ALTA S.A. REPORT OF THE MANAGEMENT BOARD ON THE COMPANY ACTIVITIES IN THE YEAR ENDED ON 31 DECEMBER 2014

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1 ALTA S.A. REPORT OF THE MANAGEMENT BOARD ON THE COMPANY ACTIVITIES IN THE YEAR ENDED ON 31 DECEMBER 2014 MARCH 2015

2 Dear Shareholders, Last year in the letter I wrote: 'On 31 May 2014 we begin the sale of houses and flats in the first quarters of Siewierz Jeziorna. In a year from today, the Management Board of ALTA S.A. will inform not only about the development of the project but also about the results of sale'. It is my pleasure to inform that as at the day of the publication of the report, out of the total number of 43 houses, flats and dwellings in the course of construction, 20 of them are under lease, reservation and developer contracts. It is a satisfying result but in order to reach planned profitability ratios, we must engage other property developer, unrelated with ALTA. A positive signal is an agreement for the sale of plots of land, concluded with a national developer, a fact of which I notified about in the current report. A significant part of this agreement are terms of sale of other land for construction. Discussions with other developers are being held, which enables us to plan further works. In the scope of commercial properties the process of disinvestment runs too slowly. At the same time, I notice the pressure on prices, especially on rent rates. It has impact on the valuation of our assets, which were subject to a considerable reduction in the reported period. The biggest short-term challenges which I face remain liquidity and refinancing of loans in TUP Property. I will pay a lot of attention to these issues. Nevertheless, I am optimistic about medium- and long-term perspectives for ALTA S.A. Let me repeat that, by striving at satisfying one of the basic needs of consumers, i.e. a comfortable home, ALTA constitutes an attractive offer for our Shareholders. Furthermore, it is still a market segment with a relatively weak competition. All our Shareholders are welcome to visit Siewierz Jeziorna it is worth seeing what is being developed there. Yours sincerely, Robert Jacek Moritz President of Management Board of ALTA S.A. 2

3 Table of contents I Basic information on the Company 1.1 ALTA and its investments II Information on activities in Description of the Company and its activities 2.2. Outlets, customers, supply sources, suppliers and operational segments 2.3.Loans and borrowings 2.4 Guarantees and sureties 2.5 Issuance of securities, dividend payment and acquisition of own shares 2.6 Other significant events III The property, financial and income standing of the Company and its financial result 3.1 Financial result of the Company 3.2 The property situation 3.3 Financial resources management and ratios 3.4 Assessment of possibilities of realisation of investment assumptions 3.5 Perspective of development of the Company and its Investments 3.6 Risk factors 3.7 Other significant events affecting the activity of the Company which occurred after the balance sheet date 3.8 Description of significant off-balance sheet items in subjective, objective and value terms 3.9 Financial instruments and risks related IV Shares, shareholders and supervision 4.1.Management Board, Supervisory Board and their remuneration 4.2.Shares owned by managing and supervising people 4.3 Major Shareholders 4.4 Information on employee share control system V Corporate Governance VI Statements of the Management Board 3

4 I Basic information on the Company 1.1. ALTA and its investments ALTA S.A. is an investment entity in the meaning of International Financial Reporting Standard 10 (IFRS) : 'Consolidated financial statements' (hereinafter IFRS). In compliance with the provisions of IFRS 10, which came into force on 1 January 2014, the Management Board of the entity has qualified ALTA S.A. as an investment entity; shares in subsidiaries and affiliates have been qualified accordingly as investments. In effect of the taken decisions, the Company ALTA S.A. does not draw up a consolidated financial statement as of 30 June As a rule, an investment entity does not consolidate its subsidiaries, therefore the Company publicizes its financial report and the report of the Management Board report on the Company activities in ALTA S.A. is entered into the register of enterprises of the District Court for the capital city of Warsaw, XII Commercial Department of the National Court Register (KRS) under KRS No The period of the Company's operations is indefinite. Pursuant to the Statues, the main area of the Company operations is the activity of holding companies (PKD Z). Main are of the investment activity of the Company ALTA covers projects within developer branch. The biggest potential among the investments constitutes Siewierz Jeziorna project. In next years, all the resources of the Company will be exploited in the development of this multidimensional, diversified investment undertaking, to the best of its potential. As at the day of submitting this report, the Investments of ALTA include: Company name and legal form Chmielowskie Sp. z o.o. TUP Property S.A. Forest Hill Sp. z o.o. Kino-Centrum Fordon Sp. z o.o. in liquidation Registered office Share capital (PLN) Scope of activity Siewierz Company is the owner of property on which Siewierz-Jeziorna, a sustainable town project, is being developed. The scope of the Company's activities covers preparation of land and utility infrastructure for the construction of houses. Warszawa Managing the portfolio of the properties owned, development of investment projects, property sale Siewierz Special purpose vehicle, currently functioning as the developer of Siewierz-Jeziorna project Bydgoszcz Special purpose vehicle, together with the city of Bydgoszcz dedicated to the realisation of investment project, the development of multifunctional recreational-commercial facility The Company in the course of liquidation Stake in the share capital (%) ALTA S.A. TUP Property S.A. ALTA S.A. ALTA S.A. TUP Property S.A. 4

