Escorts Kubota : FTES Financial Statements 2023 24

Independent Statutory Auditor's Report on the Audit

of Annual Financial Statements of

FARMTRAC TRACTORS EUROPE

Sp. z o.o.

for the financial year ended

31 March 2024

Mazars Audyt Sp. z o.o.

ul. Piękna 18

00-549 Warsaw

INDEPENDENT STATUTORY AUDITOR'S REPORT

ON THE AUDIT OF ANNUAL FINANCIAL STATEMENTS

Translation of the document originally issued in Polish

Dla Zgromadzenia Wspólników FARMTRAC TRACTORS EUROPE Sp. z o.o.

Report on the Audit of Annual Financial Statements

Opinion

We have audited the annual financial statements of FARMTRAC TRACTORS EUROPE Sp. z o.o. ("the Company") which comprise the introduction to the financial statements, the balance sheet as at 31 March 2024, the profit and loss account, the statement of changes in equity, the cash flow statement for the financial year from 1 April 2023 to 31 March 2024 and additional notes and explanations ("the financial statements").

In our opinion, the accompanying financial statements:

• give a true and fair view of the Company's property and financial position as at 31 March 2024, and of its financial performance and its cash flows for the financial year then ended in accordance with the applicable provisions of the Accounting Act dated 29 September 1994 ("the Accounting Act" - Journal of Laws of 2023, item 120 as amended) and the adopted accounting principles (policy);
• comply with the applicable legislation and with the provisions of the Company's Articles of Association as to the form and content;
• have been prepared based on the accounting books kept properly, in accordance with Chapter 2 of the Accounting Act.

Mazars Audyt Sp. z o.o.

Sąd Rejonowy dla m. st. Warszawy, XII Wydział Gospodarczy KRS nr 0000086577, kapitał zakładowy: 1 268 000,00 PLN,

NIP: 5260215409, REGON: 011110970

Basis for opinion

We conducted our audit in accordance with National Standards on Auditing as per International Standards on Auditing adopted by resolution of the National Council of Statutory Auditors No. 3430/52a/2019 of 21 March 2019 regarding national standards on auditing and other documents, as amended, and resolution of the Council of the Polish Agency for Audit Oversight No. 38/I/2022 of 15 November 2022 on national standards on quality control and National Standard on Auditing 220 (Revised) ("NSA"), as well as according to the Act on Statutory Auditors, Audit Firms and Public Supervision of 11 May 2017 ("the Act on Statutory Auditors" - Journal of Laws of 2023, item 1015 as amended). Our responsibility under those standards has been further described in "Statutory Auditor's Responsibility for the Audit of the Financial Statements" section of our report.

We are independent of the Company in accordance with the International Code of Ethics for Professional Accountants (including International Independence Standards) of the International Ethics Standards Board for Accountants ("the IESBA Code"), adopted by resolution of the National Council of Statutory Auditors No. 3431/52a/2019 of 25 March 2019 on the principles of professional ethics for statutory auditors, as amended, and other ethical requirements which are applicable to the audit of financial statements in Poland. We have fulfilled our other ethical responsibilities in accordance with these requirements and the IESBA Code. During the audit, the key statutory auditor and the audit firm remained independent of the Company in accordance with the independence requirements specified in the Act on Statutory Auditors.

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

Emphasis of matter

We draw your attention to the note contained in the Company's notes to the financial statements, section V "Going concern assumptions". As disclosed in the note, some of the liabilities, particularly those relating to the sole shareholder, disclosed in the balance sheet are past due and the financial statements as at 31 March 2024 show accumulated losses in excess of the sum of supplementary and reserve capitals and half of the share capital. According to the requirements of Article 233 of the Act of 15 September 2000, Code of Commercial Companies, the Company's Management Board is obliged to immediately convene the Shareholders' Meeting in order to adopt a resolution concerning the Company's going concern.

Our opinion does not contain any qualifications regarding this matter.

Responsibilities of the Management Board for the Financial Statements

The Company's Management Board is responsible for preparing, based on the accounting books properly kept, the financial statements that give a true and fair view of the Company's property and financial position and its financial performance in accordance with applicable

Mazars Audyt Sp. z o.o.

3

provisions of the Accounting Act and adopted accounting principles (policy), as well as with the relevant legislation and with the provisions of the Company's Articles of Association.

The Company's Management Board is also responsible for such internal control as the Management Board determines is necessary to enable the preparation of financial statements that are free of material misstatement, whether due to fraud or error.

When preparing the financial statements, the Company's Management Board is responsible for assessing the Company's ability to continue as a going concern, as well as for disclosing, if applicable, matters related to going concern and for adopting the going concern assumption as an accounting basis, unless Management Board either intends to liquidate the Company or to cease operations, or has no realistic alternative but to do so.

The Company's Management Board is obliged to ensure that the financial statements meet the requirements set out in the Accounting Act.

