (ajustare impozit pe profit) - - - - (237.445) - - (237.445)

Accounting Errors

Diferente capitalizate aferente impozitului

amanat - - - - - - - 85.468 - 85.468

Capitalized amounts related to deffered

tax

Diferente din reevaluare - - 29.424 - - - - - - 29.424

Reevaluation differences

Rezerve aferente iesirilor de mijloace fixe - - - - - - - - - -

Reserves related to non-current assets disposals

31-Dec-13 35.501.598 - 23.633.956 1.142.146 1.700.933 (39.954.592) - (2.076.742) (10.665.606) 9.281.693

Rezultatul global curent - - - - - (1.572.489) - - - (1.572.489)

Current global result

Ajustari erori contabil - - - - - (121.421) - - - (121.421)

Accounting Errors

Diferente capitalizate aferente impozitului

amanat - - - - 940.380 - 940.380

Capitalised differences related to deffered

tax -

Cresteri din reevaluari - - 1.836.599 - - - - - - 1.836.599

Increase from reevaluation

Diminuari din reevaluare - - (17.751) - - - - - - (17.751)

Decrease from reevaluation

Diminuare de capital prin acoperirea

pierderilor (25.761.453) - - - - 25.761.453 - - - -

Capital subscris Actiuni proprii Rezerve din Rezerve legale Alte reserve Rezultat Prima Alte elem. Prima aplicare Total si ajustari reevaluare nedistribuit aplicare a capitaluri a IAS29 Issued capital and Own shares Reevaluation Legal reserves Other Undistributed IAS/IFRS proprii adjustments reserves reserves result 1st Other 1st application Total application capital of IAS 29 of IAS/IFRS elements

CEMACON SA

Situatia fluxurilor de numerar (Statement of Cash-flow)

pentru anul incheiat la 31decembrie 2014 (for year ended 31 decembrie 2014)

Share Capital Decrease

Majorare de capital prin aport 7.693.309 - - - - - - - - 7.693.309

Share capital increase

Rezerva din reevaluare realizata aferenta

casarilor - - (18.702) - 18.702 - - - - -

Reevaluation differences for disposed

assets

31-Dec-14 17.433.454 - 25.434.102 1.142.146 1.719.635 (15.887.049) - (1.136.362) (10.665.606) 18.040.320

All amounts in Lei, if not otherwise stated

CEMACON SA

Notes on the Financial Statements

for the period ending December 31st, 2014

Cuprins (Contents)

Contents

1. Accounting policies of Cemacon 12

2. Accounting estimates 31

3. Revenues 33

4. Other operating revenues 33

5. Operating expenses 34

6. Personnel expenses 35

7. Financial income and expenses 36

8. Taxes 36

9. Earnings per share 37

10. Dividends 38

11. Tangible assets 39

12. Intangible assets 45

13. Goodwill and depreciation 46

14. Financial assets 47

15. Stocks 49

16. Trade receivables and other receivables 50

17. Trade and other liabilities 51

18. Loans 52

19. Employees’ benefits 55

20. Provisions 56

21. Deferred taxes 57

22. Assets and debts classified as for sale 58

23. Issued capital 59

24. Reserves 61

25. Lease 62

26. Transactions with affiliates 63

27. Cash and cash equivalents 66

28. Events subsequent to the reporting date 66

29. Adjustments of accounting errors 69

30. Payment based on shares 69

31. Other information 70

32. Contingents 71

33. Reconciliation with the financial statements in the format published by the Ministry of Finance (MF) 75

1. Accounting policies of Cemacon

Drafting principles The main accounting policies adopted in preparing the financial statements are listed below. These policies

have been constantly applied, for all the reported years, unless otherwise provided.

The financial statements are expressed in the national currency (Lei), which is also the entity’s functional currency.

Amounts are rounded up to the closest Leu, unless otherwise provided.

These financial statements have been drafted in accordance with:

the International Financial Reporting Standards (IFRS) adopted by the European Union;

the Accounting Law 82/1991, as republished (“Law 82”);

Order no. 881/2012 of the Ministry of Finance on the application of the International Financial

Reporting Standards (“IFRS”) by trading companies whose securities are admitted to trading on a regulated market;

Order no. 1286/2012 of the Ministry of Finance approving the Accounting Regulations in

accordance with the International Financial Reporting Standards (IFRS), applicable to trading companies whose securities are admitted to trading on a regulated market, as subsequently

amended.

Drafting the financial statements in accordance with the IFRS requires using certain critical accounting estimates. Drafting the financial statements in accordance with Order 1286/2012 of the Ministry of Finance

requires that the Company’s management makes estimates and hypotheses affecting the reported value of

assets and liabilities, the presentation of contingent assets and liabilities upon drafting the financial statements, and the reported income and expenditure for the period.

Estimates and judgments are continuously assessed and rely on historic experience and other factors,

including the forecasts on future events that are thought to be reasonable under the circumstances.

These financial statements have been drafted according to the principle of business continuity which means that the Company will continue doing its business in the predictable future. To assess the applicability of

this assumption, the management analyses the forecasts on future cash inflows.

Based on these analyses, the management believes that the Company will be able to continue doing its

business in the predictable future and, therefore, the application of the principle of business continuity in drafting the financial statements is well-founded.

Accounting policies (continuation) Measurement basis The financial statements have been drafted based on the historical cost, except for the items mentioned in

the notes.

Change of accounting policies

a) New standards, interpretations and amendments effective as of January 1st, 2014 A set of new standards, interpretations and amendments effective for the first time for periods starting on

(or after) the 1st of January 2014 have been adopted in these financial statements. The nature and effect of each new standard, interpretation and amendment adopted by the entity are detailed below. Note: Not all

the new standards and interpretations in force for the first time for periods starting in (or after) January 2014 are effective in the annual financial statements of the company.

IFRS 12 Disclosure of interests in other entities (applicable as of January 1st, 2014), adopted by the

EU on 11 December 2012, requires the supply of additional information on the significant judgments and

hypotheses made in order to determine the nature of the interest held in an entity or arrangement, subsidiary, joint arrangement and partnerships and non-consolidated structural entities.

b) New standards, interpretations and amendments effective as of January 1st, 2014

The following standards/interpretations have been issued, but are not mandatory for the financial year

ending on December 31st, 2014. These have not been adopted in preparing the financial statements of the year ending on December 31st, 2014 and are expected to affect the entity during the period they are

applied for the first time.

Standards that could have a financial impact.

IAS 19 (amended in November 2013) - Determined benefit plans: contributions from employees.

This amendment comes with specific objectives that:

Offer a practical use to certain contributions from employees or from third parties to a plan of

determined benefits, but only to contributions that are independent from the number of years of

service

Clarifies the treatment of contributions from employees or from third parties to a plan of

determined benefits that are not subject to practical use. These are distributed to accounts the

same way the gross benefit is attributed in accordance with IAS 19.70)

Application period: Annual reporting periods starting from or after the 1st of January 2014

Standards that could have an impact on the presentation

IAS 19 (amended in November 2013) – Depreciation of assets

Accounting policies (continuation)

Requires the presentation of the recoverable value of an asset, only during the periods when the

depreciation was booked or resumed regarding such asset.

Extends and clarifies the presentation requirements when the recovery value of an asset was

determined based on the fair value less the elimination costs

Application period: Annual reporting periods starting from or after the 1st of January 2014

Revenue recognition Revenues include the fair value of the amounts collected or to be collected as a result of selling the

provided goods and services.

Sales revenues from selling goods are recognized the moment the Company has transferred to the

purchaser the main risks and benefits associated to holding the goods.

These criteria are considered to be met when commodities are delivered to the purchaser. If the purchaser has a return right, the entity postpones the revenue recognition until the return right expires.

Sales revenues from the provision of services are recognized if they can be credibly measured and it its

likely that the company receives their money equivalent. Revenues from the provision of services are

recognized the moment such services are being provided.

Rental revenues are recognized based on the principles of commitment accounting in accordance with the economic substance of the relevant contracts.

Interest revenues are recognized on a regular basis, as such revenues are generated, based on the

commitment accounting method.

Commercial discounts granted after issuing the invoice are booked in the profit and loss account as part of

the operating revenues.

In these financial statements, the income and expenditure are presented as gross amounts. In the balance sheet, liabilities and receivables involving the same partners are presented as net amounts if there is a

compensation right.

Conversion of foreign currency transactions

The Company’s transactions in foreign currencies are booked based on the exchange rates announced by

the National Bank of Romania (“NBR”) for the transaction date.

At the end of each month, foreign currency balances are converted into Lei based on the exchange rates announced by the NBR for the last banking day of the month.

Gains and losses deriving from the settlement of foreign currency transactions and from the conversion of

monetary assets and liabilities expressed in foreign currencies are recognized in the profit and loss account, as part of the financial result.

Accounting policies (continuation) Financial assets

The entity classifies the financial assets into one of the categories presented below, depending on the purpose they were purchased for.

Evaluation based on the fair value through the profit and loss account – achieved only for categories of derivatives kept for sale. These are recognized in the balance sheet at their fair value,

whereas changes in value are recognized in the profit and loss account.

Recognition as debt or receivable – this category is for assets having a fixed maturity or that can

be easily determined and are not quoted on an active market. These usually appear from formed provisions relevant to the commodities or services for the customer, but may also incorporate other types of monetary assets relevant to contracts. These are initially recognized at their fair value plus

the transaction costs, directly attributable to the purchase or issue, being later recognized at the amortized value using the market interest rate method less the impairment adjustment.

The impairment adjustment is recognized when there is strong proof that the entity will not be able to

collect all the amounts having reached maturity according to the collection deadlines, the adjustment sum is given by the difference between the net book value and the present value of the future cash flows relevant

to the adjusted receivables. For receivables presented as net value such adjustments are booked on separate adjustment accounts, whereas the loss is recognized as administrative expenditure in the global

result statement. The moment the failure to collect is certain, the gross value of the asset is cancelled by the relevant provision value.

At regular time intervals, the entity will renegotiate the contractual terms regarding the outstanding

receivables for customers who have had a good transaction history. Such renegotiations will determine

changes in the collection time and the expected new cash inflows will be discounted using the initial interest, any difference resulting from the application of the method will be recognized in the profit and loss

account.

The entity’s financial assets consist of trade receivables, other receivables, cash and cash equivalents, included in the statement of financial position.

The cash and cash equivalents include: the petty cash and cash in current bank accounts, term deposits,

other short-term investments with very high liquidity or falling due within 3 months, and for the purpose of

drafting the statement of cash flow – bank overdraft – it is presented under the current liabilities and loans in the statement of financial position.

The accounting of foreign currency monetary operations is kept both in the currency they were conducted

and in the national currency, the conversion into the national currency is made according to the accounting policies regulating the conversion of foreign currency transactions, presented earlier herein.

Accounting policies (continuation) Financial liabilities The entity classifies the financial liabilities into one of the categories presented below, depending on the

purpose they were engaged for.

Evaluation based on the fair value through the profit and loss account – achieved only for

categories of derivatives kept for sale. These are recognized in the balance sheet at their fair value, whereas changes in value are recognized in the profit and loss account.

Other financial liabilities: – this category includes the following:

Bank loans are initially recognized at their fair value less the transaction costs directly attributed to

obtaining the loans.

Liabilities and other short-term monetary liabilities are initially recognized at their fair value, being later presented at their cost value using the market interest rate method.

Commercial liabilities are booked at the value of the amounts to be paid for the received assets or

services.

Equity The financial instruments issued by the Company are classified as equity only to the extent that they cannot

be classified as financial liabilities or financial assets.

The ordinary shares of the Company are classified as equity instruments.

Indebtedness cost

Indebtedness costs are recognized as financial expenses according to the contractual provisions for the

period when the indebtedness costs fall due or are actually engaged.

Indebtedness costs that are directly attributable to the purchase, construction or production of an asset having long production cycle are included in the cost of that asset.

The production cost of assets having a long production cycle includes only indebtedness costs relating to

the production period.

The indebtedness costs that are included in the production cost of assets having a long production cycle are

the following: total interest expense;

financial expense relevant to financial leasing contracts;

exchange rate differentials relevant to foreign currency loans, as far as these are construed as an

adjustment of the interest expense.

Accounting policies (continuation) The cost capitalization starts when:

expenses for such asset are borne;

indebtedness costs are borne, and

the necessary activities for preparing the asset in view of using it as pre-established or selling it are on-going.

The indebtedness cost capitalization is interrupted during extended periods when no work is being conducted to achieve that asset.

The indebtedness cost capitalization is ceased when most of the necessary activities for preparing the asset

that has a long production cycle in view of using it as pre-established or selling it are conducted, even if some of the administrative works may still continue.

The indebtedness costs borne during periods when capitalization is interrupted or after their capitalization ceases, are recognized in the financial expenditure entries.

Pensions and other post-retirement benefits During the normal course of business, the Company makes payments to the public health fund, pensions

fund, and unemployment fund on behalf of its employees, at the statutory rates. All the Company’s employees are members of the pension scheme of the Romanian state. These costs are recognized in the

profit and loss account at the same time wages are recognized.

Other long-term benefits Other employee benefits expected to be settled entirely within 12 months after the end of the reporting

period are presented as short-term liabilities.

Other employee benefits that are not extinguished within 12 months as of the end of the reporting period are presented as long-term liabilities and are calculated using discount rates. This is the case of employee

benefits upon retirement. For more details, please refer to Note 18 – Employee Benefits.

Leasing contracts The leasing contracts for tangible fixed assets whereby the Company undertakes all the risks and benefits

relevant to the property are classified as financial leasing contracts. Financial leasing costs are capitalized at the estimated discounted value of payments. Each payment is divided between the principal component and

the interest component in order to obtain a constant interest rate during the reimbursement period. The payable amounts are included in the short-term or long-term liabilities. The interest component is included

in the profit and loss account during the contract period. Assets held based on financial leasing contracts

are capitalized and amortized during their useful life.

Accounting policies (continuation) The leasing contracts where a significant part of the risks and benefits associated to the property is

withheld by the lessor are classified as operational leasing contracts. The payments made based on such a contract (net of any facilities granted by the lessor) are recognized in the profit and loss account on a linear

basis during the contract period.

Purchased fixed assets

a) Intangible assets Intangible assets include computer software created by entities or purchased from third parties for internal

needs, such as recipes, formulas, patterns, projects and prototypes.

Other intangible assets can be subject to straight-line amortization for a period of 3 years.

Expenses allowing intangible fixed assets to generate future economic benefits beyond the originally foreseen performance are added up to their original cost. These expenses are capitalized as intangible fixed

assets, unless they are integral part of tangible fixed assets.

Development is the application of research discoveries or other knowledge in a plan or project having to do

with the production of materials, devices, products, processes, systems or services, new or substantially improved, before starting their commercial production or use.

