FABRYKA FARB i LAKIERÓW "ŚNIEŻKA" S.A. FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 WITH AN OPINION OF AN INDEPENDENT CERTIFIED AUDITOR

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FABRYKA FARB i LAKIERÓW "ŚNIEŻKA" S.A. FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2012 WITH AN OPINION OF AN INDEPENDENT CERTIFIED AUDITOR Lubzina, 18 April 2013

Fabryka Farb i Lakierów "Śnieżka" S.A. FABRYKA FARB i LAKIERÓW "ŚNIEŻKA" S.A.... 1 Selected financial data... 4 Statement of comprehensive income... 5 Statement of financial position... 6 Cash flow statement... 7 Statement of changes in equity... 8 accounting rules (policies) and additional notes... 9 1. General information... 9 2. Identification of the consolidated financial statements... 9 3. Composition of the Company's Management Board... 9 4. Approval of the financial statements... 9 5. Company's Investments... 10 6. Material figures based on professional judgment and estimates... 11 6.1. Professional judgement 11 6.2. Estimation uncertainty 11 7. Basis for preparation of the financial statements... 11 7.1. Declaration of conformity 12 7.2. Functional currency and the currency of the financial statements 12 8. Changes in the accounting principles applied... 12 9. New standards and interpretations that have been published but not implemented yet... 12 10. Significant accounting principles... 13 10.1. Translation of items in foreign currencies 13 10.2. Property, plant and equipment 14 10.3. Investment real property 15 10.4. Intangible assets 15 10.5. Lease 16 10.6. Impairment of non-financial non-current assets 17 10.7. Costs of external financing 17 10.8. Interests in subsidiary, associates and joint arrangements 17 10.9. Financial assets 17 10.10. Impairment of financial assets 18 10.11. Embedded derivatives 19 10.12. Financial derivatives and hedge 19 10.13. Inventory 21 10.14. Trade and other receivables 21 10.15. Cash and cash equivalents 21 10.16. Interest-bearing bank loans, borrowings and debt securities 22 10.17. Trade and other liabilities 22 10.18. Provisions 22 10.19. Retirement severance pays, disability benefits, death benefits and jubilee awards 22 10.20. Revenues 22 10.21. Taxes 23 10.22. Net profit per share 24 11. Operating segments... 24 1

Fabryka Farb i Lakierów "Śnieżka" S.A. 12. Revenues and costs... 26 12.1. Other operating revenues and expenses... 26 12.2. Financial revenues and expenses... 27 12.3. Costs by type... 27 12.4. Costs of amortisation and depreciation as well as write-downs recognised in the profit or loss28 12.5. Costs of employee benefits... 28 13. Items of other comprehensive income... 28 14. Income tax... 28 14.1. Tax burden... 28 14.2. Calculation of the effective tax rate... 29 14.3. Deferred income tax... 29 15. Non-current assets classified as held for sale... 30 16. Social assets and contributions to the company social security fund... 30 17. Earnings per share... 31 18. Dividend payout and proposed dividend payout... 31 19. Property, plant and equipment... 31 20. Lease...33 20.1. Liabilities under financial lease agreements and lease purchase contracts... 33 20.2. Receivables under financial lease agreements and lease purchase contracts... 33 21. Investment real property... 34 22. Intangible assets... 34 23. Financial assets available for sale... 35 24. Other assets... 36 24.1. Other financial assets... 36 24.2. Other non-financial assets... 36 25. Employee benefits... 37 25.1. Retirement benefits and other benefits after the employment periods... 37 26. Inventory... 37 27. Trade and other receivables... 38 28. Cash and cash equivalents... 39 29. Share capital and supplementary capital / capital reserve... 40 29.1. Share capital 40 29.2. Supplementary capital 41 29.3. Undistributed profit (loss) and restrictions on dividend payout 41 30. Interest-bearing bank loans and borrowings... 42 31. Trade and other liabilities, accruals... 45 31.1. (Current) trade liabilities and other financial liabilities 45 31.2. Accruals 46 32. Causes of differences between changes resulting from the statement of financial position and changes resulting from the cash flow statement as well as additional information about the cash flow statement... 46 33. Investment liabilities... 47 34. Contingent liabilities... 47 34.1. Court cases 48 34.2. Tax settlements 48 35. Related parties... 48 2

Fabryka Farb i Lakierów "Śnieżka" S.A. 35.1. Associate 49 35.2. Terms and conditions of transactions with related parties 49 35.3. Borrowings granted to Management Board Members 50 35.4. Other transactions involving Management Board Members 50 35.5. Remuneration of the Company s managers 50 36. Remuneration of the certified auditor or the entity authorised to audit financial statements... 50 37. Objectives and principles of financial risk management... 50 37.1. Interest rate risk 51 37.2. Foreign exchange risk 51 37.3. Risk related to prices of goods 51 37.4. Credit risk 52 37.5. Liquidity risk 52 38. Financial instruments... 53 38.1. Fair values of individual types of financial instruments 53 38.2. Hedge 54 39. Capital management... 54 40. Employment structure... 55 41. Events after the balance sheet date... 55 3

