SYNTHOS S.A. Condensed interim separate financial statements with the statutory auditor s opinion on the review for the 6 months ended 30 June 2017

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3 SYNTHOS S.A. Condensed interim separate financial statements with the statutory auditor s opinion on the review for the 6 months ended 30 June 2017

4 SYNTHOS S.A. Oświęcim, ul. Chemików 1 Condensed interim separate financial statements for the 6 months ended 30 June 2017 prepared in accordance with IAS 34. Oświęcim, 29 August 2017

5 MANAGEMENT REPRESENTATIONS 4 CONDENSED INTERIM SEPARATE STATEMENT OF COMPREHENSIVE INCOME FOR THE 6 MONTHS ENDED 30 JUNE CONDENSED INTERIM SEPARATE STATEMENT OF FINANCIAL POSITION AS AT 30 JUNE CONDENSED INTERIM SEPARATE STATEMENT OF CHANGES IN EQUITY FOR THE 6 MONTHS ENDED 30 JUNE CONDENSED INTERIM SEPARATE STATEMENT OF CASH FLOWS FOR THE 6 MONTHS ENDED 30 JUNE Note 1. Accounting policy Note 2. Other operating income/(expenses) Note 3. Finance income/(costs) Note 4. Income tax recognized in the statement of comprehensive income Note 5. Receivables on account of dividends Note 6. Property, plant and equipment Note 7. Explanation of seasonality or cyclicality of operations of Synthos S.A Note 8. Contingent liabilities, sureties and guarantees Note 9. Changes in estimates Note 10. Fair value of financial instruments Note 11. Investments in subsidiaries and associates Note 12. Loans granted Note 13. Issues, redemptions and repayments of debt and equity securities, loans and borrowings. 21 Note 14. Loans, borrowings and other debt instruments Note 15. Trade and other payables Note 16. Dividends paid Note 17. Change of comparative data for capturing investments in subsidiaries, jointly controlled entities and associates following the application of IAS Note 18. Related party transactions Note 19. Events after the reporting period Note 20. Approval of the financial statements

6 MANAGEMENT REPRESENTATIONS The Management Board of Synthos S.A. hereby presents the condensed interim separate financial statements for the 6 months ended 30 JUNE 2017, which consist of: Condensed interim separate statement of comprehensive income for the period of 1 January - 30 June 2017, Condensed interim separate statement of financial position as at 30 June 2017, Condensed interim separate statement of changes in equity for the period of 1 January - 30 June 2017, Condensed interim separate statement of cash flows for the period of 1 January - 30 June 2017, Notes. These condensed interim separate financial statements have been prepared in accordance with the requirements of International Accounting Standard 34 Interim Financial Reporting, which was approved by the European Union and they are a true, reliable and transparent presentation of the assets and financial standing of Synthos S.A. and its financial result. The audit company, which reviewed the condensed interim separate financial statements was selected in accordance with the provisions of law. That entity as well as the statutory auditors who did the review satisfied the conditions for issuing an unbiased and independent report on the review as required by the binding regulations and professional standards. This does not preclude the possibility of making retrospective changes to the financial statements in connection with corrections of errors or changes in accounting principles in accordance with IAS 8. Signatures of the Management Board Members Zbigniew Warmuz President of the Management Board Zbigniew Lange Management Board Member Tomasz Piec Vice-President of the Management Board Jarosław Rogoża Management Board Member Maurice Kramer Management Board Member Michał Watoła Person responsible for keeping the accounts Oświęcim, 29 August

7 Condensed interim separate statement of comprehensive income for the 6 months ended 30 June 2017 from Note from to to restated Revenue Cost of sales (69) (67) Gross profit on sales Administrative expenses (5) (9) Other operating income/(expenses) 2 1 (23) Operating profit/(loss) 7 (17) Finance income Finance costs 3 (37) (75) Share in the profit of entities measured by the equity method Profit before tax Income tax 4 (36) (14) Net profit Components of other comprehensive income that may be reclassified to the net profit in a future period: Exchange differences on translation of foreign operations (49) 35 Measurement of available-for-sale financial assets 10 (1) - Net other comprehensive income (50) 35 Total comprehensive income Basic and diluted earnings per share attributable to equity holders of the Company in the reporting period (in PLN per share) 0, The condensed interim separate statement of comprehensive income should be analysed together with the notes constituting an integral part of the condensed interim separate financial statements 5