5 Przystań Siewierz Sp.z o.o. Duncon Bikes Sp. z o.o. in bankruptcy with liquidation Powszechna Agencja Informacyjna S.A. under the resolution on the Company dissolution adopted by the General Meeting of Shareholders of 11 December The resolution became effective on 31 December In the accounting books of TUP Property S.A. the value of the Company Kino-Centrum Fordon amounts to PLN 0, the Company dissolution does not affect the financial result of TUP Property S.A. and ALTA for Siewierz The company offers port services, events, regatta, services within tourism and recreation; administering of Siewierz Jeziorna district. Kraków The Company operations designing, producing and distributing of dealt with bicycle frames for gravity sports. The liquidation procedure is in progress. The accounting books of ALTA comprise provisions for the assets of Duncon Bikes. Warszawa ,6 Internet services branch. The Company is independent provider of telecommunications services. It provides services of data transmission and broadband Internet connection based on its own hybrid telecommunications network. Its customers are primarily institutions of public and local administration and large financial enterprises. ALTA S.A. ALTA S.A. ALTA S.A. Changes in the Investment structure in a reporting year and to the day of submitting the report for On 30 June 2014 National Registration Court (KRS) registered the change of the company name of Port Jachtowy Nieporęt into Przystań Siewierz, pursuant to the commencement of the activity. The registered office of the Company is Siewierz, Chmielowskie 1 St. (area of Siewierz Jeziorna investment). Merger of TUP Property and Centrum Handlowe Bażanty On 24 July 2014, the District Court for the capital city of Warsaw, XII Commercial Department, registered the merger of the Companies: Centrum Handlowe Bażanty Sp. z o.o. (company acquired) and TUP Property S.A. (acquiring company). The merger took place pursuant to Article sub-clause 1 according to Article of the Code of Commercial Companies i.e. in the course of takeover by Property S.A. of all the assets of the company Centrum Handlowe Bażanty, through the transfer of all the assets of the acquired company to the acquiring company, without increasing the share capital of TUP Property S.A. In the period of 2013 Centrum Handlowe Bażanty Sp. z o.o. was the owner of the property for the development of a shopping centre. The property was sold. Sale of shares of X-press Couriers Sp. z o.o. On 10 September 2014 ALTA S.A. concluded a sales agreement of shares, constituting 21,96% of share capital of X-press Couriers Sp. z o.o. The shares were sold to Investors (legal and natural persons). The transaction covered all the shares of the company X-press Couriers owned by 5

6 ALTA S.A. The sale of shares was an execution of the investment exit strategy. Liquidation of Roda Sp. z o.o. After the balance sheet date, on 21 January 2015 the District Court for Poznań Nowe Miasto i Wilda in Poznań, IX Commercial Department of National Registration Court, having examined the application of the Company, decided to delete Roda Sp. z o.o. under liquidation from the National Register Court. On 24 November 2014, the Extraordinary General Meeting of Shareholders of the Company decided to approve the report on liquidation of the company and to complete the winding-up. In the previous reporting periods the Company, together with TUP Property S.A. developed the project of revitalization of a factory building in Środa Wlkp. (where the production operations of the Company were held) and of changing its destination into a residential building for the local community. The Company TUP Property (investor) obtained a construction permit on 13 June The property and the project are ready for sale. In the period of 2014 no other investments than the ones mentioned in the above table were carried out. In 2014 the Company did not invest in domestic or foreign securities, financial instruments, intangible assets or properties. In accordance with the nature of business run by ALTA, particular Companies constitute its Investments. II Information on activities in Description of the Company and its activities As an investment entity, ALTA S.A. acts as a financial investor. The current Investments of ALTA S.A. are Companies operating in developer branch, performing there diversified activities such as lease of commercial, logistic and office properties, sale of ready-for-sale plots of land with a projects, sale of houses and flats. ALTA cooperates with its Investments in the scope of financing the activity and planning particular events aiming at effective exploitation of assets. The strategy for assumes turning all management and financial efforts towards the execution of Siewierz Jeziorna project building of the first town in Poland erected in accordance with sustainable growth policy and new urban planning. The second task indicated in the strategy is the sale of remaining assets. The activities exercised in the scope of particular Investments have impact on the continuation, opportunities of developing or resuming dividend policy of the Company in the next periods. Therefore, the activities of major Investments of ALTA in 2014 are presented below. Chmielowskie Sp. z o.o. - Siewierz Jeziorna project The registered office of the entity is in Siewierz. The Company is registered in the National Court Register under the number of represented by the District Court for the city of Warsaw, Commercial Department XII. 6