Fabryka Farb i Lakierów "Śnieżka" S.A. SELECTED FINANCIAL DATA for the year ended 31 December 2012 year ended 31 December 2012 in thousand zloty year ended 31 December 2011 in thousand euro year ended 31 December 2012 year ended 31 December 2011 I. Revenues from sales of products, goods and materials 473,119 417,728 113,360 100,898 II. Profit (loss) from operating activities 25,557 8,127 6,123 1963 III. Gross profit (loss) 26,541 2,027 6,359 490 IV. Net profit (loss) 21481 1,812 5,147 438 V. Comprehensive income for the period 21481 1,812 5,147 438 VI. Net operating cash flows 60,980 28,339 14,611 6,845 VII. Net investment cash flows (19,152) (12,705) (4,589) (3,069) VIII. Net financial cash flows (31,114) (25,594) (7,455) (6182) IX. Total net cash flows 10,714 (9,960) 2,567 (2,406) X. Total assets 308,333 318,315 75,420 72,069 XI. Liabilities and provisions for liabilities 158,944 144,453 38,879 32,705 XII. Non-current liabilities 47,419 2,498 11599 566 XIII. Current liabilities 111525 141,955 27,280 32140 XIV. Equity 149,389 173,862 36,542 39,364 XV. Share capital 13,551 13,551 3,315 3,068 XVI. Number of shares 13,550,676 13,550,676 13,550,676 13,550,676 XVII. Earnings (losses) per ordinary share (in PLN/EUR) 1.65 0.13 0.40 0.03 XVIII. Diluted earnings (losses) per ordinary share (in PLN/EUR) 1.65 0.13 0.40 0.03 XIX. Book value per share (in PLN/EUR) 11.49 12.83 2.81 2.91 XX. Diluted book value per share (in PLN/EUR) 11.49 12.83 2.81 2.91 XXI. Declared or paid dividend per share (in PLN/EUR) 2.00 1.35 0.49 0.31 EUR exchange rates applied for converting the statements: The individual items of the condensed statement of comprehensive income have been converted according to the average EUR exchange rate applicable in the period, i.e.: over 12 months of 2012 4.1736 over 12 months of 2011 4.1401 The individual items of the statement of financial position have been converted according to the EUR exchange rate at the end of the period: as of 31 December 2012 4,0882 as of 31 December 2011 4.4168 to the financial statements presented on pages 9-60 constitute an integral part hereof. 4

Fabryka Farb i Lakierów "Śnieżka" S.A. STATEMENT OF COMPREHENSIVE INCOME for the year ended 31 December 2012 Note year ended 31 December 2012 year ended 31 December 2011 Continued operations Revenues from sales of products 385,701 331,704 Revenues from sales of goods 60,362 58,570 Revenues from sales of materials 27,056 27,454 Sales revenues 473,119 417,728 Cost of goods sold 328,009 299,052 Gross profit / (loss) on sales 12.1 145,110 118,676 Other operating revenues 804 1410 Selling costs 75,983 65,413 General and administrative expenses 42,517 38,842 Other operating costs 12.1 1,857 7,704 Operating profit/(loss) 25,557 8,127 Financial revenues 12.2 5,904 5,097 Financial expenses 12.2 4,920 11,197 Gross profit/(loss) 26,541 2,027 Income tax 14 5,060 215 Net profit (loss) on continued operations 21,481 1,812 Discontinued operations - - Sales profit/loss for the period from discontinued operations - - Net profit (loss) for the period 21,481 1,812 Other comprehensive income - - Financial assets available for sale - - Hedge of cash flows - - Income tax regarding other comprehensive income - - Other net comprehensive income - - TOTAL COMPREHENSIVE INCOME FOR THE PERIOD Profit (loss) per share: 21,481 1,812 - basic, from profit for the reporting period 1.65 0.13 - basic, from profit on continued operations for the reporting 1.65 0.13 period - diluted, from profit for the reporting period 1.65 0.13 - diluted, from profit on continued operations for the reporting period 1.65 0.13 to the financial statements presented on pages 9-60 constitute an integral part hereof. 5

Fabryka Farb i Lakierów "Śnieżka" S.A. STATEMENT OF FINANCIAL POSITION as of 31 December 2012 Note 31 December 2012 31 December 2011 ASSETS Non-current assets 169,663 159,618 Property, plant and equipment 19 131,089 116,507 Investment real property 21 12,756 13,287 Intangible assets 22 1,320 1,166 Financial assets available for sale 23 58 58 Shares, stock and other long-term assets 5,24.1 22,104 27,735 Non-current receivables 2,336 865 Deferred tax assets 14.3 - - Current assets 138,209 158,595 Inventory 26 61,252 67,992 Trade and other receivables 27 57,229 78,164 Income tax receivables 27 3,617 6,631 Financial derivatives - - Other financial assets 24.1 2,455 3,025 Other non-financial assets 24.2 777 618 Cash and cash equivalents 28 12,879 2,165 Non-current assets classified as held for sale 15 102 102 TOTAL ASSETS 307,974 318,315 EQUITY AND LIABILITIES Equity attributable to shareholders of the parent company 149,390 173,862 Share capital 29.1 13,551 13,551 Share premium Equity shares (28,920) - Other reserve capitals - - Revaluation reserve - - Supplementary capital 29.2 143,278 158,499 Retained earnings/uncovered losses 29.3 21,481 1,812 Non-current liabilities 47,418 2,498 Interest-bearing loans and borrowings 30 42,998 - Provisions 25.1 1,160 870 Other liabilities 384 163 Deferred tax provision 2,876 1,465 Accruals - - Current liabilities 111,166 141,955 Trade and other liabilities 31.1 43,722 46,535 Current portion of interest-bearing loans and borrowings 30 66,876 95,005 Financial derivatives - - Income tax liabilities - - Accruals 31.2 325 195 Provisions 243 220 Liabilities related to fixed assets classified as held for sale - - - Total liabilities 158,584 144,453 TOTAL EQUITY AND LIABILITIES 307,974 318,315 to the financial statements presented on pages 9-60 constitute an integral part hereof. 6

