KORYCKA,BUDZIAK&AUDYTORZY Sp. Zo.o. Auditors & Tax Consultants NEXIA INTERNATIONAL

Transcription

1 KORYCKA,BUDZIAK&AUDYTORZY Sp. Zo.o. Auditors & Tax Consultants NEXIA INTERNATIONAL The opinion on audit of consolidated financial statement of CAPITAL GROUP OF APATOR SA for the period from 1 st January to 31 st December 2009 Warsaw, April 2010

2 THE OPINION OF INDEPENDENT CHARTERED ACCOUNTANT To the Shareholders and Supervisory Board of APATOR Joint Stock Company in Toruń We have conducted the audit of the attached consolidated financial statement of capital group of APATOR SA ( hereinafter called; Capital Group ),where the dominant entity is APATOR Joint Stock Company with the seat in Toruń, śółkiewskiego 21/29, covering: consolidated statement on financial position made at 31 st December 2009 where assets and liabilities proved the amount of PLN, consolidated statement on total income made for the period from 1 st January 2009 to 31 st December 2009 proved total income in total in amount of PLN, including net profit in amount of PLN, consolidated statement of changes in equity proved the increase of the own capital in the period from 1 st January 2009 to 31 st December 2009 by the amount of PLN, consolidated statement of cash flow account in the period from 1 st January 2009 to 31 st December 2009 proved the decrease of net cash by the amount of PLN principles of accounting and additional information and clarifications The Executive Board of the Company is responsible for making and reliable presentation of consolidated financial statement and report of activity of Capital Group. The Executive Board of the Company and members of the Supervisory Board are obligated to provide the financial statement and report on activity of Capital Group to meet the requirements specified in the Act dated 29 th September 1994 on accounting (Dz.U No 152 item 1223 with later amendments) here and after called act on accounting Our task was to make the audit of attached consolidated financial statement and based on it to give the opinion if the statement is in all significant aspects in accordance with the required rules (policy) of accounting of Capital Group and reliable and clear it proves in all significant aspects, property and financial position and also the financial result of Capital Group. We have conducted the audit of consolidated financial statement attached in accordance with the provisions of: regulations of chapter 7 of the Act of accounting national norms of performing of financial audit issued by the National Chamber of Statutory Auditors We have planned and conducted the audit in such a manner in order to get rational certainty to allow giving the opinion on the statement. In particular the audit covered checking of correctness the accounting rules (policy) applied by the entity significant estimations, checking in majority randomly accounting documents and records which contain figures and information presented in financial statement and the complete assessment of consolidated financial statement. We consider the audit has provided enough information in order to give reliable opinion. In our opinion consolidated financial statement audited in all significant aspects: presents reliable and clear the information significant for the evaluation of property and financial positions of Capital Group at 31st December 2009 and its financial result in the period from1st January 2009 to 31st December 2009, the statement has been made in accordance with appropriate accounting rules of International Accounting Standards and International Financial Reporting Standards and

3 interpretations related to them and announced in form of decrees of European Commission when cases are not governed by the above documents they are referred to the Act of Accounting and executive regulations and based on accounting books correctly kept, it is in accordance with legal regulations related to the content of financial statement and the provisions of the Statute of the entity, it is in accordance with regulations obligatory to Capital Group it present the data in accordance with the requirements defined in the regulations of Ministry of Finance dated 19 th February 2009 on current and regular information issued by security issuers and conditions to be considered as information required by law of the country not being the member of the European Union (Dz.U. No. 33 dated 28 th February 2009 item 259 with amendment in Dz.U no.131 item 1080). No claiming regarding correctness and reliability of financial statement audited, we pay your attention that capital Group presents in its consolidated statement of financial position particular components of the equities without consideration of the effects of their conversions made in accordance with the requirements of MSR 29 Financial reporting in hyperinflation The effects of conversions and the reasons why they have not been not considered in the statement of financial position of the Company are presented in the note to consolidated financial statement (Note no. 15). The issue was already mentioned in opinions of consolidated financial statements for the period of We have familiarized with the report on the activity of Capital Group made by the Executive Board of the dominant entity for the period from 1 st January 2009 to 31 st December The report on activity of Capital Group is complete in understanding of art.49 para 2 of the Act on accounting and it takes into consideration in all significant aspects, the information being mentioned in the resolution of Ministry of Finance dated 19 th February 2009 on current and regular information issued by security issuers and conditions to be considered as equal information required by law of the country not being the member of European Union (Dz.U. No 33 dated 28 th February 2009 item 259 with later amendment). Information included in the report of activity of the Capital Group having its origin in consolidated financial statement audited is in accordance with it. Chartered Accountant of the Group Key Chartered Accountant Ewa Orkiszewska nr 2890 Performing the audit on behalf of entity authorised for auditing of financial statements No 84 Korycka,Budziak@Audytorzy Sp. z o.o. ul.solec 22, Warszawa

4 KORYCKA,BUDZIAK&AUDYTORZY Sp. Zo.o. Auditors & Tax Consultants NEXIA INTERNATIONAL The report on audit of consolidated financial statement of CAPITAL GROUP OF APATOR SA for the period from 1 st January to 31 st December 2009 Warsaw, April 2010

5 Content 1. General part Identification of Capital Group The make up of the Capital Group APATOR S.A Information on the Parent Company Identification of the audited consolidated financial statement Scope and basis of audit Consolidated financial statement for the previous year Analysis of financial position of capital Group Data and ratios presenting the economic and financial positions Interpretation of presented data and ratios General conclusion Detailed part Internal accounting control system Stock taking Consolidated statement on financial position Consolidated statement of income statement Accounting principles (policy) and method of financial data presentation Goodwill from consolidation and its write downs Equity, including minority shares Consolidation exclusions and corrections Conditional liabilities Additional information and clarifications Report on activity of Capital Group Events taking place after the balance date Summarising caluse Final provisions... 16

6 1. General part 1.1 Identification of Capital Group The audit concerned the consolidated financial statement of Capital Group with Parent Company APATOR S.A. (hereinafter referred: Parent Company) made at 31 st December 2009 for the financial year covering the period since 1 st January 2009 till 31 st December The make up of the Capital Group APATOR S.A. The Capital Group of Apator S.A (hereinafter referred Capital group) at Covers the following entities: Parent Company Apator S.A. Subsidiaries: Apator Control Sp. zo.o. Apator Metrix S.A. Apator Kfap Sp. z o.o. subsidiary of ApatorPowogaz S.A. Apator Mining Sp. z o.o. FAP PAFAL S.A. Apator GmbH, Germany Apator Rector Sp. z o.o. ApatorPowogaz S.A. PPH Wodpol Sp. z o.o. subsidiary of Apator Powogaz S.A. Apator Telemetria Sp. Z o.o. subsidiary of Apator Powogaz S.A. Apator Metroteks, Ukraine subsidiary of Apator Powogaz S.A. Apator Ukraine does not run any business The make-up of Capital Group in 2009 changed in relation to the previous year by including the following subsidiaries : Apator Telemetria Sp. z o.o. with the headquarters in Słupsk and Ukrainian company Apator Metroteks. 1.3 Information on the Parent Company The Parent Company that prepared consolidated financial statement is APATOR SA with headquarters in Toruń, ul. śółkiewskiego 21/29. The Parent Company was established on 3 rd December Registration of the Company at the court was made on 14 th January 1993 under number RHB On 24 th October 2001 APATOR S.A. was registered in National Court Register at Regional Court in Toruń, VII Economy Department, under number KRS According to the Statute the essential business of Apator SA is the manufacturing and service of electrical distribution and control equipment. The Parent Company: - The Number of National Official Register of Business Entities Registered in NDPRF under number 87A0005H3

7 - Tax payer of Taxes for Goods & Services (VAT) and Tax Office has granted the Tax Identification Number Tax payer of VAT UE PL At 31 st December 2009 the value of share capital of Parent Company was PLN and it consists of shares of nominal value of 0,10 PLN each. Share capital includes registered shares of series A preferred to voting and ordinary bearer shares of series A,B and C. During the financial year primary capital was decreased by the amount of PLN due to redemption of ordinary bearer shares based on the resolution no.17/2009 of General Shareholders meeting of Apator SA dated 8 th June At 31 st December 2009 the structure of ownership of share capital of Parent Company was as follows: Number Number Share in Share in Shareholders of shares of votes share capital % total votes % Apator Mining Sp. z o.o ,80 11,28 Mariusz Lewicki ,74 9,42 Tadeusz Sosgórnik ,41 8,34 Danuta Guzowska ,33 7,49 Zbigniew Jaworski ,78 6,17 Janusz Marzygliński ,02 6,01 Pozostali akcjonariusze ,92 51,29 Total ,00 100,00 The supervising body of parent Company is the Supervisory Board acting with the following make-up in 2009 First Name and Sure Name Janusz Ryszard Marzygliński Ryszrad Wojnowski Danuta Urszula Guzowska Mariusz Lewicki Krzysztof Kazimierz Kwiatkowski Mariusz Hubert Pawlak Function Chairman of Supervisory Board Deputy Chairman of Supervisory Board Member of Supervisory Board Member of Supervisory Board Member of Supervisory Board Member of Supervisory Board appointed based on Resolution no. 14/2009 of Ordinary General Shareholders Meeting dated 8 th June 2009 The Executive Board of Parent Company was as follows: Janusz Niedźwiecki President of Apator SA Tomasz Habryka Member of Executive Board Jerzy Kuś Member of Executive Board

8 1.4 Identification of the audited consolidated financial statement Consolidated financial statement being the object of audit has been prepared by the Parent Company in accordance with appropriate accounting rules of International Accounting Standards and International Financial Reporting Standards and interpretations related to them announced in form of decrees of European Commission. The statement covers: consolidated statement on financial position made at 31 st December 2009 where on side of assets and liabilities proved the amount of PLN, consolidated statement on total income made for the period from 1 st January 2009 to 31 st December 2009 proved total income in total in amount of PLN, consolidated statement of changes in equity proved the increase of the own capital in the period from 1 st January 2009 to 31 st December 2009 by the amount of PLN consolidated statement of cash flow account in the period from 1 st January 2009 to 31 st December 2009 proved the decrease of net cash by the amount of PLN principles of accounting and additional information and clarifications The basis for making consolidated financial statement of Capital Group of Apator SA was the consolidated documentation and consolidated financial statement of Capital group of Apator Powogaz SA and statements of other entities included in Grupa Apator. The table below presents information on consolidated financial statements: Name and headquarters Day of Key chartered accountant acting on behalf of the Company preparation of financial statement of authorised entity APATOR SA in Toruń Ewa Orkiszewska Reg.no.2890 on behalf of Korycka,Budziak&Audytorzy Sp. z o.o.- authorised entity Reg no. 84 Apator Control Sp. z o.o Cezary Sierpiński Reg. no on in Toruń behalf of Korycka,Budziak&Audytorzy Apator Metrix SA in Tczew Apator Mining Sp. z o.o. in Katowice FAP PAFAL SA in Świdnica Capital Group of Apator Powogaz SA in Poznań Apator GmbH, Eberbach Germany Sp. z o.o.- authorised entity Reg no Wojciech Mackiewicz Reg. no on behalf of Korycka,Budziak&Audytorzy Sp. z o.o.- authorised entity Reg no Krystyna Lewandowska Reg.no.9306 on behalf of Korycka,Budziak&Audytorzy Sp. z o.o.- authorised entity Reg no Krystyna Lewandowska Reg. no on behalf of Korycka,Budziak&Audytorzy Sp. z o.o.- authorised entity Reg no Jan Motławski Reg.no on behalf of Korycka,Budziak&Audytorzy Sp. z o.o.- authorised entity Reg no Not audited Type of opinion on the financial statement Without reservations with a comment Without reservations with a comment Without reservations with a comment Without reservations with a comment Without reservations with a comment Without reservations with a comment The consolidation of financial statements of all subsidiaries covered by consolidated financial statement has been made by the entire method. Apator Ukraine - subsidiary that does not run business has not been consolidated. The shares of the entity in consolidated financial statement were covered by 100% write down. In consolidated financial statement of Capital Group at 31 st December 2009 were evaluated the investments in associated entities by method of ownership: Apator Elektro SA with headquarters in Moscow and Metcom KFT, Budapest. The shares in ZAO Teplovodomer were also evaluated by ownership method consoliated by Apator Powogaz SA.

9 Shares in Gran-Systema-Pafal Sp. z o. o. with headquarters in Mińsk (the entity associated with FAP PAFAL SA) at in audited year were sold in favor of the other companies. 1.5 Scope and basis of audit Based on the contract concluded on 14 th May 2009 the Executive Board of the Parent Company has commissioned Korycka, Budziak & Auditorzy Sp. z o.o. in Warsaw ul. Solec 22 entity entitled to perform the audit of financial statements, registered in the list of the National Chamber of Statutory Auditors under number 84, to perform the audit of consolidated financial statement of Capital Group for the period from 1 st January2009 to 31 st December The basis to conclude the contract was the resolution concerning the appointment of chartered accountant to audit financial statements of the Parent Company and consolidated financial statements of Capital Group of APATOR SA in the period adopted by the Supervisory Board of APATOR SA on 19 th December Audit has been carried out by Ewa Orkiszewska, chartered accountant ( reg. no 2890) Both Korycka, Budziak & Audytorzy Sp. zo.o. (hereinafter referred Auditors) as well as auditor that carries out on its behalf key chartered accountant meet the requirements of impartiality and independence specified in art 56 of the Act dated 7 th May 2009 on chartered accountants and their council, entities entitled to audit financial statements and public surveillance. The planned scope of audit has not been limited. The Parent Company of Capital Group of APATOR SA made available required by chartered accountant data (consolidation documents), information and documents. The Executive Board of parent Company submitted chartered accountant the statement in writing on among other things: completion and reliability consolidated financial statement of Capital Group and consolidation documents being the basis for making consolidated financial statement, disclosure all the events that occurred after the date of balance sheet and which could have the influence on rightness of the opinion and correctness and reliability of consolidated financial statement and evaluation of the property and financial positions of Capital Group, not use any accounting tips in order to improve artificially the image of financial position of Capital Group Audit of consolidated financial statement and consolidation documents was carried out in 14 th April till 29 th April The audit was carried out according to: regulations of the chapter 7 of the Act dated 29th September 1994 on accounting (Dz.U No. 152 item 1223 with later amendments), national norms of financial search issued by National Chamber of Statutory Auditors The aim of our audit was to express the opinion in writing if consolidated financial statement for the period since 1 st January 2009 till 31 st December 2009 is correct and reliable and it presents clearly the property and financial positions and also financial result of Capital Group in accordance with accounting rules resulting from International Accounting Standards, International Financial Reporting Standards and associated with them interpretations announced in decrees of European Commission and in case of not settled aspects in the standards in compliance with the requirements of the Act on accountancy and based on it secondary regulations issued.

10 The object of auditing was property, financial positions, financial result and profitability of Capital Group but not data concerning particular consolidated entities. The object of auditing was not to detect and clarify the events wanted by law like misuse of funds and other events against the law which could occur beyond the accounting system of consolidated entities. 1.6 Consolidated financial statement for the previous year Consolidated financial statement of Capital Group for financial year ended on 31 st December 2008 was audited by entitled entity:korycka, Budziak & Audytorzy Sp. z o.o.. The opinion was made on consolidated financial statement audited without reservations with comment concerning the disclosure in the statement prepared in accordance with International Accounting Standards and International Financial Reporting Standards the effects of hyperinflation calculation of equity of capital group only clarification note. Consolidated financial statement of Capital group for 2008 was approved by ordinary general Shareholders Meeting of APATOR SA on 8 th June 2009 and it was published in Monitor Polski B no 1782 item 9955 of 29 th September Analysis of financial position of capital Group 2.1 Data and ratios presenting the economic and financial positions Description Total balance sheet (000 PLN) Fixed assets (000 PLN) Current assets (000 PLN) Equity (000 PLN) Revenues from sales - operation continued and discontinued (000 PLN) Result from sales operation continued and discontinued (000 PLN) Net financial result * (000 PLN) Net profit per shareholders of Parent Company (000 PLN) Profitability of the property (%) Net financial result* Total assets Return of equity (%) Net financial result* Equity Sales profitability (%) Profit from sales Revenues from sales of products and goods Fluidity- fluid ratio I Current assets Short term liabilities and reserves Fluidity fluid ratio II Total current assets-reserves Short term liabilities and reserves ,5 7,3 17,7 17,4 14,0 22,5 13,3 13,5 13,2 2,0 1,7 3,5 1,2 1,1 2,3

11 Fluidity fluid ratio III 0,1 0,2 0,3 Cash and other cash assets Short term liabilities and reserves Payment rotation days Receivables from deliveries and services x 365 days Revenues from sales of products and goods Ratio of repayment of liabilities (days) Receivables from deliveries and services x 365 days Costs of products, goods and materials sold Inventory turnover (days) Inventories x 365 days Costs of products, goods and materials sold Sustainability of financing (%) Equity+reserves and long-term liabilities 65,6 70,6 66,6 26,8 27,8 25,5 83,6 81,7 65,7 75,6 71,3 83,8 Total liabilities * result attributed to the shareholders of the Parent Company and minority shareholders 2.2 Interpretation of presented data and ratios The value of assets of the Capital Group at the end of 2009 in relation to the status of the beginning of the year in spite of inclusion in Grupa Apator two subsidiaries decreased by PLN that is by 4,7%. The change was caused by: decrease of the value of fixed assets by PLN decrease of the value of current assets by PLN The decrease of the value of tangible fixed assets resulted first of all from qualification of properties in Pniewy and machines and equipment used (amount of PLN) to assets held for sales. Besides tangible fixed assets the influence on the decrease of the value of fixed assets of Capital Group had significant decrease of assets due to tax deferred (decrease by PLN) related to the performance of temporary differences in income tax regarded tax settlements of losses on optional transactions where the reserves were established in the previous year for that purpose. Among current assets the biggest drop in relation to the previous year showed cash (decrease by PLN).The decrease of cash being in possession of Capital Group is concerned first of all with expenditure of the huge amount of financial means in 2009 to settle optional transactions concluded in previous year and also with the operation of credit debt of Capital Croup. The largest share in the structure of current assets of Grupa Apator on the closing day of financial year 2009 had: Trade receivables 45,66% ( ,41%) Inventories 37,87% ( ,74%) Cash 7,07% ( ,19%) Most of sources of financing of the property of Capital Group at were equities. Their share in sources of financing of the activity of Grupa Apator in relation to the status at the beginning of financial year increased from 52,45% to 60,46%. It is the result of repayment in 2009 part of loan liabilities of the Parent Company and subsidiaries (decrease of the loan debt in total by PLN including Parent Comapny by PLN) and also repayment for the most part of financial liabilities due to

12 currency options (decrease of financial liabilities due to financial instruments by PLN). The Companies from Capital group of APATOR SA in 2009 earned the receivables from sales in transaction price higher by PLN that is by 3,19% higher than in previous year. The costs of operation activity born in 2009 were higher by PLN that is by 3,44% than in previous year and they resulted in performance in 2009 higher result on sales only by PLN that is by 1,62%. The increase of operating costs of the Capital Group was the result of: increase in value of goods and products sold by PLN that is by 0,50% increase of sales costs by PLN that is by 11,95% increase of overheads by PLN that is by 14,6% The most increase of costs by type concerned outsourcing (increase by 11,4%) and other costs (increase by 10,61%). The costs related to employee benefits increased by PLN that is by 4,05%. In spite of the achievement by Capital Group in 2009 the result on net sales a bit higher than in previous year, the result on operating activity being performed in financial year was much lower than in 2008 first of all due to worse results by: PLN of the result on write down of inventories in manufacturing and commercial ones of the companies in Grupa Apator PLN of the result of reserves regarding severance pay of pensions, jubilee awards and leaves, PLN of the result of other operating activity More profitable than in 2008 was the result of financial activity of Capital Group (decrease of losses by PLN). It is the result first of all of establishment of reserves for expected in previous year for losses to be covered in 2009 and 2010 concerning optional transactions concluded in The financial result achieved by Capital Group in 2009 was by PLN higher than in previous year. Ratios of profitability of activity showed in relation to the previous year the following changes: ratio of profitability of the property increased from 7,3% to 10,5% profitability of equity increased from 14,0% to 17,4% ratio of sales profitability maintained at the level similar to the ratio in previous year Fluidity ratios calculated on the basis of data of consolidated balance sheet showed at small growth (except ratio III) in relation to the ratios fixed at the end of the previous year. The values of the ratios achieved at the balance day do not indicate the occurrence of any threats to financial fluidity of Capital Group treated as a whole. Not large unfavourable changes were presented by ratio of inventory turnover (rotation cycle longer by 2 days) calculated on the basis of data of consolidated financial statement, other ratios of rotation improved a little bit: payment rotation days decreased by 5 days and repayment of liabilities decreased by 1 day. 2.3 General conclusion Presented data and ratios and plans of the Executive Boards of the companies in Capital Group and other information obtained during audit do not show any threats for the possibility

13 to continue the activity by entities covered by consolidated financial statement for the next year due to intended give up or significant restriction by them of current activity. 3. Detailed part 3.1 Internal accounting control system The correctness of internal control system operation in Capital Group was subject to detailed audit in particular companies (excluding foreign companies not having significant influence on consolidated financial statement). No significant irregularities that might influence on the correct registration of economic operations in entities of the Capital Group were found in the functioning of the internal control system during the audit. 3.2 Stock taking The correctness of stock taking of property elements of the companies subject to consolidation concerning the scope, dates, methods used And correctness of verification and calculations of the results was subject to detailed audit in individual companies (excluding foreign companies). Chartered accountants did not have any reservations therefore we considered that property status of the companies subject to consolidation in required scope was proved by stock taking. 3.3 Consolidated statement on financial position Items of consolidated balance Fixed assets Intangible assets Goodwill Property, plant and equipment Investment property Long-term investments Long-term receivables Long-term prepayments Deferred income tax assets Current assets Inventories Short-term receivables Short-term investments Short-term prepayments Fixed assets held for sales Total assets Equity Equity attributed to shareholders of the Parent Company Minority capital Liabilities and reserves for liabilities Long-term reserves Short-term reserves Long term liabilities Short-term liabilities

14 Total liabilities Consolidated statement of income statement Revenues and costs Revenues from sales Operating costs Profit from sales Other operating revenues (costs) Share in profits of associated entities consolidated by equity method Restructuring revenues (costs) Operating profit Financial revenues (costs) Negative goodwill transferred to result Income before tax Income tax Net profit from continued activity Net profit (loss) from discontinued activity Net profit,including Shareholders of the Parent Company Minority shareholders Other total income, including Gains and losses arising from translating the financial statements of foreign operations Total income in total including attributed to: Shareholders of Parent Company Minority shareholders Accounting principles (policy) and method of financial data presentation In consolidated financial statement for the financial year ended on 31 st december 2009, the executive Board of Parent Company presented the principles of accounting and the methods of financial data presentation of capital group. In 2009 no significant changes were made in principles of accounting principle used but small changes were made in comparative data for 2008 in particular in relation to corrected financial statements of : Apator GmbH and associated entities ZAO Teplovodomier (Russia),METCOM KFT (Hungary) and APATOR ELEKTRO (Russia) and some minor amendments concerning presentation of some items of the statement. The changes have been presented in Note 35 to consolidated financial statement. 3.6 Goodwill from consolidation and its write downs The principles to establish the goodwill from consolidation, principles of making write downs due to decrease of value of the goodwill and write downs for the last financial year have been presented in point of accounting principles and in Clarification Note no. 3 to consolidated financial statement.

15 3.7 Equity, including minority shares The status of own capitals presented in consolidated balance sheet at is in accordance with consolidation documents. Consolidated financial data concerning equities have been presented in Clarification Notes nos.15,16 and 17 to consolidated financial statement. Equity for minority at was in amount of PLN and it regarded minority shares: Apator Mining Sp. z o.o. amount of PLN Apator Rector Sp. z o.o. amount of PLN Apator Powogaz SA amount of PLN Wodopol Sp. z o.o. amount of PLN Apator Telemetria SA amount of PLN Apator Metroteks amount of PLN 3.8 Consolidation exclusions and corrections Transactions between consolidated entities were excluded from consolidation. Exclusion of mutual settlements included in assets not performed margins on transactions between entities of the Capital Group, dividends received from entities within Capital Group and also other turnovers performed within Capital Group are in accordance with consolidation documents. 3.9 Conditional liabilities Conditional liabilities of the entities of the Capital Group have been described in Clarification Note No. 21 to consolidated financial statement Additional information and clarifications The Parent Company provided additional information and clarifications according to the requirements of International Accounting Standards, International Financial Reporting Standards and interpretations referring to them and published in the form of directives of the European Commission and in the scope not regulated in these standards according to the Act on Accounting and regulations issued on its basis as well as according to the regulations of Ministry of Finance dated 19 th February 2009 on current and regular information transferred by issuers of securities and to be considered as information required by law of the country not being the member of the European Union (Dz.U. No. 33 dated 28 th February 2009 item 259 with later amendments) Report on activity of Capital Group The Executive Board of the Parent Company has submitted the report on activity of Capital Group for the period since 1 st January 2009 till 31 st December Financial data presented

16 in the report on activity result from audited consolidated financial statement prepared at 31 st December The report on activity of Capital Group meets in all significant aspects the requirements of art 49 para 2 of the Act on Accounting and the regulations of Ministry of Finance dated 19 th February 2009 on current and regular information transferred by issuers of securities and to be considered as information required by law of the country not being the member of the European Union (Dz.U. No. 33 dated 28 th February 2009 item 259 with later amendments) Events taking place after the balance date According to the statement of the Executive Board of the Parent Company there were no events after the balance date were not included into financial statement for 2009 that had a substantial influence on it. The events that took place after the date of balance and might have a substantial influence on the development of business of Apator SA and the Capital Group have been described in Clarification Note No. 37. On 31 st March 2010 APATOR SA after completion of the procedure of the obligatory purchase of shares of APATOR POWOGAZ SA became the owner of 100% of that company. Up to the day of preparation of the report Apator SA concluded the contracts with minority shareholders of Apator Mining Sp. z o.o. and based on them it became the owner of all the shares of that company. Up to the day of preparation of the report financial statement of subsidiaries: Apator Control Sp. z o.o. and Apator Rector Sp. z o.o. were approved by the General Partners Meetings Summarising caluse 1. The reliability and correctness of data included in particular items of consolidated annual report RS-2009 for the period since 1 st January 2009 till 31 st December 2009 was audited and it was found that they meet appropriate requirements. 2. As a result of our audit we found that consolidation documents are complete and correct in all significant aspects and they meet all significant requirements that consolidation documents should do. 3. The synthetic assessment of the consolidated financial statement is included in opinion being the separate document. 4. Final provisions The report has been made in six copies, four of which are received by the Parent Company. The report consists of 17 numbered pages with the signature of the auditor. Key Chartered Accountant /-/ illegible signature Ewa Orkiszewska reg. no Acting on behalf of authorised entity for Auditing of financial statements Reg. no. 84

17 Korycka,Budziak&Audytorzy Sp. z o.o. Ul. Solec Warszawa Chairman of the Executive Board /-/ illegible signature mgr Ewa orkiszewska Chartered accountant reg. No Warsaw, 29 th April 2010

18 Annual report RS Annual consolidated financial statement For the period Since 1 st January till 31 st December 2009 Toruń,

19 Consolidated financial statement for 2009 Content 1. GENERAL INFORMATION Information on dominant entity, Capital Group and consolidated financial statement THE MAKE UP OF GRUPA APATOR MAKE UP OF THE EXECUTIVE BOARD AND THE SUPERVISORY BOARD Information on basis for preparation of financial statement, reporting currency and the level of rounding of figures applied THE BASIS FOR PREPARATION OF CONSOLIDATED FINANCIAL STATEMENT REPORTING CURRENCY AND THE LEVEL OF ROUNDING OF FIGURES APPLIED ASSMUPTION OF ACTIVITY TO BE CONTNUED FINACIAL STATEMENT OF THE ENTITY MAIN FINANCIAL DATA STATEMENT ON FINANCIAL POSITION STATEMENT ON TOTAL INCOME STATEMENT ON CHANGES IN EQUITY CASH FLOW STATEMENT INTERNATIONAL STANDARDS OF FINANCIAL REPORTING APPLIED STANDARDS APPROVED IN EUROPEAN UNION STANDARDS APPLIED FOR THE FIRST TIME STANDARDS AND INTERPRETATIONS EARLIER APPLIED STANDARDS ALREADY PUBLISHED THAT HAVE NOT COME INTO LIFE SO FAR ACCOUNTING PRINCPLES APPLIED GENERAL PRINCIPLES PRINCIPLES OF CONSOLIDATION INVESTMENTS IN ASSOCIATED ENTITIES GOODWILL PRECISE RULES OF ASSETS AND LIABILITIES VALUATION USED WITHIN GrupA OWN CREATED INTANGIBLE ASSETS RESEARCH AND DEVELOPMENT COSTS PROPERTY,PLANT AND EQUIPMENT LEASING INVESTMENT PROPERTIES FIXED ASSETS AND NET ASSET GROUPS DESIGNATED FOR SALE INVENTORY OUTSIDE FINANCING COSTS STATE SUBSIDIES TRADE RECEIVABLES FINANCIAL INSTRUMENTS BANK LOANS TRADE LIABILITIES PROVISIONS SALE REVENUES TRANSACTIONS IN FOREIGN CURRENCY TAXES EQUITIES CLARIFICATION NOTES TO FINANCIAL STATEMENT NOTE NO OPERATING SEGMENTS NOTE NO INTANGIBLES NOTE NO GOODWILL Name of capital group: APATOR Page 2

20 Consolidated financial statement for 2009 NOTE NO Property, plant and equipment NOTE NO INVESTMENT PROPERTY NOTE NO Investments in associated entities NOTE NO SHARE IN COMMON VENTURES NOTE NO FINANCIAL ASSETS AVAILABLE FOR SALE AND HELD FOR TRADING NOTE NO DERIVATIVES NOTE NO INVENTORY NOTE NO LONG TERM CONTRACTS NOTE NO TRADE RECEIVABLES AND OTHER ONES NOTE NO CASH AND ITS EQUIVALENTS NOTE NO FIXED ASSETS HELD FOR SALE NOTE NO SHARE CAPITAL NOTE NO OTHER CAPITALS NOTE No OWN SHARES NOTE NO PROVISIONS FOR LIABILITIES NOTE NO TRADE LIABILITIES AND OTHER ONES NOTE NO LOANS AND BORROWINGS NOTE NO CONDITIONAL LIABILITIES AND ASSETS NOTE NO FINANCIAL LEASING AND OTHER FINANCIAL LIABILITIES NOTE NO INCOME TAX NOT NO DEFERRED INCOME TAX NOTE NO REVENUES FROM SALES EARNED IN REPORTING PERIOD NOTE NO OPERATING REVENUES AND COSTS NOTE NO FINANCIAL REVENUES AND COSTS NOT NO RESULT OF DISCONTINUED OPERATION NOTE NO PROFIT PER SHARE NOTE NO FUSION OF ENTITIES NOTE NO InformaTION ON AFFILIATED ENTITIES NOTE NO OBJECTIVES AND PRICIPLES OF FINANCIAL RISK MANAGEMENT NOTE NO REMUNERATION OF CHARTERED ACCOUNTANT NOTE NO Name of capital group: APATOR Page 3

21 Consolidated financial statement for 2009 EXPLANATIONS CONCERNING CASH FLOW ACCOUNT NOTE NO CHANGES IN ACCOUNTING PRINCIPLES NOT NO EMPLOYMENT NOTE NO EVANTS THAT OCCURRED AFTER THE REPORTING PERIOD SIGNATURES Name of capital group: APATOR Page 4

22 Consolidated financial statement for GENERAL INFORMATION 1.1. INFORMATION ON DOMINANT ENTITY, CAPITAL GROUP AND CONSOLIDATED FINANCIAL STATEMENT Capital Group APATOR ( Group ) consists of dominant entity of APATOR S.A. and its subsidiaries (see point 1.1.1). Dominant entity APATOR Joint Stock Company with the headquarters in Toruń was established by the employees of former state owned company under the name of Zakłady Aparatury Elektrycznej Apator in Toruń. The entity was registered at Regional Court in Toruń at V Economic Department on 14 th January 1993 under registration number RHB On 24th October 2001 the entity was entered into Register of Entrepreneurs at Regional Court in Toruń, VII Economic Department of National Register Court under number of The entity runs business on the territory of Poland based on regulations of the Polish Commercial Companies Code. SUBJECT OF ACTIVITY OF DOMINANT ENTITY In accordance with the Statute the main activity is manufacturing and service of electrical distribution and control equipment. Shares of APATOR S.A. are quoted on the essential market according to Warsaw Stock Exchange in Warsaw classification electrical engineering industry sector. The hereby consolidated financial statement was signed by the Executive Board of the dominant entity of APATOR SA on 29 th April The financial statement of APATOR S.A. covers 2009 and it includes comparative data for The period of duration of the dominant entity of APATOR S.A. and entities included in Capital Group is not defined THE MAKE UP OF GRUPA APATOR The Goup consists of APATOR S.A. and the following subsidiaries and associated entities: APATOR MINING Sp. z o.o. (subsidiary of APATOR SA) APATOR CONTROL Sp. z o.o. (subsidiary of APATOR SA) APATOR METRIX S.A. (subsidiary of APATOR SA) APATOR POWOGAZ S.A. (subsidiary of APATOR SA) FAP PAFAL S.A. (subsidiary of APATOR SA) APATOR RECTOR Sp. z o.o. (subsidiary of APATOR SA) APATOR GmbH (subsidiary of APATOR SA) APATOR KFAP Sp. z o.o. (subsidiary of APATOR POWOGAZ SA) WODPOL Sp. z o.o. (subsidiary of APATOR POWOGAZ S.A.) APATOR TELEMETRIA Sp. z o.o. (subsidiary of APATOR POWOGAZ S.A.) APATOR METROTEKS (subsidiary of APATOR POWOGAZ S.A.) APATOR ELEKTRO (associated entity with APATOR S.A.) Teplovodomer (associated entity with APATOR POWOGAZ S.A.) METCOM KFT (associated entity with APATOR METRIX S.A.) Name of capital group: APATOR Page 5