7 The Company s share capital is PLN and is divided into shares of nominal value PLN 50 each. The owner of Siewierz Jeziorna property. In the realisation of the project the entity is responsible for utility infrastructure of the investment and land for the construction of houses. In particular, the Company activities comprise land development design and ground leveling, laying pipelines, construction of roads and pavements, division of plots, providing access to utilities. Prepared plots of land are sold to developers who can develop residential or commercial buildings in accordance with the Local Zoning Plan, architectural code and urban planning concept. Siewierz Jeziorna is the main and potentially most profitable investment undertaking. It constitutes a prospective, multi-dimensional project in a developer sector. It comprises the activities withing residential and business area, as well as services with the possibility of implementing new technologies and sustainable development principles. Its diversified nature guarantees the control of risk, the continuity of works and the opportunity of achieving high profits. The project is based on the concept of multifunctional towns, in which residential space is developed in the neighbourhood of services and commerce, offering new job places and creating a value added to the property. The future district of Siewierz Jeziorna may be inhabited by 10 thousand people. The construction surface of the investment, covering land for the construction of houses, a public utility building, internal roads, green areas and other common land, amounts to 116,96 hectares. The property of Siewierz Jeziorna is divided into territorial zones, named respectively: Centrum, Na wzgórzu, Zalew i Chmielowskie. Local Development Plan covers an area of 43,44 hectares of the property. The property of the Company was acquired in Major events: October 2007 Charrette workshops in Siewierz - urban planning workshops resulting in the concept of the investment, agreed in the cooperation of local authorities and inhabitants of Siewierz. In urban planning such way of creating projects is named a charrette method. June 2008 Ready architectural code established by Duany Plater-Zybert & Company Architects & Town Planners (DPZ Europe) a set of architectural and urban planning rules determining the exterior looks of Siewierz Jeziorna. November the Municipality and the Communal Office of Siewierz adopted a study of land use conditions and directions for the whole area of Siewierz Jeziorna. April 2010 agreement with the Municipality of Siewierz on the development of the Investment defining future obligations of the parties connected with the realisation of the Investment, including the development of particular infrastructure elements. June the Municipality and the Communal Office of Siewierz adopted a Local Development Plan for the part of the investment. As at 31 October 2014, an independent expert valued the entire property at PLN

8 thousand, including: The value being subject to LDP amounts to PLN thousand. The value of investment property amounts to PLN thousand. The expert's valuation reflects the sales price, should a third party (an investor) be interested in developing the area in accordance with the current legal status. Detailed information concerning the valuation method were presented in a financial statement for 2014 on page 29. In 2014 the Company Chmielowskie conducted the following works in the scope of tasks assigned in the project of Siewierz Jeziorna: The architectural office completed a development plan for the area, a plan of utility infrastructure and of installation solutions covering the quarter 2 and parts of quarters 3; permits for the construction of installations were obtained A division of land for water intake and a pump station was carried out Agreements concerning the following works were concluded: establishment of optic fibre networks, laying foundations, installing exterior lighting and connecting the building to power grid networks in quarters 2 and 3. An agreement was concluded for the creation of rain water drainage on a quarters 2 and 4. The following were opened for use: first three detached houses, a part of roads and networks in the first quarter as well as a rainfall water collector and sewage system Forest Hill Sp. z o.o. - developer - residential development The registered office of the entity is in Siewierz. The Company is entered into the register of enterprises of the the District Court for the city of Poznań, Commercial Department XXI of National Court Register under the number Share capital of the Company amounts to PLN and comprises of shares, of the nominal value PLN 100 each. Forest Hill conducted the development of first houses on 18 plots of land situated in the first quarter of Siewierz Jeziorna property: a multi-family terraced house and terraced or semidetached houses. The first three houses obtained occupancy permits. Forest Hill acquired from the company Chmielowskie the projects and the plots of land for construction on which the development is being held (agreements of transfer of ownership rights were concluded between 4 th quarter of 2013r and 1 st quarter of 2014). Transactions concluded between the entities are market-determined, they are based on valuations and calculations. The sale of houses and flats began on 31 May TUP Property S.A. developer commercial properties, a portfolio of properties for lease The registered office of the entity is in Warsaw. The Company is entered into the register of enterprises of the District Court for the capital city of Warsaw, XII Commercial Department of the National Court Register under the number of 8

9 The activity of TUP Property S.A. is conducted in the following aspects: - carrying out of investment projects the company provides direct management of the project for realisation, it coordinates management activities in particular stages of the investment process and it provides financial means for the investment project; - management of portfolio of properties owned the company sets and executes a management strategy for properties constituting the portfolio (plan of the property development, management plan, organizational budget of the property); - market research, research of locations, customers and investors, transactions of sale or purchase of the property. Share capital of the Company amounts to PLN and comprises shares of the value of PLN 1 each. The Company owns a portfolio of leased properties which were a passive investment protecting the equity against value losses in the period of economic crisis. In 2014 the Company managed a portfolio of commercial properties and ran an active sale of flats in Popularna 38 investment. The Company concluded a preliminary agreement of purchase of 26 flats and 2 commercial premises from Forest Hill with the aim of leasing the property acquired. Przystań Siewierz Sp. z o.o. managing the district of Siewierz Jeziorna and the construction site; recreational services The registered office of the entity is in Siewierz. The Company is entered into the register of enterprises of the the District Court for the city of Warsaw, Commercial Department XII of National Court Register under the number Share capital of the Company amounts to PLN and comprises shares of the nominal value of PLN 300 each. The Company runs management works connected with the construction site of Siewierz Jeziorna. It prepared the background for the development in a way that the works were conducted beyond the area already urbanised, ready for use by inhabitants. It allowed for the inconveniences caused by construction works to be minimized to a large extent. Future assignments of the Company will also include the management of Siewierz Jeziorna district. Owing to experience in providing recreational services, the Company revitalized the area located at the Przeczycko Siewierski Lagoon (also a part of Siewierz-Jeziorna investment). In June 2014 the Company opened a marina; at the holiday season, sailing day camps for children living in Siewierz municipality and other events were organized at the lagoon Outlets, customers, supply sources, suppliers and operational segments The Company operates on the domestic market. The source of the Company income are primarily the transactions concluded with Investments. Owing to the nature of business, the Company is not 9