Fabryka Farb i Lakierów "Śnieżka" S.A. CASH FLOW STATEMENT for the year ended 31 December 2012 Operating cash flows year ended 31 December 2012 year ended 31 December 2011 Profit before tax 26,541 2,027 Adjustments: 11,495 24,605 Depreciation of fixed and intangible assets 13,519 12,787 Impairment losses on property, plant and equipment - 2,827 (Profit) loss on investing activities (20) 2,520 (Profit) loss on changes in the fair value of financial assets disclosed at fair value - 319 Profit / loss related to financial activities and foreign exchange differences (4,333) 6,741 Net interest and dividends 2,329 (589) Operating cash before changes in working capital 38,036 26,632 Change in inventory 6,739 (15,578) Change in receivables 20,559 52,632 Change in liabilities (2,550) (28,939) Change in provisions 313 (57) Change in deferred income 1,382 (704) Cash generated by operating activities 64,479 33,986 Subsidies received (316) - Income tax paid (3,183) (5,647) Net cash from operating activities 60,980 28,339 Cash flows from investment activities Proceeds from sales of property, plant and equipment and intangible assets 737 587 Expenses on acquisition of property, plant and equipment and intangible assets (28,967) (21,025) Expenses on acquisition of financial assets available for sale (1,260) - Proceeds from lease of fixed assets - 181 Expenses related to borrowings granted (1,790) (35,165) Proceeds from borrowings repaid 6,741 37,835 Expenses related to acquisition of subsidiaries (less the acquired cash) - (5) Proceeds from sales of related parties 2,996 747 Interest received 349 913 Dividends received 2,042 3227 Net cash used in investing activities (19,152) (12,705) Cash flows from financing activities Purchase of equity shares (28,920) - Inflows from loans and borrowings taken out 60,848 9,019 Repayment of loans and borrowings (41,486) (7,087) Repayment of liabilities under financial lease (218) (64) Subsidies received 316 - Interest (4,620) (3,707) Other proceeds 36 - Dividend and promoter certificates paid (17,070) (23,755) Net cash from financing activities (31,114) (25,594) Net increase (decrease) in cash and cash equivalents 10,714 (9,960) Opening balance of cash and cash equivalents 2,165 12,173 Movements in cash and cash equivalents due to foreign exchange differences - (48) Movements in cash relative to interest due - - Closing balance of cash and cash equivalents 12,879 2,165 to the financial statements presented on pages 9-60 constitute an integral part hereof. 7

STATEMENT OF CHANGES IN EQUITY for the year ended 31 December 2012 Share capital Fabryka Farb i Lakierów Śnieżka S.A. Share premium Equity shares Other reserve capitals Supplementary capital Revaluation reserve Retained earnings/uncovered As of 1 January 2012 13,551 - - - 146,282-35,973 195,806 Changes in the accounting policy (principles) As of 1 January 2011, restated 13,551 - - - 146,282-35,973 195,806 Net profit (loss) for the period - - - - - 1,812 1,812 Reclassification for supplementary capital from distribution of profit losses Total equity - - - 12,217 - (12,217) - Other net comprehensive income for the period - - - - - Comprehensive income for the period - - - - - Issue of shares - - - - - Cost of the issue of shares - - - - - Share-based payment - - - - - Redemption of equity shares - - - - Payment of founder certificates - - - - (720) (720) Payment of dividend - - - - (23,036) (23,036) As of 31 December 2011 13,5511 - - - 158,499-1,8121 173,8621 As of 1 January 2012 13,551 - - - 158,499-1,812 173,862 Net profit (loss) for the period - - - - - - 21,481 21,481 Reclassification for supplementary capital from distribution of profit - - - - - - Other net comprehensive income for the period - - - - - - Comprehensive income for the period - - - - - - Issue of shares - - - - - - Cost of the issue of shares - - - - - - Share-based payment - - - - - - Purchase of equity shares - - (28,920) - - (28,920) Payment of founder certificates - - - - - - - Declared payment of dividend - - - - (15,221) - (1,812) (17,033) As of 31 December 2012 13,551 - (28,920) 143,278-21,481 149,390 to the financial statements presented on pages 9-60 constitute an integral part hereof. 8

ACCOUNTING RULES (POLICIES) AND ADDITIONAL NOTES 1. General information The financial statements of Fabryka Farb i Lakierów "Śnieżka" S.A. cover the year ended 31 December 2012 and contain comparative data for the year ended 31 December 2011. Fabryka Farb i Lakierów "Śnieżka" S.A. ("Company", "entity") was founded by way of Notarial Deed of 16 January 1998. The Company is based in Lubzina 34a. The Company is entered in the register of entrepreneurs of the National Court Register maintained by the District Court in Rzeszów, 12th Commercial Division of the National Court Register, under KRS no. 0000060537. The Company was assigned the REGON statistical number 690527477. The Company has been established for an indefinite period of time. According to the Polish Classification of Activities, the Company's core business is the manufacture of paints, varnishes, adhesives, solvents 2030Z. According to the classification of the Warsaw Stock Exchange, the entity operates in the chemical sector. 2. Identification of the consolidated financial statements The Company drew up the consolidated financial statements for the year ended 31 December 2012, which were approved for publication on 18 April 2013. 3. Composition of the Company's Management Board As of 31 December 2012, the composition of the Management Board of Fabryka Farb i Lakierów "Śnieżka" S.A was as follows: Piotr Mikrut President of the Management Board from 31 March 2004 to the present, Witold Waśko Vice-President of the Management Board from 1 April 2005 to the present, Member of the Management Board between 16 February 1998 and 31 March 2005. Joanna Wróbel-Lipa Vice-President of the Management Board from 6 May 2011 the present, Member of the Management Board between 18 December 2007 and 5 May 2011. 4. Approval of the financial statements These financial statements were approved for publication by the Management Board on 18 April 2013. 9