A fixed asset generated by development is recognized only is all the following elements can be

demonstrated:

technical feasibility for accomplishing the intangible fixed asset, so that it is available for use or

sale;

the company’s intent of accomplishing the intangible fixed asset and of using or selling it; the capacity of using or selling the intangible fixed asset;

the way the intangible fixed asset generates probable future economic benefits, the existence of a

market for the production generated by the intangible fixed asset or for the intangible fixed asset

as such; the availability of technical, financial or other resources suitable for complementing the

development and for using or selling the intangible fixed asset;

the capacity to credibly assess the expenses attributable to the intangible fixed asset during its

development period.

The development expenses are recognized at their production cost.

Accounting policies (continuation) b) Tangible assets

The purchased fixed assets are initially recognized at their acquisition cost. Later, they are recognized,

depending on the type of asset, at the following values:

Lands are evaluated at their reevaluated value

Buildings are evaluated at their reevaluated value

Equipment is evaluated at its historical cost.

On December 1st, 2014, the Company conducted a reevaluation of the land, buildings, and equipment, less

for the production equipment located at Recea, for which impairment adjustments were booked.

Following the reevaluation, the assets classified as sold were booked at the lowest of the book value and

the reevaluated value.

For constructions and equipment classified for sale, the decrease of the book value was booked as expense, whereas the decrease of the book value of the land was booked as impairment adjustment.

For the Company’s assets currently in operation, the increase of the book value resulting from the

reevaluation of lands and buildings is booked as reserves, as part of the equity. The decrease compensating the previous increase booked with regard to the same asset is booked as reserves, included directly in the

equity; all the other decreases are recorded in the profit and loss account.

If a completely amortized tangible asset can still be used, upon doing its reevaluation a new value and a

new economic useful life are established, relevant to the period during which it is estimated to continue being used.

The cost of a tangible asset also includes the originally estimated costs of dismantling and moving it for

decommissioning, as well as the costs of restoring the site where the fixed asset is located, when such amounts can be credibly estimated and the Company does not have an obligation regarding the

dismantling, the moving of the tangible fixed asset, and the site restoration.

The maintenance and repairs of tangible assets are booked as expenses as soon as conducted, whereas

significant improvements caused to tangible assets that increase their value or useful life or significantly increase their capacity to generate economic benefits, are capitalized.

The amortization is calculated based on the entry value, using the straight-line method along the estimated

useful life of assets, as follows:

Asset Years

Constructions 5 – 45

Technical plants and machinery 3 – 20 Other plants, equipment and furniture 3 – 30

Accounting policies (continuation) The amortization is calculated starting with the month following their start-up, until the full recovery of their

entry value.

Lands are not amortized because they are considered to have an indefinite useful life.

Regarding the equipment within the production factory at Recea, the Company’s management has decided that its amortization be calculated per product unit.

The amortization method calculated per product unit is applied because the nature of the tangible fixed asset justifies the application of such an amortization method, the useful life of fixed assets is expressed

using the number of units produced expected to be obtained by the enterprise by using that asset, in the Company’s case 8,470,000 sqm.

According to this method, the amortization rate is determined by dividing the monthly/annual production to

the total number of products.

Since this type of amortization is difference from the fiscal depreciation, the company calculates and books

a deferred tax relevant to the difference between the fiscal depreciation and the amortization per product unit.

Amortization is ceased for assets classified for sale.

Tangible fixed assets that are quashed or sold are eliminated from the balance sheet together with the

relevant cumulated amortization. Any profit or loss resulting as a difference between the revenues generated by the quashing and its unamortized value, including the expenses caused by such an operation,

is included in the profit and loss account under “Other operating revenues” or “Other operating expenses”,

as the case may be.

When the Company recognizes the cost of a partial replacement (replacement of a part) in the book value of a tangible fixed asset, the book value of the replaced part, with its relevant amortization, is quashed.

When selling or quashing reevaluated assets, the amounts included in the reevaluation reserves are

transferred to reevaluation surplus.

Internally generated fixed assets (development costs)

The tangible and intangible fixed assets production activity requires a separation of the process into a research stage and a development stage.

When a distinction between the research stage and the development stage of an internal project for

creating an intangible fixed asset cannot be made, the expenses relevant to that project are considered as having to do with the research stage, and are recognized in the profit and loss account.

No fixed asset deriving from research or from the research stage of an internal project is recognized. Research expenses are recognized as expenditure in the profit and loss account as soon as they are

generated.

Accounting policies (continuation)

Research is the original and planned investigation conducted in view gaining new knowledge or scientific or

technical meanings.

The production cost of the fixed assets originating from the development stage includes:

direct expenses relevant to production, such as direct materials, power consumed for technological

purposes, costs representing employee wages, legal contributions, testing costs regarding the correct operation of the asset, professional fees and charges paid in connection with the asset, the

cost for obtaining the necessary authorizations;

Development expenses that are recognized as intangible fixed assets are amortized for the period during which the Company expects to obtain benefits following the developed products.

Stripping costs, during the production stage of a surface mine.

The company Cemacon SA conducts Clay exploitation activities by performing mining works in the open in the exploitation perimeter Recea Cemacon, Varsolt commune, Salaj county. The clay deposit has the shape

of a gentle hill, covered by a layer of vegetal soil having an average thickness of 0.3 m. In some areas of

the deposit, under the vegetal soil layer, there is sandy clay that is not subject to exploitation. The thickness of the sandy clay layers varies between 1m and 5m. For the exploitation activity to be conducted

under optimal conditions, the exploitation perimeter must be prepared by removing the covering consisting of vegetal soil and sandy clay, which cover the deposit.

The clay exploitation in the quarry is conducted in exploitation steps. Following the activity conducted in the quarry, the following types of materials may result:

Rubbish: vegetal soil and sandy clay – as a result of the stripping activity, unused in the production activity or capitalized in any other way.

Useful substance: yellow clay and blue clay – as a result of the exploitation activity, used in the production

activity Rubbish (stripping) – as a result of the stripping activity, unused in the production activity, will be registered

according to the International Financial Reporting Standards IFRIC 20. The fixed asset will be called “Stripping activity asset” This asset must be recognized only if the following conditions are met:

1. It is likely that the future economic benefit relevant to the stripping activity

devolves on the entity; 2. The entity can identify the component of the lode to which the access has been

improved;

3. The costs relevant to the stripping activity regarding that component can be reliably evaluated;

The asset relevant to the stripping activity will be booked as an additional item or as an improvement of an

existing asset.

The initial evaluation of the asset is made at the cost value, which is a cumulation of the costs directly borne for conducting the stripping activity through which the access to the identified ore component is

improved, plus an allocation of the directly attributable management expenses.

The asset relevant to the stripping activity must be systematically depreciated or amortized, in accordance

with the accounting policies regarding the amortization.

Accounting policies (continuation) Depreciation of fixed assets Tangible and intangible fixed assets are tested for depreciation when facts and circumstances indicate that

the book value may not be recoverable.

An impairment loss is recognized as the sum by which the book value of the asset exceeds the recoverable sum. The recoverable sum is the largest of the fair value of the asset less the sale costs and the utility

value.

To evaluate the depreciation, assets are grouped down to the lowest level where separately identifiable

cash flows exist.

Dividends

Dividends are recognized when they can be duly paid:

In the case of interim dividends, payable to the existing shareholders, the recognition is effective

when they are declared by the Directors.

In the case of final dividends, their recognition is effective when they are approved at a General Meeting of Shareholders.

Deferred tax

The assets and liabilities regarding the deferred tax are recognized if the book value of an asset or liability in the statement of financial position differs from its taxation base, except for differences appearing on:

the initial recognition of the goodwill

the initial recognition of an asset or liability in a transaction that is not a combination of enterprises

and at the transaction time does not affect the bookkeeping or the taxable profit, and

investments in subsidiaries and jointly-controlled entities, if the group is capable of controlling the

time of taking charge of the difference, and if it is likely that the difference does not reverse in the near future.

The recognition of receivables regarding the deferred tax is limited to cases where it is likely that the

taxable profit is available as compared to the difference that can be used.

As regards the assets having to do with the deferred tax deriving from real estate investments evaluated at

their fair value, it will be presumed that the recovery is achieved rather by sale than by utilization.

The value of the asset or of the liability is determined using the taxation rates already adopted or largely adopted until the reporting date and are expected to apply is the deferred tax liabilities / (assets) are

discounted / (recovered).

Assets and liabilities regarding the deferred tax are compensated when the company has the legal right to

compensate the current fiscal assets and liabilities and the deferred tax assets and liabilities when they refer to the taxes collected by the same fiscal authority from the same company.

Accounting policies (continuation) Inventories

Inventories are originally recognized based on their cost value and later based on the lowest of the cost

value and the net realizable value. The cost is composed of all the purchase costs, the conversion cost and other costs borne in order to bring the inventories to the current location, in their current condition.

In the case of end products, the production cost includes the acquisition cost of raw materials and

consumables and the production expenses directly attributable to the asset.

The cost is determined based on the “First-in, First-out” (FIFO) method. The indebtedness costs are not included.

Where necessary, adjustments are made for stocks, physically and morally outdated. The net realizable

value is estimated based on the sale price netted against the sale expenses.

When there is a change in the use of a tangible fixed asset, meaning that it is going to be improved in view of its sale, the Company books the transfer of the asset from the tangible fixed assets category into the

fixed assets held for sale category.

As of the balance sheet date, the inventories are evaluated at the lowest of the cost value and the net

realizable value.

If the book value of inventories is larger than the book value (net realizable value), the value of the inventories is reduced down to the net realizable value by making an impairment adjustment.

Assets in the form of inventories are evaluated based on the book value, less the acknowledged impairment

adjustments.

Due to the nature and specificity of the activity, for certain categories of inventories such as raw materials,

spare parts, auxiliary materials, and end products, the inventories are analysed on the balance sheet date and an adjustment is made for products that are deteriorated or morally outdated.

Fixed assets held for sale Fixed assets are classified as held for sale the moment they:

are available for immediate sale

the company’s management has committed a sale plan there are only slight chances that the sale plan suffer major changes or be withdrawn

an active program for finding purchasers is started

the asset group is traded at a reasonable price in comparison to the fair value

the sale is expected to be concluded within 12 months as of classifying the assets as held for sale.

Assets held for sale are evaluated at the lowest of: the book value before the assets are classified as held for sale, according to the company’s

accounting policies

Assets held for sale are not amortized

Accounting policies (continuation) Subsidies

Subsidies received in view of purchasing assets such as tangible fixed assets are booked as investment

subsidies and are recognized in the balance sheet as deferred income. The deferred income is recognized in the profit and loss account as the amortization expenses are booked or upon quashing or assigning the

assets purchased using such subsidy.

Provisions The entity will record a provision in its accounting books only when:

(a) it has a current liability (legal or implied) generated by a previous event;

(b) it is likely (there are more chances for it to happen than not to happen) that a resource outflow affecting the economic benefits be required in order to extinguish the liability; and

(c) a relevant estimate of the liability value can be made.

The sum booked as a provision is the best estimate of the payments required for extinguishing the current

liability on the balance sheet date; in other words, the amount the entity would normally pay on the balance sheet date in order to extinguish the liability or transfer it to a third party, at that particular time.

In the provision evaluation process, the entity will take into account the following: a) risks and uncertainties are taken into account. However, uncertainties do not justify the

creation of excessive provisions or the deliberate overvaluation of liabilities. b) discount the provisions if the effect of the time-value of money is significant, using a discount

rate(s), before taxation, reflecting the current evaluations on the market of the time-value of money, and the liability-specific risks that have not been reflected in the best estimate of

expenses. If a discount is used, the provision increase due to the passage of time is booked as

an interest expense; c) future events are taken into account, such as legislation amendments or technological

changes, if there is sufficient proof that they would occur; and d) not take into account gains from the forecasted assignment of assets, even if such prospective

assignments are tightly related to the forecast generating event.

Provisions will be reanalysed on each balance sheet date and will be adjusted so as to reflect the best current estimate. If it is no longer likely that resource outflows – affecting the economic benefits – are

required to extinguish the liability, the provision will be cancelled.

The provisions will only be used for the purposes they were originally formed.

The entity will not recognize provisions for future losses from the exploitation activity.

The value recognized as provision will be the best estimate of the necessary costs for extinguishing the

current liability on the balance sheet date.

The best estimate of the necessary costs for extinguishing the current liability is the sum the entity will

reasonably pay in view of extinguishing the liability on the balance sheet date or to transfer it to a third party at that particular time. Often, it can be impossible or highly expensive to extinguish or transfer a

liability on the balance sheet date. However, the estimate of the amount the entity will reasonably pay in view of extinguishing or transferring a liability is the expression of the best estimate of the necessary costs

for extinguishing the current liability on the balance sheet date.

Accounting policies (continuation) The estimates of the financial results and effects are determined by the analysis methods of the enterprise’s

management, considering the experience gained in similar transactions and, in some cases, the reports drafted by independent experts. The elements taken into account include any proof provided by events

occurring after the balance sheet date. However, the estimate of the sum that the enterprise will reasonably pay to extinguish or transfer a liability is the expression of the best estimate of the necessary costs for

extinguishing the current liability on the balance sheet date.

The estimates of the financial results and effects are determined by the analysis methods of the enterprise’s

management, considering the experience gained in similar transactions and, in some cases, the reports drafted by independent experts. The elements taken into account include any proof provided by events

occurring after the balance sheet date.

Doubtful elements regarding the sum to be recognized as a provision are treated in different ways, depending on the circumstances. If the provision to be evaluated involves a wide range of elements, the

liability is estimated by weighing all the possible results with the probabilities to achieve each of them. This statistical method of evaluation is called “forecasted value”. Therefore, the provision will differ depending on

the probability (e.g. 60% or 90%) for a certain loss to be suffered. If there is a continuous range of

possible results and if the probability for each of them to occur is equal, the middle point of the range will be used.

If a single liability is evaluated, the most probable individual result may form the best estimate of the debt.

However, even in such situation, the entity will also take into account other possible results. Where other possible results are either higher or lower than the most probable result, the best estimate would be a

larger or smaller amount. For example, if the entity must remedy an error in the construction of a factory built for a customer, the most probable result would be that the repair is successfully conducted since the

first attempt at a cost of 1,000, but a provision is formed for a larger amount if it is more likely that several

attempts could be necessary.

The provision is evaluated before tax since the effects of taxation on the provision and changes of the latter are contemplated by IAS 12 “Profit Tax”.

If a part of or all the expenses necessary to extinguish a provision are expected to be reimbursed by a third

party, the reimbursement must be recognized only when it is certain that it will be received if the company extinguishes its liability. The reimbursement must be considered as a separate asset. The sum recognized

for reimbursement must not exceed the amount of the provision.

In the profit and loss account, costs related to a provision will be presented at its value reduced by the

amount recognized for reimbursement.

Provisions will be revised with each balance sheet and adjusted so as to reflect the best current estimate if a resource outflow incorporating the economic benefits is no longer probable; to extinguish a liability, the

provision must be cancelled.

