Semiannual consolidated financial report PSr 2017 (Year)

Transcription

1 ELZAB PSr adjusted Polish Financial Supervision Authority Semiannual consolidated financial report PSr (Year) (pursuant to 82 paragraph 2 and 83 paragraph 3 of the Minister of Finance Regulation of February 19 th, 2009 Dz. U. 2014, item 133 with further amendments) for issuers of securities engaged in manufacturing, construction and service industries or trade for the first half of the fiscal year covering the period from 1 st January to 30 th June containing consolidated financial statements in accordance with IFRS / IAS in the currency PLN and condensed financial statement in accordance with IFRS / IAS in the currency PLN submission date: 17 th August ZAKŁADY URZĄDZEŃ KOMPUTEROWYCH ELZAB S.A ( full issuer name ) ELZAB. (abbreviated issuer name) Informatics (sector acc. to WNE classification) Zabrze (zip code) (town city) Kruczkowskiego 39 (street) (building number ) (32) (32) (telephone number) (fax) Ir@elzab.com.pl ( ) (www) (Vatin) (National Business Registry Number) Deloitte Sp. z o.o. Sp. k. No.73 (entity authorized to audit) Polish Financial Supervision Authority

2 I. SELECTED FINANCIAL DATA OF GROUP ELZAB in thousands of PLN in thousands of EUR First half of First half of 2016 First half of First half of 2016 II. Net revenue from sales III. Operating profit (loss) IV. Gross profit (loss) V. Profit (loss) attributable to equity holders of the parent VI. Net cash flows from operating activities VII. Net cash flows from investment activities VIII. Net cash flows from financing activities IX. Total net cash flow X. Annualized earnings (loss) per ordinary share (in PLN / EUR) 0,41 0,32 0,10 0,07 XI. Annualized earnings (loss) per ordinary share excluding treasury shares (in PLN/ EUR) 0,44 0,35 0,10 0,08 XII. SELECTED FINANCIAL DATA OF GROUP ELZAB 30 th June 31 st June 30 th June 31 st June XIII. Total assets XIV. Long-term liabilities XV. Short-term liabilities XVI. Equity XVII. Share capital XVIII. Total number of shares XIX. Number of shares adjusted for treasury shares XX. Book value per share (in PLN / EUR) 4,93 4,96 1,17 1,12 XXI. Book value per share excluding treasury shares (in PLN / EUR) 5,32 5,34 1,26 1,21 XXII. SELECTED FINANCIAL DATA OF ELZAB First half First half First half First half of of 2016 of of 2016 XXIII. Net revenue from sales XXIV. Operating profit (loss) XXV.Gross profit (loss) XXVI. Profit (loss) attributable to equity holders of the parent XXVII. Net cash flows from operating activities XXVIII. Net cash flows from investment activities XXIX. Net cash flows from financing activities XXX. Total net cash flow XXXI. Annualized earnings (loss) per ordinary share (in PLN / EUR) 0,52 0,75 0,12 0,17 XXXII. Annualized earnings (loss) per ordinary share excluding treasury shares (in PLN/ EUR) 0,56 0,81 0,13 0,18 XXXIII. SELECTED FINANCIAL DATA OF ELZAB 30 th June 31 st June 30 th June 31 st June XXXIV. Total assets XXXV. Long-term liabilities XXXVI. Short-term liabilities XXXVII. Equity XXXVIII. Share capital XXXXIX. Total number of shares XL. Number of shares adjusted for treasury shares XLI. Book value per share (in PLN / EUR) 5,23 5,14 1,24 1,16 XLII. Book value per share excluding treasury shares (in PLN / EUR) 5,64 5,54 1,33 1,25 Polish Financial Supervision Authority

3 When presenting selected financial data of the condensed financial statements, such data are to be properly described. Selected financial data from the consolidated balance sheet (consolidated statement of financial position) or respectively from the balance sheet (statement of financial position) should be presented at the end of the first half of the current fiscal year and at the end of the previous fiscal year, which shall be properly described. This report should be forwarded to the Polish Financial Supervision Authority, to the company managing regulated market and to the public through a news agency in accordance with the law. CONTENTS OF THE REPORT File: Description: pdf Auditor's report on review of interim report financial of ELZAB S.A pdf Auditor's report on review of interim financial statements ELZAB S.A. 3 The financial statements of the ELZAB Group for the first half The financial statements of the ELZAB Group of the fiscal year.pdf 4 ELZAB Group Report of the Management Board PS.pdf Report of the Management Board SIGNATURES OF THE COMPANY S REPRESENTATIVES: Date Name and Surname Position/Function Signature 17 th August Krzysztof Urbanowicz President of the Management Board 17 th August Jerzy Popławski Vice President of the Management Board Polish Financial Supervision Authority

4 Financial Statement of GROUP ELZAB for the period from 1 st January to 30 th June

5 Table of Contents Section I Introduction to the Consolidated Financial Statements 3 Section II The financial statements of the Group ELZAB 25 Attachment 1 Condensed financial statements ELZAB SA. 46

6 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) SECTION I INTRODUCTION TO THE CONSOLIDATED FINANCIAL STATEMENTS OF THE CAPITAL GROUP ELZAB a) Characteristics of the Capital Group ELZAB Composition of the Capital Group ELZAB for the day 30 th June was as follow : Parent Company Subsidiary: Affiliate Other entities - ELZAB S.A. - ELZAB SOFT Sp. z o.o., - ELZAB HELLAS SPV Sp. z o. o., - ELZAB HELLAS S.A. - Comp Centrum Innowacji Sp. z o.o. - Clou Sp. z o.o. Compositon of the Capital Group ELZAB did not change compared to the situation on 31 st December Characteristics of the parent company: The name of the parent company: Zakłady Urządzeń Komputerowych ELZAB S.A., ul. Kruczkowskiego 39, Zabrze. Commercial Offices of the parent company: The company has 3 sales Office: in Warsaw, street Taborowa 14; in Wroclaw, street Słubicka 22 and in Suchy Las near Poznan street Akacjowa 4. The Company operates as a joint stock company established by a notarized deed on 16 th November 1992 before notary Paweł Błaszczyk in Warsaw (Repertory No ). The current registration authority is the District Court in Gliwice, 9 th Economic Department of National Court Register (NCR). The Company is registered under the number KRS The core business of the parent company by PKD Z was "Manufacture of computers and peripherals." In accordance with IAS 27 Consolidated financial statements must include all subsidiaries. b) Indication of the duration of the issuer and units of the group, if it is marked The parent company ELZAB S.A. and other entities of the Group Elzab have been created for an indefinite period with the exception of the Company governed by Greek law ELZAB HELLAS S.A. which was created 50 years. c) Indication of the periods for which is presented consolidated financial statements and 3

7 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) comparative consolidated financial data The report presents the financial statements prepared on 30 th June ; including: Statement of financial position as of 30 th June and 31 st December 2016 Statement of comprehensive income for the period from 1 st January to 30 th June and for the comparable period from 1 st January 2016 to 30 th June 2016; Statement of Cash Flows for the period from 1 st January to 30 th June and for the comparable period from 1 st January 2016 to 30 th June 2016; Statement of changes in equity for the period from 1 st January to 30 th June and for the comparable period from 1 st January 2016 to 30 th June 2016; The financial year of the Group and subsidiaries is the calendar year. All ELZAB Group entities prepare financial statements for the same balance sheet date. d) approval of the financial statements for publication On 17 th August the Management Board of ZUK ELZAB S.A. adopted a resolution approving the extended consolidated financial statements for the first half of for publication. e) Composition of the Management Board and the Supervisory Board As of the date of publication of the financial statements for the first half of, the Management Board of the Company consisted of: Krzysztof Urbanowicz President of the Management Board Jerzy Popławski Vice President of the Management Board The Company's proxy at the date of publication of the report for the first half of is: Małgorzata Kaczmarska - Chief Accountant Dariusz Bizacki - Director of the Department As of the date of publication of the financial statements for the first half of, Supervisory Board of the Company consisted of: Grzegorz Należyty - Chairman of the Supervisory Board Jarosław Wilk - Deputy Chairman of the Supervisory Board Andrzej Wawer - Secretary of the Supervisory Board Jerzy Kotkowski - Member of the Supervisory Board Jacek Rodak - Member of the Supervisory Board Kajetan Wojnicz - Member of the Supervisory Board Changes in the composition of the Management Board and the Supervisory Board of ELZAB S.A. On 30 h June 2016, at the meeting of the Supervisory Board of ELZAB S.A. submitted the resignation from the position of President of the Management Board of ELZAB S.A Mr. Janusz Krupa. Moreover, on 30 th June, as of the approval of the financial statements of the company for the financial year 2016, the term of the current composition of the Management Board ended. Accordingly, at the meeting on 30 th June, the Supervisory Board of ELZAB S.A., based on the resolution no. 11/06/, 4

8 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) decided to set the number of members of the Management Board to two persons and appointed Mr. Krzysztof Urbanowicz to the post of President of the Management Board for the 3-year term of office. and Mr. Jerzy Popławski to the position of Vice-President of the Management Board (CR. No. 13/). Pursuant to Resolution No. 19/ of 30 th June, The procuration was granted to Mr. Dariusz Bizacki - the Director of the Department, including the power to perform actions together with a member of the Management Board. The prosecutor has been granted since 3 rd July (CR. No. 18/). On 30 June Mr. Jacek Papaj resigned acting as the Member of Supervisory Board and Mr. Krzysztof Morawski resigned acting as the Vice-Chairman of the Supervisory Board. Accordingly, the Ordinary General Meeting of ELZAB S.A. appointed members of the Supervisory Board of Jacek Rodak, Jerzy Kotkowski and Kajetan Wojnicz. Mr. Jacek Pulwarski ceased to act as a Member of the Supervisory Board upon the approval of the financial statements of the Company for the financial year 2016, on the basis of the resignation submitted on , as reported by the Company in the current report (RB. No. 5/). f) Indication of whether the consolidated financial statements have been prepared on the assumption that the issuer and its capital group in the foreseeable future and that there are no circumstances indicating a threat to the continuation of activities The consolidated financial statements for the first half of has been prepared on the assumption that all the entities of the Group. At the reporting date there are no circumstances indicating a threat to continued activity. g) Indication of whether the presented consolidated financial statements and comparative consolidated financial adjustments arisingthe claims of the bodies authorized to audit of the consolidated financial statements and the financial statements for the years for which the present consolidated financial statements and comparative consolidated financial data Independent auditor's report on the review of the abbreviated report of ELZAB Group and ELZAB S.A. 1 st January 2016 to 30 th June is without reservations. h) Summary and explanation of differences between data disclosed in the financial statements and comparative financial data and previously prepared and issued annual financial statements There were no differences. The transformation of the consolidated financial statements. The consolidated financial statements were not subject to change and no adjustments were made as a result of changes in accounting policies. i) Statement of compliance 5

9 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) This consolidated financial statement have been prepared in accordance with the International Financial Reporting Standards, as adopted by the European Union (EU). Amendments to existing standards and interpretations applied for the first time in the company's financial statements / group for. The following amendments to existing standards and interpretations issued by the International Accounting Standards Board (IASB) and approved for use in the EU enter into force for the first time in the financial statements of the Group ELZAB for. New standards and changes to existing standards that have already been issued by the IASB and approved by the EU but have not yet entered into force. While approving this financial statement, the following new standards have been issued by the IASB and approved for use in the EU but have not yet entered into force: IFRS 9,,Financial instruments - Approved by the EU on 22 nd November Effective for annual periods beginning on or after 1 st January 2018; IFRS 15,,Revenue from contracts with customers and amendments to IFRS 15 "Effective date of IFRS 15" - approved in the EU on 22 nd September Effective for annual periods beginning on or after 1 st January 2018; New standards and changes to existing standards that have already been issued by the IASB but not yet approved for use in the EU. IFRS as adopted by the EU do not differ significantly from the regulations issued by the International Accounting Standards Board (IASB), with the exception of the following new standards and amendments to standards which, according to the publication date of the financial statements have not yet been approved for use in EU (following the date of entry into force refer to the standards in the full version): IFRS 14,,Postponed balances from governed activity - Effective for annual periods beginning on or after 1 st January 2016; The European Commission has decided not to initiate the process of approval of this interim standard for use in the EU until a final version of IFRS 14, MSSF 16 Leasing - Effective for annual periods beginning on or after 1 st January 2019; IFRS 17 "Insurance Contracts" - Effective for annual periods beginning on or after 1 st January 2021; Amendments to IFRS 2 "Share-based Payments" - Classification and measurement of share-based payment. Effective for annual periods beginning on or after 1 st January 2018; Amendments to IFRS 4 "Insurance Contracts" - Application of IFRS 9 "Financial Instruments" and IFRS 4 "Insurance Instruments". Effective for annual periods beginning on or after 1 January 2018 or at the time of application IFRS 9 "Financial Instruments" " for the first time), Amendments to IFRS 10,,Consolidated Financial Statements ; and IAS 28,,Investments in associates and joint ventures Sale or transfer of assets between an investor and an associate or a 6

10 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) joint venture and subsequent changes. The date of entry into force of the change has been postponed until the end of the research on the equity method. IFRS 15,,Revenue from contracts with customers amendments to IFRS 15 "Effective date of IFRS 15" - Effective for annual periods beginning on or after 1 st January 2018; Amendments to IAS 7 "Statement of Cash Flows" - Initiative in relation to disclosures. Effective for annual periods beginning on or after 1 st January ; Amendments to IAS 12 "Income Taxes" - Recognition of deferred income tax on unrealized losses. Effective for annual periods beginning on or after 1 st January ; Amendments to IAS 40 "Investment Property" - Transfer of Investment Properties. Effective for annual periods beginning on or after 1 st January ; Amendments to various standards,,improvements to IFRS (Series ) - ( IFRS 1, IFRS 12, IFRS 28,)" - changes made under the procedures for annual amendments to focused primarily on resolving inconsistencies and clarifying wording. Amendments to IFRS 12 apply for annual periods beginning on or after 1 January, and amendments to IFRS 1 and IAS 28 apply to annual periods beginning on or after 1 January Interpretation IFRIC 22 "Transactions in Foreign Currencies and Advance Payments" Effective for annual periods beginning on or after 1 January IFRIC 23 "Uncertainty in Income Tax Accounting" Effective for annual periods beginning on or after 1 January The Company has not performed an analysis and is not able to assess the impact of the above changes on the financial statements if they were applied as at the balance sheet date. Besides the regulations adopted by the EU remains hedge accounting for financial assets and liabilities, whose principles have not been approved for use in the EU. According to estimates, application of hedge accounting for the portfolio of financial assets or liabilities pursuant to IAS 39 "Financial Instruments: Recognition and Measurement" would not have a significant impact on the financial statements, if applied as at the balance sheet date. j) description of the adopted accounting principles (policy), including methods of valuation of assets and liabilities and revenues and costs, determining the financial result and the method of preparation of the consolidated financial statements and consolidated comparable data, The consolidated financial statements of the ELZAB Group for the first half of have been prepared under the historical cost convention, except for the revaluation of certain fixed assets and financial instruments. The main accounting policies are summarized below. The consolidated financial statements for the first half of 7 and the first half of 2016 have been prepared in accordance with the principles of IFRS, as adopted by the European Union. 7

11 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) The financial statements also take into account the requirements of the Regulation of the Minister of Finance dated 19 th February On current and periodic information published by issuers of securities and conditions for recognizing as equivalent information required by laws of a non-member state (Journal of Laws of Pos. 133). ELZAB S.A., as the parent company, subsidiaries for accounting books, accounting policies and the preparation of separate financial statements apply the rules set out in IAS / IFRS as approved by the EU. Segment Reporting The primary reporting format of Group ELZAB used for segment is business segment while geographical segment is a segment complementary. A business segment is a distinguishable component of an entity in which the distribution of goods or services, which is subject to risks and characterized by returns on investment other than other business segments. The activities of Group's ELZAB is homogeneous, conducted in the production and sale of electronic equipment and goods purchased for resale. Sale of materials is strictly supplement the basic offer of ELZAB Group. Provided services include mainly maintenance services and training related to the commercial offer of the Company. ELZAB Group's products offered for sale are characterized by a similar manufacturing process. In terms of sales are used similar methods of distribution and sale of services to a specific audience. Therefore, the Group ELZAB all its activities are classified into one business segment - electronic, within which distinguishes between fiscal devices, scales and automatic identification devices and systems sales, services, IT and other equipment. A geographical segment is a distinguishable component of an entity's operations by which products or services in a particular economic environment that is subject to risks and is characterized by returns on investment different from those applicable to other areas operating in different economic environments. Group ELZAB operates mainly in Polish, which regions because of their proximity, similar economic conditions and scope of risks to be considered largely a homogeneous. For management purposes, it is defined by the value of sales realized on the territory of the Polish and foreign markets. Critical accounting estimates and assumptions Accounting The preparation of financial statements in conformity with IFRS requires the use of certain accounting estimates and assumptions as to future events that may affect the value of the assets and current liabilities in future financial statements. Estimates and assumptions are continually evaluated and are based on management's best knowledge, historical experience and expectations as to future events that in a given situation seem justified. However, they may include a margin of error and the actual results may differ from those anticipated. Error Correction Errors may relate to the recognition, measurement, presentation or disclosure of elements of financial statements. 8

