Financial year rate in the period * last day of the period

Transcription

1 THE CONSOLIDATED FINANCIAL STATEMENTS of Elemental Holding SA CAPITAL GROUP as of 31 December 2016

2 Selected financial data converted to EUR These financial statements were prepared based on the historical cost principle. The financial statements are presented in Polish zlotys ( PLN ) and, unless indicated otherwise, all sums are stated in thousand PLN, in accordance with Art. 45 paragraph 5 of the Accounting Act. Differences, if any, between sums shown in individual items of tables may differ from their totals due to the algorithm of rounding them to the nearest thousand PLN. The average exchange rates of Polish zloty in relation to Euro in the periods covered by the financial statements are determined by the National Bank of Poland. The average exchange rates of Polish zloty in relation to Euro determined by the National Bank of Poland in the periods covered by the historical financial data were as follows: Financial year average exchange exchange rate on the rate in the period * last day of the period *) an average of the exchange rates applicable on the last day of each month in a given period Individual items of assets and liabilities of the balance sheet were converted according to the exchange rates announced by the National Bank of Poland for EUR and applicable on the last day of a given period. Individual items of the profit and loss account and of the cash flow statement were converted according to the exchange rates constituting an arithmetic mean of the average exchange rates announced by the National Bank of Poland for EUR and applicable on the last day of each month in a given reporting period. Basic items of the balance sheet, the profit and loss account and the cash flow statement from the presented financial statements and the comparable data, converted to EUR Description PLN EUR PLN EUR Net revenues from sales of products, goods and materials 1,009, , , ,320 Cost of goods sold 847, , , ,785 Profit (loss) from operating activities 62,208 14,217 52,686 12,590 Gross profit (loss) 57,710 13,189 48,705 11,639 Net profit (loss) 55,402 12,661 49,656 11,866 Net profit (loss) of the parent company 50,758 11,600 45,549 10,884 Weighted average number of shares 170,466, ,466, ,612, ,612,070 Net profit (loss) per ordinary share (PLN/EUR) Fixed assets 373,216 84, ,242 64,119 Current assets 307,578 69, ,283 72,341 Equity 450, , ,737 83,242 Equity of the parent company s shareholders 441,922 99, ,192 80,064 Long-term liabilities 80,911 18, ,168 35,708 Short-term obligations 149,560 33,807 74,620 17,510 Book value per share (PLN/EUR) Net cash flows from operating activities 16,016 3,660-16,207 -,3,873 Net cash flows from investment activities -96,972-22,161-39,458-9,429 Net cash flows from financial activities 65,148 14,889 50,241 12,005 Page 2 of 70

3 Consolidated profit and loss account NOTE Sales revenues and equivalents 1,2 1,009, ,181 Net revenues from sales of services and products 38,346 39,338 Change in the balance of products: increases (+); decreases (-) ,1150 Cost of manufacturing products for the entity s own needs Net revenues from sales of goods and materials 971, ,993 Operating costs 3 947, ,076 I. Depreciation and amortization 9,051 8,129 II. Consumption of materials and energy 24,213 22,951 III. External services 28,272 32,140 IV. Taxes and charges, including: 2,052 1,534 V. Salaries and wages 25,417 26,417 VI. Social insurance and other benefits 6,075 6,172 VII. Other costs by type 4,431 5,629 VIII. Value of goods and materials sold 847, ,104 Profit (loss) from sales 62,370 54,105 Other operating revenues 4 6,038 3,476 Other operating costs 4 6,200 4,895 Profit (loss) from operating activities 62,208 52,686 Financial revenues 5 3,953 3,173 Financial costs 5 8,451 7,154 Profit (loss) from ordinary activities 57,710 48,705 Participation in net profits (losses) of entities settled using the equity method 0 Profit (loss) before taxation 57,710 48,705 Income tax 6 2, Net profit (loss) from continuing activities 55,402 49,656 Net profit (loss) from discontinued activities 7 Net profit (loss) 55,402 49,656 Profit (loss) attributable to non-controlling shareholders 4,644 4,107 Net profit (loss) attributable to the parent company 50,758 45,549 Net profit (loss) per share (in PLN) 8 Basic profit for the accounting period Diluted profit for the accounting period Net profit (loss) per share from continuing activities (in PLN) Basic profit for the accounting period Diluted profit for the accounting period Net profit (loss) per share from discontinued activities (in PLN) Page 3 of 70

4 Consolidated statement of total income NOTE Net profit (loss) 55,402 49,656 Changes in revaluation surplus Profits (losses) from the revaluation of financial asset components available for sales Effective part of profits and losses connected with cash flow hedging instruments Actuarial profits (losses) from programs of specified pension benefits Exchange differences from pricing of entities operating abroad 1,701 -,587 Income tax connected with components of other total incomes Sum of total incomes 10 57,102 49,069 Sum of total incomes attributable to non-controlling shareholders 4,644 4,107 Sum of total incomes falling to the parent company 52,458 44,962 Consolidated statement of financial standing ASSETS NOTE Fixed assets 373, ,242 Tangible fixed assets 11 91,872 92,156 Intangible assets Goodwill , ,765 Financial assets available for sales Investments in subordinate entities 17 23, Equity accounted investments 17 1,174 0 Other financial assets 18 8, Deferred tax assets Other fixed assets Current assets 307, ,283 Inventories 19 94,609 70,996 Trade receivables , ,123 Current income tax receivables Other receivables 22 8,621 7,104 Other financial assets Other assets 23 1,243 2,867 Cash and cash equivalents 24 82,333 98,140 Assets classified as intended for sales TOTAL ASSETS 680, ,525 Page 4 of 70