If a discount is used, the book value of a provision increases during each period in order to reflect the

passage of time. This increase is recognized as indebtedness cost.

Accounting policies (continuation) Affiliated parties

An affiliated party is an individual or a company associated to the entity preparing and presenting the

financial statements.

Affiliated persons:

A company is an affiliated party if one of the following conditions is applicable:

the entity and the reporting company belong to the same group (which means that each parent

company, subsidiary and other subsidiary companies reporting to the same parent company are

affiliated parties to one another). the entity is a shareholder or a partnership of the entity

both companies are affiliated or associated in partnership with the same third party

the entity is a partnership of a third party and the other entity is a shareholder of the same third

party

the entity is controlled or controlled in a partnership by an affiliated person, as defined under

affiliated persons. the affiliated party having control or associative control of the reporting entity has significant

influence on the entity (which is considered to be an affiliated party) or is a member of the key

management of the entity.

Transactions with the affiliated parties are defined as a transfer of resources, services or liabilities between the reporting entity and the affiliated party, regardless of whether a price is paid.

All the transactions with the affiliated parties are made based on the transfer pricing principles.

Risk management

Market risk and foreign exchange risk

Most of the transactions made by the company are expressed in Lei, which does not expose the company to the foreign exchange risk, as seen from this perspective.

However, the foreign exchange risk is a strong factor influencing the balance sheet and the financial

performance considering the contracts signed by the company, which are currently expressed in Euros. In 2014, when the exchange rate witnessed strong variations because of the political crisis in our country and

because of the economic crisis at European Union level, the losses due to exchange rate variations were

large and influenced the final net result.

Accounting policies (continuation) Credit risk In 2014, the commercial policy of Cemacon witnessed a major change in terms of payment conditions

granted to customers, so that last year the weight of prepaid sales decreased as compared to the previous year.

Nevertheless, despite the strong pressure coming from the competition and the distributors, the company adopted a policy of making transactions solely with trusted parties and of getting sufficient guarantees,

when needed, as a means of reducing the risk of financial loss as a result of breach of contract.

The exposure of the company and the credit rating of the contracting third parties are monitored by the management.

The trade receivables of the company consist of a large number of customers. The permanent evaluation of customer credit is made on the financial standing of customers.

To reduce the credit risk, the company has taken out a commercial credit insurance with Coface company.

Liquidity risk

The management of the liquidity risk devolves on the company’s management, who formed a suitable

framework for managing the risk regarding the short-term and medium-term provision of funds. The company manages the liquidity risk by continuously monitoring the real cash flow and by placing in

correspondence the maturity profiles of financial assets and liabilities.

Interest rate risk

The company benefits from long-term loans and short-term loans with a variable interest rate.

Currently, Cemacon has signed the agreement letter for restructuring bank loans in view of bringing balance

in the balance sheet and a reduction of the incidence of interest costs on the annual performance.

Events after the reporting date

The events after the balance sheet date are those events, both favourable and unfavourable, occurring between the balance sheet date and the date until the financial statements are authorized for lodging. Two

types of events can be identified: a) Those proving the conditions existing on the balance sheet date (events determining an

adjustment of the financial statements), and

b) Those providing indications about conditions having occurred after the balance sheet date

(events that do not determine an adjustment of the financial statements).

The financial statements of the company Cemacon SA are subject to approval by its shareholders after being issued, the approval date of the financial statements issue is the financial statements issue date, not

the date when these were approved by the shareholders.

The events after the balance sheet date include all the events occurring until the date until the financial

statements are authorized for lodging, even if such events occur after publishing an announcement on the profit or other financial information selected.

Accounting policies (continuation) The entity will adjust the recognized values in its financial statements in order to reflect the events

determining an adjustment of the financial statements. The entity will not adjust the recognized values in its financial statements in order to reflect the events not

determining an adjustment of the financial statements. If the dividends of the holders of equity instruments (as defined in IAS 32, Financial instruments:

presentation and description) are proposed or declared after the balance sheet date, the entity does not have to recognize such dividends as debt on the balance sheet date.

According to IAS 1 “Presentation of financial statements”, the entity must present the value of dividends proposed or declared after the balance sheet date, but before authorizing the financial statement for

lodging. The entity may make these presentations of information either:

(a) in the balance sheet, as a separate component of the equity, or (b) in the notes to the financial statements.

The entity will not draft the financial statements based on the business continuity principle if the

management bodies determine after the balance sheet date either that they intend to wind-up the

enterprise or cease its trading activity, or that they have no other realistic variant besides these. A deterioration of the operating results and of the financial position following the balance sheet date

indicates the need to consider whether the business continuity principle is still suitable. If the business continuity principle is no longer suitable, the effect is so persistent that this IAS 10 Standard “Events after

the reporting period” requires a fundamental change of the accounting basis rather than an adjustment of the values recognized on the initial accounting basis.

The entity must present the date when the financial statements were authorized for lodging, as well as who gave such authorization. If the entity’s owners or others have the power to amend the financial statements

after their issue, the entity will state this fact.

The entity will publish the moment the financial statements were authorized for lodging because users must know that financial statements do not reflect events subsequent to that date.

If the entity receives, after the balance sheet date, information on the conditions having existed on the balance sheet date, the entity must update the information presented with regard to such conditions, in the

light of the new information. In some cases, the entity needs to update the information presented in its financial statements in order to

reflect the information received after the balance sheet date, even if such information does not affect the values the enterprise recognizes in its financial statements.

Share-based payment.

The company will apply the provisions of IFRS 2 “Share-based payment” to distribute to accounts the following share-based payment transactions, including:

1. Equity-settled share-based payment transactions, where the entity receives goods or services as

consideration for the capital instruments of the entity (stock or stock options), 2. Cash-settled share-based payment transactions, where the entity purchases goods or services by

engaging debts towards the supplier or provider of the same for the amounts consisting of the

price (or value) of the entity’s shares or other capital instruments of the entity, and 3. Transactions where the entity receives or purchases goods or services and the contractual terms

confer the entity or the provider of goods/supplier of services the possibility to settle the transaction in cash (or other assets) or by issuing capital instruments,

Accounting policies (continuation)

The shareholders’ transfer of the entity’s equity instruments to third parties having provided goods or services to the entity (including the employees) are share-based payment transactions only if the transfer is

made for a purpose different than the payment for the goods or services provided to the entity. This is also applicable to transfers of equity instruments of the holding or of equity instruments of another entity of the

group to the parties having provided goods or services to the entity.

A transaction with an employee (or some other third party) acting as holder of the equity instruments of the entity is not a share-based payment transaction. For example, if the entity grants to all holders of a certain

class of equity instruments the right of additionally purchasing equity instruments of that entity at a price

that is lower than the fair value of the instruments, and an employee receives such a right because he/she is the holder of equity instruments of that class, the granting or exercising of that right is not the object of a

transaction classified as a share-based payment transaction.

Share-based payment transactions are those share-based payment transactions where the entity purchases or receives goods or services. Goods include: inventories, consumables, machinery, equipment, plants,

intangible assets and other non-financial assets. However, the entity must not apply this IFRS to

transactions where the entity purchases goods as part of the net assets purchased in a combination of

enterprises to which IAS 22 is applicable. Therefore, the equity instruments issued in a combination of enterprises in exchange to obtaining control over the purchased company does not fall within its scope.

The entity will recognize the goods or services received or purchased in a share-based payment transaction

when it obtains the goods or when the services are provided. The entity must recognize a suitable increase in its equity if the goods or services have been received in the share-based payment transaction, or a debt

if the goods or services have been purchased in a cash-settled share-based payment transaction. If the goods or services purchased or received in a share-based payment transaction do not qualify to be

recognized as assets, they will be recognized as expenditure.

For equity-settled share-based payment transactions, the entity must assess the goods or services received

and, accordingly, increase its equity to the fair value of the received goods or services, only if the fair value cannot be credibly determined. If the entity cannot credibly estimate the fair value of the goods or services

received, the entity must determine their value and their relevant increase in equity, indirectly, by referring to the fair value of the granted equity instruments.

For transactions with employees and third parties providing similar services*, the entity must evaluate the

fair value of the services received by referring to the fair value of the granted equity instruments since the

fair value of the received services cannot be credibly estimated. The fair value of these equity instruments must be assessed on the assignment date.

Stocks, stock options or other equity instruments are granted to employees as remuneration, in excess of

the wage and other employee benefits. Usually, the direct evaluation of the services received is not possible for certain components of the employee remuneration. Also, the remuneration cannot be evaluated

independently from the fair value, without directly evaluating the fair value of the granted equity instruments. Moreover, stocks or stock options are granted rather as part of a bonus contract than as part

of a basic remuneration, for example as an incentive for the employees to remain with the company or to

recompense them for their efforts

Accounting policies (continuation) to improve the entity’s performance. By granting options or stock options in excess of other remunerations,

the entity pays additional remunerations in order to get additional benefits. The estimation of the fair value of such additional benefits is very difficult to make. Because of the difficulty to evaluate the fair value of the

services received, the entity must evaluate the fair value of the employee services received by referring to the fair value of the granted equity instruments.

There must be a presumption that the fair value of the goods and services received can be credibly

estimate. The fair value must be determined on the date the entity gets the goods or the other party

provides the services. In few cases, if the entity rejects the presumption because it cannot credibly estimate the fair value of the goods and services received, the entity must evaluate the goods and services received

and accordingly increase its equity by referring to the fair value of the granted equity instruments, evaluated at the date the entity obtains the goods or the other party provides the services.

The entity will distribute those services to accounts the moment they are provided by the third party during

the benefit entitlement period, while increasing its equity accordingly. For example:

a) if stock options are granted to an employee only if he/she has three years of service, then the

entity assumes the services provided by the employee as consideration for the stock options to be received during the three years, during the benefit entitlement period.

b) if an employee receives stock options conditional on performance and remains an employee until the achievement of that performance, and the benefit obtaining period depends on meeting such

condition, the entity will assume the services to be provided by the employee as consideration for the stock options to be received during the benefit entitlement period. The entity estimates the

benefit granting period upon granting them, based on the probability of meeting the performance condition. If the performance condition is a market-determined condition, the estimation of the

length of the benefit entitlement period is consequent on the assumptions used in estimating the

fair value of the granted options and will not be subsequently revised. If the performance condition is not a market-determined condition, the entity must revise the estimation made with regard to

the length of the benefit granting period if subsequent information indicates that the length differs from the previously estimated one.

For transactions made by referring to the fair value of the granted equity instruments, the entity must

evaluate the fair value of the granted equity instruments on the evaluation date, based on the market prices, if available, considering the terms and conditions until such equity instruments were granted.

If the market prices are not available, the entity must estimate the fair value of the granted equity

instruments using an evaluation technique to evaluate what the price of the equity instruments may have been on the evaluation date in a transaction where the price is objectively determined. The evaluation

technique must be consequent on the generally accepted evaluation methodology for the evaluation of financial instruments and must incorporate all the factors and all the presumptions contemplated by the

market players in establishing the price. For cash-settled share-based payment transactions, the entity must evaluate the goods or services

purchased and the engaged debt at its fair value. Until the debt is settled, the entity must reevaluate the faire value of the debt on each reporting date and on the settlement date, with any amendments in the fair

value recognized in the profit and loss account of the period.

2. Accounting estimates

The company makes certain estimates and assumptions concerning the future. Estimates and judgments

are continually evaluated based on historical experience and other factors, including expectations o f

future events that are believed to be reasonable under the given circumstances. In the future, actual

experience may differ from these estimates and assumptions. Estimates and assumptions that have a

significant risk of causing a material adjustment to the carrying amounts of assets and liabilities within

the next financial year are discussed below.

Estimates and Assumptions

IFRS 13 Fair Value Measurement

A number of assets and liabilities in the financial statements of the Company require a fair value

measurement and / or presentation.

IFRS 13 defines fair value as the price that would be charged by selling an asset or paid by

transferring a liability in a transaction regulated between market participants at the assessment date

(i.e. an exit price). The definition of fair value emphasizes that fair value is a market-based

assessment, not an entity-specific value.

IFRS 13 applies when another IFRS requires or permits fair value measurements or disclosures about fair

value measurements except for the following cases:

a) Share-based payment transactions covered by IFRS 2

b) Lease transactions that fall under IAS 17

c) Assessments which are similar to fair value, without being fair value, such as net realizable value

which falls under IAS 2.

d) Assets in the charts of accounts measured at fair value in accordance with IAS 19.

e) Investment in pension schemes assessed at fair value in accordance with IAS 26.

f) Assets the recoverable amount of which is fair value less costs related to transfer in accordance

with IAS 36.

The Fair Value Hierarchy – in order to improve the consistency and comparability of fair value

measurements and related disclosures, this hierarchy is classified in 3 levels:

1. Level 1 Input Data - quoted prices unadjusted in active markets for identical assets and liabilities, to

which the company has access to the assessment data.

2. Level 2 Input Data – input data different from quotation prices included in Level 1 that are

observable directly or indirectly for the asset or liability.

3. Level 3 Input Data – unobservable input data for the asset or liability.

Litigation

The company analyses existing disputes subsequent events existing at the reporting date to assess the

need for provisions or disclosures in the financial statements.

Among the factors considered in making decisions on provisions are: the nature of the dispute, claim or

assessment, the proceedings and potential level of damages in the jurisdiction in which

Accounting estimates (continued)

the dispute was brought, the progress of the case (including the progress as of the date of the financial

statements, and before those statements are issued), the views and opinions of legal advisors, experience

in similar cases and any decision of the company management on how to respond to the litigation.

Corporate tax

During its normal activity, transactions and calculations are made for which the final tax determination is

uncertain. As a result, the company recognizes tax liabilities based on estimates regarding which is clear

that additional taxes and interest will be due. These debts or liabilities are recognized, despite the fact that

the company believes that tax return is probable, the company believes that certain positions are likely to

be challenged and not be fully supported by a possible revision of tax authorities.

The company believes that its commitments to tax liabilities are adequate for all years open to review,

based on the evaluation of many factors including past experience and interpretations of tax laws.

This assessment is based on estimates and assumptions and may involve a number of complex judgments

about future events. To the extent that the final tax outcome of these transactions is different than the

amounts recorded, such differences will impact the corporate tax expense in the period in which such

determination is made.

Provision for pensions

Provisions for pensions: according to the collective labour agreement valid in 2013, the company's

employees will receive on retirement, according to the seniority in the company the following

compensation only once:

< 5 years 0

5 – 20 years 1 individual salary on retirement date

> 20 years 2 individual salaries on retirement date

The estimated values were calculated based on the number of employees who will retire and the average

value of the allowance paid to an employee. In order to capture the time value of money a discount rate of

10.45% was used - representing the weighted average rate of return of the private pension funds for the

last 24 months. The company estimates that these amounts will be realized in the long term for a period of

34 years.

Depreciation at product level

For the equipment in Recea production plant, the company's management decided that depreciation should

be calculated per unit of product.