23 Consolidated financial statement for 2009 Consolidated entities in Capital Goup Company Seat Essential subject of activity Appropriate Court /Body for registration Share in capital Remarks APATOR MINING Sp. z o.o. Katowice Manufacturing of distribution and control electrical equipment, electrical equipment, cranes, pumps and compressors and services Regional Court in Katowice, Economy Department of National Court Register KRS ,89% Subsidiary APATOR CONTROL Sp. z o.o. Toruń Manufacturing of distribution and control equipment, electrical equipment and services and research & developments of technical studies Regional Court in Toruń, VII Economy Department of National Court Register KRS ,00% Subsidiary APATOR METRIX SA Tczew Manufacturing of metering instruments and equipment, control, navigation and for other purposes FAP PAFAL S.A. Świdnica Manufacturing of control and metering equipment, electrical and electronic one, trading and service RECTOR Sp. z o.o. APATOR POWOGAZ S.A. Zielona Góra Poznań IT technology, edition activity, printing, and copying of records in information carriers Manufacturing of metering instruments and control, research, navigation equipment and manufacturing of other equipment of general use Regional Court in Gdańsk, IX Economy Department of National Court Register KRS Regional Court for Wrocław - Fabryczna in Wrocław, IX Economy Department of National Court register KRS Regional Court in Zielona Góra, VIII Economy Department of National Court Register KRS Regional Court in Poznań Nowe Miasto and Wilda in Poznań, VIII Economy Department of National Court Register KRS ,00% Subsidiary 100,00% Subsidiary 70,00% Subsidiary 99,40% Subsidiary APATOR GmbH Worms Sales of systems of prepayment electricity meters HRB Amtsgericht Mainz 100,00% Subsidiary APATOR ELEKTRO Moscow Sales of electrical and electronic equipment 50,00% Associated APATOR KFAP Sp. z o.o. Cracow Manufacturing and sales of metering equipment and instruments and services related to legalization of metering equipment Regional Court for Cracow-Center in Cracow, XI Economy Department of National Court Register KRS ,00% 99,40% Subsidiary indirectly Indirect share Name of capital group: APATOR Page 6

24 Consolidated financial statement for 2009 Company Seat Essential subject of activity Appropriate Court /Body for registration Share in capital Remarks WODPOL Sp. z o.o. Poznań Service activity in the scope of repairs of products manufactured by POWOGAZ, projects, designs and technological designs Regional Court in Poznań, XXI Economy Department of National Court Register KRS ,33% 76,87% Subsidiary indirectly Indirect share APATOR TELEMETRIA Sp. z o.o. APATOR METROTEKS Słupsk Kiev Ukraine Manufacturing of data reading and transmitting equipment, manufacturing of system IT applications Distribution of water meters and heat meters Regional Court in Gdańsk Północ in Gdańsk, VIII Economy Department of national Court Register KRS ,80% 50,50% 61,00% 60,63% Subsidiary indirectly Indirect share Subsidiary indirectly Indirect share Teplovodomer Mytishi Russia METCOM KFT Hungary Sales of gas meters Manufacturing and sales of water meters and heat meters and their legalization and service 44,06% 43,80% 24,00% 24,00% Associated indirectly Indirect share Associated indirectly Indirect share Name of capital group: APATOR Page 7

25 Dominant entity APATOR S.A. has got 81% of shares in the Company APATOR UKRAINA. The company established in 1998 and after two years it discontinued its operation. After having consulted with Ukrainian lawyers APATOR S.A. has obtained the information that the shut down of APATOR- UKRAINA will cause high costs to be born. The dominant entity APATOR S.A. ceased any financing of APATOR UKRAINA, and its shares have been covered by write downs. It was impossible to cover with consolidation of financial data. No person from Management and owners of the Capital Group APATOR are involved in management or supervision of this company. The subsidiary of APATOR MINING Sp. z o.o. has in its possession of shares of the dominant entity APATOR S.A. Changes in Capital Group of APATOR during 2009 : On 28th January 2009 subsidiary APATOR POWOGAZ S.A. acquired 50,8% of shares in WMC Telemetria Sp. z o.o. The subsidiary APATOR POWOGAZ S.A. acquired 508 shares from 4 natural persons (127 shares from each person). Nominal value of one share is 100,00 PLN. The purchase price of share is 3.967,00 PLN. Total purchase price of the above shares with the purchase costs is PLN. The deadline for payment of shares was fixed on 7 days of the conclusion of the contract. The transfer of ownership of the shares was on the day of payment. Share capital of WMC Telemetria Sp. z o.o. is PLN and it is divided to shares of nominal value of 100,00 PLN. The shares acquired are 50,8% of share capital and 50,8% of total number of votes. On 12 th May 2009 subsidiary FAP PAFAL S.A. sold all its shares in Gran-Systema-Pafal Sp. z o.o. with headquarters in Mińsk in Byelarus to other shareholders for the amount of USD. The company FAP PAFAL S.A. had 50% shares of nominal value USD. In 2009 APATOR SA acquired from natural person 1 registered share of Apator Powogaz SA for the amount of 4,3 000 PLN. On 11 th May 2009 the contract on sale of registered shares of Apator Powogaz S.A. was concluded. Based on the contract Apator Powogaz S.A. acquired from Apator SA 700 own shares for the amount of PLN for their redemption. On 12 th October 2009 Regional Court in Poznań made the decision on reducing the share capital of APATOR POWOGAZ S.A. from the amount of ,00 PLN to the amount of ,00 PLN and changing number of shares from pieces to pieces. On 4 th November 2009 subsidiary APATOR POWOGAZ acquired 61% shares in APATOR METROTEKS with the headquarters in Kiev in (Ukraine) for the amount of PLN MAKE UP OF THE EXECUTIVE BOARD AND THE SUPERVISORY BOARD The Executive Board Janusz Niedźwiecki President Tomasz Habryka Member of the Executive Board Jerzy Kuś Member of the Executive Board The Supervisory Board Janusz Marzygliński Chairman Ryszard Wojnowski Deputy Chairman Danuta Guzowska Member of the Supervisory Board Mariusz Lewicki Member of the Supervisory Board Krzysztof Kwiatkowski Member of the Supervisory Board Mariusz Pawlak Member of the Supervisory Board 2. INFORMATION ON BASIS FOR PREPARATION OF FINANCIAL STATEMENT, REPORTING CURRENCY AND THE LEVEL OF ROUNDING OF FIGURES APPLIED THE BASIS FOR PREPARATION OF CONSOLIDATED FINANCIAL STATEMENT The financial statement of CAPITAL GROUP APATOR has been prepared in accordance with International Accounting Standards, International Finance Reporting Standards and referred to them interpretations published in form of decrees of European Commission.

26 Financial statement for REPORTING CURRENCY AND THE LEVEL OF ROUNDING OF FIGURES APPLIED. The reporting currency of hereby consolidated financial statement is the Polish zloty and all amounts are expressed in thousand Polish zloty (if it is not pointed out different).the financial statement of the entity in Capital Group was calculated to reporting currency based on principles resulting from International Accounting Standard no ASSMUPTION OF ACTIVITY TO BE CONTNUED The consolidated financial statement was prepared based on the assumption that economic operation of the companies in Grupa Apator will be continued in the near future that is for the period not shorter than 12 months after the reporting period. On the day of approval of hereby financial statement no circumstances was found that could indicate the threat for the activity not to be continued by the companies in Grupa. Name of capital group: APATOR SA Page 9

27 Financial statement for FINACIAL STATEMENT OF THE ENTITY 3.1. MAIN FINANCIAL DATA Revenues from sales of products, goods and materials (continued and discontinued operation) Revenues from sales of products, goods and materials (operation continued) 2009 PLN 2008 PLN 2009 EUR 2008 EUR Revenues from sales of products, goods and materials (operation discontinued)) Profit (loss) from operating activity (continued operation) Gross profit (loss) (continued operation) Net profit (loss) (continued operation) profit (loss) from discontinued operation) Net profit (loss) (continued and discontinued operation) Net profit (loss) per shareholders of dominant entity in Grupa Net profit (loss) per minority shareholders Cash flow from operating activity Cash flow from investment activity Cash flow from financial activity Total cash flow Total assets Fixed assets Current assets Equity with the shares of minority Minority shares Share capital Non current liabilities and long-term reserves Current liabilities and short-term reserves Weighted average number of shares Profit (loss) per share (continued operation) (in PLN/Eur) 1,06 0,74 0,25 0,23 Profit (loss) per share (continued and discontinued operation) (in PLN/Eur) 1,06 0,74 0,25 0,23 Book value per share (PLN/Eur) 6,31 5,71 1,54 1,37 Items of assets and liabilities and cash flow account were translated according to average foreign exchange rate obligatory for the day of statement. Items in income statement were calculated according to average foreign exchange rate being the average of average foreign exchange rates being announced by the National Bank of Poland being obligatory on the last day of the month. Statement on financial position, cash flow account , ,1724 Statement on total income , ,5321 Name of capital group: APATOR SA Page 10

28 Financial statement for STATEMENT ON FINANCIAL POSITION Description Note Day FIXED ASSETS Intangibles Goodwill Property, plant and equipment Investment property Investments in associated entities consolidated by equity method Long-term financial assets available for sale Other long-term investments in related entities Long-term loans granted - - Long-term account receivables Other long-term accruals Deferred income tax assets CURRENT ASSETS Inventory Trade receivables Tax, duties and insurance dues Prepayments advance payments for the purchase of services Other short-term liabilities Short-term financial assets available for sale Short-term financial assets held for trading Other short-term financial assets - - Short-term loans granted - - Cash and cash equivalents Short-term prepayments and accrued income Fixed assets classified as held for sale TOTAL ASSETS EQUITY Equity per shareholders of dominant entity Primary capital Nominal share premium capital Other supplementary capital Revaluation reserve capital Own shares 17 (5 914) (7 389) Reserve capitals Hedging reserve and foreign exchange differences from consolidation (221) (113) Direct amounts in capital regarding fixed assets for sale - - Undistributed profit/loss from previous periods Net profit (loss) Write-off from net profit in the financial year (5 702) (2 859) LIABILITIES Minority shares Long-term liabilities Interest bearing loans and borrowings Other long-term financial liabilities 9, Other long-term liabilities - - Deferred income tax liabilities Provisions for liabilities due to employee benefits Other long-term reserves 45 - Name of capital group: APATOR SA Page 11

29 Financial statement for 2009 Description Note Day Short-term liabilities Short-term loans and borrowings Other short-term financial liabilities 9, Trade liabilities Tax, customs, social security creditors Wages and salaries creditors Advance payments received Other short-term liabilities Prepayments Provisions for liabilities due to employee benefits Short-term provisions Liabilities concerning fixed assets classified as held for sale - - TOTAL LIABILITIES Name of capital group: APATOR SA Page 12

30 Financial statement for STATEMENT ON TOTAL INCOME CALCULATION VARIANT Description Note Period Continued operation Revenues from sales Revenues from sales of products and services Revenues from sales of goods and materials Own sales cost ( ) ( ) Cost of products and materials sold ( ) ( ) Cost of good and materials sold (30 558) (29 544) Gross profit (loss) from sales Sales costs (24 584) (21 959) Overheads (54 848) (48 087) Profit (loss) from sales Other operating revenues (costs) * result on sales of fixed assets * result on revaluation of non financial fixed assets * result on revaluation of non financial current assets * result on reserves on pensions, jubilee awards * result of evaluation of the property * write off due to depreciation of the Company (192) - * result on other operating activity (2 383) (137) Share in profit of entities consolidated by equity method Restructuring costs - - Profit (loss) on operating activity Financial revenues (costs) 27 (11 447) (27 497) * dividends and share in profits - - * interest received on loans and borrowings (3 000) (3 738) * result on other interest * result on sales of financial assets available for sale * result on financial assets as held for trading - - *result on exchange rate differences (2 871) 552 * result on derivatives (5 794) (24 628) * result on revaluation of financial fixed assets - - * result on revaluation of financial current assets (529) (356) * other financial revenues (costs) (547) (564) * expenditures on purchase of shares in subsidiary after having taken over the control - (327) Taking the control over subsidiary (negative goodwill) - - Profit (loss) before tax Income tax 23,24 (7 368) (5 972) Net profit (loss) from continued operation Discontinued operation Net profit (loss) from discontinued operation Continued and discontinued operation Net profit (loss) Other total income Gains and losses arising from translating the financial statements of a foreign operation (108) (25) Effects of valuation of financial assets available for sale - - Hedging accounting - - Effects of revaluation of fixed assets - - Name of capital group: APATOR SA Page 13

31 Financial statement for 2009 Description Note Period Actuarial profits and losses - - Share in other total income of associated entities - - Income tax concerning other total income - - Other net total income (108) (25) Total income in total Net profit (loss) including: Note shareholders of dominant entity minority shareholders Total income in total, including: Note shareholders of dominant entity minority shareholders Net profit (loss) per one ordinary share: Note PLN / share PLN / share from continued operation 29 - primary 1,06 0,74 - diluted 1,06 0,74 From continued and discontinued operation 29 - primary 1,06 0,74 - diluted 1,06 0,74 COMPARATIVE VARIANT Description Note Period Continued operation Revenues from sales Revenues from sales of products and services Revenues from sales of goods and materials Change in status of finished products and manufacturing in progress Costs of operating activity ( ) ( ) Costs of manufacturing of products for own needs of the entity Amortization (15 226) (13 946) Materials and energy consumption ( ) ( ) Outsourcing (42 923) (38 619) Employee benefits (89 723) (86 230) Other costs (18 095) (16 360) Costs of goods and materials sold (30 558) (29 544) Profit (loss) from sales Other operating revenues (costs) * result on sales of fixed assets * result on revaluation of non financial fixed assets * result on revaluation on non financial current assets * result on reserves for pensions, jubilee awards, leaves * result on valuation of property * write off due to depreciation of the Company (192) - * result on other operating activity (2 383) (137) Share in profit of consolidated entities by equity method Restructuring revenues ( costs) - - Profit (loss) on operating activity Name of capital group: APATOR SA Page 14

32 Financial statement for 2009 Description Note Period Financial revenues (costs) 27 (11 447) (27 497) * dividends and shares in profit - - * interest received on loans and borrowings (3 000) (3 738) * result on other interest * result on selling of financial assets available for sale * result on financial assets held for trading - - * result on foreign exchange rate differences (2 871) 552 * result on derivatives (5 794) (24 628) * result on revaluation of financial fixed assets - - * result on revaluation of financial current assets (529) (356) * other financial revenues (costs) (547) (564) * expenditure on purchase of shares of subsidiary after having taken over the control - (327) Taking the control over subsidiary (negative goodwill) - - Profit (losss) before tax Income tax 23,24 (7 368) (5 972) Net profit (loss) from continued operation Discontinued operation Net profit (loss) from discontinued operation Continued and discontinued operation Net profit (loss) Other total income Gains and losses arising from translating the financial statements of a foreign operation (108) (25) Effects of valuation of financial asset available for sales - - Hedging accounting - - Effects of revaluation of fixed assets - - Actuarial profits and losses - - Share in other total income of associated entities - - Income tax concerning other total income - - Net other total income (108) (25) Total income in total Net profit (loss), including: Note shareholders of dominant entity minority shareholders Total income in total, including: Note shareholders of dominant entity minority shareholders Net profit (loss) per ordinary share: Note PLN / share PLN / share from continued operation 29 - primary 1,06 0,74 - diluted 1,06 0,74 From continued operation and discontinued 29 - primary 1,06 0,74 - diluted 1,06 0,74 Name of capital group: APATOR SA Page 15

33 Financial statement for STATEMENT ON CHANGES IN EQUITY Description Primary Capital Capital per shareholders of the dominant entity Foreign Other exchange Undistributed Capitals rates from financial result translation Total Minority share Total equity Balance on (2) Adjustment of essential error Balance after changes (2) Changes in equity in the period since till Profits (losses) from revaluation Investments available for sale: profits (losses) from valuation referred to equity transferred to the profit (losses) on sales Hedging instruments for cash flow: profits (losses) referred to equity profits (losses) transferred to financial result of the period profits (losses) considered in valuation of balance of hedging items Foreign exchange rate differences from valuation of entities abroad - - (111) - (111) - (111) Tax concerning item presented in capital or transferred from capital Net profit for the period since to Total income taken in the period since till (111) Dividends (14 344) (14 344) (13) (14 357) Settlement of advance payment towards dividend from previous year Advance payments towards dividends paid (2 859) (2 859) (4) (2 863) Profit distribution (20 601) Purchase of own shares - (1 475) - - (1 475) - (1 475) Establishment of reserve capital - (16 000) - - (16 000) - (16 000) Establishment of reserve capital Cover for the loss from supplementary capital - (10 425) Consolidation adjustments (reserves from previous years) (133) (133) - (133) Consolidation of Metcom KFT Consolidation of Grupa PoWoGaz Purchase of own shares by PoWoGaz Consolidation of Rector Purchase of additional shares ofi Apator Powogaz (1 380) (1 380) Name of capital group: APATOR SA Page 16

34 Financial statement for 2009 Description Primary Capital Capital per shareholders of the dominant entity Foreign Other exchange Undistributed Capitals rates from financial result translation Total Minority share Total equity Purchase of additional shares of Apator Mining (11) (11) (7) (18) Purchase of additional shares of Apator GmbH (1 098) (1 098) - (1 098) Balance at (113) Balance at (27) Correction of essential error - - (86) (128) (214) (18) (232) Balance after changes (113) Changes in equity in the period since till Profits (losses) from revaluation Investments available for sale: profits (losses) from valuation referred to equity transferred to the profit (losses) on sales Hedging instruments for cash flow: profits (losses) referred to equity profits (losses) transferred to financial result of the period profits (losses) considered in valuation of balance of hedging items Foreign exchange rate differences from valuation of entities abroad - - (108) - (108) - (108) Tax concerning item presented in capital or transferred from capital Net profit for the period since to Total income taken in the period since till (108) Dividends (9 986) (9 986) (1 784) (11 770) Settlement of advance payment towards dividend from previous year Advance payments towards dividends paid (5 702) (5 702) (3) (5 705) Profit distribution (45 317) Purchase of own shares - (557) - - (557) - (557) Redemption of own shares (18) (2 014) - - (2 032) - (2 032) Redemption of own shares Covering of the loss - (2 962) Consolidation of Telemetry Consolidation of Metroteks Purchase of additional shares of Apator Powogaz (3) (3) (3) (6) Change due to redemption of shares of Powogaz Change due to redemption of shares of Wodpol - (2) (2) (2) Balance at (221) Name of capital group: APATOR SA Page 17

35 Financial statement for CASH FLOW STATEMENT Period Description Note Cash flow from operating activity Profit before tax (continued operation) Adjustments: Amortization of intangibles Write downs due to reduction of the goodwill Amortization of fixed assets Write downs due to decrease of the value of tangibles of fixed assets (375) (94) (Profit) loss on sales of tangibles of fixed assets (1 508) (1 481) (Profit) loss on sales of financial assets available for sale (13) 14 (Profits) losses from valuation of investment property according to fair value (13) (128) (Profits) losses due to change of fair value of financial assets specified according to fair value - 2 Costs of interest Share in (profits) losses of associated entities (160) (89) Write down of negative goodwill - - Interest received (2) (68) Dividends received - - (Positive) negative foreign exchange rates differences Other adjustments 34 (6 072) Cash from operating activity prior consideration of changes in current capital Changes in inventory (1 472) (1 588) Changes in receivables (1 465) Changes in liabilities 34 (1 831) Changes in reserves (5 435) Changes in accruals 34 (973) (326) Other adjustments 34 (742) (2 105) Cash earned during operating activity Interest paid - - Income tax paid (6 020) (7 365) Net cash from operating activity Cash flow from investment activity Expenditure for the purchase of intangibles (980) (1 421) Inflow from sales of intangibles - - Expenditure for the purchase of property, plant and equipment (12 256) (7 862) Inflow from sales of property,plant and equipment Expenditure on purchase of investment property - - Inflow from sales of investment property - - Expenditure for the purchase of financial assets available for sale - (16) Inflow from sales of financial assets available for sale Expenditure of financial assets held for trading - - Inflow from sales of financial assets held for trading Expenditure for the purchase of subsidiaries (reduced by the value of taken over cash)) (2 239) (80 110) Inflow of sales of subsidiaries - 90 Inflow from subsidies received - - Borrowings granted - - Repayment received from borrowings granted - - Interest received 2 49 Name of capital group: APATOR SA Page 18

36 Financial statement for 2009 Period Description Note Dividend received - - Other inflows (expenditures) 34 (19 108) (899) Net cash used to investment activity (32 493) (81 716) Cash flow from financial activity Net inflows from the issue of shares - - Acquisition of own shares (584) (1 452) Inflows due to the issue of debt securities - - Buy back of of debt securities - - Inflows due to loans and borrowings taken Repayment of loans and borrowings (20 507) (7 399) Interest (2 989) (3 881) Dividends paid (14 588) (16 773) Repayment of liabilities due to financial leasing (360) (289) Other inflows (expenditure) 34 (95) (51) Net cash from financial activity (23 332) Increase (decrease) of net cash and its equivalents (9 897) Change in cash and its equivalents due to foreign exchange rate differences (77) (116) Cash and its equivalents at the beginning of the period Foreign exchange rates (127) (11) Cash and its eqivalents at the end of the period Foreign exchange rates (204) (127) 4. INTERNATIONAL STANDARDS OF FINANCIAL REPORTING APPLIED 4.1 STANDARDS APPROVED IN EUROPEAN UNION International Standards of Financial Reporting in the shape approved by European Commission currently do not differ significantly from accepted by International Accounting Standards Committee except below interpretations that according to the status at 31 st December 2009 have not been approved for application so far. o o o Amendments to ISFR 1 Application of International Standards of Financial Reporting for the first time published on 23 rd July 2009 contain additional exemptions for the entities that used ISFR for the first time. It is obligatory referring to the annual periods commencing from 1 st January 2010 or after that date. Amendments to MSSF 2 Payment by shares it regards additional guidelines concerning the payment transactions to be settled by shares between of capital group (with consideration of the guidelines included in former KIMSF 11) and their adjust the scope of the Standard to cover the guidelines included in former KIMSF 8) ISFR (2009) Amendments to ISFR amendments made within the procedure on introduction of annual amendments to Standards published on 16 th April 2009 amendments made within the procedure on introduction of annual (ISFR 2, ISFR 5, ISFR 8, ISFR 1, MSR 7, MSR 17, MSR 18, MSR 36, MSR 38, MSR 39, KIMSF 9, KIMSF 16) focused mainly on solution of nonconformity and precision of wording (most of amendments is obligatory for annual periods commencing 1 st January2010 or after that date) According to estimations of the entities in Grupa APATOR above mentioned standards, interpretations and amendments to standards would not have the significant influence on financial statement of Grupa. At the same time still out of regulations accepted by European Union is hedging of accounting of financial assets and liabilities which principles had not been accepted to be used in European Union yet. According to the estimation of the Grupa the use of MSR 39 Financial instruments: taking and valuation would not have significant influence on financial statement if the amendments to the standard are accepted by European Union to be used at the end of reporting period. 4.2 STANDARDS APPLIED FOR THE FIRST TIME Preparing hereby the financial statement APATOR S.A. applied for the first time the following regulations: Name of capital group: APATOR SA Page 19

37 Financial statement for 2009 Name of capital group: APATOR SA Page 20 o Amendment to MSR 1 Presentation of financial statements published on 6 th September 2007 and accepted by European Union on 17 th December 2008 and having got the usage to financial statements prepared for the periods commencing on 1 st January 2009 and later. The amendment covers changes in names of the essential statements and presentation of balance sheet, income statement and changes in equity. Grupa APATOR has applied to hereby financial statement amended standard introducing amendments retrospectively. Amendments to the above standard have not influence on earlier presented financial results and the value of own capitals but only on presentation of financial statements and the titles of those statements. o Amendment to MSR 23 Costs of external financing published on 29 th March 2007 and accepted by European Union on 10th December 2008 and having got the usage to financial statements prepared for the periods commencing 1 st January 2009 and later. Amendment to the standard covers elimination of the option so far for the possibilities to take costs of external financing directly in income statement. Grupa APATOR applied in case of previous financial statements the principle to take costs of external financing in income statement in the moment of their transfer. Since 1st January 2009 Grupa APATOR applies the principle of capitalization according to amended standard. According to temporary regulations amendment the amendment has been introduced prospectively. The amendments to the above standard have no influence on earlier presented financial results and the value of own capitals. o MSSR 8 Operating segments published on 30 th November 2006 and accepted by European Union on 21 st November 2007 and having got the usage to financial statements prepared for the periods commencing on 1 st January 2009 and later. Standard replaces MSR 14 Reporting according to segments of activity and it requires among other things that operating segments to be defined based on internal statements concerning components of business entity subject to annual reviews made by the member of management responsible for making decision in order to allocate the resources in particular segments and the assessment of their operations. Standard applied by Grupa APATOR retrospectively, in accordance with temporary requirements No significant presenting changes have occurred because under the government of MSR 14 identification of trade segments was based on reporting to be presented the main bodies responsible for making decisions in business and therefore these segments have been considered as operating segments for purposes of MSSF 8. Amendments to the above standard do not have the influence on earlier presented financial results and the value of own capitals. o Amendments to MSSF 1 Application of MSSF for the first time and to MSR 27 Consolidated and individual financial statements published on 22nd May 2008 and accepted by European Union on 23 rd January 2009 and obligatory in reference to annual periods commencing 1 st January 2009 and later. Application of the standard does not have the influence on earlier presented results and the value of own capitals because the reporting of Grupa APATOR is already based on MSSF. o Amendment to MSSF 7 Financial instruments: disclosure of information published on 5 th March 2009 and accepted by European Union on 27 th November 2009 and having got the application to financial statements commencing on 1 st January 2009 or later. Amendments to MSSF 7 introduce three level of hierarchy of disclosure concerning evaluation of fair value and it requires to disclosure additional information by the entity on relative credibility of the evaluations of fair value. Amendments additionally precise and extend existing requirements of disclosure concerning the risk of fluidity. In the first year of the application the entity does not have to present comparative data within the disclosure required by those amendments. Amendments to the above standard have no influence on earlier presented financial results and the value of own capitals.. o MSSF (2008) Amendments to MSSF published on 22 nd May 2008 and accepted by European Union on 23 rd January Most of amendments is obligatory for annual periods commencing on 1 st January 2009 and later. Improvements of MSSF are annual process accepted by RMSR in order to introduce not urgent but necessary amendments to MSSF. Amendments resulted from adjustments to MSSF had no influence on financial statements of Grupa APATOR. o Amendment to KIMSF 9 repeated valuation of introduced derivatives and amendments to MSR 39 Financial instruments: taken and evaluation published 12 th March 2009 and accepted by European Union on 30 th November Amendments serve to clarify the problem of treating of derivatives introduced into other contracts in situation if hybrid component of financial assets is retrained from category of financial assets evaluated in fair value by financial result. It is obligatory to the periods ending on 30 th June 2009 or later. Amendments to the above standard and interpretation do not have the influence on earlier presented financial results and value of own capitals. o Interpretation of KIMSF 11 MSSF 2 Payment in shares within the group and transaction on own shares acquired published on 2nd November 2006 and accepted by European Union on 1 st June 2007 it clarifies how to apply MSSF 2 to the contracts concerning payment in shares which cover own capital instruments of the entity or instruments or capital instruments of the entity that belongs to the same capital group. Interpretation is obligatory with reference to annual periods commencing on 1 st March 2008 or after that date. Regulations contained in KIMSF 11 had no influence on statement of APATOR S.A.

38 Financial statement for 2009 o o o Amendment to MSSF 2 Payment in form of shares published on 17 th January 2008 and accepted by European Union on16th December Amendment concerning the conditions of acquisition of entitlements and their cancellation is applied to annual periods commencing on 1 st January 2009 or after that date. Regulations contained in amendment to MSSF 2 had no influence on financial statement prepared by Grupa APATOR. Interpretation of KIMSF 13 loyalty programmes published on 5 th July 2007 and accepted by European Union on 16 th December 2008 that eliminates occurring in practice incoherence in the method of taking in books for property or services transferred free of charge shares or sold at lower price within loyalty programmes to customers practicing by enterprises in order to remunerate their customers by points, air miles or other forms of additional entitlements at the sales of goods and services. This Interpretation is obligatory since financial year commencing after 31 st December 2008 Regulations included in KIMSF 13 had no influence on statement of Grupa APATOR. Interpretation of KIMSF 14 MSR 19 Limit of evaluation of assets due to defined benefits, minimum requirements of financing and their mutual dependence published on 5 th July 2007 and accepted by European Union on 16 th December 2008 which clarifies the regulations of MSR 19 concerning evaluation of assets due to appropriate benefits in the context of the programmes of defined benefits after the period of employment where are minimum requirements for financing. This interpretation is obligatory since financial year commencing after 31 st December Regulations contained in KIMSF 13 had no influence on the statement of Grupa APATOR. 4.3 STANDARDS AND INTERPRETATIONS EARLIER APPLIED Preparing hereby financial statement Grupa APATOR did not decide to apply earlier standards and their amendments in relation to their date of obligation contained in this standard. 4.4 STANDARDS ALREADY PUBLISHED THAT HAVE NOT COME INTO LIFE SO FAR Moreover, Grupa APATOR preparing this financial statement did not apply the following standards, amendments to standards and interpretations which were published and accepted to apply in European Union but they are not in use: o Amendments to MSR 32 Financial instruments: presentation published on 8 th October 2009 and accepted by European Union on 23 rd December 2009 define the taking of subscription rights. Amendments are obligatory together with the commencement of financial year starting after 31 st January o Interpretation of KIMSF 18 Transfer of assets by customers published on 29th January 2009 and accepted by European Union on 27th November Interpretation concerns particularly public sector and it applies to all contracts based on them the entity receives from customer the component of tangible fixed asset (or cash allocated to construct such component) that has to be use to connect a customer to its network or to assure permanent availability of delivery of goods or services. Interpretation is obligatory with the commencement of financial year starting after 31 st October o Interpretation of KIMSF 17 transfer of non cash assets to the owners was published on 27 th November 2008 and was accepted by European Union on 26 th November Interpretation includes the guidelines concerning the settlement of distribution of non cash assets among shareholders. It is resulted from the interpretation first of all that the dividend should be valuated in fair value of the assets spent and the difference between this amount and earlier balance one of those assets should betaken into financial result at the moment of settlement of dividend due. Interpretation is obligatory with the commencement of financial year starting after 31 st October o MSSF 1 (amendment) Application of MSSF for the first time published on 27 th November 2008 and accepted by European Union on 25 th November Reorganization of the content has been made and most of exceptions and relieves to enclosures in large number in the Standard have been moved. Amendments are obligatory with the commencement of financial year starting after 31st December o MSR 39 (amendment) Financial instruments: taking and evaluation published on 31 st July 2008 and accepted by European Union on 15 th September The amendments clarify two issues concerning hedging accounting: recognition of inflation as the risk or part of a risk subject to hedging and hedging in form of options. The amendments precise that inflation can subject to hedging only in case when the changes are agreed and defined as the element of the cash flows taken as financial instrument. Amended MSR 39 allows the entity to determine the options acquired (or net option acquired) as hedging instruments to hedge financial or non financial element. The amendments are obligatory with the commencement of financial year starting after 30 th June Name of capital group: APATOR SA Page 21

39 Financial statement for 2009 o o o o o o Amendments to MSR 39 Financial instruments: taking and valuation and MSSF 7 Financial instruments: disclosure of information published on 27 th November 2008 and accepted by European Union on 9 th September The amendments precise he date of coming to life and temporary means related to amendments of the standards issued by the International Accounting Standards Board on 13 th October Interpretation of KIMSF 15 Contracts concerning the construction of property published on 3 rd July 2008 and accepted by European Union on 22nd July 2009 that clarifies when one should take the revenues from the construction of property and also if the contract on construction of property is covered by the stipulations of MSR 11 Contracts on civil service or also MSR 18 Revenues. Interpretation is obligatory with the commencement of financial year starting after 31st December Interpretation of KIMSF 16 Hedging of shares in net assets of the entity operating abroad published on 3rd July 2008 and accepted by European Union on 4th June 2009 that clarifies how to apply the requirements of MSR 21 Effects of the change in foreign exchange rates and MSR 39 Financial instruments: taking and valuation in cases when the entity is hedged against currency risk resulting from it shares in net assets of the entity operating abroad. Interpretation is obligatory with the commencement of financial year starting after 30th June MSSF 3 (Updated) Fusion of the entities published on 10th January 2008 and accepted by European Union on 3rd June 2009 that defines the principles and requirements concerning the method of fusions of the entities, what kind of fusions the taking over entity takes and valuates in its financial statement particular elements (such as possible to identify acquired assets, taken over liabilities, non control shares and the goodwill) concerned with accounting of purchase transaction. It defines also what information concerning such type of transactions has to be disclosed. The acceptance of updated MSSF 3 is followed by amendments to be made in MSSF 1, MSSF 2, MSSF 7, MSR 12, MSR 16, MSR 28, MSR 32, MSR 33, MSR 34, MSR 36, MSR 37, MSR 38, MSR 39 and interpretation of KIMSF 9 in order to provide cohesion of international accounting standards. Updated MSSF 3 is obligatory with the commencement of financial year after 30th June Amendments to MSR 27 Consolidated and individual financial statements published on 10th January 2008 and accepted by European Union on 3rd June 2009 that define in what circumstances the entity has to prepare consolidated financial statement, how the dominant entities have to take amendments in their share in property in subsidiaries and how the losses of subsidiary should be allocated to control and non control shares. These amendments are obligatory with the commencement of financial year starting after 30 th June MSSF (2008) Amendments to MSSF published on 22nd May 2008 and accepted by European Union on 23rd January Improvements of MSSF are annual process accepted by RMSR in order to introduce not urgent but necessary amendments to MSSF. Amendments to MSSF 5 Fixed assets for sales and discontinued operation and amendments to MSSF 1 Application of International Financial Reporting Standards for the first time are obligatory with the commencement of financial year starting after 30th June Amendments to MSSF 5 precise that the entity which has decided to make the sale which is connected with the loss of control over subsidiary classifies all assets and liabilities of this subsidiary as for sale, if criteria included in this standard have been met. Disclosure of discontinued operation is required if the subsidiary forms a group to be sold and it meets criteria included in the definition of discontinued operation. Name of capital group: APATOR SA Page 22