10 dependent on suppliers and external recipients. Particular Companies operate on the property market and due to a broad access to suppliers and contractors, their activity is also not dependent on suppliers, recipients or supply resources of means indispensable to develop the facilities. The activity of Companies-Investments is also conducted on the domestic market. The Company does not set apart the segments of its activity. All the investments of the Company operate within one sector. 2.3.Loans and borrowings Loans of ALTA S.A. - contracted and terminated ALTA S.A. is not a party to transactions of loan agreements and it did not conclude such agreements in previous years. In the period of 2014 no conclusion or termination of a loan agreement took place. Similarly, no new loan agreements were concluded by any of the Company-Investments. Information on the agreements with banks was included in the item Agreements significant for the activity. Loan agreement remain valid in TUP Property, and they were contracted respectively: in Bank Zachodni WBK as at the balance sheet date, the loan is of a short-term nature and it amounts to PLN thousand; interest rate of the loan is variable, based on EURIBOR interest rate, increased by the margin; the loan was contracted in EURO. DZ Bank AG as at the balance sheet date the loan is of a long-term nature and it amounts to PLN thousand; interest rate of the loan is variable, based on EURIBOR interest rate, increased by the margin; the loan was contracted in EURO. In 2014 TUP Property repaid the debt amounting to PLN thousand Borrowings contracted, granted and terminated As at the balance sheet date ALTA S.A. had no contracted borrowings and no conclusion or termination of a borrowing agreement took place. As at the balance sheet date ALTA S.A. was the Lender in respect to the following entities: Borrower Chmielowskie Sp. z o.o. X-press Couriers Sp. z o.o. Lender ALTA S.A. ALTA S.A. The starting point of the borrowing Consolidated loan of 30 June 2014 Consolidated loan of 30 December 2011 Maturity date 31 December June 2016 Amount in PLN '000 Amount of the loan exploited ,6 Amount of the loan exploited 425 Interest calculation method Variable interest rate Variable interest rate 2.4 Guarantees and sureties 10

11 Status and amount of sureties as at the balance sheet date on 31 December 2014 are as follows: Amount of sureties granted to TUP Property by ALTA S.A. surety of a non-renewable long-term loan granted to the Company by DZ Bank AG Amount of surety: up to PLN thousand Maturity: 24 June 2023 surety of a loan granted by BZ WBK S.A. Amount of surety: PLN thousand Maturity: 31 December 2017 A customary collateral of the loans which TUP Property contracted in previous years with the aim of refinancing the purchase of the portfolio of working properties are mortgages established in favour of Lenders, respectively: Location of properties on which there is a contractual joint mortgage established in the amount of PLN thousand, a contractual joint deposit mortgage in the amount of PLN thousand and a contractual joint mortgage in the amount of PLN 639 thousand, in favour of Bank Zachodni WBK S.A.: - Będzin, Gdańsk, Nowy Sącz, Ostrzeszów, Syców, Warsaw Belgradzka Street, Zabrze, Katowice Bażantów (property to let). Location of properties on which there is an ordinary contractual joint mortgage in the amount of PLN thousand, a contractual joint deposit mortgage in the amount of PLN thousand, in favour of DZ Bank AG S.A.: - Głuchowo, Ożarów, Tychy, Pruszków Surety granted to Forest Hill by ALTA S.A. On 11 July 2014, ALTA S.A. granted a surety to Forest Hill, in respect of a payment for construction works. The value of the surety amounts to PLN thousand. A single payment due to granting a surety amounts to PLN 15,2 thousand. Additionally, Forest Hill will quarterly pay an amount constituting the equivalent of 0,35% of the value of the guarantee. ALTA will aim at reducing the scope of sureties and guarantees granted. A desirable situation is replacing this form of security with another type of contingent liabilities which will not encumber the Company. The Management Board of ALTA and its investments conclude that there were no premises to establish provisions for potential liabilities connected with the above-mentioned sureties and guarantees. 2.5 Issuance of securities, dividend payment and acquisition of own shares Throughout 12 months ended in 2014, ALTA did not issue securities. The Company did not pay the dividend, nor did it acquire own shares. 2.6 Other significant events Agreements with impact on the Company economic activity In 2014 ALTA S.A. and its particular, Companies Investments with projects in progress, were parties 11