Stock adjustments

Where necessary, adjustments are made for worn or obsolete stocks. The net realizable value is estimated

based on the selling price less selling expenses.

32

CEMACON SA

Notes on the Financial Statements

for the period ending December 31st, 2014

3. Revenues

Sales revenues 31.Dec.14 31.Dec.13

Sales of finished products 50,239,737 39,287,791

Sales of goods 7,052,559 682,322

Sales of services 1,012,733 4,871,626

Services pending - -

Rental revenues - 35,139

Trade discounts - -

Total 58,305,029 44,876,878 All amounts in Lei, if not otherwise stated

The main revenue earned by the company in 2014 is considered by exercising the main object of activity,

sales of finished products amounting to RON 50,239,737. Revenue from sales of services consists of

transport services invoiced to third parties.

4. Other operating revenues

Other operating revenues are generated by activities that are not part of the overall scope of activity of the

company and are therefore presented separated from sales revenue.

Other operating income 31.Dec.14 31.Dec.13

Revenues from various services (3,306,001) 3,162,711

Revenues from the sale of assets 668,971 1,815

Revenues from real estate investments - -

Cancellation of impairment of uncertain receivables - 1,826,318

Cancellation of impairment of inventories 32,544 -

Cancellations of other provisions - -

Miscellaneous 3,575,609 1,650,629

971,123 6,641,473 All amounts in Lei, if not otherwise stated

In 2010 the company received a grant for investments in the amount of RON 1,612,687; in 2014 the

company recognized as revenue related to these grants the amount of RON 75.642.

Revenues from the grant are recognized during the depreciation of fixed assets to which they refer. The grant

recognized refers to the 15% grant of the loan received by the company from EBRD sources for the energy efficiency

project started in 2009 with the building of the new brick factory in Recea.

Turnover of account 708 is affected primarily by packaging returns during the relevant period.

33

CEMACON SA

Notes on the Financial Statements

for the period ending December 31st, 2014

5. Operating expenses

Other operating expenses 31-Dec-14 31-Dec-13

Utilities 6,469,959 6,390,652

Repairs 730,247 616,808

Rent 295,306 822,655

Insurances 356,499 248,296

Fees 171,562 330,429

Publicity 2,300,800 2,228,338

Travel and transport 9,276,617 7,842,083

Post and telecommunications 161,686 143,257

Other services provided by third parties 2,853,904 3,408,309

Taxes to the state budget 2,429,547 1,053,808

Environmental protection - -

Loss on disposal of assets 144,278 -

Losses and adjustments for uncertain debts 40,067 487,000

Adjustment of stocks - 285,362

Other provisions 1,451,451 1,144,246

Miscellaneous 1,074,510 1,205,450

27,756,433 26,206,693 All amounts in Lei, if not otherwise stated

34

CEMACON SA

Notes on the Financial Statements

for the period ending December 31st, 2014

6. Personnel expenses

Personnel expenses 31.dec.14 31.dec.13

Salaries 4,691,988 5,072,699

Bonuses 1,152,230 405,398

Temporary work contracts 35,800 72,255

Taxes and social contributions 1,553,748 2,190,643

Other benefits 280,803 272,715

7,714,569 8,013,710

Salaries paid at the end of the period 252,396 322,431

Key Management

Key Management consists of those persons having authority and responsibility to plan, direct and control

the activities of the company.

a) Allowances granted to members of administration, management and supervision boards.

Indemnification expenses 2014 2013

Directors 222,780 477,359

Bonuses 71,259 669,712

Managers 1,033,850 640,659

Taxes and contributions 183,397 -

1,511,286 1,787,730

Salaries payable at the end of the period: 2014 2013

Directors 13,224 13,110

Managers 719,035 8,460

732,259 21,570

b) Advances and loans to members of the administrative, management and supervisory boards:

In 2014 were not granted any advances or loans to the members of the administrative, management and

supervisory boards

Employees

The structure and average number of employees is: 137

Average number of employees 31-Dec-14 31-Dec-13

Management staff 49 45

Production staff 88 78

137 123

35

CEMACON SA

Notes on the Financial Statements

for the period ending December 31st, 2014

7. Financial income and expenses

Finance cost 31-Dec-14 31-Dec-13

Income from investment securities transferred 64,123 -

Adjustment of investments - -

Interest income 51,694 45,754

Interest costs (8,401,014) (8,092,121)

Other financial income 5,232 (1,297)

Other financial expenses (657,158) (166,204)

Exchange difference (15,272) (1,815,076)

Finance cost (8,952,395) (10,028,944)

Interest income is related to short-term deposits concluded by the company in 2014 and 2013.

Interest costs relate to bank loans contracted by the company. For more details, see note 17.

Financial income and expenses recorded are generated mostly by the monthly revaluation of foreign

currency balances regarding bank loans, debts to leasing companies and suppliers.

The structure of financial income and expenses from exchange rate differences for 2014:

Revaluation of

Suppliers

Revaluation Revaluation

of leases of loans

Revaluation

of cash

Expenditure on foreign exchange differences 25,930

Revenues regarding exchange currency differences 46,226

34,323 3,502,003

26,305 3,530,294

357,928

302,087

8. Taxes

Current taxes 2014 2013

Corporate tax expense for the year profit Adjustments for

previous years profit

Total current tax

Deferred corporate tax 2014 2013

Total deferred tax at the beginning of period Temporary differences

reversed

Recognition of deferred tax that was not previously recognized

246,177

2,388,340

(439,097)

685,274

Total deferred corporate tax 2,634,517 246,177

Total Tax 2,634,517 246,177

36

CEMACON SA

Notes on the Financial Statements

for the period ending December 31st, 2014

During the ordinary course of business, transactions and calculations are made for which the determination of final is

uncertain. As a result, the company recognizes tax liabilities based on estimates regarding the certainty that additional

taxes and interest will be due. These debts or liabilities are recognized, and despite the fact that the company believes

that tax return is probable, the company believes that certain positions are likely to be challenged and not be fully

supported by a possible revision of tax authorities.

The company believes that its commitments to tax liabilities are adequate for all years open to review, based on

the evaluation of many factors including past experience and interpretations of tax laws.

This assessment is based on estimates and assumptions and may involve a number of complex judgments about

future events. To the extent that the final tax outcome of these transactions is different than the amounts

recorded, such differences will impact the corporate tax expense in the period in which such determination is

made.

9. Earnings per share

Earnings per share 31-Dec-14 31-Dec-13

Number of shares issued 82,191,053 262,872,486

Operational profit / (loss) (EBITDA) 13,019,165 7,970,957

Operational profit / (loss) (EBITDA) per share 0.1584 0.0303

Profit / (loss) from operations (EBIT) 7,379,906 2,808,532

Profit / (loss) from operations per share 0.0898 0.0107

Total profit / (loss) -1,572,489 -6,535,138

Total profit / (loss) per share -0.0191 -0.0249

Earnings per share is calculated by dividing the profit / (loss) by the number of shares issued on December 31,

2014.

For details on the number of shares see Note 23 – ‘Share Capital’.

On December 22, 2014 the Extraordinary General Meeting of Shareholders of CEMACON SA decided the Company's

share capital increase with the amount of RON 8,219,105.30, within subscriptions validly made within subscription

deadlines of Step 1 or Step 2, as they are defined below, by cash contribution (including, in Step 2, by converting

receivables held against the Company) from RON 8,219,105.30 to RON 16,438,210.60 by issuing a total of

82,191,053.00 shares (‘New shares’) with a nominal value of 0.1 RON / share.

Due to the second increase by converting the loan into shares, the final number of shares will be 113,990,000.

37

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

Considering the effects of the capital increase approved, the company has calculated the diluted

earnings per share, which is shown in the following table:

Diluted earnings per share

Diluted earnings per share 31.dec.14 31.dec.13

Current number of shares 82,191,053 262,872,486

Number of shares issued subsequently 31,798,947 31,798,947

Number of Shares after issuance 113,990,000 294,671,433

Total profit / (loss) - 1,572,489 lei - 6,535,138 lei

Total profit / (loss) per share - 0.0191 lei - 0.0249 lei

Total diluted profit/ (loss) per share - 0.0138 lei - 0.0222 lei

10. Dividends

In 2014 the company did not pay any dividends.

CEMACON SA

Note la Situatiile FInanciare pentru perioada incheiata la 31 Decembrie 2014

11. Tangible assets

Cost value of Assets as at December 31, 2014

Tangible assets Initial balance Acquisition

s

Value increase Revaluation

increase Disposals

Revaluation

movements

(held for sale)

Revaluation

decreases

Final balance

Land 7,539,711 - - 127,556 - 89,195 16,945 7,561,127

Land improvements 306,376 - 29,700 - - - - 336,076

Buildings 31,841,532 819,931 1,197,774 1,921,796 7,415 58,865 1,316,685 34,398,068

Machinery, Plant and Equipment 97,362,266 3,457,809 260,044 332,036 798,290 204,360 109,960 100,299,545

Furniture and office equipment 135,912 20,082 20,404 - 19,820 (21,896) 9,871 168,603

Fixed assets in progress 1,022,420 5,329,610 - - 5,660,597 - - 691,433

Total 138,208,217 9,627,432 1,507,922 2,381,388 6,486,122 330,524 1,453,461 143,454,852

The value of the cost of assets as of December 31, 2013

tangible assets Initial balance Acquisitio

ns

Value increase Revaluation

increase Disposals

Reclassification

(held for sale)

Revaluatio

n

decreases Final balance

Land 12,048,654 - - 11,564 - -4,511,030 -9,477 7,539,711

Land improvements 285,799 - 20,577 - - - - 306,376

Buildings 39,306,296 1,444,866 256,760 46,066 - -7,822,949 -1,389,507 31,841,532

Machinery, Plant and Equipment 106,182,090 605,886 801,034 - -67,277 -10,116,734 -42,733 97,362,266

Furniture and office equipment 159,947 - 28,378 - - -52,412 - 135,912

Fixed assets in progress 2,044,904 2,029,419 - - -3,051,902 - - 1,022,420

Total 160,027,690 4,080,172 1,106,749 57,630 -3,119,179 -22,503,125 -1,441,717 138,208,219

39

CEMACON SA

Notes on the Financial Statements

for the period ending December 31st, 2014

Tangible assets (continued)

The amount of depreciation and impairment as of December 31, 2014

Depreciation and Adjustments Initial balance

Depreciation and

impairments during

the year

Depreciation

related to fixed

assets transferred

Depreciation of

fixed assets

held for sale Adjustments

established during

the year

Adjustments

resumed on

income

Final balance

Depreciation of land arrangements 101,081 33,479 - - - - 134,560

Depreciation of buildings - - - - - - -

Depreciation of machinery, plant, equipment 16,086,638 4,257,546 544,060 - - - 19,800,124

Depreciation of furniture and office equipment 65,461 12,313 23,473 - - - 54,301

Impairment of land 2,413,078 14,341 - - - 105,339 2,322,080

Impairment of machines, equipment and plant 4,653,447 - - - - - 4,653,447

Total 23,319,705 4,317,679 567,533 - - 105,339 26,964,512

The amount of amortization and impairment as of December 31, 2013

Depreciation and Adjustments Initial balance

Depreciation and

impairments during

the year

Depreciation

related to fixed

assets transferred

Depreciation of

fixed assets

held for sale Adjustments

established during

the year

Adjustments

resumed on

income

Final balance

Depreciation of land arrangements 56,270 44,811 - - - - 101,081

Depreciation of buildings - - - - - - -

Depreciation of tangible assets 12,490,935 3,862,154 - 67,277 - 199,174 - - 16,086,638

Depreciation of furniture and office equipment 57,132 8,329 - - - - 65,461

Impairment of land 2,411,276 - - - 1,802 - 2,413,078

Impairment of plant, fixed assets 4,653,447 - - - - - 4,653,447

Total 19,669,059 3,915,293 - 67,277 - 199,173 1,802 - 23,319,705

40

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

Tangible assets (continued)

Net value of tangible assets on December 31, 2014

Gross value at 31 Reclassification spre

Net value 31 Dec

Tangible assets 2014 Dec 2014 for sale

Depreciation Adjustments 2013

Land 7,561,127 - - - 2,322,080 5,239,047

Land improvements 336,076 - - 134,560 - 201,516

Buildings 34,398,068 - - - 34,398,068

Machinery, Plant and Equipment 100,299,545 - - 19,800,124 - 4,653,447 75,845,974

Furniture and office equipment 168,603 - - 54,301 - 114,302

Fixed assets in progress 691,433 - - - 691,433

Total 143,454,852 - - 19,988,98

5

- 6,975,527 116,490,340

Net value of tangible assets on December 31, 2013

Tangible assets 2013 Gross value at 31

Dec 2013

Reclassification

for sale Depreciation Adjustmen

ts

Net value 31 Dec

2013

Land 12,050,742 -4,511,030 - -2,413,078 5,126,634

Land improvements 306,376 - -101,081 - 205,295

Buildings 39,664,481 -7,822,949 - - 31,841,532

Machinery, Plant and Equipment 107,479,001 -9,946,793 -16,285,812 -4,653,447 76,592,949

Furniture and office equipment 188,324 -23,180 -65,461 - 99,684

Fixed assets in progress 1,022,420 - - - 1,022,420

Total 160,711,344 -22,303,952 -16,452,354 -7,066,525 114,888,514

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

Tangible assets (continued)

Fixed assets held for sale

The following major classes of assets and liabilities were classified as held for sale in the statement of

financial position on December 31, 2014:

Fixed Assets Value remaining

31 Dec 2013 Depreciation Revaluation

differences

Value

remaining on

Dec. 31, 2014

Land 4,511,030 - 89,196 4,600,226

Buildings 7,822,949 - 58,865 7,881,814

Machinery, Plant and Equipment 9,917,561 - 403,534 10,321,095

Furniture and office equipment 52,412 - (21,897) 30,515

Total 22,303,952 - 529,698 22,833,650

For more details, see note 21 “Assets and liabilities classified for sale”.

During 2014 the company Cemacon recognized an Asset related to the stripping activity worth RON

241,459.

Revaluation of fixed assets

The assets held by the company on December 31, 2014 were appraised at fair value by the appraisal

company SC CS INVEST CONSULTING SRL, independent appraiser.

The revaluation was made on land, buildings and equipment, except for equipment in Recea quarry, clay preparation

line from Recea and production line of Recea for which depreciation was calculated according to IAS 36.

For the assets in Zalau classified for sale the appraisal was prepared and recording was made at the

lowest value and the carrying amount of the revalued amount.

In order to determine fair value the following methods were used:

Locations The valuation procedure

Zalau (Factory) The land was appraised by direct comparison technique and the

buildings by the cost - net replacement cost approach (main

method) and by the income approach, the rent capitalization

method (second method). (Level 2 property) Equipment was

appraised by the cost - net replacement cost approach. (Level 3

property)

Zalau (TUF Department) The land was appraised by direct comparison technique (Level 1

property), buildings by the cost - net replacement cost approach

(Level 3 property) and equipment by the cost - net replacement

cost approach (Level 3 property).