40 Financial statement for 2009 According to the estimations of the entities in Grupa APATOR above mentioned standards, interpretations and amendments to the standards except updated MSSF 3 and MSR 27 would not have any significant influence on financial statement if they were applied by the entity at the end of reporting period. The application of updated MSSF 3 and MSR 27 had the influence on the increase of the goodwill that has arisen after the acquisition of subsidiaries Apator Telemetria Sp. z o.o. and Apator Metroteks by APATOR POWOGAZ S.A. and the increase of minority capital. The reference the costs of acquisition of subsidiaries to the costs of the period due to low values would not have significant influence on the change in the value of assets and liabilities in the balance. Description Apator Telemetria Sp. z o.o. Apator Metroteks Total Values taken in the statement for 2009 Goodwill Minority capital Values after the application of updated MSSF 3 and MSR 27 Goodwill Minority capital Changes after the application of updated MSSF 3 and MSR 27 Goodwill Minority capital Name of capital group: APATOR SA Page 23

41 Financial statement for ACCOUNTING PRINCPLES APPLIED 5.1 GENERAL PRINCIPLES Financial statement is prepared in accordance with the conception of historical cost, except evaluation of some fixed assets (investment property) and financial assets that according to MSSF are evaluated according to fair value or amortized cost with consideration of the effective interest rate. The most significant accounting principles applied by Capital Group have been presented in points from 4.2. to CONSOLIDATION PRINCIPLES OF CONSOLIDATION Consolidated financial statement includes the financial statement of APATOR SA the dominant company and statements of the companies being under its control prepared at 31 st December Control is understood as the ability to influence on the financial and operational policy of the subsidiary in order to gain profit from its operations. On the day of purchase of the subsidiary (taking control) the assets and liabilities of purchased entity are estimated according to their fair value. The excess of the purchase price above the fair market value of the identifiable taken over net assets of the company is presented as the goodwill. If the purchase price of the company is lower from the fair value of the identifiable taken over net assets of the company, the difference is presented as a profit in the income statement for the period in which the purchase took place. The share of minority shareholders is presented in an appropriate proportion of net fair value of assets. In the following periods losses falling to minority shareholders above the value of their shares, decrease the capital of the parent company. In the case of purchase of minority interests that is the purchase of additional shares having got already control previously, a new fair market value of the purchased assets and equity is not established. This operation is presented as a movement in capitals between minority interest and parent company interest of the value settled basing on the fair market value of net assets on the day of taking over. Differences between value of assets and payment have the influence on the result of the period, in which the takeover took place. Dependent companies sold during financial year are subject to consolidation from the beginning of the financial year until the day of selling. Financial results of entities purchased during the year are included in the financial statement from the moment of their purchase. If it is necessary, the adjustments are made in the financial reports of dependent or affiliated companies aiming at the unification of accounting principles used by the entity in accordance with the principles used by the parent company. All the transactions, balances, income and costs between affiliated entities included in the consolidation were left out of the consolidated financial statement INVESTMENTS IN ASSOCIATED ENTITIES Associated companies are such entities over which the parent company does not have control, but has much influence on them by participating in establishing financial and operational policy. Shares in associated companies are valuated by equity method, excluding a situation when they are classified as for sale. Investments in associated companies are valuated according to purchase price taking into consideration changes in the share of the company in net assets, that have taken place until the balance date, less the loss of value of specific investments. Significant profits and losses resulting from transactions between Grupa and an associated company are subject to consolidation exclusions up to the level of shares owned. The excess of the purchase price over the fair value of identifiable net assets of the associated entity as of the purchase date is presented as a goodwill and presented in the item Investments in associated companies consolidated with the equity method. Name of capital group: APATOR SA Page 24

42 Financial statement for 2009 If the purchase price is lower than fair value of identifiable net assets of the associated entity as of the purchase date, the difference is presented as a profit in the profit and loss account for the period during which the takeover took place GOODWILL Goodwill established at consolidation is an excess of the entity purchase cost over the fair value of identifiable components of assets and equity and liabilities of the dependent or affiliated company, or a common enterprise on the purchase day. Goodwill is pointed out as a component of assets and at least once a year put to value loss test. The results of value loss are applied to the profit and loss account and are not reversed in the following periods. 5.3 PRECISE RULES OF ASSETS AND LIABILITIES VALUATION USED WITHIN GRUPA OWN CREATED INTANGIBLE ASSETS RESEARCH AND DEVELOPMENT COSTS Assets fulfilling the following criteria can be included into intangible assets: - they may be excluded or separated from an economic entity, sell, transfer, licence or give for free usage to third parties, both individually and jointly with related contracts, asset or liability components or - result from contractual titles or other legal titles, irrespective whether they are sellable or possible to separate from an economic entity or other titles or liabilities. Intangible assets purchased in the scope of a separate transaction are presented in the balance according to their purchase price. Intangible assets purchased in the scope of an economic entity takeover are presented in the balance according to their fair value on the date of takeover. After the initial presentation intangible and legal assets are valuated according to the purchase price or the manufacturing cost less amortization and revaluation by way of value loss. Usage period of intangible assets, depending on their type is assessed and regarded as restricted or unspecified. Intangible assets with unspecified period of usage and those that are not yet used are reviewed every year for possible loss of value, in reference to various assets or at the level of the centre acquiring financial means. In reference to other intangible assets a yearly assessment is made, whether any premises for loss of value occurred. Periods of usage of various intangible and legal assets are reviewed yearly, and if need be, adjusted from the beginning of the following year. For amortization purposes of intangibles with specified period of usage the method of linear amortization is applied. The periods of usage of particular components of intangibles are as follows: Patents and licenses since 2 till 5 years R&D since 3 till 5 years Costs of research and development Costs of research are not activated and are presented in the profit and loss account as costs in the period in which they were born. Costs of development works are capitalized only if: - a specific project is performed (e.g. software or new procedures); - it is possible that a component of the assets shall bring future economic gains; - project costs can be reliably estimated. Costs of development works are amortized with the linear method throughout the forecasted period of their economic usefulness. If distinguishing of the own created asset component is impossible, the costs of development works are presented in the profit and loss account in the period in which they were incurred PROPERTY,PLANT AND EQUIPMENT Property plant and equipment are fixed assets owned by entities in order to use them for production, supply of merchandise or rendering services, give for paid usage to third parties or for administrative purposes that are forecasted to be used for more than one period. They are valuated according to their purchase price, production costs or revaluated value (after revaluation of fixed assets) less amortization and permanent loss of value. According to the approach based on components the entity assumes different amortisation rates for important components of a tangible asset. Entities do not state residual Name of capital group: APATOR SA Page 25

43 Financial statement for 2009 value of fixed assets. Fixed assets economic policy does not anticipate the sale of fixed assets, they can only be sold as scrap after liquidation. Fixed assets in entities include property and plant equipment with a foreseeable period of economic usability longer than one year and purchase price from 3.5 thousand PLN. Fixed assets from group 491 (computers and units of computers) are included in the register of fixed assets regardless of their purchase price. Fixed assets with value less than 3.5 thousand PLN (excluding computers and units of computers) are booked directly into material wear prime costs. Amortization is made on fixed assets the price of which is higher that 3.5 thousand PLN. Amortization commencement takes place in the month of usage commencement. While establishing yearly amortisation rates the period of economic usage of the fixed asset is taken into consideration. Correctness of the usage of amortization rates and periods by the entity is periodically checked by production departments managers. Purchased fixed assets in the conditions of hyperinflation were revaluated to fair value. The value was established by an independent property expert. For amortization purposes of fixed assets the method of linear amortization is applied. The periods of usage for particular components of fixed assets are as follows: Buildings and constructions since 3 till 70 years Machines and equipment since 2 till 25 years Means of transportation since 4 till 10 years Other fixed assets since 3 till 10 years If during the preparation of a financial report there occurred circumstances that suggest that the balance value of property and plant equipment may not be regained, a review of the assets is performed in the scope of possible loss of value. If there are any premises suggesting that, there could have occurred a loss of value, and the balance value is higher than the value possible to regain, than the vale of these assets of centres acquiring financial means, that own such assets is decreased to the level of recoverable value. Recoverable value is equal to the higher of the two following values: fair value less sales costs or usage value. While assessing usage value, estimated future income are is discounted to the current value using a gross discount rate reflecting current prices of money vale in time and risk connected to the given assets component. In the case of an assets component, which does not generate money income in a sufficiently independent way, the recoverable value is settled for the centre acquiring financial means to which this component relates. Profits or losses resulting from sale/liquidation or ceasing to use the fixed assets are presented as a difference between sales income and net value of such fixed assets and are included in the profit and loss account. Commenced investments concern fixed assets under construction or assembly and are presented according to purchase prices or production cost. Fixed assets under construction are not subject to amortization until construction completion and handing over of the fixed asset for usage. Companies have the right of perpetual usufruct of the land purchased with an administrative decision. If the companies do not have a reliably established valuation according to fair value they do not include their right in the balance. The right is represented in the additional notes. If the companies have a reliably established valuation according to fair value of the perpetual usufruct of land it is presented in the balance, and is not amortized. APATOR SA parent company and subsidiary APATOR POWOGAZ SA have their plants and equipment being used in social activity. Theses assets together with the right of perpetual usufruct of the land on the day of passing to MSR/MSSF were evaluated in fair value by property expert. Due to lack of plans of selling of the property and the fact of reimbursement of costs of keeping that property from Factory Social Fund, according to the agreements with Trade Unions, the companies present the assets in their financial statements and Grupa in consolidated financial statement LEASING Financial leasing contracts are such contracts according to which the whole risk and the whole possible benefits resulting from being the owner as a leasing recipient are carried over to companies. All other types of leasing are treated as operational leasing. Usage according to company leasing contracts are treated equally to company assets and are valued at the commencement of leasing contract according to the lower of the two following values: fair value of the property component being the subject of leasing or the current value of minimal leasing fees. Leasing fees are divided into interest and capital parts in such a way that the interest rate from the remaining liability remains a constant value. Leasing fees for operational leasing are applied to profit and loss account with the linear method for the period of leasing. Name of capital group: APATOR SA Page 26

44 Financial statement for INVESTMENT PROPERTIES Those properties can be considered investment properties that are treated as a source of income from rents and/or are kept in possession because of the expected increase of their value. Investment properties are valuated on the balance day at fair value. Profit and loss resulting from changes in the fair value of investment properties are presented in the profit and loss account in the period in which they occurred FIXED ASSETS AND NET ASSET GROUPS DESIGNATED FOR SALE Fixed assets classified for sale and also net asset groups designated for sale are valued at the level of the lower of the two values: balance value or fair value less sales costs. Fixed assets and net asset groups are designated for sale if their balance value can be recovered rather by sale than by usage. This condition is considered as fulfilled only when the assets component (or net asset groups designated for sale) is available in its current state for immediate sale, and occurrence of sale transactions during the year until the change of classification is very probable INVENTORY Materials and merchandise are valuated according to purchase price. The purchase price includes the due payment without VAT due. Purchase costs (transport costs, border fees, customs, unloading and loading costs) are charged for a separate purchase costs account. If the level of purchase costs during a period does not exceed 2% (which is an irrelevant value) in reference to materials used in a given period, the material prices are not increased by it. Materials and goods are subject to systematic valuation write-down during the period, after each change of the purchase price at the level of weighted average. The deviations that occur are settled at the end of each month after estimate write-down. The products are estimated systematically according to production cost, and the product inventory is estimated according to production costs not higher than their net sale prices, possible to achieve if as if sale would have taken place on a balance day. Production cost is made up of the sum of direct costs (materials, remunerations) and a justified part of indirect costs connected to the manufacturing of the product including indirect production costs and part of constant indirect costs at the level of such costs with normal usage of production capacity. Inventory is verified for each reporting period. For the purpose of making the inventory value real an analysis of inventory age structure is conducted, in which the main factor is the date of warehouse incoming and outgoing. Write-down is created in reference to inventory of over 180 days assuming the creation of a write-down in the amount of 10% of the value of the inventory left. Another 10% of value of inventory left is taken for each 180. This way inventory left for over 5 years are subject to 100% writedown. In case of economically unsuitable inventory the write-down is 100%. At the end of the period also an analysis of inventory by way of loss of value, resulting from the difference between the book price and current market price (careful estimate) OUTSIDE FINANCING COSTS All outside financing costs that can be refer directly to purchase, construction or creation of being adjusted of the component of assets since 1 st January 2009 they are no longer referred directly to the charge of costs of the period when they were incurred. According to amended standard MSR 23 (approved by European Union on 10 th December 2008) Grupa applies the rule of capitalization of outside financing (interest and other costs born) by the company due to financial means borrowed) regarding the purchase or construction of plant and property. The rule of capitalization is not applied to the assets evaluated by fair value and inventory being manufactured repeatable with short manufacturing cycle. In accordance with temporary regulations the change was introduced prospectively. Estimated in 2009 by the companies in Capital Group APATOR outside financing costs that referred to the financing of the components of the property, requiring the their adjustment prior its acceptance to use, they were of not significant value therefore they were abandoned to activate them as the element of purchase price or manufacturing cost STATE SUBSIDIES Government subsidies, including non-money subsidies presented in fair value are included only if there is a sufficient certainty that Grupa shall fulfil the conditions referring to the given subsidy and that the given subsidy shall in fact be received. If the subsidy concerns a given cost position than it is included as decrease of costs, which were supposed to be compensated by this subsidy. However if the subsidy concerns an assets component then its fair value decreases the value of this component and than it is gradually included in the profit and loss account as an income over the periods pro-rata to depreciations made to this assets component. Name of capital group: APATOR SA Page 27

45 Financial statement for TRADE RECEIVABLES Trade receivables are estimated in books at their nominal value adjusted with appropriate write-downs of the value of doubtful receivables. Receivable value is subject to write-down taking into consideration the probability of their payment by making an appropriate write-down to the operational or financial costs. Receivables and claims impossible to obtain, that is receivables documented with a verdict given by an execution proceedings institution, are not include in the assets. Write-downs for receivables with risk are made. These are receivables overdue more than 180 days without new payment dates settled. Receivables due over 180 days are corrected by a cumulated amount of the discounted difference between the initial value and value on date due, calculated according to an effective interest rate defined as WIBOR 6M rate FINANCIAL INSTRUMENTS Grupa qualifies each contract which results in establishment of a financial assets component for one of the parties and a financial liability or capital instrument for the other as a financial instrument, under the condition that explicit economic results come from the contract concluded by two or more parties. Grupa classifies financial instruments as follows: Financial assets or liabilities components estimated according to fair value through a profit and loss account assets and liabilities purchased or incurred mainly for the sale or purchase within a short time or are a part of the portfolio of specified financial instruments which are jointly managed and for which there is a confirmation of current actual pattern to generate short-term profits and derivatives; Investments held until maturity date financial assets that are not derivatives, with set or possible to set payments and with a set maturity date, towards which Grupa has a definite intention and is able to keep them until the maturity date expires; Loans and receivables financial assets not being derivatives, with set or possible to set payments which are not quoted on the active market, Financial assets available for sale - financial assets not being derivatives, which were designated for as available for sale or not being (a) loans and receivables, (b) investments held until maturity date expires, nor (c) financial assets valued in fair value through the financial result. Other financial liabilities. Inclusion and exclusion of a financial asset component and financial liability Financial asset component or financial liability is presented in the balance if Grupa is the party of the contract of such instrument. Standardized assets and financial liabilities purchase and sale transactions are included [option: on the date of transaction conclusion / on the date of their settlement]. Financial assets component is excluded from the balance if rights to economic benefits and risks resulting from the concluded contract were performed, expired of Grupa waived them. Grupa excludes a financial liability from the balance if the liability expired, that is when the obligation included in the contract was fulfilled, waived or expired. Estimation of financial instruments on the date of their establishment On the date of purchase financial assets and liabilities are estimated by Grupa according to their fair value, that is most often according to fair value of the price paid in the case of assets component or amount received in the case of a liability. Transaction costs are included by Grupa to the initial value of the estimation of all the assets and financial liabilities, outside of the assets and liabilities category estimated in fair value through the profit and loss account. Estimation of financial instruments on a balance day Grupa estimates: - according to depreciated cost, taking into consideration the effective interest rate: investments held until maturity date, loans and receivables and other financial liabilities. The estimation may also be conducted for value that requires payment, if the discount effects are irrelevant, - according to the fair value: assets and financial liabilities from the category of valuation in fair value through the profit and loss account and category of financial assets available for sale. If fair market value establishment is not possible (such a situation may take place in the case of unquoted capital instruments), such elements are valuated at the amount of cost (purchase price). Name of capital group: APATOR SA Page 28

46 Financial statement for 2009 Name of capital group: APATOR SA Page 29 Effects of estimation of financial assets available for sale is included in equity. Effects of estimation of financial assets and liabilities qualified for other categories are included in the profit and loss account. Hedging accounting In case of transactions that fulfil the requirements specified in MSR hedging dreivatives for cash flow are included in the fair value taking into consideration value changes: - in part considered to be an effective hedge directly in equity, - in part considered to be an ineffective hedge in the profit and loss account. In 2009 and previous years entities in Capital Group APATOR did not apply hedging accounting for any hegding transactions for the cash flow. The evaluation of derivatives related to these transactions were taken directly in financial result. Hedging derivatives for fair value of assets and liabilities are included in fair value. Effects of changes in fair value of these instruments are included in the financial result BANK LOANS Bank loans with interest charges are included according to purchase price corresponding to the fair value of gained financial means, less the direct costs connected to granting the loan. In the following periods loans are estimated according to a depreciated purchase price, while using an effective interest rate TRADE LIABILITIES After an initial inclusion all the liabilities, excluding liabilities estimated according to fair value on the basis of profit and loss account are estimated in the corrected purchase price, using the effective interest rate method. However in the case of liabilities with a maturity period not longer than 12 months from the balance date, premises influencing the estimation value of such liabilities in an adjusted purchase price are analyzed (changes of interest rate, possible additional cash flow and other). According to the results of the analysis made estimation is made in the amount of payment due only when the difference between the value in adjusted purchase price and value in the amount of the due payment does not have a significant influence on qualitative characteristics of the financial statement PROVISIONS Provisions are created if there is a duty (legal or customary) on the Grupa resulting from past events and it is probable that the fulfilment of such a duty will cause a necessity of outflow of means and a reliable estimation of the amount is possible. The costs concerning a given provision are included in the profit and loss account after decreasing it with all returns. If the influence of the value of money overtime is significant, the size of a provision is settled through discounting forecasted future cash flow to current value, using a gross discount interest rate representing current market prices of money value overtime and possible risk connected to the given liability. If the method used was based on discounting, the increase of the provision in reference to the passage of time is presented as outside financing costs. Provisions are also created for future liabilities caused by restructuring, if according to separate regulations Grupa is obliged to its conduct or a binding contract was concluded concerning this and the restructuring plans allow in a reliable way to estimate the value of these future liabilities, while the decision on provision creation is made by the Executive Board. If there is no appropriate restructuring plan in the financial report then conditional liabilities for this title are revealed. According to the remuneration systems the employees are entitled to retirement gratuity and in some of the companies of Grupa employees are entitled to jubilee awards. Awards are paid to employees after a specified number of years of service. Retirement gratuities are paid once on passing to retirement. The amount of retirement gratuities and prizes depends on the length of service and average employee remuneration. The company creates provisions for the future liabilities by way of retirement gratuities and prizes in order to assign costs to periods that relate to them. According to MSR 19 jubilee awards are other long-term employee benefits, and the retirement gratuities are specified post-employment benefits programs. Provisions creates for prizes and retirement gratuities are set according to forecasted individual entitlements method according to MSR 19 and actuary techniques. The base for reliable assessment of provision size are: Rights for the mentioned benefits acquiring criteria in the companies of the capital group Actuary assumptions Grupa creates a provision for the costs of cumulated paid absences, that it will have to incur as a result of unused entitlement by the employees which entitlement accrued on the balance day. Provision for the

47 Financial statement for 2009 costs of cumulated paid absences is included as a liability (passive inter-period cost settlement) after deduction of all amounts already paid. Provision for the costs of cumulated paid absences is a shortterm provision and is not subject to discounting. Grupa also creates a provision for warranty repairs because in Grupa APATOR the sales contracts are concluded with the warranty granted as a rule for two or three years. Therefore in order to calculate the provision the relation of ratio of warranty repairs to the general sales in this period is applied SALE REVENUES Sale revenues are included according to International Accounting Standard No 18 Revenues in the fair value of payments received or due and represent dues for products, merchandise and services supplied in the scope of normal business activity, after subtracting rebates, VAT and other taxes connected to sales (excise), appropriately to the state of contract performance advancement. Revenue is included in such an amount at which Grupa is likely to gain economic benefits connected to the given transaction and when the amount of income can be reliably estimated. Sale of merchandise and products Sale of merchandise and products is included at the moment of merchandise and product delivery and risks and benefits resulting from the title to the goods are transferred to the buyer and when the revenue amount can be reliably estimated. Rendering services Revenues of rendering services are included according to the level of advancement of their performance, if the result of the transaction concerning rendering services can be reliably estimated. The percentage state of advancement of service performance is settled as a ratio of incurred costs for the given day and general estimated costs of the transaction. If as a result of transaction concerning rendering a service cannot be reliably estimated, than the revenues gained by way of this contract are included only up to the value of costs incurred, that Grupa is expecting to regain. Interests Income by way of interests are included successively as they grow, in reference to the net balance value of a given financial asset, according to the effective interest rate method. Dividends Dividends are included at the moment of establishing the rights of shareholder to receive them. Revenues from renting Revenues from renting of investment property are included with a linear method throughout the rent period in relation to the contracts concluded TRANSACTIONS IN FOREIGN CURRENCY TAXES In financial statements of the entities of Grupa APATOR transactions in foreign currency which are calculated according to the exchange rate for the date of transaction concluded. On balance day cash assets and liabilities are calculated according to the exchange rate of a leading bank for the balance day. Profits and losses resulting from currency exchange are applied directly to the profit and loss account, excluding the cases in which they were created as a result of valuation of non-cash assets and liabilities, in the case of which changes to fair value is applied directly to equity. Operational currency of a foreign dependent company is EUR. On a balance day assets and liabilities of such foreign dependent companies are calculated into the Grupa presentation currency according to the exchange rate valid on balance day, and their profit and loss accounts are calculated according to an weighted average exchange rate for the given financial year. Exchange rate differences appearing as a result of such calculation are included directly in equity as a separate element. At the moment of sale of a foreign entity, accumulated, deferred exchange rate differences in equity, concerning the given foreign entity, are included in the profit and loss account. Compulsory result encumbrance include: current tax and deferred tax. Current tax encumbrance is calculated according to the basic tax result (taxation basis) of a given financial year. Taxation profit (loss) is different from net accounting profit (loss) in reference to exclusion of taxed income and costs being the cost of achieving revenue in the following years and costs and revenue items, that will never be subjected to taxation. Tax encumbrances are calculated according to tax rates valid for the given financial year. Name of capital group: APATOR SA Page 30

48 Financial statement for 2009 Deferred tax is calculated according to the balance method as tax subject to payment or return in the future on the basis of differences between assets and liabilities balance values and relevant tax values used for the calculation of taxation basis. Provision for deferred tax is created from all the temporary positive differences subject to taxation, however assets component by way of deferred tax is recognized up to the amount, in which it is probable, that it will be possible to lower future taxation income by recognized negative exchange rate differences. Assets item or tax liability does not arise if the temporary difference arises by the goodwill or original presentation of another assets component or liability in a transaction that did not influence neither the basic result nor the accounting result. Provision by way of deferred tax is recognized from temporary tax differences arising as a result of investment in subsidiaries and affiliated companies and joint ventures, unless the companies are able to control the moment of temporary difference reversal and it is probable that in the foreseeable future the temporary difference will not be reversed. The value of the assets component by way of deferred tax is subject to analysis for on each balance day, and in the case if forecasted future tax profits will not be enough for the performance of the assets component or its part an appropriation will take place. Deferred tax is accounted according to tax rates that shall be valid at the moment when the asset item shall be performed or the liability becomes due. Deferred tax is included in the profit and loss account, excluding the case where it concerns items included directly in equity. In this case deferred tax is also settled directly into equity EQUITIES Equities of the companies being the part of Grupa APATOR include: share capital, nominal share premium, other reserve capital, revaluation reserve, capital reserves, hedging reserve and foreign exchange differences from consolidation, financial result. Items lowering the multitude of equities include: own shares and appropriation of the current financial year result. Grupa calculated the components of equity according to the requirements of MSR 29 Financial Reporting in Hyperinflation. The calculation results and required disclosures are presented by the Grupa only in clarification notes of the financial statement. Name of capital group: APATOR SA Page 31

49 Financial statement for CLARIFICATION NOTES TO FINANCIAL STATEMENT NOTE NO. 1 OPERATING SEGMENTS Activity of Grupa APATOR is focused on to key segments of electrical engineering sector: metering and switchgear. The Company is aimed at comprehensive operation in the scope of metering and readout of utility services and to provide electrical equipment for safe making and breaking of electrical circuits. Description Metering Equipment Continued operation Switchgear Equipment Other Total Discontinued operation Total Financial results of operating segments for the reporting period (since till ) Total revenues External net revenues from sale Inter segment revenues from sales (37 685) (1 146) (2 148) (40 979) - (40 979) Total costs ( ) (86 105) (1 398) ( ) - ( ) 1. External costs ( ) (87 358) (3 546) ( ) - ( ) 2. Inter segment costs Result of segment Costs not allocated (53 888) (53 888) Share in profit of associated entities Profit (loss) from operating activity Financial revenues Financial costs (32 055) (32 055) Profit before tax Income tax (7 368) - (7 368) Minority shares (1 211) - (1 211) Net profit (loss) Other information on segments at Assets: Fixed assets Intangibles Goodwill Inventory Trade receivables Assets not allocated Liabilities Capital expenditures Property, plant and equipment and intangibles Expenditures not allocated Amortization Property, plant and equipment Intangibles Amortization not allocated Write downs Inventory Liabilities Financial results of operating segments for the previous period (since til ) Total revenues External net revenues from sales Inter segment revenues from sales (29 246) (1 707) (1 886) (32 839) - (32 839) Total costs ( ) (95 224) (1 387) ( ) - ( ) 1. External costs ( ) (96 795) (5 807) ( ) - ( ) 2. Inter segments costs Name of capital group: APATOR SA Page 32

50 Financial statement for 2009 Description Metering Equipment Continued operation Switchgear Equipment Other Total Discontinued operation Result of segment Costs not allocated (40 016) (40 016) Share in profit of associated entities Profit (loss) from operating activity Financial revenues Financial costs (41 002) (41 002) Profit before tax Income tax (5 972) (5 972) Minority shares (1 730) - (1 730) Net profit (loss) Other information on segments at Assets: Fixed assets Intangibles Goodwill Inventory Trade receivables Assets not allocated Liabilities Capital expenditure Property,plant and equipment and intangibles Expenditure not allocated Amortization Property, plant and equipment Intangibles Amortization not allocated Write downs Inventory Liabilities Geographical information The Company has separated the following three areas of activity: Home covering the sales on the territory of the country; Export export; EU sales to the countries of the European Union. Continued operation Description Discontinued Total Home Export EU Total operation Revenues from sales in geographical segments for the reporting period since till ) Total revenues External net revenues from sale Inter segment revenues from sales (39 982) - (997) (40 979) - (40 979) Revenues from sales in geographical segments for pervious period (since till ) Total revenues External net revenues from sale Inter segment revenues from sales (32 836) - (3) (32 839) - (32 839) Total Information on more important customers Grupa APATOR does not sell to the leading customer. The main customers of Grupa are power concerns. Name of capital group: APATOR SA Page 33

51 Financial statement for 2009 NOTE NO. 2 INTANGIBLES Description Goodwill Patents and licenses and software R&D costs Other intangibles Total Net balance value at Increase of value due to take over of Rector Increase of value due to take over of PoWoGaz Increase of value due to acquisition Increase of value due to reclassification Decrease due to liquidation - (487) (1 311) (9) (1 807) Amortization - (431) (596) (170) (1 197) Amortization on the day of take over of Rector (887) (887) Amortization on the day of take over of Powogaz - (1 743) - - (1 743) Decrease of current redemption due to liquidation, sales Other changes Net balance value at Net balance value at Increase of value due to own manufacturing Increase of value due to acquisition Increase of value due to take over of Apator Telemetria Decrease of value due to liquidation - (21) (686) - (707) Decrease of value due to sale Change of gross value due to reclassification (1 505) - Write downs due to deprecation Reversal of write downs Amortization for the period - (487) (707) (100) (1 294) Redemption on the day of take over of Apator Telemetria (55) (55) Changes of redemption due to reclassification - (1 370) Reduction of current redemption due to liquidation, sales Other changes Net balance value at Status at Gross balance value Sum of current redemption and write downs - (2 870) (7 079) (6 141) (16 090) Net balance value Status at Gross balance value Sum of current redemption and write downs - (4 706) (7 100) (4 926) (16 732) Net balance value Table in 2008 is not in accordance with the balance since balance item Intangibles includes the advance payments towards intangibles. Description Status at the day: Advance payments towards intangibles Total The write downs for intangibles are presented in the table below. Name of capital group: APATOR SA Page 34

52 Financial statement for 2009 WRITE DOWNS DUE DEPRECIATION Goodwill Patents and licenses and software R&D Other intangibles Total Write downs value at Write down due to depreciation taken in income statement and referred to equity during the period The amount of reversal of write downs due to depreciation taken in income statement and referred to directly to equity during the period (128) - (128) Write downs value at NOTE NO. 3 GOODWILL Description Day Apator Control Sp. z o.o Apator Kfap Sp. z o.o Apator GmbH - - Apator Rector Sp. z o.o Apator PoWoGaz S.A Apator Telemetria Sp.z o.o Apator Metroteks (Ukraine) Net goodwill Description Gross balance value at Increase of value due to take over of Grupa PoWoGaz Increase of value due to take over of Rector Decrease of value due to the sale of subsidiary (-) - Increase of value due to adjustments resulting of later taking - Decrease of value due to adjustments resulting from later taking (-) - Net foreign exchange differences calculated from financial statement to the currency of presentation - Other changes in balance value - Gross balance value at Write downs due to depreciation at Write downs due to deprecation taken during the period - Other changes - Write downs due to deprecation at Net goodwill at Value Gross balance value at Increase of value due to take over the subsidiary - Apator Telemetria Increase of value due to take over the subsidiary Apator Metroteks 333 Decrease of value due to sale of subsidiary (-) - Increase of value due to adjustments resulting due to later taking - Decrease of value due to adjustments resulting from later taking (-) - Foreign exchange differences from translation of financial statement to the currency of presentation - Other changes in balance value - Gross balance value at Write downs due to depreciation at Write downs due to depreciation taken during the period (Apator Kfap) 192 Other changes - Write downs due to depreciation at Net goodwill at Name of capital group: APATOR SA Page 35

53 Financial statement for 2009 NOTE NO. 4 PROPERTY, PLANT AND EQUIPMENT Description Lands,buildings and constructions Machines and equipment Means of transportation Other fixed assets Net balance value at Increase of value due to take over of Rector Increase of value due to take over of Powogaz Increase of value due to acquisition Increase of value due to modernization Increase of value due to own manufacturing Increase of value due to reclassification Increase of value due to acquisition of ST from leasing Decrease of value due to sale - (8 146) (1 001) (6) (9 153) Decrease of value due to liquidation (25) (998) (123) (1 939) (3 085) Increase of value due to reclassification - (1 070) - - (1 070) Amortization for the period (1 342) (5 462) (1 300) (4 643) (12 747) Redemption on the day of take over of Rector (42) (533) - (12) (587) Redemption on the day of take over of Powogaz (565) (12 721) (617) (15 975) (29 878) Increase of amortization charges due to sale Increase of amortization charges due to liquidation Increase of amortization charges due to reclassification (823) Net balance value at Net balance value at Increase of value due to take over of Apator Telemetria Increase of value due to take over of Apator Metroteks Increase of value due to acquisition Increase of value due to modernization Increase of value due to own technology Increase of value due to take over of ST from leasing Decrease of value due to sale (1 534) (5 427) (953) (119) (8 033) Decrease of value due to liquidation (19) (1 508) - (4 559) (6 086) Change of value due to reclassification (2 606) (1 979) - (171) (4 756) Write downs due to depreciation (32) (32) Reversal of write downs Amortization for the period (1 481) (5 969) (1 542) (4 940) (13 932) Redemption on the day of take over of Apator Telemetria - (15) (8) - (23) Increase of amortization charges due to sale Increase of amortization charges due to liquidation Increase of value due to reclassification Increase of amortization charges due to fate loss Net balance value at Status at Gross balance value Total Sum of current redemption and write downs (10 033) (58 413) (3 804) (67 072) ( ) Name of capital group: APATOR SA Page 36

54 Financial statement for 2009 Description Lands,buildings and constructions Machines and equipment Means of transportation Other fixed assets Net balance value Status at Gross balance value Sum of current redemption and write downs (11 160) (56 404) (4 525) (66 920) ( ) Net balance value Total Table is not in accordance with the balance since the balance item Property,plant and equipment does not include advance payments for fixed assets under construction and their write downs and the settlement of subsidy. Description Status at the day: Fixed assets under construction Advance payments for fixed assets Write downs - (194) Settlement of subsidy (42) (51) Total Grupa has got fixed assets presented off balance and used based on leasing and renting contracts. Description Status at the day: Computer equipment Cars Total Write downs for fixed assets are presented in the table below. WRITE DOWNS DUE TO DEPRECIATION Lands,buildings and constructions under construction Machines and equipment Means of transportation Other fixed assets Value of write downs at Total Write down due to depreciation taken in income statement and directly referred to equity during the period Amount of reversal of write downs due to depreciation taken in income statement and directly referred to equity during the period (364) (364) Value of write downs at Since part of the companies of Capital Group APATOR has not evaluated in reliable manner the right to perpetual usufruct of land acquired based on administrative decision they take them in off balance items. The value of the right to perpetual usufruct of land of Grupa APATOR they assumed the evaluation based on administrative decision to establish the annual fee for the use of the above right. Additional information on tangibles is presented in the table below. Description Status at the day: Subsidiary - FAP PAFAL SA Hedging of property, plant and equipment: Name of capital group: APATOR SA Page 37