8 Condensed interim separate statement of financial position as at 30 June 2017 Assets Note 30 June December 2016 Non-current assets Property, plant and equipment Intangible assets Investments in subsidiaries and associates Available-for-sale financial assets 5 6 Deferred tax assets Loans granted Current assets Trade and other receivables Cash and cash equivalents Receivables due on account of dividends Total assets Equity and liabilities Equity Share capital Revaluation reserve (24) (23) Exchange differences on translation of foreign operations Retained earnings ,768 Equity Non-current liabilities Loans, borrowings and other debt instruments ,531 Deferred revenue from government grants Current liabilities Loans, borrowings and other debt instruments Provisions 7 7 Income tax payable Trade and other payables Deferred revenue Total equity and liabilities The condensed interim separate statement of financial position should be analysed together with the notes constituting an integral part of the condensed interim separate financial statements 6

9 Condensed interim separate statement of changes in equity for the 6 months ended 30 June 2017 Share capital Revaluation reserve Exchange differences on translation of foreign operations Retained earnings Total equity Note 1 January Net profit Other comprehensive income Total net comprehensive income June 2016, January (23) Net profit Other comprehensive income - (1) (49) - (50) Total net comprehensive income - (1) (49) Payment of dividends (662) (662) 30 June 2017, 40 (24) The condensed interim separate statement of changes in equity should be analysed together with the notes constituting an integral part of the condensed interim separate financial statements 7

10 Condensed interim separate statement of cash flows for the 6 months ended 30 June 2017 from Note from to to restated Profit before tax Adjustments Depreciation and amortization 8 8 Dividends Gains/losses on exchange differences (62) 30 Interest Profits of entities measured by the equity method 11 (321) (175) Costs of discontinued development work - 22 Interim dividend received 28 - Other (1) - Operating profit before changes in working capital Movement in receivables 1 (7) Movement in trade and other payables (3) 11 Net cash generated in operating activities Tax paid (42) 1 Net cash from operating activities Sale of intangible assets and property, plant and equipment 1 - Repayment of loans - 19 Grants received 1 56 Interest received 1 - Purchase of intangible assets and property, plant and equipment (25) (7) Subscription/purchase of shares in subsidiaries and associates (2) (122) Loans granted (14) (19) Net cash from investing activities (38) (73) Cash flows from financing activities Dividends and other distributions to owners 16 (662) - Interest paid (35) (35) Net cash from financing activities (697) (35) Total net cash flow (336) (96) Balance sheet movement in cash, including: (342) (87) Cash at the beginning of the period Effect of exchange differences relating to cash and cash equivalents and measurement of term deposits (6) 9 Cash at the end of the period The condensed interim separate statement of cash flows should be analysed together with the notes constituting an integral part of the condensed interim separate financial statements 8

11 Explanatory notes Synthos S.A. (previously Firma Chemiczna Dwory S.A., hereinafter referred to as the Company ) is a joint stock company registered in Poland. Its shares are listed on the Warsaw Stock Exchange. The Company s seat is located in Oświęcim at ul. Chemików 1. Key company details: Phone: Information by phone (33) to 25 Telefax: (33) recepcja@synthosgroup.com Website: The Company was entered in the National Court Register on 27 August 2001 under file number KRS NIP REGON The company s line of business includes in particular: activities of holding companies business and management consultancy activities accounting and bookkeeping activities The Company is the parent company in the Synthos S.A. Group The duration of the Company is not limited by the Articles of Association. Synthos S.A. has a foreign branch in the Czech Republic - Synthos S.A. (organizační složka). The registered office of the branch is in Kralupy nad Vltavou O.Wichterleho 810. The branch is entered in the Court Register in Prague under file number NIP The branch s line of business includes in particular: accounting and bookkeeping activities These condensed interim separate financial statements of the Company for the 6 months ended 30 June 2017 were approved for publication by the Management Board. The Company also prepared the condensed interim consolidated financial statements for the 6 months ended 30 June 2017, which were approved for publication by the Management Board on 29 August Company s Management Board: Zbigniew Warmuz President of the Management Board Tomasz Piec Vice President of the Management Board Marice Kramer Management Board Member Zbigniew Lange Management Board Member Jarosław Rogoża Management Board Member As of 31 December 2016, Mr. Tomasz Kalwat resigned from his position on the Management Board of Synthos S.A. 9