Zalau (Stejarul) Real estate property was appraised by the income – rent

capitalization approach (Level 2 property), of which the value

of land which was appraised by direct comparison technique

was deducted from (Level 1 property), thus resulting in the

construction value.

42

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

Equipment was appraised by the cost - net replacement cost

approach. (Level 3 property)

Tunari (Quarry) The land was appraised by plotting (for the large plot) and with

the direct comparison technique (for plots resulting from

parceling). (Level 1 property) and buildings by the cost - net

replacement cost approach. (Level 3 property)

Recea (Factory land) The land was appraised by direct comparison technique (Level 1

property), and buildings by the cost - net replacement cost approach

and then the results were verified as well as by the income approach.

(Level 3 property)

Panic plot of land (locality of Hereclean) The land was appraised by direct comparison technique.

(Level 1 property)

Beltiug (warehouse land) The land was appraised by direct comparison technique (Level 1

property), and buildings by the cost - net replacement cost

approach. (Level 3 property)

Revaluation differences were recorded either on account of capital in the revaluation reserve, either in the profit

and loss account, the effect of these beings presented below:

Increases from revaluation reserve 1,836,599

Discounts from revaluation reserve 17,751

Revenue 650,128

Expenditure 80,654

Reversals of income from previously recorded expenses amount to RON 650,128.

By applying these methods and related techniques, a set of values was obtained, which was interpreted by

the appraiser and by their reconciliation was formed the appraiser’s opinion on the possible market value

obtainable in the relevant area on the appraisal date.

Changes of the revaluation reserve during the financial year are presented below:

Movements of revaluation reserves 2014

Revaluation reserve at the beginning of financial year 23,633,956

1,818,849

Revaluation differences transferred during the financial year -

Amounts transferred from the revaluation reserve during the financial year

(18,702)

Revaluation reserve at the end of the financial year 25,434,102

On December 31, 2014, there were no restrictions on the distribution of the revaluation surplus (2013: N/A).

Treatment of revaluation reserve for tax purposes

According to tax laws in Romania, by May 1, 2009 revaluation reserves of tangible assets became taxable only

when their destination was changed. Subsequently to changing the tax code, starting May 1, 2009 revaluation

reserves of fixed assets

43

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

Tangible assets (Continued)

made after January 1, 2004, which are deducted from the calculation of the taxable income through tax

depreciation or expenditure on sold assets and / or retired, taxation is made at the same time with deduction of

tax depreciation, that is at the discharge of these fixed assets, as appropriate.

Impairment losses according to IAS 36, as reflected in the profit and loss account

Tangible assets are tested for impairment when facts and circumstances indicate that the carrying value may not

be recoverable.

An impairment loss is recognized as the amount by which the asset's carrying amount exceeds the recoverable amount.

The recoverable amount is the higher value of the asset's fair value less sales costs and value in use. In order to

appraise impairment, assets are grouped at the lowest level at which separately identifiable cash flows exist.

Considering the recommendations of paragraph 36 of IAS 36.12, the company examined the factors that might

lead to clues to impairment on December 31, 2014.

Considering the aspects analysed, the company believes that there is no evidence on impairment of assets in Recea

factory and therefore the calculation of depreciation for assets from Recea on December 31, 2013 in accordance with

paragraph 36.9 of IAS 36 is not necessary.

Currently from all the assets of Cemacon, the income generating activity is focused on Recea factory assets, land,

buildings and equipment representing a clay quarry exploitation, preparation halls, and production, production

line (press, dryer, oven etc), storage area and quarry machinery and logistics.

The value of adjustments for impairment for location Recea is as follows:

Land

Machinery, Supplies,

facilities and office

buildings Equipment equipment Total

Initial balance

Increases

Discounts

Net carrying amount

4,653,447

4,653,447

4,653,447

4,653,447

Tangible assets pledged and restricted

Bank guarantees are:

Intangible assets 2014 BCR security Unencumbered Total

Plots of land 10,610,796 1,550,557 12,161,353

Buildings 30,107,698 10,172,183 42,279,881

Machinery,plant,equipment 96,296,627 14,324,012 110,620,639

Furniture and office equipment 0 199,120 199,120

Fixed assets in progress 0 691,433 691,433

137,015,121 26,937,305 165,952,426

44

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

12. Intangible assets

Structure of intangible assets:

Dec.31, 14

Intangible assets Initial Balance

Internal developmen

t

Acquisitions

Final Balance

Development expenses 489,058 - - 489,058

Concessions, patents, licenses 60,109 27,883 87,992

Other intangible assets 65,710 33,707 99,417

Total 614,877 - 61,590 676,467

Dec. 31, 13

Intangible assets Initial Balance

Internal

Acquisitions

Final Balance developmen

t Development expenses 309,782 179,276 - 489,058

Concessions, patents, licenses 46,423 - 13,686 60,109

Other intangible assets 52,389 - 13,321 65,710

Total 408,594 179,276 27,007 614,877

The structure of depreciation and value adjustments for intangible assets is as follows:

Depreciation and adjustments for assets Dec 31, 2014

Initial balance

Depreciation by year

Adjustments for

depreciation Final

balance

Development expenses 309,782 35,855 - 345,637

Concessions, patents, licenses 45,406 9,783 - 55,189

Other intangible assets 53,129 6,345 - 59,474

Total 408,318 51,983 - 460,301

Adjustments

Depreciation and adjustments for intangible assets on December 31, 2013

Initial balance

Depreciation by year

for Final

balance

depreciation Development expenses 305,162 4,620 - 309,782

Concessions, patents, licenses 41,009 4,397 - 45,406

Other intangible assets 52,389 740 - 53,129

Total 398,561 9,757 - 408,318

45

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

Net value of intangible assets:

Asset type Stock

value

2013

Net

value

2014

Stock Net

value value

Development expenses 489,058 179,276 489,058 143,421

Concessions, patents, licenses 60,109 14,703 87,992 32,803

Other intangible assets 65,710 12,581 99,417 39,943

Total 614,877 206,560 676,467 216,167

The accounting treatment of depreciation of development costs is consistent to the accounting policy

regarding the depreciation of fixed assets in the profit centre Recea, depreciation per unit of product.

In 2014 the company has not capitalized development costs under IAS 38. The

remaining intangible assets shall be depreciated linearly over a period of 3 years.

The depreciation cost is recorded in the profit and loss account of the period in which it is made, in the

position of Amortization and impairment in the statement of comprehensive income.

13. Goodwill and depreciation

The Company did not hold on December 31, 2014 any intangible assets as goodwill.

Tangible and intangible assets are tested for depreciation when facts and circumstances indicate that

the carrying value may not be recoverable. An impairment loss is recognized as the amount by which

the asset's carrying amount exceeds the recoverable amount. The recoverable amount is the higher

value of the asset's fair value less sales costs and value in use. To appraise impairment, assets are

grouped at the lowest level at which separately identifiable cash flows exist.

On December 31, 2014 taking into account the recommendations of paragraph 36 of IAS 36.12, the

company examined the factors that might lead to clues regarding impairment.

Considering the aspects analysed, our company believes that there is no evidence on impairment of assets

in Recea factory and therefore it is not necessary to make a calculation of depreciation for assets from

Recea on December 31, 2014 in accordance with paragraph 36.9 of IAS 36.

46

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

14. Financial assets

Investments in shares 30-Dec-14 31-Dec-13

Investments in subsidiaries 200 -

Investments in associates - -

Investments in jointly controlled entities - -

Investments available for sale 1,278,223 1,278,223

Depreciation (1,278,223) (1,278,223)

Amounts payable for investments - -

Total 200 -

Investments in subsidiaries refer to Cemacon Real Estate Srl, a company controlled 100% by Cemacon SA.

Cemacon Real Estate Company Srl was established following the agreement signed by Cemacon SA and BCR

(Banca Comerciala Romana) in order to transfer non-core assets under the restructuring process.

Long-term securities are valued at historical cost less possible adjustments for impairment. Classification of

securities in financial assets or short-term investments is made depending on the intention of the company of

holding securities up to a year or more than a year.

Activities and the percentage of the share capital held by the company in businesses representing securities held as

financial assets are summarized below:

Name of company

Country of

registration Date Percentage

of registration Object held

production of construction

Cercon Ariesul SA Romania 2004 materials 11.45%

buying and selling

Cemacon Real own real

Estate Srl Romania 2013 estate 100%

On December 31, 2014, the Company held shares with an acquisition cost of RON 1,278,223, for which in 2010 a

provision for impairment of shares was recorded, amounting to RON 1,278,223 (December 31, 2010: RON 1,278,223),

the reason being that SC Cercon Aries SA entered bankruptcy proceedings starting June 11, 2009.

On 31 December 2014, the Company held shares in Cemacon Real Estate Srl worth RON 200, representing 100%

of its capital.

On December 31, 2014, the Company had securities for rented spaces and also for the National Administration of

State Reserves ("ANRS") totalling RON 59,397.

47

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

On December 31, 2014 and December 31, 2013, the Company had no loans granted ot SC Cercon

Aries S. A. and it did not guarantee for any of the loans contracted by SC Cercon Aries S. A.

48

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

15. Stocks

Stocks 31-Dec.-14 31-Dec-13

Raw materials and consumables 8,565,640 3,713,961

Adjustments (270,602) (252,851)

Production in progress 66,120 840,777

Adjustments - -

Semi-products and finished products 4,750,959 4,314,031

Adjustments (92,155) (133,836)

Goods 957,234 272,779

Adjustments (87,279) (95,893)

Biological assets - -

Adjustments - -

Total 13,889,917 8,658,968

The cost of inventories recognized in the profit and loss account have the following structure:

Raw materials and consumables 31-Dec-14 31-Dec-13 Raw materials 3,151,004 2,271,485

Additional material 2,602,143 4,546,819

Goods 2,395,560 580,595

Inventory items 76,347 75,441

Other supplies 32,779 18,170

Miscellaneous 3,477,261 2,277,909

11,735,094 9,770,419

On December 31, 2014 the following stocks are considered as tangible assets as security

without dispossession of future receivables for loans held “for details see note 18”

No. Product name ceramic block Quantity MU/pc. Storage

1 EVOCERAMIC 29 240/290/238CLSIN 1,915,792 Recea

2 EVOCERAMIC 24V240/240/238CLSIN 116,912 Recea

3 EVOCERAMIC 1/229 115/290/238 CLS I N 53,600 Recea

4 EVOCERAMIC 20 NF 450/200/238 CLS I 18,648 Recea

5 EVOCERAMIC 12 NF 460/120/238 CLS I 2,496 Recea

6 EVOCERAMIC 24AERO 430/240/238 CLS I 1,380 Recea

Analysis of age

Receivables not yet

due Unadjusted outstanding receivables

up to 3

months 3 to 6

months 6 to

12 months

over

Total

Adjustments

At the beginning of the period

Established during the year.

Costs in the bad debt period.

Cancellation of unused adjustments.

Exchange differences.

At the end of the period

49

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

16. Trade receivables and other receivables

31 Dec 31 Dec

Trade and other receivables 2014 2013

Trade receivables 7,270,931 7,985,630

Adjustments for trade receivables (1,564,710) (1,524,643)

Intragroup receivables - -

Adjustments for intragroup receivables - -

Receivables to partners / shareholders - -

Employees - -

Corporate tax - -

Other debts against the State Budget 566,133 126,249

Subsidies - -

Sundry debtors and other receivables 21,181 415,623

Adjustments for other receivables - -

Interest receivable - -

Total financial assets other than cash, classified as

loans and receivables 6,293,536 7,002,859

Advances 274,214 508,884

Total 6,567,750 7,511,743

The structure of receivables according to their age on

December 31, 2014

is as follows:

31.Dec.14

31.Dec.13

4,384,356 4,508,357

1,997,671 2,889,315

37,524 91,200

148,199 22,871

- -

6,567,750

7,511,743

31-Dec-14

31-Dec-13 1,524,643 2,234,887

475,863 197,560

(678,564)

(435,797) (229,240)

- -

- -

1,564,709

1,524,643

50

CEMACON SA

Notes on the Financial Statements for the period ending December 31st, 2014

17. Trade and other liabilities

Trade and other liabilities 31-Dec-14 31-Dec-14

Trade liabilities 3,728,475 4,444,068

Suppliers of fixed assets 328,773 366,979

Intra-group liabilities - -

Lease liabilities 22,747 -

Debt related to employees 1,000,217 340,345

Taxes and social contributions 354,532 1,014,140

Other tax liabilities 3,618 1,320,647

Other liabilities 843,761 393,331

Interest to pay - 21,253,787

Total debt less loans classified as

measured at amortized cost 6,282,124 29,133,296

Dividends - -

Advances 67,002 74,689

Revenue in advance - -

Total 6,349,125 29,207,985

18. Loans

The classification of short-term and long-term loans on the 31st of December, 2014 is the following:

Current 31-Dec-14 31-Dec-13

Short-term loans and overdraft 10,757,040 10,763,285

Current long-term loans 14,342,409 22,423,500

Bonds - -

Financial lease 58,284,255 54,112,126

Loans from affiliates - -

83,383,704 87,298,911

Long-term loan Long-term loans 63,707,518 30,074,273

Bonds - -

Financial lease 824,973 452,992

Loans from affiliates - - 64,532,490 30,527,265

Total 147,916,194 117,826,176

On the 31st of December, 2014, the Company contracted the following loans:

long-term loan from Anglo Romanian Bank Limited Sibiu Agency, contracted on the 27th of June,

2008, for a period of 8 years, amounting to €20,000,000, with an annual margin interest +

EURIBOR 6M. In May 2011, the balance of this loan was transferred to the Romanian

Commercial Bank. In 2013, part of the balance transferred to RCB was transferred to Business

Capital for Romania - Opportunity Fund Coperatief

long-term loan from the Romanian Commercial Bank, contracted on the 18th of December, 2006,

for a period of 5 years, amounting to €4,350,000, with an annual margin interest + EURIBOR

6M. In 2013, part of the balance transferred to RCB was transferred to Business Capital for

Romania - Opportunity Fund Coperatief

long-term loan from the Romanian Commercial Bank, contracted on the 25th of August, 2009, for

a period of 7 years, amounting to €2,500,000, with an annual margin interest + EURIBOR 6M.

short-term loan from the Romanian Commercial Bank, contracted on the 18th of December,

2006, for a period of 1 year, with annual extension, amounting to €2,400.00, with a margin

interest + EURIBOR 3M.

short-term loan from Business Capital for Romania - Opportunity Fund Coperatief, contracted by

the loan transfer from the Romanian Commercial Bank amounting to €12,000,000 with an

annual margin interest + EURIBOR 6M.

short-term loan from short-term majority shareholders amounting to €500,000 with EURIBOR

1M interest, contracted on the 18th of February, 2014

On the 4th of November, 2013, the Company and its main shareholders, KJK Fund II, Consultanta Andrei &

Andrei, SSIF Broker and Casa de Insolventa Transilvania signed together with the Romanian Commercial

Bank SA ("RCB") a term-sheet agreement regarding the restructuring of the loan package mainly

amounting to €26,105,964, plus interests and penalties, granted by RCB to the Company during 2006-2009

("Loan") whose repayment under the initially agreed terms was not possible due to the financial difficulties

faced by the Company in the last years ("Agreement”).