12 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) Errors detected at the stage of preparation of financial statements, the Company revises the financial statements. Errors detected in subsequent periods are corrected by adjusting comparable data presented in the financial statements in the period in which the error was detected. Company corrects errors of previous periods using the retrospective approach and retrospective restatement, as far as is practicable, guided by the principle of materiality at the same time. Costs of the external financing Costs of the external financing are recognized in the statement of comprehensive income in the period in which they are incurred. If the borrowing costs are directly attributable to the acquisition, construction or production of a qualifying asset are capitalized to them as part of the purchase price or cost of the asset (IAS 23). 2. Fixed assets Tangible fixed assets include tangible and expenditure on fixed assets under construction, which are held for use in the production, supply of goods and services, in order to lease to other entities under lease agreements or for administrative purposes with an expected period of use longer than 1 year, which is expected by the Company to generate a future economic benefit. Expenditure on assets include capital expenditures as well as advance payments for future deliveries of machinery, equipment and services related to the construction of fixed assets. For determining the carrying amount and the determination of depreciation and downs due to impairment of tangible fixed assets, the provisions of IAS 16 (Property, Plant and Equipment) and IAS 36 (Impairment of Assets). Tangible assets include: buildings, structures machinery and equipment means of transport other fixed assets land machinery and equipment under construction requiring assembly and fixed assets under construction Fixed assets and fixed assets under construction at the time of entry as assets are valued at purchase price or production cost. The purchase price is the purchase price of the vendor invoice plus the costs associated with the purchase until the asset is to be used (as: Costs of transportation, loading, unloading, insurance, transport, assembly, installation and commissioning, notary fees, duties and taxes). For the cost of production is considered a value, at cost, used to generate the asset tangible assets, external services, payroll and other costs attributable to the value of the produced asset incurred until the asset is put into use. To the initial value also includes reasonable part of borrowing costs in accordance with the guidelines of IAS 23. The upgrade costs are included in the carrying value of fixed assets when it is likely that this account will 9

13 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) generate economic benefits for the Company, and the costs incurred for the modernization can be reliably measured. All other expenditure on repairs and maintenance of fixed assets relates to the financial result in the reporting periods in which they were incurred. Land is not depreciated. Fixed assets are depreciated over their useful economic life. Depreciation is calculated on a straight-line basis, from the month following the month in which the asset is put into use. At the balance sheet fixed assets are stated at acquisition or production cost less any accumulated depreciation and any write-downs made in respect of impairment. The following time ranges have been adopted as the estimated useful lives of tangible assets: buildings, structures: years, machinery and equipment: 2-20 years, means of transport : 2,5 8 years, other fixed assets : 2-10 years ELZAB S.A. granted by administrative right of perpetual usufruct of land presents off-balance sheet, since the content of the decision is not provided for a condition of transfer of title to the Company. In the case of acquisition of such rights on the secondary market, they are presented as intangible assets and amortized over their expected usage. Based on the principle of materiality regulated on the basis of IAS 1 and on the basis of the accounting policies set out in point. 2,, fixed assets in use for longer than one year ': to depreciate at 100% when they are submitted for use, if the initial value is higher than 1000 pln and lower than 3500 pln; refers to 100% of the costs of materials when they are submitted for use, if the initial value does not exceed 1000 pln. Records Quantitative these assets is carried out on the account off-balance sheet; Depreciation of fixed assets is recognized in the costs of core activities except depreciation of leased space, which is recognized in other operating expenses. The Group reviews periodically, not later than the end of the financial year, verification of the useful lives of fixed assets, final value and depreciation methods and the consequences of changes in these estimates are taken into account in the next and subsequent financial years (prospectively). Fixed assets and fixed assets under construction are tested for impairment if there are indications of loss of value, and for fixed assets under construction during the period of their possible impairment is determined on each balance sheet date. The principles applied in determining the impairment is shown in a further paragraph devoted to this subject. The effects of impairment of fixed assets and fixed assets under construction are recognized in other operating expenses. Gains or losses arising from sale / liquidation of tangible fixed assets is defined as the difference between sales revenue and the carrying value of these items and are recognized in the statement of comprehensive income, respectively the balance as profit or loss on disposal in other income or expenses. Intangible assets include assets that have no physical form, are identifiable, remain under the control of the entity as a result of past events and from which predictions by the Company will achieve future 10

14 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) economic benefits. An intangible asset is recognized only if it is probable that the economic benefit will flow to the enterprise and the cost of the asset can be measured reliably. In the future economic benefits derived from an intangible asset may include revenue from the sale of products or services, cost savings or other benefits resulting from the use of the asset by the entity. To determine the value at initial recognition, determining depreciation and updating the provisions of IAS 38 (Intangible Assets) and 36 (Impairment of Assets). Intangible assets include: intangible assets arise from the Group's in-house development work, the following conditions: - It is possible to complete the development work so as to be suitable for use or sale - There are provable evidence intention to complete the development work and its use or sale - Development work will be able to be used or sold - The way in which development work will generate probable future economic benefits (existence of a market for products arising due to the development work or on the same development work), - Available technical and financial resources necessary to complete the development work and its use or sale - It is possible to measure reliably the expenditure on development work. Above mentioned criteria apply to the initial investment and the costs incurred at a later date. - other intangible assets - copyrights and related property rights, rights to inventions, patents, trademarks, utility models and licenses, know-how. Expenditure on research and development do not meet / conditions are recognized in the weight of the current period. Intangible assets at the time of entry as assets are valued at production cost or at cost. For the cost of production is any expenditure that can be directly subordinated necessary to create, produce and prepare the asset for use in the manner intended by management. The production costs Intangible assets include: materials and services used or consumed in generating the intangible asset, the cost of employee benefits, reasonable borrowing costs and other costs directly attributable to bringing the asset into use in accordance with its intended use. The purchase price is the purchase price taking into account the import customs duties, taxes included in the price of non-deductible and other expenses related to the preparation of an intangible asset for use in accordance with its intended use. At the balance sheet date, intangible assets are shown at cost or at cost less any accumulated depreciation and any write-downs made in respect of impairment. Intangible assets are amortized on a straight line from 2 to 10 years for development costs and other intangible assets. Amortization of intangible assets is recognized in the current operating costs of the Group's core. The Group reviews periodically, not later than the end of the financial year, verification of the useful lives of intangible assets, final value and depreciation methods and the consequences of changes in these estimates are taken into account in the next and subsequent financial years (prospectively). In the case of goodwill not subject to amortization. Goodwill is subject to annual impairment tests. Writeoffs of goodwill are recognized in the Group's financial costs and can not be reversed. Intangible assets with a value less than 3500 PLN, due to the insignificance, can charge the cost of the 11

15 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) current period or may be redeemed one time. Impairment of fixed assets and intangible assets apart from goodwill. At each balance sheet date, the Group reviews the carrying values of its fixed assets and intangible assets to determine whether there is any indication of impairment. This happens when the Company obtains sufficient certainty that the asset will not bring the expected future economic benefits and will significantly lower. If any such indication exists, the recoverable amount of the asset in order to determine the potential impairment loss. The recoverable amount is the higher of an asset's fair value less costs to sell or value in use. If the recoverable amount is lower than the carrying amount of an asset (or cash-generating unit), the carrying amount of the asset or unit is reduced to its recoverable amount. An impairment loss is recognized immediately as an expense in the period in which it occurred, except if the asset was revalued (when the impairment loss is treated as a revaluation decrease). Write-downs are charged to other operating expenses of the period when the impairment is identified, no later than the end of the financial year. If the Group obtains sufficient assurance that cessation of the reasons for which recognized an impairment loss of an asset or an intangible asset, it reverses the previous revaluation charge in part or in full by recognizing other operating income. Leasing A lease agreement, under which substantially all the risks and rewards incidental to legal ownership are transferred to the Company, is classified as finance lease. The subject of a finance lease is recognized as assets at the inception of the lease at the lower of the two amounts: the fair value of the leased asset or the present value of the minimum lease payments. Each lease payment shall be apportioned between finance cost and the amount that reduces the balance of the liability, in such a way as to maintain a constant rate of interest on the remaining balance of the liability. The interest element of the lease payment is recognized as finance cost in the profit and loss statement over the lease term in such a way as to obtain a constant periodic rate of interest for each period on the remaining balance of the liability. A lease agreement, under which a significant portion of risks and rewards incidental to legal ownership are retained by the lessor, is classified as operating lease. Lease payments under operating leases net of any incentives received from the lessor (financing) are accounted for in expense on a straight-line basis over the lease term. 3. Financial assets The Group classifies its financial assets into the following categories: loans and receivables, financial assets held to maturity, financial assets at fair value through profit or loss of income and financial assets available for sale. The classification depends on the purpose of acquisition of the investment. Classification is made on initial recognition, and subsequently subjected to verification on each balance sheet date, if it is required or permitted by IAS

16 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) Financial assets at fair value through profit or loss, This category includes two sub-categories: - Financial assets held for trading. A financial asset is classified in this category if acquired principally for the purpose of selling in the short term or is a derivative not constituting a hedging instrument, - Financial assets designated upon initial recognition as at fair value through profit or loss, if permitted by IAS 39. Assets in this category are classified as current assets if they are held for trading or are expected to be realized within 12 months of the balance sheet date. Loans and receivables Loans and receivables are non-derivative financial assets with fixed or determinable payments, that are not quoted in an active market. They arise when the Company provides money, supplies goods or services directly to a debtor with no intention to classify these receivables as financial assets at fair value through profit and loss statement. Loans and receivables are included in current assets, except for those whose maturities are greater than 12 months after the balance sheet date. Loans and receivables with maturities greater than 12 months after the balance sheet date, are classified as fixed assets. Loans and receivables are recognized in the balance sheet as: trade and other receivables. Investments held to maturity Investments held to maturity are non-derivative financial assets with fixed or determinable payments and fixed maturities that the Company intends and is able to hold to maturity. Available -for - sale financial assets Available-for-sale financial assets are those non-derivative financial assets, that are designated as available for sale or are not classified into any of above categories. This category includes shares in related entities. Available-for-sale financial assets are included in fixed assets, unless the Company intends to dispose of the investment within 12 months after the balance sheet date. Purchases and sales of investments are recognized on the transaction - ie. The date on which the Group commits to purchase or sell the asset. Investments are initially recognized at fair value plus transaction costs, except for investments in the categories measured at fair value through profit or loss of income, which are initially recognized at fair value without transaction costs. Investments are excluded from the books when the rights to receive cash flows from the financial assets have expired or have been transferred and the Group has transferred substantially all risks and rewards of ownership. Financial assets available for sale and financial assets at fair value through profit or loss are measured at initial recognition at fair value. Financial assets available for sale, if it is not possible to determine their fair value, and they do not have a fixed maturity are measured at cost less accumulated impairment losses. Loans and receivables and financial assets held to maturity are measured at amortized cost using the effective interest rate. The effects of the valuation of financial assets at fair value through profit or loss are recognized in profit or loss of the period in which they arise. The effects of the valuation of financial assets available for sale are recognized in other components of comprehensive income except for impairment losses and the gains and losses from foreign exchange differences that arise on monetary assets. At the time of removal of the accounting records of financial assets are "available for sale", the accumulated gains and losses previously 13

17 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) recognized in other items of comprehensive income is recognized in profit or loss. The fair value of investments in active markets are based on current bid prices. If there is no active market for financial assets (or if the securities are not quoted), the Group establishes fair value by using valuation techniques that include the use of recent transactions under normal market conditions, a comparison to other instruments that are substantially the same, analysis discounted cash flow, option pricing models and other techniques / valuation models commonly used in the market, tailored to the specific situation of the issuer. The Group assesses at each balance sheet date whether there is objective evidence that a financial asset or group of financial assets is impaired. If such evidence exists for financial assets available for sale, the cumulative loss recognized in other items of comprehensive income - measured as the difference between the acquisition cost and the current fair value, less any impairment loss on that financial asset previously recognized in profit or loss - is removed from other components of comprehensive income and recognized in profit or loss. The reversal of an impairment loss is recognized if in subsequent periods after the impairment, the fair value of financial instruments has increased as a result of events occurring after recognition of the loss. Losses from impairment recognized in the income statement on equity instruments are not reversed in correspondence with the financial result. If there are indications of impairment of unquoted equity instruments, which are valued at acquisition cost (due to the inability to reliably determine the fair value), the impairment loss is determined as the difference between the asset's carrying value and the present value of estimated future cash flows discounted at the current market return rate of similar financial assets. Write-off such never reversed. If there is evidence of possible impairment of loans and receivables or investments held to maturity are measured at amortized cost, the impairment loss is determined as the difference between the asset's carrying amount and the present value of estimated future cash flows discounted at the original effective interest rate for these assets (ie. the effective interest rate computed at initial recognition for assets based on a fixed rate and the effective interest rate determined at the time of the last revaluation of assets based on a variable interest rate). An impairment loss is recognized in profit or loss. Impairment loss is reversed if in subsequent periods, the impairment loss decreases and the decrease can be attributed to events occurring after recognition. As a result of the reversal of write-down the carrying value of financial assets may not exceed the amortized cost which would be established if not previously recognized impairment loss of value. Reversal of impairment loss is recognized in profit or loss. 4. Assets Inventories Inventories include assets held for sale in the ordinary course of business, that are in the process of production for such sale and which have the form of materials or supplies to be consumed in the production process or in the rendering of services. Inventories include materials, goods, work in progress and finished products. Inventories are valued at purchase price or production cost not higher than net selling prices. The purchase price or production cost of inventories includes all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. 14

18 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) The costs of purchase of inventories comprise the purchase price, the cost of taxes and costs of transport, handling and other costs directly attributable to the acquisition of finished goods, materials and services. In determining the cost of the purchase is deducted trade discounts, rebates and other similar items. Finished products and work in progress are valued at actual cost. The costs of conversion of inventories include costs directly related to the units of production, such as direct labor and material costs. For the cost of production consists of the systematic allocation of fixed and variable production overheads that are incurred in converting materials into finished goods. Fixed indirect production costs are those indirect costs of production that remain relatively constant regardless of the volume of production, such as depreciation, maintenance of buildings and plant equipment and production (departmental) the costs of management and administration. Indirect variable costs of production are those indirect costs of production that vary directly, or nearly directly, with the volume of production, such as indirect materials and labor. To establish the costs of disposal of inventories the Group uses the weighted average method. At the end of the reporting period inventory valuation is performed with the principles of prudence. Impairment losses resulting from prudent valuation and impairment of overdue items are included in the core business. Inventories of goods, materials and finished products until September 2012 were taken write-down, according to an individual assessment of the possibility of their use or resale, and the price realizable at the balance sheet date. Since September 2012 the Company applies the principle of binding period of origin of the supply of a fixed % revaluation. Statistical inventory revaluation is performed on a quarterly basis. Trade and other receivables Trade receivables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest method less impairment losses. In the case of receivables with a maturity of 12 months the discount effect is skipped. Other receivables are valued at the amount due. The determination of impairment losses on receivables occurs when there is objective evidence that the Group will not be able to collect all amounts due according to the original terms of receivables and overdue period is over 150 days. The Group makes impairment charges for specific contractors after their prior analysis taking into account the circumstances of the reality of the payment. The Group may also make collective revaluation allowances numerous but small receivables. The decision to impose the write-down of receivables made by the Board at the request of Credit Manager. Impairment of receivables is presented in the item cost of sales. Solution of impairment results in a decrease in cost of sales. Presentation of impairment losses in the statement of comprehensive income as per account balance respectively in the costs of basic sales. Cash Cash includes assets in the form of domestic and foreign currency on hand and in bank accounts. Domestic cash recognized at nominal value. Exchange differences arising from the valuation of the balance sheet date cash denominated in foreign currencies are recognized as follows: - Positive exchange rate differences are included in financial income, - Foreign exchange losses are included in financial expenses. Cash at bank accounts are stated inclusive of interest, which are recognized in financial income. 15