5. Company's Investments The Company holds interests in the following subsidiaries, co-subsidiaries and associates: Hadrokor Sp. z o.o. Entity Fabryka Farb i Lakierów Proszkowych "Proximal" Sp. z o.o. Śnieżka Group Śnieżka-Ukraina Sp. z o.o. Core operations manufacture and sale of paints and varnishes and other chemical products Percentage share of the Company in the capital 31 December 31 December 2012 2011 51.09% 51.09% lease of real estate 100% 100% manufacture of paints, varnishes, solvents, adhesives, fillers, etc.; wholesale and retail sale of construction materials 82.52% 81.27% Śnieżka-BelPol Sp. z o.o. manufacture of paints, varnishes and solvents, 99% 88% wholesale and retail sale of construction materials, transport by lorry Śnieżka Sp. z o.o. in Wistowa manufacture of paints and varnishes 100% 100% IP Solutions Sp. z o.o. trademark management 100% 100% TM Investment Sp. z o.o. trademark management 100% 100% Plastbud Sp. z o.o. manufacture and sale of paints and varnishes 10.07% 10.07% Śnieżka Romania SRL wholesale and retail sale 0% 80% Company name, legal form and location of the management office SUBSIDIARIES Fabryka Farb i Lakierów Proszkowych Proximal Sp. z o.o. Śnieżka Group Carrying value of interests as of 31 December 2012 Carrying value of interests as of 31 December 2011 3,458 3,458 Hadrokor Sp. z o.o. 715 715 Farbud Sp. zo.o. - - Śnieżka Ukraina Sp. z o.o. 16,769 16,022 Śnieżka-BelPol Sp. z o.o. 1,152 696 Śnieżka Sp. z o.o. - Wistowa - - Śnieżka Romania S.R.L. - - IP Solutions Sp. z o.o. 5 5 TM Investment Sp. z o.o. 5 5 Total interests held in subsidiaries 22,104 20,901 ASSOCIATES Plastbud Sp. z o.o. Total interests held in associates 48 48 48 48 As of 31 December 2012 and as of 31 December 2011 the share in the overall number of votes held by the Company in its subsidiaries, co-subsidiaries and associates was equivalent to the share of the Company in the capitals of those units. The parent company holds a 10.07% interest in Plastbud Sp. z o.o. Due to the amount of trading between the investor and the above company, this entity is treated as an associate. The entity also holds an interest in Podkarpacki Bank Spółdzielczy. As of 31 December 2012 the carrying value of this interest amounted to PLN 10 thousand. 10

6. Material figures based on professional judgment and estimates 6.1. Professional judgement In the application of the accounting principles (policy) to the issues discussed below, the most important aspect, apart from the accounting estimates, was the professional judgment of the management. One of the areas which require judgment on part of the management is the verification of indications for the impairment of investments in related parties. As of each balance sheet date, the Company estimates whether there are objective grounds of impairment of an item of financial assets or a group of financial assets. Lease is another area where, in addition to accounting estimates, the Company uses the management's judgment. The Company classifies lease as operating or finance lease based on the assessment of the extent to which the risks and benefits from holding the subject of lease are attributable to the lessor and to the lessee. This assessment is based on the economic content of each transaction. Another area in which the Company's Management Board relied on professional judgement was the loss of control over Śnieżka Romania. On 19 November 2012 Śnieżka S.A. disposed of all its shares held in Śnieżka Romania SRL. Until the date of approving these financial statements, the sale of shares has not been registered by the competent court. As of 31 December 2012 Śnieżka Romania SRL was no longer a member of the Śnieżka Capital Group. 6.2. Estimation uncertainty The text below discusses the key assumptions concerning the future and other key sources of uncertainty as of the balance sheet date that have a significant risk of causing a material adjustment to the carrying value of assets and liabilities in subsequent financial year. Impairment of assets As of every balance sheet date, the business entity verifies whether there are any circumstances indicating an impairment of any item of assets. Details regarding impairment of assets are presented in Note 21, 23 and Note 24. Measurement of employee benefit provisions Employee benefit provisions have been estimated using actuarial methods. The assumptions adopted for this purpose are presented in Note 25. Deferred tax assets The Company recognises deferred tax assets based on the assumption that tax profit will be generated in the future, allowing for the assets to be used. However, a deterioration of the generated tax results in the future may deem this assumption invalid. Amortisation and depreciation rates Amortisation and depreciation rates are based on the expected economic useful life of property, plant and equipment and intangible assets. Items of property, plant and equipment or their material and separate parts are depreciated with the straight-line method over their useful life. Depreciation and amortisation allowances are made as long as the residual value of an asset does not exceed its carrying value. Every year the Company verifies the adopted economic useful lives based on current estimates. Revaluation allowances for receivables As at the balance sheet date, the Company verifies whether there is objective proof of impairment of receivables. If the recoverable value of an asset is lower than its carrying value, the Company makes a revaluation allowance to the present value of the planned cash flows. 7. Basis for preparation of the financial statements These financial statements have been prepared in accordance with the historical cost principle. 11