5 LIABILITIES NOTE Equity 450, ,737 Equities of the parent company s shareholders 441, ,192 Share capital , ,466 Supplementary capital from taking up shares above par value , ,781 Other capitals (supplementary capital and retained earnings) ,146 30,254 Capital from consolidation adjustments 28-26,391-26,391 Capital from exchange differences 1, Financial result of the current period 50,758 45,549 Capital of non-controlling shareholders 30 8,401 13,545 Long-term liabilities 80, ,168 Credits and loans 29 41,989 29,641 Other financial liabilities 30 28, ,915 Other long-term obligations Deferred income tax provisions Accruals 36 9,633 10,104 Provision for pension benefits and similar benefits Other provisions Short-term liabilities 149,560 74,620 Credits and loans 29 32,404 21,177 Other financial liabilities 30 51,348 10,982 Trade liabilities 32 47,027 31,783 Income tax liabilities Other liabilities 33 12,501 5,322 Accruals Provision for pension benefits and similar benefits Other provisions 39 5,080 4,509 TOTAL LIABILITIES 680, ,525 Book value per share (in PLN) Page 5 of 70

6 Statement of changes in consolidated equity Share capital Suppleme ntary capital from selling the shares above par value Capital from settlement of reverse acquisition Other capital s (supple mentar y capital and retaine d earning s) Financial result of the current period Capital from exchan ge differe nces Equity of the parent company s sharehol ders Capital of noncontrolling shareholde rs Total equity Equity as of 01 January , ,781-26,391 75, ,192 13, ,737 Changes in accounting principles Adjustment of errors from previous years Equity after adjustments Share issue ,748 -,1, , ,781-26,391 76, ,002 10, ,799 Share issue costs Settlement of minority interest acquisition Net profit distribution 0-7,040-7,040 Option pricing 43,026 43,026 43,026 Sales of shares in Turkey Sum of total incomes 4,507 4,507 4, ,758 1,701 52,458 4,644 57,102 Equity as of 31 December , ,708 -,26, ,146 50,758 1, ,922 8, ,323 Page 6 of 70

7 Statement of changes in consolidated equity Share capital Suppleme ntary capital from selling the shares above par value Capital from settlement of reverse acquisition Other capitals (suppleme ntary capital and retained earnings) Financial result of the current period Capital from exchange difference s Equity of the parent company s sharehold ers Capital of noncontrolling sharehold ers Total equity Equity as of 01 January 154,824 71,468-26,391 75, , ,460 Changes in accounting principles Adjustment of errors from Equity after adjustmen ts Share issue Share issue costs Settlement of minority interest acquisition Net profit distribution Option pricing Sum of total incomes Equity as of 31 December 154,824 71,468-26,391 75, , ,460 15,642 51,800 67,442 67,442-1,488-1,488-1,488-2,748-2,748 9,554 6, ,551-42,551-42,551 45, ,962 4,107 49, , ,781-26,391 30,254 45, ,192 13, ,737 Attached notes constitute an integral part of these financial statements 7

8 Consolidated cash flow statement OPERATING ACTIVITIES Profit (loss) before taxation 57,710 48,705 Total adjustments -41,694-64,912 Depreciation 9,051 8,129 Profits (losses) from exchange differences -1, Interest and participation in profits (dividends) -70, Profit (loss) from investment activities 73, Change in the balance of provisions 155 3,611 Change in the balance of inventories -28,278-1,064 Change in the balance of receivables -29,143-81,343 Change in the balance of liabilities, excluding loans and credits 3,599 7,277 Change in the balance of other assets 2,135-1,897 Other operating activities adjustments Income tax (paid)/refunded A. Net cash flows from operating activities 16,016-16,207 INVESTMENT ACTIVITIES Receipts 4,974 5,409 Disposal of intangible assets and tangible fixed assets 1,657 1,086 Disposal of financial assets 0 1 Cash taken over (acquisition settlement) 1,219 1,101 Repayment of loans granted Other investment receipts 1,898 3,221 Expenses 101,946 44,867 Purchase of intangible assets and tangible fixed assets 11,537 5,597 Purchase of real estate investments 0 0 Financial asset expenses 90,409 37,955 Other investment expenses 0 1,315 B. Net cash flows from investment activities -96,972-39,458 Receipts Net receipt from issuing the shares (share emission) and other capital instruments as well as additional capital contributions FINANCIAL ACTIVITIES 78,787 88, ,882 Credits and loans 21,234 31,684 Dividend received 57,484 0 Other financial receipts Expenses 13,638 37,882 Purchase of own shares (stocks) Dividends and other payments for owners Profit distribution expenses other than payments for owners 0 0 Repayment of credits and loans 1,420 26,070 Redemption of debt securities For other financial liabilities 0 0 Payments of financial lease agreement liabilities 5,450 4,261 Interest 5,748 5,311 Other financial expenses 0 1,490 C. Net cash flows from financial activities 65,148 50,241 D. Total net cash flows (A+B+C) -15,807-5,424 E. Change in the balance of cash, including: -15,807-5,424 change in the balance of cash due to exchange differences F. Cash at the beginning of the period 98, ,564 G. Cash at the end of the period (F+D) 82,333 98,140 Page 8 of 70

9 GENERAL INFORMATION I. Data of the parent company from a legal point of view: Name: Legal form: Registered office: Country of registration: Core object of business activities: Core object of business activities of the Capital Group Elemental Holding SA spółka akcyjna [Polish joint-stock company] ul. Traugutta 42A, Grodzisk Mazowiecki Poland The core business of the Parent Company includes activities of head offices and holdings, accounting and bookkeeping activity, tax consulting The core business of the Capital Group companies includes waste collection, treatment and disposal activities; recovery of raw materials; wholesale of waste and scrap; reclamation activities and other waste management service activities District Court for the Capital City of Warsaw, 14 th Commercial Registration authority: Division of the National Court Register (KRS) under KRS number REGON statistical number: NIP tax ID number: The parent company was established under a notarial deed of 14 August 2008 as Synergis Metalrecycling. On 14 December 2010, Synergis Metalrecycling was transformed into Elemental Holding Spółka Akcyjna. II. Duration of the capital group: The parent company Elemental Holding SA and the other entities of the Capital Group were established for an unspecified time. III. Periods presented Historical consolidated financial information includes data concerning the period from 01 January 2016 to 31 December Comparable data are presented as of 31 December 2015 for the consolidated financial standing statement, for the period from 01 January 2015 to 31 December 2015 for the consolidated profit and loss account, the consolidated total income statement, the consolidated cash flow statement, and the statement of changes in consolidated equity. Page 9 of 70

