Agroland Business System S A : Q1 2022 Report

TABLE OF CONTENTS

ISSUER INFORMATION___________________________________ 3

MESSAGE FROM THE CEO _________________________________ 4

ABOUT AGROLAND BUSINESS SYSTEM_______________________ 6

KEY EVENTS IN Q1 2022 AND AFTER CLOSING OF THE REPORTING PERIOD_______________________________________________ 8

FINANCIAL STATEMENT _________________________________ 15

BALANCE SHEET _______________________________________ 16

MAIN FINANCIAL INDICATORS ___________________________ 17

DECLARATION FROM THE MANAGEMENT ____________________ 18

Disclaimer: The financial figures presented in the descriptive part of the report, expressed in millions of lei, are rounded to the nearest whole number and can lead to small differences in regularization.

ISSUER INFORMATION

INFORMATION ABOUT THIS FINANCIAL REPORT

Type of report

For financial period Report publishing date According to

ISSUER INFORMATION

Issuer's name

Fiscal code

Trade registry number

Registered office

Quarterly Report for Q1 2022 01.01.2022 - 31.03.2022 27.05.2022

Annex 13 to the FSA Regulation 5/2018

Agroland Business System SA

RO 25165241

J35 / 405/2009

Timisoara, 14 Garii street, Timis County, Romania

INFORMATION ABOUT FINANCIAL INSTRUMENTS

Subscribed and paid-up share capital

Market on which the securities are traded

Total number of shares

Symbol

CONTACT DETAILS FOR INVESTORS

RON 5,179,059.60

SMT- AeRO Premium

51,790,596 shares

AG shares; AGR25 bonds

Phone number	[phone]/0256 247 435
E-mail	[e-mail]
Website	www.agroland.ro

The interim consolidated financial statements as of March 31, 2022, presented in the following pages, are unaudited.

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MESSAGE FROM THE CEO

Dear shareholders,

Welcome to the Agroland Business System report for the first quarter of 2022.

The results generated by our group during this period are positive, which pleases us, especially since the first three months of 2022 were under a less favorable context, influenced by the geopolitical conflict, high inflation, rising energy prices, but also the complementary agri-food crisis. In Q1 2022, we maintained the growth rate in terms of revenues, as they increased by 21% compared to Q1 2021, in line with the dynamics recorded in 2021 (+ 22% 2021 vs. 2020), reaching 66.8 million lei.

At the same time, in terms of profitability, it increased in Q1 2022 by 31% compared to Q1 2021, thus significantly exceeding the evolution recorded in 2021, when net profit was declining compared to 2020. Despite the galloping prices, we are glad that in Q1 2022, expenditures increased by 1% below revenues. From a financial point of view, we ended Q1 2022 with a net result of 1.6 million lei, compared to 1.2 million lei in Q1 2021. So far, we have managed to transfer all price increases to final customers, an operation that many retailers have failed to accomplish. Therefore, as the financial results show, the net margins of our products did not suffer. It is also clear that the maturity of some of our MEGA stores is significantly contributing to this positive trend, so we expect the net result to continue to grow with the development of the MEGA network.

In this sense, in the first three months of 2022 we continued the investments to expand Agroland Business System - we are glad that we opened three new MEGA stores, in Pascani, Husi and Timisoara, in our home market, increasing the total number of stores to 19 locations. For 2022, our goal is to reach a total of 25 MEGA stores, which we estimate will reach maturity by 2024. Since the beginning of the year, we have opened 4 traditional stores - in Costesti, Dorohoi, Valu lui Traian and Recaș. We are glad that we have reached an important stage regarding the launch of a new website, www.agroland.ro, which we believe will become an important sales vector in the coming years.

The expansion of the MEGA network is beginning to have a significant impact on our results, and in this context, I would like to point out that in Q1 2022, we received over 187,000 customers in our stores, and from all sales channels (traditional, MEGA, online and through franchisees), MEGA stores had the largest contribution, of over 93,000 customers, surpassing the performance of traditional stores for the second consecutive quarter. These results are the best proof that our business model works and that MEGA stores will be the main source of traffic as well as revenue, as our networks continue to grow, aiming to become the favorite retailer of Romanians for gardening, hobby farming and pet products.