19 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) Short-term prepayments Group reports prepayments if the expenditures incurred relate to periods following the period in which they are incurred. Fixed assets held for sale The Group classifies non-current assets held for sale (or group of assets for disposal) as held for sale (IFRS 5 Assets held for sale) if it considers that their carrying amount will be recovered through a sale transaction rather than through continuing use in its business activities. This condition is deemed fulfilled when the sale is highly probable and the asset (asset group) is available in its current state for immediate sale. Classifying fixed assets for sale implies that the management of the Company to complete the sale within one year from the date of reclassification of assets. Extending the time period needed for the finalization of the sales transaction does not preclude the classification of the asset (or disposal group) as held for sale if the delay is caused by events or circumstances beyond the individual's control and where there is sufficient evidence that the entity is determined to carry out his plan sales the asset (or disposal group). In relation to assets held for sale cease to be depreciated. The Group measures non-current asset (or group of assets for sale) classified as held for sale at the lower of carrying amount or fair value less costs to sell. In the statement of financial assets held for sale (or disposal group) is presented in a separate item of current assets. If the assets for sale involve liabilities which I transferred in the transaction, including the disposal group, these liabilities are presented as a separate item in current liabilities. 5. Equity The Group's equity consists of: - share capital is recognized in the amount shown under the Statutes and the National Court Register, capital - supplementary capital in an amount equivalent to reserves of the parent company is divided into two categories: - capital from the issuance of shares above their nominal value - on this capital are transferred surplus achieved in the issue, net of costs incurred in connection with the issuance of shares - capital - is created from appropriations of profit for subsequent financial years in the amount and according to the principles set out in the Code of Commercial Companies, reserve capital - created on the objectives set by the Group, own shares - own shares to the value purchased by the parent company of its own shares for redemption and for resale or other purpose related to the implementation of the strategy of the Company (the value of shares purchased is deducted from the Company's equity), exchange differences arising from translation of financial statements of consolidated entities preparing financial statements in a currency other than the functional currency of the parent company, retained earnings, which include: - undistributed profit or uncovered loss from previous years (accumulated profit / loss from previous years) - the result of the current financial year. 16

20 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) 6. Liabilities and provisions for liabilities Provisions The Group establishes provisions when there is a current legal or constructive obligation arising from past events, that a likely liability to pay. There must be a greater likelihood that the outflow of funds will be required to settle the obligation, than that will not be required and if its size can be reliably estimated. The costs of reserves, depending on their type, are shown in the relevant cost categories. If it is probable that some or all of the economic benefits required to settle a provision can be recovered from a third party, the liability is recognized as an asset if the probability of recovering that amount is sufficiently high and can be measured reliably. The provisions are reviewed at the balance sheet date to adjust the estimates to reflect the current knowledge on that day. Provisions for employee benefits The Company's employees are entitled to payment of the benefits after the acquisition of certain rights to these benefits. Provisions for retirement benefits are estimated at 1 monthly check. Estimates of pension payments made on behalf of the Company's independent actuary or employees of the Company. In addition, the Company creates a provision for accrued leaves whose value is estimated based on the rules for determining the equivalent for unused annual leave. Provisions for employee benefits are recognized in the cost of core business. The company also estimates a provision for an annual premium of the Board and quarterly bonuses for the employees covered by the Program Management by Objectives. Management bonus is discretionary, depending on the decision of the Supervisory Board and shall be paid upon approval of the annual report of the Company. Payment of quarterly bonus for employees is dependent on the achievement of the objectives of the company and individual goals. Provision for bonuses of the Management Board and quarterly bonuses of employees is recognized in the costs of core activities. Bank loans Bank loans are recognized at the fair value of the proceeds, less costs directly related to their acquisition. In subsequent periods, loans are measured at amortized cost using the effective interest rate. Irrelevant discount amount are not included in the books and in the financial statements. Group companies as longterm loans treat loans whose repayment falls into a period of more than 12 months after the balance sheet date. Short-term liabilities Short-term liabilities include liabilities whose maturity from the date of the balance sheet date falls within a period shorter than 12 months. Liabilities trade payables are recognized in the balance sheet, regardless of their maturity, as short-term liabilities. Short-term liabilities include in particular liabilities Trade payables, loans and borrowings, wages, taxes, duties, insurance and other benefits. Financial liabilities, including trade payables are recognized initially at fair value and subsequently measured at amortized cost using the effective interest rate method. In the case of liabilities with a maturity of 12 months the discount effect is skipped. 17

21 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) Any late payment fees are recognized upon receipt of notes from suppliers. Other liabilities are recognized at the amount due. Special funds include the Social Fund. This item is presented on balance, in conjunction with granted from this fund loans and cash to the Social Fund. Deferred revenue Deferred revenue includes accrued but not yet received income benefits, which are recognized as income on a cash basis. 7. Revenue recognition Revenue from sales is recognized at the fair value of the consideration received or receivable, net of expected discounts, customer returns and similar reduction in the value-added tax VAT and other salesrelated taxes. Revenues from sales of products, goods and materials are recognized when all the following conditions: transfer from the company to the buyer the significant risks and rewards of ownership of the goods / products / materials, assignment by the Company management functions to a degree associated with ownership and effective control over the sold items, the possibility of making a reliable estimate of the amount of revenues, it is probable that the economic benefits associated with the transaction, the possibility of reliable valuation of costs incurred or expected in connection with the transaction Dividend income is recognized when the right to receive payment. Interest income is recognized on an accrual basis using the effective interest rate, if the gain is not doubtful. 8. Principles of consolidation Subsidiaries and non-controlling interest Subsidiaries are all entities in respect of which ELZAB SA It has the power to govern the financial and operating policies, generally accompanying a shareholding of a majority of the voting rights. When assessing whether ELZAB SA controls another entity, the existence and effect of potential voting rights that are currently exercisable or convertible. The financial results of subsidiaries acquired or sold during the year are included in the consolidated financial statements from / until their effective acquisition or disposal. Where appropriate, the financial 18

22 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) statements of subsidiaries are adjusted in order to standardize the accounting principles applied by the entity with the principles applied by the other Group entities. All transactions, balances, income and expenses between affiliates included in consolidation are eliminated in full on consolidation. Non-controlling interests are presented separately from the Group's equity. Non-controlling interests may be initially measured either at fair value or in proportion to the share of fair value of net assets acquired. Selecting one of the / w method is available for each business combination. In subsequent periods the value of non-controlling includes the value recognized initially adjusted for changes in the value of the equity in proportion to their shareholding. Total income is allocated to non-controlling interests even if it results in a negative value of these shares. Changes in the share in the subsidiary does not cause loss of control are recognized as equity transactions. The book values of the Group's share and non-controlling interests are appropriately modified to reflect changes in the structure of the share. The difference between the value of which is modified value of the minority interest and the fair value of payments received or transmitted is recognized directly in equity of the Group. In the event of loss of control over a subsidiary, the profit or loss on disposal is calculated as the difference between: (i) the aggregate fair value of the consideration received and the fair value of units remaining in the Group and (ii) the book value of assets (including goodwill), liabilities and minority interest. The amounts recognized in relation to the divested unit, in other comprehensive income are reclassified to the statement of comprehensive income. The fair value of shares in the unit remain in the Group after the sale, is considered the initial fair value for their subsequent recognition in accordance with IAS 39, or the initial cost of investments in associates or joint ventures. Goodwill arising on the acquisition is determined as of the acquisition date surplus of the sum transferred payments, the value of non-controlling interest and the fair value of previously held interests in the acquiree over the Group's interest in the net fair value of the identifiable assets, liabilities and contingent liabilities recognized at the acquisition date. In the event of a negative value, the Group makes a review of the determination of fair values of individual components of net assets acquired. If the result of the review is still the value is negative it is immediately recognized in the financial result. Goodwill is initially recognized as an asset at cost and subsequently measured at cost less accumulated loss due to impairment. For the purpose of impairment testing, goodwill is allocated to each Group centers generating cash flows that should benefit from the synergies of the merger. Units generating cash flows to which goodwill is allocated, are tested for impairment annually or more frequently if it can be reliably assumed that the impairment occurred. If the recoverable amount of cash-generating unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount of goodwill allocated to this resort, and then to the other assets of the unit pro rata to the carrying value of the individual assets of the unit. An impairment loss recognized for goodwill is not reversed in a subsequent period. On disposal of a subsidiary or a jointly controlled entity on its goodwill taken into account when calculating the profit / loss on disposal. Shares in subsidiaries in separate financial statements Due to the fact that the entities whose shares are held by ELZAB S.A. there is no active market, 19

23 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) investments in subsidiaries and associates are valued at acquisition cost less accumulated impairment losses. At each balance sheet date an assessment is made whether there is objective evidence that the investment is impaired, by comparing the net asset or part of the net assets of the value of any shares. Impairment loss of investments financial costs. In the case of cessation of the reason for which a write-off of impairment losses, the equivalent of the whole or part of the previous revaluation charge increases the value of investments and is recognized as financial income. Subsidiaries are fully consolidated from the date control over them ELZAB S.A. They cease to be consolidated from the date that control ceases. The Company may decide not to consolidate the subsidiary and a decision must be taken after taking into account the criteria of IAS 27 and SIC 12 concerning the control in terms of the possibility of direct financial and operating policies of the entity and other conditions that determine the ability to direct decision-making unit to obtain benefits. An associate, is consolidated using the equity method. The consolidated balance sheet is presented in fixed assets in line - "Long-term financial assets", while in the consolidated balance sheet in fixed assets in the line "Investments in subsidiaries are valued using the equity method". 9. Foreign currency transactions and valuation of items denominated in foreign currencies Functional currency and presentation currency Items included in the Group's financial statements are measured in the currency of the primary economic environment in which the Group companies operate (in functional currency). Economic transactions are recognized in PLN, EURO in the case of ELZAB HELLAS S.A and Hungarian forint (HUF, until the sale of the shares held by MICRA METRIPOND KFT), which constitute the functional currency. The currency of presentation is PLN. Items in the financial statements are presented rounded to the full thousand zlotys. There may be a case of feeding data with greater accuracy. Transactions and balances Transactions denominated in foreign currencies are translated on initial recognition at the functional currency using the average exchange rate announced by the bank with the last working day preceding the day of the transaction. At the balance sheet denominated in foreign currency monetary items are translated at the closing rate (closing rate - this is the average rate of the Bank effective as at the valuation date). Assets and liabilities measured at fair value and denominated in foreign currencies are valued at the exchange rate prevailing on the date of determination of fair value. Non-monetary items are valued at historical cost. Gains and losses from foreign exchange differences resulting from the settlement of foreign currency transactions and assets and liabilities denominated in foreign currencies are recognized in the statement of comprehensive income. On consolidation, the assets and liabilities of foreign operations are translated into the Polish currency at the average NBP exchange rate prevailing at the balance sheet date. Revenues and expenses are translated using the average rate of the average NBP exchange rates on the last day of each month of the reporting period. Equity is translated at the rate of acquisition of capital. For conversion of items in the statement of cash flows The Group applies the average exchange rate 20

24 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) announced by NBP at the end of the reporting period, including the positions of the change in inventories, receivables, provisions and liabilities are translated at the appropriate average exchange rate announced by the National Bank of Poland at the end of the current reporting period and at the end of the comparable reporting period and positions arising from the statement of comprehensive income such as interest and other financial expenses the average exchange rate announced by the NBP on the last day of each month during the reporting period. 10. Principles of preparation of the statement of comprehensive income ELZAB S.A. prepares the consolidated statement of comprehensive income by function, in a one-piece, which includes all the components of total income. In the statement of comprehensive income is separated continuing operations and discontinued operations. The net financial result is composed of: - as a result of the sale - result from other operating activities - as a result of financial operations,- - mandatory burden the financial result of the income tax from legal entities - deferred income tax. Cost of products sold shall be adjusted on the result of renovation of stocks of finished products. Value of goods and materials takes into account the results from the revaluation of inventories of goods and materials. The result of updating receivables adjusts the costs of sales. In the statement of comprehensive income's results-it presents itself: in other operating profit or loss on disposal of fixed assets, financing activities: - gain or loss on the disposal of investments respectively in financial income or expenses - surplus of foreign exchange gains or losses in other financial income - surplus of foreign exchange losses over gains in other financial expenses. 11. Principles of preparing the statement of cash flows The Company prepares its consolidated statement of cash flows using the indirect method. In the cash flow statement is used in the following breakdown of activities: - Operating activities, which includes sales of products, goods, materials and services. It includes all activities which aim to make a profit. The value of net cash flows from operating activities is obtained by adjusting the financial result for items that did not result in cash flow and have been recognized in profit and the cash titles on other activities than operating activities. - Investing activities include: - cash spent on acquisition of tangible fixed assets and intangible assets - cash inflows from the sale of tangible fixed assets and intangible assets - expenditure of funds for the purchase of shares and bonds and securities - cash inflows from the sale or redemption of foreign shares and bonds - expenses related to loans, - repayment of loans with interest, - inflows from dividends received from stocks and shares and interest on cash deposits with long-term, 21

25 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) - Financing activities include: - cash inflows from bank loans taken out, - repayment of loans and servicing loans (interest) - cash inflows from the issue of shares - expenditure on the payment of dividends to shareholders. 12. Current income tax and deferred income tax Current income tax is calculated on the basis of tax result (tax base) for the year. Taxable income is determined based on the result of the balance sheet with the exception of taxable income and expenses which are deductible in the period other than the financial year and such income, which will never be subject to taxation, and such costs, which never will be a deductible. Load current income tax is calculated based on the tax rates applicable in a given year. Exchange rate differences for tax purposes are calculated according to the rules laid down in Article 15a of the Law on income tax from legal persons. Realized foreign exchange gains constitute taxable income and realized foreign exchange losses are the cost of the tax, depending on changes in foreign currency exchange rate. Deferred income tax is determined in respect of temporary differences between the carrying amounts of assets and liabilities and their tax value. Deferred income tax in the income statement and in the statement of comprehensive income is due to changes in state assets and provisions for income tax: deferred tax assets in the amount of expected future income tax deduction in respect of deductible temporary differences, which will result in a future reduction of the tax base and tax loss deduction, taking into account the precautionary principle. Deferred tax assets are recognized when it is probable that future profits will be taxable, which will enable the use of temporary differences. reserve of the income tax from the title postponed is established in the amount of income tax payable in the future in respect of taxable temporary differences, which will in the future increase the tax base. Taxable temporary differences exist if the book value of the assets exceeds their tax value and the book value of liabilities is lower than their tax base. Assets and deferred tax liabilities are recognized in the statement of financial position on balance. Verification of assets and the deferred tax assets is made at the end of each quarter of the financial year. The amount of assets and deferred income tax is determined by the rates applicable in the year of the tax obligation. Off assets with the obligations of the deferred tax assets is made in the report on the financial situation at the level of individual financial statements of subsidiaries. k) An indication of the average exchange rate of the zloty in the periods covered by the consolidated financial statements and comparative consolidated financial data in relation to the euro set by the Polish National Bank, in particular: - the exchange rate prevailing on the last day of each period - the average rate for the period, calculated as the arithmetic average of the rates prevailing on the last day of each month in the period, and in appropriate cases - calculated as the arithmetic 22

26 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) average of the rates prevailing on the last day of the period and the last day of the preceding period -the highest and the lowest exchange rate applicable in each period, To convert the selected financial data for the period, the following EURO exchange rates were assumed: - individual items of assets and liabilities from the balance sheet and cash flows for the first half of were converted according to EUR/PLN exchange rates published by the National Bank of Poland prevailing on the last day of the period: 30 th June - 4, individual items of Profit and Loss Statement and Cash Flow Statement were converted according to the rate being the arithmetic mean of average EUR/PLN exchange rates published by the National Bank of Poland prevailing on the last day of each month from 1 st January to 30 th June 4,2474. The highest rate adopted for the calculation of the average exchange rate in the first half of amounted to 4,3308 (31 st January ), while the lowest was 4,1737 (31 st May ). To convert the selected financial data for the comparable period, the following EURO exchange rates were assumed: - individual items of assets and liabilities from the balance sheet and cash flows for the first half of were converted according to EUR/PLN exchange rates published by the National Bank of Poland prevailing on the last day of the period: 31 st December , individual items of cash flows for the first half of 2015 were converted according to EUR/PLN exchange rates published by the National Bank of Poland prevailing on the last day of the period: 30 th June , individual items of Profit and Loss Statement and Cash Flow Statement were converted according to the rate being the arithmetic mean of average EUR/PLN exchange rates published by the National Bank of Poland prevailing on the last day of each month from 1 st January to 30 th June ,3805 The highest rate adopted for the calculation of the average exchange rate in the first half of 2016 amounted to (29 th January 2016 ), while the lowest was - 4,2684 (31 st March 2016 ). 23