Statutory Auditor's Responsibilities for the Audit of the Financial Statements

Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that includes our opinion. Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in accordance with the National Standards on Auditing will always detect a material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of these financial statements.

The scope of audit does not include assurance as to the future profitability of the Company and effectiveness or efficiency of running the Company's affairs by the Management Board at present or in the future.

According to principles of the National Standards on Auditing, we exercise professional judgement and maintain professional scepticism throughout the audit, as well as:

• we identify and assess risks of material misstatement of financial statements, whether due to fraud or error, we design and perform audit procedures responsive to those risks and we obtain audit evidence which is sufficient and appropriate to provide a basis for our audit opinion. The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the override of internal control;
• we obtain an understanding of internal control relevant to the audit in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the internal control in the Company;
• we evaluate the appropriateness of the accounting principles (policy) used and the reasonableness of the accounting estimates and related disclosures made by the Management Board of the Company;
• we conclude on the appropriateness of management's use of the going concern basis of accounting and, based on the audit evidence obtained, as to whether a material

Mazars Audyt Sp. z o.o.

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uncertainty exists related to events or conditions that may cast significant doubt on the Company's ability to continue as a going concern. If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's report to the related disclosures in the financial statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to the date of our auditor's report. However, future events or conditions may cause the Company to cease to continue as a going concern;

• we evaluate the overall presentation, structure and content of the financial statements, including the disclosures, and whether the financial statements represent the underlying transactions and events in a manner that achieves fair presentation.

Other Information, including the Management report

Other information includes the Management report for the financial year ended 31 March 2024 ("the Management Report").

Responsibility of the Management Board

The responsibility for the preparation of the Management Report in accordance with the applicable regulations lies with the Company's Management Board.

The Management Board of the Company obliged to ensure that the Management Report meets the requirements set out in the Accounting Act.

Statutory Auditor's Responsibility

Our opinion on the audit of the financial statements does not cover the Management Report. Our responsibility regarding the audit of financial statements is to get acquainted with the Management Report and to consider whether it is not significantly incoherent with the financial statements or with our knowledge obtained during the audit or if the Management Report seems to be significantly misstated in other manner. If, based on work performed, we consider that there are material misstatements in the Management Report, we are obliged to inform about it in our audit report. In accordance with the Act on Statutory Auditors, our responsibility is also to give an opinion whether the management report has been prepared in accordance with applicable regulations and whether it complies with information contained in the annual financial statements.

Opinion on the Management Report

Based on the work performed during the audit, in our opinion, the Management Report:

• has been prepared in accordance with Article 49 of the Accounting Act,
• is in line with information contained in the financial statements.

Mazars Audyt Sp. z o.o.

5

Apart from this issue, according to our knowledge of the Company and its environment obtained during the audit, we declare that we have not identified any material misstatement in the Management Report.

The key statutory auditor responsible for the audit that was the base of this independent statutory auditor's report is Mariusz Tomczak.

Acting on behalf of Mazars Audyt Sp. z o.o. with its registered office in Warsaw, ul. Piękna 18, entered on the list of audit firms under no. 186, on behalf of which the key statutory auditor audited the financial statements.

Mariusz Tomczak	Michał Majewski
Key Statutory Auditor	Partner
No 12055

Warsaw, 14 Mai 2024

Mazars Audyt Sp. z o.o.

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Additional Information to the Financial Statements for the period from April 1, 2023 to March 31,

2024

ADDITIONAL INFORMATION TO THE FINANCIAL

STATEMENTS

FARMTRAC TRACTORS EUROPE SP. Z OO

INCLUDING AN INTRODUCTION AND ADDITIONAL

EXPLANATORY NOTES

for the period from April 1, 2023 to March 31, 2024

Mrągowo, on May 14, 2024

FARMTRAC TRACTORS EUROPE SP. Z OO

Additional Information to the Financial Statements for the period from April 1, 2023 to March 31,

2024

I. Data identifying the Company

Farmtrac Tractors Europe Sp. z o. o. with its registered office in Mrągowo, ul. Przemysłowa 11 was established by a notarial deed of the Republic of Poland. A No. 2408/2000 of June 1,

2000andregistered in the 5th Commercial Division of the District Court in Olsztyn, Department B under number 2381.

On October 12, 2001, by the decision of the District Court in Olsztyn, 8th Commercial Division of the National Court Register in Olsztyn, Farmtrac Tractors Europe Limited Liability Company was entered into the Register of Entrepreneurs under the KRS number: 0000051183.

As at the balance sheet date, the Management Board consisted of the following persons:

1. Bharat Madan - Member of the Management Board
2. Priyank Kalra - Member of the Management Board
3. Maciej Rujner - Member of the Management Board

II Basic subject and duration of the Company's activity

The core business of the Company is production, development, import of parts and accessories, sale and organization of service of agricultural tractors.

According to the agreement, the duration of the Company is unlimited.

There were no circumstances or legal actions that would result in a limited duration of the Company's operations.