10 IV. Composition of authorities of the parent company as of : The Management Board: As of : Paweł Jarski PRESIDENT OF THE MANAGEMENT BOARD Anna Kostro MEMBER OF THE MANAGEMENT BOARD Marta Rutkowska MEMBER OF THE MANAGEMENT BOARD On 31 August 2016, the Management Board of Elemental Holding SA received a statement from Mr. Jarosław Michalik about his resignation from the position of a Member of the Issuer's Management Board with effect from 31 August On 28 November 2016, the Supervisory Board of the Company appointed Ms. Anna Kostro to the Management Board and entrusted her with the role of a Member of the Management Board in charge of the Recycling of Electronic Waste. On 19 December 2016, the Supervisory Board of the Company appointed Ms. Marta Rutkowska to the Management Board and entrusted her with the role of a Member of the Management Board in charge of the Recycling of Catalysts. As of : Paweł Jarski PRESIDENT OF THE MANAGEMENT BOARD Jarosław Michalik VICE-PRESIDENT OF THE MANAGEMENT BOARD The Supervisory Board Agata Jarska Term of office Member of the Supervisory Board Chairman of the Supervisory Board Marek Piosik Member of the Supervisory Board Tomasz Malinowski Member of the Supervisory Board Wojciech Napiórkowski Member of the Supervisory Board Krzysztof Szymański Member of the Supervisory Board Page 10 of 70

11 Term of office Agata Jarska Member of the Supervisory Board Sylwia Błaszczak Member of the Supervisory Board Paweł Błaszczak Member of the Supervisory Board Tomasz Malinowski Member of the Supervisory Board Aleksander Baryś Member of the Supervisory Board Secretary of the Supervisory Board Krzysztof Szymański Member of the Supervisory Board Rafał Bator Member of the Supervisory Board Changes in the Supervisory Board composition from 01 January 2016 until the date of issue On 22 January 2016, Elemental Holding SA received a statement from Mr. Rafał Bator a Member of the Supervisory Board on his resignation from office in the Supervisory Board. On 21 June 2016, the Management Board of Elemental Holding SA received from Ms. Sylwia Błaszczak a Member of the Supervisory Board a statement on her resignation from office in the Supervisory Board. On 22 June 2016, the Ordinary General Meeting of Shareholders appointed a new member of the Supervisory Board Ms. Zuzanna Benincasa. On 26 July 2016, the Management Board of Elemental Holding SA received from Mr. Paweł Błaszczyk - a Member of the Supervisory Board a statement on his resignation from office in the Supervisory Board. On 30 September 2016, the Management Board of Elemental Holding SA received from Mr. Aleksander Baryś a Member of the Supervisory Board a statement on his resignation from office in the Supervisory Board. On 10 October 2016, the Supervisory Board of Elemental Holding SA, acting pursuant to 12 paragraph 4 of the Company s Articles of Association, appointed Mr. Marek Piosik to the Supervisory Board. This appointment was approved by a resolution of the Extraordinary General Meeting of Shareholders of Elemental Holding SA dated 21 December On 21 December 2016, the Extraordinary General Meeting of Shareholders of Elemental Holding SA made further changes to the composition of the Company s Supervisory Board. Ms. Zuzanna Benincasa was removed from the Board, whereas a new member, Mr. Wojciech Napiórkowski, was appointed. V. Chartered auditors: The entity examining the financial statements for 2016 was the company: Grant Thornton Polska spółka z ograniczoną odpowiedzialnością sp.k ul. Abpa Antoniego Baraniaka Poznań Page 11 of 70

12 VI. Significant shareholders of the parent company: Shareholder Number of shares % of equity capital Number of votes % of votes Altus TFI SA % % Ibah Holdings Limited % % EVF I Investments S.a.r.l % % Nationale-Nederlanden PTE SA % % TFI Aviva Investors Poland SA % % Other % % Total % % VII. Subsidiaries and affiliates: As of Name of subsidiary Registered office % of owned capital and votes carried at the General Meeting of Shareholders (GMS): Tesla Recycling spółka z ograniczoną Grodzisk Mazowiecki odpowiedzialnością sp.k. 100% Syntom spółka z ograniczoną odpowiedzialnością Warsaw sp.k. 100% Terra Recycling spółka z ograniczoną Grodzisk Mazowiecki odpowiedzialnością sp.k. 100% Elemental Asset Management spółka z Grodzisk Mazowiecki ograniczoną odpowiedzialnością S.K.A. 100% Collect Points spółka z ograniczoną Grodzisk Mazowiecki odpowiedzialnością sp.k. 100% PGM Group spółka z ograniczoną Piastów odpowiedzialnością sp.k. 51% Metal Holding s.r.o. Čapajevova, Slovakia 94,65% UAB "EMP recycling" Galinės vil., Lithuania 51% Evciler Kimya Madencilik Ve Değerli Metaller Ankara, Turkey Sanayi Ticaret A.Ş. 19%* Evciler & Elemental Recycling BV Amsterdam, the Netherlands 100% Evciler & Elemental Recycling Middle East Dubai, United Arab Emirates DMCC 100% Kat-Metal Oy Tervajoki, Finland 51% Kat-Metal Estonia Oü Tallinn, Estonia 46%** AWT Recycling Ltd. Leeds, Great Britain 51% Elemental FIZ Warsaw 100% of certificates FINEX SICAV SIF SA - Private Equity VII Luxemburg 100% Elemental Capital SARL Luxemburg 100% Elemental Capital 1 S.C.Sp. Luxemburg 100% Syntom sp, z o.o. Grodzisk Mazowiecki 100% Syntom Holdco sp. z o.o. Warsaw 100% Page 12 of 70