27 Capital Group ELZAB Section I Introduction to the consolidated financial statements 30 th June (in thousand PLN) l) The main items of the financial statements and comparable financial data converted into euro in thousands of PLN in thousands of EUR SELECTED FINANCIAL DATA OF GROUP ELZAB First half First half First half First half of of 2016 of of 2016 Net revenue from sales Operating profit (loss) Gross profit (loss) Profit (loss) attributable to equity holders of the parent Net cash flows from operating activities Net cash flows from investment activities Net cash flows from financing activities Total net cash flow Annualized earnings (loss) per ordinary share (in PLN / EUR) 0,41 0,32 0,10 0,07 Annualized earnings (loss) per ordinary share excluding treasury shares (in PLN/ EUR) 0,44 0,35 0,10 0,08 in thousands of PLN in thousands of EUR SELECTED FINANCIAL DATA OF GROUP ELZAB 30 th June 31 st December 30 th June 31 st December Total assets Long-term liabilities Short-term liabilities Equity Share capital Total number of shares Number of shares adjusted for treasury shares Book value per share (in PLN / EUR) 4,93 4,96 1,17 1,12 Book value per share excluding treasury shares (in PLN / EUR) 5,32 5,34 1,26 1,21 in thousands of PLN in thousands of EUR SELECTED FINANCIAL DATA OF ELZAB First half First half First half First half of 2016 of of 2016 of Net revenue from sales Operating profit (loss) Gross profit (loss) Profit (loss) attributable to equity holders of the parent Net cash flows from operating activities Net cash flows from investment activities Net cash flows from financing activities Total net cash flow Annualized earnings (loss) per ordinary share (in PLN / EUR) 0,52 0,75 0,12 0,17 Annualized earnings (loss) per ordinary share excluding treasury shares (in PLN/ EUR) 0,56 0,81 0,13 0,18 in thousands of PLN in thousands of EUR SELECTED FINANCIAL DATA OF ELZAB 30 th June 31 st December June December 2016 Total assets Long-term liabilities Short-term liabilities Equity Share capital Total number of shares Number of shares adjusted for treasury shares Book value per share (in PLN / EUR) 5,23 5,14 1,24 1,16 Book value per share excluding treasury shares (in PLN / EUR) 5,64 5,54 1,33 1,25 24

28 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł STATEMENT OF FINANCIAL POSITION GROUP ELZAB (thousand PLN) ASSETS No. Notes As of 30th June As of 31st December 2016 A. Fixed assets Tangible fixed assets Note no Investment real estate Note no. 1a Goodwill Note no Intangible assets Note no. 2a Shares in subsidiaries are valued using the equity method Note no Shares in other entities Note no Long-term financial assets Note no. 3a Deferred tax assets Note no Long-term receivables and prepayments Note no B. Current assets Stocks Note no Short-term receivables and prepayments Note no. 5,3a Receivables from income tax Short-term financial assets Note no. 3a Cash and cash equivalents Note no. 7, 3a C. Non-current assets classified as held for sale Note no Total assets LIABILITIES No. Notes As of 30th June As of 31st December 2016 A. Equity Share capital Note no Surplus from sale of shares above their nominal value Own shares Note no Other reserves - own shares Reserves and spare Note no Foreign exchange differences on translation of subordinated entities Profit / loss from previous years and the current year, including: Cumulative gains / losses from previous years Profit / loss for the current year Equity attributable to non-controlling interest Note no B. Long-term liabilities Provisions Note no Deferred income tax Note no Long-term bank credits and loans Note no Long-term lease liabilities Note no. 14a Long-term financial liabilities Long-term liabilities and accruals Note no C. Current liabilities Provisions Note no Short-term bank credits and loans Note no Short-term lease Note no. 14a Short-term financial liabilities Short-term liabilities and accrual Note no Liabilities Income tax Total liabilities STATEMENT OF COMPREHENSIVE INCOME GROUP ELZAB (thousand PLN) OPTION SPREADSHEET No. Notes from 1st January from 1st January to 30th June 2016 to 30th June 2016 A. Revenues from sales of products, goods and materials Nota nr B. Costs of products, goods and materials Nota nr C. Gross profit / loss from the sale of (A-B) D. Cost of sales Nota nr E. General and administrative expenses Nota nr F. Net profit / loss from the sale of (C-D-E) G. Other income Nota nr H. Other expenses Nota nr I. Profit / loss from operating activities (F + G-H) J. Financial income Nota nr K. Financial costs Nota nr L. Share in losses / profits of associates M. Gross profit / loss (I+J-K-L) N. Income tax Nota nr O. Net profit / loss from continuing operations (M-N) P. Net profit / loss from discontinued operations Nota nr R. Net profit / loss (O+P) Attributable to: 0 0 Owners of the parent Profit / loss attributable to non-controlling interests the share S. Other comprehensive income: 21 0 which will not be subsequently reclassified to profit or loss 0 0 Income tax - due to the difference in the balance sheet depreciation and tax, revaluation of assets 21 0 Foreign exchange differences on translation of subordinated entities 21 0 T. Total comprehensive income (R+S) (R+S) Total Income attributable to: Owners of the parent Non-controlling shares No. Notes from 1st January to 30th June from 1st January 2016 to 30th June 2016 Earnings per share: - Annualized net profit / loss The number of all shares Number of shares excluding own shares Note no Basic earnings continuing operations (for all shares) 0,41 0,32 - Basic earnings continuing operations (the number of shares adjusted for the treasury s 0,44 0,35 - Basic earnings from discontinued operations 0,00 0,00 25

29 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł STATEMENT OF CASH FLOWS GROUP ELZAB INDIRECT METHOD No. Notes from 1st January 2016 to 30th June 2016 (thousand PLN) from 1st January 2015 to 30th June 2015 Cash flows from operating activities Net profit / loss Adjustments for: Share in net profit / loss of associates and joint ventures accounted for using the equity method Not-exercising shares of the control Amortization of fixed assets Amortization of intangible assets Impairment of goodwill 0 0 Gains / losses on foreign exchange differences 7 0 Costs and interest income Dividend income 0 0 Profit / loss from investing activities Change in provisions Change in inventories Change in receivables and prepayments and accruals Change in liabilities and accrued expenses Tax recognized in the statement of comprehensive income Paid / returned income tax Other adjustments 0 0 Net cash flows from operating activities Cash flows from investing activities Proceeds from sale of fixed assets and intangible assets Net proceeds from the sale of associates and subsidiaries 0 0 Proceeds from sales of short-term financial assets 0 0 Proceeds from interest Proceeds from dividends 0 0 Repayment of loans Expenditure on acquisition of tangible fixed assets and intangible assets Net expenses for the acquisition of subsidiaries and associates 204 Expenditures for the purchase of short-term financial assets 0 0 Loans granted 0 0 Other Net cash flows from investing activities Cash flows from financing activities Proceeds from borrowings Net proceeds from issue of shares, bonds, notes, bills 0 0 Other 0 0 Repayment of borrowings Payment of liabilities under finance lease agreements Dividends paid to shareholders 0 0 Dividends paid to minority shareholders 0 0 Purchase of own shares 0 0 Interest paid Other 0 0 Net cash flows from financing activities Increase / decrease in cash and cash equivalents Cash, cash equivalents at beginning of period Gains / losses on foreign exchange differences on valuation of cash, cash equivalentscash, 0 0 cash equivalents at end of period including: 0 0 -funds of the Social Fund 0 0 Amount of unused credit limit of bank account

30 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł NOTE NO. 1 TANGIBLE FIXED ASSETS (thousand PLN) TANGIBLE FIXED ASSETS Fixed assets, including: Fixed assets under construction Tangible fixed assets, total As of 30th June As of 31st December Liabilities related to purchase of fixed assets on 30th June, amount of 740 thousand PLN (including the purchase of equipment, adaptation, production space). In the first half of to the gross value of tangible assets is not counted among the costs of external financing. from 1st January to 30th June Land Buildings Means of transport Machines and devices Gross value at beginning of period Additions acquisition Adopted on the basis of a financial leasing agreement improvement 4 4 Decreases sale Liquidation Termination of contracts of lease Attributed to discontinued operations 0 Attributed to discontinued operations 0 Movements of the inner (+/-) 0 Adjustment due to net exchange differences arising from translation Gross value at end of period Accumulated amortization at beginning of period amortization for the period decrease sale Termination of contracts of lease derecognition of depreciation of revalued assets 0 Movements of the inner (+/-) 0 Adjustment due to net exchange differences arising from translation Accumulated amortization at end of period Impairment losses at the beginning of the period 0 Shot during an impairment loss of value 0 Reversal during an impairment loss of value 0 The value takes into account depreciation and impairment losses at the end of the period Net value at end of period from 1st January 2016 to 31st December 2016 Land Buildings Means of Machines and transport devices Others Total Gross value at beginning of period Additions acquisition Adopted on the basis of a financial leasing agreement improvement 0 Decreases Liquidation sale derecognition of depreciation of revalued assets 0 - Derecognition of the gross value of revalued assets Proceed to other items of assets 0 - others 0 Assigned to discontinued operations 0 Gross value at end of period Accumulated amortization at beginning of period amortization for the period acquisition derecognition of depreciation of revalued assets 0 Movements of the inner (+/-) Accumulated amortization at end of period Impairment losses at the beginning of the period Recognition in the period of impairment allowance Reversal during an impairment loss of value Value including amortization and impairment loss at the end of the period Net value at end of period Others Total FIXED ASSETS OFF-BALANCE SHEET (thousand PLN) FIXED ASSETS OFF-BALANCE SHEET As of 30th June As of 31st December 2016 used under rental, lease or other agreement, including leasing agreement, including: Land in perpetual usufruct 0 0 Fixed assets off-balance sheet, total

31 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł ELZAB S.A rents space for a branch in Warsaw. ELZAB HELLAS S.A rents office and warehouse space. No information on the value of leased space. Amount of contingent liabilities: '- as at 30th June : - protection bill of exchange operating leases (balance sheet financial leasing) concluded with ING Lease (Poland) Sp. o.o. Warsaw to finance the purchase of production equipment and non-productive (IT equipment) and cars. The total value of leased assets accounted for thousand PLN - promissory note of Millennium S.A. - the credit limit is thousand PLN, mbank S.A. - the credit limit is thousand PLN; BZ WBK S.A. - the credit limit is thousand PLN; ING S.A. -the credit limit is thousand PLN '- as at 31st December 2016: - protection bill of exchange operating leases (balance sheet financial leasing) concluded with ING Lease (Poland) Sp. o.o. Warsaw to finance the purchase of production equipment and non-productive (IT equipment) and cars with Millennium Leasing Sp. o.o. to finance the purchase of cars. The total value of leased assets accounted for thousand PLN. - - promissory note of Millennium S.A. - the credit limit is thousand PLN, mbank S.A. - the credit limit is thousand PLN; BZ WBK S.A. - the credit limit is thousand PLN; ING S.A. -the credit limit is thousand PLN The amount of off-balance sheet liabilities (net capital) as at 30th June and 31st December 2016 amounted to 0 thousand PLN. Contingent assets: A loan is secured by amount of 150 thousand EUR issued by ELZAB S.A. to a registered pledge on all of its shares in MONEA V Sp. o o o to the maximum sum of collateral of 300 thousand EUR, and a surety to 300 thousand EUR granted by MONEA V Sp. z oo and a registered pledge on shares constituting 33% of the share capital of ELZAB HELLAS SPV Sp. z o.o. which MONEA V Sp. z o. o. has at ELZAB HELLAS SPV Sp. z o.o with up to the maximum amount of collateral of 300 thousand EUR. 'On 30th June were the following security on tangible fixed assets of the Company ELZAB S.A : a) securing loans for thermal modernization taken on Voivodship Fund for Environmental Protection and Water Management - contractual mortgage KW GL1Z / /8 with assignment of rights from the insurance policy to the amount of thousand PLN b) a registered pledge on cutting machine nibbling PX1225 Strippit INC. ING Bank Slaski - securing a loan for the purchase of maszyny- to thousand PLN. NOTE NO. 1a INVESTMENT PROPERTY (thousand PLN) INVESTMENT PROPERTY Status at the beginning of the period a) Increases - acquisition - other b) Reductions - sale - write-downs Status at end of period As of 30th June As of 31st December The property in Suchy Las was sold in July this year. The sales price amounted to PLN. The real estate of office of ELZAB S.A. still will be located in Suchy Las. NOTE NO. 2 GOODWILL (thousand PLN) GOODWILL OF SUBSIDIARIES As of 30th June As of 31st December 2016 a) goodwill - subsidiaries Goodwill of subsidiaries, total CHANGE IN GOODWILL OF SUBSIDIARIES As of 30th June As of 31st December 2016 a) gross goodwill at beginning of period b) gross goodwill at the end of the period c) write-off of goodwill at beginning of period 0 0 d) amortization of goodwill for the period 0 0 e) goodwill write-off at the end of the period 0 0 f) the consolidation of 0 0 g) net goodwill at the end of the period As of 30th June goodwill of individual subsidiaries is as follows: ELZAB SOFT Sp. z o.o. the company consolidated since of August Goodwill arising on the acquisition 55 thousand PLN Goodwill as of 30th June 55 thousand PLN The value of the consolidated companies as of 30th June amounted 55 thousand PLN. The Company, in accordance with the accounting policy and IAS 36 performs a test for impairment of goodwill. The last test was conducted at the end of 2016 and showed no evidence to recognize impairment of assets. NOTE N0. 2a INTANGIBLE ASSETS (EXCLUDING GOODWILL) (Thousand PLN) INTANGIBLE ASSETS Intangible assets produced on their own Development work in progress, intangible assets in progress Other intangible assets Total intangible assets INTANGIBLE ASSETS - GOODWILL Goodwill resulting from the merger of ELZAB S.A. and MEDESA Sp.z o.o.. Total intangible assets - goodwill As of 30th June As of 31st December As of 30th June As of 31st December

32 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł from 1st January to 30th June Intangible assets produced on their Other intangible assets own Development work Others Development work Others Gross value at beginning of period Additions acquisition developmental works led on their own The acquisition of the connections jedn.gospodarczych 0 - Due to revaluation 0 - other 0 Decreases Withdrawal from the use 0 - Liquidation 0 - sale 0 - Due to revaluation 0 - other 0 Movements of the inner (+/-) 0 Adjustment due to net exchange differences arising from translation 0 Gross value at end of period Accumulated amortization at beginning of period amortization for the period other increases 0 decrease 0 Movements of the inner (+/-) 0 Adjustment due to net exchange differences arising from translation -1-1 Accumulated amortization at end of period Impairment losses at the beginning of the period 0 Shot during an impairment loss of value 0 Reversal during an impairment loss of value 0 The value takes into account depreciation and impairment losses Net value at end of period Amortization of intangible assets charged: the costs of production of 691 thousand PLN the cost of sales of 96 thousand PLN general and administrative expenses 99 thousand PLN, 7 thousand PLN was recognized for expenditures on research and development. from 1st January 2016 to 31st December 2016 Intangible assets produced on their Other intangible assets own Development work Others Development work Others Gross value at beginning of period Additions acquisition developmental works led on their own The acquisition of the connections jedn.gospodarczych 0 - Due to revaluation 0 - other 5 5 Decreases Withdrawal from the use 0 - Liquidation 0 - sale 0 - Due to revaluation 0 - other Movements of the inner (+/-) 0 Gross value at end of period Accumulated amortization at beginning of period amortization for the period other increases 0 decrease 0 Movements of the inner (+/-) -4-4 Accumulated amortization at end of period Impairment losses at the beginning of the period Recognition in the period of impairment allowance Reversal during an impairment loss of value The value takes into account depreciation and impairment losses at the end of the period Net value at end of period Commitments for the purchase of intangible assets on 30th June amounted to 10 thousand PLN. There are no intangible assets with indefinite useful lives. EXPENDITURES FOR DEVELOPMENT SUSTAINED IN THE YEAR Total Total from 1st January to 30th June from 1st January 2016 to 31st December 2016 from 1st January 2016 to 30th June 2016 Depreciation Consumption of raw and auxiliary materials Salaries with charges Other costs (including, among others, the costs of faculty, external services) TOTAL Capital development are recognized on intangible assets in progress until the end of the work. Expenditures on development are recognized on intangible assets until their completion. Period costs were not charged with the development work: depreciation in the amount of 584 thousand PLN and the cost of written development work in the amount of 161 thousand PLN. In the first half of ELZAB S.A completed the partnership project "Innovative Selling Position", for which received funding under Measure 1.4 support for special projects of the Operational Programme Innovative Economy The object of the project is to develop an innovative approach retail sales - cash register. The project also includes the functionality of the model bearing features of innovation associated with new services and values provided in the form of a prototype, protocols, programs and associated components. The amount of co-financing for the project amounted to 906 thousand PLN of which 532 thousand PLN were spent on ELZAB S.A. 29