55 Financial statement for 2009 Subsidiary - APATOR METRIX S.A. has got the hedging of property, plant and equipment the stand for legalization of water meters of book value of PLN (bank guarantee the contract dated 27 th October 2006 ) Additional information on property, plant and equipment Description Status at the day: Balance value of temporary unused property, plant and equipment Gross balance value of all completely amortized property, plant and equipment being still in use Balance value of property, plant and equipment withdrawn from use and not qualified as held for sale - - Information on property,plant and equipment being in use for social activity is presented in the table below. Description Lands,buildings and constructions under construction Machines and equipment Means of transportation Other fixed assets Net balance value at Increase of value due to acquisition Amortization (118) (3) - (32) (153) Net balance value at Net balance value at Increase of value due to acquisition Amortization (119) (1) - (42) (162) Net balance value at Status at Gross balance value Sum of current redemption and write downs (497) (28) - (106) (631) Net balance value Status at Gross balance value Sum of current redemption and write downs (616) (29) - (148) (793) Net balance value Total NOTE NO. 5 INVESTMENT PROPERTY Description Since till For the period Since till Value at the begining of the period Increase (decrease) of fasir value Qualified to investment property - - Sale - - Vale at the end of the period Parent company of GRUPA APATOR has qualified as investment property the land with buildings purchased that it gave for renting to not affiliated entities. The fair value of investment property of APATOR S.A. at 31st December 2009 was calculated based on evaluation carried out on that day by Property Expert - mgr Wiesław Wolant (independent expert not connected with the Company). The expert has got suitable qualifications and experience to carry out the evaluation of property. The evaluation of investment property of the Company was carried out by reference to market prices regarding similar property. Name of capital group: APATOR SA Page 38

56 Financial statement for 2009 All investment property of APATOR S.A. is its possession. NOTE NO. 6 INVESTMENTS IN ASSOCIATED ENTITIES APATOR S.A. has in possession 50% of shares in associated entity- Apator-Elektro with headquarters in Moscow. Shares in the entity have been evaluated by equity method for the amount of PLN. Subsidiary - APATOR METRIX S.A. has in possession 24% of shares in METCOM KFT with headquarters in Hungary. Effective share of APATOR S.A. in associated entity indirectly is 24%. The company is dealing with the sales of gas meters in Hungary manufactured by APATOR METRIX S.A. In 2008 was co0nsolidated by equity method. The shares in the company have been evaluated for the amount of PLN. Subsidiary - APATOR POWOGAZ has in possession 44,06% shares in Teplovodomer with the headquarters in Moscow. The shares of the company have been evaluated by equity method for the amount of PLN. Name of the company Headquarters Percentage of shares Percentage of votes Method of consolidation Apator Elektro Russia 50,00% 50,00% Equity method METCOM KFT Hungary 24,00% 24,00% Equity method Teplovodomer Russia 44,06% 44,06% Equity method Description Apator Elektro Metcom Kft Teplovodomer (*) Total 2008 Fixed assets Current assets Long term liabilities Short term liabilities Net assets Share of Grupa in net assets Total revenue Net profit Share of Grupa in net profit Fixed assets Current assets Long term liabilities Short term liabilities Net assets Share of Grupa in net assets Total revenue Net profit Share of Grupa in net profit NOTE NO. 7 SHARE IN COMMON VENTURES Capital group of APATOR has no shares in common ventures. NOTE NO. 8 FINANCIAL ASSETS AVAILABLE FOR SALE AND HELD FOR TRADING Information on financial assets available for sale and financial assets held for trading has been presented in the table. Name of capital group: APATOR SA Page 39

57 Financial statement for 2009 Description Day Financial assets available for sale Financial assets held for trading Bills of exchange Shares of Energoaparatura Katowice 1 1 Evaluation of derivatives The comparison of balance values and fair values of financial instruments (except trade receivables and trade liabilities) has been presented in the table. Description Balance value at Fair value at Financial assets Financial assets available for sale Financial assets held for trading Other short term financial assets Other financial assets (long term ones) Financial liabilities Bank loans and borrowings Liabilities due to financial leasing, contracts on tenancy with option of purchase and contracts with deferred payment Liabilities due to purchase of own shares Liabilities due to derivatives Liabilities due to earlier settlement of the options Preferred shares redeemed convertible to ordinary shares NOTE NO. 9 DERIVATIVES GRUPA APATOR dominant entity ING optional strategy At 31st December 2009 Apator had in its possession the transaction of optional strategy of OTC market concluded on 25th August 2008 with ING Bank Śląski S.A. based on the frame contract. Totally, strategy concluded with ING Bank Śląski consists of 210 operations of Currency Options 105 options put and 105 options call. Conditions of the strategy: Amount and currency Put Eur (totaly Eur) Amount and currency Call Eur (totaly Eur) Exchange rate 3,4600 Barrier 3,2050 Date of performance since 28th August 2008 till 26 th August 2010 Fees zero cost transaction On 14th October 2008 APATOR S.A. made the move of 1 option call with the date of performance on 16 th October Conditions: Amount and currency Call Eur Exchange rate 3,4600 Barrier 3,4300 Date of performance 16 th April 2009 The transaction has expired inter bank market the exchange rate reached the level of barrier. On 21st October 2008 APATOR S.A. made the move of 1 option call with the date of performance on 23rd October Conditions: Amount and currency Call Eur Exchange rate 3,4600 Name of capital group: APATOR SA Page 40

58 Financial statement for 2009 Barrier 3,4140 Date of performance 23 rd April 2009 On 12 th November 2008 APATOR S.A. made the move of 6 options call with the date of performance since 14 th November 2008 till 18 th December 2008.Conditions: Amount and currency Call Euro (totally Eur) Exchange rate 3,4800 Barrier 3,2050 Date of performance since 5th February 2009 till 12 th March In currency operations of optional strategy transactions were settled with profit in amount of PLN and loss in amount of PLN. The other not settled currency operations (94 options) were evaluated for the amount of PLN. In the period since January till December 2009, 60 currency operations of optional strategy in accordance with the contract concluded were settled in time with the loss of PLN. The evaluation value taken to the cost in 2008 was PLN. The influence on the result of 2009 has the difference in amount of PLN (loss in result account). At the same time Apator SA made the decision on earlier settlement of 17 operations of optional strategy: Under the contract concluded on 16 th November currency operations that dates of performance were on: 8 th July 2010, 15 th July 2010, 22 nd July 2010 and 29 th July 2010 were settled on 16 th November 2009 with the loss of PLN. The evaluation value taken into costs 2008 was PLN. The influence on the result in 2009 has the difference in amount of PLN (profit in results account). Under the contract concluded on 18th November currency operations that the date of performance was on: 3rd June 2010, 10th June 2010, 17 th June 2010, 24 June 2010, and 1 st July 2010 were settled on 20 th November 2009 with the loss in amount of PLN. The evaluation value taken into costs in 2008 was PLN. The influence on result has the difference in amount of PLN (profit in results account). Under the contract concluded on 3rd December 2009,4 currency operations that the dates of performance were on: 5th August 2010, 12th August 2010, 19 th August 2010 and 26 th August 2010 were settled on 3 rd December 2009 at loss in amount of The evaluation was taken to the costs in 2008 was PLN. The influence on the result has the difference in amount of PLN. (profit in income statement). Under the contract concluded on 3rd December currency operations that the dates of performance were on: 6 th May 2010, 13 th May 2010, 20 th May 2010 and 27 th May 2010 were settled on 3 rd December 2009 with the loss in amount of PLN. The evaluation was taken into the costs in 2008 was PLN. The influence on the result has the difference in amount of PLN (profit in income statement). Under the contract concluded on 7 th December currency operations that the dates of performance were on: 8 th April 2010, 15 th April 2010, 22 nd April 2010 and 29 th April 010 were settled on 7 th December 2009 with the loss in amount of PLN. The evaluation value taken into costs in 2008 was PLN. The influence on the result has the difference in amount of PLN (profit in income statement). Under the contract concluded on 7 th December currency operations that the dates of performance were on: 4 th March 2010, 11 th March 2010, 18 th March 2010, 25 th March 2010 and 1 st April 2010 were settled on 7 th December 2009 with the loss in amount of PLN. The evaluation value taken into costs in 2008 was PLN. The influence on the result has the difference in amount of PLN (profit in income statement). At 31 st December 2009 some currency operations were not settled (8 options call) they were evaluated for the amount of PLN. The evaluations taken into costs in 2008 was PLN. The influence on the result in 2009 has the difference in amount of PLN. (profit in income statement) The evaluation of liabilities due to not settled optional transactions was carried out by the independent company - Financial Markets Center Management Sp. z o.o. Name of capital group: APATOR SA Page 41 Transaction of purchase of currency (Bank Handlowy) On 23 rd October 2008 APATOR S.A. and Bank Handlowy concluded the transaction on unreal cumulative hedging purchase of convertible currency by Bank. Conditions of the transaction concluded: Amount and currency of hedging transaction Eur ( Eur) Additional amount and currency of hedging transaction Eur ( Eur) Hedging exchange rate 4,0000 Conversion exchange rate 3,500

59 Financial statement for 2009 Date of settlement since 30 th December 2008 till 30 th September On 16 th March 2009 the agreement on restructuring was concluded based on it APATOR S.A. closed the hedging transaction of the purchase of convertible currency for the amount of PLN. The amount due to the bank is paid according to agreed time-table in three instalments at the end of each quarter (i.e. 31 st March 2009, 30 th June 2009 and 30 th September 2009). The evaluation value taken into costs in 2008 was PLN. The influence on the result in 2009 has the difference in amount of PLN (loss in income statement). Currency transactions (Raiffeisen Bank) On 20 th September 2009 APATOR SA concluded two forward transactions with Raiffeisen Bank Polska Spółka Akcyjna with the headquarters in Warsaw. Conditions of the first transaction were as follows: Amount and currency purchased PLN Amount and currency sold Eur Day of completion of transaction 26 th November 2010 Hedging exchange rate 4,312 Conditions of the second transaction: Amount and currency purchased PLN Amount and currency sold Eur Day of completion of transaction 29 th December 2010 Hedging exchange rate 4,324 On 7 th October 2009 APATOR SA concluded forward transaction with Raiffeisen Bank Polska SA. Conditions of transaction: Amount and currency purchased PLN Amount and currency sold Eur Day of completion of transaction 27 th October 2010 Hedging exchange rate 4,3015 On 12 th October 2009 APATOR SA concluded forward transaction with Raiffeisen Bank Polska SA. Conditions of transaction: Amount and currency purchased PLN Amount and currency sold Eur Day of completion of transaction 28 th September 2010 Hedging exchange rate 4,3322 On 9 th December 2009 APATOR S.A. concluded forward transaction with Raiffeisen Bank Polska S.A. Conditions of transaction: Amount and currency purchased PLN Amount and currency sold Eur Day of completion of transaction 31 st August 2010 Hedging exchange rate 4,2000 On 15 th December 2009 APATOR S.A. concluded forward transaction with Raiffeisen Bank Polska S.A. Conditions of transaction: Amount and currency purchased PLN Amount and currency sold Eur Day of completion of transaction 30 th July 2010 Hedging exchange rate 4,2100 At 31 st December 2009 not settled forward transactions were evaluated for the amount PLN. The evaluation value was taken into financial revenues for The evaluation was carried out by independent company - Financial Markets Center Management Sp. z o.o. Currency transactions (Bank Handlowy) In 2009 transactions on immediate exchange of currency were concluded and settled with the profit in amount of PLN. Name of capital group: APATOR SA Page 42

60 Financial statement for 2009 Information summarizing the result on derivatives in dominant entity APATOR SA Description since till since till Revenues: performance Bank Handlowy ING Bank Śląski - 52 Raiffeisen Bank Polska S.A evaluation at the end of the period Bank Handlowy - - ING Bank Śląski - - Raiffeisen Bank Polska S.A evaluation at the beginning of the period - (452) Bank Handlowy - (452) Costs: performance Bank Handlowy ING Bank Śląski Raiffeisen Bank Polska S.A evaluation at the end of the period Bank Handlowy ING Bank Śląski Raiffeisen Bank Polska S.A evaluation on the beginning of the period (6 329) (33) Bank Handlowy (231) (33) ING Bank Śląski (6 098) - Result on derivatives (182) (5 192) FAP PAFAL SA subsidiary In 2009 the Company was settling the hedging transactions concluded in The breakdown of not performed optional transactions and forward contracts at in 000 EUR : Bank Options put Options call Forward Bank Handlowy BZ WBK BPH Total During the financial year all hedging transactions in opening balance were settled. Statement on total revenues prepared for the reporting period shows in financial cost the negative result of hedging transactions performed in value of ,00 PLN. The result includes the performance of contracts and optional transactions concluded by the Company in 2008 and closing of contracts before the deadline according to the following breakdown: 1. concluded on with BH optional transaction for 43 pieces of forward option with prolonged exclusion 50/ EUR (conditions: EUR/PLN <3,36 compensation 1000 PLN, 3,36<EUR/PLN<3,50 sale EUR at 3,50, EUR/PLN>3,60 sale EUR at 3,50, on fixing EUR/PLN>3,50 prolongation of transaction by 12 months for the amount of EUR at 3,50, lower exchange rate 3,3250) settled in the period pieces of option for the amount of EUR, loss in transaction ,00 PLN Name of capital group: APATOR SA Page 43

61 Financial statement for 2009 Name of capital group: APATOR SA Page concluded on with BH optional transaction for 26 pieces of forward option with prolonged exclusion 50/ EUR (conditions: EUR/PLN <3,20 sale EUR at 3,20, 3,20<EUR/PLN<3,35 sale EUR at 3,35, EUR/PLN>3,35 sale EUR at 3,28, on fixing EUR/PLN>3,28 prolongation of transaction by 12 months for the amount of EUR at 3,28) settled in the period pieces of option for the amount of EUR, loss in transaction ,00 PLN 3. concluded on z BH optional transaction for 26 pieces of forward option with prolonged exclusion 50/ EUR (conditions: EUR/PLN <3,19 sale of EUR at 3,19, 3,19<EUR/PLN<3,40 sale of EUR at 3,40, EUR/PLN>3,40 sale of EUR at 3,30, on fixing EUR/PLN>3,30 prolongation of transaction by 12 months for the amount of EUR at 3,30) settled in the period pieces of option for the amount of EUR, loss in transaction ,00 PLN 4. concluded on with BH forward contract - sale to bank EUR with nominal of EUR on at exchange rate 3,6140, settled on , loss in transaction ,00 PLN 5. concluded on with BZWBK optional transaction for 11 pieces of Canadian forward option 100/ EUR (conditions: EUR/PLN <3,30 sale of EUR at 3,30, 3,30<EUR/PLN<3,4510 sale of EUR at 3,4510, EUR/PLN>3,4510 sale of EUR at 3,4510) settled in the period pieces of option for the amount of EUR, loss in transaction ,00 PLN 6. concluded on optional transaction with Bank Zachodni WBK for 12 pieces of Canadian forward option of nominal of 50/ EUR in the period since till ( conditions: EUR/PLN<3,30 sale to bank EUR at 3,30, EUR/PLN>3,30 sale to bank EUR at 3,30) settled in the period pieces of option for the amount of EUR, loss in transaction ,00 PLN 7. concluded on optional transaction with Bank Zachodni WBK for 12 pieces of forward option within the limits of nominal 100/ EUR for the period since till (conditions: EUR/PLN<3,08 subsidy PLN, 3,08<EUR/PLN<3,33 sale to bank EUR at 3,33, 3,34<EUR/PLN<3,40 sale to bank EUR at 3,33, EUR/PLN>3,40 sale to bank EUR at 3,33 and EUR at 3,40) settled in the period pieces of option for the amount of EUR, loss in transaction ,00 PLN 8. concluded on the contract with Bank Przemysłowo-Handlowy for 3 pieces of option of nominal 100/ EUR for the period since till (conditions: EUR/PLN<3,15 exclusion, 3,15<EUR/PLN<3,30 sale to bank EUR at 3,30, EUR/PLN>3,30 sale to bank EUR at 3,30) settled in the period pieces of option for the amount of EUR, loss in transaction ,00 PLN 9. concluded on the contract with Bank Przemysłowo-Handlowy for 3 pieces of option of nominal 100/ EUR for the period since till on the following conditions: EUR/PLN<3,33 sale to bank EUR at 3,33, EUR/PLN>3,33 sale to bank EUR at 3,33. Settled in the period pieces of option for the amount of EUR, loss in transaction ,00 PLN 10. concluded on the contract with Bank Przemysłowo-Handlowy for 1 piece of option of nominal 100/ EUR with deadline for the performance (conditions: EUR/PLN<3,20 sale to bank EUR at 3,20, 3,20<EUR/PLN<3,35 sale expires, EUR/PLN>3,35 sale to bank EUR po 3,35) settled on piece of option for the amount of EUR, loss in transaction ,00 PLN 11. concluded on z BPH optional transaction for 6 pieces of option 100/ EUR (conditions: EUR/PLN< 3,30 exclusion, 3,30<EUR/PLN<3,45 sale of EUR at 3,45, EUR/PLN>3,45 sale of EUR at 3,45) settled in the period pieces of option for the amount of EUR, loss in transaction ,00 PLN 12. concluded on with Bank Przemysłowo-Handlowy the contract for 1 piece of option of nominal 200/ EUR with deadline for the performance on ( conditions: EUR/PLN<3,10 sale to bank EUR at 3,10, 3,10<EUR/PLN<3,55 option expires, EUR/PLN>3,35 sale to bank EUR at 3,35) settled on piece of option for the amount of EUR, loss in transaction ,00 PLN 13. concluded on the contract with Bank Przemysłowo-Handlowy for 1 piece of option of nominal 200/ EUR with the deadline of performanc3e on on the following conditions: EUR/PLN<3,00 sale to bank EUR at 3,00, 3,00<EUR/PLN<3,4350 option expires,

62 Financial statement for 2009 EUR/PLN>3,4350 sale to bank EUR at 3,4350- settled on piece of option for the amount of EUR, loss in transaction ,00 PLN 14. concluded on contract with Bank Przemysłowo-Handlowy for 1 piece of option of nominal of 500/ EUR with the deadline of performance on under following conditions: EUR/PLN<3,35 sale to bank EUR at 3,35, 3,35<EUR/PLN<3,55 option expires, EUR/PLN>3,55 sale to bank EUR at 3,55- - settled on piece of option for the amount of EUR, loss in transaction ,00 PLN 15. concluded on with BPH forward contract- sale to the bank EUR of nominal on at exchange rate 3,4750, settled on , loss in transaction ,00 PLN 16. on the Company concluded the agreement with Bank Handlowy, in accordance with it the parties decided to this day as the day of earlier settlement of transactions concluded on , and not performed for that day. Options call have been settled: - on in amount of ,00 EUR - on in amount of ,00 EUR - on in amount of ,00 EUR In total earlier settlement of the options call covered ,00 EUR. The amount due to the bank resulting of earlier settlement of transaction included in financial costs of the I quarter of 2009 is ,00 PLN and it is paid towards the Bank in installments, amounts and terms specified in the schedule. Unit value of installment is ,00 PLN, number of installments 52, payment in the period since till At financial liability of the Company towards the Bank Handlowy due to settled currency options before the deadline is PLN. At the Company had in Bank Handlowy the options put for the total amount of EUR, giving the entity the right to sell EUR in the following nominal at the exchange rates: EUR at exchange rate 3,50, EUR at exchange rate 3,28, EUR at exchange rate 3,30. Evaluation of the above instruments made by Bank Handlowy at the end of reporting period was 941,23 PLN. Up to the moment of approval of financial statement by the Executive Board options put expired for the amount of EUR and it remained EUR. Due to the fact that the Executive Board does not expect the strengthening of Polish zloty below the level of exchange rate of the options they have not been included in the statement. Financial revenues for 2009 include the evaluation of hedging transactions of the Company against the risk of exchange rate differences in amount of ,00 PLN. The evaluation was undertaken in accordance with financial policy of Grupa APATOR by independent entity entitled to undertake such type of evaluations that is Financial Markets Center Management Sp. z o.o. with headquarters in Warsaw, Stawki 2, running business based on entry to National Court register under number KRS The value of evaluation of not settled transactions at the end of reporting period was taken in statement on total income. Total amount of not perform hedging transactions at is EUR. Information summarizing the result of derivatives in subsidiary - FAP PAFAL SA Period Revenues: performance evaluation at the end of the period evaluation at the beginning of the period - (584) Costs: performance evaluation at the end of the period evaluation at the beginning of the period (12 136) (413) Result on contracts (5 022) (12 339) Name of capital group: APATOR SA Page 45

63 Financial statement for 2009 APATOR METRIX SA subsidiary At 31st December 2008 the subsidiary - APATOR METRIX SA had optional transaction concluded with Bank Millenium on 14 th July In total, transaction concluded with Bank Millenium consisted of 24 operations of currency options included 12 options put and 12 options call. Conditions of the transaction are as follows: Amount and currency Put Eur (in total Eur) Amount and currency Call Eur (in total Eur) Exchange rate from 3,445 to 3,225 (every month it decreases by 0,02 PLN) Date of performance since 11 th August 2008 till 13 th July 2009 Maximum cumulative profit for the Company PLN Fees transaction with no charge The transaction includes the option of prolongation by a year if the exchange rate will reach on 13th July 2009 the value above 3,445. Conditions of the prolonged transaction: Amount and currency Put Eur (in total Eur) Amount and currency Call Eur (in total Eur) Exchange rate 3,445 Date of performance since 11 th August 2009 till 12 th July 2010 Fees transaction with no charge In operations of currency optional transactions were settled with profit in amount of PLN and loss in amount of PLN. Outstanding not settled currency options (19 options) have been evaluated for the amount of PLN. In the period since January till December 2009 outstanding 19 currency operations of optional strategy were settled at loss of PLN. Evaluation was taken in charge of costs of 2008 and it was PLN. The influence on the result of 2009 has the difference in value of PLN. At 31 st December 2009 the Company does not have not settled currency transactions. The evaluation of liabilities due to no settled optional transactions was undertaken by independent entity Financial Markets Center Management Sp. z o.o. Information summarizing the result of derivatives in subsidiary - APATOR METRIX SA Period Revenues: performance evaluation at the end of the period evaluation at the beginning of the period - - Costs: performance evaluation at the end of the period evaluation at the beginning of the period (2 751) - Result on contracts (1 118) (2 882) APATOR POWOGAZ SA - subsidiary Subsidiary - Powogaz S.A. in 2009 settled all currency transactions concluded in Forward contracts concluded in accordance with contracts with Raiffeisen Bank Polska S.A. have been settled at loss in value of PLN. The evaluation taken in charge of 2008 was PLN. The influence on result of current year has the difference in value of PLN (loss in financial result). Optional transactions concluded in accordance with contracts concluded with Bank Handlowy S.A. have been settled at loss in value of PLN. Evaluation taken in charge of costs of 2008 was PLN. The influence on result of 2009 has the difference in value of PLN (loss in financial result) In 2009 subsidiary of Apator Powogaz S.A. concluded the hedging transactions of forward type based on contracts with Raiffeisen Bank Polska S.A. on the following conditions: Name of capital group: APATOR SA Page 46

64 Financial statement for 2009 Conclusion of transaction Date Settlement of transaction Currency Amount in 000 in currency Exchange rate EUR 700 4, EUR 500 4, EUR 500 4, EUR 500 4, EUR 500 4, EUR 500 4, EUR 500 4, EUR 400 4,4065 At 31 st December 2009 not settled hedging transactions of forward type were evaluated per balance for the amount of PLN. The evaluation was undertaken by independent entity Financial Markets Center Management Sp. z o.o. Information summarizing the result of derivatives in subsidiary - APATOR POWOGAZ S.A. Period 2009 May-December 2008 Revenues: performance evaluation at the end of the period evaluation at the beginning of the period - (290) Costs: performance evaluation at the end of the period evaluation at the beginning of the period (4 044) (82) Result on contracts 528 (4 215) The data of Apator Powogaz S.A. for 2008 have been presented for the period when dominant entity - APATOR S.A. supervised the subsidiary. NOTE NO. 10 INVENTORY Information on inventories has been presented in the tables. Description Day Materials Manufacturing in progress Finished products Goods Advance payments for deliveries Inventories in total, including balance value presented in fair value and reduced by sales costs balance value of inventories being the hedging of liabilities Description For the period Value of inventories taken as the cost in the period Write offs of the value of inventories taken as the cost in the period Write offs of the value of inventories reversed in the period Name of capital group: APATOR SA Page 47

65 Financial statement for 2009 The company in order to make the value of inventories real makes the analysis of the age structure when decisive factor is the date of coming the item in the warehouse. Based on the analysis the company makes the write downs. At the same time the companies make the analysis of inventories due to their depreciation. (conservative estimate). Information on write downs of inventories is presented in the table below. Day Description Materials Manufacturing in progress Finished products Goods Total write downs Subsidiary - APATOR POWOGAZ S.A. at 31 st December 2009 has got the pledge of products in value of PLN towards Raiffeisen Bank Polska S.A. in order to hedge the contract by the limit of credibility. Subsidiary FAP PAFAL S.A. at 31 st December 2009 has got the pledge of products in value of PLN towards BZ WBK S.A. in order to hedge the loan contract on current account. NOTE NO. 11 LONG TERM CONTRACTS In 2009 subsidiary APATOR RECTOR Sp. z o.o. reached the revenues due to provision of services related to long term contracts with the following contracting parties: Contract (1) Fonbud TP S.A. Contract (2) ZE Gdańsk ENERGA - GDA/01/2006 Implementation of SID Contract (3) ZE Słupsk ENERGA ZES/01/2006 Implementation of SID Contract (4) ENERGA OPERATOR ENERGA Nr 1/2008 Implementation of SID Contract (5) ZE Toruń U/DYR../TM/10/2008 Implementation of SID Contract (6) PGE Dystrybucja Warszawa Komit Contract (7) ZE Koszalin Implementations PO U/2/11/2009 Contract (8) 1/IT4/2008 Upgrade KOMIT-GEWO Edit Teren In 2009 indirect subsidiary APATOR TELEMETRIA Sp. z o.o. reached the revenues due to provision of services related to long term contracts with the following contracting parties: Contract (9) Zakład Energetyki Cieplnej SkarŜysko Kamienna Sp. z o.o. (implementation of data radio read out system) Information on long term contracts has been presented in the tables below. Contract (1) Contract (2) Description For the period For the period od do od do od do od do The revenues from the contract initially established in the contract Amendments Total amount of revenues from the contract including revenues invoiced in financial year Costs of the contract born till the balance day (7 634) (3 453) (1 298) (942) Costs of the contract remained for the performance of the contract - (3 107) (82) (313) Estimated total costst of the contract (7 634) (6 560) (1 380) (1 255) Estimated profits The value of advancement on balance day 100% 53% 94% 75% Contract (3) Contract (4) Description For the period For the period Name of capital group: APATOR SA Page 48

66 Financial statement for 2009 Description Name of capital group: APATOR SA Page The revenues from the contract initially established in the contract Amendments Total amount of revenues from the contract including revenues invoiced in financial year Costs of the contract born till the balance day (842) (450) (215) - Costs of the contract remained for the performance of the contract (59) (318) - Estimated total costst of the contract (901) (768) (215) - Estimated profits The value of advancement on balance day 93% 59% 100% Contract (5) Contract (6) Description For the period For the period The revenues from the contract initially established in the contract Amendments Total amount of revenues from the contract including revenues invoiced in financial year Costs of the contract born till the balance day (439) - (137) - Costs of the contract remained for the performance of the contract (62) Estimated total costst of the contract (501) - (137) - Estimated profits The value of advancement on balance day 88% 100% Contract (7) Contract (8) Description For the period For the period The revenues from the contract initially established in the contract Amendments Total amount of revenues from the contract including revenues invoiced in financial year Costs of the contract born till the balance day (3) - (189) - Costs of the contract remained for the performance of the contract (81) Estimated total costst of the contract (84) - (189) - Estimated profits (141) - The value of advancement on balance day 4% 100% Contract (9) TOTAL Description For the period For the period The revenues from the contract initially established in the contract Amendments Total amount of revenues from the contract including revenues invoiced in financial year Costs of the contract born till the balance day (53) - (10 810) (4 845) Costs of the contract remained for the performance of the contract (62) - (346) (3 738) Estimated total costst of the contract (115) - (11 156) (8 583) Estimated profits The value of advancement on balance day 46% 97% 56%

67 Financial statement for 2009 Long term contracts Contract (1) Contract (2) Contract (3) Contract (4) Costs born till due to performance of the contract (7 634) (1 298) (842) (215) Reserves for losses taken till Costs born adjusted by taken reserves for losses (7 634) (1 298) (842) (215) Amounts invoiced till Result of the contract taken till according to the values invoiced Not invoiced revenues on balance day according to the degree of advancement Profits (losses) taken till Prepayments of revenues Receivables on balance day Long term contracts Contract (5) Contract (6) Contract (7) Contract (8) Costs born till due to performance of the contract (439) (137) (3) (189) Reserves for losses taken till Costs born adjusted by taken reserves for losses (439) (137) (3) (189) Amounts invoiced till Result of the contract taken till according to the values invoiced (141) Not invoiced revenues on balance day according to the degree of advancement Profits (losses) taken till (141) Prepayments of revenues Receivables on balance day Long term contracts Contract (9) TOTAL Costs born till due to performance of the contract (53) (10 810) Reserves for losses taken till Costs born adjusted by taken reserves for losses (53) (10 810) Amounts invoiced till Result of the contract taken till according to the values invoiced (53) Not invoiced revenues on balance day according to the degree of advancement Profits (losses) taken till Prepayments of revenues - 13 Receivables on balance day NOTE NO. 12 TRADE RECEIVABLES AND OTHER ONES Information on trade receivables and other ones has been presented in the table. Description Name of capital group: APATOR SA Page 50 Day Trade receivables Current receivables Overdue receivables till 1 month Overdue receivables from 1 month to 3 months Overdue receivables from 3 months to 6 months Overdue receivables from 6 months to 1 year Overdue receivables over 1 year Evaluation of receivables current value - - Write downs of trade receivables value (2 851) (4 531) Other receivables Receivables due to sales of investments and fixed assets long term

68 Financial statement for 2009 Description Day Receivables due to long term hedging Discount of long term receivables (27) (20) Receivables due to sales of shares short term ones 48 - Receivables due to income tax of legal persons Receivables due to VAT, customs and other taxes Receivables due to fixed assets sold and value of intangibles Other receivables Prepayments advance payments for purchase of services Deposits for hedging of the options Disputable claims Write downs of the value of other receivables (190) (481) Total receivables, including long-term part short-term part Total receivables, including to affiliated entities to other entities Write downs of receivables value have been presented in the table below: Write downs of receivables Day Value at the beginning of the period Increase - establishment Increase write downs of subsidiaries on the day of take over - - Write down in revenues of unused amounts (7 127) (2 124) Cancelled (2 500) (461) Value at the end of the period NOTE NO. 13 CASH AND ITS EQUIVALENTS Cash in bank bears variable interest rates. Short term deposits are located for different periods from one to three months depending on current needs of the Companies for cash and they bear interest rates according to established ones. Description Cash in cash office Cash on bank accounts Short-term deposits Cash in process - - Total cash and its equivalents At 31 st December 2009 cash held on deposit in amount of PLN was alienated towards Bank Millenium for hedging of the guarantee granted by the Bank for good performance of the contract by subsidiary- Rector Sp. z o.o. for Fonbud Sp. z o.o. NOTE NO. 14 FIXED ASSETS HELD FOR SALE In 2008 in subsidiary FAP Pafal S.A. the decision was made to sell the shares of Gran Systema Pafal Sp. z o.o. (Belarus) to its partners. Therefore the above shares of the value of PLN at 31 st December 2008 have been presented in item fixed assets held for sale. On 12 th May 2009 subsidiary FAP PAFAL Name of capital group: APATOR SA Page 51

69 Financial statement for 2009 S.A. sold all its shares to the partners for the amount of USD. FAP PAFAL S.A. had 50% of shares of nominal value of USD. Subsidiary - APATOR POWOGAZ S.A. based on the resolution of the Supervisory Board dated 14 th December 2009 held for sale the properties with machines and equipment in Pniewy. Property plant and equipment held for sale have been evaluated by independent property expert The Chambers - Lis, Mizera i Wspólnicy with headquarters in Poznań. Fixed assets held for sale were evaluated according to lower one from two values: balance value or fair value reduced by sales costs. Description Balance value Evaluation of the expert Write down Value of fixed assets held for sale Lands, buildings and constructions Machines and equipment Means of transportation Other fixed assets Total NOTE NO. 15 SHARE CAPITAL Information on share capital has been presented in the tables. Description Day Number of shares Nominal value of share (PLN / share) 0,10 0,10 Share capital Description For the period Share capital at the beginning of the period Increase of share capital in the period Decrease of share capital in the period 18 - Redemption of own shares 18 - Share capital at the end of the period The General Shareholders Meeting on 8 th June 2009 adopted the Resolution no.17/2009 on reduction of the value of share capital of APATOR S.A. from the amount of ,00 PLN to the amount of ,80 PLN that is by the amount of ,20 PLN. According to the resolution the reduction of share capital is made by redemption of bearer shares of APATOR S.A. of A, B and C series of nominal value 0,10 PLN each and marked by the National Depository of Securities with the code PLAPATR Shares have been purchased by APATOR S.A. for their redemption based on Resolution no.14/2007 of General Shareholders Meeting dated 11 th June 2007 and Resolution no.19/2008 of General Shareholders Meeting dated 23 rd June On 18 th November 2009 APATOR S.A. received the verdict of Regional Court in Toruń, VII Economic Department of National Register Court and based on it the registration took place on 13 th November 2009 of reduction of share capital of the Company from the amount of ,00 PLN to the amount of ,80 PLN that is by the amount of ,20 PLN. The reduction of capital was carried out according to art and 2 of the Polish Commercial Companies Code and 11 of the Statute of APATOR S.A. by redemption of own shares of the Company acquired for their redemption. The structure of shareholders at 31 st December 2009 has been presented in the table. Name of capital group: APATOR SA Page 52