13 Tesla Recycling sp. z o.o Grodzisk Mazowiecki 100% Tesla Holdco sp. z o.o. Warsaw 100% Terra Recycling sp. z o.o. Grodzisk Mazowiecki 100% Terra Holdco sp. z o.o. w organizacji Warsaw 100% Elemental Group sp. z o.o. Grodzisk Mazowiecki 100% Platinium M.M. sp. z o.o. Warsaw 51% Elemental Asset Management sp. z o.o. Grodzisk Mazowiecki 100% Collect Points sp. z o.o. Grodzisk Mazowiecki 100% PGM Group sp. z o.o. Piastów 51% PGM Holdco sp. z o.o. Warsaw 100% Syntom spółka z ograniczoną odpowiedzialnością Property Management S.K.A Warsaw 100% * Affiliated company ** Kat-Metal Oy has 90% of share capital and votes at the GMS As of Name of subsidiary Registered office % of owned capital and votes carried at the GMS: Tesla Recycling spółka z ograniczoną Grodzisk Mazowiecki odpowiedzialnością sp.k 100% Syntom spółka z ograniczoną odpowiedzialnością Warsaw sp.k 100% Terra Recycling spółka z ograniczoną Grodzisk Mazowiecki odpowiedzialnością sp.k 100% Elemental Asset Management sp. z o.o. S.K.A. Grodzisk Mazowiecki 100% Collect Point sp. z o.o. S.K.A. Grodzisk Mazowiecki 100% Collect Points spółka z ograniczoną Grodzisk Mazowiecki 100% odpowiedzialnością sp.k PGM Group Sp. z o.o. SKA Piastów 51% Metal Holding s.r.o. Čapajevova, Slovakia 67% UAB "EMP recycling" Galinės vil., Lithuania 51% Evciler Kimya Madencilik Ve Değerli Metaller Ankara, Turkey Sanayi Ticaret A.Ş 51% Evciler & Elemental Recycling BV Strawinskylaan XX Amsterdam, the Netherlands 100% by Evciler Kimya Madencilik Ve Değerli Metaller Sanayi Ticaret A.Ş Evciler & Elemental Recycling Middle East DMCC Dubai, United Arab Emirates 100% by Evciler & Elemental Recycling BV Elemental FIZ Warsaw 100% Elemental Capital sarl Luxemburg 100% Elemental Capital 1 S.C.Sp. Luxemburg 100% Syntom Sp. z o.o. Grodzisk Mazowiecki 100% Tesla Recycling Sp. z o.o Grodzisk Mazowiecki 100% Terra Recycling Sp. z o.o. Grodzisk Mazowiecki 100% Elemental Group Sp.z o.o. Grodzisk Mazowiecki 100% Elemental Asset Management Sp. z o.o. Grodzisk Mazowiecki 100% Collect Points Sp.z o.o. Grodzisk Mazowiecki 100% Collect Point Sp.z o.o. Grodzisk Mazowiecki 100% PGM Group Sp.z o.o. Piastów 51% Page 13 of 70

14 Graphical presentation of the capital group: 51% 100% 100% 100% zarząd 99,9% 100% 99,9% 51% 100% zarząd 100% 99,9% 0,1% 100% 51% Legend/key General partner Holding Operating company 51% zarząd 0,1% 0,2% 51% 100% 90% 51% On 22 January 2016, a subsidiary of Elemental Holding SA - Collect Point spółka z ograniczoną odpowiedzialnością S.K.A. transferred all its 510 shares, representing 51% of the share capital of PGM Group spółka z ograniczoną odpowiedzialnością S.K.A. onto a subsidiary of Elemental Holding SA Syntom spółka z ograniczoną odpowiedzialnością sp.k. On 22 January 2016, a subsidiary of Elemental Holding SA Collect Point spółka z ograniczoną odpowiedzialnością S.K.A. transferred all its 510 shares, representing 51% of the share capital of PGM Group spółka z ograniczoną odpowiedzialnością onto a subsidiary of Elemental Holding SA Syntom spółka z ograniczoną odpowiedzialnością sp.k. On 3 February 2016, Syntom spółka z ograniczoną odpowiedzialnością sp.k. a subsidiary of Elemental Holding SA sold all of its rights and obligations in Collect Point spółka z ograniczoną odpowiedzialnością sp.k. On 3 February 2016, Syntom spółka z ograniczoną odpowiedzialnością sp.k. a subsidiary of Elemental Holding SA sold all its 100 shares, representing 100% of the share capital of Collect Point spółka z ograniczoną odpowiedzialnością. On 5 February 2016, a subsidiary Tesla Recycling spółka z ograniczoną odpowiedzialnością sp.k purchased 26.22% of shares in Metal Holding s.r.o. On the same day the capital of the subsidiary was increased by 100 thousand Euro. As a result, Tesla Recycling spółka z ograniczoną działalnością sp.k. become a shareholder holding 94.65% of shares. On 10 June 2016, the capital increase was registered by a competent Registration Court based in Presov, Slovakia. On 20 July 2016, Syntom spółka z ograniczoną odpowiedzialnością sp.k. purchased 500 shares representing 100% of share capital of CPL spółka z ograniczoną odpowiedzialnością Property Management S.K.A. On 17 August 2016, Syntom sp. z o.o. acquired all rights and obligations of the general partner of the aforementioned company. On 18 August 2016, a resolution was adopted on the change of the company name to Syntom spółka z ograniczoną odpowiedzialnością Property Management S.K.A. Page 14 of 70