12 to agreements concluded with external contractors which were significant from the perspective of the Company. Agreements concluded in 2014: Investment sale On 10 September 2014 ALTA S.A. concluded a sales agreement of shares, constituting 21,96% of share capital of X-press Couriers Sp. z o.o. The shares were sold to Investors (legal and natural persons). The transaction covered all the shares of the company X-press Couriers owned by ALTA S.A. The sale of shares was an execution of the investment exit strategy. Bank agreements TUP Property S.A. carries out activities aiming at refinancing of its debt, i.e. loans contracted in DZ Bank AG S.A and in Bank Zachodni WBK S.A. Agreement with DZ Bank AG S.A. On 10 December 2014 TUP Property S.A. and DZ Bank AG S.A. branch in Poland with the registered office in Warsaw (Bank - the Lender) concluded an agreement on the termination of a loan contract and early repayment of the loan. The loan contract was concluded on 24 June 2010 for the amount of EURO thousand (with respect to the exchange rate as at the balance sheet date it amounts to PLN thousand) with maturity date on 24 June As at the day of concluding the Agreement, the amount of the loan equals PLN thousand. As agreed by the parties, early repayment day shall be 31 March In the event of partial or full default in the repayment of the loan by 31 March 2015, the parties will remain bound by the stipulations of the loan contract, as effective before concluding the Agreement, the Bank however, will acquire the right to decide on the contractual rights and obligations in favour of third party, without the Borrower's consent. The Parties confirmed that early repayment of the loan is concluded by common accord and is connected with the termination of operations in Poland by DZ Bank AG S.A. Appendix to the loan agreement between TUP Property S.A. and Bank Zachodni WBK S.A. On 29 December 2014 TUP Property (the Borrower) i Bank Zachodni WBK seated in Wrocław (Bank the Lender) signed an appendix to the investment loan agreement of 18 December 2007 with further amendments. As at the day of signing the Appendix the amount of the outstanding amount equals PLN thousand. As agreed by the Parties, the repayment of the full amount of the loan with interest, commissions and other amounts due to the Lender shall be postponed from 31 December 2014 and should take place on 31 March Property sale On 14 March 2014 Forest Hill concluded with Murapol Projekt Sp. z o.o. 2 limited joint-stock partnership, an agreement transferring the ownership of the Company's property, located in Katowice, to the acquiring party. The property being the object of sale, covered the area of 2,2417 hectares for residential development (multi-family houses). The transaction amounted to PLN thousand. On the same day the Company concluded a sale agreement of the property with the surface of 12

13 1,1357 hectares, located in Katowice and belonging to Centrum Handlowe Bażanty, destined for the development of a small shopping centre. The property was covered by the transaction of sale, with the transfer of ownership to the acquiring party (Murapol Projekt Sp. z o.o. 2 limited jointstock partnership). The value of sale amounted to PLN thousand. On 24 July 2014 TUP Property S.A.(acquiring Company) and Centrum Handlowe Bażanty Sp. z o.o. merged. The above-mentioned properties were situated in the same location. On 17 September 2014 the Company and Murapol S.A. concluded a preliminary agreement of sale of the property in Katowice at Bażantów Street. The property is developed with a production hall, neighbouring an office building. TUP Property undertook to demolish the production hall, unleased since the beginning of 2014, in accordance with the concept of the development plan for the area, launched in previous years. The office part of the property, not being the object of sale, after the revitalization will be used for office and commercial purposes. The property sold will be covered by another quarter of residential district, pursuant to Local Development Plan, adopted from the initiative of TUP Property S.A. in The concept of changing area development plan and the subsequent project of a residential district constituted one of the goals of issuing the shares of ALTA in The Parties agreed that the preliminary agreement would be concluded by 30 June The sale price will amount to PLN thousand net. On 1 December 2014, the Management Board of Chmielowskie signed an engagement letter, and then on 12 March 2015, concluded a preliminary agreement for the sale of plots of land to an unrelated development company - Murapol S.A.. This transaction is in line with the Company sale assumptions and its scope of activity; furthermore, it constitutes the confirmation of the investment development opportunities in compliance with the assumed strategy and of profit gain from the conducted activity. Murapol S.A. intends to acquire properties with the surface of sq. km, on which 2 multifamily buildings will be developed (38 flats and 2 retail and commercial premises in total), in line with the project of Siewierz Jeziorna sustainable district. The Parties intend to cooperate in order to complete the sale agreement. Main items of the agreement have already been negotiated. On the basis of the engagement letter the Purchaser can begin the process of booking and offering flats and premises for sale Agreements concluded between affiliates on conditions other than market-based. Transactions concluded between affiliated entities are market-based. These agreements are of a management and organisational nature, they aim at a better employment of assets and human resource. Information on transactions with affiliated entities are presented in the explanatory note No of the Company financial statement Court proceedings There are no court proceedings or enforcements pending against ALTA S.A. A significant issue is the matter concerning proceedings aiming at the recovery of receivables from the company Modena Park. Receivables of Modena Park 13