The agreement provides a set of principles applicable to the Loan restructuring, and the measures and

actions which must be undertaken by the Company, its shareholders and RCB, representing the conditions

whose successful completion depends on the establishment of new Loan repayment terms, namely:

the conversion of a part, amounting to about €12 million, of the debts of the Company to RCB

related to the existing loan in the Company’ shares. An investor to which RCB assigns that part

of the loan-related receivable shall be identified. The conversion of the assigned receivable to

the Company’ shares shall be done so as the assignee investor has, as a result of the

conversion, a number of shares (a) representing maximum 33% of the issued capital of

Cemacon and (b) [about] equal to the number of shares individually held by the greatest

current shareholder of the Company, namely KJK Fund II;

the transfer of secondary assets and the obligations to repay a loan granted to the Company by

RCB, amounting to €5 million, to a newly established company, Cemacon Real Estate SRL. The

repayment of the loan taken over by Cemacon Real Estate shall be guaranteed: (i) by a

mortgage over all assets of the newly established company, and (ii) a personal guarantee

issued by Cemacon in favour of RCB amounting to up to €3 million;

Subject to the fully compliance with the aforementioned suspensive conditions, in the limits permissible by

the applicable legal provisions, RCB, the Company and the majority shareholders of the Company shall

negotiate and sign the documents related to the Loan restructuring as follows:

(a) a loan amounting to €13 million granted to the Company, with a 10-year maturity, with

a 1-year grace period for the principal and interest payment, guaranteed by the Company’s

assets;

(b) a loan amounting to €5 million, taken over by Cemacon Real Estate, whose repayment

is guaranteed by the assets of Cemacon Real Estate SRL and a personal guarantee of Cemacon

amounting to up to €3 million.

On the 23rd of February, 2015, Cemacon SA and Business Capital for Romania - Opportunity Fund

Cooperatief U.A (BOF) signed the agreement whereby the parties ordered the freezing and fully conversion

held by BOF amounting to €58,033,045.02 to Cemacon shares as part of the restructuring of Cemacon

loan granted by RCB according to the decision of the Extraordinary General Meeting of Shareholders as of

the 22nd of December, 2014.

On the 19th of March, 2015 the Company signed with the Romanian Commercial Bank the new loan

agreements, thus finalizing the financial restructuring started in 2010. The new signed agreements refer

to:

Loan agreement no. 2 as of the 19th of March, 2015 amounting to RON 58,487,000 with maturity in

December 2023.

In long-term and short-term division of such loans, the aforementioned agreement was taken into account.

On the loan signature, the difference in the value between the "Existing payment obligations" and, on the

other hand, the "Payment obligation of Cemacon RE” and the "New payment obligation of Cemacon" as

defined by the loan agreement, was cancelled according to the agreement.

On the 31st of December, 2014, the loan structure was as follows:

31st of December, 2013 31st of December, 2014

Loan Institution RON Currency RON Currency

Romanian Commercial Bank RON 2,718,319 € 606,132 RON 2,716,743 € 606,132

Romanian Commercial Bank RON 39,151,431 € 8,730,000 RON 39,128,733 € 8,730,000

Romanian Commercial Bank RON 10,628,024 € 2,369,840 RON 10,621,862 € 2,369,840

Romanian Commercial Bank RON 10,763,280 € 2,400,000 RON 10,757,040 € 2,400,000

Business Capital for Romania RON 53,816,400 € 12,000,000

- Opportunity Fund Cooperatief RON 53,785,200 € 12,000,000

Majority shareholders RON 0 € 0 RON -

Interest RON 21,166,162 € 4,719,638 RON 29,652,709 € 6,615,807

TOTAL RON 138,243,616 RON 30,825,610 RON 146,662,286 € 32,721,779

In 2014, the company did not have unused loan facilities.

The bank guarantees consisting in non-current assets on the 31st of December, 2014 related to the

contracted loans have the following structure:

2014 Non-current assets RCB Guarantees Unencumbered Total

Land RON 10,610,796 RON 1,550,557 RON 12,161,353

Constructions RON 32,107,698 RON 10,172,183 RON 42,279,881

Machines, plants and equipment RON 96,296,627 RON 14,324,012 RON 110,620,639

Furniture and office appliance RON - RON 199,120 RON 199,120

Pending non-current assets RON - RON 691,433 RON 691,433

Total RON 139,015,121 RON 26,937,305 RON 165,952,426

Other bank guarantees related to the loans:

personal security without dispossession on the credit balance of accounts/sub-accounts opened by the

Borrower with the Bank, registered in the Electronic Archive for Security Interests in Movable Property;

personal security without dispossession on finished product stocks consisting of:

No. Ceramic block product name Quantity um/pcs. Storage

1 EVOCERAMIC 29 240/290/238CLSIN 1,915,792 RECEA

2 EVOCERAMIC 24V240/240/238CLSIN 116,912 RECEA

3 EVOCERAMIC 1/229 115/290/238 CLS I N 53,600 RECEA

4 EVOCERAMIC 20 NF 450/200/238 CLS I 18,648 RECEA

5 EVOCERAMIC 12 NF 460/120/238 CLS I 2,496 RECEA

6 EVOCERAMIC 24AERO 430/240/238 CLS I 1,380 RECEA

property of SC CEMACON SA, registered in the Electronic Archive for Security Interests in Movable

Property.

Assignment in favour of the bank in a percentage of 41% of the cash resulted from new

agreements/present and future cash collection registered in the "Electronic Archive for Security Interests in

Movable Property”.

19. Employees’ benefits

The debts regarding the employees' benefits consist of:

Indemnity for annual leave which is annually granted for the leaves used in the reference year. For the

unused leaves, the company established at the end of the year a provision for unused leaves.

Upon retirement, according to the collective labour agreement valid in 2013, the employees shall receive

once, according to the seniority in the company, the following indemnities:

< 5 years 0

5 – 20 years 1 individual salary on the retirement date

> 20 years 2 individual salaries on the retirement date

For this type of indemnity, the company established a provision with the value of benefits granted at

retirement. For details, see note 19 Provisions.

Employees’ benefits 2014 2013

Benefits upon retirement 315,625 190,715

Provision related to the annual leave 57,925 243,025

Bonuses 1,281,345 1,075,110

Other benefits -

Total 1,654,895 1,508,850

Structure of benefits 2014 2013

Short-term 1,339,270 1,318,135

Long-term 315,625 190,715

Total 1,654,895 1,508,850

In case of unjust dismissal of the General Manager, he/she shall be entitled in addition to other

compensations under the law or this agreement to receive an amount equal to the remaining amount which

he/she would have received until the end of term, but not more than €60,000 (in net amount), as

compensation for his/her dismissal.

In case of unjust dismissal of the Financial Manager, he/she shall be entitled in addition to other

compensations under the law or this agreement to receive an amount equal to the remaining amount which

he/she would have received until the end of term, but not more than €48,000 (in net amount), as

compensation for his/her dismissal.

In case of unjust dismissal of the Technical Manager, he/she shall be entitled in addition to other

compensations under the law or this agreement to receive an amount equal to the remaining amount which

he/she would have received until the end of term, but not more than €34,800 (in net amount), as

compensation for his/her dismissal.

20. Provisions

The structure of provisions on the 31st of December, 2014 is the following:

Structure of provisions Short-term Long-term

Disputes 168,506 -

Unused leaves 57,925 -

Pensions - 315,625

Environmental reclamation provision - 348,873

Other provisions 1,575,289 -

Total 1,801,720 664,498

The Company established provisions for the following events which shall generate future cash outflows as

a result of past events:

Dispute provisions: under the existing disputes on the 31st of December, 2014 and using the best

estimates regarding their settlement, the company established provisions for the estimated amounts

to be paid. The presented amounts include both the estimated compensations on the 31st of

December, 2015 and the related legal expenses. The probability of winning such disputes is less than

50% which is why the related provisions were established.

Provisions for unused leaves: the company registered provisions for leave-related expenses unused by

the employees in 2014. The provisioned amounts were estimated based on the number of leave days

related to 2014 which remained to be used by the company’s employees and related leave

indemnities. The company estimates that the amounts related to such provisions shall be done in

2015.

Pension provisions: according to the collective labour agreement valid in 2014, the company’s

employees shall receive once, upon retirement, according to the seniority in the company, the

following indemnities:

< 5 years 0

5 - 20 years 1 individual salary on the retirement date

> 20 years 2 individual salaries on the retirement date

The estimated values were calculated based on the number of employees to be retired and the

average value of the indemnity received by an employee. To observe the time value of money, a

9.23% discount rate was used – representing the weighted average rate of return of all private

pension funds in the last 24 months. The company estimates that such amounts shall be done on the

long run, for a period of 34 years.

Environmental reclamation provisions: due to the fact that the company also carries out activities

related to mineral resource exploitation (clay) under the operating permits and licenses, it is liable to

make environmental reclamation expenses related to the exploited perimeters. The related expenses

are estimated to be achieved by the end of the exploitation period, which is why the company

established provisions related to such expenses.

Other provisions: within such categories, various provisions are included for which the entity is

expected to achieve short-term cash outflows but with uncertain value. To estimate such amounts,

the company used the best estimates and knowledge on the generating facts on the 31st of

December, 2014.

Provision Initial

balance Additional provisions

Used amounts

Reversal of unused

amounts

time passing

Increases

regarding the

discount of

amounts once with

the passing of time

Effects of the discount rate

change

Final balance

Disputes 1,464,992 (716,688) (579,798) - - 168,506

Unused leaves 243,025 (185,100) - - - 57,925

Pensions 190,715 124,910 - - - - 315,625

Environmental

reclamation

provision 306.377 12.798 - -

306,377 12,798

-

-

29,699 - 348,874

Bonus provision for

employees

595,860 616,860 (450,921) (144,939)

616,860

Bonus provision for

management

- 661,486

661,486

Other provisions 270,553 26,390 - - - 296,943

Total 3,071,522 1,442,444 (1,352,709) (724,737) 29,699 - 2,466,219

21. Deferred taxes

Deferred income tax 2014 2013

Total deferred tax at the beginning of the period 246,177 (439,097)

Temporary reversed differences

Acknowledgement of the deferred tax receivables which were not

previously acknowledged 2,388,340 685,274

Total deferred income tax 2,634,517 246,177

Total tax 2,634,517 246,177

For the equipment in Recea production factory, the company calculates depreciation per product unit, case

in which there is a difference between the calculated depreciation according to the fiscal model and the

applicable one. For this difference, the company calculates and registers the deferred income tax.

The receivable from the deferred income tax incurred as a result of accrued fiscal losses registered by the

entity in the previous years. The fiscal loss was mostly caused by the financial costs related to the loans

which the company has.

In 2014, the deferred tax receivable is greater, because compared to the previous year the entire fiscal loss

was considered, which until now for reasons of caution it has not been fully considered, given the financial

restructuring which was not completed. Considering that, until the publication of the financial statements,

the restructuring was completed and there are very good reasons to believe that the entire loss shall be

recovered, the company acknowledged the entire deferred tax receivable related to the fiscal loss.

58

Losses prior to 2013 RON 10,877,111

Deferred tax receivables RON 1,740,338

The entire amount has been acknowledged in the 2014 profit and loss account.

Deferred tax acknowledged in the comprehensive income RON 1,447,960

Deferred tax acknowledged in capitals RON 940,380

As a result of the signature of the term-sheet agreement for the restructuring of loans signed with the

Romanian Commercial Bank, a reduction of financial costs is estimated. As a result of these assumptions,

the company estimates that in the future it will record positive comprehensive income, which is why the

company believes that it shall use the deferred tax receivables.

22. Assets and debts classified as for sale

(i) General description

The Board of Directors announced its intention to sell the assets of the brick factory in Zalau and the

premises in Stejarul administrative building in Zalau and the non-current assets were classified as held-for-

sale in the financial position.

The management believes that the sale shall be completed in March 2015. In time, the company accrued a

series of assets, a part being used in production in the previous years: Tunari quarry, Zalau platform with

the equipment related to the old production line etc., and other held without being productive: Stejarul

Building apartments, etc.

Considering the launch of the new Recea factory, and the economic context in which the focus is on

liquidity and liquidation of assets, this package of unproductive and non-essential non-current assets for

Cemacon, was classified as held-for-sale assets by the decisions of the company’s decision-making bodies:

General Meeting of Shareholders and Board of Directors.

During the time since these decisions, concrete actions were taken to promote them on the specialty

market and various solutions have been searched for their sale.

On the 19th of March, 2015, Cemacon SA signed the Novation Agreement with the Romanian Commercial

Bank (Agreement no. 4) whereby it transferred the assets held for sale to Cemacon Real Estate Srl. The

operational phase of the asset transfer is pending on the publication of financial statements.

(ii) Held-for-sale assets and debts

The following major classes of assets and liabilities were classified as being held for sale in the financial

position on the 30th of December, 2014:

Fixed assets Remaining amount

31st of December,

2013

Depreciations

Revaluation

differences

Remaining

amount

31st of

December,

2014

Land 4,511,030 - 89,196 4,600,226

Constructions 7,822,949 - 58,865 7,881,814

Machines, plants and

equipment 9,917,561 - 403,534 10,321,095

Furniture and office appliance 52,412 - (21,897) 30,515

Total 22,303,952 - 529,698 22,833,650

In 2014, the held-for-sale assets generated the following income and expenses which generated cash

outflows and inflows:

Income and expenses related to held-for-sale fixed assets

income from rent 80,625

total expense of which: 141,774

utility expenses 21,799

tax and fee expenses 119,115

building insurance expenses 860

(iii) Evaluation at fair value

The assets held by the company on the 31st of December, 2014 were evaluated at fair value by the

evaluation company SC CS.INVEST CONSULTING SRL.

Fair value = is the price which would be received to sell an asset or paid to transfer a debt in a normal

transaction between the market participants on the evaluation date. (IFRS 13).

23. Issued capital

On the 31st of December, the structure of issued capital was as follows:

Structure of issued capital 31-Dec-13 31-Dec-14

Number of authorized shares 262,872,486 pcs. 82,191,053 pcs.

Number of subscribed and paid-up shares 262,872,486 pcs. 82,191,053 pcs.

Number of subscribed and unpaid-up shares - -

Nominal value of a share RON 0.10 RON 0.10

Issued capital value RON 26,287,249 RON 8,219,105

All shares of the company are common and have the same voting right.

The movements on the capital structure in 2014 can be seen in the following table:

2013

Number

Value

2014

Number Value

Ordinary shares of RON 01 each 262,872,486

pcs.