12 On 9 January 2017 the Supervisory Board appointed Mr. Zbigniew Warmuz to the position of the President of the Synthos S.A. Management Board. On 5 April 2017, the Supervisory Board appointed Mr. Maurice Kramer to the position of a Member of the Synthos S.A. Management Board Supervisory Board: Jarosław Grodzki Robert Oskard Grzegorz Miroński Wojciech Ciesielski Mariusz Gromek Note 1. Chairman Deputy Chairman Secretary Supervisory Board Member Supervisory Board Member Accounting policy 1. Compliance statement and the basis for preparing the condensed interim separate financial statements These condensed interim separate financial statements of Synthos S.A. for the first half of 2017 have been prepared in accordance with the International Accounting Standard 34 Interim Financial Reporting approved by the European Union. As at the date of approving these financial statements there is no evidence indicating significant uncertainty as to the ability of the Company to continue its business as a going concern. These condensed interim separate financial statements are a true, reliable and transparent presentation of the assets and financial standing of the Company and its interim financial result. The interim financial result may not fully reflect the achievable financial result for the financial year. The condensed interim separate financial statements do not include all the information and disclosures that are required in the annual separate financial statements and they should be read along with the Company s separate financial statements for the year ended 31 December 2016 approved for publication on 22 March The key accounting policies applied in the condensed interim separate financial statements are consistent with the policies applied in the annual separate financial statements for 2016, except for the application of new or amended standards and interpretations as described in item 2 below. 2. New and amended accounting standards and interpretations The following standards and interpretations have been published by the International Accounting Standards Council but have not come into force yet: Amendments to IFRS 2 Share Based Payments Amendments to IFRS 2 Classification and measurement of share based payment transactions (published on 20 June 2016) applicable to annual periods beginning on or after 1 January IFRS 9 Financial Instruments Standard published on 24 July 2014 and applicable to annual periods beginning on or after 1 January IFRS 14 Regulatory Deferral Accounts 10

13 Standard published on 30 January 2014 and applicable to annual periods beginning on or after 1 January According to a decision of the European Commission, the process of approving the preliminary version of the standard will not be initiated before the final version of the standard is published. The standard has not been approved by the EU by the approval date of these financial statements. IFRS 15 Revenue from Contracts with Customers Standard published on 28 May 2014 including amendments to IFRS 15 published on 11 September 2015 and applicable to annual periods beginning on or after 1 January The standard was adopted by the European Union on 22 September IFRS 15 introduces a five-step model for recognizing revenue from contracts with customers. According to the standard, revenue is recognized in an amount that reflects the consideration to which the Company is entitled in exchange for the goods or services delivered to the client. The new standard will replace all the current requirements for the recognition of revenue under IFRS. In reference to annual periods starting on or after 1 January 2018, a full retrospective approach or a modified retrospective approach must be applied. Earlier application is permitted. The Company plans to implement the new standard in line with the required effective date. As at the date of preparing the separate interim financial statements, the Company s Management Board has not yet completed the work on impact analysis. IFRS 16 Leases Standard published on 13 January 2016 and applicable to annual periods beginning on or after 1 January The company plans to complete the full analysis of the standard s impact on the separate financial statements in the first half of Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts Standard published on 12 September 2016 and applicable to annual periods beginning on or after 1 January The company plans to complete the full analysis of the standard s impact on the separate financial statements in the second half of Amendments to IAS 12 Recognition of deferred income tax assets for unrealized losses Standard published on 19 January 2016 and applicable to annual periods beginning on or after 1 January Application of these amendments had no effect on the Company s financial standing or its performance. Amendments to IAS 7 Disclosure initiative Standard published on 29 January 2016 and applicable to annual periods beginning on or after 1 January Application of these amendments had no effect on the Company s financial standing or its performance. Amendments arising from the IFRS review The amendments were published on 8 December Amendments to IFRS 12 are applicable to annual periods beginning on or after 1 January 2017, while amendments to IFRS 1 and IAS 28 are applicable to annual periods beginning on or after 1 January