14 The receivables, second part of price for the property covered by the project Modena Park increased by relevant interest, as at the date of filing the application, i.e. 30 May 2012 amounted to PLN and is fully written-down. Collateral for the receivables of 'Modena Park' 1. Court order granting enforceability clause of Article 5 of the notarial deed dated 24 June 2010, as to the obligation to pay TUP the amount of PLN 31 million constituting the Receivables plus the interest. Modena Park submitted to the payment of the Receivables up to the maximum amount of PLN 31 million, under Article 777 1, clause 5 of the Code of Civil Procedure. The notarial deed of 24 June 2010 constitutes an agreement as to the conditions of debt repayment, acknowledgment of the debt and submission to the enforcement. 2. Collective open-end mortgage up to PLN 31 million for sold properties, second only to the mortgage in favour of the lending bank. 3. Letter of Comfort a document of , constituting a guarantee that the Capital Group Meydan Group (the owner of companies belonging to the Family Meydan) would meet its obligations under the contract for sale of the property Modena Park, signed by a person authorised to represent Meydan Group. Aiming at the enforcement of repayment of receivables by Modena Park S.A. the activities of Management Board of ALTA S.A. are two-fold: Lawsuit against the Management Board of Modena Park Sp. z o.o. pursuant to Article of the Code of Commercial Companies: On 30 May 2012, TUP S.A. filed in the District Court in Poznan, Economic Department 9, a lawsuit against Mr Yaniv Meydan the Chairman of Modena Park Sp. z o.o. (the Debtor, a subsidiary of Opal Property Developments, a member of the Capital Group Meydan Group) pursuant to Article of the Code of Commercial Companies. The lawsuit covers an amount of PLN , and it can be extended at a later date. According to the Above article, if execution against the company proves ineffective, the Board members are jointly and severally hold responsible for the company s liabilities. The Court consented to the request of ALTA S.A. to appoint an expert for taking evidence of accounting opinion on whether and when prerequisites for Modena Park s insolvency materialized. (The Debtor's liabilities exceeded his assets). On 15 November 2013 the first seating of the case took place. After the receipt of the auditor's opinion, The Court obliged the expert to complement the opinion by the end of August The expert submitted to the Court an opinion favorable for the defendant, against which ALTA S.A. lodged an appeal. On 23 December 2014, the Management Board of the Company was notified that the District Court of Gdańsk, Commercial Division IX, dismissed the suit of ALTA S.A. against Yanivov Meydan (the Defendant) the President of the Management Board of Modena Park Sp. z o.o. (A Debtor to ALTA S.A.) pursuant to Article 299 of the Code of Commercial Companies. According to the Court ALTA S.A. did not suffer injury in the meaning of Article 299 of the Code of Commercial Companies. The Court concluded that the petition in bankruptcy of Modena Park was filed too late, considering the situation of the Company - Debtor. The Court also indicated that even if the Defendant had filed a petition in bankruptcy of the Debtor in a relevant moment, the claims of ALTA S.A. would not have been satisfied. The above-mentioned was justified by the findings of the 14

15 expert, in whose opinion the value of the property of Modena in the middle of 2009, had already been too low to satisfy ALTA S.A. (second in line as a mortgage creditor). Property enforcement proceedings On 10 September 2012, the Board of TUP S.A. received from the Court Enforcement Officer of the District Court in Poznan - Grunwald and Jezyce boroughs, a notice on the commencement of the foreclosure of property owned by the Debtor Modena Park Sp. z o.o. and covered by the project Modena Park together with a notice to pay the bank s receivables. The foreclosure was initiated under the Article 805 and 923 of Code of Civil Procedure at the request of creditor: Bank Polska Kasa Opieki S.A. with its registered office in Warsaw (Bank- the Lender). Bank the Lender in order to secure repayment of the loan is listed first on the mortgage of the real estate. A motion for the extension of enforcement proceedings On 8 April 2013 the Management Board of ALTA S.A. filed to the Court Enforcement Officer at the District Court a motion for the extension of enforcement proceedings from previously conducted proceedings covering the amount of PLN 1 mln to the amount of PLN 31 and for including it in the assets of the Debtor, i.e. Modena Park Sp. z o.o. The assets of the Debtor consist of the property, located Poznań, which was the object of agreement concluded between the Creditor and the Debtor on 30 April One of the securities of the payment of receivables to ALTA S.A. is a contractual joint deposit mortgage up to the amount of PLN 31 mln established on the above mentioned property, second to mortgage in favour of Bank Polska Kasa Opieki S.A. (Bank the Debtor's Lender). Enforcement proceedings are conducted against the above mentioned property by a court enforcement officer, at the request of Bank Polska Kasa Opieki S.A. ALTA S.A. and Modena Park filed objections to the valuation of the property submitted by the expert, estimating its value for PLN The proxy of ALTA S.A. applied to the property owner - Modena Park Sp. z o.o. for the division of plots covered by enforcement proceedings and establishing for each plot of land a separate entry in a mortgage register. This would allow for each plot of land to constitute a separate object of enforcement proceedings and the offer of the enforcement officer could attract a potentially bigger group of recipients, thus the total amount from the sale of the plots of land would be higher. To date, the Management Board of Modena Park has not undertaken measures to act in this way. The Management Board of ALTA S.A. contacted the enforcement officer carrying out the proceedings, in view of implementing the above mentioned solution. To date, the owner of the property has not filed a motion for the division of plots. After 13 months, the District Court of Poznań-Grunwald issued a decision on complaints against the actions of the enforcement officer filed by ALTA and Modena Park in the scope of description and valuation of the property. Both complaints were dismissed, against which ALTA lodged a complaint. No factors occurred to make significant settlements due to the litigations Changes in the basic rules of management No significant changes in the basic rules of management of the Company took place during 12 months ended on 31 December