RON 26,287,249 262,872,486 pcs. RON 26,287,249

Reduction by entrainment of losses -

RON

- RON - 257,614,526 pcs.

pcs.

- RON 25,761,453

Conversion of debts during the year -

RON

- RON

- - RON

Emissions during the year -

RON

- RON

+ 76,966,093 pcs. RON +7,693,309

Acquisition of own shares -

RON

- RON

- - RON

Total 262,872,486 pcs.

26,287,249

RON 26,287,249 82,191,053 pcs. RON 8,219,105

The Extraordinary General Meeting of Shareholders as of the 24th of March, 2014 approved the reduction of

the issued capital, by the entrainment of losses registered in the last 4 years, from the value of RON

26,287,248.6 to the value of RON 525,796, by the reduction of the number of shares from 262,872,486

shares to 5,257,960 shares.

On the 24th of March, 2014, the Extraordinary General Meeting of Shareholders of Cemacon SA decided the

approval of the increase in the Company’s issued capital in order to ensure the financial resources for the

company’s development, by issuing a number of maximum 88,000,000 new shares, at the nominal value of

RON 0.1 according to article 210 paragraph (1) of Law no. 31/1990.

The increase in issued capital was done during the period 14th of October – 13th of November, 2014.

The shareholders included in the Issuer’s Register on the 15th of April, 2014 had an applied right for

subscription of new shares according to a conversion index of 0.334763 approved by the decision of the

Extraordinary General Meeting of Shareholders. Of the total shareholders with subscription right, 96

subscriptions were validated.

On the 11th of December, 2014, the Central Depositary SA registered in the Cemacon SA register the

increase in the issued capital which was increased by a number of 76,933,093 shares with a nominal value

of RON 0.1/share, from the value of RON 525,796.00 (divided into 5,257,960 shares) at the value of RON

8,219,105.3 (divided into 82,191,053 shares).

Shareholding structure of the 31st of December, 2014

Shareholder Number of shares Percent

KJK FUND II SICAV-SIF loc. LUXEMBOURG LUX 31,799,065 38.6892%

SC CONSULTANTA ANDREI&ANDREI SRL, ARAD, ARAD County 19,979,032 24.3080%

S.S.I.F. BROKER S.A. CLUJ-NAPOCA, CLUJ County 16,657,252

20.2665%

other shareholders / others 13,755,704 16.7363%

Total 82,191,053 100.0000%

Shareholding structure of the 31st of December, 2013

Shareholder Number of shares Percent

other shareholders / others 100,591,580 38.2663%

KJK FUND II SICAV-SIF loc. LUXEMBOURG LUX 76,677,501 29.1691%

SC CONSULTANTA ANDREI&ANDREI SRL ARAD 46,621,358 17.7354%

ARAD County

S.S.I.F. BROKER S.A. CLUJ-NAPOCA, CLUJ County 38,982,047 14.8293%

Total 262,872,486 100.0000%

24. Reserves

The following describe the nature and type of each reserve from own capitals:

Type of reserve

Description and purpose

Legal reserve They are annually established from the company’s profit in the quantities and limits

provided by the law. In 2013, the limits are 5% applied on the accounting profit until it

reaches 20% of the paid-up subscribed capital. At the end of 2013, the company’s

reserves reached 20% of the subscribed capital, which is why in 2013 no reserves were

established.

Revaluation reserves

The revaluation reserves are established from the differences resulted from the

revaluation of tangible and intangible assets. The presentation of the revaluation

reserves shall be done according to each type of non-current asset and on each

revaluation operation which took place. In 2013, the company made the revaluation and

registered the revaluation results according to the accounting policies.

Other reserves There are other reserves not provided by the law which were optionally established on

the net profit to cover the accounting losses or for other purposes, under the decision of

the general meeting of shareholders, by complying with the legal provisions. In 2013,

the company did not register other reserves.

Type of reserve Initial balance Increases Reductions

Final balance

Legal reserves 1,142.146 - - 1,142,146

Revaluation reserves 23,633,956 1,836,599 (36,453)

,53)

25,434,102

Other reserves 1,700,933 - - 1,700,933

Total 26,477,035 1,836,599 (36,453) 28,277,181

25. Lease

On the 31st of December, 2014, the company concluded financial lease agreements with the following lease

companies:

Lease company Type of lease Leased property

PORSCHE LEASING ROMANIA IFN Financial lease Vehicles

IMPULS LEASING Financial lease Machines, equipment

The situation of debts regarding the financial lease on the 31st of December, 2014 is the following:

Leased assets Initial balance Increases Reductions Final balance

Buildings - - - -

Vehicles 609,120 707,929 399,354 917,695

Equipment 97,057 319,877 123,622 293,312

Total 706,177 1,027,806 1,550,782 1,211,007

The due date of the lease payments during 2013-2014 is presented in the following table:

2014

Lease Payment Due Date Total value Interest Net value

less than 1 year RON 484,780 RON 55,842 428,938

between 1-5 years RON 829,487 RON 47,421 782,066

over 5 years - RON - RON 0

Total RON 1,314,267 RON 103,263 1,211,004

2013

Lease Payment Due Date Total value Interest Net value

less than 1 year RON 292,979 RON 39,794 253,185

between 1-5 years RON 477,337 RON 24,346 452,992

over 5 years - RON - RON 0

Total RON 770,316 RON 64,140 706,177

26. Transactions with affiliates

The company's affiliates are:

Cercon Ariesul with the registered office in Campia Turzii, 1 Ialomitei St., Cluj County

Cemacon holds shares in this company SA

Consultanta Andrei&Andrei Srl with the registered office in Bucharest, 1st district, 14 Jandarmeriei

St., building A2, 3rd entrance, ap. 2; tax identification number: RO 17345454, Trade Register number

J40/14670/2011

Director of Cemacon SA

KJK Fund II SICAV-SIF with the registered office in Luxemburg, 412F Esch Road, code L-2086

Director of Cemacon.

Orion Strategy Solution Srl with the registered office in Cluj County, Cluj-Napoca, 7 Artelor St.; Tax

identification number Ro26118990; Trade Register number J12/3026/2013;

Chairman of Cemacon SA Board of Directors

Liviu-Ionel Stoleru, General Manager of Cemacon SA, is the Director of Orion Strategy Solution Srl

and representative of this entity of the Board of Directors of Cemacon SA.

Casa de Insolventa Transilvania Sprl with the registered office in Cluj County, Cluj-Napoca, 48 Calea

Dorobantilor St., 6th floor, Tax identification number: RO 21057514,

Declared to act together with KJK Fund and Consultanta Andrei&Andrei

S.S.I.F. Broker Sa with the registered office in Cluj-Napoca, 119 Calea Motilor; Tax identification

number: RO 29371864

Declared to act together with KJK Fund and Consultanta Andrei&Andrei

Cemacon Real Estate with the registered office in Salaj County, Zalau, 1 Fabricii St., tax identification

number RO 32604048

Company held by Cemacon SA in a proportion of 100%

Transactions with affiliates (Continued)

The transactions with affiliates are summarized in the following table:

Service Sales Service Acquisitions

Affiliates 1 Jan – 31 Dec 2014 1 Jan – 31 Dec 2013 1 Jan – 31 Dec 2014 1 Jan – 31 Dec 2013

Cercon Ariesul - - -

Consultanta Andrei&Andrei Srl - - 138,167 92,151

KJK FUND II SICAV-SIF - - 87,828 98,552

Orion Strategy Solution Srl - - 593,918 849,553

S.S.I.F. Broker Sa - - 22,311 -

Casa de insolventa Transilvania - - -

Cemacon Real Estate Srl - - - -

Total - - 842,224 1,040,256

Amounts in RON

The balances with affiliates are summarized in the following table:

Receivables from

affiliates

Debts from affiliates Loans received from shareholders

Loans returned to shareholders

Affiliates 31.dec.14 31.dec.13 31.dec.14 31.dec.13 01.01.2014-

31.12.2014

01.01.2013-

31.12.2013

01.01.2014-

31.12.2014

01.01.2013-

31.12.2013

Cercon Ariesul

Consultanta Andrei&Andrei Srl KJK FUND II SICAV-SIF

Orion Strategy Solution Srl S.S.I.F. Broker Sa

Casa de insolventa Transilvania Cemacon Real Estate Srl

- -

- - - -

- - - -

- - -

- -

- - - -

- - - -

- - -

-

-

-

186,380

- 9,817

- -

-

-

- 9,817

- -

-

602,831 997,557

- 503,917

133,325 -

-

- -

- -

- -

-

596,982 979.190

- 497,911

131,748 -

-

- -

- -

-

Total - - 196,197 9,817 2,237,630 - 2,205,831 - Amounts in RON

27. Cash and cash equivalents

Cash and cash equivalents 31-Dec-14 31-Dec-13

Cash at bank 12,336,476 6,902,272

Cash and cash equivalents 2,185 262

Deposits - -

Miscellaneous - -

Total 12,338,661 6,902,535

28. Events subsequent to the reporting date

On the 22nd of December, 2014, the Extraordinary General Meeting of Shareholders of CEMACON S.A.

decided a series of events which were not finalized on the 31st of December, 2014.

a) The approval of the increase in the Company’s issued capital amounting to RON 8,219,105.30 within the

limits of subscriptions validly made within the periods of subscription related to Phase 1 and, respectively,

Phase 2, as defined below, by a cash contribution (including, within Phase 2, by the conversion of

receivables held against the Company) from RON 8,219,105.30 to RON 16,438,210.60, by the issuance of a

number of 82,191,053.00 shares ("New Shares") with a nominal value of RON 0.1/share. The New Shares

shall be submitted for subscription as follows:

i) In Phase 1, all shareholders of the Company registered in the Shareholders’ Register on the 15th of

January, 2015 ("Registration Date”) under their preference right, proportional to the stake in the

issued capital held by them on the Registration Date ("Phase 1”), at a subscription price amounting

to RON 1.5/share, considering a nominal value of RON 0.1/share and a premium on shares amounting

to RON 1.4/share. Thus, in Phase 1, each shareholder exercising the preference right may subscribe

for each share a number of 1 New Shares. The subscription right may be exercised for a period of 31

days from the data established in the announcement and prospectus proportional to the offer

approved by the Financial Supervisory Authority, the date subsequent to the Registration Date and the

publication date of the decision of the Extraordinary General Meeting of Shareholders in the Official

Gazette of Romania.

(ii) If all New Shares submitted for subscription to the beneficial shareholders of the preference right

were not subscribed in Phase 1, in the Period of Subscription related to Phase 1, the new unsubscribed

shares shall be submitted for subscription in Phase 2 to the qualified investors according to the first

come, first served method ("Phase 2”). The Period of Subscription in Phase 2 is 5 business days,

calculated from the first business day following the publication of the Board of Directors’ report

regarding Phase 1 or until the full subscription of shares provided within Phase 2. The Phase 2

subscription price of the New Shares by the qualified investors is minimum RON 1.6/share considering

the nominal values of RON 0.1/share and a premium on shares amounting to RON 1.5/share.

The subscribed shares in Phase 1 shall be fully paid on the Subscription Date in the Company’s bank

account intended for the increase in issued capital, while the subscribed shares in Phase 2 may be

paid both in cash and by converting the receivables held against the Company.

The unsubscribed shares in Phase 2 shall be cancelled by the decision of the Company’s Board of

Directors, and the Company’s issued capital shall be increased within the limit of the results of

validated subscriptions determined by the Company’s Board of Directors.

b) The approval of the restructuring of loans granted to the Company by the Romanian Commercial Bank

S.A. ("RCB") under the loan agreements numbers 25/27th of June, 2008, 542/35333/18th of December,

2006, 186/612/25th of August, 2009, 543/35334/18th of December, 2006, as subsequently amended (“Loan

Agreements”), the total amount due by the Company under the Loan Agreements on the 31st of October,

2014 being €19,646,801.11 (respectively the main total amount of €14,105,964.00 and total interests of

€5,540,837.11, mentioning that the interest is calculated under the relevant agreements until the effective

restructuring and operations related to the asset transfer and establishment of guarantees, restructuring

which includes at least the following operations and legal documents:

(i) conclusion of a novation agreement between RCB, as Lender, the Company, as Existing

Debtor and Cemacon Real Estate SRL (company affiliated to the Company), as New Debtor,

whereby the parties regulate, among others, that:

(i) Cemacon Real Estate SRL takes over by novation a part of the Company’s debts to

RCB under the Loan Agreements, in the amount of €5 million, together with the

related rights and obligations; and that

(ii) the Company’s debt to RCB is reduced to €13 million, shall be denominated in RON

and unitarily regulated by a new loan agreement which replaces the existing Loan

Agreements. The novation shall take place by maintaining all existing guarantees

related to the Loan Agreements;

(ii) by novation, the Company shall transfer to Cemacon Real Estate SRL, by means of a sale and

purchase agreement, a part of its assets, together with the related activity, transfer which is

to include, without limitation, the ownership over the assets referred to in Annex 1 to this

decision, assets evaluated at a value approximately equal to the amount of the debt taken

over by Cemacon Real Estate SRL through novation. Subsequent to the transfer, all

transferred assets shall be mortgaged by Cemacon Real Estate SRL under those mentioned in

section (vii) below.

(iii) the conclusion of a loan agreement between RCB and the Company which replaces the Loan

Agreements and regulates the terms and conditions in which the Company repays to RCB the

amount of €13 million, denominated in RON, respectively for a period of 9 years, starting in

May 2015, together with the related interest and costs to be negotiated by the Company’s

representative.

(iv) to guarantee the fulfilment of the payment obligations arising from the aforementioned loan

agreement and, additionally, all guarantees existing and related to the Loan Agreements to

be fully maintained as a result of novation, the Company shall establish in favour of RCB

Lender the real estate and pledged-asset mortgages over all assets in the property of the

Company, including, without limitation, mortgage over all lands and constructions, equipment

and fixed assets, stocks, receivables (of any nature, including commercial and resulting from

the insurance policies), intellectual property rights, shares held by the Company in any other

entity, including within Cemacon Real Estate SRL, etc.;

(v) conclusion of addenda to all personal security agreements and/or existing mortgage

agreements and related Loan Agreements, whereby the aforementioned novation is

implemented;

(vi) conclusion of a loan agreement between RCB and Cemacon Real Estate SRL regulating the

terms and conditions whereby Cemacon Real Estate SRL repays to RCB the amount of €5

million, respectively within 5 years, together with the related interest and costs to be

negotiated by the representatives of Cemacon Real Estate SRL;

(vii) to guarantee the fulfilment of the payment obligations arising from this loan agreement,

Cemacon Real Estate SRL shall establish in favour of RCB Lender the real estate and pledged-

asset mortgages over all assets in the property of Cemacon Real Estate SRL, including,

without limitation, mortgages over all lands and constructions, equipment and fixed assets,

stocks, receivables (of any nature, including commercial and resulting from the insurance

policies), intellectual property rights, shares held by Cemacon Real Estate SRL in any other

entity, etc.