14 Application of these amendments had no effect on the Company s financial standing or its performance. Amendments to IAS 40: Transfers of Investment Property The amendments were published on 8 January 2016 and are applicable to annual periods beginning on or after 1 January IFRS 17 Insurance Contracts Standard published on 18 May 2017 and applicable to annual periods beginning on or after 1 January IFRIC Interpretation 22: Foreign currency transactions and advance consideration Standard published on 8 December 2016 and applicable to annual periods beginning on or after 1 January IFRIC Interpretation 23 Uncertainty over income tax treatments Standard published on 7 June 2017 and applicable to annual periods beginning on or after 1 January The effective dates are the dates arising from the wording of the standards announced by the International Accounting Standards Board. The application dates of the standards in the European Union may differ from the application dates arising from the wording of the standards and are announced upon their approval for application by the European Union. No new or amended standards or interpretations applicable to annual periods beginning after 1 January 2016 were published after 1 January The Group has not elected the option of early application of any standard, interpretation or amendment which has been published but has not yet become effective in light of the European Union regulations. Note 2. Other operating income/(expenses) from to from to Grants 1 - Other 1 - Total other operating income 2 - Costs of discontinued development work * - (23) Other (1) - Total other operating expenses (1) (23) Other operating income/(expenses) 1 (23) * In H1 2016, the Company performed a revaluation of development work in the amount of PLN 23 million, since the effectiveness of the projects was lower than assumed when they were launched. The projects were aimed at developing alternative methods for obtaining raw materials. Currently, the main factors underlying the lower effectiveness of the projects subject to revaluation, are the low prices of raw materials. 12

15 Note 3. Finance income/(costs) from to from to Income on interest on loans granted 1 14 Net exchange differences 70 - Income on account of deposits - 3 Interest income from purchased bonds - 20 Income received on account of guarantee fee 3 2 Finance income Bond interest costs (36) (37) Cost of interest on amounts due to the state budget - (10) Net exchange differences - (28) Other (1) - Total finance costs (37) (75) Note 4. Income tax recognized in the statement of comprehensive income In 2016, the legal form of subsidiaries was changed and the group's whole structure was transformed. As a result, Synthos S.A. is the payer of income received on account of being a shareholder in Synthos Dwory 7 sp. z o.o. spółka jawna, Synthos Dwory 2 spółka z ograniczoną odpowiedzialnością SD4 spółka komandytowa (formerly Synthos Dwory 4 Sp. z o.o.), Synthos Dwory 2 spółka z ograniczoną odpowiedzialnością SD5 spółka komandytowa (formerly Synthos Dwory 5 Sp. z o.o.), Synthos Dwory 2 spółka z ograniczoną odpowiedzialnością SD8 spółka komandytowa (formerly Synthos Dwory 8 Sp. z o.o.), Synthos Styrenics Synthos Dwory 2 Sp. z o.o. spółka komandytowa. In 2016, the Tax Inspection Office launched tax inspection in the Company for financial years As a result of the tax inspections, the Office assessed an additional CIT liability for in the amount of PLN 54 million. Of that amount, the Company paid PLN 18 million by the reporting date. As at 30 June 2017, the Company recognizes a disputed tax liability of PLN 36 million in the Income tax payable item and presents accrued interest of PLN 6 million in the Other liabilities item. The proceedings for the year 2010 are currently at the stage of a grievance submitted to the Supreme Court of Administration; the Company also appealed against the decisions for the years to the Head of the Małopolski Customs and Tax Office. 13