16 2.6.5 Research and development The realisation of the Company's undertaking does not require conducting research and development activities Other significant events in No significant events occurred, other than the ones described in particular items of this chapter, including the events of a specific nature, affecting the activity and achieved results. III The property, financial and income standing of the Company and its financial result 3.1 Financial result of the Company The table below presents financial and operational data on the results achieved by the Company in the period of and comparable data for 12 months ended on 31 December Full financial data were published in a financial statement of ALTA S.A. FINANCIAL RESULT change PLN '000 PLN '000 % Revenues from basic operational activity % Costs of basic operational activity (5 534) (4 869) 14% Profit/loss from sale (1 224) (1 066) 15% Result form sale and revaluation of financial assets % Financial revenues % Financial costs (168) (83) 102% Gross profit/ loss % Net profit/ loss % As in previous periods, the financial result of ALTA is based on the valuation of shares and equity of Companies-Investments. The Management Board of ALTA measures them at fair value through result. In 2014 the net profit of the Company amounted to PLN thousand. As in previous years, the valuation of shares was affected by: Property valuation carried out by independent property valuers or the Management Board of the Company EURO exchange rate connected with the valuation of leased properties (it refers to the properties of TUP Property S.A., valuated by the Company Management Board) Investments in undertaking in particular Companies The biggest impact on the amount of the result had the valuation of Chmielowskie. Revaluation of the Company's shares amounted to PLN thousand and resulted from the increase of the value of the property covered by Siewierz Jeziorna project. Detailed information on the methods applied and the valuation results of each entity was included 16

17 in the financial statement of the Company, in the explanatory note and 10.2 'Financial instruments'. In the year ended on 31 December 2014, the Company achieved 13% higher revenues from the basic activity, while recognizing s 14 % increase in the cost of operating. The loss on sale disclosed, less the management costs, was 15% higher than in The nature of the Company activity, based on investment and holding operations, contributes to the negative sale result. Investments as at 31 December.2014 Name of the entity Value of the Investment at purchasing price Value of allowance made Carrying amount as at 31 December20 14 Chmielowskie Sp. z o.o TUP Property S.A Forest Hill Sp. z o.o (6 395) Roda Sp. z o.o. in liquidation (1 969) - Przystań Siewierz Sp. z o.o (2 880) - Kino-Centrum Fordon Sp. z o.o. in liquidation Powszechna Agencja Informacyjna PAGI S.A Duncon Sp. z o.o. 257 (257) - Polkombi S.A. 2 (2) - Total gross value The property situation ASSETS change PLN '000 PLN '000 % Total assets % Fixed assets including: % Shares % Other long-term financial assets % Current assets including % Other financial assets % LIABILITIES AND EQUITIES change PLN '000 PLN '000 % Issued share capital % Retained profits % Total equities % Long-term liabilities % Short-term liabilities % The statement on the financial situation of the Company in 2014 was closed with the balance sheet total of PLN thousand, which constituted a 4% increase compared to the previous year. 17

18 A dominant position in fixed assets are shares in subsidiaries and affiliates which in 2014 constituted the value of 92% of this position of assets and 92% of the balance sheet total. A significant position of the entity's assets is represented by long-term financial assets (as in previous year), the value of which increased considerably and which reflects the increase of amounts of the loans granted by ALTA to Chmielowskie. The value of equity capital amounted to PLN thousand, constituting 98% of the balance sheet total as at the reporting day. The increase of the equity capital is reflected by the disclosed net profit of the Company. 18