(viii) conclusion of a company guarantee agreement (fidejussion) whereby the Company

guarantees the obligations of Cemacon Real Estate SRL resulting from the aforementioned

loan agreement within the limit of €3 million and, in exchange for an annual commission

payable by Cemacon Real Estate SRL to the Company amounting to 2.5%/year of the

guarantee value;

(ix) any other required or useful documents to implement the loan restructuring, as described

above.

Considering the effects of the approved capital increase, the entity calculated the diluted result per share;

it is presented in the following table:

Diluted earnings per share

Diluted earnings per share 31.dec.14 31.dec.13

Number of current shares 82,191,053 262,872,486

Number of subsequent issued shares 31,798,947 31,798,947

Number of shares after issue 113,990,000 294,671,433

Total profit/(loss) - RON 1,572,489 - RON 6,535,138

Total profit/(loss) per share - RON 0.0191 - RON 0.0249

Total diluted profit/(loss) per share - RON 0,0138 - RON 0,0222

On the 23rd of February, 2015, Cemacon SA and Business Capital for Romania - Opportunity Fund

Cooperatief U.A (BOF) signed the agreement whereby the parties ordered the freezing and fully

conversion held by BOF amounting to €58,033,045.02 to Cemacon shares as part of the restructuring of

Cemacon loan granted by RCB according to the decision of the Extraordinary General Meeting of

Shareholders as of the 22nd of December, 2014.

On the 19th of March, 2015, the Company signed with the Romanian Commercial Bank the new loan

agreements, thus finalizing the financial restructuring started in 2010. The new signed agreements refer

to:

Loan agreement no. 2 of the 19th of March, 2015 amounting to RON 58,487,000 with maturity in

December 2023.

In the long-term and short-term division of such loans, the aforementioned agreement was taken into

account.

On the loan signature, the difference in the value between the "Existing payment obligations" and, on the

other hand, the "Payment obligation of Cemacon RE” and "New payment obligation of Cemacon" as

defined by the loan agreement, was cancelled according to the agreement.

29. Adjustments of accounting errors

In 2014, the company performed the correction of the 2013 accounting errors amounting to RON 121,421,

representing expenses related to 2013 green certificates which were not provisioned.

In order not to affect the 2014 financial year, the company registered such expense in relation to the

retained earnings.

The effect of such transaction can be summarized in the following table:

Undistributed result as of the 31 Dec 2014 (26,668,785)

Adjustment of accounting error (121,421)

Undistributed result after adjustment (26,790,206)

2013 comprehensive income (6,535,138)

Adjustment of accounting error (121,421)

2013 comprehensive income after adjustment (6,656,559)

The 2013 earnings per share after the adjustment registration is summarized in the following table

Earnings per share

2013 before

adjustment

2013 after

adjustment

Number of issued shares 262,872,486 262,872,486

Total profit/(loss) (6,535,138) (6,656,559)

Total profit/(loss) per share (0.0249) (0.0253)

30. Payment based on shares

Considering the decision no. 1 of the Ordinary General Meeting of Shareholders of Cemacon SA as of the

25th of October, 2013, implemented by the Decision no. 108 of the Board of Directors of Cemacon SA as of

the 24th of September, 2014 and management agreements signed with the company’s managers whereby

there is the obligation to grant a bonus in the Company’s shares to the management, more exactly, during

2014-2016, within the total limit of 5% of the Company’s issued capital during the aforementioned period

and within the minimum annual limit of 1.6% of the Company's issued capital. On the 31st of December,

2014, the company registered a provision amounting to RON 653,825.

2014 2014 2013 2013

Weighted average of

the acquisition price (RON)

Number of shares

Weighted average of

the acquisition price (RON)

Number of shares

Unpaid on the 1st of January - - - -

Granted during the year 0.3374 1,937,832 - -

Cancelled during the year - - - -

Used during the year - - - -

Expired during the year - - - -

Unpaid on the 31st of December 0.3374 1,937,832 - -

The total number of shares to be granted within the agreement is 3,516,401.55 divided by 3 years as

follows:

2014 1,195,576.53

2015 1,195,576.53

2016 1,125,248.49

Shares related to 2014 were not settled on the 31st of December, 2014 which is why the company

acknowledged a provision amounting to RON 653,825.

In order to establish the provision, Cemacon share trade price was considered on the current platform of

Bucharest Stock Exchange on the 31st of December, 2014: RON 0.2748/share and the price of RON 0.4000

per share, price at which the company estimates that the market shall be stabilized as a result of the capital

operations. Thus, the average of the two prices has been applied, obtaining an average price of RON

0.3374/share. To obtain the fair value of the shares, the entity has used 2nd level information.

31. Other information

Other elements of the comprehensive income:

In other comprehensive income elements, the entity registered the transfer of the revaluation reserve

related to the invalidated fixed assets amounting to RON 18,701.

Information on the Company’s presentation:

Cemacon SA is a Romanian legal entity, established as joint stock Company under the Government Decision

no. 1200/1991 with the registered office in Cluj-Napoca, 48 Dorobantilor St., Silver Business Center, 1st

floor, Cluj County. The company’s main activity is "Manufacture of bricks, roof tiles and construction

products, in baked clay".

The bases of conversion used to express in national currency the assets and liabilities, income

and expenses initially outlined in a foreign currency:

The way used to express the property items in national currency, income and expenses emphasized in a

foreign currency is presented in Note 1. The main exchange rates used for RON conversion of balances

expressed in foreign currency on the 31st of December, 2013 and 31st of March, 2014 are:

Exchange rate

Foreign currency Abbreviation 31-Dec-14 31-Dec-13

US dollar USD 3.6868 3.2551

Euro EUR 4.4821 4.4847

Fees paid to auditors/censors

All paid fees refer to the audit services on the individual financial statements prepared by the Company

under IFRS. The Company paid during the year concluded on the 31st of December, 2014, fees to auditors

under the agreement concluded between the parties. The Company's audit is provided by BDO Auditors &

Accountants SRL.

Activity segments.

During 2013, the company re-commissioned the zeolite mineral powders department, established in 1994.

During the year, the company registered expenses amounting to 312,000. The income from the sale of

zeolite mineral powders related to 2014 amounted to 65,234.

Amendments.

The directors are not entitled to subsequently amend the financial statements.

The financial statements together with the notes to the financial statements were published for approval on

the 30th of March, 2015.

32. Contingents

Taxation

All amounts due to the State for taxes and fees were paid or registered on the balance date. The Romanian

tax system is undergoing consolidation and harmonization with the European legislation, there being

different interpretations of the authorities in connection with the tax legislation, which may give rise to

taxes, fees and additional penalties. If the state authorities discover violations of the Romanian legal

provisions, they may be determined as applicable: confiscation of the concerned amounts, imposition of

additional tax liabilities, imposition of fines, application of delay increases (applied to remaining actual

payment amounts). Therefore, the tax sanctions resulted from violations of the legal provisions may lead to

important amounts to be paid to the State.

The Company deems that it paid on time and fully all taxes, fees, penalties and penalty interest, if

applicable.

In Romania, the tax year is opened for verifications for a period of 5 years.

Transfer price

Under the relevant tax legislation, the tax assessment of a transaction with the affiliates is based on the

market price concept related to that transaction. Under this concept, the transfer prices must be adjusted

so as to reflect the market prices which would have been established between the entities between which

there is no relation of affiliation and which act independently under “normal market conditions”.

It is likely that the transfer price verifications are carried out in the future by the tax authorities to

determine whether these prices comply with the principle of "normal market conditions" and that the

taxable base of the Romanian taxpayer is not distorted.

Risk factors

Border market risk

The border market investors must be aware that such markets have a great risk than the markets of

countries with developed economy and mature legal and political systems. This risk is determined by the

need to adapt the legal system to create efficient instruments both legally and economically to ensure the

required framework of a functional market economy.

The Romanian capital market classifies at the current level of development in the category of border

markets, which have greater risks compared to developed markets, although they can provide greater

performance to investors. The country risk is generated by the probability of political, social and economic

contingencies, repeated legal changes, and fluctuations of exchange rate or high rates of inflation.

Even if Romania is a member state of the European Union, the Issuer’s financial statement and results may

be influenced by contingencies characteristic to a border market, considered to be a market characterized

by a higher volatility, especially in the current global context.

Risk determined by the correlation with global market evolution

The events on the global financial market have a direct and indirect impact on the evolution of the

Romanian economic market which is reflected on the evolution of the Romanian capital market in the last

years. Therefore, the global evolutions affect both the Issuer’s activity and its evolution on the capital

market.

The Romanian economy, as any developing economy, is sensitive to the fluctuation of global business. The

political, economic, social and any other type of events on the global market have a significant impact on

the economic climate in which the Issuer carries out its activity.

Financial crisis

The significant turbulences occurring on the global loan market had a significant effect on the entities

operating in various industries, creating a crisis of liquidity and solvency in the financial banking markets.

Other significant effects of the crisis are higher funding costs, reduction of the loan market and

consumption, significant volatility of capital markets and exchange rates etc. Bankruptcies affected the

banking financial sector, some states contributing to the re-capitalization of such entities in order to save

them from bankruptcy. The lending capacity has significantly been reduced as the lending availability, so

that most of the non-banking sector worldwide is facing a downturn or severe economic recession.

Risks generated by the legislative instability

The results of Issuer’s initiatives are difficult to predict and may suffer from the Romanian legislative

instability. The frequent modification of norms, including those involving a direct impact on the Issuer’s

activity may generate risks for the Issuer.

The Issuer’s effort to constantly adapt to the changing legislative requirements may generate significant

additional costs and the possible future changes in the legislative framework may negatively influence the

Issuer’s activity and profitability.

Risk of exchange rate variations

The Company’s currency transactions are recorded in the accounting records at the exchange rate as of

their date, earnings and losses resulting from the settlement of such transactions and from the conversion

of monetary assets and liabilities denominated in foreign currency, being recognized as expenses or income

in the profit or loss account.

The cash balances in foreign currency are converted in RON at the exchange rate as of the end of the

year.

Loan risk

The Company carries out commercial activities only with acknowledged third parties, which justify the

financing on loan. The Company’s policy is that all customers who want to carry out commercial relations

as lending to be subject to the verification proceedings. Moreover, the receivable balances are continuously

monitored, resulting in insignificant exposure of the Company to the risk of bad debt.

Operational risks

The main operational risks faced by the Company are presented in the following table:

Risk Risk category Impact

Lack of (reliable) supplies for raw materials and

materials Acquisitions Improper product quality

Increase in supply prices for raw materials,

materials, packaging Acquisitions Production-profitability cost

Increase in the energy price over the performed

estimates Acquisitions Production-profitability cost

Unpredicted increase of prices for transportation

services in certain periods Acquisitions Profitability

Losses on non-collection of receivables due to the

client’s insolvency / bankruptcy Customer Financial losses

Increase in the average collection period with

impact on cash-flow and non-collection risk Customer Financial losses

Newly launched products of competition (especially

similar products in the traditional area) Competition

Loss of market share, pressure

on prices

Entry into a price war with competitors Competition Reduction of margins

Low penetration and sales under forecasts of

products newly launched on the market Innovation Costs, competitiveness

Technical issues, accidental failures which may

affect productivity Manufacturing Production-profitability cost

Improper quality of batches of finished products Manufacturing

Image-brand damage, non-

performance of the sales plan

Information attack/incident which may affect the

normal performance of internal processes

(manufacturing, invoicing, e-mail)

Information and

communication

technology

Blocking basic

processes/activities

Loss of confidential information

Discrediting own products by the competition Reputation Image-brand damage

Loss of lawsuits pending with payment of

compensation Legal Exceptional financial losses

Interest rate risk

The interest rate risk has the risk that the value of a financial instrument fluctuates due to the variation of

interest rates on the market. The Company's exposure to the risk of changes in interest rates primarily

relates to variable interest bearing loans which the Company has on the long-term.

Liquidity risk

The management of the liquidity risk belongs to the Company’s management, which established a proper

framework for the risk management regarding the short- and average-term provision of funds. The

Company manages the liquidity risk by continuously monitoring the real cash flow and by mapping the

maturity profiles of financial assets and debts.

Risks on shares

In terms of value of transactions or market capitalization, the Bucharest Stock Exchange can be considered

a small size stock exchange compared to other markets in the world, there being such risks related to the

low market liquidity and high volatility of the traded share price.

The low market liquidity may determine the impossibility to buy or sale the Company’s shares without a

significant impact on the price of that share, thus generating a high volatility of share price.

33. Reconciliation with the financial statements in the format published by the Ministry of

Finance (MF)

Reconciliation of the Financial Position

Non-current assets 31-Dec-14 31-Dec-13

Other non-current assets MF 59,397 54,689

Deferred tax 2,634,517 246,177

Investments in shares IFRS 200 -

Other non-current assets IFRS 2,693,914 300,866

Verification - -

Current assets 31-Dec-14 31-Dec-13

Stocks MF 36,723,567 30,962,921

Held-for-sale assets IFRS 22,833,650 22,303,952

IFRS stocks 13,889,917 8,658,968

Verification - -

Receivables MF 9,161,689 7,675,019

Deferred tax (2,634,517) (246,177)

Prepayments 41,101 72,046

Treasury advance payments 1,614 10,855

Receivables IFRS 6,567,750 7,511,743

Verification - -

Cash and cash equivalents MF 12,340,275 6,913,390

Treasury advance payments (1,614) (10,855)

Cash and cash equivalents IFRS 12,338,661 6,902,535

Verification - -

Reserves 31-12-14 31-Dec-13

Reserves MF 28,775,765 26,956,917

Reserves representing surplus from revaluation reserves (498,583) (479,882)

Reserves IFRS 28,277,182 26,477,035

Verification - -

Retained earnings 31-12-14 31-Dec-13

Retained earnings MF 14,794,441 33,899,335

Retained earnings from adoption of IAS 29 MF 10,665,606 10,665,606

Current earnings MF (1,572,489) (6,535,138)

Reserves representing surplus from revaluation reserves 498,584 479,882

Retained earnings IFRS (26,533,953) 50,620,197

Verification - -

Reconciliation of the Comprehensive Income

Operating Income 31-12-14 31-12-13

Operating income MF 58,022,008 50,678,617

Income from current assets adjustment 499,199 2,024,063

Income from provisions 2,086,454 595,061

Expenses on adjustment of stocks 506,721 684,745

Operating income IFRS 60,141,007 44,876,878

Verification - -

Operating expenses 31-12-14 30-Jun-13

Operating expenses MF 52,090,062 45,462,216

Income from current asset adjustment 499,199 2,024,063

Income from provisions 2,086,454 595,061

Expenses on adjustment of stocks 506,721 684,745

Operating expenses IFRS 54,209,061 47,870,085

Verification - -

General Manager Financial Manager

Stoleru Liviu Sologon Daniel

Signature _________ Signature _____________

Company’s stamp