The performance in Q1 2022, as well as the food crisis in which we find ourselves today, contributes to the growth of the business during 2022. Avicola Mihailesti is perfectly positioned to serve the local market and increase its share. Our concept of circular economy and non-genetically modified eggs has a huge potential for growth in the local market and, given the quality of commercial eggs, I encourage all our shareholders to try them. In this context, we are glad that, in addition to Lidl, the eggs produced by us will soon be available in another important international supermarket chain, with a presence throughout the country.

We strongly believe in the future of domestic food production and the circular economy. Therefore, we are in the process of investing in increasing production capacity, and from our calculations, we will position ourselves in the top 3-5 producers of consumer eggs in Romania. This year, we will make an investment of approximately 800,000 euros in capacity increase, from 150,000 laying

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hens to 200,000 laying hens, supported by our own funds. For 2022, we aim for revenues of 12.5 million lei from the sale of commercial eggs, an increase of 30% compared to 2021 and an increase of 60% of the sales of day-old chicks produced on the Mihailesti platform, which is estimated that will reach 10 million lei this year.

In respect to the circular economy, ensuring local production is crucial not only for the environment, but also for reducing the carbon footprint and helping economies to become independent of cross-border supply and mitigate the risks of disruption or natural disasters, this approach to local production (food, energy, etc.) having an important critical potential. Also, shorter supply chains are part of the climate adaptation strategy and, unfortunately, Romania is far from improving this situation, as currently more than 50% of the food sold in our country is imported. Thus, at the beginning of this week we convened the General Meeting of Shareholders, which will take place in Timisoara on June 27, with the main purpose of acquiring the Combined Feed Factory, together with the related assets, located in Caransebes, Caras-Severin County, with a purchase price of 950,000 euros without VAT. The compound feed factory is fundamental for our activity because it will ensure the delivery of feed for the chickens from the Avicola Mihailesti farm. Also on the agenda of the GMS is the approval of obtaining two credit facilities with a total value of 9.2 million lei, including for financing the current activity of Avicola Mihailesti and the purchase of new harvest cereals for the Caransebeș factory.

Since the beginning of this year, I have been very vocal about the food crisis we are already going through, a situation caused by the grain crisis and the energy crisis, both accelerated and amplified by the conflict in Ukraine. In our country, the food crisis is already manifested by the continuous increase in prices, which will most likely not end until the end of 2023. It is also possible that in Romania, there will be disruptions in terms of supply of imported products, all European countries facing production problems.

One of the main challenges for the market in the near future will be the widening of the global grain shortage, primarily due to a lack of fertilizers for agriculture (65% come from Russia and Belarus, which are under sanctions). The intensification of the energy crisis will lead, in addition to major increases in food prices, to the closure of some producers who will not cope with the impact, which will cause the lack of certain products on store shelves. From this point of view, we are ready to benefit from this context through Agroland Agribusiness. As many of you have already seen in the report we published earlier this week, which contains the AAB results for Q1 2022, Agroland Agribusiness 's performance has seen a three-digit increase since the beginning of the year and we expect it to be a year very good for our Agribusiness division as well.

Returning to Agroland Business System, the company is in full development, and I am glad that in the General Meeting of Shareholders in April of this year you approved the appointment of the Board of Directors, which will include Leonard Leca, Gyorgy Ovari, as well as myself. On behalf of the newly established Board of Directors, I would like to thank you all for your trust and I look forward to working together to make Agroland one of the largest retailers in the local market. Regarding our journey in the capital market, we constantly receive questions about our transfer to the Main Market. We are currently in the process of transposing our financial statements to IFRS and selecting the auditor who will support us in our work on the Main Market. As soon as we have updates, we will inform shareholders about the details of the process. We are also looking forward to discussing any issues with you, in Timisoara, at the GMS, which will take place on June 27th!

We invite you to read more about Agroland's performance in Q1 2022, on the following pages. In case of any questions related to our activity since the beginning of the year, whether it is about business or the capital market, please do not hesitate to contact us at [e-mail].

Horia Cardos

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