Since October 2018, the company has been ISO 9001-2015 certified.

III List of entities related to the Company

As at March 31, 2024, the sole shareholder of the Company was Escorts Kubota Limited - 15,500 shares worth PLN 15,500,000.00. (100% shares).

IV Period covered by the report

The financial statements were prepared for the period from April 1, 2023 to March 31, 2024.

V Assumption of continuation of business activity

The financial statements were prepared with the assumption that the Company would continue its business operations in the foreseeable future.

In the financial statement prepared by the Management Board as at March 31, 2024:

• The accumulated losses disclosed by the Management Board in the financial statements for the current year exceed the sum of the supplementary and reserve capitals and half of the share capital.

FARMTRAC TRACTORS EUROPE SP. Z OO

Additional Information to the Financial Statements for the period from April 1, 2023 to March 31,

2024

• Current assets are higher than short-term liabilities by over PLN 3 million. Nevertheless, a significant part of short-term liabilities, especially those relating to the sole shareholder, are overdue. The Management Board is aware that if liabilities towards the sole shareholder had to be repaid in full, the Company could lose financial liquidity and the continuation of its operations would be at risk. The Management Board does not identify any circumstances that would indicate the shareholder's intention to withhold the current financial support, i.e. to demand immediate payment of the entire balance of liabilities, which are in fact an important source of financing the business, allowing it to maintain liquidity at a level enabling the business to be run. If the Company's financial situation deteriorates, the Management Board believes that there would be no problems with spreading/significantly deferring the payment of these liabilities.
• In accordance with the financial plan adopted by the group for the next financial year, the Management Board expects an improvement in the Company's financial results.

VI Discussion of the adopted accounting principles (policy), including methods of valuing

assets
and liabilities (including depreciation), measuring	the	financial	result	and
preparing	financial	statements	to	the	extent	that	the	Act	leaves

the entity the right to choose:

The financial statements were prepared in accordance with the provisions of Chapter 2 of the Act

of September 29, 1994 on Accounting (Journal of Laws of 2023, item 120, as amended) and the implementing regulations issued on its basis and applied by the Company in a manner continuous accounting principles.

The company has documentation describing the accounting principles adopted by it and applied on a continuous basis. An important element of this documentation is a set of specific principles and methods for valuing assets and liabilities and determining the financial result, including principles for which the Company had the right to choose solutions or apply simplifications under the Accounting Act.

The financial statements were prepared using the accounting principles described below:

1. Fixed assets and intangible assets are depreciated using the straight-line method according to the depreciation rates provided for tax purposes, with the exception of development works, where instead of the 33% rate, 20% is used, which corresponds to the periods of their economic usefulness. The above-mentioned assets are depreciated from the month following their acceptance for use.
   The Company does not amortize the right of perpetual usufruct of land. Intangible assets are initially recognized at purchase price.
   Fixed assets are valued according to purchase prices or production costs.
2. intangible assets are amortized as follows:

-computer software - within 2 years

• other intangible assets - within 5 years, Examples of depreciation rates for fixed assets:

FARMTRAC TRACTORS EUROPE SP. Z OO

Additional Information to the Financial Statements for the period from April 1, 2023 to March 31,

2024

1. • computer teams - 30%
   • devices - 20%
2. fixed assets with a value not exceeding PLN 3,500.00. are included in the register of fixed assets, but are written off as costs on a one-off basis in the month following their acceptance for use.

d)	Fixed	assets	and intangible assets	are	presented	in	the	balance	sheet
at net value.
e)	Fixed	assets	under	construction	are	valued	at	the	total	costs

directly related to their purchase or production. Fixed assets under construction are not depreciated until their construction is completed and put into use.

1. Valuation of current assets

• production materials and spare and household parts - at purchase prices, applying the "first in, first out" principle.
• finished products and work in progress at the actual cost of production
• receivables and liabilities in the amount due, short-term receivables were disclosed in the amount due less impairment losses. Write-downs on receivables are included in other operating costs. Receivable write-offs are made in 100% for receivables over 1 year old. Receivables from related entities are not subject to impairment.
• domestic cash is recognized at nominal value,
• cash and settlements in foreign currencies are converted as at the balance sheet date at the average NBP exchange rate on the balance sheet date,

a)	Equity is recognized in the accounting books divided into types

and according to the principles specified in legal provisions and the provisions of the

Company's articles of association.

1. Deferred taxes
   Current corporate income tax liabilities are determined in accordance with Polish tax regulations.
   Due to temporary differences between the value of assets and liabilities shown in the accounting books and their tax value, the Company creates a provision and determines deferred tax assets.
   Assets are determined in the amount of the amount to be deducted from income tax in the future, in connection with negative temporary differences, which will result in a future reduction of the basis for calculating income tax, taking into account the prudence principle.

A deferred income tax reserve is created in the amount of income tax that will be

payable

in

the

future

due

to

FARMTRAC TRACTORS EUROPE SP. Z OO