These financial statements are presented in PLN and all figures, unless indicated otherwise, are provided in thousands of PLN. These financial statements have been prepared based on the going concern assumption. As of the approval of these financial statements, there are no circumstances threatening the Company s going concern status during a period of at least 12 months after the balance sheet date, i.e. after 31 December 2012. 7.1. Declaration of conformity These financial statements have been drawn up in conformity with the International Financial Reporting Standards ("IFRS") and the IFRS approved by the EU. In consideration of the IFRS implementation process taking place in the EU and the Company's business, and with regard to the accounting principles applied by the Company, there is no difference between the already effective IFRS and the IFRS approved by the EU for the financial year ended 31 December 2012. 7.2. Functional currency and the currency of the financial statements The functional currency of the Company and the reporting currency of these financial statements is the Polish zloty. 8. Changes in the accounting principles applied The accounting principles (policy) applied to draw up these financial statements are consistent with those to the preparation of the Company's financial statements for the year ended 31 December 2011, except for the application of new or amended standards and interpretations effective for annual periods beginning on or after 1 January 2012. Amendments to IFRS 7 Financial Instruments: Disclosures: Transfer of Financial Assets applying to annual periods beginning on or after 1 July 2011. The application of these changes did not influence the financing position or the result on the Company's Activity or the scope of information presented in the Company's financial statements. The Company did not decide to perform an early adoption of any standards, interpretations or revisions which have already been published but are not yet effective. 9. New standards and interpretations that have been published but not implemented yet The first phase of IFRS 9 Financial Instruments: Recognition and Measurement applying to annual periods beginning on or after 1 January 2015 not approved by the EU until the approval of these financial statements. During subsequent phases the International Accounting Standards Board will deal with hedge accounting and impairment. Application of the first phase of IFRS 9 will influence recognition and measurement of the financial assets of the Company. The Company will evaluate this influence in conjunction with other phases once they are published in order to present a coherent picture, Amendments to IAS 19 Employee Benefits applying to annual periods beginning on or after 1 January 2013, the amendments implement new requirements in the scope of recognition and measurement of costs of programs of certain benefits and termination benefits, as well as change the disclosure requirements concerning all employee benefits, Amendments to IFRS 1 Presentation of Financial Statements: Presentation of the Item of Other Comprehensive Income applying to annual periods beginning on or after 1 July 2012, Amendments to IAS 12 Income Taxes: Recovery of Underlying Assets applying to annual periods beginning on or after 1 January 2012 in the EU applying at the latest to annual periods beginning on or after 1 January 2013, Amendments to IFRS 1 First-Time Adoption of International Financial Reporting Standards: Severe Hyperinflation and Removal of Fixed Dates for First-Time Adopters applying to annual periods beginning 12

on or after 1 July 2011 in the EU applying at the latest to annual periods beginning on or after 1 January 2013, IFRS 19 Consolidated Financial Statements applying to annual periods beginning on or after 1 January 2013 in the EU applying at the latest to annual periods beginning on or after 1 January 2014, IFRS 11 Joint Arrangements applying to annual periods beginning on or after 1 January 2013 in the EU applying at the latest to annual periods beginning on or after 1 January 2014, IFRS 12 Disclosure of Interests in Other Entities applying to annual periods beginning on or after 1 January 2013 in the EU applying at the latest to annual periods beginning on or after 1 January 2014, Amendments to IFRS 10, IFRS 11 and IFRS 12 Transition Guidance applying to annual periods beginning on or after 1 January 2013 until the approval of these financial statements, not approved by the EU, IFRS 13 Fair Value Measurement applying to annual periods beginning on or after 1 January 2013, IAS 27 Separate Financial Statements applying to annual periods beginning on or after 1 January 2013 in the EU applying at the latest to annual periods beginning on or after 1 January 2014, IAS 28 Investments in Associates applying to annual periods beginning on or after 1 January 2013 in the EU applying at the latest to annual periods beginning on or after 1 January 2014, IFRIC 20 Stripping Costs in the Production Stage of a Surface Mine applying to annual periods beginning on or after 1 January 2013, Amendments to IFRS 7 Financial Instruments: Disclosures: Offsetting Financial Assets and Financial Liabilities applying to annual periods beginning on or after 1 January 2013. Amendments to IAS 32 Financial Instruments: Presentation: Offsetting Financial Assets and Financial Liabilities applying to annual periods beginning on or after 1 January 2014, Amendments to IFRS 1 First-Time Adoption of International Financial Reporting Standards: Government Loans applying to annual periods beginning on or after 1 January 2013, Amendments resulting from the improvements of the IFRS (published in May 2012) applying to annual periods beginning on or after 1 January 2013 until the approval of these financial statements, not approved by the EU, Amendments to IFRS 10, IFRS 12 and IAS 27 Investment Entities (published on 31 October 2012) applying to annual periods beginning on or after 1 January 2013 until the approval of these statements, not approved by the EU. In the opinion of the Management Board, these changes will not influence the Company's financial statements. The Company will apply the amendments to IFRS 10, 11 and 12 as of 2014. Currently the Company is analysing the influence of the above-mentioned IFRS on the financial statements. 10. Significant accounting principles 10.1. Translation of items in foreign currencies The Company initially recognises transactions in foreign currencies in the functional currency (PLN) applying the spot exchange rate to translate the amount denominated in a foreign currency. It is the average exchange rate published by the National Bank of Poland for each currency on the last working day preceding the transaction conclusion date. As of the balance sheet date: cash items in a foreign currency are translated applying the closing rate for the relevant currency. The closing rate constitutes the spot exchange rate as of the balance sheet date. (the Company assumes that this is the average exchange rate of the National Bank of Poland of the last working day preceding the balance sheet date). non-cash items measured at the historical cost denominated in a foreign currency are translated at the spot exchange rate of the transaction date. 13