70 Financial statement for 2009 Description Shares Votes % of shares % of votes Apator Mining Sp. z o.o ,80% 11,28% Persons holding over 5% ,28% 37,43% Mariusz Lewicki ,74% 9,42% Tadeusz Sosgórnik ,41% 8,34% Danuta Guzowska ,33% 7,49% Zbigniew Jaworski ,78% 6,17% Janusz Marzygliński ,02% 6,01% Others ,92% 51,29% TOTAL % 100% At the day of passing to MSSF/MSR Grupa APATOR made calculations of equity occurred in hyperinflation. In opinion of the Executive Board of the Company some doubts can arise the taking in the balance already mentioned hyperinflation corrections as not covered loss from previous years in the situation when it regards the events from several years ago and corresponding profits were distributed prior the date of preparation of the financial statement. Moreover, it is not clear if possible taking of hyperinflation correction causes the effects based on the Polish Commercial Companies Code regarding dividend or conditions when it is necessary to adopt the resolution concerning the living of the entity longer. In such situation in opinion of the Executive Board taking the hyperinflation correction directly in the balance could be misleading for the readers of financial statement and therefore appropriate amounts have been presented in the note. Description Day Share capital Hyperinflation correction Share capital after translation Reserve capital Hyperinflation correction Supplementary capital after translation Undistributed financial result Hyperinflation correction (3 844) (3 844) Undistributed financial result after translation In order to calculate the equity in hyperinflation the following price ratios have been taken into consideration: Year Ratio , , , ,9 NOTE NO. 16 OTHER CAPITALS Information on other capitals has been presented in the table. Description Own shares Supplementary capital Capital from revaluation Other reserve capitals Total Value at (5 914) Increases since till (1 475) Distribution of the result Purchase of own shares (1 475) (1 475) Establishment of reserve capital Decreases since till Name of capital group: APATOR SA Page 53

71 Financial statement for 2009 Description Own shares Supplementary capital Capital from revaluation Other reserve capitals Total Establishment of reserve capital Cover of the loss from supplementary capital Value at (7 389) Value at (7 389) Increases since till (557) Distribution of the result Purchase of own shares (557) Establishment of reserve capital Decreases since till (2 032) Cover of the loss from supplementary capital Payment of dividend Changes due to redemption of shares of Wodpol Redemption of own shares (2 032) (18) Reserve capital establishment Value at (5 914) Profit distribution (cover loss) in entities in Capital Group APATOR. Dominant entity in GRUPA APATOR According to the Resolution No 11/2009 of General Shareholders Meeting of APATOR S.A. dated 8th June 2009 net profit was distributed for financial year 2008 in amount of ,33 PLN in the following manner: dividend ,90 PLN, supplementary capital ,43 PLN. Towards expected dividend from the profit for financial year 2008 the advance payment was paid in total amount ,90 PLN that is 0,10 PLN per share. For the advance payment towards expected dividend were entitled registered shares of A series and bearer shares of A, B and C series. In payment of advance payment towards expected dividend did not take part own shares acquired for the redemption. The rights to receive the advance payment towards the dividend for financial year 2008 have obtained the shareholders holding shares APATOR SA on 5 th December The payment of the advance payment was made on 12th December The rights to the payment of the other part of dividend were entitled registered shares of A series and bearer shares of A, B and C series. In the payment of the other part of dividend did not take part own shares of APATOR S.A. purchased for the redemption. The rights to other part of dividend in total amount of ,00 PLN have obtained the shareholders holding the shares of APATOR S.A. on 29 th June The payment of the other part of dividend in amount of 0,25 PLN per share was made on 14 th July In accordance with the Resolution No. 12/2009 of General Shareholders Meeting of APATOR S.A. dated 8 th June 2009 the financial result from previous years was distributed in amount of ,69 PLN destining it in whole to supplementary capital. Subsidiary - APATOR MINING Sp. z o.o. According to the resolution 8/2009 of Ordinary Partners Meeting of APATOR MINING Sp. z o.o. dated 30 th March 2009 the profit distribution of amount of ,74 PLN was made in the following manner: dividend ,00 PLN, supplementary capital ,74 PLN Right to dividend was fixed on the day of General Partners Meeting to be held that is on 30 th March 2009 The payment of dividend is presented as follows: Amount of ,00 PLN as advance payment was paid on 24 th November 2008 according to the Resolution of General Partners meeting no. 1/2008 dated 21 st October 2008, Amount of ,00 PLN was paid in two instalments: ,00 PLN on 31 st March 2009 ; ,00 PLN on 28 th May 2009 Name of capital group: APATOR SA Page 54

72 Financial statement for 2009 On 2 nd December 2009 the Executive Board of APATOR MINING Sp. z o.o. adopted the Resolution No. 1/2009 on payment of advance payment towards the dividend. In accordance with adopted resolution the advance payment towards expected dividend for 2009 was 100,00 PLN per 1 share, and entitled to get advance payment are shareholders who are entitled to the shares on 2 nd December The Supervisory Board of APATOR MINING Sp. z o.o on 4 th December 2009 adopted the Resolution no. 171/2009 approving the resolution of the Executive Board. Payment of advance payment towards expected dividend for 2009 in amount of ,0 PLN will be paid on 15 th December Subsidiary - APATOR CONTROL Sp. z o.o. According to the Resolution No. 9/2009 of Ordinary Partners Meeting of APATOR CONTROL Sp. z o.o. dated 28 th April 2009 profit distribution was made for 2008 in value of ,09 PLN in the following manner: dividend ,00 PLN, reserve capital ,09 PLN The date of payment of dividend has been fixed as follows: 30 th April ,00 PLN 19 th May ,00 PLN 29 th May ,00 PLN Subsidiary - APATOR RECTOR Sp. z o.o. According to the Resolution No. 3/2009 of Ordinary Partners Meeting of APATOR RECTOR Sp. z o.o. dated 22 nd April 2009 profit distribution for 2008 was made in value ,75 PLN in the following manner: dividend ,00 PLN, supplementary capital 656,75 PLN The right to dividend was fixed on the day of Ordinary Partners Meeting to be held that is on 22 nd April The date of payment was fixed as follows: 23 rd April ,00 PLN 28 th May ,00 PLN Subsidiary - APATOR METRIX S.A. According to the Resolution No. 3/2009 of Ordinary General Shareholders Meeting of APATOR METRIX S.A. dated 22nd June 2009 profit distribution for 2008 was made in value of ,01 PLN as follows: dividend ,52 PLN, supplementary capital ,49 PLN. One share entitles for payment of dividend in value of 4,76 PLN. The list of shareholders entitled to dividend for financial year 2009 was established on 22 nd June The date of payment of dividend was fixed as follows: 15 th July ,00 PLN 15 th August ,52 PLN Subsidiary - FAP PAFAL S.A. According to the Resolution No. 11/2009 of Ordinary General Shareholders Meeting of FAP PAFAL S.A. of 19 th June 2009 profit distribution for 2008 was made in value of ,35 PLN entirely to supplementary capital According to the Resolution No. 12/2009 of Ordinary General Shareholders Meeting of FAP PAFAL S.A. dated 19 th June 2009 it was decided to make payment of dividend in total value of ,00 PLN (3,40 PLN per share). Entitled for payment of dividend were shareholders holding shares on 19 th June The date of payment of dividend was fixed as follows: 30 th June ,00 PLN 31 st July ,00 PLN NOTE NO. 17 OWN SHARES Capital Group APATOR has not option for own shares. Subsidiary - APATOR MINING Sp. z o.o. has in its possession shares of dominant entity - APATOR S.A. Name of capital group: APATOR SA Page 55

73 Financial statement for 2009 According to the Resolution No 13/2007 of General Shareholders Meeting of APATOR S.A. dated 11 th June 2007 the fund was established for redemption of APATOR S.A. by separation of the sum of PLN from supplementary capital. General Shareholders Meeting of APATOR S.A. gave the consent to acqusition by APATOR S.A. own shares for their later redemption til 31 st May Since 23 rd April till 30 th May 2008 APATOR S.A. acquired own shares for their redemption. According to the Resolution No. 18/2008 of General Shareholders Meeting of APATOR S.A. dated 23 rd June 2008 the consent to the acquisition by APATOR S.A. of own shares for their later redemption was prolonged till 30 th June According to the Resolution No. 19/2008 the fund for redemption of shares was expanded to the amount of 20 m PLN. Since 1 st July 2008 till 31 st December 2008 Apator S.A. acquired own shares for their redemption. In 2009 Apator S.A. acquired own shares for their redemption. General Shareholders Meeting of APATOR S.A. according to the resolution No. 16/2009 dated 8th June 2009 decided to redeem bearer shares of APATOR S.A. of A, B and C series of nominal value of 0,10PLN each, marked by the National Depository of Securities with the code PLAPATR Shares were bought in the period since 23rd April 2008 till 3rd April Total sot of acquisition of own shares was ,66 PLN: Shareholder who sold shares to APATOR S.A. were paid in total amount of ,58 PLN. Commissions and deposit fees were 5.727,08 PLN On 13th November 2009 the reduction of capital of the Company from the amount ,00 PLN to the amount ,80 PLN, i.e. by the amount ,20 PLN. The reduction of capital was carried out according to art and 2 of the Polish Commercial Companies Code and 11 of the Statute of APATOR S.A. by acquisition of own shares of the Company for their redemption. On 9th December 2009 the National Depository of Securities adopted the resolution no 513/09 with regard to the redemption of shares of APATOR S.A., shares of APATOR S.A. are marked with the code PLAPATR00018 NOTE NO. 18 PROVISIONS FOR LIABILITIES Information on provisions for liabilities has been presented in the table. Description Employees Extras Margins Warranties Future costs Provisions at Consolidation of Grupa PoWoGaz Consolidation of Rector Provisions kept Provisions used (4 856) (990) (96) (124) (3 557) (9 623) Provisions diluted (408) (31) (439) Other changes in provisions Provisions at Provisions at Provisions kept Provisions used (10) (960) - - (929) (1 899) Provisions diluted (2 586) - (473) (726) (696) (4 481) Other changes in provisions Provisions at short term provisions long term provisions Total NOTE NO. 19 TRADE LIABILITIES AND OTHER ONES Information on trade liabilities and other ones has been presented in the table. Name of capital group: APATOR SA Page 56

74 Financial statement for 2009 Description Day Trade liabilities Current liabilities Overdue liabilities up to 1 month Overdue liabilities from 1 month to 3 months Overdue liabilities from 3 months to 6 months Overdue liabilities from 6 months up to 1 year 9 1 Overdue liabilities over 1 year Other liabilities Loans and borrowings Liabilities due to income tax Liabilities due to other taxes, customs and social insurance Liabilities due to salaries and wages Liabilities due to derivatives Liabilities due to settlement of derivatives Other financial liabilities Advance payments received for deliveries Liabilities due to bills of exchange - - Liabilities due to dividend Investment liabilities Other liabilities due to other entities Prepayments for revenues Total liabilities, including long term part short term part Total liabilities,including to related entities to other entities NOTE NO. 20 LOANS AND BORROWINGS Information on loans and borrowings has been presented in the tables. Description Amount due Interest Loans Raiffeisen Bank Polska S.A Raiffeisen Bank Polska S.A Citibank Handlowy - Bank Handlowy w Warszawie S.A Citibank Handlowy - Bank Handlowy w Warszawie S.A BZ WBK Bank Millenium ING Bank Śląski Citibank Handlowy - Bank Handlowy w Warszawie S.A Credit cards 15 0 Borrowings Borrowings from minority of Apator Telemetria Total loans and borrowings Description Day Short-term loans and borrowings Long-term loans and borrowings paid over 1 year up to 2 years Name of capital group: APATOR SA Page 57

75 Financial statement for paid over 2 years up to 5 years paid over 5 years - - Total loans and borrowings Name of capital group: APATOR SA Page 58 Description Value in currency Day Value in PLN Value in currency Value in PLN PLN Total loans and borrowings X X The fair value has been taken like book value of loans since the companies did not intend to sell those loans. Information on interest rate risk has been presented in the table: Loans and borrowings Description < 1 year 1-5 years > 5 years Total Share of age at Raiffeisen Bank Polska S.A Raiffeisen Bank Polska S.A Citibank Handlowy - Bank Handlowy w Warszawie S.A Citibank Handlowy - Bank Handlowy w Warszawie S.A BZ WBK S.A Bank Milenium S.A ING Bank Śląski Citibank Handlowy - Bank Handlowy w Warszawie S.A Credit cards Borrowings from minority of Apator Telemetria Loans and borrowings Share of age at Raiffeisen Bank Polska S.A Citibank Handlowy Bank Milenium S.A ING Bank Śląski Dominant entity APATOR SA At 31 st December 2009 Apator SA had the debt due to loans in amount of PLN. The Company did not have any debt due to borrowings. Conditions of the loan incurred on current account under the contract concluded on 27 th May 2004 and annex dated 17 th April 2008 with Bank Handlowy w Warszawie SA are as follows: Amount of the loan PLN for the period since 17 th April 2008 till 20th April 2008; PLN for the period since 21 st April 2008 till 20 th April 2010 Deadline of the loan repayment 20th April 2010 Type of hedging Bail mortgage in amount of PLN Assignment of receivables in amount of PLN Assignment of rights from contract regarding insurance of property Interest rate WIBOR 1M + annual margin of 0,5625% Commissions and costs 0,3% of loan amount I installment of the preparatory commission 0,3% of loan amount II installment of preparatory commission to be paid on 21 st April 2009

76 Financial statement for 2009 Current engagement 0,4% of loan amount not used engage commission 0,1% of loan amount commission for the change of conditions PLN Conditions on long-term loan incurred under the contract concluded on 17th April 2008 with Bank Handlowy w Warszawie SA are as follows: Amount of the loan PLN Deadline of the loan repayment PLN till 30th June PLN till 30th June PLN till 30th June PLN till 30th June PLN till 30th June 2013 Type of hedging Ordinary mortgage in total amount of PLN Bail mortgage for the amount of PLN Warranties of the companies: APATOR-MINING Sp. z o.o., APATOR-METRIX S.A. and FAP PAFAL SA Interest rate WIBOR 1M + annual margin 0,3% Commissions and costs 0,1% of loan amount preparatory commission Current engagement PLN Conditions of the loan incurred on current account and revolving loan under the contract on liability limit concluded on 16 th June 2005 and annex dated 14 th December 2009 with Raiffeisen Bank Polska SA: Limit PLN: PLN loan on current account PLN revolving loan PLN limit for letter of credit without advance payment PLN limit for bank guarantees Deadline of the loan repayment 7th December 2010 Type of hedging Power of attorney to current account Secret assignment of liabilities in amount of min. 40% entire business trading Interest rate - WIBOR 1T + annual margin of 1,5% loan on current account - WIBOR 1M + annual margin of 1,5% revolving loan Commissions and costs 0,75% annually engage commission Current engagement PLN current account PLN revolving loan Subsidiary - APATOR MINING Sp. z o.o. At 31 st December 2009 APATOR-MINING Sp. z o.o. had the debt due to loans in value of PLN. The conditions of loan incurred on bank account under the contract concluded on 4 th November 2008 with ING Bank Śląski S.A.: Amount of loan PLN since 29 th December 2009 till 28 th March PLN since 29 th March 2010 till 30 th June 2010 Deadline of repayment 30 th June2010 Type of hedging Guarantee of APATOR S.A. Power of attorney to current account Interest rate WIBOR 1M + 1,5% Commissions and costs 0,3% of the amount of loan received 0,035% of the amount of loan used Current engagement PLN Conditions of loan incurred on current account under the contract concluded on 15 th May 2009 with Bank Handlowy w Warszawie S.A.: Name of capital group: APATOR SA Page 59

77 Financial statement for 2009 Amount of loan PLN since 15 th May till 29 th July PLN since 30 th July till 30 th August PLN since 31 st August till 29 th September PLN since 30 th September till 29 th October PLN since 30 th October till 30 th November PLN since 1 st December till 29 th December PLN since 30 th December 2009 till 28 th January PLN since 29 th January till 25 th February PLN since 26 th February till 29 th March PLN since 30 th March till 13 th May 2010 Deadline of repayment 13 th May 2010 Type of hedging Guarantee of APATOR S.A. Power of attorney to current account Interest rate WIBOR 1M + 1,1% Commissions and costs 0,5% amount of loan preparatory commission 0,4% - engage commission Current engagement PLNł (interest rates of PLN included) Subsidiary - APATOR CONTROL Sp. z o.o. At 31 st December 2009 APATOR CONTROL Sp. z o.o. had no debt due to bank loans and borrowings. Subsidiary - APATOR METRIX S.A. At 31 st December 2009 APATOR METRIX S.A. had the debt due to bank loan granted by Bank Milenium S.A. Conditions of the loan incurred on current account under the contract concluded on 28 th February 2007 and annex dated 22 nd April 2009 with Ban Milenium SA.: Amount of the loan PLN since 28 th February till 6 th May 2007; PLN since 7 th May till 27 th June 2007; PLN since 28 th June till 31 st December 2007; PLN since 1 st January till 31 st March 2008; PLN since 1 st April till 15 th April 2008; PLN since 16 th April 31 st December 2008; PLN since 1 st January till 21 st April 2009; PLN since 22 nd April 2009 till 21 st April Deadline of repayment 21 st April 2010 Type of hedging Bail mortgage up to the amount of PLN on property with buildings Interest rate WIBOR 1M + margin 1,5% Commissions and margins 0,08% of loan amount commission for readiness Current engagement PLN Subsidiary - FAP PAFAL S.A. At 31 st December 2009 FAP PAFAL S.A. had the debt due to loans in value of PLN. Conditions of the loan incurred on current account under the contract concluded on 15 th June 2005 and annex dated15th June 2009 with BZ WBK S.A.: Amount of the loan PLN Deadline of repayment 17 th July repaid Type of hedging Bail mortgage on properties in amount of PLN Product pledge in amount of PLN Cession of receivables in amount of PLN bill of exchange in blanco Interest rate WIBOR 1M + margin 1,50% Commissions and costs 0,75% loan amount preparatory commission 0,73% commission of the loan unused Conditions of the loan incurred on current account under the contract concluded 10 th July 2009 and annex dated 19 th November 2009 with BZ WBK S.A.: Name of capital group: APATOR SA Page 60

78 Financial statement for 2009 Amount of the loan PLN since 17 th July PLN since 19 th November 2009 Deadline of repayment 30 th June 2010 Type of hedging Bail mortgage on properties for the amount of PLN Product pledge in amount of PLN Cession of receivables in amount of PLN Bill of exchange in blanco Interest rate WIBOR 1M + margin 1,50% Commissions and costs 0,6875% of loan amount preparatory commission 0,73% - commission of unused loan Current engagement PLN Conditions of loan contract on current account under the contract concluded on 16 th July 2008 with Bank Przemysłowo Handlowy S.A.: Amount of the loan PLN Deadline of repayment 16 th July repaid Type of hedging Machine and equipment pledge for the amount of PLN Product pledge in amount of PLN Interest rate WIBOR 1M + margin 0,50% Commissions and costs none Subsidiary - RECTOR Sp. z o.o.. At 31 st December 2009 Rector Sp. z o.o. had no debt due to loans and borrowings. The company has concluded loan contract on current account with Bank Millenium S.A., that it did not make use till the date of preparation of the statement. Conditions of the loan incurred on current account under the contract concluded on 4th March 2008 and annex dated 6 th March 2009 with Bank Millenium S.A.: Amount of the loan PLN till 6 th March PLN till 3 rd October 2010 Deadline of repayment 3 rd October 2010 Type of hedging Contract on transfer of receivables Interest rate WIBOR 1M + margin 2% Commissions and costs Commission for readiness 0,12% Current engagement PLN Subsidiary - APATOR GmbH At 31 st December 2009 Apator GmbH had no debt due to loans and borrowings except borrowings granted by dominant entity - APATOR S.A. Subsidiary - APATOR Powogaz At 31 st December 2009 Grupa Apator Powogaz had the debt due to borrowings incurred from minority shareholders of Apator Telemetria in value of PLN and the debt on credit cards in value of PLN. Four contracts on borrowings concluded in April and May 2009 with minority shareholders of Apator Telemetria Sp. z o.o.,each for the amount of PLN has the deadline for repayment fixed on 31 st May Annual interest rate is 6%; interest are paid in advance till 31 st December Name of capital group: APATOR SA Page 61

79 Financial statement for 2009 NOTE NO. 21 CONDITIONAL LIABILITIES AND ASSETS Operating leasing and renting At 31 st December 2009 Apator SA had the liabilities due to renting contracts concluded on computer equipment and cars. The contract concluded with IBM Polska Sp. z o.o. defines monthly rent in amount of PLN for renting of server. The value of equipment rented at 31 st December 2009 is PLN. The contract was concluded for 36 month period. On 15 th September 2009 the contract for renting cars was concluded with Arpol Motor Company Sp. z o. o. The object of renting is the car Seat Leon, the contract was concluded for the period of 36 months. Monthly rent was defined for the amount of PLN plus additional amount (0,45 PLN per 1 kilometer) for exceeded limit of kilometers ( km per year). Apator SA under the contract has pre-emotion right to the car rented anytime based on three month notice at the gross price of PLN reduced by PLN for each month of renting paid. On 1 st October 2009 the contract was concluded for renting the car Mitsubishi Outlander from Arpol Motor Company Sp. z o.o. the contract was concluded for the period of 36 months, monthly rent was defined for the amount of PLN plus additional amount (0,65 PLN per 1 kilometer) for exceeded limit of kilometers ( km per year). Apator SA under the contract has pre-emotion right to the car rented after termination of the contract at the price of PLN.. Subsidiary - APATOR RECTOR Sp. z o.o. At 31 st December 2009 Rector Sp. z o.o. had liabilities due to operating leasing for renting cars. The contracts with Prima Car Management S.A. were concluded in 2006, 2007 and In accordance with the contracts PLN (including payment up to 1 year PLN) still remained to be repaid. Guarantees Dominant entity - APATOR S.A. On 25 th July 2007 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the bank for the amount of PLN for Koncernu Energetycznego Energa SA in order to guarantee proper performance of commitments by Apator SA. Guarantee is valid till 24 th July Hedging for bank credibility is mortgage. On 31 st July 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the bank for the amount of PLN for Energa Operator SA in order to guarantee proper performance of commitments by Apator SA and PAFAL SA. Guarantee is valid till 4 th September Hedging for bank credibility is mortgage. On 3 rd August 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the bank for the amount of PLN for Energa Operator SA in order to guarantee proper performance of commitments by Apator SA and PAFAL SA. Guarantee is valid till 19 th September Hedging for bank credibility is mortgage. On 19 th September 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the bank for the amount of PLN for RWE Stoen Operator SA in order to guarantee proper performance of commitments by Apator SA and PAFAL SA. Under the agreement the guarantee was valid till 5 th December 2009 and it was prolonged on 20 th November to 31 st December Hedging for bank credibility is mortgage. On 9 th October 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the bank for the amount of PLN for Enea Operator SA in order to guarantee proper performance of commitments by Apator SA and PAFAL SA. Guarantee is valid till 31 st December Hedging for bank credibility is mortgage. Name of capital group: APATOR SA Page 62

80 Financial statement for 2009 On 20 th October 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the bank for the amount of PLN for PGE Dystrybucja Warszawa teren Sp. z o.o. in order to guarantee proper performance of commitments by Apator SA. Guarantee is valid till 31 st December Hedging for bank credibility is mortgage. On 21 st October 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the bank for the amount of Eur for REGIE DE PRODUCION (BURUNDI) in order to guarantee the return of advance payment. Guarantee is valid till 28 th February Hedging for bank credibility is mortgage. On 21 st October 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the bank for the amount of Eur for REGIE DE PRODUCION (BURUNDI) in order to guarantee the proper performance the commitments of APATOR SA. Guarantee is valid till 31 st October Hedging for bank credibility is mortgage. On 4 th November 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the tender guarantee for the amount of USD for RECO (Rwanda). Guarantee is valid till 31 st March Hedging for bank credibility is mortgage. On 12 th November 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the bank for the amount of PLN for Enea Operator SA. Under the agreement guarantee was valid till 14 th January 2010 and on 23 rd December 2009 it was prolonged till 15 th March Hedging for bank credibility is mortgage. On 20 th November 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the tender guarantee for the amount of PLN for PGE Dystrybucja Łódź - Teren SA. in order to guarantee proper performance of commitments by Apator SA.Guarantee is valid till 29 th January Hedging for bank credibility is mortgage. On 17 th December 2009 the Company reached the agreement with Bank Handlowy w Warszawie SA on guarantee to be granted. Under the agreement reached Bank granted the bank guarantee for the amount of PLN for RWE Stoen Operator Sp. z o.o. in order to guarantee proper performance of commitments by Apator SA. Under the contract concluded guarantee is valid till 14 th January Hedging for bank credibility is mortgage. Subsidiary - FAP PAFAL S.A. The company at 31 st December 2009 has got in its off balance records the guarantees for the remedy of defects and guarantees for tender bonds for total amount of PLN: guarantee for remedy of defects issued by Hestia SA towards STORN S.A PLN guarantees for tender bonds issued by BZ WBK S.A PLN Subsidiary - APATOR METRIX SA The company concluded the contract on bank guarantee on 27 th October Under the contract the company has the right to make us of guarantees granted by the Bank with the validity period not exceeding 36 months of the date of the issue of the guarantee. The hedging for the contract is thee contract on transfer of title to secure the repayment for legalization stands for gas meters of book value at 31 st December 2009 in value of PLN. Subsidiary - APATOR RECTOR Sp. z o.o. The company at 31 st December 2009 has got the agreement concluded with Bank Millenium on granting the guarantee. Under the agreement Bank has granted the guarantee towards Fonbud in order of good performance of the contract. In accordance with the agreement the guarantee is valid till May 2011 and the hedging of receivables of the Bank is the cash in bank deposit in value of PLN conveyed by the Bank. Subsidiary - APATOR POWOGAZ S.A. At 31 st December 2009 has got the agreement concluded with Raiffeisen Bank Polska S.A. on granting the guarantee. Under the agreement concluded, Bank granted the guarantee for tender bonds: towards Chief Executive Oficer, Africa Re Centra, Kenya for the amount of USD with the validity of 28 th February 2010 ; Name of capital group: APATOR SA Page 63

81 Financial statement for 2009 Tyska Spółdzielnia Mieszkaniowa OSKARD Tychy for the amount of PLN with the validity of 6 th April At 31 st December 2009 the following contracting parties had in their possessions own bills of exchange issued by Apator Powogaz S.A.: Beneficiary of bill of exchange Bill of exchange The reason of issuing Date of return InterRisk Towarzystwo Insurance policy no /51/143/2009 Ubezpieczeń S.A. Insurance Group in blanco (guarantee for remedy of defects) InterRisk Towarzystwo Ubezpieczeń S.A. Insurance Group in blanco InterRisk Towarzystwo Ubezpieczeń S.A. Insurance Group in blanco InterRisk Towarzystwo Ubezpieczeń S.A. Insurance Group in blanco Raiffeisen-Leasing Polska S.A. in blanco General contract on granting of contractual insurance guarantee no (guarantees for tender bonds) General contract on granting of contractual insurance guarantee no (guarantee for appropriate performance of the contract) General contract on granting of contractual insurance guarantee no (guarantee for remedy of defects) Contract on operating leasing no. MF918N (UL) Dominant entity concluded with the insurance company - Risk Towarzystwo Ubezpieczeń S.A., Vienna Insurance Group, Przedstawicielstwo Generalne Toruń the contract on granting of contractual insurance guarantees. Under the contract InterRisk S.A. guarantees the liabilities of APATOR POWGAZ S.A. due to: Obligation to pay the tender bond - limit is ,00 PLN Not doing its duties or improper doing it duties specified in the contract (commercial contract) limit is ,00 PLN lack of remedy or improper remedy of defects limit is ,00 PLN At r. the following guarantees issued by InterRisk were active: Beneficiary of guarantee Guarantee Amount Validity Zakład Energetyki Cieplnej S.A. Katowice usunięcia wad i usterek PLN RTBS "ADMINISTRATOR" Sp. z o.o., Radom Wadialna PLN Warranties APATOR S.A. granted warranty due to granted loan under the contract concluded on 4th November 2008 with ING Bankiem Śląskim S.A. and annex to the contract dated18th December 2009 on current account of APATOR MINING Sp. z o.o. in amount of PLN. Guarantee to the amount of PLN covers liabilities resulting from loan contract and particularly liabilities regarding interest, commissions and other costs of execution is valid till 30 th June APATOR S.A. granted warranty under the contract on guarantee concluded on 15th May 2009 with Bank Handlowy S.A. he contract was concluded in order to hedge the repayment of liabilities due to loan granted on 15th May 2009 on current account of APATOR MINING Sp. z o.o. in amount of PLN. Guarantee to the amount of PLN covering liabilities resulting from loan contract and regarding particularly liabilities of the loan, interest, commissions and other costs of execution is valid till 30th November 2010 (bank execution is valid 30th November 2012). Subsidiaries Apator Metrix S.A., Apator Mining Sp. z o.o. and FAP Pafal S.A. concluded on 17 th April 2008 with Bank Handlowy SA the contract on warranty being the hedging of repayment of receivables due to the loan granted to dominant entity - APATOR S.A. in amount of PLN. Guarantee was granted to the amount of PLN. According to the stipulations of the contract guarantors undertake to perform the duties of the debtor in case when the debtor does not fullfil its duties in time. Guarantee is valid till 31 st December Conditional liabilities Dominant entity - APATOR S.A. Name of capital group: APATOR SA Page 64

82 Financial statement for 2009 Under the investment contract concluded on 30 th August 2007 with Przedsiębiorstwo Techniczno Handlowe Rector Unlimited Partnership represented by partners, Apator SA purchased 70% of shares in transformed Rector Sp. z o. o. for the amount of PLN. Apator SA has undertaken to pay extra after the period of three years to the price of 70% shares provided the transformed company Rector will earn expected net profit in the period Under the contract the extra payment will not exceed the amount of PLN. At the same time Apator SA committed to purchase outstanding 30% shares after three years at the price defined based on the value of the company. Subsidiary - APATOR POWOGAZ S.A. During the purchase of Apator Metroteks selling parties was granted additional conditional price extras depending on result to be gained in the future by the company. Maximum value should be as follows.: Eur paid after the approval of result of financial year 2010; Eur paid after the approval of results of financial year NOTE NO.22 FINANCIAL LEASING AND OTHER FINANCIAL LIABILITIES APATOR S.A has financial liabilities resulting from the contract concluded on 26 th March 2008 with IBM Polska Sp. z o.o. Liabilities resulting from the contract regard the purchase of the software with deferred payment. The value of the software purchased is PLN. Total financing costs were established for PLN. Payment in 36 installments of PLN each in the period since 31 st May 2008 till 30 th April Liability is subject to evaluation by the method of amortized cost at effective interest rate. At 31 st December 009 the liability is PLN. The liability has been presented in item other financial liabilities. Spółka Apator Metrix has financial liabilities due to the contracts concluded on 10 th June 2008 and 21 st July 2008 with Volkswagen Leasing Polska Sp. z o.o. The object of the contracts are cars of make Skoda. The contract have been concluded for the period of 48 months. The liability at 31 st December 2009 is PLN. (including long term ones for the amount of PLN). Apator Rector Sp. z o.o. concluded financial leasing contracts where their objects are cars of the value of PLN at 31 st December 2009.The liability at 31 st December 2009 is PLN (including long term ones for the amount of PLN). Apator Kfap Sp. z o.o. in January 2009 concluded financial leasing contract where their objects are three cars. The liability is PLN (including long term ones for the amount of PLN). Apator Powogaz S.A. in 2009 concluded financial leasing contract where its object is a car of the value of PLN. The contract with option of purchase has been concluded for the period of 35 months. The liability is PLN. (including long term ones for the amount of PLN) Apator Telemetria Sp. z o.o. has at 31 st December 2009 liability due to financial lesing (short term liability) in value of PLN. NOTE NO. 23 INCOME TAX Structure of income tax for the reporting period has been presented in the table. Main components of tax charge: Period Income statement Current income tax Current expenses due to income tax (continued operation) Current expenses due to income tax (discontinued operation) - - Adjustments regarding current income tax from previous years - - Deferred income tax (3 902) Related to establishment and reverse of temporary differences (3 902) Name of capital group: APATOR SA Page 65

83 Financial statement for 2009 Main components of tax charge: Period Related to reduction of income tax rates - - Tax expense indicated in income ststement Statement on changes in equity Current income tax - - Current income tax due to foreign exchange differences from the loan - - Deferred income tax - - Net loss due to revaluation of hedging of the cash flow - - Not used profit due to financial assets available for sale - - Net deferred income tax taken in reserve capital in the first application of MSR Net deferred income tax from hedging of the cash flow settled during the financial year - - Net deferred income tax from financial assets available for sale and sold during the financial year. - - Tax profit indicated in equity - - NOT NO. 24 DEFERRED INCOME TAX Deferred income tax has been presented in table. Description Balance day Income statement in the period Provisions due to deferred income tax - interest from liabilities, borrowings and advance payments for shares (1) 10 - discount of bills of exchange - 2 (2) 1 - evaluation of currency - 92 (92) 92 - temporary differences - leasing future tax revenues (162) evaluation of long term contracts (not invoiced revenues) balance amortization other than tax one (464) (19) - evaluation of other financial assets (138) - cost of legal representation evaluation of property excess of nominal value over book value of apport Gross provisions due to deferred income tax (293) 156 Assets due to deferred income tax - write downs of inventories, margin held in inventories (130) (1 011) - other accruals (114) 75 - salaries and wages unpaid, insurance fees, leaves (959) 55 - tax losses (265) - balance amortization different to tax one from provisions for warranty repairs for employees benefits (598) - evaluation- negative exchange rate differences (160) manufacturing costs in progress and current maintenance costs in reporting period net write downs of liabilities (181) - evaluation of liabilities current value for margin of revenues 5 12 (7) (5) - write downs of fixed assets (81) - - eliminated profit on inter group transactions (198) Name of capital group: APATOR SA Page 66