33 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł NOTA NR 3 SHARES IN SUBSIDIARIES CONSOLIDATED BY FULL METHOD (in PLN thousand) Detailed information on the subsidiaries as of 30th June 2016 are as follows: Place of registration and activity The percentage of shares and voting rights held by the Company 30th June 31st December 2016 Name of subsidiary Core Business ELZAB SOFT Sp. z o.o. production, distribution Poland 87,50% 87,50% software ELZAB HELLAS SPV Sp. z o.o. consulting 67,00% 67,00% production and ELZAB HELLAS S.A. distribution of Greece scales, distribution 67%,00*) 67%,00*) of fiscal devices )* indirect participation of ELZAB SA, participation of ELZAB HELLAS SPV in ELZAB HELLAS SA 100% Core Business Production and distribution of software consulting production and distribution of scales, distribution of fiscal devices Place of registration and Number of companies in which they hold less than 100% of shares 30th June 31st December 2016 activity Poland 1 1 Poland 1 1 Greece 1 1 The following table shows details of the subsidiaries of the Group, which have significant non-controlling interests: The percentage of shares and voting rights held by the Group 30th June 31st December 2016 Profit (loss) locked to the non-controlling interest Name of entity ELZAB SOFT Sp. z o.o. 87,50% 87,50% ELZAB HELLAS SPV Sp. z o.o. 67,00% 67,00% ELZAB HELLAS S.A. 67%,00*) 67%,00*) Razem )* indirect participation of ELZAB SA, participation of ELZAB HELLAS SPV in ELZAB HELLAS SA 100% 30th June 31st December th June As of 30th June 2016 in relation to the Group's equity ELZAB shown in the table above the nominal value of the shares is deemed to be immaterial. Consequently, it publishes a summary financial information in respect of the Group's subsidiaries having a significant non-controlling interests. The cumulative value of noncontrolling interest 31st December 2016 Ownership changes ELZAB Group - shares in subsidiaries In the first half of there were no changes in the composition of its subsidiaries. Significant restrictions There are significant capacity constraints of the Company or its subsidiaries in the access and use of assets and the settlement of liabilities of the Group. Financial assistance ELZAB SA granted a loans to ELZAB HELLAS SPV Sp. o o and ELZAB HELLAS S.A. in the total amount of 2335 thousand. zł. There is no significant risk associated with the implementation of these commitments Surety agreement Not applicable. SHARES IN SUBSIDIARIES VALUED BY THE EQUITY METHOD (in thousand PLN) Detailed information about the entity associated ELZAB Group as of 30th June are as follows: Name of associate COMP Centrum Innowacji Sp.z o.o. Core production, distribution software Place of registration and activity The percentage of shares and voting rights held by the Company As of 30th June As of 31st December 2016 Poland 49,72% 49,72% 30th June 31st December 2016 Name of associate Cumulatively, the share of profits / Expense losses of associates Net value Cumulatively, the share of profits / Expense losses of associates Net value COMP Centrum Innowacji Sp.z o.o Investments in associates together Presentation of financial statements In separate statements ZUK ELZAB S.A. the company has shown interest in subsidiaries - as long-term financial assets at the purchase price adjusted by possible writeoffs due to impairment The consolidated statements ZUK ELZAB S.A. company Comp Innovation Centre Sp.z o.o. will be consolidated using the equity method and presented in the balance sheet in fixed assets in line - "Investments in subsidiaries under the equity method" Below is a summary of the financial data of the associate ELZAB Group. Amounts stated below are the amounts from the consolidated financial statements of CCI Group Comp Innovation Centre Assets Fixed assets Current liabilities Long-term liabilities As of 30th June As of 31st December

34 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł Group Comp Innovation Centre Revenues Profit (loss) from continuing operations Profit (loss) from discontinued operations (after tax) Profit (loss) for the year Other comprehensive income for the period Total comprehensive income for the period Dividends received from associated company Group Comp Innovation Centre The carrying value of the Group's interest in the COMP INNOVATION CENTRE at the beginning of the period (A) Change in the Group's equity Comp Innovation Centre Change in the Group's equity Comp Innovation Centre excluding capital increase Percentage share of the Group in shares of Comp Innovation Centre until August Percentage share of the Group in shares of Comp Innovation Centre since September 2015 Equity Group Comp Innovation Centre for the Group ELZAB, excluding capital increase (B) The capital increase (C) The carrying value of the Group's interest in the COMP INNOVATION CENTRE at the end of the period (A + B + C) from 1st January to 30th June from 1st January 2016 to 31st December from 1st January to 30th June from 1st January 2016 to 31st December ,00% - 49,72% 49,72% Significant restrictions There are significant capacity constraints of the associate to transfer funds to the Group in the form of cash dividends or to repay loans or advances made by the Group. NOTE NO. 3a FINANCIAL ASSETS (thousand PLN) Type of financial instrument As of 30th June As of 31st December 2016 A. Cash Cash at bank B. Loans and receivables Receivables from loans granted Entitlements without tax receivables C. Financial assets held to maturity Bonds issued by related parties NOTE NO. 4 ASSETS AND PROVISIONS FOR DEFERRED INCOME TAX (thousand PLN) As of 30th June As of 31st December 2016 from 1st January to 30th June from 1st January 2016 to 30th June 2016 Deferred income tax temporary differences - Financial leasing the difference between the carrying amount and tax due to increases in the value of tangible fixed asset other ( interest ) Gross reserves for deferred income tax Profit and Loss Account Deferred income tax - Jubilee awards, retirement benefits Valuation of real estate in Suchy Las Unused holidays Accrued expenses Suspended margin on inventories the difference between the carrying value and tax base of intangible assets Fund promotional and advertising Guarantee fund Interest on issued by ELZAB S.A. bonds Tax loss possible to deduct Gross assets for deferred income tax Load / recognition of deferred income tax Balance Off assets with the obligations of the deferred tax assets is made in the report on the financial situation at the level of individual financial statements of subsidiaries. As of 30th June As of 31st December 2016 Aktywa z tytułu odroczonego podatku dochodowego Rezerwy z tytułu odroczonego podatku dochodowego Saldo aktywa z tytułu odroczonego podatku dochodowego Saldo rezerwy z tytułu odroczonego podatku dochodowego

35 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł NOTE NO. 5 RECEIVABLES AND PREPAYMENTS ( thousand PLN) As of 30th June As of 31st December 2016 Trade receivables and services from other entities: Long-term Short-term Trade receivables and services from related parties: Long-term 0 - Short-term Prepayments: Long-term 0 - Short-term Other receivables: Long-term 0 - Short-term Prepayments: Long-term Short-term Impairment losses at the beginning of the period Recognition during the write-downs for impairment Reversal during an impairment loss of value Exit from consolidation 0 0 Adjustment due to foreign currency translation 0 0 Impairment losses at the end of the period TOTAL SHORT-TERM RECEIVABLES As of 30th June As of 31st December 2016 a) from related parties For deliveries and services with maturity date: up to 12 months over to 12 months others 0 0 b) receivables from other entities For deliveries and services with maturity date: up to 12 months over to 12 months Taxes, subsidies, customs duties, social and health insurance and other benefits Other (including prepayments) Short-term receivables Total net c) impairment of receivables Short-term receivables Total gross On 30th June there is no security on receivables. CHANGE IN WRITE-DOWNS ON SHORT-TERM RECEIVABLES As of 30th June As of 31st December 2016 Balance at beginning of period a) increase (due to) Write downs Adjustment due to foreign exchange differences arising from translation 0 0 b) decrease (due to) Reversal of write-downs others 0 Write-downs of current receivables at end of period SHORT-TERM RECEIVABLES FROM RELATED PARTIES As of 30th June As of 31st December 2016 a) in respect of supplies and services, including: from related parties b) others, including: from related parties 0 0 Short-term receivables from related entities, net total c) write-downs of receivables from related parties 0 0 Short-term receivables from related entities, gross total GROSS CURRENT RECEIVABLES (CURRENCY) As of 30th June As of 31st December 2016 a) in Polish currency b) in foreign currencies (by currency and after conversion into PLN) b1.unit / currency in thousand GBP thousand PLN b2.unit / currency in thousand EUR thousand PLN b3.unit / currency in thousand USD thousand PLN b4.unit / currency in thousand HUF thousand PLN other currencies in thousand PLN 0 Short-term liabilities together TRADE RECEIVABLES (GROSS) - WITH REMAINING FROM THE BALANCE SHEET DATE: As of 30th June As of 31st December 2016 a) up to 1 month b) from 1 month to 3 months c) over 3 months to 6 months d) over 6 months to 1 year 0 0 e) over 1 year 0 0 f) overdue receivables Trade receivables and services, total (gross) g) write-downs of receivables from supplies and services Trade receivables and services, total (net)

36 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł TRADE RECEIVABLES AND SERVICES OVERDUE (GROSS) - DIVIDED INTO RECEIVABLES NOT REPAID OVER: As of 30th June As of 31st December 2016 a) up to 1 month b) from 1 month to 3 months c) over 3 months to 6 months d) over 6 months to 1 year e) over 1 year Trade receivables and services, overdue, total (gross) f) write-downs of receivables from supplies and services, overdue Trade receivables and services, overdue, total (net) LONG-TERM PREPAYMENTS As of 30th June As of 31st December 2016 Costs of bond issuance 0 40 Other Long-term prepayments, total SHORT-TERM PREPAYMENTS As of 30th June As of 31st December 2016 Property tax 306 Property insurance, the Management Board and the Supervisory Board Costs of bond issuance Perpetual usufruct of land 20 0 Others Short-term prepayments NOTE NO 6 INVENTORIES (thousand PLN) As of 30th June As of 31st December 2016 Materials Semi-finished products and work in progress finished products Goods Total inventories STATE OF WRITE-DOWNS OF INVENTORIES AS OF 30th JUNE The gross value of The net value of Impairment inventories inventories Materials Semi-finished products and work in progress finished products Goods Total inventories STATE OF WRITE-DOWNS OF INVENTORIES AS OF 31ST DECEMBER The gross value of The net value of Impairment 2016 inventories inventories Materials Semi-finished products and work in progress finished products Goods Total inventories STATE OF WRITE-DOWNS OF INVENTORIES As of 30th June As of 31st December 2016 Balance at beginning of period Increase due Creating write-off Prudent valuation 0 0 Decreases due Reversal of impairment Reversal of the prudence of the previous year Exit from consolidation 0 0 Exchange differences 0 0 Allowances at end of period NOTE NO. 7 CASH AND CASH EQUIVALENTS (thousand PLN) As of 30th June As of 31st December 2016 Cash at bank and in hand Other cash 0 0 short-term deposits 0 0 Total gross Write-downs on commercial bills of contractors 0 0 Total Net, including: Cash at bank and in hand attributable to discontinued operations 0 0 The amount of unused credit limit of bank account Cash and cash equivalents shown in the cash flow statement are consistent with values balance sheet. There were no non-cash transactions disclosed in the statement of cash flows, which would be excluded from investing and financing activities. There were no net cash flows relating to discontinued operations. 33

37 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł NOTE NO 8 NON-CURRENT ASSETS CLASSIFIED AS HELD FOR SALE (thousand PLN) from 1st January to 30th June from 1st January 2016 to 30th June 2016 ASSETS Tangible fixed assets, including: land Buildings, structures Total non-current assets classified as held for sale The Management Board of ELZAB SA has decided to reclassify the property in Suchy Las from the item "Non-current assets classified as held for sale" under "Investment property". The property is still available for immediate sale. The board is actively seeking buyers of real estate. NOTE NO. 9 SHARE CAPITAL (thousand PLN) KAPITAŁ ZAKŁADOWY Seria / emisja Rodzaj akcji Rodzaj Rodzaj uprzywilejowania ograniczenia akcji praw do akcji Wartość serii / emisji wg Liczba akcji wartości nominalnej Sposób pokrycia kapitału Prawo do Data rejestracji dywidendy (od daty) A zwykłe wpłata gotówki B uprzywilejowane co do głosu 1: wpłata gotówki B zwykłe wpłata gotówki C zwykłe wpłata gotówki D zwykłe wpłata gotówki Liczba akcji razem Kapitał zakładowy, razem Wartość nominalna jednej akcji =1,36 zł 34

38 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł NOTE NO. 10 OWN SHARES (thousand PLN) As of 30th June 2016 As of 31st December 2015 Own shares purchased for redemption Own shares purchased for resale or other purpose related to the Company's Strategy Own shares ELZAB SA - AKCJE WŁASNE rok ilość akcji cena zakupu ELZAB SA - akcje własne nabyte w celu umorzenia ELZAB SA - akcje własne nabyte w celu odsprzedaży lub innym celu związanym z realizacją Strategii Spółki ELZAB SA - akcje własne nabyte w celu ich umorzenia lub po uprzednim pozytywnym zaopiniowaniu przez Radę Nadzorczą Spółki w celu ich dalszej odsprzedaży, wymiany lub na inny cel określony Uchwałą Zarządu Spółki wartość akcji w cenie zakupu % kapitału zakładowego % głosów na WZA wartość nominalna nabytych akcji wartość nabytych akcji , ,51% 2,49% , ,65% 0,64% ,11% 4,07% RAZEM X , ,27% 7,21% NOTE NO. 11 RESERVES, SPARE AND CAPITAL REVALUATION (thousand PLN) from 1st January to 30th June Supplementary capital created from profit Reserve capital from revaluation of tangible fixed assets Balance at beginning of period Changes in accounting principles (policy) 0 Balance at beginning of period after adjustments (restated) Increase due to transfer of the result from the previous year, parent company Adjustment due to liquidation of fixed assets 0 Balance at end of period Total 35

39 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł from 1st January 2016 to 31st December 2016 Supplementary capital created from profit Reserve capital from revaluation of tangible fixed assets Total Balance at beginning of period Balance at beginning of period after adjustments (restated) Increase due to transfer of the result from the previous year, parent company Zwiększenie z tytułu sprzedaży i likwidacji środków trwałych Balance at end of period Capital generated from profits may be paid in the form of dividends. Other reserves are not subject to payment. ELZAB S.A. Creates reserve capital for buying back own shares NOTE NO 12 NOT-EXERCISING SHARES OF THE CONTROL (thousand PLN) As of 30th June 2016 As of 31st December 2015 Non-controlling interests at beginning of period Share of profits / losses during the year Disposal of Subsidiary Non-controlling interests at end of period NOTE NO. 13 PROVISIONS (thouasn PLN) from 1st January to 30th June Provisions for warranty repairs, guarantees Retirement pension, unused leave Other employee benefits (bonuses, quarterly and annual) Other reserves (including the reserve fund for the promotion and advertising) Value at the beginning of the period, including: Short-term at beginning of period Long-term at the beginning of the period Additions Created in the period and an increase in the existing Acquired as connections jedn.gospodarczych 0 Decreases Utilized during the year Solved but unused Adjustment due to foreign exchange losses on translation of 0 Exit from consolidation 0 Value at the end of the period including: Short-term end of the period Long-term at the end of the period from 1st January 2016 to 31th December 2016 Provisions for warranty repairs, guarantees Retirement pension, unused leave Other employee benefits (bonuses, quarterly and annual) Other reserves (including the reserve fund for the promotion and advertising) Value at the beginning of the period, including: Short-term at beginning of period Long-term at the beginning of the period Additions Created in the period and an increase in the existing Acquired as connections jedn.gospodarczych 0 Decreases Utilized during the year Solved but unused Adjustment due to foreign exchange losses on translation of 0 Exit from consolidation 0 Value at the end of the period including: Short-term end of the period Long-term at the end of the period Total Total The main items of the reserves are as follows: A. Provisions for employee benefits include: provision for unused holidays in the size of projected salaries for the holiday, provision for retirement bonuses, calculated using unit rights. The provision for the benefit depends on the number of units produced entitlement to benefits, the full amount of the projected benefit obligation, the current basis of benefit, projected increase in minimum benefits, the discount rate and the probability of the benefit in question. The calculations are mistaken into account only currently employed workers who have lost their entitlement to benefits. provision for bonuses of the Board - is discretionary, dependent on the decision of the Supervisory Board, created in the amount approved by the Supervisory Board provision for quarterly bonus, on the part of employees who are covered by the Programme Management By Objectives The last valuation of the present value of obligations arising from benefits on retirement and pension benefits was made on the day of 31th December 2016 by the Company. B. Provision for warranty repairs - warranty period provided by ELZAB S.A. does not exceed 12 months, which causes the change in the value of money over time has no significant effect on the estimate of reserves. The provision is estimated in the amount resulting from the difference between the amount of fees for warranty service of all sales in the first half of. Equipment covered by service charges and related equipment sold and installed at the customer's end. The provision for warranty repairs also creates MICRA MERTIPOND KFT. C. Provision for marketing - is the cost of promotion organized in the first half of 36