Foreign exchange differences arise from settlement of cash items or from translating these items as of the balance sheet date at exchange rates other than those at which they were translated upon initial recognition thereof. They are recognised in the result of the period during which they arise, on the stipulation that positive foreign exchange differences increase financial revenues of the relevant period while negative foreign exchange differences increase financial expenses of the relevant period. Foreign exchange differences resulting from the settlement of non-cash items are recognised in the statement of comprehensive income in the period during which the settlement was made. The following exchange rates were adopted for the purpose of the balance sheet valuation: 28 December 2012 31 December 2011 USD 3.0893 3.4174 EUR 4.0745 4.4168 RON UAH BYR 0.9191 0.3812 0.000359 1.0226 0.4255 0.000402 10.2. Property, plant and equipment Property, plant and equipment are fixed assets maintained by the entity for use in the production process or in deliveries of goods and rendering of services, to hand over for use to other entities under tenancy agreements or for administrative purposes. The above-mentioned fixed assets are recognised as an item of assets if it is expected that they will be used for a period longer than one year and if it is probable that the entity will derive future economic benefits with respect to the relevant item of assets. Items of property, plant and equipment are recognised on the basis of the acquisition price or the adopted manufacturing cost thereof, less accumulated depreciation and amortisation allowances as well as impairment losses. In the case where a given item of property, plant and equipment consists of separate and significant components with different usage periods, these parts are treated as separate items of property, plant and equipment. A register of fixed assets is kept in quantity and value terms divided into generic groups. Items of property, plant and equipment or their material and separate parts are depreciated with the straight-line method over their useful life. Depreciation and amortisation allowances are made as long as the residual value of an asset does not exceed its carrying value. Land is not subject to depreciation. Usage periods of fixed assets for individual generic groups: Generic group Name of the generic group Type of group of property, plant and equipment Usage period Group 0 Land Land not specified Group 1 Buildings Buildings 20-40 years Group 2 Structures Structures 20-40 years Group 3 Boilers and power machines Machines and equipment 5-10 years Group 4 Machines and equipment Machines and equipment 3-15 years Group 5 Machines, equipment and special sector appliances Machines and equipment 5-10 years Group 6 Technical equipment Machines and equipment 4-30 years Group 7 Means of transport Means of transport 3-8 years Group 8 Tools, instruments, movables and equipment Other fixed assets 5-15 years As of the balance sheet date, the entity estimates whether there are circumstances indicating an impairment of any item of property, plant and equipment. If such circumstances are found, the entity estimates the recoverable value of the relevant asset. If the carrying value of a relevant fixed asset exceeds the recoverable value estimated for it, the carrying value of this fixed asset is subject to an impairment loss to the amount of its recoverable value. The entity verifies usage periods and residual values of property, plant and equipment on an annual basis. 14

A given item of property, plant and equipment is removed from the statement of financial position of the entity after it has been disposed of or if no economic benefits are expected from further use of such an asset. Any profits or losses resulting from removing a given PP&E item from the statement of financial position of the entity are recognised in the statement of comprehensive income in the period during which such a write-off was made. Fixed assets under construction comprise fixed assets in the process of construction or assembly and they are recognised at acquisition prices or manufacturing costs, less impairment losses. Write-offs are made mainly due to the probability that a fixed asset under construction will not bring benefits in the future. Commenced investments are not subject to depreciation. Depreciation of a fixed asset begins when the given fixed asset is complete and ready for use. 10.3. Investment real property Investment real property is recognised in assets when it is probable that the entity will derive future economic benefits with respect to that property and when the acquisition price or manufacturing cost thereof may be reasonably explained. Investment real property is measured at the acquisition price or the manufacturing cost thereof, less accumulated depreciation and amortisation allowances as well as impairment losses. Investment real property is removed from the balance sheet in the case of disposal thereof or permanent withdrawal of a relevant investment real property from use if no future benefits from the sale thereof are anticipated. Any profits or losses resulting from removing an investment real property from the balance sheet are recognised in the profit or loss in the period during which such removal was performed. 10.4. Intangible assets Intangible assets are defined as identifiable non-cash assets without a physical form. This category includes for instance computer software, patents, copyrights, formulas, licences. Intangible assets are measured at the acquisition price or the manufacturing cost thereof, taking into account accumulated depreciation and amortisation allowances as well as impairment losses. Depreciation and amortisation allowances are made using the straight-line method for intangible assets with a specified usage period. Intangible assets with an unspecified usage period are not subject to depreciation and amortisation allowances. Depreciation and amortisation allowances begin on the first day of the month following the month during which the relevant intangible asset was accepted for use. The usage period and the method of depreciating intangible assets are subject to annual verification. At the Company usage periods for intangible assets range between 2 and 10 years. Profits or losses resulting from removing intangible assets from the statement of financial position are measured according to the difference between net revenues from sales and the carrying value of the relevant asset, and they are recognised in the profit or loss upon the removal thereof from the statement of financial position. 15