84 Financial statement for 2009 Description Balance day Income statement in the period overestimation of fixed assets according to MSR - 3 (3) (43) - evaluation of bills of exchange write offs due to depreciation of R&D (170) - evaluation of derivatives (4 242) provision for extras interest and commissions from loans (2) - provision for scrapping (34) - other evaluation of construction contracts Gross assets due to deferred income tax (3 747) Charging due to deferred income tax X X (3 902) Net provision due to deferred income tax X X Net assets due to deferred income tax X X NOT NO. 25 REVENUES FROM SALES EARNED IN REPORTING PERIOD Revenues from sales in Capital Group APATOR have been presented in the statement of total income statement. Additional information is included in the note concerning operating segments. NOTE NO. 26 OPERATING REVENUES AND COSTS Operating revenues and costs have been presented in the table. Description Period Operatingrevenues Revenues from sales of fixed assets and right of perpetual usufruct of land and intangibles Write offs for inventories Sales of depreciated products Write offs for intangibles Write offs for fixed assets and provisions for liquidation Provisions for employees benefits Evaluation of properties Provisions for liabilities Compensations received Donations received Provision for margin Provisions for warranty repairs Surplus of stocktaking Reimbursement of costs(fairs and conferences) - 53 Provisions for scrapping Reimbursement of costs of proceedings in the court Other revenues Operating costs Net value of sold and liquidated fixed assets and right of perpetual usufruct of land Costs related to sales of fixed assets 15 - Name of capital group: APATOR SA Page 67

85 Financial statement for 2009 Description Period Write offs for inventories Conservative estimate of inventories Write offs for fixed assets and fixed assets held for sales Provisions for employees benefits Evaluation of properties Investment give up 59 - Liquidated intangibles Fate loss and shortages in stocktaking Provision for liabilities Damages to property Donations granted Scrapping of inventories Provisions for warranty repairs Provisions for margin Penalties paid, fines and compensations Provisions for VAT Costs regarding proceedings at court, collectors, legal representation Free fees 26 - Deduction of goodwill Reimbursed costs, arrangement of conferences - 77 Other costs Net operating revenues (costs) NOTE NO. 27 FINANCIAL REVENUES AND COSTS Financial revenues and costs have been presented in the table. Name of capital group: APATOR SA Page 68 Description Period Financial revenues Bank and receivable interest Interest of bills of exchange received 71 - Sales of securities - 64 Write downs of financial current assets Positive exchange rate differences Revenues due to derivatives Evaluation of receivables current value 31 - Write downs of shares - - Evaluation of short term financial assets - 16 Revenues from sales of financial assets Interest cancelled - - Other Financial costs Loans and borrowings interest Bank guarantees and commissions Other interest Interest paid of bills of exchange 12 - Interest cancelled Costs of sales of financial assets Evaluation of bills of exchange 46 -

86 Financial statement for 2009 Description Period Negative exchange rate differences Costs due to derivatives Write downs of financial fixed assets - - Write downs of financial current assets Write downs of financial assets 20 Commissions from compensations and financial services - 30 Purchase of shares in subsidiary (after taking over the control) Other Net financial revenues (costs) (11 447) (27 497) Instruments used to minimize exchange rate risk due to export contract and sales within EU countries and import contracts and purchases within EU countries were forward contracts and currency options. The breakdown of revenues and costs concerning currency transactions has been presented in the table: Periods Revenues: performance evaluation at the end of the period evaluation at the beginning of the period - (1 326) Costs: performance evaluation at the end of the period evaluation at the beginning of the period (25 260) (528) Results on contracts (5 794) (24 628) Profits (losses) due to net exchange rates differences have been presented in the table. Period Items of income statement where exchange rate difference have been taken Revenues from sales - - Costs of products, goods and materials sold - - Sales costs - - Overheads - - Financial revenues Financial costs (11 072) (7 148) Total (2 871) 552 NOT NO. 28 RESULT OF DISCONTINUED OPERATION Grupa does not have any discontinued operation. NOTE NO. 29 PROFIT PER SHARE Profit per share was calculated by division of net profit by number of shares being in possession of entities outside Capital Group APATOR. Name of capital group: APATOR SA Page 69

87 Financial statement for 2009 Data concerning the profit and shares have been presented in the table below that had been used for calculations of net profit per share. Period Profit Net profit from continued operation per ordinary shareholders of dominant entity Profit (loss)) on discontinued operation per ordinary shareholders of dominant entity - - Net profit per ordinary shareholders of dominant entity Interest bearing preferred redeemed shares convertible to ordinary shares - - Net profit per ordinary shareholders of dominant entity corrected by effect of convertible preferred shares Weighted average number of shares Shares issued Own shares Weighted average number of shares (without own shares) Influence of dilution - - Weighted average number of shares issued (without own shares) corrected by effect of dilution Purchase of own shares Number Status Own shares at April May June July August September October November December Total January February March April May June July August September October November December Total TOTAL Weighted average number of shares for the period of six months was calculated in the following manner: * 1/ *1/ * 1/ * 9/12 NOTE NO. 30 FUSION OF ENTITIES Name of capital group: APATOR SA Page 70

88 Financial statement for 2009 Settlemnet of fusions in 2008 of initial nature On 22 nd January 2008 the contract was concluded on purchase by APATOR S.A. 70% of shares in Rector Sp. z o.o. with headquarters in Zielona Góra. The purchase price was 21 m PLN, the date of payment was fixed on 7 days of the conclusion of the contract. The transfer of the ownership of shares was on the day of payment that is on 29 th January Share capital of the company is PLN. On 30 th April 2008 the Grupa was extended by manufacturer of water meters - Powogaz S.A. APATOR S.A. acquired shares of the company for total amount of 70 m PLN. The above shares are 97,10% of share capital of the company. Share capital of Powogaz S.A. was PLN. Fair values of assets and liabilities of Rector Sp. z o.o. (current name Apator Rector Sp. z o.o.) and Powogaz S.A. (current name Apator Powogaz S.A.) on the day of acquisition have been presented in the table below. Description Apator Rector Sp. z o.o. Grupa Powogaz Total Fixed assets Intangibles Property, plant and equipment Financial assets Receivables Assets due to deferred tax Current assets Inventory Liabilities Financial assets Prepayments Cash and its equivalents Total assets Long term liabilities and provisions Liabilities Provisions for tax Other provisions Short term liabilities and provisions Liabilities Provisions Total liabilities and provisions Net assets Minority shares (301) (1 596) (1 897) Net assets acquired, total Goodwill of the company on purchase Purchase price The influence of cash due to fusion of Apator Rector Sp. z o.o. and Apator Powogaz S.A. have been presented in the table below: Description Apator Rector Sp. z o.o. Grupa Powogaz Net cash taken over with the subsidiary Cash paid (21 215) (70 951) (92 166) Net cash outflows (20 646) (59 898) (80 544) In cash flow statement for 2008 in the item Expenditures for the purchase of subsidiaries reduced by cash taken over it was demonstrated the amount of PLN. The difference in value of PLN resulted from the settlement of the advance payment paid for the shares in Apator GmbH (return) and purchase of shares from minorities of Apator Mining Sp. z o.o. and Apator Powogaz S.A. The influence of the taken over on the results of Grupa APATOR has been presented in the table below: Total Name of capital group: APATOR SA Page 71

89 Financial statement for 2009 Description Apator Rector Sp. z o.o. Grupa Powogaz Total Total revenues (for 2008) Net profit (for 2008) (2 176) Total revenues (for the period of control) Net profit (for the period of control) Share in net profit (for the period of control) Fusions that ocurred in 2009 TELEMETRIA On 28 th January 2009 subsidiary APATOR POWOGAZ S.A. acquired 50,8% of shares in WMC Telemetria Sp. z o.o. Share capital in WMC Telemetria Sp. z o.o. is PLN and it is divided into shares of nominal value of 100,00 PLN. Acquired shares are 50,8% of share capital and 50,8% of total votes. Due to consolidation the goodwill is in value of PLN. Fair values of assets and liabilities of Apator Telemetria on the day of take over have been presented in the table below. Description Apator Telemetria Sp. z o.o. Fixed assets 222 Intangibles 164 Property, plant and equipment 58 Financial assets - Receivables - Assets due to deferred tax - Current assets 513 Inventory 33 Liabilities 359 Financial assets - Prepayments - Cash and its equivalents 121 Total assets 735 Long term liabilities and provisions - Liabilities - Provisions for tax - Other provisions - Short term liabilities and provisions 361 Liabilities 361 Provisions - Total liabilities and provisions 361 Net assets 374 Minority shares (184) Net assets acquired, total 190 Goodwill of the company on purchase Purchase price The influence of cash due to the fusion of Apator Telemetria Sp. z o.o. has been presented in the table below: Description Apator Telemetria Sp. z o.o. Net cash taken over with the subsidiary 121 Cash paid (2 022) Net cash expedintures (1 901) Name of capital group: APATOR SA Page 72

90 Financial statement for 2009 The influence of the take over on results of Grupa APATOR has been presented in the table below: Description Apator Telemetria Sp. z o.o. Total revenues (for 2009) Net profit (for 2009) 194 Total revenues (for the period of control) Net profit (for the period of control) 191 Share in net profit (or the period of control) 97 APATOR METROTEKS In 2009 subsidiary APATOR POWOGAZ S.A. acquired 61% of shares of Ukrainian company - APATOR METROTEKS (Ukraine) for the amount of PLN. In result of consolidation of Apator Metroteks the goodwill was PLN. The settlement of fusion is of initial nature. Agreed purchase price of shares provides for extras to the purchase price. Fair values of assets and liabilities of Apator Metroteks on the day of take over have been presented in the the table below. Description Metroteks Fixed assets 3 Intangibles - Property, plant and equipment 2 Financial assets - Receivables - Assets due to deferred tax 1 Current assets 68 Inventory 46 Liabilities 6 Financial assets - Prepayments - Cash and its equivalents 16 Total assets 71 Long term liabilities and provisions - Liabilities - Provisions for tax - Other provisions - Short term liabilities and provisions 47 Liabilities 47 Provisions - Total liabilities and provisions 47 Net assets 24 Minority shares (9) Net assets acquired, total 15 Goodwill of the company on purchase 333 Purchase price 348 The influence of cash due to fusion Apator Metroteks has been presented in the table below: Description Metroteks Name of capital group: APATOR SA Page 73

91 Financial statement for 2009 Net cash taken over with subsidiary 16 Cash paid (348) Net cash expenditures (332) The influence of the take over on results of Grupa APATOR has been presented in the table. Description Metroteks Total revenues (for 2009) 315 Net profit (for 2009) (2) Total revenues (for the period of control) 76 Net profit (for the period of control) (23) Share in net profit (or the period of control) (14) NOTE NO. 31 INFORMATION ON AFFILIATED ENTITIES Information on affiliated entities has been presented in the table. Benefits to management staff Period Short term employee benefits Benefits after employment 9 4 Other long term benefits Benefits due to termination of employment contract Payment in form of own shares - - Total Transactions with affiliated entities / balance of entity regarding affiliated entities Dominant entity Subsidiaries Affiliated entities Sales of products and services Sales of goods and materials Sales of fixed assets and intangibles Sales of shares Cost regarding sale Cost regarding sale of shares Trade receivables Other receivables Borrowings granted Repayment of borrowings granted Interest received from borrowings granted Receivables due to borrowing granted Revenues due to dividend Dividend paid Financial revenues discount of bills exchange Adopted dividend (for payment) Purchase of products, goods and materials Trade liabilities Investment liabilities In accordance with MSR 24, APATOR S.A. made identification of affiliated entities. The affiliated entities are as follows: a. subsidiaries Apator-Control Sp. z o.o. Name of capital group: APATOR SA Page 74

92 Financial statement for 2009 Name of capital group: APATOR SA Page 75 Apator-Mining Sp. z o.o. FAP Pafal S.A. Apator Mertix S.A. Apator GmbH Apator Rector Sp. z o.o. Apator Powogaz SA b. semi subsidiaries Apator-Kfap Sp. z o.o. Wodpol Sp. z o.o. Apator Telemetria Sp. z o.o. Apator Metroteks - Ukraina c. affiliated entity Apator-Elektro - Moscow d. semi affiliated entities Teplovodomer Russia Metcom KFT - Hungary e. members of the Supervisory Board f. members of key management personnel g. close to families of members of the Supervisory Board and Management Staff being in one common household h. entities being controlled by persons specified in points e and f. The Executive Board of APATOR S.A. stated that the make-up of the top management of APATOR S.A. is as follows: Janusz Niedźwiecki President, Managing Director Tomasz Habryka Member of the Executive Board, Marketing and Sales Director of Switchgear, (since 1 st January 2010 Member of the Executive Board, Switchgear Director) Jerzy Kuś member of the Executive Board,Marketing and Sales Director of Metering Equipment and Systems (since 1 st January 2010 Member of the Executive Board, Metering Equipment and Systems Director) Janina Karaszewska-Zandrowicz Proxy, Finance Director Zbigniew Baranowski Proxy, Manufacturing Director Tomasz Piasecki Technique and Development Director (till 26 th January 2010) No transactions with affiliated entities specified in points e h have been found, except the payment of salaries for the fulfilment of duties or benefits for the employment. Salaries of members of the Executive Board and the Supervisory Board resulting of the fulfilment of their duties in dominant entity is demonstrated in the table: Description Essential remuneration Other benefits Total Remuneration of Members of the Executive Board Janusz Niedźwiecki Tomasz Habryka Jerzy Kuś Total Remuneration of Members of the Supervisory Board Danuta Guzowska Mariusz Lewicki Janusz Marzygliński Ryszard Wojnowski Krzysztof Kwiatkowski Mariusz Pawlak Total Remuneration of Members of the Executive Board and the Supervisory Board resulting of the fulfilment of their duties in subsidiaries and affiliated entities has been presented in the table: Description Remuneration of Members of the Executive Board Essential remuneration Other benefits Janusz Niedźwiecki Tomasz Habryka Total

93 Financial statement for 2009 Jerzy Kuś Total Remuneration of Members of the Supervisory Board Danuta Guzowska Mariusz Lewicki Janusz Marzygliński Ryszard Wojnowski Krzysztof Kwiatkowski Mariusz Pawlak Total NOTE NO. 32 OBJECTIVES AND PRICIPLES OF FINANCIAL RISK MANAGEMENT Apart to derivatives the main financial instruments that being used by Grupa are bank loans, loans on current account. Grupa has got also financial assets such trade receivables, foreign bills of exchange, cash arising in the result of direct activity and other receivables and loan granted. The Companies conclude also transactions on derivatives including first of all forward contracts and currency options. The objective of these transactions is currency risk management arising during the activity of the Companies. The forward contracts and currency options are concluded based on current situations, forecasts for the foreign exchange rates. The principle of Grupa is not to run the turnover with financial instruments. The main types of risk resulting from financial instruments of Grupa cover currency risk, fluidity risk, and loan risk. Currency risk The Companies are exposed to currency risk due to the transactions concluded. The risk occurs in result of sale and purchase by Grupa in other currencies than the functional currency (PLN). The status of trade receivables and liabilities and loan granted and divided into currencies. At At Description Currency PLN Currency PLN Trade receivables x x Receivables in 000 EUR Receivables in 000 CZK Receivables in 000 GBP Receivables in 000 USD Advancepayments transferred for purchase of materials and services x 936 x Advance payments in 000 USD Advance payments in 000 EUR Cash x x Receivables in 000 EUR Receivables in 000 CZK Receivables in 000 GBP Receivables in 000 USD Trade liabilities x x Receivables in 000 EUR Receivables in 000 CZK Receivables in 000 GBP Receivables in 000 USD Advance payments received for deliveries x 76 x 188 Advance payments in 000 USD Advance payments in 000 EUR Name of capital group: APATOR SA Page 76

94 Financial statement for 2009 According to accepted on 26th May 2009 guideline regulations regarding hedging contracts in order to hedge inflows from export exceeding the import expenses forward contracts are used (since 2010 also ordinary cost options). Hedging contracts to be concluded require the consent of the Executive Board in form of resolution where the maximum nominal of hedging is defined based on plan of foreign trade balance and the value of current hedging. The conclusion of complex hedging structure is made after positive opinion received of the Supervisory Board. The Supervisory Board makes the decision after having received the reasons of its intention from the Executive Board to apply such hedging and its potential influence on financial results. The table below presents the sensibility of gross financial result to rational possible fluctuations of exchange rate of EUR assuming stability of other factors. Description Change of exchange rate Influence on gross financial result Sensibility analysis in the period % 834-5% -553 Sensibiity analysis in the period % % There is also the risk resulting from leasing contracts concluded for means of transportation where the liabilities are in Swiss francs in Capital Group Apator. The table below presents the sensibility of gross financial result on rational possible changes of the exchange rate of CHF provided stability of other factors. Description Change of exchange rate Influence on gross financial result Sensibility analysis in the period % -8-10% 8 Sensibiity analysis in the period % % 15 Interest rate risk The Companies are exposed to interest rate risk because it takes cash interested according to variable interest rates. The Companies do not apply hedging in form of swaps and forwards of interest rates due to low variability of WIBOR rates which are the base for the interest rates of the loans. If interest rates are by 50 basis points higher/lower and all other variables remained constant than: Profit of Grupa for the period ended on 31st December 2009 will decease / increase by PLN; Profit of Grupa for the period ended on 31st December 2008 will decrease / increase by PLN; For the purpose of the analysis it should be assumed that the amount of unpaid liabilities on balance day was unpaid for the whole year. Loan risk Name of capital group: APATOR SA Page 77

95 Financial statement for 2009 Loan risk consists in that contracting party will not do its duties resulting from financial instrument or the contract what causes the losses born by the second party The companies in Capital Group APATOR are exposed to loan risk resulting from their operating activity mainly it regards trade receivables. Grupa conclude the contracts exclusively with famous firms having got good loan worthiness. All customers who want to make us of deferred payment are subject to initial verification. There is financial instruction in the Companies concerning of the control of sales orders. Grupa aims for the cooperation with all to be performed based on commercial contracts. Moreover, due to current monitoring of receivables the exposition of the Companies to bad receivables is insignificant. Trade receivables include the mounts due from large number of customers spread over different sectors and geographical areas. Loan risk concerning cash and derivatives is limited since the contracting parties of Grupa APATOR are the banks of the high rating granted by international rating agencies. Fluidtiy risk Grupa controls the risk of lack of cash making monthly plans of expenditures and weekly financial positions. The Companies aim at maintaining equilibrium between continuity and flexibility of financing. In order to finance current activity the Companies make use mainly of the loans on current accounts. For the investment activity (purchase of shares of Powogaz S.A.) the dominant entity APATOR SA has taken long-term loan in amount of 45 m PLN. At 31 st December 2009 the debt due to the loan was 36 m PLN. The table below presents the information on the loan due dates of liabilities. Description to 1 month From 1 month to 3 months From 3 months to 12 months From 1 year to 5 years Over 5 years Status at Trade liabilities Financial derivatives Other liabilities Loan Total Financial assets and liabilities according to fair value The table below presents the analysis of financial instruments measured in fair value and segregated according to three level structure where: Level 1 fair value based on prices on stock exchange (not corrected) being offered for the same assets or liabilities on active markets; Level 2 fair value is fixed on the basis of values being observed on the market but not being direct market quotation; Level 3 fair value is fixed on the basis of different techniques of evaluation not putting on any market data being observed Description Level 1 Level 2 Level 3 Total Financial assets evaluated in fair value by financial result Derivatives Shares of Energoaparatura katowice Financial liabilities evaluated in fair value by financial result Derivatives Other In current period transfers between level 1 and level 2 did not occurred. Total Name of capital group: APATOR SA Page 78

96 Financial statement for 2009 Capital management The main objective of capital management of Grupa is to keep good loan rating and capital ratios that would support operating activity of Grupa and would increase the value for its shareholders. Grupa manages the capital structure and in result of changes in economical conditions it introduces the changes in it. In order to maintain or make corrections of capital structure, the dominant entity is able to pay dividend to shareholders, return the capital to shareholders or to issue new shares. Grupa monitors the status of capitals using financial leverage ratio that is calculated as the relation of net debt to sum of capitals increased by net debt. Grupa includes in net debt the interested loans and borrowings, trade liabilities and other liabilities excluding derivatives reduced by cash and its equivalents. The equity covers equity presented in the statement on financial position. Financial leverage Day Debt Cash and its equivalents (10 234) (20 208) Net debt Equity Capital and net debt Financial leverage 31% 39% NOTE NO. 33 REMUNERATION OF CHARTERED ACCOUNTANT On 14 th May 2009 the contract with KORYCKA, BUDZIAK & AUDYTORZY Sp. z o.o. was concluded on auditing of interim and annual individual financial statements and rewiews and auditing of annual consolidated financial statements of APATOR S.A. forfinancial years 2009 and In accordance with the contract concluded the remuneration of chartered accountant for auditing of individual financial statement of dominant entity - APATOR S.A. and review of consolidated statement of Grupa APATOR for the first half of 2009 was established for the amount of PLN. According to the contract concluded the remuneration of chartered accountant for auditing of individual financial statement of dominant entity - APATOR S.A. and auditing of consolidated financial statement of Grupa APATOR for 2009 was established for the amount of PLN. Apart to the above remuneration APATOR S.A. covers proved costs of staying of auditing team outside the headquarters of auditors (travels, lodging) and currier mail. NOTE NO. 34 EXPLANATIONS CONCERNING CASH FLOW ACCOUNT Grupa APATOR proves cash flows account from operating activity by use of indirect method where the profit is corrected by effects of transactions with non cash nature, changes in inventories, receivables and liabilities and other items in case of them the cash effects are cash flows from financial activity or investment activity. 1. Discrepancies between changes in balance of some items and changes in them presented in cash flow account. Change in inventory Inventory (1 551) Inventory on the day of take over of Apator Telemetria 33 Inventory on the day of take over of Metroteksu 46 Total changes (1 472) Change in receivables Trade receivables Receivables due to taxation, customs and social security 183 Long-term receivables 34 Other receivables 796 Name of capital group: APATOR SA Page 79

97 Financial statement for 2009 Prepayments advance payments for the purchase of services 965 Receivables on the day of take over of Apator Telemetria 359 Receivables on the day of take over of Apator Metroteks 5 Correction of receivables due to sales of shares 48 Correction of receivables due to dividend (17) Correction of receivables due to income tax 512 Correction of investment receivables (without VAT) Total change Change in liabilities Trade liabilities (521) Liabilities due to taxes, customs and social securities (1 909) Liabilities due to wages and salaries (386) Other liabilities (1 140) Advance payments (114) Liabilities on the day of take over of Apator Telemetria (26) Liabilities on the day of take over of Apator Metroteks (47) Correction of liabilities due to dividends (6) Correction of liabilities due to income tax Correction of liabilities due to investments (without VAT) 747 Total change (1 831) Change in provisions Long-term provisions for employee benefits (126) Short-term provisions for employee benefits (420) Other short-term provisions 875 Other long-term provisions 45 Total change 374 Changes in accruals and prepayments Short term settlements of prepayments (646) Long term settlements of prepayments (21) Accruals (306) Total change (973) 2. Explanations for the amounts taken as other corrections and other expenditures (inflows) Other corrections operating activity Day Damages to fixed assets - - Liquidation of fixed assets, investments failed and reclassification of fixed assets Settlement of donation (9) (9) Evaluation of hedging transactions (26 082) (Profit) loss due to settlement of options Write downs of shares value - 1 Exchange rates from consolidation (19) (17) Increase of minority capitals due to the purchase of own shares Additional purchase of own shares Other 80 - Gross profit (loss) on discontinued activity - - Total (6 072) Name of capital group: APATOR SA Page 80

98 Financial statement for 2009 Other corrections operating activity after consideration the changes in Day current capital Liabilities paid by bills of exchange (297) (1 465) Acceptance of finished goods to fixed assets (445) (478) Other - (162) Total (742) (2 105) Other inflows (outflows) investment activity Day Advance payments for fixed assets under construction (1 768) (819) Advance payments for intangibles (13) - Expenditures due to hedging contracts and options (17 302) (31) Payment of commission and other costs concerning sale and liquidation of fixed assets (15) (28) Other (10) (21) TotL (19 108) (899) Other inflows (outflows) financial activity Day Leasing interest (34) (24) PCC fees (30) 3 Commissions and fees from loans and borrowings (31) (30) Total (95) (51) NOTE NO. 35 CHANGES IN ACCOUNTING PRINCIPLES Change (1) After consolidated statement for 2008 was prepared and approved, dominant entity - APATOR S.A. received corrected financial statement of subsidiary - APATOR GmbH. Change (2) After consolidated statement for 2008 was prepared and approved, subsidiary - APATOR POWOGAZ received corrected financial statement of associated entity - Teplovodomer (Russia). Change (3) After consolidated statement for 2008 was prepared and approved, dominant entity - APATOR S.A. received corrected financial statement of associated entity - APATOR ELEKTRO (Russia). Change (4) After consolidated statement for 2008 was prepared and approved, subsidiary APATOR METRIX S.A. received corrected financial statement of associated entity METCOM KFT (Hungary). Change (5) Dominant entity - APATOR S.A. made corrections of receivables resulting from settlement of long term contracts in subsidiary - APATOR RECTOR Sp. z o.o. Change (6) Dominant entity - APATOR S.A. made corrections of exchange rate differences in cash flow account resulting from settlement of cash flow account. Change (7) Subsidiary - FAP PAFAL S.A. introduced the change in exchange rate differences and receivables and liabilities due to sale and purchase of property, equipment and plant in cash flow statement. The company made correction to number of shares quoted on Warsaw Stock Exchange and the method of presentation of the performance of the contracts on currency transactions. Change (8) Capital Group APATOR made some changes in settlement of dividend paid and advance payments towards future dividends of minority shares. Further to the above data presented and comparable with data of 2008 some changes were made that you can find in the table below. Name of capital group: APATOR SA Page 81

99 Financial statement for 2009 Item in the statement Change (1) Change (2) Change (3) Change (4) Change (5) Change (6) Change (7) Change (8) Total Statement on financial position Investments in associated entities consolidated by equity method - (219) (10) (3) (232) Trade receivables Other short term receivables (40) (40) Accruals and prepayments (2) - - (882) (884) Total assets (42) (219) (10) (3) (274) Capital from evaluation of hedging transactions and exchange rate differences from consolidation 2 (82) (9) (86) Undistributed financial result Financial result of current period (2) (136) (1) (13) (152) Write offs of financial result of current year Minority shares - (1) (17) (18) Liabilities due to taxes, customs and social insurance (39) (39) Other short term liabilities (2) (2) Short term provisions (1) (1) Total liabilities (42) (219) (10) (3) (274) Statement of total income Share in profits of entities consolidated by equity method - (137) (1) (2) (140) Financial activity result of exchange rate differences Financial activity result of revaluation of financial fixed assets (11) (11) Financial activity- other revenues / costs (48) (48) Profit (loss) of minority shareholders Financial result of current period (2) (136) (1) (13) (152) Gains and losses arising from translating the financial statements of foreign operations 2 (82) (9) (86) Othe total income 2 (82) (9) (86) Cash flow account Profit before tax (continued operation) (2) (137) (1) (13) (153) (Profit loss on sales of property, plant and equipment (452) - (452) (Profits) losses due to change of fair value of financial assets specified according to fair value Name of capital group: APATOR SA Page 82

100 Financial statement for 2009 Item in the statement Change (1) Change (2) Change (3) Change (4) Change (5) Change (6) Change (7) Change (8) Total Share in (profits) losses in associated entities (positive) negative exchange rate differences (1) - 2 Operating activity other corrections exchange rate differences from translation Operating activity other corrections settlement of contracts and options Change in receivables (882) (835) Change in liabilities (40) (18) Change in provisions (2) (2) Change in accruals and prepayments Expenditures for purchase of property,plant and equipment Inflows from sales property, plant and equipment Expenditures from other investment activity contracts and options (31) (31) Exchange rate differences at the beginning of the period (1) - (1) Exchange rate differences at the end of the period (3) - - (3) Total (1) - (1) Name of capital group: APATOR SA Page 83

101 Financial statement for 2009 NOT NO. 36 EMPLOYMENT The employment at 31 st December 2009 in subsidiares and in dominant entity were as follows: Company Number of employees APATOR S.A. 391 FAP PAFAL S.A. 383 APATOR MERTIX S.A. 263 APATOR MINING Sp. z o.o. 121 APATOR CONTROL Sp. z o.o. 57 APATOR RECTOR Sp. z o.o. 74 APATOR POWOGAZ S.A. 294 APATOR KFAP Sp. z o.o. 40 TOV APATOR METROTEKS 7 APATOR TELEMETRIA Sp. z o.o. 4 WODPOL Sp. z o.o. 7 APATOR GmbH 2 Total NOTE NO.37 EVANTS THAT OCCURRED AFTER THE REPORTING PERIOD Till the day the statement is prepared, i.e. 29 th April 2010 remaining to be settled currency operations of optional strategy in accordance with contract concluded on 25 th August 2008 with ING Bank Śląski were settled with the loss in amount of PLN. The evaluation value was taken in charge of costs in 2009 and it was PLN. The influence on the result in 2010 has the difference in amount of PLN (profit in current financial result). On 4 th January 2010 APATOR S.A. concluded the contract on cooperation with the subsidiary FAP PAFALA S.A., the object of the contract was the sales of products of the subsidiary, after sales service and provision of design services towards FAP PAFAL S.A. Estimated mutual turnover due to the above contract in 2010 are PLN. The Executive Board of the Company on 25 th February 2010 announced that declared level of dividend for financial year 2009 is 0,50 PLN gross per share, but declared level of advance payment towards expected dividend from the profit for financial year 2010 is 0,25 PLN gross per share. Towards the dividend for financial year 2009 was paid in December 2009 the advance payment in amount of 0,20 PLN per share. The other declared amount of dividend in amount of 0,30 PLN gross per share will be paid after the approval of General Shareholders Meeting of APATOR S.A. At 31 st March 2010 the procedure of the compulsory purchase of shares of APATOR POWOGAZ S.A. was completed. Therefore, at the above mentioned day the dominant company APATOR S.A. has in its possession 100 % of shares of subsidiary APATOR POWOGAZ S.A. Till the day of the statement is prepared i.e. 29 th April 2010 dominant entity APATOR SA concluded the sales contracts with minority shareholders of subsidiary APATOR MINING Sp. z o.o. Therefore, on that day the dominant entity APATOR SA has 100% of shares in subsidiary APATOR MINING Sp. z o.o. On 16 th April 2010 Ordinary General Partners Meeting of APATOR CONTROL Sp. z o.o. was held where based on adoption of the Resolution No. 2 the financial statement was approved for Ordinary General Partners Meeting adopted also the resolution No. 8 on profit distribution for financial year Based on that resolution the profit in value ,55 PLN was entirely designed for payment of the dividend. The payment of dividend will be made in the following terms: 17 th May 2010 amount of ,27 PLN 15 th June 2010 amount of ,28 PLN Name of capital group: APATOR SA Page 84

102 Financial statement for 2009 On 27 th April 2010 Ordinary General Partners Meeting of APATOR RECTOR Sp. z.o., was held where based on the Resolution No 2/2010 adopted the financial statement for 2009 was approved. Ordinary General Partners Meeting adopted also the Resolution No 3/2010 on profit distribution for financial year Based on that resolution the profit in value of ,83 PLN was distributed into: dividend in value of ,00 PLN supplementary capital in value ,83 PLN The partners who held on 27 th April 2010 the shares are entitled to the dividend. The payment of dividend will be in the following terms: 30 th April 2010 amount of ,00 PLN till 30 th December 2010 amount of ,00 PLN, however the day of payment of dividend will be established by the Executive Board Name of capital group: APATOR SA Page 85

103 Financial statement for SIGNATURES Signatures of Members of the Executive Board Date Janusz Niedźwiecki President, Managing Director Date Tomasz Habryka Member of the Executive Board, Marketing and Sales Director of Switchgear Date Jerzy Kuś Member of the Executive Board, Marketing and Sales Director of Metering Equipment and Systems The signature of the person responsible for keeping books Date Janina Karaszewska Zandrowicz Finance Director Name of capital group: APATOR SA Page 86

104 Letter from the President of Apator SA Dear Sirs, Our shareholders, customers and collaborators. On behalf of the Executive Board of Apator SA I have pleasure to present you financial statement and the report of the Executive Board including the summary of the most important achievements of the past year and the main tasks we determined for the future. In 2009 Grupa Apator performed the strategy of development assuming to obtain the leader position in Central and Eastern Europe both in the scope of metering equipment and switchgear equipment. In spite of world economic crisis, Grupa Apator achieved last year higher revenues from sales than in 2008 and they reached 368 m. PLN. Profit on sales achieved the level of 49 m. PLN and net profit was 31m. PLN. Both items of financial result were higher than in Moreover, net profit takes into consideration additional costs born by Grupa Apator related to the settlement of deadline transactions concluded in Among many successes achieved last year by Grupa Apator was the further increase of export. In spite of crisis it was higher by 15 m. PLN in relation to 2008, its share in revenues in total was 28%. On foreign markets we not only increased the level of sales of traditional products being exported but also the sales prepayment electricity meters that won new African market like Sierra Leone, Burundi, Malavi or Rwanda. Significant influence on further increase of export of Grupa Apator had also the higher sales of water meters performed by Apator Powogaz SA and gas meters performed by Apator Metrix SA. In the last period the process of restructuring of the companies was continued in Grupa Apator. The effect of the process was the decrease of the costs of current activity, improvement both manufacturing processes and efficiency of labour and implementation in January 2010 changes in the organization of sales of post-paid electronic electricity meters. Invariably, since many years we share the profits with our shareholders we have succeeded to earn each year. In spite of world economic crisis we have declared higher than in 2008 the level of dividend - 0,50 PLN per share. Last year Apator SA was granted high valuation in rating of public companies of social respect - Respect Rating. Thus Apator has joined the group of 16 elite companies being in the Respect Index. The Company was appreciated for its involvement in the performance of its tasks according to the principles of social respect of enterprises. At the end of 2009 we made the assessment of the effectiveness of strategy of development of Grupa Apator performed in the period and we focused on determination of further strategic objectives till Updated strategy of development we will present in I would like to assure you that since many years invariably Grupa Apator focuses on the performance of strategy of permanent growth of value of the Company. At the same time I would like to thank you the shareholders, the Supervisory Board, business partners and other stakeholders for their cooperation and confidence in Apator SA and Grupa Apator in Yours faithfully, Janusz Niedźwiecki President