40 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł NOTE NO. 14 Liabilities from bank loans and borrowings (thousand PLN) Balance at 30th June Type of credit / loan Name of the bank / lender Currency Terms of interest Maturity date Security Amount by Amount per Foreign-currency agreement contract in PLN liability Commitment PLN Overdraft ING BANK ŚLĄSKI PLN WIBOR 1M + 20th May 2018 statement on submission to enforcement, power of attorney BANK's MARGIN to the accounts Investment loan ING BANK ŚLĄSKI PLN WIBOR 1M + 30th April 2018 Registered pledge on cutting machine brand PX BANK's MARGIN Strippit INC. with assignment of rights from insurance policy, declaration on submission to enforcement, power of attorney to the accounts Overdraft Bank Millennium SA PLN WIBOR 1M + BANK's MARGIN 28th February 2018 statement on submission to enforcement, power of attorney to the accounts Overdraft BZ WBK SA PLN WIBOR 1M + BANK's MARGIN Overdraft mbank SA PLN WIBOR 1M + BANK's MARGIN Loan Wojewódzki Fundusz Ochrony Środowiska PLN rediscount rate plus a i Gospodarki Wodnej w Katowicach margin 30th September. 4th July 2018 Blank promissory note with a promissory note declaration, statement of submission to enforcement, power of attorney to the accounts Blank promissory note with a promissory note declaration, statement of submission to execution 30th September 2019 contractual mortgage KW GL1Z / eighths with assignment of rights from insurance policy Loan MONEA V Sp. z o.o. EUR EURIBOR 1M + 26th September 2019 Lack of security MARGIN Total Liabilities from bank loans and borrowings (thousand PLN) Balance at 31st December 2016 Type of credit / loan Name of the bank / lender Currency Terms of interest Maturity date Security Amount by Amount per Foreign-currency agreement contract in PLN liability Commitment PLN Overdraft ING BANK ŚLĄSKI SA PLN WIBOR 1M + 6th May statement on submission to enforcement, power of attorney BANK's MARGIN to the accounts Investment loan ING BANK ŚLĄSKI SA PLN WIBOR 1M + 30th April 2018 Registered pledge on cutting machine brand PX BANK's MARGIN Strippit INC. with assignment of rights from insurance policy, declaration on submission to enforcement, power of attorney to the accounts Overdraft Bank Millennium SA PLN WIBOR 1M + BANK's MARGIN 28th February 2018 Blank promissory note with a promissory note agreement Overdraft BZ WBK SA PLN WIBOR 1M + BANK's MARGIN Overdraft mbank SA PLN WIBOR 1M + BANK's MARGIN Loan Wojewódzki Fundusz Ochrony Środowiska PLN rediscount rate plus a i Gospodarki Wodnej w Katowicach margin 30th September. 4th July 2018 Blank promissory note with a promissory note declaration, statement of submission to enforcement, power of attorney to the accounts Blank promissory note with a promissory note declaration, statement of submission to execution 30th September 2019 contractual mortgage KW GL1Z / eighths with assignment of rights from insurance policy Loan MONEA V Sp. z o.o. EUR EURIBOR 1M + 26th September 2019 Lack of security MARGIN Total

41 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł NOTE NO 14a OTHER FINANCIAL LIABILITIES (LEASING) * (thousand PLN) OPERATING LEASE Not applicable. As of 30th June As of 31st December 2016 OPERATING LEASE 1. The total amount of future lease payments at the balance sheet date. 2. The present value of lease payments for each of the following periods, including: - up to 1 year - over 1 year - From 3 to 5 years - Over 5 years 3. The amount of interest in the current year (incurred and to be incurred) 4. The amount of interest to the end of the lease )*Financial instruments measured at amortized cost Leases are covered by transport and production equipment. Major provisions of the lease agreements: As of 30th June As of 31st December The contract period lessor is entitled to make proportional adjustments to the remuneration due to changes in tax rates, stamp duties or other taxes public, While ELZAB S.A. not solve the earlier agreement and subject to the obligations of the agreement, the Company has the right to purchase vehicles for the selling price corresponding to the predetermined value of the final, Agreements may be terminated either by the lessor (the reasons set out in the agreement) and the lessee (without giving reasons). Termination of contracts associated with the payment of amounts due by the user specified in the agreement, The lessee will immediately notify the Financing of any events and circumstances which may affect its ability to perform its obligations under this Agreement, including the deterioration in its financial situation. NOTE NO 15 LIABILITIES AND PREPAYMENTS (thousand PLN) As of 30th June As of 31st December 2016 Liabilities from supplies and services to other units: Long-term Short-term Liabilities Trade payables to related parties: Long-term Short-term Prepayments: Long-term Short-term 0 0 Other liabilities: Long-term Short-term Accruals: Long-term Short-term Deferred income: Long-term Short-term TOTAL LONG-TERM LIABILITIES WITHOUT FINANCIAL OBLIGATIONS As of 30th As of 31st June December 2016 Deposits on rented space Long-term liabilities together SHORT-TERM LIABILITIES WITHOUT FINANCIAL OBLIGATIONS As of 30th As of 31st June December 2016 a) to related parties For deliveries and services with maturity date: Up to 12 months Over 12 months 0 0 b) to related parties For deliveries and services with maturity date: Up to 12 months Over 12 months taxes, customs duties, insurance and other benefits remuneration other c) for dividend distributions, including: to related entities 0 0 Short-term liabilities together SHORT-TERM LIABILITIES WITHOUT FINANCIAL LIABILITIES (CURRENCY) As of 30th June As of 31st December 2016 a) in Polish currency b) in foreign currencies (by currency and after conversion into PLN) b1. unit / currency in thousand EUR thousand PLN b2. unit / currency in thousand USD thousand PLN b3. unit / currency in thousand GBP thousand PLN b3. unit / currency in thousand HUF 0 60 thousand PLN 0 1 other currencies in thousand PLN 0 0 Short-term liabilities together PREPAYMENTS As of 30th As of 31st June December 2016 a) accrued expenses Short-term (by title) Costs of auditing the financial statements others 0 0 b) deferred income Long-term (by title) grant deferred revenue Short-term (by title) others Prepayments, total

42 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł - NOTES TO THE STATEMENT OF COMPREHENSIVE INCOME NOTE NO 16 NET SALES OF PRODUCTS, GOODS AND MATERIALS (BUSINESSLIKE STRUCTURE) (thousand PLN) from 1st January from 1st January to 30th June 2016 to 30th June 2016 Revenues from sales of products Sales of services Revenues from sales of materials Revenues from sales of goods Total Including revenues from related parties ELZAB Group in the first half of did not have any customers for which the realized sales was more than 10% of sales revenues. NET REVENUES FROM SALES (TERRITORIAL STRUCTURE) from 1st January from 1st January to 30th June 2016 to 30th June 2016 Revenues from sales of the Republic of Poland % Share in total sales 93,6% 92,6% Revenues from sales on the foreign market % Share in total sales 6,4% 7,4% Total Revenues and results of business segments ELZAB Group realizes revenues from sales in one industry segment of electronic devices, which includes fiscal and non-fiscal devices, which are products of own production and goods purchased for resale. Revenues generated from other sales, ie. From the sale of materials complement the main Group's offer. Provided services warranty, post-warranty service, training and installation are closely related to the commercial offer of the Group. Because for most of the factors referred to in the definition of segment is met similarities and areas of activity of the Company does not meet the conditions that were considered to be reportable segments under IFRS 8, there is no need to separate business and geographical segments with different levels of risk and return on investment. Therefore, there shall be no division of the carrying amounts of the assets and liabilities because they are involved in the generation of profit in one segment of the electronics industry. The range offered for sale has a similar production process, distribution and methods used to provide services and is designed for specific audiences. In this situation, there is no need to make the distribution of the carrying amounts of the assets and liabilities because they are involved in the generation of profit in one segment of the electronics industry. Currently, sales are carried out through offices in Warsaw, Wroclaw and in Suchy. Sale is supported by regional sales managers serving various regions of the country. The following tables present revenue and gross margin business segment for the first half of and for the comparable period of the first half of 2016 detailing the electronic own products and services as well as goods and materials. For management purposes, the following reporting of achieved gross margin on the various ranges or groups of products in each subsidiary included in the ELZAB Capital Group. Name of entity / first half of Electronic equipment of its own production and services, including maintenance services Goods (electronic equipment) and materials and accessories TOTAL SALES ELZAB S.A. 85,5% 14,5% 100,0% - revenues ELZAB SOFT Sp. z o.o. 92,9% 7,1% 100,0% - revenues ELZAB HELLAS SPV Sp. z o.o. 100,0% 0,0% 100,0% - revenues ELZAB HELLAS S.A. 1,1% 98,9% 100,0% - revenues Revenues to external customers 84,6% 15,4% 100,0% - revenues Gross margin on sales achieved in the first half of Name of entity / first half of 2016 Electronic equipment of its own production and services, including maintenance services Goods (electronic equipment) and materials and accessories TOTAL SALES ELZAB S.A. 85,5% 14,5% 100,0% - revenues ELZAB SOFT Sp. z o.o. 93,7% 6,3% 100,0% - revenues Revenues to external customers 85,8% 14,2% 100,0% - revenues Gross margin on sales achieved in the first half of NOTE NO. 17 PRIME COSTS IN THE CALCULATING ARRANGEMENT (thousand PLN) TYPE OF COSTS INCURRED from 1st January from 1st January to 30th June 2016 to 30th June 2016 Amortization of fixed assets Amortization of intangible assets Employee benefits costs Usage of materials and energy Koszty usług obcych The costs of external services Other expenses (including the remuneration of the members of the Supervisory Board) Change in products, work in progress and the cost of manufacturing products for own needs Total

43 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł COSTS IN THE CALCULATING ARRANGEMENT from 1st January from 1st January to 30th June 2016 to 30th June 2016 Cost of sales General and administrative expenses Cost of products sold Total The value of sold goods and materials The result of updating inventories of The result of updating stocks of goods and materials The result of updating receivables Total cost of sales COSTS OF EMPLOYEE BENEFITS from 1st January from 1st January to 30th June 2016 to 30th June 2016 Payroll costs Social security costs The costs of the benefits of health and safety regulations Costs due to staff training and qualifications The cost of pension benefits 3 6 Other employee benefits Provisions for employee benefits -3-6 Total NOTE NO 18 OTHER INCOME AND EXPENSES OTHER INCOME (thousand PLN) from 1st January from 1st January to 30th June 2016 to 30th June 2016 Revenue from leases of fixed assets Gain on sale of tangible fixed assets Other (including m.in: awarded court costs and court proceedings, damages and compensation, subsidy, income from contractual penalties) TOTAL including non-cash revenues arising from exchanges of goods or services 0 0 OTHER COSTS from 1st January to 30th June from 1st January 2016 to 30th June 2016 The costs of enforcement, judicial and procedural (including provision for litigation costs awarded) 4 11 Donations The costs of leased space Others (including the cost of random events, penalties, taxes and fees) TOTAL NOTE NO. 19 FINANCIAL INCOME AND EXPENSES (thousand PLN) FINANCIAL INCOME from 1st January from 1st January to 30th June 2016 to 30th June 2016 Interest income Reversal of impairment losses on interest on receivables 27 9 Valuation of forward transactions 9 Gains from foreign exchange differences 0 95 Other financial income (reversal of accrued interest on the bond issue by ELZAB, accrued interest on loans) TOTAL FINANCIAL COSTS from 1st January from 1st January to 30th June 2016 to 30th June 2016 The interest costs, including those relating to: Bank loans Financial leasing contracts Interest paid on bonds (issue ELZAB) Other interest Losses from foreign exchange differences Valuation of forward transactions 9 0 Other borrowing costs (commissions, fees on the unused credit limit) Losses from foreign exchange differences 0 0 Impairment losses on interest receivables from major Reversal of accrued interest 0 0 TOTAL

44 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł NOTE NO. 20 INCOME TAX (thousand PLN) CURRENT INCOME TAX from 1st January from 1st January to 30th June 2016 to 30th June 2016 The financial result before tax from continuing operations Profit / loss before tax from discontinued operations 0 0 The tax rate (in%) 19% 19% The difference between the gross and taxable income, including: a/ off revenue not taxable b/ adding the costs which are not deductible c/ ddeduction donations 0 0 d/ correction of the negative tax base of subsidiaries 0 0 The tax base The tax burden according to the applicable tax rate *) Load / credit shown in the profit and loss account DEFERRED INCOME TAX from 1st January to 30th June from 1st January 2016 to 30th June 2016 Decrease due to creation of assets and the reversal of provisions for temporary differences Increase due to the write-off of assets and the establishment of reserves for temporary differences Deferred income tax time, total MAIN COMPONENTS OF LOAD / RECOGNITION OF TAX IN THE PROFIT AND LOSS from 1st January from 1st January to 30th June 2016 to 30th June 2016 Current income tax Current load of titles tax Adjustments to current income tax from previous years 0 0 Deferred income tax Load / recognition of deferred tax relating to origination and reversal of temporary differences - Load / recognition of deferred tax relating to changes in tax rates 0 0 Load / credit shown in the profit and loss account, including: Assigned to continuing operation Attributed to discontinued operations 0 0 NOTE NO. 21 DISCONTINUED OPERATIONS (thousand PLN) There are no financial results from discontinued operations NOTE NO 22 EARNINGS PER SHARE DETAILS OF FINANCIAL RESULTS AND SHARES, USED TO CALCULATE BASIC AND DILUTED EARNINGS PER SHARE from 1st January from 1st January to 30th June 2016 to 30th June 2016 Net profit / loss from continuing operations Profit / loss on discontinued operations 0 0 Net profit / loss The total number of shares Number of shares Number of shares adjusted for treasury shares The Company has no instruments causing dilution of the share capital. Basic earnings per share is calculated by dividing the net profit / loss attributable to shareholders of the Company and the weighted average number of ordinary shares during the year, excluding ordinary shares purchased by the Company and reported The calculation of earnings / loss per share is the statement of comprehensive income NOTE NO. 23 RELATED PARTY TRANSACTIONS Detailed information on transactions between the Group and other related parties are presented below. In the first half of and in the first half of 2016 company had the following transactions with related parties: Commercial transactions Sales for ELZAB GROUP from from 1st January from 1st January to 30th June 2016 to 30th June 2016 COMP S.A Comp Centrum Innowacji Sp. z o.o MICRA METRIPOND KFT ENIGMA Systemy Ochrony Informacji Sp. z o.o INSOFT Sp. z o.o. 0 4 Paytel SA 32 0 CLOU Sp. z o.o Total The above note also were recognized revenue from leases from related parties and which are recognized in other operating income There were no sales transactions that would differ from those commonly used for sales contracts. 40