Principles applied to the intangible assets of the Company may be summarised as follows: Usage periods Depreciation method applied Internally manufactured or acquired Impairment testing 10.5. Lease Company as Lessee Patents and licences Not specified. For patents and licenses used under agreements concluded for a specified period of time, this period is assumed, taking into account an additional period for which usage may be extended. Assets with an unspecified period of usage are neither depreciated nor restated. Depreciated during the term of the agreement (2-10 years) - using the straight-line method Research and development Computer software Other, e.g. copyright, licences 5-10 years 2-10 years 2-10 years 5-10 years using the straight-line method 2-10 years using the straight-line method 2-10 years using the straight-line method Acquired Internally manufactured Acquired Acquired Unspecified period of usage - annually and in the case of premises indicating impairment. For other - annual assessment if there are premises indicating impairment. Annually in the case of assets not handed over for use yet and in the case of premises indicating impairment. Annual assessment if there are premises indicating impairment. Annual assessment if there are premises indicating impairment. Lease agreements under which the entity carries practically the entire risk and derives practically all benefits resulting from the ownership of items of property, plant and equipment are classified as financial lease agreements. Property, plant and equipment acquired through financial lease is disclosed in the current value of minimum lease fees, less accumulated depreciation and amortisation allowances as well as impairment losses. Lease fees are divided into financial expenses and reduction of the outstanding liability balance in order to obtain a fixed interest rate with respect to the outstanding liability balance. Financial expenses are posted directly in costs, unless compounding terms and conditions are met. In case of lack of sufficient certainty that the lessee gains ownership title before the end of the lease period, the asset is redeemed in the shorter of the following periods: the lease period or the usage period. The entity analyses premises whether to carry out impairment testing of property, plant and equipment under lease as well as verifies the usage period of these fixed assets. Company as Lessor Lease agreements concluded by the entity with lessees are classified as financial lease agreements and are presented as receivables in the amount equivalent to the lease investment net. The Company recognises lease fees as a repayment of the principal amount receivable and financial revenues which for the entity are a refund of funds invested and a consideration for services. The Company assigns financial revenues during the term of the lease agreement in a reasonable and systematic manner. Lease fees concerning a relevant financial period reduce the gross lease investment, reducing both the principal amount receivable and the amount of unrealised financial revenues. 16

10.6. Impairment of non-financial non-current assets As of every balance sheet date, the business entity verifies whether there are any circumstances indicating an impairment of any item of assets. If such circumstances are found, the business entity estimates the recoverable value of the relevant asset. Regardless of whether there are any grounds indicating impairment, the business entity is obliged to carry out an annual test verifying whether impairment has occurred of intangible assets with unspecified usage periods or intangible assets which are not available for use yet by comparing the carrying value thereof with the recoverable value thereof. The recoverable value is the higher of either the fair value less selling costs of the relevant asset or the use value thereof. Fair value less selling costs is defined as the amount that may be obtained from selling an asset on market terms and conditions between transaction parties, after the deduction of disposal costs. However, the use value is defined as the current, estimated value of future cash flows expected from further use of the relevant asset or cash-generating unit. The carrying value of an asset is reduced to the level of the recoverable value thereof if and only if the recoverable value of this asset is lower than the carrying value thereof. The amount of this reduction constitutes an impairment loss. The impairment loss is recognised as an expense in the statement of comprehensive income in other operational expenses. If the recoverable value exceeds the carrying value of the relevant asset, no impairment loss is recognised. After the impairment loss has been recognised, it is necessary to adjust depreciation and amortisation allowances of the relevant asset in such a manner so as to recognise write-offs on the adjusted carrying value during the remaining usage period. As of each balance sheet date the entity estimates if there are any grounds suggesting that the impairment loss recognised in previous periods with respect to a given asset, excluding goodwill, is superfluous or whether it should be reduced. If such grounds are identified, the entity estimates the recoverable value of the relevant asset once again. Reversals of impairment losses on assets, excluding goodwill, are recognised as revenues in the statement of comprehensive income. The carrying value of an asset which has been increased as a result of reversing the impairment loss should not exceed the carrying value determined (after deducting depreciation) if no impairment loss was recognised with respect to this asset in previous years. 10.7. Costs of external financing Costs of external financing directly related to an acquisition, construction or manufacture of fixed assets requiring a considerable amount of time for preparation to use in accordance with the designation thereof are recognised as a part of the manufacturing cost of the relevant fixed asset. All other costs of external financing are charged to costs upon the incurrence thereof. The Company uses external financing, which is earmarked mainly for purposes related to current activities, special purpose financing comprises loans incurred at ING Bank Śląski S.A. (a loan of PLN 20 million) and at Bank Handlowy w Warszawie S.A. (a loan of PLN 7.5 million). Costs of external financing comprise the total cost of a bank loan and borrowings utilised by the Company, i.e. interest with fees. Interest is calculated on the basis of the WIBOR 1M rate augmented by margin and fee. Costs of external financing are defined as borrowing costs that may be directly related to an acquisition or manufacture of a relevant eligible asset; they are compounded as a part of the cost of this asset when it is probable that these costs will bring future economic benefits as a result and if they may be reasonably estimated. The Company activates the difference between costs of external financing and revenues from temporary investment of funds borrowed. 10.8. Interests in subsidiary, associates and joint arrangements Shares in subsidiary, associates and joint arrangements are disclosed at the historical cost after taking into account impairment losses. In the case of disposal of shares, the value thereof is measured using the weighted average price formula. 10.9. Financial assets Financial assets are divided into the following categories: 17