105 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Content: 1. GENERAL INFORMATION THE STATEMENT OF THE EXECUTIVE BOARD OF APATOR SA REGARDING MAKING OF CONSOLIDATED FINANCIAL STATEMENT AND THE REPORT ON ACTIVITY OF GRUPA APATOR APPOINTMENT OF CHARTERED ACCOUNTANT AND THE DECLARATION OF THE EXECUTIVE BOARD OF APATOR SA REGARDING CHARTERED ACCOUNTANT DECLARATION OF ACCEPTANCE OF THE RULES OF CORPORATE GOVERNANCE WITH REFERENCE TO APATOR SA.8 5. BODIES SUPERVISING AND MANAGING THE ENTITIES OF GRUPA APATOR INFORMATION ON KNOWN TO THE ISSUER CONTRACTS (INCLUDING THOSE CONCLUDED AFTER THE BALANCE DAY), IN RESULT OF WHICH THEY CAN CAUSE THE CHANGES IN PROPORTIONS OF THE SHARES HELD BY CURRENT SHAREHOLDERS IN THE FUTURE CONTRACTS CONCLUDED BETWEEN GRUPA APATOR AND PERSONS OF MANAGEMENT STAFF OF THE ENTITIES THAT FORESEEN COMPENSATION IN CASE OF THEIR RESIGN OR DISMISSAL FROM THE POSTS WITHOUT CLEAR REASONS OR THEIR RECALL OR DISMISSAL DUE ACQUISITION OF THE COMPANY DESCRIPTION OF THE MAIN FEATURES OF INTERNAL CONTROL SYSTEMS AND RISK MANAGEMENT IN GRUPA APATOR WITH REFERENCE TO THE PROCESS OF PREPARATION OF INDIVIDUAL AND CONSOLIDATED FINANCIAL STATEMENTS INFORMATION ON SALES MARKETS AND SOURCES OF PROCUREMENT THE ESSENTIAL ECONOMIC VALUES INCLUDED IN CONSOLIDATED ANNUAL FINANCIAL STATEMENT THE ASSESSMENT THE POSSIBILITY OF PERFORMANCE OF INVESTMENT PLANS INCLUDING CAPITAL INVESTMENTS IN COMPARISON WITH THE FUNDS BEING IN POSSESSION, TAKING INTO CONSIDERATION THE POSSIBLE CHANGES IN FINANCING STRUCTURE OF THE ACTIVITY ASSESSMENT AND ITS JUSTIFICATION, CONCERNING THE MANAGEMENT OF FINANCIAL RESOURCES, PARTICULARLY TAKING INTO CONSIDERATION THE ABILITY TO MEET THE OBLIGATIONS AND TO DEFINE POSSIBLE THREATS AND ACTIONS THAT THE ISSUER TOOK OR IS GOING TO TAKE IN ORDER TO OPPOSE THE THREATS CHANGES IN THE ESSENTIAL RULES OF MANAGEMENT OF THE COMPANY OF ISSUER AND ITS CAPITAL GROUP DESCRIPTION OF THE STRUCTURE OF THE MAIN CAPITAL DEPOSITS OR MAIN CAPITAL INVESTMENTS PERFORMED IN GRUPA APATOR IN THE FINANCIAL YEAR MORE IMPORTANT EVENTS HAVING GOT THE INFLUENCE ON ACTIVITY AND FINANCIAL RESULTS OF GRUPA APATOR IN THE FINANCIAL YEAR OR WHICH POSSIBLY WILL HAVE THE INFLUENCE IN THE NEXT YEARS INFORMATION ON CONCLUSION BY APATOR SA OR ITS SUBSIDIARY ONE OR MORE TRANSACTIONS WITH AFFILIATED ENTITIES IF THEY ARE INDIVIDUALLY OR IN TOTAL SIGNIFICANT AND THEY WERE CONCLUDED ON OTHER CONDITIONS THAN MARKET ONES CHARACTERISTICS OF EXTERNAL AND INTERNAL FACTORS SIGNIFICANT FOR THE DEVELOPMENT OF GRUPA APATOR, INCLUDING SIGNIFICANT FACTORS OF RISK AND THREATS AND DESCRIPTION OF THE PERSPECTIVES FOR DEVELOPMENT OF ITS ACTIVITY IN THE COMING FINANCIAL YEAR DEVELOPMENT POLICY OF GRUPA APATOR INFORMATION ON PROCEEDINGS AT THE COURT, BODY APPROPRIATE FOR ARBITRATION OR BODY OF PUBLIC ADMINISTRATION REGARDING LIABILITIES OR RECEIVABLES OF APATOR SA INFORMATION ON CONTRACTS CONCLUDED AND SIGNIFICANT TO ACTIVITY OF THE GRUPA APATOR, INCLUDING THE CONTRACTS KNOWN TO THE ISSUER CONCLUDED BETWEEN SHAREHOLDERS, INSURANCE CONTRACTS, CONTRACTS ON COOPERATION OR COLLABORATION INFORMATION ON ISSUING OF SECURITIES INFORMATION ON CHECKING SYSTEM OF PROGRAMMES FOR THE SHARES OF EMPLOEES THE FORECAST OF FINANCIAL RESULTS

106 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN General information 1.1 Make up of Grupa Apator Apator SA with the seat in Toruń at śółkiewskiego 21/29 is parent entity in Grupa Apator. It is registered in Regional Court in Toruń at VII Economic Department of the National Court Register under number KRS: The shares of SA are quoted on essential market of Warsaw Stock Exchange sector according to Warsaw Stock Exchange in Warsaw electrical engineering industry. The shares of the Company are included in index swig80 and Respect Index. Apator SA forms the capital group of six domestic entities and two foreign ones. The share of Apator SA in share capital of particular companies at 31 st December 2009 has been presented in the table below. Name of the Company Seat Relationships Share in capital FAP Pafal SA Świdnica subsidiary 100,00% Apator Metrix SA Tczew subsidiary 100,00% Apator Powogaz SA Poznań subsidiary 99,40%*) Apator Rector sp. z o. o. Zielona Góra subsidiary 70,00% Apator Control sp. z o. o. Toruń subsidiary 100,00% Apator Mining sp. z o. o. Katowice subsidiary 99,89%**) Apator Elektro Moscow Associated entity 50,00% Apator GmbH Berlin subsidiary 100,00% *) In Apator Powogaz SA the procedure of the enforced purchase of shares has been completed - at 31 st March 2010 Apator SA had 100% capital of the company. **) In the period since January 2010 to April 2010 Apator SA acquired 28 shares of Apator Mining Sp. z o.o. therefore on the moment of the issue of the report Apator SA has 100,00% shares in Apator Mining Sp. z o. o. Apator SA is strategic investor in all subsidiaries (it has one hundred percent or almost one hundred per cent packages of shares). There are no capital connections between subsidiaries. There are also no 2

107 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 connections between subsidiaries and associated entity. Apator Metrix SA and Apator Powogaz SA in Grupa Apator (except parent entity) have the shares in other entities. Apator Metrix SA has 24% shares in Hungarian company- Metcom KFT. Apator Powogaz SA has 100% shares in Apator Kfap sp. z o. o., 77,33% shares in Wodpol sp. z o. o., 44,06% shares in ZAO Teplovodomer in Russia. On 28 th January 2009 Apator Powogaz SA acquired 50,8% shares in WMC Telemetria sp. z o.o. with the seat in Słupsk. The company is the producer and supplier of wireless telemetry systems for heat meters and water meters. On 4 th November 2009 Apator Powogaz SA acquired 61% shares in Apator Metroteks with the seat in Kiev (Ukraine). The company deals with distribution of products of Grupa Apator Powogaz on Ukrainian market. Apator Powogaz SA and Apator Kfap sp. z o. o., Wodpol sp. z o. o., Teplovodomer in Russia, Apator Telemetria sp. z o.o. and Apator Metroteks form capital group within Grupa Apator. Scope of activity of the entities in Grupa Apator in 2009 SEGMENT: METERING OF UTILITY SERVICES Name of the company Seat of the company Scope of activity Apator SA Toruń prepayment electricity meters, metering systems FAP Pafal SA Świdnica post-paid electricity meters (inductive and electronic ones), Apator Metrix SA Tczew residential and industrial gas meters, industrial systems Grupa Apator Powogaz Apator Rector Sp. z o. o. Poznań Zielona Góra residential and industrial water meters, heat meters, temperature sensors, metering systems it systems for distribution management in power engineering, heat engineering, water supply and sewage systems, gas engineering, telecommunication, rescue operations and local government administration Apator GmbH Berlin export of products of Grupa Apator to German market SEGMENT: PROTECTION AND SWITCHING OF POWER CIRCUITS Apator SA Apator Control Sp. z o. o. Apator Mining Sp. z o. o. Toruń Toruń Katowice low voltage switchgear for making and breaking and protection of electrical circuits drives and applications of drives, distribution and control equipment mining equipment Apator Elektro SA Moskwa export of switchgear to Russian market Apator GmbH Berlin export of products of Grupa Apator to German market 3

108 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN Entities subject to consolidation parent company: Apator SA with the seat in Toruń, subsidiaries subject to full consolidation :. Firm Seat Share in capital Remarks Apator Mining sp. z o. o. Katowice 99,89%*) Subsidiary Apator Control sp. z o. o. Toruń 100,00% Subsidiary Apator Metrix SA Tczew 100,00% Subsidiary FAP Pafal SA Świdnica 100,00% Subsidiary Apator Rector sp. z o. o. Zielona Góra 70,00% Subsidiary Apator Powogaz SA Poznań 99,40%**) Subsidiary Apator GmbH Berlin (Germany) 100,00% Subsidiary Apator Kfap sp. z o. o. Kraków 100,00% 99,40% Wodpol sp. z o.o. Poznań 77,33% 76,87% Apator Metroteks Kiev (Ukraine) 61,00% 60,63% Apator Telemetria sp. z o.o. Słupsk 50,80% 50,50% Indirect subsidiary Indirect share Indirect subsidiary Indirect share Indirect subsidiary Indirect share Indirect subsidiary Indirect share * In the period since January 2010 to April 2010 Apator SA acquired 28 shares of Apator Mining Sp. z o.o. therefore on the moment of the issue of the report Apator SA has 100,00% shares in Apator Mining Sp. z o. o **) In Apator Powogaz SA the procedure of the enforced purchase of shares has been completed - at 31 st March 2010 Apator SA had 100% capital of the company. 4

109 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN associated entities evaluated by equity method: Firm Seat Share in capital Remarks Apator Elektro Moscow (Russia) 50,00% Associated entity ZAO Teplovodomer Mytishi (Russia) 44,06% 43,80% Indirect associated entity Indirect share Metcom KFT Hungary 24,00% 24,00% Indirect associated entity Indirect share 1.3 Vision of Grupa Apator Vision: GRUPA APATOR is bound to be a leader in Central & Eastern Europe for development and sales of metering systems, metering equipment and switchgear. Strategic objective of APATOR SA and GRUPA APATOR is to create the Polish technological group based on strong brand of APATOR bound to increase the sales on foreign markets. APATOR SA and GRUPA APATOR concentrate their activities on two segments of electromechanical industry: metering and switchgear. Such companies like APATOR SA, FAP PAFAL SA, APATOR METRIX SA, APATOR POWOGAZ SA, APATOR RECTOR Sp. z o.o., APATOR GmbH act in the segment of metering of utility services. Metering segment offers advanced services, products and comprehensive implementations covering among other things the manufacturing of smart meters for electricity, gas, water and heat and also start up and service of automated meter management and prepayment systems. Comprehensive and broad offer covers both hardware and software of smart metering integrated systems and enabling active demand side management, optimization of energy consumption and also the inventory of network property of utility services of distributors and other enterprises of built-up field structure. GRUPA APATOR holds strong position and it has great experience in the segment regarding protection and switching of electrical circuits. Such companies like APATOR SA, APATOR MINING Sp. z o.o., APATOR CONTROL Sp. z o.o. and APATOR ELEKTRO S.A. and APATOR GmbH act in this segment. In contrary to metering companies all the above mentioned entities act in independent segments of the markets. The aim of the strategy is to hold strong position on domestic market and to increase export. 1.4 Business activity of particular entities in Grupa Apator APATOR SA parent entity Business activity of the company includes the design, manufacturing, sales of metering systems and metering equipment and switchgear. The main products of the company are LEWsystem Apator ( pre-paid and post- paid system) and AMRsystem Apator (remote data reading system), prepayment electricity meters, surge protective devices, ARS, PBS, RBK type disconnectors and 4G series rotary cam switches. Moreover since January 2010 Apator SA provides with the design services and deals with distribution and after sales service of products of subsidiary FAP Pafal SA. APATOR SA manufactures for subsidiaries: calculators for heat meters; the assembly and sales of heat meters are performed by Grupa Apator Powogaz, electronic electricity meters that are assemblied and legalized by FAP Pafal SA. The company sells its products on domestic and foreign markets. Management System according to ISO , ISO and PN-N standards operates in the company. 5

110 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN FAP Pafal SA - subsidiary Business activity of the company to the end of 2009 was the design, manufacturing and sales of induction and electronic electricity meters. In January 2010 Apator SA concluded the contract on cooperation with FAP Pafal SA. The subject of the cooperation is to deal by Apator SA with: - sales of electronic electricity meters being manufactured by FAP Pafal SA, - after sales service - provision of design services for FAP Pafal SA The conclusion of the contract on cooperation results from performance of the strategy of Grupa Apator according to it the development and sales of electronic electricity meters (post-paid and pre-paid) and metering systems are performed by Apator SA. FAP Pafal SA is the entity that has been in GRUPA APATOR since April 2004 Quality Management System according to ISO standard operates in the company APATOR METRIX SA subsidiary Business activity of the company includes the design, manufacturing, and sales of bellows gas meters both residential and industrial ones and provision of the service regarding legalization of such gas meters. The strategy of the company is to perform the main objectives that are to maintain parent position on domestic market and to obtain the position of one of the leaders on European markets in the range of manufacturing and supplies of traditional bellows gas meters as well as smart gas meters. The company sells its products both on domestic market and foreign ones. APATOR METRIX SA is the entity that has been in GRUPA APATOR since January Quality Management System according to ISO and ISO standards operates in the company APATOR RECTOR Sp. z o. o. subsidiary Business activity of the company includes the manufacturing, provision and implementation of IT solutions for inventory and management of branch distribution networks. It offers comprehensive IT solutions for the suppliers of utility services (power engineering, gas engineering, water supply and sewage companies and heat engineering) and also for telecommunication, rescue operations and local government administration. The unique feature of the offered systems is the possibility to upgrade them by GIS spatial information that makes easier to interpret and present the data. APATOR RECTOR Sp. z o.o. has been in GRUPA APATOR since January Apator Powogaz SA - subsidiary The business activity of the entity includes the design, manufacturing and sales of residential and industrial water meters and heat meters. The company deals with the assembly and start-up of metering systems for water and heat. Apator Powogaz SA has also a strong position on foreign markets. The headquarters of the entity are in Poznań ul. Klemensa Janickiego 23/25. Currently, APATOR Powogaz SA is the competence center for water and heat meters for the entire Grupa APATOR. Quality Management System according to ISO and ISO standards operates in the company. APATOR Powogaz SA composites capital group which includes at 31 st December 2009 the following entities: APATOR-KFAP Sp. z o.o. with the seat in Cracow, WODPOL Sp. z o.o. with the seat in Poznań, TEPLOVODOMER SA with the seat in Mytiszczi ( Russia) APATOR TELEMETRIA Sp. z o.o. with the seat in Słupsk 6

111 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Business activity of APATOR-KFAP Sp. z o.o. is : - assembly and legalization of split and compact heat meters (manufacturing of calculators is carried out in APATOR SA), - manufacture,legalization and sales of temperature sensors, - repeated legalization, Business activity of WODPOL Sp. z o.o. is: - after warranty repairs of the products manufactured by APATOR POWOGAZ SA Business activity of ZAO Teplovodomer SA is: - sales of the products of APATOR POWOGAZ SA on the territory of Russia (according to certificates possessed authorizing to sell them), - warranty service and post warranty repairs of the above products, - installation of water meters in flats, public housing and industrial objects Business activity of Apator Metroteks is: - distribution of products of Grupa Apator Powogaz on Ukrainian market Business activity of APATOR TELEMETRIA Sp. z o.o. is: - manufacture of data reading and data transmitting equipment from any type of heat meters, water meters, electricity meters, and central managing equipment, - development of information technology system applications APATOR MINING Sp. z o.o. subsidiary Business activity of the company includes the design, manufacturing and sales of distribution equipment, control equipment and metering equipment for mining, automation and electronic elements for mining, screw compressors and also provision of services regarding the repairs and maintenance services. The main products are: circuit breakers, transformer units, enclosures for mining equipment, electronic elements for mining, compressors The company does not sell its products directly on foreign markets but through the cooperating companies (e.g. KOPEX). APATOR MINING Sp. z o.o. is the entity that has been in GRUPA APATOR since Quality Management System according to ISO and standards has been implemented in the company APATOR CONTROL Sp. z o.o. subsidiary Business activity of the company includes the design, manufacturing and sales of AC/DC drives and drive applications, switchgear units and transformer stations and services in the scope of their implementation and maintenance. Quality Management System according to ISO operates in the company. APATOR CONTROL Sp. z o.o. is the entity that has been in GRUPA APATOR since APATOR GmbH subsidiary The company established in May APATOR GmbH with headquarters in Germany was registered on 25 th October The objective of the company is to export switchgear and metering equipment of GRUPA APATOR to the German market. 7

112 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN APATOR ELEKTRO SA associated entity The company has its headquarters in Moscow. Business activity of APATOR ELEKTRO SA is the distribution of products of GRUPA APATOR on the Russia market, mainly switchgear. The company has been in GRUPA APATOR since The statement of the Executive Board of APATOR SA regarding making of consolidated financial statement and the report on activity of Grupa Apator. The Executive Board of APATOR SA: Janusz Niedźwiecki President of Executive Board, Tomasz Habryka Member of Executive Board, Jerzy Kuś Member of Executive Board makes a statement that according to the best knowledge of the Executive Board, annual consolidated financial statement of Grupa Apator and comparable data were made in accordance with International Accounting Standards and International Financial Reporting Standards and related to them interpretations announced as the resolutions of European Commission. The companies of Grupa Apator comply with the regulations of the act on accounting and executive regulations issued based on the act regarding aspects not regulated by MSR/MSSF. Consolidated financial statement reflects in real manner, reliable and clearly the property and financial situation of Grupa Apator and also its financial result. The report on activity of Grupa Apator contains real picture of development of achievements and situations of the company with description of essential risks and threats included. Detailed principles of making the report were presented in clarification notes to the consolidated financial statement. 3. Appointment of chartered accountant and the declaration of the Executive Board of APATOR SA regarding chartered accountant The audit of consolidated financial statement was performed by authorised entity for auditing of financial statements Korycka, Budziak & Audytorzy Sp. z o.o. with the seat in Warsaw. The contract with entity authorised for auditing of financial statements was concluded on 14 th May According to the contract the remuneration of the authorised entity is PLN plus VAT and it includes the auditing of individual and consolidated financial statements for 2009, individual semi annual financial statement and also the review of consolidated semi annual financial statement. Moreover, APATOR SA covers the lodging, travelling and courier mail costs. For financial year 2008 the remuneration was PLN plus VAT. APATOR SA made used in the past of service of the firm Korycka, Budziak & Audytorzy Sp. z o.o. The Executive Board of APATOR SA declares that the entity authorised for auditing of financial statements, - Korycka, Budziak & Audytorzy Sp. z o.o., that had performed the audit of the annual financial statement was selected according to the law. The firm - Korycka, Budziak & Audytorzy Sp. z o.o. registered in register of authorised entities under number 84 and also the members of it, Executive Board and supervising bodies and chartered accountants performing the audit towards Apator SA and entities related to it comply with the conditions of impartial and independent report of audit in accordance with art 56 of the act dated 7 th May 2009 on chartered accountants and their council, entities authorised for auditing of financial statements and government control. 4. Declaration of acceptance of the rules of corporate governance with reference to Apator SA 4.1 The set of rules of corporate governance to be observed by APATOR SA and place where the set of these rules is available to the public The Executive Board of APATOR SA has declared to observe all the rules of corporate governance and made public the information on single case of not acceptance of one rule of Best Practice in 2009 regarding the broadcasting of the Ordinary General Shareholders Meeting on 8 th June The set of rules is presented on the website: and the website of APATOR SA: in section - investor service. 8

113 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN The acceptance of the rules of corporate governance On 9 th June 2009 the Executive Board of APATOR SA made public the information that since 8 th June 2009 i.e. the day of the Ordinary General Shareholders Meeting was held, the Company accepts the rule of the best practices no III.6, according to which at least two members of the Supervisory Board should met the criteria of independence from the company and entities remaining in some relations with the company. At the same time the Executive Board of APATOR SA advised that the criteria of independence mentioned in the Best Practices no III.6 are met by two newly appointed members of the Supervisory Board: Mr Mariusz Pawlak and Mr Krzysztof Kwiatkowski. Further to the above APATOR SA observes all the rules of the Best Practices of Public Companies quoted on Warsaw Stock Exchange. In result of extension of makeup of the Supervisory Board with two independent members, the Supervisory Board of APATOR SA on 23 rd September 2009 brought into existence the Audit Committee of Supervisory Board in APATOR SA.Two Audit Committee members and being at the same time members of Supervisory Board of Apator S.A. comply criteria of independence from APATOR SA. Establishing the Audit Committee, APATOR SA fulfils the stipulations of the rule III point 7 of the Best Practices of Public Companies quoted on Warsaw Stock Exchange. The essential task of the Committee is advisory to the Supervisory Board on proper implementation the rules of budget and financial reporting, internal control of Grupa APATOR and cooperation with chartered accountants of the Company. Detailed description regarding the functioning of the Audit Committee is presented in point Shareholders of APATOR SA holding directly or indirectly huge packages of shares with their number indicated, their percentage share in company capital, number of votes and percentage share in total number of votes at General Shareholders Meeting Shareholders holding more than 5% of votes at General Shareholders Meeting The list of shareholders holding more than 5% of votes at General Shareholders Meeting has been presented below: At 31 st December 2009 Description shares votes % shares % votes Apator Mining sp. z o. o ,80% 11,28% Mariusz Lewicki*) ,74% 9,42% Tadeusz Sosgórnik ,41% 8,34% Danuta Guzowska*) ,33% 7,49% Zbigniew Jaworski ,78% 6,17% Janusz Marzygliński ,02% 6,01% Total ,08% 48,71% *) with the spouse Share of particular groups of shareholders in total number of shares Below pie chart presents the share of particular groups of shareholders in share capital (based on payment of advance payment towards dividend for 2009) 9

114 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Institutional investors 28% Apator Mining 19% Natural persons (packages over 5% of votes) 22% Others 31% The share of institutional investors stabilized in 2009 and achieved the level of 28%. Funds acquire ordinary bearer shares therefore their share in share capital is higher than share in voting. The graph below presents the share of institutional investors in share capital in the recent six years. Share of institutional investors in capital of APATOR SA 33% 31% 29% 25% 27% 28% 21% 20% 17% 15% 13% 9% 9% 5% Share price The beginning of 2009 is the continuation of the long-term downward tendency of share price of APATOR SA that commenced the slump on Warsaw Stock Exchange in The tendency has maintained for the first three months of the current year where the share price was below 10 PLN. After this period with the stabilization of WIG index, the share price of the Company commenced to increase and it reached and in July the level of 19,88 PLN. In the second half of the year the share price dropped a bit and stabilized and average level of 16,00 PLN and at the end of the year it reached the level of 15,91PLN per share. 10

115 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Share price (PLN) and volume of turnover (pcs) volume of turnover share price Share price of Apator SA swig The table below presents selected market data of Apator SA in 2009 DESCRIPTION Date Unit 2009 Closing rate on the first day of quotation in PLN 9,90 Valuation of the goodwill at the beginning of the period PLN

116 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 DESCRIPTION Date Unit 2009 Closing rate on the last day of quotation in PLN 15,91 Valuation of the goodwill at the end of the period PLN The lowest share price PLN 8,21 The highest share price PLN 19,88 Packet transactions - PLN Average turn over volume per session - pcs Dividend policy The main objective of the Executive Board of APATOR SA is to increase the satisfaction of shareholders of investment in shares of the Company. The objective is performed by: expansion of Grupa APATOR and in result of it, long-term value is being created for the shareholders, dividend payment policy On 16 th March 2007 the Executive Board of the Company determined dividend policy of APATOR SA. and declared to make annual payment of dividend of 75% net profit of APATOR SA earned for the financial year. The payment of dividend will be made in two parts: one in form of advance payment in current financial year and the second one after the final value the whole dividend has been approved by General Shareholders Meeting. At the same time Executive Board of APATOR S.A. stipulated that in case of performance of significant investment, Management of the Company may decide on other distribution of the profit for financial year. The above policy has been obligatory since the moment of the profit distribution made for financial year On 8 th June 2009 the General Shareholders Meeting approved the payment of dividend from the profit earned in 2008 in amount of 0,35 PLN per share, towards the dividend the advance payment was paid on 12 th December 2008 in amount of 0,10 PLN per share (totally ,90 PLN). The outstanding amount of dividend in amount of 0,25 PLN per share (totally ,00 PLN), was paid on 14 th July 2009.The shareholders holding their shares on 29 th June 2009 were authorised for payment of dividend. The lower level of dividend for 2008 in relation to the previous two years is in accordance with the dividend policy of the Company and it considers investment expenditures in amount of PLN for the extension in 2008 of Grupa Apator by the entities; Apator Powogaz SA and Apator Rector sp. z o. o. On 28 th October 2009 the Executive Board of Apator SA made the decision on payment of advance payment towards anticipated dividend from the profit in 2009 in total amount of ,60 PLN, that is 0,20 PLN gross per share. For the payment of the advance payment towards anticipated dividend for financial year 2009 were authorised registered shares of A series and bearer shares of A, B and C series. The right for payment of advance payment towards anticipated dividend from the profit in financial year 2009 obtained the shareholders holding the shares of Apator SA on 4 th December 2009 but the payment was made on 11 th December The difference in between declared on 3 rd March 2009 (current report no 50/2009) advance payment in amount of 0,25 PLN per share and the amount of advance payment paid in amount of 0,20 PLN per share, resulted from legal regulations. In accordance with the Polish Commercial Companies Code the amount of advance payment towards anticipated dividend is allowed to be the half at the most of the profit earned from the end of the previous financial year increased by reserve capitals that can be at the disposal of the Executive Board for payment of advance payment reduced by not covered losses and own shares. 12

117 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Dividend per share of Apator SA 0,90 PLN 0,80 PLN 0,80 PLN 0,70 PLN 0,64 PLN 0,60 PLN 0,50 PLN 0,50 PLN 0,50 PLN 0,40 PLN 0,30 PLN 0,36 PLN 0,35 PLN 0,20 PLN 0,14 PLN 0,15 PLN 0,10 PLN 0,03 PLN 0,05 PLN 0,00 PLN Declaration of div idend f or The holders of any securities that provide special entitlements to control and the description of the entitlements There is no holder of securities issued by Apator SA who has any special control entitlements of the Company. At 31 st December 2009 share capital is made up of shares of nominal value of 0,10 PLN each and it was divided into: Shares and votes Number of shares Structure of shares % Number of votes Structure of votes % Registered shares ,21% ,31% Bearer shares ,79% ,69% Total shares ,00% ,00% Each bearer share gives the right to one vote but registered shares are preferred ones where one share gives the right to four votes at General Shareholders Meeting. On the day of preparation of the report (29 th April 2010) after conversion of shares made on 12 th January 2010, preferred shares are 22,21% of share capital and 53,31% of votes at General Shareholders Meeting of Apator SA. The rules of sales of registered shares are governed by the Statute of Apator SA. 13

118 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Bearer shares Registered shares Structure of shares and votes - at Number of shares Number of votes 4.5 All limitations regarding voting like; limited right to holders holding some part or limited number of votes, time limitations regarding voting or records according to them at cooperation of the company, capital rights relating to the securities are separated from holding the securities There are not any limitations in voting by shareholders of Apator SA. During 2009 Apator SA was the owner of own shares (ordinary bearer shares) acquired for their redemption. The shares were 0,5283% of share capital and they entitled to votes (0,3178%) at General Shareholders Meeting. Average unit price of own shares purchased was 10,86 PLN. Accordaning to art. 364 para. 2 of the Polish Commercial Companies Code, the Company has not used them to voting at General Shareholders Meeting and they have not been taken into consideration for the payment of the dividend. Based on Resolution no. 16/2009 of Ordinary General Shareholders Meeting of Apator SA dated 8 th June 2009 the procedure of redemption of the above shares was performed. On 18 th November 2009 Apator SA received the decision of Regional Court in Toruń, VII Economy Department of the National Court Register based on which the registration was made on 13 th November 2009 regarding the reduction of the company capital from the amount of ,00 PLN to the amount of ,80 PLN, that is by the amount of ,20 PLN. The reduction of the capital was made based on art and 2 of the Polish Commercial Companies Code and 11 of the statute of Apator SA and resolution of General Shareholders Meeting by redemption of own shares of the Company acquired for their redemption. Moreover, on 13 th November 2009 the registration of the change of registered shares preferred in voting 1:4 to ordinary bearer shares was performed. The change was made on 5 th January General Shareholders Meeting on 8 th June 2009 passed the Programme of own shares acquisition for redemption. Since 8 th June 2009 (commenced the acquisition of own shares) till the moment of the issue of the report Apator SA did not purchase any own shares. 4.6 All limitations regarding the transfer of ownership of securities of Apator SA Preferred registered shares are subject to some limitations in selling. They can be sold by shareholders or their heirs or their legal successors only to shareholders holding registered shares. The selling of registered shares to other persons than shareholders holding registered shares requires the permission of the Executive Board. If the Executive Board does not consent to transfer the shares then it should within 60 days: indicate other buyer, define the price in accordance with the bearer share price on the day of application. If the Executive Board within 60 days of the day of application in writing for selling of shares does not make any decision then the selling of shares is not subject to any limitations. Bearer shares are not subject to any limitations in the terms of transfer of ownership. 14

119 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN The rules regarding appointment and dismissal of persons in management and giving and deprival their powers particularly the right to make the decision concerning the issuing and buying up the shares According to the Statute of Apator SA, the right to make the decision on: share issue, convertible bonds or bonds with priority rights, share acquisition and redemption, rise or reduction of share capital belongs exclusively to the competence of General Shareholders Meeting of Apator SA Supervisory Board The members of the Supervisory Board of Apator SA are nominated and dismissed by the General Shareholders Meeting of Apator SA. General Shareholders Meeting decides also about the number of members of the Supervisory Board and their remuneration. Members of the Supervisory Board should have appropriate knowledge and experience. The makeup of the Supervisory Board can consist of 5 to 7 members elected by General Shareholders Meeting for the period of 5 years. Members of the Supervisory Board are nominated for the common tenure. The reduction of the number of members of the Supervisory Board during the tenure to not less than 5 members does not cause the need to complete the makeup of the Supervisory Board. The Supervisory Board at its first meeting nominates from its members the Chairman and Deputy to Chairman of the Supervisory Board. Member of the Supervisory Board is subject prohibition against competitive activities. Members of the Supervisory Board are not allowed to be: Member of the Executive Board, Proxy, Liquidator, Head of Branch Office or Company, Chief Accountant employed in the Company, Legal Adviser or barrister of the person that are subject directly to member of the Executive Board. Moreover members of the Supervisory Board are not allowed to be member of the Executive Board or Liquidator of subsidiary or dependent cooperative. Resolutions of the Supervisory Board are valid if all its members are invited and in case of presence: at least three members in case of five person makeup of Supervisory Board, at least four members in case of over five person makeup of the Supervisory Board. The resolutions of the Supervisory Board are made by absolute majority of votes of the members present at the meeting. In case of equality of votes, the vote of the Chairman of the Supervisory Board is decisive one. The General Shareholders Meeting passes the Regulations of the Supervisory Board. The Supervisory Board has no entitlements to make the decision regarding the issue or acquisition of shares The Executive Board The members of the Executive Board of Apator SA are appointed and dismissed according to the regulations of Polish Commercial Companies Code and stipulations of the Statute of the Company. The makeup of the Executive Board of Apator SA consists from one to three members nominated for three years by the Supervisory Board for the common tenure. The Supervisory Board adopts the resolutions concerning the following issues: establishment of the number of members of the Executive Board, appointment and dismissal of the Executive Board, nomination of the President of the Executive Board, suspension in their duties due to serious reasons, all or particular members of the Executive Board, delegation of the members of the Supervisory Board for temporary to perform the duties of the member of the Executive Board, establishment of remuneration of members of the Executive Board taking into account its motivative character. The members of the Executive Board are allowed to be dismissed in every moment by the Supervisory 15

120 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Board or General Shareholders Meeting. However, the stipulations of their contracts of employment remain valid. The Executive Board manages all the activity of the Company and it represents the Company outside, it manages its property and all the matters not restricted to other bodies, it is responsible for proper accounting of the Company and it observes exactly the stipulations of the Statute, Regulations of the Executive Board and resolutions adopted by the top management of the Company. The Executive Board in its activity is oriented to first of all the interest of the Company. The operation of the Executive Board is managed by the President of the Executive Board. The resolutions of the Executive Board are adopted based on the absolute majority of votes. In case of equal number of votes the vote of the President is decisive. Each member of the Executive Board independently or proxy is authorized to make statements regarding the property rights and obligations of the Company and to sign the documents. Each member of the Executive Board has the right and obligation to manage the matters of the Company not exceeding the scope of normal duties of the Company. Members of the Supervisory Board and Proxies are subject to prohibition against competitive activities The Supervisory Board establishes the Regulations of the Executive Board The Executive Board is not allowed to make decisions on issuing or acquisition of shares. 4.8 The amendment to the rules in the Statute of APATOR SA Amendments to the Statute of APATOR SA are allowed to be made by General Shareholders Meeting of APATOR SA according to para 14 point 13 of the Statute of the Company. The amendment to the statute is allowed to be adopted by General Shareholders Meeting based on three fourth majority of votes. In case of amendment to be made in the Statute, in announcement on calling of General Shareholders Meeting current reading is presented and also the content of the amendments to be introduced. In the resolution with the amendment to the Statute, General Shareholders Meeting is allowed to authorize the Supervisory Board to edit uniform text of the Statute or to introduce some editorial amendments. 4.9 The operation of General Shareholders Meeting and its essential entitlements and the description of rights of shareholders and the method of their performance and particularly the rules related to the regulations of General Shareholders Meeting if such regulations exist, provided information concerned does not result directly from the law Structure of the management of the Company is as follows: GENERAL SHAREHOLDERS MEETING Supervisory Board Janusz Marzygliński, Ryszard Wojnowski, Danuta Guzowska, Mariusz Lewicki, Krzysztof Kwiatkowski, Mariusz Pawlak Executive Board Janusz Niedźwiecki, Tomasz Habryka, Jerzy Kuś General Shareholders Meeting of Apator SA operates based on stipulations of the Polish Commercial Companies Code, the Statute of the Company and Regulations of General Shareholders Meeting of Apator SA. General Shareholders Meetings are ordinary and extraordinary ones. Ordinary General Shareholders Meeting is called annually at the latest to the end of June. General Shareholders Meeting is called by the announcement in the manner specified in the Polish Commercial Companies Code at least of 26 days prior the date of General Shareholders Meeting to be held. 16