15 On 17 August 2016, on the basis of the sale of all rights and obligations, Syntom spółka z ograniczoną odpowiedzialnością sp.k purchased all rights and obligations of the company CPL spółka z ograniczoną odpowiedzialności Property Management S.KA. with its registered office in Poznań. On 18 August 2016, the Extraordinary General Meeting of CPL spółka z ograniczoną odpowiedzialnością Property Management S.K.A adopted a resolution to change the name of the company to Syntom spółka z ograniczoną odpowiedzialnością Property Management S.K.A. and move its registered office to Grodzisk Mazowiecki. On 30 September 2016, the District Court for the capital city Warsaw in Warsaw issued a decision on the registration of the transformation of PGM Group spółka z ograniczoną odpowiedzialnością spółka komandytowo-akcyjna with its registered office in Piastów into a limited partnership [Polish spółka komandytowa] in the Register of Entrepreneurs. On 25 October 2016, the Management Board of Elemental Holding SA received information from its subsidiary - Elemental Capital S.a.r.l., being a general partner of the company Elemental Capital 1 S.C.Sp., that on 25 October 2016 the subsidiary signed a share purchase agreement with a majority shareholder of Kat-Metal Oy with its registered office in Tervajoki, Finland, providing for the purchase of shares representing 51% of its share capital and authorizing to 51% of votes at the General Meeting of Shareholders of Kat-Metal Oy. On 30 November 2016, the Management Board of Elemental Holding SA received information from its subsidiary Elemental Capital S.a.r.l being a general partner of the company Elemental Capital 1 S.C.Sp. that on 30 November 2016, the subsidiary signed a share purchase agreement with a majority shareholder of AWT Recycling Limited with its registered office in Leeds, England, providing for the purchase of shares representing 51% of its share capital and authorizing to 51% of votes at the General Meeting of Shareholders of the company. On 07 December 2016, all the rights and obligations relating to PGM Group spółka z ograniczoną odpowiedzialnością sp.k owned by Syntom spółka z ograniczoną odpowiedzialnością sp.k were transferred to Elemental Capital 1 S.C.Sp. as part of the dividend settlement. On 08 December 2016, a limited liability company [Polish spółka z ograniczoną odpowiedzialnością] named Tesla Holdco spółka z ograniczoną odpowiedzialnością was established. All 1, shares with a nominal value of PLN each, for a total value of PLN 100,000.00, were taken over by a single shareholder - the Contributor and covered by a contribution in kind in the form of all the rights and obligations of Elemental Capital 1 S.C.Sp. as a limited partner of Tesla Recycling spółka z ograniczoną odpowiedzialnością spółka komandytowa. On 08 December 2016, a limited liability company named Syntom Holdco spółka z ograniczoną odpowiedzialnością was established. All 1, shares with a nominal value of PLN each, for a total value of PLN 100,000.00, were taken over by a single shareholder - the Contributor and will be covered by a contribution in kind in the form of all the rights and obligations of Elemental Capital 1 S.C.Sp. as a limited partner of Syntom spółka z ograniczoną odpowiedzialnością spółka komandytowa. On 08 December 2016, a limited liability company named PGM Holdco spółka z ograniczoną odpowiedzialnością was established. All 1, shares with a nominal value of PLN each, for a total value of PLN 100,000.00, were taken over by a single shareholder - the Contributor and covered by a contribution in kind in the form of all the rights and obligations of Elemental Capital 1 S.C.Sp. as a limited partner of PGM Group spółka z ograniczoną odpowiedzialnością spółka komandytowa. On 08 December 2016, a limited liability company named Terra Holdco spółka z ograniczoną odpowiedzialnością na podstawie aktu założycielskiego. All 1, shares with a nominal value of PLN each, for a total value of PLN 100,000.00, were taken over by a single shareholder - the Contributor and covered by a contribution in kind in the form of all the rights and obligations of Elemental Capital 1 S.C.Sp. as a limited partner of Terra Recycling spółka z ograniczoną odpowiedzialnością spółka komandytowa. On 21 December 2016, Elemental Capital 1 S.C.Sp. entered into an agreement on transfer all of the rights and obligations of a limited partner in Collect Points spółka z ograniczoną odpowiedzialnością sp.k. onto Syntom Holdco sp. z o.o. Page 15 of 70

16 On 29 December 2016, a subsidiary of the Issuer - Elemental Group sp. z o.o. entered into an agreement on the transfer all rights and obligations of the limited partner in Platinium M.M. spółka z ograniczoną odpowiedzialnością spółka komandytowa and an agreement to acquire a majority of shares in Platinium M.M. spółka z ograniczoną odpowiedzialnością, being a general partner of the company. The agreement on the transfer all rights and obligations was entered into under condition of registering the amendments to the Company s Articles of Association by the Registration Court. This condition was fulfilled after the balance sheet date, i.e. 17 March On 29 December 2016 all shares of the subsidiary - Elemental Capital 1 S.C.Sp. with its registered office in Luxembourg were brought by Elemental Fundusz Inwestycyjny Zamknięty to an alternative investment fund operating under the laws of the Grand Duchy of Luxembourg, in exchange for the participation units of the fund. On 30 December 2016, all shares of the subsidiary Evciler & Elemental Recycling B.V with its registered office in Amsterdam, Netherlands were acquired by this alternative investment fund. On 30 December 2016, 320 shares of a subsidiary Evciler Kimya Madencilik ve Degerli Metaller Sanayi Ticaret Anonim Sirketi with its registered office in Ankara, Turkey, representing 32% of its share capital, were sold to a third party. VIII. Declaration of the Management Board Pursuant to the Regulation of the Minister of Finance of 19 February 2009 on current and periodic information provided by issuers of securities and conditions for recognizing as equivalent information required by the laws of a non-member state (Journal of Laws: Dz.U ), hereinafter referred to as the Regulation, the Company s Management Board declares that, to the best of its knowledge, this consolidated financial statement and comparable data were prepared in accordance with the principles of accounting binding for the Group as well as that they reflect the Capital Group s material status, financial standing and financial results in a true, reliable and clear manner. These consolidated financial statements were prepared according to the principles of accounting, in compliance with the International Financial Reporting Standards (IFRS), which were approved by the European Union, and in the scope required by the Regulation. The statements cover the period from 01 January to 31 December 2016 and comparable period from 01 January to 31 December The Management Board of the parent company declares that the entity authorized to examine financial statements which examined these consolidated financial statements was selected in accordance with the provisions of law as well as that both the entity and the expert auditors met the conditions necessary to issue an objective and independent opinion after the examination, in accordance with the relevant provisions of the national law. IX. Approval of the financial statement This consolidated financial information was approved for publication by the Management Board of the parent company on 30 March SUPPLEMENTARY INFORMATION TO THE CONSOLIDATED FINANCIAL STATEMENTS Page 16 of 70