16 from to from to Income tax Income tax for the current period 23 - Income tax for previous years Income tax Recognition/reversal of temporary differences 13 (4) Income tax recognized in the financial result in the statement of comprehensive income 13 (4) % from to % from to Profit before tax Tax based on the applicable tax rate 19% 70 19% 23 Revenue not subject to taxation (permanent differences) - valuation of shares using the equity method (61) (27) Revenues of general partnerships 27 - Adjustment of tax for previous years % 36 12% 14 *Change in deferred tax temporary differences in the period As at 1 January 2017 Statement of comprehensive income As at 30 June 2017, Property, plant and equipment 2-2 Other investments - (1) (1) Receivables 4-4 Provisions (2) - (2) Liabilities under bonds and loans (27) 14 (13) (23) 13 (10) Note 5. Receivables on account of dividends On 30 June 2017, pursuant to Resolution no. 1 adopted by partners of Synthos Dwory 7 spółka z ograniczoną odpowiedzialnością spółka jawna (general partnership), a dividend for 2016 was adopted in the amount of PLN 199 million, which was reduced by interim dividend of PLN 16 million received in The receivable of PLN 183 million remains to be paid. 14

17 Note 6. Property, plant and equipment Buildings and structures Machinery and equipment Means of transport Other Fixed assets under construction Gross value as at 1 January Additions: - Purchase Reclassification (3) - Disposals: - Sale/scrapping - (1) (1) - - (2) Gross value as at 30 June 2017, Total Accumulated depreciation as at 1 January Additions: - Depreciation for the period Disposals: - Sale/scrapping - (1) (1) - - (2) Accumulated depreciation as at 30 June 2017, Net value As at 1 January As at 30 June 2017,

18 Buildings and structures Machinery and equipment Means of transport Other Fixed assets under construction Total Gross value as at 1 January Additions: - Purchase Reclassification (5) - Disposals: Gross value as at 30 June 2016, Accumulated depreciation ass at 1 January Additions: - Depreciation for the period Disposals: Accumulated depreciation as at 30 June 2016, Net value As at 1 January As at 30 June 2016,

19 Note 7. Explanation of seasonality or cyclicality of operations of Synthos S.A. The Company does not show signs of seasonality of cyclicality of supply and sales. Note 8. Contingent liabilities, sureties and guarantees On 30 September 2014 Synthos Finance AB with its registered office in Stockholm, Sweden, a 100% subsidiary of Synthos S.A., issued Senior Notes with a total nominal value of EUR 350 million. The liabilities of Synthos Finance AB arising from this issue were secured with a guarantee extended by Synthos S.A. jointly and severally with its subsidiaries Synthos Dwory 7 spółka z ograniczoną odpowiedzialnością sp. jawna, SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and SYNTHOS PBR (jointly Guarantors ). The guarantee extended by the Guarantors covers all the liabilities of Synthos Finance AB arising from the Notes (including the liability to pay the nominal value of the Notes and the respective interest) and was extended to all Noteholders. On 2 April 2015 Synthos Finance AB with its registered office in Stockholm, Sweden, a 100% subsidiary of Synthos S.A., issued Senior Notes with a total nominal value of EUR 50 million. The liabilities of Synthos Finance AB arising from this issue were also secured with a guarantee extended by Synthos S.A. jointly and severally with its subsidiaries Synthos Dwory 7 spółka z ograniczoną odpowiedzialnością sp. jawna, SYNTHOS Kralupy a.s., TAMERO INVEST s.r.o. and SYNTHOS PBR (jointly Guarantors ). The guarantee extended by the Guarantors encompasses the entirety of the obligations of Synthos Finance AB stemming from the notes (including the obligation to repay the face value of the notes and the interest on the notes) and has been extended to all noteholders. The maximum guarantee amount extended by the Guarantors covers 150% of the nominal value of the notes issued. The guarantee will expire after the Noteholders claims in respect of Synthos Finance AB have expired. On 7 June 2016, under a revolving loan agreement for an amount of up to EUR 220 million concluded between Synthos S.A., Synthos Dwory 7 sp. z o.o. sp.j., Synthos PBR s.r.o., Synthos Kralupy a.s., Tamero Invest s.r.o. and Synthos Agro sp. o.o. extended an irrevocable and unconditional surety for all the borrowers for due and timely performance of all of their financial liabilities under the financing by each borrower. The surety was extended up to the amount equal to 150% of the Total Exposure. The surety will be fully effective and will bind each surety until the earlier of the following dates: - on which all the lenders claims under financing documents are unconditionally and irrevocably satisfied in full and expire; - or 30 April As at the date of these statements, no circumstances have arisen in which the surety would be obligated to fulfil the obligation. 17