19 Explanation of the differences between the published financial results and those previously published There were no differences between results published in this financial statement and the results previously published. The Company did not publish financial results forecast for the reporting year. 3.3 Financial resources management and ratios (with consideration for the changes in the principles of managing the Company) The management of the Company's financial resources in 2014 and in previous years consisted in the realisation and control of assumed cash flows and of the investments of the Company, taking into account that particular financial projects are financed primarily with own means. In 2014 the Companies-Investments, engaged in main projects, did not obtain external financing. There are no surpluses of financial resources. All the financial resources are engaged by particular Companies in the realisation of Siewierz Jeziorna project, according to the tasks assigned in the project. The investment nature of ALTA's operations makes the ratios based on equity capital and assets more relevant for the assessment of profitability than the ratios based on sale revenues. RETURN ON ASSETS Profit/net loss/total assets 0,05 0,00 RETURN ON EQUITY Profit/net loss/equity*100 4,76 0,34 Profitability of assets informs about profit/loss brought to the Company by each 1 PLN from the equity engaged in financing the assets. Higher effectiveness of equity implies a possibility of higher financial surplus. Owing to disclosing a significant profit in 2014 compared to 2013, the ratios in comparable years improved. DEBT RATIO Total liabilities/total assets 1,46% 2,69% In the years was not a party to any loan agreements. In the main positions of the Company's liabilities were: deferred income tax provisions and trade liabilities. FINANCING STRUCTURE DURABILITY RATIO equity/total liabilities 1,00 1,00 CURRENT LIQUIDITY RATIO Current assets/short-term liabilities 0,63 2,23 19

20 NET WORKING CAPITAL Current assets current liabilities (355) The financing of the Company is primarily based on own equity. The positions of current assets and current liabilities are dependent mostly on amounts of loans granted by ALTA S.A. Market price of share to book value per share (PLN) Stock exchange price of 1 share/book value of 1 share ,17 0, Assessment of possibilities of realisation of investment assumptions (including capital investments compared to amounts of resources owned) The Company has engaged its capital in several long-term investments. The undertakings conducted are capital-intensive, financed primarily with own resources. The Company does not plan to engage in new investment project in the foreseeable future. 3.5 Perspective of development of the Company and its Investments (taking into account the market strategy developed and defining external and internal factors) The perspectives of development are connected with the possibilities offered by Siewierz Jeziorna project. It is an undertaking for several years, which combines many areas of operating, thus allowing for profits to be gained in a few dimensions: sale of land and property, lease of commercial, service and recreational premises. Key elements of the strategy which determine the activity in the next months of operating and constitute internal factors of development, are: Disinvestment in the area of low value projects at the stage of growth and passive projects which reached investment maturity Conducting Siewierz Jeziorna project, including: Preparing construction land for sale in next quarters Design studies concerning the development of next realisation stages Extending the cooperation and the sale of land with the developers other than Forest Hill Designing and developing business area Implementing Clean Tech park project at the production stage the project Control of risks related to the development of investments Ensuring financial liquidity Sale of plots of land, houses and flats in the pace allowing for achieving profitability threshold of the investment External factors, beyond the Company's influence but against which adaptation measures can be undertaken, are: macroeconomic conditions, the development of property market of the agglomeration covering Siewierz Jeziorna project, policy of banks and their inclination to grant 20

21 loans to individual customers and enterprises, the tendency of the environment and of the contractors to increase the risk. 3.6 Risk factors A direct risk which the Company faces constitutes valuation risk. It is connected with the valuation of shares and equity of Investments of the Company. Valuation risk is affected by the situation of particular Investments, the success of undertakings developed and results achieved. For this reason, the factors of risk referring to particular investments concern ALTA as well: Liquidity risk related to the execution of sureties and guarantees granted to the Companies Investments Credit guarantees In prior years ALTA S.A. granted sureties of two loans of TUP Property S.A. The repayment of the loan to Bank Zachodni WBK in the full amount i.e. PLN thousand was set for 31 March As at the balance sheet date, the amount of surety granted by ALTA S.A. amounts to PLN thousand. ALTA S.A. granted a guarantee of proper performance of the terms of contract of the Forest Hill Sp. z o. o. The amount of the guarantee of proper performance is PLN thousand. In the event of default or refinancing failure by the maturity date, the companies TUP Property and Forest Hill as well as ALTA S.A. indirectly, as a guarantor are subject to the risk of liquidity. Activities of the Management Board aiming at mitigating the risk: The Management Board of ALTA S.A. monitors the credit situation of the Investment. It conducts the process of the debt rollover and supervises the proper performance of the terms of contract, as presented below together with the risk description. Risk connected with the Investments of the ALTA Company specified as the risk of fair value In investments of the ALTA Company i.e. Chmielowskie Sp. z o.o., TUP Property S.A. and Forest Hill Sp. z o.o. the risk of liquidity has been identified. Materialization of this risk will influence the fair value of shares of these investments in the accounting books of ALTA S.A. 21 TUP Property S.A. On 29 December 2014 TUP Property (the Borrower) i Bank Zachodni WBK signed an appendix to the investment loan agreement of 18 December 2007 with further amendments. The parties agreed that the date of debt repayment in the full amount of PLN thousand was postponed to 31 March In the event of default or refinancing failure by the maturity date, the companies TUP Property and ALTA S.A. indirectly, as a guarantor (to the amount of PLN thousand) are subject to the risk of liquidity. TUP Property is the owner of portfolio of properties for rent. These properties also constitute the collateral for the credit facility. In the event of necessary execution of the socalled rapid sale, there is a risk of decrease of the portfolio value and a risk of the valuation of properties in the acquisition value of PLN thousand, which will influence the