45 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł Commercial transactions Purchases of ELZAB Group from from 1st January to 30th June from 1st January 2016 to 30th June 2016 COMP S.A CLOU Sp. z o.o INSOFT Sp. z o.o Paytel SA 4 4 MICRA METRIPOND KFT 2 2 Comp Centrum Innowacji Sp. z o.o Total Receivables from 1st January from 1st January to 30th June 2016 to 30th June Receivables from the Group's gross ELZAB 2016 COMP S.A Comp Centrum Innowacji Sp. z o.o JNJ Limited MICRA METRIPOND KFT ENIGMA Systemy Ochrony Informacji Sp. z o.o. 1 The Group's gross receivables from related parties ELZAB Impairment losses on receivables 0 0 The Group's net receivables from related parties ELZAB from 1st January from 1st January to 30th June 2016 to 30th June Balance of receivables from covered bonds 2016 Comp Centrum Innowacji Sp. z o.o Total Trade payables from 1st January from 1st January to 30th June 2016 to 30th June Balance of ELZAB Group liabilities to 2016 COMP S.A Comp Centrum Innowacji Sp. z o.o CLOU Sp. z o.o INSOFT Sp. z o.o PAYTEL SA 1 2 MICRA METRIPOND KFT 0 1 Total from 1st January from 1st January to 30th June 2016 to 30th June Liabilities due to dividend payment 2016 COMP S.A. 0 0 Total 0 0 NOTE NO. 24 EVENTS AFTER THE BALANCE SHEET DATE There were no significant events after the balance sheet date. NOTE NO. 25 KEY RISKS AND RISKS OF THE GROUP ELZAB ELZAB Group's strategic objective is to increase shareholder value, through an increased financial results, which is a fundamental element sales growth in domestic and foreign markets. There is a risk factor independent, which will influence the effects of implementing this strategy, in particular, decline in demand for products, perturbations in capturing foreign markets, intensifying competition in markets where ELZAB Group operates or intends to operate, the slowdown in the economy. In the first half of the ELZAB Group operated in a competitive market. Source of competition are local producers and importers of equipment from abroad. Competition in the market makes, through the necessary actions and promotional -marketingowe, reduction of margin, which is noticeable in the performance of the Group ELZAB results. In the case of ELZAB S.A. main suppliers of materials and components for the production of cash registers and commercial goods are 85 % domestic suppliers and 15 % of foreign suppliers. Four largest suppliers represents 60 % of total supply. The share of other domestic and foreign suppliers does not exceed 5% of total supply. The specificity of fiscal market in Poland is its seasonality. In terms of basic products ELZAB SA they are fiscal devices seasonality is associated with the entry into force of the regulations of the Minister of Finance imposing an obligation to install cash registers new groups of taxpayers.at the end of In connection with the entry into force of the Regulation of the Minister of Finance dated 4th November On exemptions from the obligation to keep records using cash registers requiring the latest by 3rd January To record sales using cash registers specific groups of taxpayers, released earlier this obligation, regardless of the market, increased sales of small banks on the Polish market. Previous decisions arising from the Regulations, which stimulated demand are: - in Ordinance of the Minister of Finance of 29th November On exemptions from the obligation to keep records using cash registers. In the first quarter of Obligation to register sales by fiscal device were covered by taxpayers who, in Realized turnover for individuals worth more than 20 thousand. zł (until then it was 40 thousand. zł). Obligation to register sales were also covered by, among others, schools rides; - In When the duty to record turnover, from 1 May 2011., Included important new groups of taxpayers - doctors and lawyers. The seasonality of sales is not important for the secondary market. Financial risks The Group's activities ELZAB is exposed to various types of financial risk. Risk management seeks to minimize potential adverse effects of these risks on the Group's financial result. 41

46 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł The financial risk factors to which a greater or lesser extent, is exposed to the Group's operations ELZAB include: - Credit risk - Liquidity risk, - Market risk, which include: price risk, interest rate risk and foreign exchange risk. The main financial instruments used by the ELZAB Group are bank loans (short- and long-term) and liabilities from supplies and services. ELZAB Group also has financial assets, which consist primarily of trade receivables and cash and cash equivalents and bonds. Categories and classes of financial instruments presented in the following tables: FINANCIAL ASSETS AND LIABILITIES BY CATEGORY (ACCORDING TO IAS 39) As of 30th June As of 31st December 2016 Financial assets Own receivables and granted loans Cash and cash equivalents Bonds Financial liabilities Liabilities measured at amortized cost The fair value of these assets and liabilities does not differ from their carrying value. Loans granted and own receivables do not include: tax receivables, advances for deliveries, prepayments and accruals. Liabilities measured at amortized cost do not include tax liabilities, advances received for supplies. Given the nature and characteristics of the above categories of financial instruments, within each group divided into the following classes of instruments: LOANS AND RECEIVABLES OWN As of 30th June As of 31st December 2016 Receivables from related parties (Note 5) Receivables from other entities Short-term (Note 5) - Trade Receivables from other entities Short-term (Note 5) - other Loans granted Total The impact of this category result for the period: Change of impairment losses on receivables recognized in the result for the period Change of impairment losses on loans recognized in the result for the period 0 0 Interest accrued on loans granted, charged to the result of the period Interest accrued on loans, based on the result for the period LIABILITIES MEASURED AT AMORTIZED COST As of 30th June As of 31st December 2016 Loan liabilities (Note 14) Liabilities for bonds issued Trade payables to related parties (Note 15) Trade liabilities to other entities (Note 15) Other liabilities to other entities Short-term (Note 15) Obligations under finance leases (Note 14a) Total The impact of this category result for the period: Interest on the loan referenced in the result for the period Interest on issued bonds, referenced in the result for the period Interest on leases, recognized in result for the period Credit Risk The following table shows the maximum credit risk to which the Group is exposed ELZAB. The maximum exposure to credit risk As of 30th June As of 31st December 2016 Shares in associates Shares in other entities Receivables Loan Cash and cash equivalents with no deposits and cash on hand Other financial instruments - deposits and bonds, bills, forwards Total Należności ELZAB S.A. to its customers apply the principles of the credit policy consists in assigning each client an appropriate credit limit is dependent on the amount of annual purchases gross repayments of receivables and the financial situation of the recipient. In 2013 has been revised payment terms, which are counted from the date of invoice (30, 45 or 60 days).in rare cases once awarded a payment date 90 days from the date of the invoice. The balance of receivables is monitored on a regular basis. ELZAB S.A. consistently treats the audience nieregulujących payments on time. If you do not meet the agreed terms of payment in the implementation of subsequent contracts change in the terms on prepayment, payment in cash or blocking deliveries to the customer. The consistent application of these procedures increases the guarantee of transactions with reliable partners.in addition, credit policy ELZAB S.A. is the need to verify the information agencies new clients, which is to be allocated to deferred payments. ELZAB SOFT Sp. z o.o. the normal course of the sale are used for their audiences 14 and 30 day payment terms of the invoice date. ELZAB HELLAS SA applies for its customers the following conditions: cash sale or 30 to 120 days from the invoice date. Concentration of receivables The ELZAB Capital Group has no significant concentrations of receivables. Accordingly, the group is little risk of losing its fluidity. Aging of receivables and receivables broken down by payment terms illustrate the explanatory notes to the balance sheet. Cash and cash equivalents The Company's policy is to maintain an appropriate level of cash sufficient to settle its obligations, maintaining the necessary level of working capital and to finance current investment needs and development. The Company has additional possibilities of financing in the form of a credit limit in the current bank account. Consistent control of revenue and expenditure allows the Company to adjust the current obligations, which means that the Company has no significant items overdue. The tables below show the maturity analysis of financial liabilities by remaining period to the contractual maturity date of the balance sheet. 42

47 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł Liquidity risk The Group's policy is to maintain an appropriate level of cash sufficient to settle its obligations, maintaining the necessary level of working capital and to finance current investment needs and development. ELZAB S.A. has the additional possibility of financing in the form of credit limits in the current bank account. Consistent control proceeds through the ongoing monitoring of receivables and expenses enables the Group to settle its obligations The tables below show the maturity analysis of financial liabilities by remaining period to the contractual maturity date of the balance sheet date. Contracted value 30th June The current value of cash flow To 1 year From 1 to 3 years From 3 to 5 years Over 5 years Financial liabilities Liabilities from finance leases Bank loans Bond liabilities Trade payables Financial liabilities - derivatives do not occur Contracted value 31th December 2016 The current value of cash flow To 1 year From 1 to 3 years From 3 to 5 years Over 5 years Financial liabilities Liabilities from finance leases Bank loans, including overdrafts, loans Liabilities due to capital increase in CLOU Sp. z o.o Bond liabilities Trade payables Financial liabilities - derivatives do not occur According to the assessment of the parent company ELZAB SA state funds, funds available under the credit line and forecasts in terms of inflows and outflows of cash from operations will be sufficient to service the liabilities of the Group, including loans, including interest and bank commissions. Market risk ELZAB Group companies are not exposed to significant risk from participation in securities trading in an active market. Interest rate risk ELZAB Group is exposed to interest rate risk in connection with the partial financing of their activities with bank loans and leasing. In the first half of 2015 ELZAB S.A. issued bonds with a nominal value of 25,000 thousand PLN. The Company and its subsidiaries did not benefit from interest rate hedging in the form of derivatives. The following table illustrates the sensitivity profile of ELZAB Group to the risk of changes in interest rates and their impact on the financial result on the assumption that interest rates will change by 1%. 30th June 31st December 2016 Instruments with a variable interest rate Bank loans Lease liability Liabilities for bonds issued The impact of changes in interest rates on the financial result an increase of 1% a reduction of 1% Foreign exchange risk ELZAB Group is exposed to foreign exchange risk, as part of the sales and purchase transactions concluded in foreign currencies. Given the low percentage share of sales in foreign currencies to total sales, this risk is small. The currency risk is greater in the case of the supply of foreign and domestic, bought by intermediaries but from abroad, where domestic prices are determined in relation to the price of foreign exchange. Group ELZAB been hedging foreign exchange risk by entering into forward contracts. On 30th June Elzab Group had the following open forward transactions: Date of the transaction currency quantity course implementation time limit for completion valuation at the balance sheet date future expenses / proceeds 20th June PLN/USD , th June PLN/USD , th June PLN/USD , th June PLN/USD , th June PLN/USD , th June PLN/USD , th May PLN/USD , th May PLN/USD , st June PLN/USD , th May HUF/PLN , th May HUF/PLN , th May HUF/PLN , th June HUF/PLN , th June HUF/PLN , HUF: refers to the price for 100 HUF total The tables below show the sensitivity profile of the risk of changes in exchange rates, broken down by currency (in thousands.) 30th June Total In the currency EUR In the currency USD In the currency HUF In the currency GBP Trade receivables and other receivables in the currency after translation into PLN as of 30th June change in the exchange rate, the impact on the financial result result in thousands PLN, when the growth rate of 5% result in thousands PLN, when the growth rate of 10% change in the exchange rate, the impact on the financial result result in thousands PLN, the drop rate of 5% result in thousands PLN, the drop rate of 10% th June Total In the currency EUR In the currency USD In the currency HUF In the currency GBP Trade payables and other currency after translation into PLN as of 30th June change in the exchange rate, the impact on the financial result result in thousands PLN, when the growth rate of 5% result in thousands PLN, when the growth rate of 10% change in the exchange rate, the impact on the financial result result in thousands PLN, the drop rate of 5% result in thousands PLN, the drop rate of 10% Exposure ELZAB assets of the Group to currency risk Total In the currency EUR In the currency USD In the currency HUF In the currency GBP change in exchange rate, effect on earnings per balance result in thousands PLN, when the growth rate of 5% result in thousands PLN, when the growth rate of 10% change in the exchange rate, the impact on the financial result 0 result in thousands PLN, the drop rate of 5% result in thousands PLN, the drop rate of 10%

48 DZIAŁ II Sprawozdanie finansowe GRUPA ELZAB za I półrocze r. w tys. zł 31st December 2016 Total In the currency EUR In the currency USD In the currency HUF In the currency GBP Trade receivables and other receivables in the currency after translation into PLN as at 31st December change in the exchange rate, the impact on the financial result result in thousands PLN, when the growth rate of 5% result in thousands PLN, when the growth rate of 10% change in the exchange rate, the impact on the financial result result in thousands PLN, the drop rate of 5% result in thousands PLN, the drop rate of 10% st December 2016 Total In the currency EUR In the currency USD In the currency HUF In the currency GBP Trade payables and other currency after translation into PLN as at 31st December change in the exchange rate, the impact on the financial result result in thousands PLN, when the growth rate of 5% result in thousands PLN, when the growth rate of 10% change in the exchange rate, the impact on the financial result result in thousands PLN, the drop rate of 5% result in thousands PLN, the drop rate of 10% In the currency EUR In the currency USD In the currency HUF In the currency GBP Exposure ELZAB assets of the Group to currency risk Total change in exchange rate, effect on earnings per balance result in thousands PLN, when the growth rate of 5% result in thousands PLN, when the growth rate of 10% change in the exchange rate, the impact on the financial result result in thousands PLN, the drop rate of 5% result in thousands PLN, the drop rate of 10% In the first half of in connection with the sale and purchase of foreign currency fluctuations in exchange rates may have an impact on the financial result by the value of the consumption of material and through sales realized in foreign currencies and through the implementation of payments in foreign currencies. Capital risk management The purpose of capital risk management is to protect the ELZAB Group's ability to continue its operations so that it can realize a return to shareholders and maintain an optimal capital structure to reduce its cost. The ELZAB Group monitors capital using the debt ratio. The debt ratio is calculated as the ratio of net debt to total capital. Net debt is calculated as the sum of liabilities (loans, trade and other liabilities) less cash and cash equivalents. Total capital is calculated as the sum of equity and net debt. 30th June 31th December 2016 The debt ratio is as follows: Total liabilities, excluding provisions Cash and cash equivalents, without financial means restricted cash Total net debt Total equity Total capital The debt ratio% 43,49 43,00 Signatures of Board Members 17th August Krzysztof Urbanowicz Chairman of the Board 17th August Jerzy Popławski Vice President of the Management Board Signature of person responsible for bookkeeping 17th August Małgorzata Kaczmarska Chief Accountant 44

49 Załącznik 1 Skrócone sprawozdanie finansowe ELZAB S.A. za I półrocze r. w tys. zł Attachment 1 Condensed financial statements of ELZAB S.A. STATEMENT OF FINANCIAL POSITION ELZAB S.A. ASSETS No. Notes As of 30th June (thousand PLN) As of 31st December 2016 A. Non-current assets Tangible fixed assets Note no Investment real estate Note no.1a Intangible assets Note no Long-term financial assets Note no Deferred income tax Long-term receivables and prepayments 0 40 B. Current assets Stocks Short-term receivables and prepayments Receivables from income tax Short-term financial assets Cash and cash equivalents C.Non-current assets classified as held for sale 0 0 Total assets LIABILITIES No. Notes As of 30th June As of 31st December 2016 A. Equity Share capital Surplus from sale of shares above their nominal value Own shares Other reserves - own shares Reserves and spare Profit / loss from previous years and the current year, including: Cumulative gains / losses from previous years Profit / loss for the current year B. Long-term liabilities Provisions Deferred income tax Long-term bank credits and loans Long-term lease liabilities Long-term financial liabilities Long-term liabilities and accruals C. Current liabilities Provisions Short-term bank credits and loans Short-term lease Short-term financial liabilities Short-term liabilities and accrual Liabilities Income tax Total liabilities STATEMENT OF COMPREHENSIVE INCOME ELZAB S.A. OPTION SPREADSHEET No. Notes from 1st January to 30th June (thousand PLN) from 1st January 2016 to 30th June 2016 A. Revenues from sales of products, goods and materials B. Costs of products, goods and materials C. Gross profit / loss from the sale of (A-B) D. Cost of sales E. General and administrative expenses F. Net profit / loss from the sale of (C-D-E) G. Other income H. Other expenses I. Profit / loss from operating activities (F + G-H) J. Financial income K. Financial costs L. Gross profit / loss (I + J-K) M. Income tax N. Net profit / loss from continuing operations (L-M) O. Net profit / loss from discontinued operations 0 0 P. Net profit / loss (N + O) R. Other comprehensive income 0 0 S. Total comprehensive income (P + R) No. Notes from 1st January to 30th June from 1st January 2016 to 30th June 2016 Earnings per share: - Annualized net profit / loss The number of all shares Number of shares excluding own shares Basic earnings continuing operations (for all shares) 0,52 0,75 - Basic earnings continuing operations (the number of shares adjusted for the treasury shares) 0,56 0,81 - Basic earnings from discontinued operations 0,00 0,00 46