20 Note 9. Changes in estimates Preparation of the interim condensed separate financial statements in accordance with IAS 34 requires that certain significant accounting estimations are used. It also requires the Management Board to exercise its judgment when applying the accounting principles adopted by the Company. The material estimations and judgments did not change after the publication of the 2016 annual consolidated financial statements. During the 6 months of 2017, there were no material changes of estimations and the methodology and assumptions that could have a material effect on the current period or future periods. Note 10. Fair value of financial instruments Details on fair values of financial instruments that may be estimated: Financial instruments measured at fair value as at 30 June 2017, Level 1 Level 2 Level 3 Available-for-sale assets Financial instruments measured at fair value as at 31 December 2016 Level 1 Level 2 Level 3 Available-for-sale assets Level 1 Shares of companies listed on the stock exchanges. Fair value has been determined on the basis of quotations on the stock market. Level 2 None. Level 3 None. The value of the remaining financial assets and liabilities is similar to their fair value. Note 11. Investments in subsidiaries and associates According to IAS 27 Separate Financial Statements, the Company applied the equity method to capture investments in subsidiaries, jointly controlled and associates in the separate financial statements. In 2016, the Company changed the valuation of subsidiaries from the purchase price method to the equity method. 18

21 From to Company name Interest in the company As at 1 January 2017 Purchase of shares and capital increase Impairmen t loss* Participation in net financial result Distributions/accrue d dividends Exchange differences on translation of foreign operations As at 30 June 2017 Synthos PBR s.r.o 100% (269) (7) 496 Synthos Kralupy a.s. 100% (44) (25) 1500 Synthos Dwory 7 sp. z o.o. spółka jawna 100% (199) Synthos Styrenics Synthos Dwory 2 sp. z o.o. spółka komandytowa 100% (29) (27) Synthos Holding Netherlands B.V. 100% (83) - (78) (17) 83 Synthos Dwory 2 sp. z o.o. 100% Synthos Care 100% Photo Hitech Sp. z o.o. 44% From to As at 1 January (112) 433 (590) (49) Purchase of shares and capital increase Participatio n in net financial result Payment of dividends Other comprehensiv e income Exchange differences on translation of foreign operations As at 31 December 2016 Company name Interest in the company Other Synthos PBR s.r.o 100% Synthos Kralupy a.s. 100% 455-1, (160) Synthos Dwory 7 sp. z o.o. spółka jawna 100% Red Chilli Ltd. 100% (1,039) Synthos Styrenics Synthos Dwory 2 sp. z o.o. spółka komandytowa 100% Synthos Holding Netherlands B.V. 100% (23) Synthos Dwory 2 sp. z o.o. 100% Photo Hitech Sp. z o.o. 44% (160) (23)