17 I. Compliance with the International Financial Reporting Standards. These consolidated financial statements were prepared in accordance with the International Financial Reporting Standards (IFRS) approved by the EU. As of the day of approving these statements for publication, taking into account the ongoing process of introducing the IFRS in the EU and the activities conducted by the Group, there is no difference between the IFRS in force and the IFRS approved by the EU in the scope of the accounting principles applied by the Group. The IFRS include standards and interpretations accepted by the International Accounting Standards Board (IASB) and the International Financial Reporting Interpretations Committee (IFRIC). II. Assumption of continuation of business activity and comparability of financial statements These consolidated financial statements were prepared with an assumption of continuation of business activity by the Group for the period of 12 months after the last balance day, i.e The Management Board of the parent company has not identified any facts or circumstances which would indicate threats to the possibility of continuing the business activity throughout the period of 12 months after the balance day as a result of a deliberate or forced omission or a significant limitation of current activity. Until the date of preparing the consolidated financial statements for the year 2016, there were no events which were not recognized in the account books of the reporting period even though they should have been. At the same time, there are no significant events concerning previous years in these financial statements. III. Consolidation principles a) Subsidiaries Subsidiaries mean all entities whose financial and operating policy the Group has ability to manage; this is usually due to holding a majority of the total number of votes in the decision-making bodies. An assessment of whether the Group controls a given subsidiary is made by analyzing the existence and influence of potential voting rights which can be exercised or changed at a given moment. On the day of purchasing a subsidiary (taking control of it), assets and liabilities of the purchased entity are measured at their fair value. The purchase price surplus above the fair value of the entity s identifiable accepted net assets is recognized in the balance sheet assets as goodwill. If the purchase price is lower than the fair value of the entity s identifiable accepted net assets, the difference is recognized as a profit in the profit and loss account for the period when the purchase took place. Non-controlling interests are recognized according to the fair value of net assets that falls to them. In subsequent periods, losses falling to non-controlling interests are attributed to parent company owners and non-controlling interests, even if the non-controlling interests assume a negative value as a result. Subsidiaries sold in a given fiscal year are subject to consolidation from the beginning of the fiscal year to the day of their disposal. Financial results of entities purchased throughout the year are recognized in the financial statements from the moment of their purchase. Revenues, costs, settlements and unrealized profits from transactions between the Group s companies are eliminated. Unrealized losses are also subject to elimination unless a given transaction constitutes a proof of impairment of the transferred asset component. The principles of accounting applied by subsidiaries were changed wherever necessary so as to ensure compliance with the applied principles accounting by the Group. b) Non-controlling interests/shares In the case of a reverse acquisition, some owners of an entity considered as a subsidiary from the legal point of view (an acquiring entity from the accounting point of view) do not need to exchange their capital interests for the capital Page 17 of 70

18 interests of the entity considered a parent company from the legal point of view (an acquired entity from the accounting point of view). Such owners are treated as owners of non-controlling interests in the consolidated financial statements prepared after the reverse acquisition. This is because the owners of the entity considered as an acquired one from the legal point of view who do not exchange their capital interests for the capital interests of the entity considered as an acquiring one from the legal point of view own interests only in the financial result and net assets of the entity considered as an acquired one from the legal point of view, not in the financial result and net assets of the consolidated entity. Assets and liabilities of the entity considered as an acquired one from the legal point of view are recognized and measured in the consolidated financial statements according to their balance sheet value before the consolidation. Therefore, in the case of a reverse acquisition, the shareholders non-controlling interests reflect their proportional participation in the balance sheet value of net assets before the consolidation belonging to the entity considered as an acquired one from the legal point of view, even if non-controlling interests in other acquisitions were measured at fair values on the day of such acquisitions. c) Affiliated companies Affiliated companies are entities on which the Group exerts a significant influence but does not control them; this is usually accompanied by having 20 to 50% of the total number of votes in the decision-making bodies. Investments in affiliated companies are settled based on the equity method. d) Companies covered by the consolidated financial statements These consolidated financial statements for the periods ending on 31 December 2016 and 31 December 2015 cover the following entities included in the Group: Name of subsidiary Registered office % of owned capital and votes at the GMS: Tesla Recycling spółka z ograniczoną Grodzisk Mazowiecki odpowiedzialnością sp.k. 100% Syntom spółka z ograniczoną odpowiedzialnością Warsaw sp.k. 100% Terra Recycling spółka z ograniczoną Grodzisk Mazowiecki odpowiedzialnością sp.k. 100% Elemental Asset Management spółka z Grodzisk Mazowiecki ograniczoną odpowiedzialnością S.K.A. 100% Collect Points spółka z ograniczoną Grodzisk Mazowiecki odpowiedzialnością sp.k. 100% PGM Group spółka z ograniczoną Piastów odpowiedzialnością sp.k. 51%. Metal Holding s.r.o. Čapajevova, Slovakia 94,65% UAB "EMP recycling" Galinės vil., Lithuania 51% Evciler kimya madencilik ve değerli metaller sanayi ticaret a.ş. Ankara, Turkey 19%* Evciler & Elemental Recycling BV Amsterdam, Netherlands 100% Evciler & Elemental Recycling Middle East Dubai, United Arab Emirates DMCC 100% Kat-Metal Oy Tervajoki, Finland 51% Kat-Metal Estonia Oü Tallinn, Estonia 46% ** AWT Recycling Ltd. Leeds, Great Britain 51% Elemental FIZ Warsaw 100% of certificates FINEX SICAV SIF SA - Private Equity VII Luxembourg 100% Page 18 of 70