Financial assets held until maturity, Financial assets measured at fair value through the financial result, Borrowings and receivables, Financial assets available for sale. Financial assets held until maturity are defined as financial assets quoted on the active market that are not derivatives, with identified or identifiable payments and with a specified maturity date, which the Company intends and is able to keep in possession by that time, other than: specified upon initial recognition as measured at fair value through the financial result, specified as available for sale, meeting the definition of borrowings and receivables. Financial assets held until maturity are measured at the depreciated cost using the effective interest rate method. Financial assets held until maturity are classified as long-term assets if they mature more than 12 months from the balance sheet date. Financial assets measured at fair value through the financial results are measured at fair value taking into account the market value thereof as of the balance sheet date, excluding sale transaction costs. Changes in the value of these financial instruments are recognised in the statement of comprehensive income as financial revenues or expenses. As of 31 December 2012 no financial assets were classified into the category measured at fair value through the financial result. Borrowings and liabilities are financial assets, not classified as derivatives, with identified or identifiable payments, not quoted on the active market. They are classified as current assets provided that they mature in less than 12 months from the balance sheet date. Borrowings granted and receivables maturing in more than 12 months from the balance sheet date are classified as non-current assets. Financial assets available for sale are defined as financial assets that are not derivatives which have been classified as available for sale or which do not belong to any of the above-mentioned three categories of assets. Financial assets available for sale are recognised at fair value augmented by transaction costs which may be directly related to an acquisition or issue of a financial asset. In the case of stock exchange quotations on the active market and if it is not possible to reasonably estimate the fair value thereof using alternative methods, financial assets available for sale are measured at the acquisition price adjusted by impairment losses. The positive and negative difference between the fair value of assets available for sale and the acquisition price thereof, less the deferred tax, is recognised in other comprehensive income. A drop of the value of assets available for sale caused by impairment is recognised as a financial expense. Acquisitions and sales of financial assets are recognised as of the transaction date. Upon initial recognition a financial asset is measured at fair value augmented, in the case of an asset not classified as measured at fair value through the financial result, by transaction costs that may be directly related to the acquisition. A financial asset is removed from the balance sheet when the Company loses control over contractual rights comprising the relevant financial instrument; this usually happens when the instrument is sold or when all cash flows ascribed to the given instrument are transferred to an independent third party. 10.10. Impairment of financial assets As of each balance sheet date, the Company estimates whether there are objective grounds of impairment of an item of financial assets or a group of financial assets. If there are grounds indicating that a loss has been incurred due to impairment of borrowings granted and receivables measured at the depreciated cost, then the amount of the impairment loss is equivalent to the difference between the carrying value of a financial asset and the current value of estimated future cash flows (excluding future losses due to a failure to collect receivables which have not been incurred yet), discounted using the initial (i.e. determined upon initial recognition) effective interest rate. The carrying value of an asset is reduced by applying write-downs. The amount of the loss is recognised in the profit or loss. If during the next period the impairment loss decreased and if this decrease may be objectively connected with an event occurring after the recognition of this impairment loss, then the previous impairment loss is reversed. Later reversal of an impairment loss is recognised in the profit or loss in the scope in which as of the reversal date the carrying value of the asset does not exceed the depreciated cost thereof. 18

If there are objective grounds indicating that impairment has occurred of a non-quoted equity instrument that is not disclosed at its fair value as its fair value may not be reasonably determined, or a derivative that is linked and must be settled by the supplier of such a non-quoted equity instrument, then the amount of the impairment loss is determined as the difference between the carrying value of the financial asset and the current value of estimated future cash flows discounted with the use of the current market rate for similar financial assets. If there are objective grounds indicating that impairment has occurred of a financial asset available for sale, then the amount constituting the difference between the acquisition price of this asset (less principal payments and depreciation) and its current fair value, less any impairment losses previously recognised in the profit or loss, is written off from equity and reclassified into the profit or loss. Reversal of impairment losses of equity instruments classified as available for sale may not be recognised in the profit or loss. If during the next period the fair value of a debt instrument available for sale increases and if this increase may be objectively linked with an event occurring after the recognition of the impairment loss in the profit or loss, then the amount of the reversed impairment loss is recognised in the profit or loss. 10.11. Embedded derivatives Embedded derivatives are separated from agreements and are treated as derivatives if all of the following conditions are satisfied: the economic nature and risk of the embedded instrument are not closely connected with the economic nature and risk of the agreement into which the relevant instrument is embedded; a separate instrument with identical performance terms and conditions as the embedded instrument would meet the definition of a derivative; a hybrid (complex) instrument is not disclosed at fair value and changes of its fair value are not recognised in the profit or loss. Embedded instruments are disclosed similarly to separate derivatives which are not classified as hedging instruments. The scope in which, according to IAS 39, economic properties and risk typical of embedded derivatives in foreign currencies are closely connected with economic properties and risk typical of principal agreements (principal contracts) also covers situations in which the currency of the principal agreement is the usual currency for contracts of purchase or sale of non-financial positions on the market for a given transaction. The Company evaluates whether a given embedded derivative is subject to separation upon initial recognition thereof. 10.12. Financial derivatives and hedge Derivatives used by the Company in order to hedge against the risk related to changes in foreign exchange rates comprise mainly forward contracts and currency options. Such financial derivatives are measured at fair value. Derivatives are disclosed as assets when their value is positive and as liabilities when their value is negative. Profits and losses due to changes of the fair value of derivatives which do not meet the requirements of hedge accounting are directly charged to the net financial result of the financial year. The fair value of forward contracts is determined by comparison against current forward rates in contracts with similar maturity dates. The fair value of currency options is determined by comparison against the market value of similar instruments. In hedge accounting, hedge is classified as: hedge of the fair value, hedging against the risk of changes of the fair value of the asset or liability recognised, or hedge of cash flows, hedging against changes of cash flows that may be ascribed to a particular type of risk connected with the asset or liability recognised or with the projected transaction, or hedge of the interest in net assets in a foreign operation. Hedge of a currency risk of a reasonably anticipated future liability is settled as a hedge of cash flows. Upon establishing hedge, the Company formally specifies and documents the hedging connection as well as the purpose of risk management and the strategy of establishing hedge. The documentation identifies the hedging 19