22 In the reporting period, the Company subscribed to shares in SYNTHOS CARE Synthos Dwory 2 spółka z ograniczoną odpowiedzialnością spółka komandytowa with its registered office in Oświęcim (the total value of the transaction was PLN 2 million). On 30 March 2017 the subsidiary Bilberry SCsp. in Luxembourg was liquidated. * Impairment loss Based on a review of operations and expectations concerning the outlook for the EPS business acquired on 31 August 2016 from the INEOS Group (hereinafter: Styrenics West ), the Company s Management Board believes it cannot guarantee the level of the margins on Styrenics West products that was assumed in the acquisition process. The assumptions regarding the sales prices and the bargaining capacity at the purchasing side are not reflected in the actual performance and cannot be maintained in the long run. The analyzed business is not vertically integrated and consequently it is highly sensitive to any volatility of the market environment. In the period under analysis, the prices of styrene (which is the main raw material) were highly volatile, however the volatility could not be reflected in the EPS prices sold by Styrenics West. The Company has taken steps to improve profitability of this product group, however full implementation of the new solutions will require additional time and potentially capital expenditures. In the longer perspective, the Company s Management Board also notes the risk that demand for EPS in the packaging segment may decline in favor of substitute materials, which consequently may pose a threat for margins and sales volumes or their increase in this segment. In Europe, approximately 21% of EPS is used for packaging. The remaining 79% is mainly the thermal insulation segment, where EPS has a strong and solid position. In the context of energy savings policies and development of the construction sector, the insulation segment still has significant growth prospects. Consequently, as at 30 June 2017, certain indications have been identified that necessitated asset impairment tests in the Synthos S.A. Group. As the Group prepared assumptions for the asset impairment test pursuant to IAS 36 Impairment of Assets, it analyzed the necessity of and the actual capacity for estimating fair value and value in use of the individual assets The measurement of fair value less costs of disposal is not possible, since there is no basis for making a reliable estimation of the price at which the assets in question could be sold. As a result, it was determined that value in use provided the best reflection of the recoverable amount of the analyzed assets, in accordance with IAS The valuation model was prepared on the basis of a medium term analysis in the period of The forecast cash flows are discounted to their present value using the discount rate of 8.2%, including the tax effect, reflecting the current market estimation of time value of money and risk typical for a given asset. The impact of the impairment loss on net profit, including the tax effect, presented in the statement of comprehensive income in the condensed interim separate financial statements for H is PLN 112 million. 20

23 Note 12. Loans granted Long-term loans 30 June December 2016 Receivables on account of loans granted to related parties Total Loan repayment schedule Effective interest rate Total <1 year 1 to 5 years Synthos Agro sp. z o.o. Fixed interest rate Total In 2017, the Company granted a PLN 14 million loan to Synthos Agro sp. z o.o. Note 13. Issues, redemptions and repayments of debt and equity securities, loans and borrowings In 2014, the Company issued bonds in the total amount of EUR 350 million (equivalent to PLN 1,492 million). 3,500 unsecured bearer bonds were issued, numbered from 01 to The issue price of one bond is EUR 98,286 while its nominal value is EUR 100,000. The bonds will be redeemed by payment of an amount equal to the nominal value of the bonds on 30 September 2021; the interest rate is fixed. As at 30 June 2017, the outstanding bearer bonds are held by a subsidiary Synthos Finance AB. Note 14. Loans, borrowings and other debt instruments This note presents information on the Company s liabilities on account of loans, borrowings and other debt instruments Non-current liabilities 30 June December 2016 Liabilities on bonds Current liabilities Bond interest liabilities Note 15. Trade and other payables 30 June December 2016 Trade payables to other entities

24 Trade payables to related entities - 4 Tax and social insurance payables, excluding income tax 2 2 Salaries payable 1 1 Accrued expenses 11 9 Special-purpose funds 1 1 Capital commitments 3 3 Payables from interest on amounts due to the state budget Note 16. Dividends paid On 8 May 2017, the Ordinary Shareholder Meeting of Synthos S.A. adopted resolution no. 18/2017 to pay dividend of PLN 1,362,947,500, i.e. PLN 1.03 per one share. Pursuant to the Company Management Board resolution no. VII/26/2016 of 21 November 2016, the parent company paid the shareholders the interim dividend in the amount of PLN 701,322,500, i.e. PLN 0.53 per one share. After subtracting the amount of the paid interim dividend from the amount of the dividend stipulated in the resolution, on 29 May 2017 the shareholders were paid the remaining amount, i.e. PLN 661,625,000. No dividends were paid in H Dividends paid per share from to from to Dividends paid per share