121 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 The right to attend the General Shareholders Meeting have only persons being the shareholders being on 16 days prior the date of General Shareholders Meeting to be held (the day of registration of participants in the General Shareholders Meeting): authorized persons based on registered shares and temporary certificates, liens and users who have the right to vote, they have the right to attend the General Shareholders Meeting if they are registered in share book on the day of registration of the attendance the General Shareholders Meeting; the list of authorized persons based on bearer shares to attend the General Shareholders Meeting is made by the Company based on the list made by the National Depository of Securities SA in accordance with the rules of the Polish Commercial Companies Code. Shareholder or shareholders representing at least 1/20 of share capital are allowed to: demand to call Extraordinary Shareholders Meeting and to put appropriate matters on the agenda of the General Shareholders Meeting. The demand to call Extraordinary Shareholders Meeting should be made to the Executive Board in writing or in electronic form; demand to put appropriate matters on the agenda of coming General Shareholders Meeting. The demand should be submitted to the Executive Board not later than 21 days prior the fixed date of General Shareholders Meeting to be held. The Executive Board is obligated not later than 18 days prior the fixed date of General Shareholders Meeting to be held to immediate announcement the amendments to the agenda introduced based on demand of shareholders. The announcement is made in the manner appropriate to calling the General Shareholders Meeting. - submit in writing or in electronic form to the Company prior the date of the General Shareholders Meeting the drafts of resolutions regarding the matters put on the agenda of the General Shareholders Meeting or the matters to be put to the agenda of debates. The Company immediately gives announcement about the projects of the resolutions on the website. Every shareholder is allowed during the General Shareholders Meeting to submit the draft of the resolutions regarding the matters in the agenda. At the General Shareholders Meeting should be presented: members of the Supervisory Board and the Executive Board in the makeup enabling to give the merit answers to the questions during the General Shareholders Meeting. chartered accountant if the debates regard the financial issues of the Company. The General Shareholders Meeting is valid regardless to the number of shares and shares represented unless the regulations of the Polish Commercial Companies Code say different. The General Shareholders Meeting is allowed to adopt the resolutions only regarding matters put on the agenda of the debates except order resolutions that can regard only the matters concerning with the conduct of the debates. The resolution regarding the give up to debate the issue put on the agenda is allowed to be adopted only in case of significant and material reasons. The application in such a matter should be justified in details. The General Shareholders Meeting is not allowed to adopt the resolution to remove from the agenda of the meeting or to cease from debate the issue put on the agenda of the meeting based on the application of the shareholders. The resolutions are adopted by absolute majority of votes unless the regulations of the Statute of the Company or the Polish Commercial Companies Code say different. Voting is open except the situations specified by art. 420 of the Polish Commercial Companies Code when closed voting is arranged for the elections and dismissals of the members of the bodies in the Company, in case of applications regarding their responsibility and also in personal matters and for the demand of even one shareholder or authorized representative present at the General Shareholders Meeting. On 8 th June 2009, Ordinary General Shareholders Meeting of APATOR S.A. was held, where: report of the Executive Board on activity of the Executive Board and capital group for the financial year 2008 were approved; financial statement of APATOR SA and capital group was approved for financial year 2008; vote of approval was granted to the members of the Executive Board for the fulfillment of their duties in financial year 2008; report for financial year 2008 of Supervisory Board was approved; vote of approval was granted to the members of the Supervisory Board for the fulfillment of their duties in financial year 2008;; resolution was adopted on distribution of profit for the financial year 2008 and payment of dividend; resolution was adopted on distribution of retained earnings from previous years; 17

122 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 resolution on increase of number of the Supervisory Board up to 6 persons was adopted; resolution on appointment of Mr Mariusz Pawlak the member of the Supervisory Board of APATOR SA for current common tenure was adopted; resolution on completion of the Programme for acquisition of own shares for their redemption on reduction of the company capital dated 9th July 2008 was adopted; resolution on redemption of bearer shares of A, B and C series was adopted; resolution on reduction of the company capital with regard to redemption of shares and amedments to 7 of the Statute of APATOR SA was adopted; resolution on amendment to 6 of the Statute of APATOR SA was adopted; resolution on amendment to 14 of the Statute of APATOR SA was adopted; resolution on the Programme for the acquisition of own shares for their redemption and reduction of the company capital was adopted; resolution on the authorization of the Supervisory Board to edit uniform text of the Statute was adopted resolution on the amendment to the regulations of General Shareholders Meetings of APATOR S.A. was adopted 4.10 Personal makeup and changes made in it during last year and description of the operation of managing and supervisory bodies of APATOR SA Supervisory Board Supervisory Board of current common tenure was appointed by Ordinary General Shareholders Meeting on 6 th June 2005 for five year tenure that lasts till 2010.(the day of General Shareholders Meeting to be held in 20010). In the period since 1 st January till 8 th June 2009 the makeup of the Supervisory Board was the following: Janusz Marzygliński - Chairman of the Supervisory Board, Ryszard Wojnowski - Deputy Chairman of the Supervisory Board, Danuta Guzowska - Member of the Supervisory Board, Mariusz Lewicki - Member of the Supervisory Board, Krzysztof Kwiatkowski - Member of the Supervisory Board. Since 8 th June 2009 the makeup of the Supervisory Board was the following: Janusz Marzygliński - Chairman of the Supervisory Board, Ryszard Wojnowski - Deputy Chairman of the Supervisory Board, Danuta Guzowska - Member of the Supervisory Board, Mariusz Lewicki - Member of the Supervisory Board, Krzysztof Kwiatkowski - Member of the Supervisory Board, Mariusz Pawlak - Member of the Supervisory Board. On 8 th June 2009 the General Shareholders Meeting based on resolution no 14/2009 appointed Mr Mariusz Pawlak to the member of the Supervisory Board. Mr Mariusz Pawlak and Mr Krzysztof Kwiatkowski are the members of the Supervisory Board complying with independence criteria from the Company described in Best Practices no III.6. The Supervisory Board of Apator SA operates based on regulations of the Polish Commercial Companies Code, the Satute of the Company and the regulations of the Supervisory Board of Apator S.A. The Statute of the Company and the Regulations of the Supervisory Board of APATOR SA are available on the website of APATOR SA : in section Investment Service. According to the Statute, the makeup of Supervisory Board consists of 5 to 7 members appointed by the General Shareholders Meeting for the period of 5 years. The members of the Supervisory Board are appointed for the common tenure. The reduction of the number of the members of Supervisory Board during the tenure to not less than 5 members does not cause the necessity to complete the makeup of the Supervisory Board. In order to have the resolution of the Supervisory Board valid it is required that all the 18

123 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 members are invited and present: in case of the makeup of 5 persons of the Supervisory Board at least three of them and in case the makeup more than 5 persons at least four persons should be present. The resolutions are adopted based on absolute majority of votes of the members present. In case of equal votes the vote of the Chairman of the Supervisory Board is decisive. Shares being in the possession of the members of the Supervisory Board are as follows; at 31st December 2009 DESCRIPTION shares votes % shares % votes Mariusz Lewicki*) ,74% 9,42% Danuta Guzowska*) ,33% 7,49% Ryszard Wojnowski ,26% 1,96% Janusz Marzygliński ,02% 6,01% Krzysztof Kwiatkowski 0 0 0,00% 0,00% Mariusz Pawlak 0 0 0,00% 0,00% Total ,35% 24,88% *) with spouse The members of the Supervisory Board of APATOR SA acting in supervisory bodies of subsidiaries: Mariusz Lewicki Chairman of the Supervisory Board of APATOR MINING sp. z o.o., Chairman of the Supervisory Board of APATOR METRIX SA; Janusz Marzygliński Chairman of the Supervisory Board of APATOR RECTOR sp.z o. o., Chairman of the Supervisory Board of APATOR POWOGAZ SA Chairman of the Supervisory Board of FAP PAFAL SA till Ryszard Wojnowski Chairman of the Supervisory Board of APATOR CONTROL sp. z o. o. The members of the Supervisory Board of Apator SA do not have shares in subsidiaries and associated entities included in Grupa Apator. Remuneration of the members of the Supervisory Board was not significant cost item of the activity APATOR SA and had no serious influence on its financial result.the remuneration obtained in 2009 was the following: Name and surname Remuneration in Apator SA Remuneration in subisidiaries Total remuneration 000 PLN 000 PLN 000 PLN Danuta Guzowska Mariusz Lewicki Janusz Marzygliński Ryszard Wojnowski Mariusz Pawlak Krzysztof Kwiatkowski Total According to stipulations of the Statute of APATOR SA, the sessions of Supervisory Board were called once a quarter of the year or more frequent if required based on the invitation of the Chairman of Supervisory Board. In 2009 took place 9 sessions of the Supervisory Board of APATOR SA. The members of the Executive Board of APATOR SA took part in them. The members of the Executive Board provided Supervisory Board exhaustive information on all important matters regarding the activity of APATOR SA and Grupa APATOR. During the sessions of the Supervisory Board, the resolutions were adopted on matters that had been listed in the agenda and sent to the members of Supervisory Board with the announcement about the session to be held. The activity of the Supervisory Board focused on the matters of great importance for the activity of APATOR SA and Grupa APATOR. 19

124 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN Executive Board Since 1 st January 2009 the Executive Board of APATOR SA has been operating in team of three persons. The Supervisory Board of APATOR SA nominated Mr Jerzy Kuś the member of the Executive Board since 1 st January 2009 for the common tenure that ends on the day of the session of Ordinary Shareholders Meeting of APATOR SA in The Supervisory Board appointed Mr Jerzy Kuś as Marketing and Sales Director for Metering Equipment and Systems. This information was made public in current report 126/2008 dated 27 th October Janusz Niedźwiecki - President of Executive Board, Tomasz Habryka - Member of Executive Board, Jerzy Kuś - Member of Executive Board The Executive Board operates based on regulations of the Polish Commercial Companies Code, the Statute of the Company and the Regulations of the Executive Board of APATOR SA. The Statute of the Company and the Regulations of the Executive Board of APATOR SA are available on the website of APATOR SA in section investor service. The members of the Executive Board are the members of the supervisory boards of dependent companies (status on 31 st December 2009): Janusz Niedźwiecki -Deputy Chairman of Supervisory Board in FAP Pafal SA and Apator Metrix SA, Member of the Supervisory Board of Apator Powogaz SA, Tomasz Habryka - Deputy Chairman of Supervisory Board in Apator Control sp. z o. o. Jerzy Kuś - Member of Executive Board till the end of 2009, Member of Supervisory Board in Apator Rector sp. z o. o., The members of the Executive Board of Apator SA do not have shares in the entities in Grupa Apator. Remuneration of the members of the Executive Board was established based on transparent procedures and rules, taking into consideration its motivated character and assurance of effective and fluent management of the Company. The remunerations responded to criteria of the scope of responsibility resulting from the function performed remaining in reasonable relation to the value of remuneration of the members of the executive boards in similar companies and on comparable markets. Remuneration of the members of the Executive Board received in 2009 was as follows: Name and surname Remuneration in Apator SA in 000 PLN Bonus / Reward Apator SA in 000 PLN Remuneration in subidiaries in 000 PLN Total remuneration in 000 PLN Janusz Niedźwiecki Tomasz Habryka Jerzy Kuś Total The shares of APATOR SA being in possession of the members of the Executive Board are as follows: Status at 31st December 2009 DESCRIPTION shares votes % shares % votes Janusz Niedźwiecki ,24% 2,96% Tomasz Habryka 0 0 0,00% 0,00% Jerzy Kuś ,00057% 0,00034% Total ,24057% 2,96034% Taking decisions on the matters of the Company, the members of the Executive Board act within the limits of reasonable economical risk i.e. after having considered all the information, analysis and opinions that 20

125 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 according to the opinion of the Executive Board should be in such a case be taken into consideration due to the interest of the Company. In order to establish the interest of the Company, reasonable interests in long term prospective of shareholders, creditors, employees and other entities and persons cooperating with the Company in business and also the interests of local societies have been taken into consideration. The Executive Board has managed with the special care in order to provide transactions with shareholders and other persons who interests have influence on the interest of the Company to be made on market conditions Audit Comittee of the Supervisory Board of Apator SA The Supervisory Board of Apator SA on 23 rd September 2009 appointed Audit Committee of the Supervisory Board of the Company. Autit Committee makeup consists of at least three members including the chairman, nominated for the period of the tenure by the Supervisory Board from among its members. Currently the makeup of Audit Committee is as follows: Mariusz Lewicki Chairman of the Committee, Mariusz Pawlak Member of the Committee, Krzysztof Kwiatkowski Member of the Committee Two members of Audit Committee at the same time members of the Supervisory Board, comply with the criteria of independence from Apator SA. The meetings of Audit Committee should take place at least twice a year, prior the financial statements (semi annual and annual) are published by the Company. The aim of functioning of Audit Committee is advisory the Supervisory Board on the issues concerning individual and consolidated financial reporting, internal control and risk management and cooperation with chartered accountants. The main tasks of Audit Committee are as follows: monitoring of financial reporting process (research of accounting standards applied, circulation of information, documents and amendments to be made related to it); monitoring of the effectiveness of internal control systems, internal audit and risk management; monitoring of performance of financial audit; monitoring of the independence of chartered accountant nominated to audit the financial statements Detailed rules of the operation of Audit Committee are specified in the Regulations of Audit Committee of the Supervisory Board of Apator SA that are available on the website of Apator SA : in section investor service. 5. Bodies supervising and managing the entities of Grupa Apator The make up of supervisory boards and executive boards of the entities of Grupa Apator are present in the table below: Entity Apator SA Apator Metrix SA FAP Pafal SA Apator Rector sp. z o. o. Apator Powogaz SA Make up of Supervisory Board at Janusz Marzygliński Ryszard Wojnowski Danuta Guzowska Mariusz Lewicki Krzysztof Kwiatkowski Mariusz Pawlak Janusz Lewicki Janusz Niedźwiecki Tomasz Urbańczyk Kazimierz Piotrkowski Janusz Niedźwiecki Janina Karaszewska-Zandrowicz Janusz Marzygliński Tomasz Piasecki Jerzy Kuś Janusz Marzygliński Janina Karaszewska-Zandrowicz Make up of Executive Board at Janusz Niedźwiecki Tomasz Habryka Jerzy Kuś Arkadiusz Chmielewski Ryszard Lippke Bohdan Wierzbicki Jerzy Kuś Krzysztof Wojtczak Marek Kurzawa Marek Michalski Krzysztof Prucnal Mieczysław Ziółek 21

126 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Entity Apator Mining sp. z o.o. Apator Control sp. z o.o. Apator Elektro Apator GmbH Make up of Supervisory Board Make up of Executive Board at at Tadeusz Sosgórnik Marcin Szczurowicz Janusz Niedźwiecki Jolanta Dombrowska Mariusz Lewicki Kazimierz Piotrowski Tadeusz Sosgórnik Zbigniew Baranowski Ryszard Wojnowski Tomasz Habryka Ryszard Trąbała Monika Guzowska Aleksander Iwanow K. G. Burcew Mirosław Klepacki A. W. Konfetkin O. W. Petrowa - Tomasz Habryka Mirosław Klepacki 6. Information on known to the issuer contracts (including those concluded after the balance day), in result of which they can cause the changes in proportions of the shares held by current shareholders in the future. Apator SA has no knowledge about such contracts. 7. Contracts concluded between Grupa Apator and persons of management staff of the entities that foreseen compensation in case of their resign or dismissal from the posts without clear reasons or their recall or dismissal due acquisition of the company There are no such special contracts in Grupa Apator concluded between the Company and persons of management staff regarding compensation in case of their resign or dismissal from the posts without significant reason or recall or dismissal due to acquisition of the company. Persons of the management staff of Grupa Apator are employees of the Company based on the contracts of employment. In case of resign or dismissal from the post the parties will perform their obligations based on obligatory legal regulations including particularly labour law. 8. Description of the main features of internal control systems and risk management in Grupa Apator with reference to the process of preparation of individual and consolidated financial statements Financial statements are prepared by Accounting Department of Apator SA. The department is separated organization unit operating in the division of Finance Director of Apator SA. The Company prepares individual and consolidated financial statements in accordance with International Accounting Standards and International Financial Reporting Standards. They both include interpretations accepted by the Commission for Interpretation of International Financial Reporting Standards. Moreover, financial statements are prepared based on the Regulation of Ministry of Finance dated 19 th February 2009 (with later amendments) on current and regular information being transferred by issuers of securities and conditions of the information to be considered as equivalent one required by law of the country not being the member of the EU. Reporting and accounting in entities like Apator SA, FaP Pafal SA, Apator Metrix SA, Apator Powogaz SA and Apator Control Sp. z o.o. are performed by use of BaaN IV -Integrated Management System. Each entity has its own accounting based on own accounting policy that defines the main principles of recording of economic events. However, the essential elements of the process of preparing the statements are accepted for all the entities in Grupa Apator common principles of accounting based on solutions applied in parent entity Apator SA. In consequence of recording made there are accounting books in particular entities being further the basis to prepare individual financial statements by all entities of the group. Individual financial statements are the bases to prepare consolidated financial statements of Grupa Apator. 22

127 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 In the process of preparing of the financial statements the following risks have been identified: input data errors, improper data presentation, effects of wrong estimations made by independent advicers (actuaries, experts), at the stage of financial data consolidation of Grupy Apator improper data integration coming from the entities that do not have BaaN IV integrated management system with data from entities where the system operates. All mentioned areas of the risk are minimized by internal and external control systems and common for all entities in Grupa Apator principles of accounting. Direct responsible for minimizing the existing of risk level and also for identification of new dangers is the Executive Board of Apator SA and Finance Director who assesses on current basis effectiveness of internal control system in the process of preparing of financial statements. The assumption of effective internal control system in financial reporting is to provide correct financial information included in financial statements and correctness of their presentation. The correctness is performed by auditing the compliance with provisions and guidelines of financial law and internal regulations and also by audit based on ISO 9001:2000. Internal control is performed directly by every employee (including self-assessment system), its superior and persons cooperating with him and managers of organization units in the scope of quality and correctness of the tasks made by particular employees. The objective is to provide the compliance of the tasks wit internal control mechanisms. At every stage of preparation of financial statements one of the essential control mechanisms (external ones) is regular verification of financial statements by independent chartered accountant, particularly the review of semi-annual and audit of annual statements. The entity to be chartered accountant for Apator SA and Grupa Apator is selected in such manner to provide the independence in performance of the tasks. The selection of chartered accountant is made by supervisory boards of particular companies among reputable auditing companies that guarantee high standards of services and independence. All the companies in Grupa Apator are audited by the same entity entitled to auditing of financial statements. The Audit Committee of the Supervisory Board of Apator SA that was established on 23 rd September 2009 takes part in monitoring process of the effectiveness of internal control system. The essential task of the Committee is the advising regarding the issues of individual and consolidated financial reporting, internal control and risk management and cooperation with chartered accountant (more in point ). Financial data that are essential for financial statements and periodical reports are also needed for every month financial and operation reporting. After closing the accounting of monthly settlement period, the top management (Executive Board, Directors) under supervision of the Supervisory Board make monthly analysis of financial results of Apator SA, particular companies in Grupa Apator and consolidated results of Grupa Apator. The analysis of the results achieved is made by their comparison to the assumptions regarding business included in annual budget and in strategy of development. Identified deviations are analyzed on current basis in view of their influence on current results Grupa Apator and further possible corrective actions are taken. Moreover, the reviews of annual business plans are made in Grupa Apator and it regards both all the entities of capital group and entire Grupa Apator. In the process of preparing budget covering all operation areas is involved entire management of top and medium level. Prepared budget is accepted by the Executive Board of the Company and approved by the Supervisory Board. Based on assessment of the procedures applied, the Executive Board confirms that at 31 st December 2009 there were no circumstances that could have negative influence on the effectiveness of internal control in the range of preparation of financial statements. 9. Employment in Grupa Apator The employment in subsidiaries and parent entity is presented in the table below. Increase/Decrease Name of the entity At At persons Dynamics Apator SA ,24% FAP Pafal SA ,79% Apator Metrix SA ,64% Apator Mining sp. z o. o ,03% Apator Control sp. z o. o ,94% Apator Rector sp. z o. o ,14% 23

128 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Increase/Decrease Name of the entity At At persons Dynamics Grupa Apator Powogaz ,24% Apator GmbH ,00% Total ,30% The employment in Grupa Apator (in subsidiaries and parent entity) at 31 st December 2009 decreases in relation to the number of employees at 31 st December 2008 by 118 persons (by 6,70%). The main changes in employment regarded to: FAP Pafal SA decrease by 97 persons due to reduction of employment in manufacturing and technical division and also no longer prolongation of majority of expiring in 2009 contracts concluded for the limited time of employment, Apator Metrix SA decrease by 12 persons Grupy Apator Powogaz changes in employment by 10 persons (decrease) caused by: o o natural exchange of employees (pensions, obtaining qualified employees), organization and restructuring changes of the Apator Kfap commercial representatives have joined Apator Powogaz SA, Moreover, dismissal of people in assembly department of water meter and legalization was performed in associated entity of ZAO Teplovodomer (Grupa Apator Powogaz) due to the completion of that activity in the company. The decrease in employment was by 74 persons. 10. Information on sales markets and sources of procurement 10.1 Investment attractiveness of sectors related to Grupa Apator In the sector of manufacturing and distribution of electrical equipment, the employment dropped by (1,%) in the second half of 2009.The changes in prices in the sector were a bit slower than in entire economy (2,5 %) and slower than in previous year. In 2009 the value of manufacturing in industry was lower by o 3,2 % than one year ago and the dynamics of drop was slower (last year 4,3%). According to Central Statistical Office report permissions for construction were granted in 2009 i.e. by 22,3% less than in previous year the situation in building industry was still getting worse. The number of flats constructed was lower by 3% than in the previous year. Bad situation in building industry allows for the assumption that in 2010 the situation will not change for better. The value of the ratio of economic situation in electrical engineering branch was by 1% lower than last year. The situation in mining got worse mining extraction dropped by 12,9% and it caused less orders placed for mining equipment in mining industry. In switchgear segment in the first half of this year some negative events were noted. First of them was the decrease by almost 9% of the sales of cables. The further were worse results than last year in enterprises dealing with integration (construction of the switchgear, substations drop by 8%). Distribution segment of electrical equipment also faced clear slow down of the increase of revenues. In 2009 wholesales of electrical equipment sold goods for the amount of about 2 billion PLN that means the decrease of turn over by 20%.Some wholesales networks had the decrease in sales reaching 30%. The results confirm further considerable getting worse situation in electrical engineering sector. The sales of electricity also dropped (-10%) what may cause the worse situation in energy distribution sector. Metering equipment sector is one of the most prospective segments of activity of Grupa Apator. The segment of electricity meters in Poland develops steady however in the first half of the year one could notice a bit slow down that regarded with developing recession in the Polish economy (huge ups and downs in the economy and sales in particular months). Dynamics of growth of the market is still high. Among metering equipment segments, quick development of the segment of software for data and distribution and metering management is noted where the development rate is two-digit. Unusual dynamic is 24

129 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 the segment of systems of remote data reading (water, heat, electricity) where the annual growth reaches several dozen percent. Among the meters for utility services the quickest growth was observed among water meters 28%. In gas meters segment the increase by 6% was noted. Segment of electricity meters in spite of bad situation in power industry increased about 2%. Quick development is also observed in case of the segment concerning electricity meters ( smart meters ), which huge installation is expected in Poland by Energy Regulatory Office in It is also expected that over 15,5 m electricity meters will be replaced in Poland. The electricity meters will be operated in AMR type remote data reading system. Similar number of water meters will be probably replaced by water meters with remote data reading Sales strategy The trade and marketing actions being performed by Grupa Apator are aimed at: creation of strong brand of Apator based on extended Grupa Apator and it product brands like: Pafal, Metrix, Powogaz, Rector, Kfap, Mining, Control, Telemetria, establishment of the stable customer base actions are being carried out aiming at to start-up long term loyalty programme, increase of export wining new markets in Africa, Asia and to strengthen its position on current markets, emphasizing the image of modern, flexible and technologically competent Company operating in sector of metering and switchgear equipment, maintaining the image of the honest partner in business, maintaining the image of the Company that takes care about quality of its products and respecting the environment and natural resources Strategic objective concerning metering equipment is to prepare the Polish customer to settle utility services by utilities and to provide the equipment favorable the saving the consumption of utility services. Further to the above the development works in the segment are aimed at first of all to develop comprehensive metering systems, modern solutions for reading and transfer of information adjusted to the service of consumers on liberalized competitive energy market. Grupa Apator is stronger involved with the initiatives concerning sustainable development, particularly with measures taken to save energy and smart management of power networks. In case of switchgear equipment, Grupa Apator strives to maintain the position of important supplier of products of good quality at the same time keeping low manufacturing costs and offers broad range of products 10.3 Sales structure Consolidated revenues from sales of Grupa Apator in 2009 were at the level of PLN (in 2008: PLN), included: Sales of products PLN, Sales of goods and materials PLN. Revenues from sales of particular products were as follows: Description Structure Dynamics in 000 PLN in 000 PLN in 2009 Metering segment ,26% 68,35% Switchgea segment ,24% 30,78% Other sales ,58% 0,87% Total ,19% 100,00% In the sales structure of capital group metering equipment is the parent that in 2009 was 68,35% of revenues from sales in total. The following factors had the influence on the value of revenues from sales in total in 2009: 25

130 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Activity of Grupa Apator in extended make up in entire reporting period of 2009 (in 2008 Apator Powogaz SA joined the Grupa on 30 th April 2008 ), Increase of export caused by the increase of sales volume on new markets (Africa) and getting weaker of zloty, Decrease of sales in switchgear segment that was feeling more the effects of recession than metering segment (decrease of sales by PLN in relation to 2008). metering segment 68% Sales segments in 2009 switchgear segment 31% other sale 1% Sales segments in 2008 etering segment 65% switchgear segment 34% other sale 1% 10.4 Export Grupa Apator is consequently bound to achieve leader position in Central and Eastern Europe in the range of systems and metering equipment and switchgear. The main exporters in Grupa Apator in 2009 were: Apator SA switchgear and prepayment electricity meters, Apator Metrix SA gas meters, Apator Powogaz SA water meters, FAP Pafal SA electricity meters. Grupa Apator in 2009 achieved the revenues from export at the level of PLN, i.e. higher by PLN (by 16,65%) in relation to The share of export in total sales increased from 24,77% in 2008 up to 28,00% in The following factors had the influence on the above results: 26

131 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Increased sales of water meters (among other things by the activity of Grupa Apator in the entire financial year 2009 in the extended make up by Apator Powogaz SA in 2008 the period from may to December), increased sales of prepayment meters (particularly to African countries: Tunisia, Sierra Leone, Burundi), increased sales of gas meters (particularly to Denmark, Portugal, Italy). The relations of export and domestic sales are presented in the table below. Territorial structure of revenues Dynamics (000 PLN) (000 PLN) (%) domestic market ,76% export ,65% Total revenues ,19% Export segments have been presented by the bar charts below. Export segments of Grupa APATOR ( 000 PLN) PLN PLN Switchgear segment Metering segment 27

132 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Segment structure of export of Grupa APATOR in 2009 Metering segment 82% Switchgear segment 18% Segment structure of export of Grupa APATOR in 2008 Metering segment 78% Switchgear segment 22% The table below presents geographical structure of export. Value (000 PLN) Structure (%) Description Dynamics European Union ,98% 53,54% 55,78% Other countries ,55% 46,46% 44,22% Total export ,65% 100,00% 100,00% In geographical structure of export European Union and other countries considerable increase of export to other countries has occurred, mainly due to export of metering equipment to African countries. The below bar chart presents main countries where Grupa Apator performed the export (value over PLN) in the period since January till December in 2009 and

133 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 Export of Grupa APATOR according to countries of sales performed over > PLN Russia Denmark Germany Hungary Ukraine Belarus Sierra Leone Romania Burundi Austria Lithuania Great Britain Italy Bulgaria Croatia Turkey Portugal France Serbia Colombia Czech Republic Spain Egypt Belgium Sources of procurement In 2009 Grupa Apator continued the actions aiming at the maintenance of proper procurement and further reduction of costs of purchased materials, services and goods. Further to the above the following have been done: common purchase of metallurgical and plastic products and electronic components performed with subsidiaries renegotiations of commercial conditions with suppliers of products of high volume turnover, permanent oversight carried out over the performance of the contracts concluded in entire Grupa Apator, regular valuation of credibility of strategic suppliers bid analysis and selection of suppliers, Grupa Apator is provided with materials, services and goods in most part on domestic market i.e. from entities registered in Poland. Import is the minority of the entire procurement. However, many suppliers, domestic manufacturers import the raw materials therefore part of purchases from Polish entities is the indirect import. Therefore, the exchange rates have the influence on prices of goods being purchased from import and on domestic market as well. In the range of the manufacturing of post-paid electronic electricity meters, Apator SA cooperates with the subisidiary - FAP Pafal SA with the seat in Świdnica. It regards the manufacturing of printed circuit boards for electricity meters by Apator SA and the supply them to FAP Pafal SA. The cooperation is based on the contract concluded between Apator SA and FAP Pafal SA on the 1 st March 2005 (with later annexes). The contract defines general conditions of cooperation in the range of the supply by Apator SA printed circuit boards and subassemblies to FAP Pafal SA. Number of deliveries is performed according to current orders and prices are agreed on market conditions. The contract is concluded on unlimited period. The detail conditions of the contract do not deviate from the ones commonly applied in such contracts. The value of the common turnover in 2009 between Apator SA and FAP Pafal SA was PLN. Except above mentioned case no supplier performing the procurement to particular companies in Grupa Apator in 2009 exceeded 10% of revenues from sales in 2009 of Apator SA. 29

134 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 The largest external suppliers of Grupa Apator with supplies over 2 m PLN are presented in the table below.. Value in 2009 Recipient of supplies Supplier (000 PLN) in Grupa Apator Schenker sp. z o. o., Bydgoszcz Apator SA Fabryka Armatur Swarzędz sp. z o. o., Swarzędz Apator Powogaz SA Ningbo Free Trade Zone Min Sun International Co. Ltd, CPR Apator Powogaz SA Flonidan DC A/S, Denmark Apator Metrix SA B&S Gaz Serwis sp. z o. o., Tczew Apator Metrix SA Sabic Innovative Plastics Poland sp. z o. o., Warszawa Apator SA EBV Elektronik GmbH & Co.KG, Germany Apator SA Control Techniques Drives Ltd, Great Britain Apator Control sp. z o. o. Elsit sp. z o. o., Gliwice FAP Pafal SA Reliance Technology Development Ltd, Hongkong Apator SA Effbe-France S..A. S., France Apator Metrix SA Hutmen SA, Wrocław Apator SA Ferrex sp. z o. o., Poznań Apator Powogaz SA PPUH Raft, Turza Śląska Apator Mining sp. o. o. Walcownia Metali Dziedzice" SA, Czechowice-Dziedzice FAP Pafal SA Masters sp. z o. o., Straszyn Apator SA PHM Pehamet sp. z o. o., Mrowla Apator SA Metallurgical products (non ferrous metals, steel, connecting elements, etc.) and plastic products, plastics and chemicals are the essential part of purchase of Grupa Apator. In 2009 was noted significant increase in world prices of raw materials, mainly cooper (from about USD/t at the beginning of 2009 to the level of about USD/t at the end of 2009 r.) and crude oil (at the beginning of 2009 from the level. 46,86 USD/bbl to the level about 77,97 USD/bbl at the end of 2009 ). It has been mainly reflected in increase of costs of non ferrous materials being purchased in steelworks and plastics. The graph below shows the price of cooper in USD/t and crude oil in USD/ bbl in source: 30

135 REPORT OF THE EXECUTIVE BOARD OF APATOR SA ON ACTIVITY OF GRUPA APATOR IN 2009 source: The essential economic values included in consolidated annual financial statement 11.1 The assessment of factors and non standard events having the influence on the result of activity in financial year with determination of the degree of the influence of those factors of non standard events on the result achieved In 2009 the factor having significant negative influence on the results achieved was the slow down of domestic economy and economic recession at the most important foreign recipients of the products of Grupa Apator. Moreover, the increase of the exchange rate of EUR reflected negatively to the price of raw materials and materials being imported but at the same time it had positive influence on the revenues from slaes on foreign markets. The Executive Board of Apator SA identifies four essential areas of factors having got the influence on the results of activity of Grupa Apator. They are as follows: 1. Effects of world economic crisis The sales of Apator SA and Grupa APATOR depend mainly on the level of performance of investments in Polish economy and in the world. Global crisis caused the limitation of expenditure on investments and in even in some areas it made their cancellation. It caused the reduction of the demand for products being manufactured by the Company and Grupa Apator. In Apator SA and entire Grupa Apator more sensitive for the effects of economy crisis was switchgear segment where the decrease of sales in relation to 2008 was PLN. The drop regarded both domestic sales (by PLN) and export (by PLN). On the other hand dramatic weakness of zloty exchange rate having its beginning in the third quarter of 2008 and remained in it dropping tendency to the end of four quarter of 2009 had positive influence on the value of revenues from export of the Company and Grupa Apator calculated in PLN. In the result of the above and winning of new markets for selling of metering equipment, the increase of share of export in revenues in total has occurred. Essential success of Apator SA was the deliveries of prepayment system to African markets (Sierra Leone, Burundi). 2. Performance and valuation of hedging transactions concluded in 2008 The costs related to hedging transactions concluded in 2008 had negative influence on the results of Grupa 31