19 Elemental Capital SARL Luxembourg 100% Elemental Capital 1 S.C.Sp. Luxembourg 100% Syntom sp, z o.o. Grodzisk Mazowiecki 100% Syntom Holdco sp. z o.o. Warsaw 100% Tesla Recycling sp. z o.o Grodzisk Mazowiecki 100% Tesla Holdco sp. z o.o. Warsaw 100% Terra Recycling sp. z o.o. Grodzisk Mazowiecki 100% Terra Holdco sp. z o.o. w organizacji Warsaw 100% Elemental Group sp. z o.o. Grodzisk Mazowiecki 100% Platinium M.M. sp. z o.o. Poznań 51% Elemental Asset Management sp. z o.o. Grodzisk Mazowiecki 100% Collect Points sp. z o.o. Grodzisk Mazowiecki 100% PGM Group sp. z o.o. Piastów 51% PGM Holdco sp. z o.o. Warsaw 100% Syntom spółka z ograniczoną odpowiedzialnością Warsaw Property Management S.K.A 100% * Affiliated company ** 90% of the share capital and votes at the GMS are owned by Kat-Metal Oy f) Companies not covered by the consolidated financial statements The companies UAB Electrorecycling Services i ROTATA, affiliated with the company UAB EMP recycling as well as Elemental FIZ and FINEX SICAV SIF S.A Private Equity VII were not included in consolidation due to insignificance of data. IV. Description of the adopted accounting principles (policy), including methods of pricing assets and liabilities, revenues and costs These consolidated financial statements were prepared based on the historical cost principle. These consolidated financial statements are presented in Polish zlotys ( PLN ) and all sums are stated in thousand PLN unless indicated otherwise. Presentation of statements according to segments of activity: The Group adopted a basic reporting arrangement in the form of geographical segments, namely segments connected with conducting activities in various geographical areas defined according to the sales market location criterion. Three segments were distinguished: domestic market (Poland), Europe, Asia. No division into sectors was made since Elemental Holding S.A. Group is a group of horizontally integrated enterprises and the Management Board believes that they should be assessed as a whole in terms of financial effects of their activity. Only consolidated financial data and information presented accordingly provide objective conclusions after the analysis, so Elemental Holding Group does not distinguish activity segments. According to the Management Board, only an overall view allows for the most objective assessment of types and effects of the business activities in which the Group is involved. The Group s unique nature, complexity of processes and variety of activity areas, in which the Group operates, makes the presentation of consolidated results the only method that does not distort the objective image of financial effects of the activity. Distinguishing operating segments does not provide the readers of the financial statements with significant information and could lead to wrong conclusions. Page 19 of 70

20 The Group s operating assets are located on the territory of Poland. Revenues from and costs of operating activities The entity s revenues are economic gain increases obtained in a given fiscal year in the form of obtaining or improving assets of an entity or decreasing its obligations, which eventually leads to the entity s equity increase. Operating revenues, i.e. revenues from the sales of products, services, goods and materials as well as from financial operations, are established in line with the accrual principle. Costs are economic gain decreases carried out in a given fiscal year in the form of disbursement or value decrease of the assets or arising of obligations, which eventually leads to the entity s equity decrease. Operating costs include costs by type, mainly the following ones: value of sold goods, employee remuneration costs, external service costs as well as costs of consumed materials and energy. Sale of goods/materials The revenues are recognized at the moment when the significant risk and gains stemming from the ownership right of the goods are transferred onto the buyer. The revenues also include due or obtained sales amounts minus the value added tax (VAT). Sale of services The revenues from the provision of services are recognized proportionally to the degree of service completion. Other revenues, costs, profits and losses Other operating costs and revenues are items indirectly related to a company s basic business. Financial revenues and costs are recognized in the results of the period they concern excluding the costs directly related to the purchase or construction of an asset component. State subsidies State subsidies are recognized in the face value of a received subsidy to the account of other revenues. They are recognized in the financial statements in the period of receiving the subsidy. The value of granted subsidies concerning tangible assets is stated in accruals of the liabilities and written off in other operating revenues proportionally to the depreciation of tangible assets financed with the subsidy. Subsidies concerning tangible assets are recognized in the period when the Group has a reasonable belief that the economic entity receiving the subsidy will meet the conditions connected with the subsidy and that the subsidy will be granted. The value of tangible assets financed with funds from the Company Fund for Rehabilitation of Disabled Persons (Polish: ZFRON) is recognized in the Other capitals item. Taxes The companies of Elemental Holding S.A. Capital Group are independent entities in respect of income tax settlements with the state budget; therefore, the Group does not constitute a tax capital group. Current corporate income tax obligations are calculated in accordance with Polish tax law provisions. The income tax is calculated based on gross profit determined under accounting provisions and adjusted in respect of non-taxable revenues, costs other than tax-deductible costs as well as deductions of losses from previous years, investment tax exemptions and donations. Deferred tax The deferred income tax provision is created in an amount equal to the income tax amount payable in the future in relation to occurrence of positive temporary differences, i.e. differences that will cause an increase in the income tax calculation basis in the future. The deferred income tax provision is not created in relation to temporary differences concerning goodwill whose depreciation does not cause a decrease in the tax calculation basis or stemming from the initial recognition of a component of assets or liabilities during a transaction which does not constitute a consolidation of enterprises or a purchase of an entity or its organized part and which does not influence the gross financial result or the tax calculation basis at the moment when it is concluded. Page 20 of 70