50 Załącznik 1 Skrócone sprawozdanie finansowe ELZAB S.A. za I półrocze r. w tys. zł STATEMENT OF CASH FLOWS ELZAB S.A. INDIRECT METHOD No. Notes from 1st January to 30th June (thousand PLN) from 1st January 2016 to 30th June 2016 Cash flows from operating activities Net profit / loss Adjustments for: Depreciation of fixed assets Amortization of intangible assets Impairment of goodwill 0 0 Gains / losses on foreign exchange differences 0 0 Costs and interest income Dividend income 0 0 Profit / loss from investing activities Change in provisions Change in inventories Change in receivables and prepayments Change in liabilities and accruals Tax recognized in the statement of comprehensive income Paid / returned income tax Other adjustments 0 0 Net cash flows from operating activities Cash flows from investing activities Proceeds from sale of fixed assets and intangible assets Net proceeds from the sale of associates and subsidiaries 0 0 Proceeds from sales of short-term financial assets 0 0 Proceeds from interest Proceeds from dividends 0 0 Repayment of loans Expenditure on acquisition of tangible fixed assets and intangible assets Net expenses for the acquisition of subsidiaries and associates Expenditures for the purchase of short-term financial assets 0 0 Loans granted Other Net cash flows from investing activities Cash flows from financing activities Proceeds from borrowings Net proceeds from issue of shares, bonds, notes, bills Repayment of borrowings Payment of liabilities under finance lease agreements Dividends paid to shareholders 0 0 Dividends paid to minority shareholders 0 0 Purchase of own shares 0 0 Interest paid Other 0 0 Net cash flows from financing activities Increase / decrease in cash and cash equivalents Cash, cash equivalents at beginning of period Cash, cash equivalents at end of period Amount of unused credit limit of bank account

51 Załącznik 1 Skrócone sprawozdanie finansowe ELZAB S.A. za I półrocze r. w tys. zł STATEMENT OF CHANGES IN EQUITY (thousand PLN) Share capital Surplus from sale of shares above their nominal value Own shares Other reserves - own shares Supplementary capital created from profits Reserve capital from revaluation of assets Profit / loss from previous years and the current year, including: profit / loss from previous years net profit / loss of the current year Balance at 1st January Changes in accounting policies 0 Balance at 1st January after adjustments (restated) Total comprehensive income Adjustment due to liquidation of fixed assets 0 0 Settlement of the financial result for the previous financial year - transfer to reserve capital Profit / loss for the year Other changes in equity Balance at 30th June Total Share capital Surplus from sale of shares above their nominal value Own shares Other reserves - own shares Supplementary capital created from profits Reserve capital from revaluation of assets Profit / loss from previous years and the current year, including: profit / loss from previous years net profit / loss of the current year Balance at 1st January Changes in accounting policies 0 Balance at 1st January 2016 after adjustments (restated) Total comprehensive income Transfer of capital reserve reserve capital - share buyback 0 0 Settlement of the financial result for the previous year Adjustment due to liquidation of fixed assets Income tax - Reversal of provision for the difference in the balance sheet depreciation and tax as a result of the valuation of fixed assets on the date of transition to IFRS Profit / loss for the year Other changes in equity Settlement of the financial result for the previous financial year - dividend payment Balance at 31st December Total Share capital Surplus from sale of shares above their nominal value Own shares Other reserves - own shares Supplementary capital created from profits Reserve capital from revaluation of assets Profit / loss from previous years and the current year, including: profit / loss from previous years net profit / loss of the current year Balance at 1st January Changes in accounting policies 0 Balance at 1st January 2016 after adjustments (restated) Total comprehensive income Adjustment for liquidation of fixed assets Settlement of the financial result for the previous financial year - transfer to reserve capital Profit / loss for the year Other changes in equity Settlement of the financial result for the previous financial year - dividend payment Balance at 30th June Total 48

52 Załącznik 1 Skrócone sprawozdanie finansowe ELZAB S.A. za I półrocze r. w tys. zł NOTE NO..1 TANGIBLE FIXED ASSETS (thousand PLN) TANGIBLE FIXED ASSETS Fixed assets, including: Fixed assets under construction Tangible fixed assets, total As of 30th June As of 31st December from 1st January to 30th June Land Buildings Means of Machines and transport devices Others Total Gross value at beginning of period Additions acquisition improvement Adopted on the basis of a financial leasing agreement Decreases sale liquidation termination of contracts of lease Internal displacement (+/-) 0 Gross value at end of period Accumulated amortization at beginning of period amortization for the period decrease Internal displacement (+/-) 0 Accumulated amortization at end of period The value takes into account depreciation and impairment losses at the end of the period Net value at end of period from 1st January 2016 to 30th December 2016 Land Buildings Means of Machines and transport devices Others Total Gross value at beginning of period Additions acquisition improvement Proceed with the other items of assets Adopted on the basis of a financial leasing agreement Decreases Sale Termination of lease agreements Proceed to other items of assets Liquidation Attributed to discontinued operations 0 Internal displacement (+/-) 0 0 Gross value at end of period Accumulated amortization at beginning of period amortization for the period other increases other reductions termination of lease agreements Accumulated amortization at end of period Impairment losses at the beginning of the period 0 Shot during an impairment loss of value 0 Reversal during an impairment loss of value 0 The value takes into account depreciation and impairment losses at the end of the period Net value at end of period from 1st January 2016 to 30th June 2016 Land Buildings Means of Machines and transport devices Others Total Gross value at beginning of period Additions acquisition improvement 0 - Adopted on the basis of a financial leasing agreement 0 Decreases sale Liquidation Termination of lease agreements Attributed to discontinued operations 0 Internal displacement (+/-) 0 Gross value at end of period Accumulated amortization at beginning of period amortization for the period decrease Internal displacement (+/-) 0 Amortization at the end of the period The value takes into account depreciation and impairment losses at the end of the period Net value at end of period

53 Załącznik 1 Skrócone sprawozdanie finansowe ELZAB S.A. za I półrocze r. w tys. zł FIXED ASSETS OFF-BALANCE SHEET (thousand PLN) As of 30th June As of 31st December 2016 used under rental, lease or other agreement, including leasing agreement, including: Used under operating leases - Land in perpetual usufruct 0 0 Fixed assets off-balance sheet, total 0 0 NOTE NO. 1a INVESTMENT PROPERTY (thousand PLN) INVESTMENT PROPERTY Status at the beginning of the period a) Increases - acquisition - other b) Reductions - sale - write-downs Status at end of period As of 30th As of 31st June December The property in Suchy Las was sold in July this year. The sales price amounted to PLN. The real estate of office of ELZAB S.A. still will be located in Suchy Las. NOTE NO. 2 INTANGIBLE ASSETS (EXCLUDING GOODWILL) (Thousand PLN) INTANGIBLE ASSETS Intangible assets produced on their own Development work in progress, intangible assets in progress Other intangible assets Total intangible assets INTANGIBLE ASSETS - GOODWILL Goodwill resulting from the merger of ELZAB SA and MEDESA Sp. o.o.. Total intangible assets - goodwill As of 30th June As of 31st December As of 30th As of 31st June December from 1st January to 30th June Intangible assets produced on their own Other intangible assets Total Development Development Others work work Others Gross value at beginning of period Additions acquisition developmental works led on their own Decreases Gross value at end of period Accumulated amortization at beginning of period amortization for the period other increases - decrease - Accumulated amortization at end of period The value takes into account depreciation and impairment losses at the end of the period Adjustment due to net exchange differences arising from translation - Net value at end of period from 1st January 2016 to 31st December 2016 Intangible assets produced on their own Other intangible assets Development Development Others work work Others Gross value at beginning of period Additions acquisition adoption of investment developmental works led on their own acquisition in the context of business combinations with revaluations other Decreases withdrawal from the use liquidation sale with revaluations due to the reclassification of assets held for sale other Gross value at end of period Accumulated amortization at beginning of period amortization for the period other increases - decrease - Accumulated amortization at end of period Impairment losses at the beginning of the period - Shot during an impairment loss of value - Reversal during an impairment loss of value - The value takes into account depreciation and impairment losses Adjustment due to net exchange differences arising from translation - Net value at end of period Total 49

54 Załącznik 1 Skrócone sprawozdanie finansowe ELZAB S.A. za I półrocze r. w tys. zł from 1st January 2016 to 30th June 2016 Intangible assets produced on their own Other intangible assets Total Development work Others Development work Gross value at beginning of period Additions acquisition developmental works led on their own Decreases Gross value at end of period Accumulated amortization at beginning of period amortization for the period other increases - decrease - Accumulated amortization at end of period Impairment allowance at the beginning of the period - Recognition in the period of impairment allowance - Reversal during an impairment loss of value - at the end of the period Adjustment due to net exchange differences arising from translation - Net value at end of period Others EXPENDITURES FOR DEVELOPMENT SUSTAINED IN THE YEAR from 1st January to 30th June from 1st January 2016 to 31st December 2016 from 1st January 2016 to 30th June 2016 Depreciation Consumption of raw and auxiliary materials Salaries with charges Other costs (including, among others, the costs of faculty, external services) TOTAL Capital development are recognized on intangible assets in progress until the end of the work. Expenditures on development are recognized on intangible assets until their completion. Period costs were not charged with the development work: depreciation in the amount of 584 thousand PLN and the cost of written development work in the amount of 161 thousand PLN. In the first half of ELZAB S.A completed the partnership project "Innovative Selling Position", for which received funding under Measure 1.4 support for special projects of the Operational Programme Innovative Economy The object of the project is to develop an innovative approach retail sales - cash register. The project also includes the functionality of the model bearing features of innovation associated with new services and values provided in the form of a prototype, protocols, programs and associated components. The amount of co-financing for the project amounted to 906 thousand PLN of which 532 thousand PLN were spent on ELZAB S.A. NOTE NO. 3 LONG-TERM FINANCIAL ASSETS (in thousand PLN) LONG-TERM FINANCIAL ASSETS As of 30th June As of 31st December 2016 Shares in subsidiaries Shares in associated companies Shares in other entities Long-term loans TOTAL The percentage of shares and voting rights held by the Company Place of registration 30th June 31st December 2016 Name of subsidiary Core business and activity ELZAB SOFT Sp. z o.o. production, distribution software Poland 87,50% 87,50% ELZAB HELLAS SPV Sp. z o.o. consulting Poland 67,00% 67,00% The percentage of shares and voting rights held by the Company 30th June 31st December 2016 Place of registration Name of the associated company Core business and activity activity connected with the consulting in COMP CENTRUM INNOWACJI Sp.z o.o. the computer science Poland 49,72% 49,72% 50

55 Załącznik 1 Skrócone sprawozdanie finansowe ELZAB S.A. za I półrocze r. w tys. zł The percentage of shares and voting rights held by the Company Other entities Core business Place of registration and activity 30th June 31st December 2016 CLOU Sp. z o.o. marketing, publishing, advertising Poland 30,00% 30,00% As of 30th June As of 31s December 2016 Name of subsidiary Expense Impairment Net value Expense Impairment Net value ELZAB SOFT Sp. z o.o ELZAB HELLAS SPV Sp. z o.o Investments in subsidiaries total As of 30th June As of 31s December 2016 Name of the associated company Expense Impairment Net value Expense Impairment Net value COMP CENTRUM INNOWACJI Sp.z o.o Investments in associates total As of 30th June As of 31s December 2016 Name of another entities Expense Impairment Net value Expense Impairment Net value CLOU Sp. z o.o Name of another entities total Signatures of Board Members 17th August Krzysztof Urbanowicz President of the Management Board 17th August Jerzy Popławski Vice President of the Management Board Signature of person responsible for bookkeeping 17th August Małgorzata Kaczmarska Chief Accountant 51

56 Zakłady Urządzeń Komputerowych ELZAB S.A. Report on the activities of ELZAB Group for the first half of

57 ELZAB Group REPORT ON THE OPERATIONS OF GROUP ELZAB 30 th June (in thousand PLN) Table of Contents I. Introduction Basic information Employment Composition of Management and Supervisory Board Remuneration paid to members of the Company... 5 II. The size and types of equity ELZAB Group Equity capital Settlement of profit from previous years, the parent company Proposed distribution of the parent company for the current periods Ownership Capital Structure Shares ELZAB SA in the possession of members of the Management and the Supervisory Board Shares in associated companies held by members of the Management Board and the Supervisory Board Changes in Shareholding ELZAB S.A Share Buyback Listing of shares in ELZAB S.A. on the Warsaw Stock Exchange III. Basic values economic and financial a. Revenues b. Costs c. Financial instruments d. Investment real estate e. The structure of assets and liabilities in the consolidated statement of financial position of the group f. Development work g. Guarantees and sureties h. Position of the Management Board regarding the possibility of realization of published forecasts of results 17 i. Dependence on suppliers and customers j. Significant proceedings pending before court, competent arbitration authority or public administration IV. Key financial indicators V. Non-Recurring Events and other factors affecting the Group's financial situation ELZAB VI. Other information important for evaluation of the personnel, assets, financial position and ability to meet obligations VII. Information on the issue, redemption and repayment of debt and equity securities VIII. Information on significant transactions and transactions with related parties IX. Information on significant new contracts for the ELZAB Group Credits, loans and lease liabilities Bonds Acceptance Agreement X. Agreement with the entity authorized to audit financial statements XI. Basic risks and threats in the activities of the Group ELZAB XII. Factors which in the opinion of ELZAB S.A. will affect its results in at least one quarter XIII. The forecast development of the Capital Group XIV. Statement of compliance XV. Statement on the appointment of the auditor

58 ELZAB Group REPORT ON THE OPERATIONS OF GROUP ELZAB 30 th June (in thousand PLN) I. Introduction 1. Basic information Parent company, Zakłady Urządzeń Komputerowych ELZAB S.A., Kruczkowskiego 39 street, postal code Zabrze, the Company is a joint-stock commercial law. The company has 3 sales Office: - in Warsaw, street Taborowa 14 - in Wroclaw, street Słubicka 22 - in Suchy Las near Poznan street Akacjowa 4. The company entered into the National Court Register - Register of Entrepreneurs NCR Chief Inspector of Environmental Protection granted to the Company registration number E WBW accordance with Article 10 paragraph. 1 and 2 of the Act of 29 th July 2005 on waste electrical and electronic equipment (Dz. U. No. 180, poz.1495). The core business entities in the ELZAB Capital Group and the main source of revenue is from the sale of electronic devices. As of 30 th June ELZAB Group consisted of the following entities: - ELZAB S.A. - the parent company, - ELZAB SOFT Sp. z o. o.- the subsidiary, fully consolidated, the share of ELZAB S.A % of the capital and at the General Meeting, - ELZAB HELLAS SPV Sp. z o. o. the subsidiary, fully consolidated, the share of ELZAB S.A 67 % in the share capital of the Company and GM. The remainder of the shares are held by MONEA V Sp. z o. o., - ELZAB HELLAS AE (joint stock company) - the subsidiary, fully consolidated, participation ELZAB HELLAS SPV Sp. z o. o % Of the capital and at the General Meeting, - COMP INNOVATION CENTRE Sp. z o. o. - the affiliated company, valued by the equity method, the share of ELZAB S.A % in the share capital of the Company and GM. The remainder of the shares are held by COMP S.A., the dominant entity in relation to ELZAB S.A. - Clou Sp. z o.o. in Warsaw - the remaining entity, participation of ELZAB S.A. - 30% in the Company's capital and at the GM. The remaining part of the shares is held by COMP group companies In the first half of there were no changes in the structure of the ELZAB Group. Graphical representation of the organizational structure of the ELZAB Capital Group as of 30 th June. 3

59 ELZAB Group REPORT ON THE OPERATIONS OF GROUP ELZAB 30 th June (in thousand PLN) 2. Employment Total employment in the ELZAB Capital Group as of 30 th June amounted to 304 people, compared to the situation on 31 st December people. The control system of employee shares In the Group ELZAB there is no employee share program. 3. Composition of Management and Supervisory Board As for 30 th June the Management Board of the Company consists of: Krzysztof Urbanowicz President of the Management Board Jerzy Popławski Vice President of the Management Board The Company's proxy at the date of publication of the report for the first half of is: Małgorzata Kaczmarska - Chief Accountant Dariusz Bizacki - Director of the Department As for 30 th June the Supervisory Board of the Company consists of: Grzegorz Należyty - Chairman of the Supervisory Board Jarosław Wilk - Deputy Chairman of the Supervisory Board Andrzej Wawer - Secretary of the Supervisory Board 4