25 Note 17. Change of comparative data for capturing investments in subsidiaries, jointly controlled entities and associates following the application of IAS 27 Based on IAS 27, Separate Financial Statements, the company restated the comparative data as at 30 June Restated condensed interim separate statement of comprehensive income for the 6 months ended 30 June 2016 from to Correction from to , restated Revenue Cost of sales (67) - (67) Gross profit on sales Administrative expenses (9) - (9) Other operating income/(expenses) (23) - (23) Operating profit/(loss) (17) - (17) Finance income Finance costs (75) - (75) Share in the profit of entities measured by the equity method Profit before tax (53) Income tax (14) - (14) Net profit (67) Components of other comprehensive income that may be reclassified to the net profit in a future period: Exchange differences on translation of foreign operations (1) Net other comprehensive income (1) Total comprehensive income (68) Basic and diluted earnings per share attributable to equity holders of the Company in the reporting period (in PLN per share) (0.05)

26 Restated condensed interim separate statement of cash flows for the 6 months ended 30 June 2016 from to Correction from to restated Profit before tax (53) Adjustments Depreciation and amortization 8-8 Gains/losses on exchange differences Profits of entities measured by the equity method - (175) (175) Costs of discontinued development work Operating profit before changes in working capital 7-7 Movement in receivables (7) - (7) Movement in trade and other payables Net cash generated in operating activities Tax paid 1-1 Net cash from operating activities Repayment of loans Grants received Purchase of intangible assets and property, plant and equipment (7) - (7) Subscription/purchase of shares in subsidiaries and associates (122) - (122) Loans granted (19) - (19) Net cash from investing activities (73) - (73) Cash flows from financing activities Interest paid (35) - (35) Net cash from financing activities (35) - (35) Total net cash flow (96) - (96) Balance sheet movement in cash, including: (87) - (87) Cash at the beginning of the period Effect of exchange differences relating to cash and cash equivalents and measurement of term deposits 9-9 Cash at the end of the period

27 Note 18. Related party transactions Related party transactions Receivables from related parties Direct subsidiaries 30 June December 2016 Synthos Kralupy a.s Synthos PBR s.r.o. 3 1 Synthos Dwory 7 spółka z ograniczoną odpowiedzialnością spółka jawna 10 9 Synthos Finance AB 4 4 Synthos Styrenics Synthos Dwory 2 Sp. z o.o. sp. komandytowa 4 - Indirect subsidiaries Tamero Invest s.r.o. - 1 Synthos Agro Sp. z o.o. - 1 Receivables from related parties on account of guarantees 30 June December 2016 Direct subsidiaries Synthos Finance AB 1 1 Receivables from related parties on account of loans 30 June December 2016 Indirect subsidiaries Synthos Agro Sp. z o.o Payables to related parties 30 June December 2016 Direct subsidiaries Synthos PBR s.r.o. - 4 Payables to related parties under bonds Direct subsidiaries 30 June December 2016 Synthos Finance AB Revenue on mutual transactions between related parties Direct subsidiaries from to from to Synthos Kralupy a.s Synthos PBR s.r.o. 3 5 Synthos Dwory 7 spółka z ograniczoną odpowiedzialnością spółka jawna Synthos Styrenics Synthos Dwory 2 Sp. z o.o. sp. komandytowa 8-25

28 Indirect subsidiaries Tamero Invest s.r.o. 1 3 Synthos Agro Sp. z o.o. 2 2 Finance income on mutual transactions between related parties from to from to Indirect subsidiaries Synthos Agro Sp. z o.o. 1 - Purchases from related parties Direct subsidiaries from to from to Synthos Dwory 7 spółka z ograniczoną odpowiedzialnością spółka jawna 4 2 Other related parties (controlled by the main shareholder) Magellan Pro-Service Sp. z o.o. 3 3 Other 3 1 Finance costs of mutual transactions between related parties Direct subsidiaries from to from to Synthos Finance AB Note 19. Events after the reporting period After 30 June 2017 up to the date of drawing up these condensed interim separate financial statements, no material events occurred that were not captured in these condensed interim separate financial statements even though they should have been. Note 20. Approval of the financial statements The Management Board of Synthos S.A. hereby represents that, as of 29 August 2017, it approves the Company s condensed interim separate financial statements for the period from 1 January to 30 June

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