21 The deferred income tax asset component is recognized in relation to all negative temporary differences and unused tax losses transferred to subsequent years, in the amount equal to a probable taxable income to be achieved which will allow for utilizing the abovementioned differences and losses. The balance sheet value of the deferred income tax asset component is verified on every balance day and decreased correspondingly to the decrease of probability of achieving the taxable income sufficient to partially or fully realize the deferred income tax asset component. The deferred income tax assets and deferred income tax provisions are measured using taxation rates which, under the provisions passed until the balance day, will be binding in the period when the asset component is realized or the provision is released. The deferred tax assets and deferred tax provisions are presented separately in the balance sheet. Tangible fixed assets Tangible assets are measured at their purchase price, production cost or revaluation value decreased by accumulated depreciation and impairment write-offs. Lands are valued at their purchase price decreased by impairment write-offs. Costs borne after the introduction of a tangible asset to utilization as well as the costs of repairs, costs of inspections and maintenance charges influence the financial result of the reporting period when they are incurred. However, if it is possible to prove that those costs resulted in an increase of the expected economic gains to be obtained owing to the possession of a given tangible asset so that the gains became greater than originally assumed, the costs increase the initial value of the tangible asset. Tangible assets, except lands and perpetual usufruct rights, are subject to straight-line depreciation throughout the period corresponding to the estimated period of their useful economic life or throughout the shorter of the following two periods: useful economic life or the usufruct rights. The duration is as follows: Type Depreciation rate Period Lands (perpetual usufruct rights) - - Buildings and structures 5% to 6.5% Machines and technical equipment 5% to 50% 2-20 Means of transport 10% to 30% Other tangible assets 5% to 50% 2-20 The depreciation begins in the month following the month in which the tangible asset was accepted for use. Fixed assets under construction are measured at an amount equal to the total costs directly related to their purchase or production decreased by impairment write-offs. Intangible assets Intangible assets include the assets which meet the following criteria: - they can be excluded or separated from an economic entity and sold, transferred, licensed or handed over for paid use to third persons, either individually or together with the agreements, asset components or obligation components associated with them; or - they stem from contractual titles or other legal titles regardless of whether they are marketable or possible to separate from an economic entity or from other titles or obligations. Intangible assets purchased as part of a separate transaction are recognized in the balance according to their purchase price. Intangible assets purchased as part of an economic entity acquisition transaction are recognized in the balance according to their fair value on the acquisition day. After the initial recognition, intangible assets are measured at their purchase price or production cost after deducting accumulated depreciation and impairment write-offs. The useful life of intangible assets, depending on their type, is assessed and considered as limited or unspecified. Except development works, intangible assets produced by the entity itself are not recognized in assets, while the outlays spent to produce them are recognized in the costs of the period in which they were incurred. The useful lives of individual intangible and legal assets are verified annually and, should the need arise, adjusted from the beginning of the next fiscal year. Page 21 of 70

22 Depreciation begins in the month following the month in which the intangible asset is accepted for use. Depreciation is calculated on a straight-line basis at the standard rates between 5 and 50%. Goodwill Goodwill is a surplus of the purchase price above the fair value of identifiable net assets of a subsidiary, a joint subsidiary or an affiliate as on the acquisition day. Goodwill is determined individually for every acquired company. Goodwill is not depreciated. A goodwill impairment test is carried out at the end of every reporting period in respect of companies from the acquisition of which six months have passed. Non-financial asset impairment On every balance day, the Group s entities conduct an analysis to identify any objective proofs confirming whether individual components of non-financial assets became impaired and conduct impairment tests. Write-offs due to permanent impairment are charged to other operating costs, while in relation to the revalued tangible assets they decrease the differences caused by revaluation and charged to revaluation capital. Any possible write-off surplus above the differences caused by revaluation is charged to other operating costs. Investment property Investment property is initially measured at the purchase price or production cost, taking into account the transaction conclusion costs. After the initial measurement, the investment property value is decreased by impairment write-offs. Lease Financial lease agreements, under which transfer in principle the entire risk and all the benefits stemming from possessing the subject of lease onto the company are recognized in the balance sheet on the first day of the lease at a lower of the two following values: the fair value of the tangible asset constituting the subject of lease or the current value of minimum lease charges. The minimal minimum lease are distributed between financial costs and decease in the balance of lease liabilities so as to obtain a fixed interest rate in relation to the unpaid balance of liabilities. Conditional lease charges are recognized in the costs of the period when they were incurred. Tangible assets used under financial lease agreements are depreciated according to the principles applied to the company s own assets. However, if there is no sufficient certainty that the Company will obtain the ownership title before the end of the lease period, a given component is depreciated throughout the shorter of the two following periods: the estimated useful life of the tangible asset or the lease period. Lease agreements under which the lessor retains in principle the entire risk and all the benefits stemming from possessing the subject of lease are considered operational lease agreements. Operational lease charges are recognized as costs in the profit and loss account using the straight-line method throughout the lease period. Investments in subordinate entities Investments in subordinate entities are assets purchased to obtain economic gains stemming from a value increase of those assets or from obtaining revenues therefrom in the form of dividends or other benefits. They are measured at their purchase price less permanent impairment write-offs. Except investments in subsidiaries, joint subsidiaries and affiliates, which are recognized at their purchase price under IAS 27 and IAS 28, financial liabilities and assets are recognized and measured under IAS 39 Financial Instruments: Recognition and Measurement. Financial assets and liabilities Financial assets include shares in affiliated entities, assets measured at their fair value through the profit and loss account, hedging derivative instruments, granted loans and own receivables as well as cash and cash equivalents. Financial liabilities include credits and loans taken, other types of financing (factoring), credits in current accounts, financial liabilities measured at their fair value through the profit and loss account, hedging derivative instruments, trade liabilities, liabilities towards tangible asset suppliers and lease liabilities. Financial instruments Page 22 of 70